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1 BEFORE THE ENVIRONMENTAL APPEALS BOARD U.S. ENVIRONMENTAL PROTECTION AGENCY WASHINGTON, D.C. + + + + + ORDER SCHEDULING STATUS CONFERENCE/ EXPEDITED ORAL ARGUMENT " . I IN THE MATTER OF: LA PALOMA ENERGY PSD Appeal No. CENTER LLC., 13-10 PSD Permit No. TX-1288-GHG Wednesday, February 12, 2014 Administrative Courtroom Room 1152 EPA East Building 1201 Constitution Avenue, NW Washington, DC The above-entitled matter came on for hearing, pursuant to notice, at 3:23 p.m. BEFORE: THE HONORABLE CATHERINE R. MCCABE Environmental Appeals Judge THE HONORABLE RANDOLPH HILL Environmental Appeals Judge THE HONORABLE KATHIE A. STEIN Environmental Appeals Judge NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. (202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us

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Page 1: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us

1

BEFORE THE ENVIRONMENTAL APPEALS BOARD

US ENVIRONMENTAL PROTECTION AGENCY WASHINGTON DC

+ + + + +

ORDER SCHEDULING STATUS CONFERENCE ~I

EXPEDITED ORAL ARGUMENT ~ I

IN THE MATTER OF

LA PALOMA ENERGY PSD Appeal No CENTER LLC 13-10

PSD Permit No TX-1288-GHG

Wednesday February 12 2014

Administrative Courtroom Room 1152 EPA East Building 1201 Constitution Avenue NW Washington DC

The above-entitled matter came on for hearing pursuant to notice at 323 pm

BEFORE

THE HONORABLE CATHERINE R MCCABE Environmental Appeals Judge

THE HONORABLE RANDOLPH HILL Environmental Appeals Judge

THE HONORABLE KATHIE A STEIN Environmental Appeals Judge

NEAL R GROSS COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE NW (202) 234-4433 WASHINGTON DC 20005-3701 wwwnealrgrosscom

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bull APPEARANCES

LLC

bull and

Energy -=-=-==-=-=-shy

RICHARD ALONSO ESQ SANDRA Y SNYDER ESQ Bracewell amp Giuliani LLP 2000 K Street NW Suite 500 Washington DC 20006 (202) 828-5861 (202) 857-4824 fax

Club

DAVID C BENDER ESQ McGillivray Westerberg amp Bender 211 S Paterson Street Suite 320 Madison WI 53703 (608) 310-3566 (608) 310-3561 fax

TRAVIS RITCHIE ESQ Sierra Club Environmental Law Program

2nd85 Street 2nd Floor San Francisco CA 94105 (415) 977-5727

NEAL R GROSS COURT REPORTERS AND TRANSCRIBERS

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On Behalf Environmental Protection Agency Region Q

BRIAN TOMASOVIC ESQ US Environmental Protection Agency Office of Regional Counsel Region 6 1455 Ross Avenue Dallas TX 75202 (214) 665-9725 (214) 665-2182 fax

and

MATTHEW MARKS ESQ BRIAN DOSTER ESQ US Environmental Protection Agency Office of General Counsel Air and Radiation Law Office 1200 Pennsylvania Avenue NW Washington DC 20460 (202) 564-3276 (202) 564-5603 fax

PRESENT

Eurika Durr Clerk of the Board

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P-R-O-C-E-E D-I-N-G-S

323 pm

MS DURR All rise Environmental

Appeals Board of the United States

Environmental Protection Agency is now in

session for a status conferenceexpeditedoral

argument in re La Paloma Energy Center l LLC

rmit Number PAS-TX-1288-GHG PSD Appeal

Number 13-10 The Honorable Judges Kathie

Stein l Catherine McCabe Randolph Hill

presiding

Please turn off all cell phones

and no recording devices lowed Please be

seated

JUDGE MCCABE Good afternoon I

am Judge McCabe On my right is Judge Stein

and on my left is Judge Hill We are the

three panel members for this case

Id I ike to welcome you all to

Washington on this non-snowy day But first

why dont we take appearances of counsel who

will be presenting for each of the parties

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MR BENDER Good ternoon

David Bender for petitioners the Sierra Club

JUDGE MCCABE Okay Welcome

MR ALONSO Good ternoon

Richard Alonso on behalf of La Paloma

JUDGE MCCABE Welcome

MR TOMASOVI C Good afternoon

Brian Tomasovic from the EPA Region 6 Dallas

Office l joined at table by from the Office of

General Counsel Matthew Marks and Brian

Doster

JUDGE MCCABE Thank you And do

we have anyone else on the phone

MR RI E Yes I your Honor

This is Travis Richie with the Sierra Club

JUDGE MCCABE Okay Before we

beginl let me ask who will be speaking for

Sierra Club Is that just Mr Bender I or will

Mr Richie also be speaking Okay I thank you

Well first of all I would really like to

thank you all those of you especially who had

to change travel plans l for being here today

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on short notice and I realize that not only

disturbs flight arrangements but probably

disturbs your preparation time The good news

for all of you of course is that we are

going to do this a little differently today

so hope ly that wont make as much a

difference as it might in the ordinary case

Before we begin let me do a

travel check as to what time your flights on

leaving I understand a number of you are

eager to be back out of town and ahead of the

snow this evening Mr Bender

MR BENDER I f everything goes as

planned 700

JUDGE MCCABE Seven 0 clock is

your flight time And whats your airport

MR BENDER National

JUDGE MCCABE National Okay

Mr Alonso can I assume youre remaining in

town

MR ALONSO Yes

JUDGE MCCABE I assume this is a

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representative of a company with you

MR ALONSO Yes Im sorry This

is Sandra Snyder with Bracewell also

representing La Paloma and we do not have any

travel restrictions tonight

JUDGE MCCABE Thank you And

from the EPA side

MR TOMASOVIC My flight departs

at 8 pm

JUDGE MCCABE All right Then I

think we should have plenty of time Weve

scheduled an hour and a half for this We

will try our best to get you out on timel so

you can run for the airports Snow is not

supposed to begin until later this evening

We are doing this slightly

differently than our normal procedure because

this is a status conference as well as an

expedited oral argument As usual well go

ahead and allocate one half an hour

approximately to each party But the order

the parties will be slightly different than

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usual

We will start in this case with

the permitee with La Paloma Energy Center

who I will refer to briefly as La Paloma I

suspect the other judges will be doing that

too for the record Because we have some

status questions for you which I assume will

not surprise you given our scheduling order

Those answers to those questions may inform

the rest of the discussion that we have here

today so we thought it best to begin with La

Paloma

Normally of course our practice

would be to begin with the petitioner the

Sierra Club So in this case Mr Bender Im

going to give you your choice as to whether

you would like to go second or third Some

people like to have the first word some

people like to have the last word

You also have the option if you

choose to go second after La Paloma to

reserve five minutes of your time for rebuttal

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after EPA What would you like to do

MR BENDER I I 11 combine both and

do it all together

JUDGE MCCABE Okay Thats the

way weIll proceed then WeIll begin first

with La Paloma

mentioned l if we didnt we should have in ourI

order to you l were not expecting you or

asking you to make any formal presentations

today I as you would in the normal oral

argument

In the interest of timel please

presume that weve read your briefs l that

were famil with the records And in the

interest of saving time and getting you out of

here weld like to focus right away on the

judges questions If you have anything that

you would like to say very briefly first l

thoughl please 1 us know that and feel free

Mr onso

MR ALONSO Thank you Judges

And we just want to first start off by

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recognizing and thanking you for expediting

this appeal I believe the briefs were

submitted on December 27th and the Board

reached out to us just a couple of weeks later

to schedule this argument So were really

appreciative of that We are prepared to

answer your questions presented in your order

as well as any other issue thats before the

Court

As to your first issue you asked

us to report on the status of the projects

First 1 me address the construction time

line We currently have all government

approvals that are required for pre-

construction as well as agreements that we

need wi th governments We have tax agreements

that were completed We have a water supply

agreement with the local water works We have

land agreements in place We have our TCEQ

Air Permit that was finali in February of

2013

The two main components that we

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are missing right now is number one

financing Financing is contingent on

receiving a final PSD permit Once we receive

a final agency action on the permit we expect

to close that financing in short order right

ter that

As far as construction we have in

EPC the engineering procurement and

construction contract completed That was

executed in September of 2013 So shortly

er this closing we can start construction

shortly right after that That was wi th

Bechtel Power Corporation and again they are

standing by ready to start construction

JUDGE MCCABE Most importantly

Mr Alonso could you address whether youve

selected your turbine yet

MR ALONSO Yes we are prepared

to talk about that We have preliminarily

identified the preferred turbine that we would

like to install at this site It is the GE

7FA turbine However we are currently

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various escalation clauses of our existing

contracts including for the turbine in the

sense that we have planned to be done with

this process on January 1st Not just the

contract for the turbine but for other

components of the site every day that goes on

the cl is paying escalation fees on that

contract

JUDGE MCCABE So do you have a

turb contract or not

MR ALONSO We do have a spot for

manufacturing of the turbine

JUDGE MCCABE So is that like

reserving a place in case you decide to put in

your order

MR ALONSO Correct And that

deadline is April 1st On April 1st we have

what happened ter January is that we

negotiated our escalation clauses through

April 1st Come April 1st I think that the

weIll come April 1st I we would have to

renegotiate that contract And most likely I

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we can maybe even consider selecting one of

the other turbines that are in this permit

So if we dont have a final permit

in the next you know -- and Im not putting

any pressure on you guys but as of April

1st I think that the well I know the

developer would like the flexibility to

install anyone of these three turbines

JUDGE MCCABE Im not sure Im

completely following you What happens -shy

lets try it this way What happens if you

get your permit tomorrow

MR ALONSO If we get our permit

tomorrow we would close our financing a

couple of weeks later and we could start and

then we would put in a notice for the

procurement finalizing the GE 7FA turbine

contract

JUDGE MCCABE And how soon could

that happen or would that happen

MR ALONSO That would happen

upon closing and we would -shy

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JUDGE MCCABE So are we talking

about a week two weeks a month

MR ALONSO Yes My

understanding the information that I have is

that closing can happen in its a matter of

weeks a couple of weeks after we receive a

final permit

JUDGE MCCABE Okay So when you

say youve preliminary picked this GE 7FA

turbine -- can we just refer to that as the GE

turbine

MR ALONSO Sure

JUDGE MCCABE Its the only one

right thats a GE Okay Well call this

the GE turbine Youve preliminary selected

that If you get your permit tomorrow is

there any reason that youll change that

choice

MR ALONSO Most likely not If

we get our permit tomorrow if we get it

before April 1st we are probably we are most

likely yes going to select we are going to

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select the turbine

JUDGE MCCABE Okay If you get

your permit before April 1st you will select

the GE turbine is that correct

MR ALONSO That is yes

JUDGE MCCABE And my

understanding of this turbine is that its the

smallest of the three and according to heat

rates the least efficient the one to which

the region has assigned the highest GHG

ssion limit is that correct

MR ALONSO That is correct

JUDGE MCCABE Okay That will

very much inform the rest of our discussion

Thank you Mr Alonso Do you know yet

another question on your preparation here do

you know yet where the facility will be placed

in the ERCOT dispatch order and whether it

will be operated as a baseload or load cycling

facility

MR ALONSO Our plan is to

operate this as a baseload uni t However we

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will respond to the ERCOT orders as they come

I mean in Texas our business plan is to

operate this as a baseload unit

JUDGE MCCABE Does ERCOT give you

any preview of that

MR ALONSO Excuse me

JUDGE MCCABE Does ERCOT give you

any advanced notice as to whether youre going

to be likely operated as a baseload or not

MR ALONSO Our intention is to

operate it as a baseload Im not qui sure

about we can follow up with you on that as

far as ERCOT notices Im not prepared to

talk about the ERCOT notices But to the

extent that ERCOT manages dispatching we will

comply with their orders

JUDGE MCCABE Okay And you

expect at this point based on current

condi ons which I understand can change if

other plants come online or other things

happen you expect based on current

conditions that youll be dispatched high

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enough in the order that this will be a

baseload plant and therefore it will be

operated at 100-percent capacity

MR ALONSO Pretty close to it

JUDGE MCCABE On a regular basis

MR ALONSO On a regular basis

we would like to have you know utilize this

as much as possible Keep in mind though

while we do have the you know as an EPA

administrative record yes larger turbines

may be more efficient But at the end of the

day they also have higher mass emissions

And so when you look at it from an

environmental perspective to the ent that

an environmental impact plays into that the

environment really feels the impact of the

mass limit more than anything else I believe

JUDGE MCCABE Understood Okay

Can you tell us a little bit about what was

the chief factor that drove the companys

selection of the turbine how important was

the capacity or size for example

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MR ALONSO I dont know the ins

and outs why they selected that turbine

I believe its just commercial terms It was

the better commercial term -shy

JUDGE MCCABE Would you like to

consult with your client at all to see if you

can clarify that answer

MR ALONSO Sure Shes here

JUDGE MCCABE This may help you

Some of the questions that were also

interested in are how important was the

capacity or size the uni t in terms of your

decision to s the GE turbine and how do

the relative heat rates or the GHG emission

rates affect decision Did they affect

that decision if its made

MR ALONSO The way that this

project was developed is that we went out for

competitive bids of at least three turbines

And based on the necessary heat rate the

forecast of demand that was the basis of the

select ion It was not based on you know any

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other factors except for trying to meet the

purpose of the proj ect which is to supply the

load and the heat rates and the financial

arrangements that resulted from that bid

process

JUDGE HILL Was that forecast of

demand strictly internal or was it something

dictated by either EReOT or some other

external entity

MR ALONSO La Paloma is a

merchant power plant Wei re not regulated so

its not that wei to extent that your

question is to whether or not we had any

regulatory oversight -shy

JUDGE HILL Or just external

information or some sort of external driver

I guess

MR ALONSO me consul t wi th

- sorrYI I just wasnt prepared

JUDGE HILL No thats okay

MR ALONSO So specific

questions Okay

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JUDGE MCCABE But we appreciate

your corning

MR ALONSO But Im glad that

Kathleen the proj ect developer Kathleen

Smi th is here wi th us today When you develop

these projects yes they went out they had

third party evaluations of load demand and

what would fit for this market absolutely

JUDGE HILL Okay

MR ALONSO I mean its -shy

JUDGE HILL Let me ask one other

follow-up You said at the very outset Mr

Alonso that you had preliminarily identified

the GE turbine and the record before us is

that certainly at the time of the application

that decision hadnt been made Im not

asking for a specific date but roughly when

was that determination made relative

because Im curious how it relates to this

proceeding

MR ALONSO So again we made

the selection based on closing in January but

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the selection of the turbine was made in

August expecting to be you know

manufactured and installed in January So to

answer your question it was August of 2013

JUDGE HILL Did you communicate

that to the region at that time

MR ALONSO No because again

because of the timing of this permit it is a

preliminary determination At that time in

August if we were 100-percent certain that we

would get a permi t in January sure we

probably would have you know told the region

and maybe the final permit may have looked

differently But we couldnt put our eggs

all our eggs in that one basket at that time

JUDGE MCCABE What was your

understanding Mr Alonso of what the region

planned to do once you made your turbine

section Will they revise your permit or

leave in those three original limits

MR ALONSO We have a special

condition in the permit that requires that La

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Paloma submit an amended permit application to

remove the other two turbines that are not

selected from the permit So it would be a

deletion of the two other turbines that are

not selected

JUDGE STEIN Why if youve made

the decision to proceed with this particular

turbine if you receive your permit within the

time frame that is necessary for you would

you be revisiting that question if you dont

get the permit until May

MR ALONSO If we -shy

JUDGE STEIN Just hypothetically

if you get the permit a month after why is it

that suddenly thats an open question again

Im having difficulty understanding that

MR ALONSO Correct Our current

negotiations on the escalation clauses of the

contracts we have currently negotiated terms

through April 1st At that point youre

right we would have an option to negotiate

further or more likely than not we could we

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might go through another bid process to

determine whether or not maybe another turbine

might be more beneficial from an economic

perspective to install

JUDGE STEIN Thank you

JUDGE MCCABE Just to make sure

the record is clear on this though at this

point youre telling us that if the company

gets its final PSD permit from EPA before

April 1st it will be the GE turbine

MR ALONSO That is my

understanding

JUDGE MCCABE Okay Would you

like to qualify that statement

MR ALONSO Right The problem

is that again we cannot make a final

decision on the turbine until after we get the

permit because youre only going to reserve

your place line for a certain amount of

time at the manufacturing plant

JUDGE MCCABE But if you get your

permit tomorrow or anytime before April 1st

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or perhaps you need a week advanced notice

then you would be choosing the GE turbine We

can rely on that

MR ALONSO Yes

JUDGE MCCABE Is that correct

MR ALONSO More likely than not

we will be selecting that turbine

JUDGE MCCABE When you say more

likely than not or preliminary then Im not

sure what youre telling me Mr Alonso

Which is it Will you have that GE turbine be

your selection

JUDGE HILL What else might

prevent you from going ahead with the GE

turbine if there were a decision before April

1st is another way to ask the question

MR ALONSO To maintain

flexibility I mean thats one of the

purpose were here I mean if we get a call

tomorrow from Siemens saying that theyre

going to give us the turbine at five cents

maybe wed go with the Siemens

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JUDGE MCCABE So price matters

MR ALONSO Absolutely

JUDGE HILL Price really I I meant

but

MR ALONSO The likelihood of

that is minimal

IJUDGE HILL But let s explore

that for a second because it sort of takes us

to the other direction So if you so ifl

Siemens were tOI you know I mean I and I can

certainly relate to this 11m trying to do

some home maintenance But so they come in

with a bid youre not expecting l and you saYI

You know what That I s the one we should go

with thats going to be one of the larger

turbines So what will happen in terms of

your demand forecast or I I meanl how will you

operate that plan

MR ALONSO It may not fit the

business plan at the time I meanl we would

like to maintain the flexibility of selecting

the turbine as much as we can in this final

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permit Everything is in place that if we

were to get a final permit tomorrow that the

GE turbine would be used However we still

want I dont want to tell you that its 100shy

percent guaranteed We would like to maintain

that flexibility

JUDGE MCCABE But you understand

s your very desire to maintain that

flexibility that leads us all to be here

today right As I understand it the main

issue that the petitioners have with the limit

that was chosen in this case is the fact that

you are reserving flexibility to make this

choice after you get your permit

MR ALONSO But the limit is the

limit doesnt satisfy region as appropriate

and valid under BACT What the permitee is

arguing here today is that somehow we start

off with a class of control devices The

region has identified combustion combined

cycle turbines as a control class That is

your step one BACT is an evolution all the

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way through step five Once you get to step

five the purpose and the intent of step five

is to impose an emission limit looking at

those control devices and its not just

combined cycle We have a whole list of

technologies that were identified by the

region that apply to each of these turbines

At that point you look at the

ssion unit and you develop a unit-specific

emission rate that reflects the technology as

its supplied to that particular emission

unit

JUDGE MCCABE Dont you also look

at comparable units located at other

facilities when the permitting authority makes

that decision

MR ALONSO Absolutely You look

at technologies at other through the

clearinghouse and other technical information

That is your step two analysis absolutely

JUDGE MCCABE Then why wouldnt

you look at other turbines that are available

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MR ALONSO Im sorry

JUDGE MCCABE Then why wouldnt

you look at these other turbines that are

available

MR ALONSO You look at the other

turbines as - - well f are you saying the other

turbines that are mentioned

JUDGE MCCABE The Siemens

turbines

MR ALONSO The Siemens turbines

and the GE turbines have the exact same

technology installed Again at the end

and Siemens does not make the identical

products Theres going to be some

variability amongst those products and I

would argue that the actual impact of these

units or these emission rates arent that

off from each other But in step five the

region looked at the turbines and looked at

as this board has approved in the past and in

particular in Prairie State the ability to

take into consideration operational

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variability compliance headroom and other

factors made to ensure that the BACT limit at

the end of the day is workable and something

that can be achievable from a compliance

perspective

JUDGE MCCABE Mr Alonso wed

like to go on to that subject of the relative

heat rates and therefore the GHG emission

rates of these three turbines But before we

leave the subj ect that we are on of the

criteria that the company used perhaps past

tense or might in the future if something

unexpected happens use in the future to

select the turbine I heard you say two

primary things And I know were several

beats back on the questioning now But I

heard you say the forecast of demand how much

power you can 1 -- Im sure where ERCOT

will dispatch you is part of that equation -shy

and the heat rates Are those the two most

important factors to the company in selecting

the turbine Price obviously has something

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to do with this too

MR ALONSO Yes I mean and the

result of the bidding process and how that

and the third-party analysis of the energy

demand and everything else Absolutely

JUDGE HILL So are you really

saying to a large extent price is the

primary driver

MR ALONSO No not necessarily

I mean its what fits for this particular

you know looking at the forecast -shy

JUDGE HILL But its the balance

of price to demand to efficiency

MR ALONSO Sure Im sure

There is a cost component to this but its

not a cost component as specified in step four

of the BACT analysis

JUDGE HILL No Im not doing

BACT right now Im talking about just the

decision of which one to install

MR ALONSO Sure Its a

business decision and the product developer

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would like to maintain that flexibility At

the time the permit was submitted we

concurrently went and did basically a dual

process of trying to get a PSD permi t and try

to come to terms with all these agreements

whether the turbine or your tax agreement

your water use agreement And thats why our

initial application had three turb s in it

To say that we had to do I that

work up-front and then wait another two years

to get a PSD permit it would really delay the

proj ect and lose a window opportunity

currently right now at ERCOT where there are

some energy constraints in Texas This is a

very good time to build a gas-fired power

plant in Texas

JUDGE STEIN I want to follow up

Are you -shy

JUDGE HILL Yes yes

JUDGE STEIN I wanted to follow

up on your decision of the ous steps of

the BACT process I understand your wanting

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to have flexibility to the last possible

moment At the same time ordinarily in the

step two analysis you would be looking at

whether technologies are available and

applicable And if somebody was going to

drive the company to say you should build a

size thats too small or too large its my

understanding that there would be an

opportunity at that point for commenters to

explain why a different size unit might be

appropriate and you in turn would have an

opportunity to say well that doesnt work

for us

But by keeping the flexibility

until the end of the process my question is

whether you have deprived either citizens

groups or other comn1enters of the opportunity

to meaningfully comment at an earlier phase of

the process And therefore by keeping your

flexibility to the last moment you are

perhaps you should assume the risk for having

done that

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I mean in pio Pico we briefly

talked about the sizing issues Weve

acknowledged I understand your points on you

get to pick the size But if you pick it so

late in the process that nobody else can

meaningfullycomment notwithstandingthe size

you want to pick if you pick it a little

bigger its much more efficient how can that

happen if you wait until the end the

process to choose to say what technology you

the company want to go with

MR ALONSO First of 1 you

know recognizing BACT and step two Im not

aware of any precedent in PSD permitting or

from this board that somehow size and

itself is a control device Step two and to

a certain extent I step one is to identify

control devices you know technology that

would be applied to a given emission unit or

a given source And I believe that its been

pretty well established that the permittee has

a lot of flexibility in deciding the design

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factors in how the plant is designed I

would you know ask the Board to consider

that size is not a control device its more

a design criteria that is used by permittees

when they go to design a source

IJUDGE STEIN Yes I m not

thinking of size as a control technology I

see the control technology as combined cycle

turbines But when you look at combined cycle

turbines youve looked at three different

models They have different efficiencies We

can get later people can tell us whether

theyre comparable or theyre not But if the

company is headed towards a particular

efficiency and the agency or other commenters

think they should be headed elsewhere that

this particular technology combined cycle

turbines can get you a more efficient

process where in the process are they

supposed to raise that

MR ALONSO They could raise that

in how the technologies are defined and

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developed in step two

JUDGE MCCABE You may be hurting

Mr Richies ears doing that so

MR ALONSO Sorry sorry Region

6 identified roughly four different energy

efficiency and processes or practices that

apply to the class of this technology which

is a combined cycle class The public has

full opportunity and they had in this permit

to comment on exactly that whether its

installation whether its installing an

efficient heat exchanger design economizer

exhaust steam These are the control devices

that apply to the class of technology which is

whats known as combined cycle

That list today is what we have

today That list was different ten years ago

and its going to be different ten years from

now because BACT evolves That is where the

public has its say

To set a one-level you know all-

combined cycle must be 90 the 9092 pound

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I Iper C02 megawatt hour that s not BACT BACT

is set on a case-by-case emission unit-

specific basis What Sierra Club is basically

asking this board to consider is taking that

one limitl the 90921 and apply it to two

other totally different combined cycle

turbines I and I dont see that as what is

intended by BACT

JUDGE MCCABE That brings us to

an interesting question Can the GE turbine l

which you are most likely to select l to quote

you l achieve the GHG emissions rate that the

region established the Siemens turbine

MR ALONSO First of all weI

think that to require the GE turbine to meet

that limit would be asking the permittee to

over comply with an adequately-developedBACT

limit We dont think -shy

JUDGE MCCABE 11m asking you for

a factual answer l Mr Alonso

MR ALONSO From a factual

question l I mean l 1 1 m not

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JUDGE MCCABE Would you like to

consult with your client

MR ALONSO Yes okay We are

not prepared at this time to say 100 percent

whether or not we can meet that limit What

we would have to do is possibly de-rate We

might have shy

JUDGE MCCABE Possibly what

MR ALONSO De-rate the unit

JUDGE MCCABE De

MR ALONSO The unit may be not

at its maximum capacity

JUDGE MCCABE What would that do

Explain that

JUDGE HILL You mean run it

greater than capacity

JUDGE MCCABE Yes he means if

they de-rate it that they would operate it at

less than its 1 capacity What would that

do to your heat rate

MR ALONSO Probably not much

But they would have to do something

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operational to unit to basically comply

with that limit Plus we would not have the

compliance headroom that was developed for

degradation factors We might be able to meet

it day one but who knows in ten years And

just operation flexibility It would be

really difficult to commit to that limit

JUDGE MCCABE Let me see if Im

understanding you correctly I hear you say

that de-rating it would be one option to meet

that GHG emissions limit because its a total

limit even though your efficiency rate would

clearly go down if you de-rated it I hear

you saying that option number two would

essentially be to take it out of your

compliance margin which the petitioner has

characterized as generous I believe in its

comments on this permit Are those the only

two ways that the company could meet the heat

or the GHG emission limit that the region set

for the Siemens turbines in using the GE

turbine

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MR ALONSO I mean we can follow

up wi th the Board on this but to the extent

of whether or not theres other engineering

solutions or modifications to that turbine

that could be done tOI you know l basically

change the design of this unitl I meanl I

think that I s why we went through the BACT

process l though I meanl the end-of -day

emission limit is based on vendor information

that we obtain from GEl and the region took

that and applied the control technologies to

those numbers I and thats how we establish

BACT limits at the end of the day is you take

those control technologies and you impose them

onto the uni t that s supposed to be buil t I youI

work in compliance headroom l and it wasl you

know I and this board is generally deferred to

EPA techni staff on issues about compliance

headroom and whats -shy

JUDGE MCCABE I dont even think

thats an issue on this appeal l so you dont

need to go there

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MR ALONSO Well no no no To

the extent that you said that the Sierra Club

thinks that compliance headrooms are generous

JUDGE MCCABE That was just a

comment They didnt raise it on appeal

MR ALONSO Okay

JUDGE MCCABE But let me ask you

this Mr Alonso Im hearing essentially

that the only two ways that you could that

the company could meet the limit on the GE

turbine would be to either de-rate it in

which case youre not getting the power that

you want out it or to take it out of your

compliance margin which is effectively

somewhat lowering your limit really

But Im puzzled about one thing

Didnt the company in its original permit

application propose to use the average of

propose to set the permit limit at the average

the GHG emission rates or heat rates of the

three uni ts the three turbines And if

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thats the case isnt that an admission that

you can actually meet the more-demanding

emission limit on the less efficient unit

MR ALONSO Let me just say when

we initially submitted this permit

application we used the LCRA permit that

Region 6 had processed and finalized in a

period of six months

JUDGE HILL Im sorry What is

LCRA

MR ALONSO The Lower River

Colorado Authority They permitted a gas

plant in Region 6 It was not appealed to

this board So we modeled it after that

application

JUDGE MCCABE You modeled your

application after theirs

MR ALONSO To a certain extent

because it worked at Region 6 as far as this

averaging It turns out that once between

draft and final LCRA was able to select the

turbine and they selected a turbine The

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timing worked for them given their

development path

JUDGE MCCABE Im sorry You

said they selected theirs between the draft

and final permits

MR ALONSO They did And ir

final permit came out with one turbine But

thats a different project dif

development path

JUDGE HILL Well but I think the

question is youre saying that if you were to

apply the Siemens emission limit to the GE

turbine that that would over comply But if

the permit limit were set at the average of

the three and you would as you apparently are

almost likely to do select the GE turbine

then youre going to meet a lower limit than

the limit that would have been set on the GE

turbine alone So would you have been arguing

that that was over-compliance as well

MR ALONSO I mean the record

speaks for itself I mean obviously if we

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submit a permit application agreeing to a

certain limit we would have to you know

probably shave our compliance headroom But

it doesnt it doesnt I mean the issue

before the Board though I believe is whether

or not Region 6 acted properly in its BACT

analysis of these three turbines of these

particular emission units Whether or not a

unit can over comply or whether a permittee

can take a voluntarily limit to reduce its

emissions I believe thats outside of the

BACT process

JUDGE STEIN But I think what is

inside the BACT process is whether or not the

emissions limit that the region has selected

is in fact BACT And thats what Im

struggling with This case comes to us in a

somewhat unusual setting in that I dont

recall in my many years on the Board ever

seeing a situation and its possible that we

did in which three different emissions limits

were picked for the same unit

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Now Im not saying its not

happening Im simply saying that I dont

have any experience with that And what Im

more famil with is a control technology

being p whether its I you know a

scrubber or something else and within thatl

technology I the company being called upon

through the BACT process to meet an emissions

limit that reflects the best emissions limit

that that technology can achieve

And if the technology is combined

cycle then clearly there are certain sizes

of combined cycle that may be able to achieve

a better emissions than the unit that youre

picking And I dont have a problem with

somebody saying to me well we can I t do that

because of A B and C But my problem is

whether BACT automatically gets picked by

size rather than what the class of technology

is capable of performing

MR ALONSO Again I think two

points as to previous practices I meanl we

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have identified seven GHG permits or Im

sorry PSD permits that have throughout the

country and different permitting authorities

further research identified five more where

you have two or three emission units and all

units have dif rates They range from

California Arizona Florida Oregon North

Carolina So it is an established

practice out there in the permitting

JUDGE STEIN Were those

federally-issued permits or state-issued

permits if you know

MR ALONSO They were well you

know they were all state-issued permits but

some of those were in delegated states such

as Washington the s of Florida so they

are federal permits I agree that I dont

believe that this issue has come before the

Board but keep in mind BACT is a progression

And I think in step one the technology is

combined cycle And you take that technology

and you run it through the five steps But at

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the end of the day in step five if you take

the design of the emission unit thats being

proposed to be installed and you take those

technologies you know the use of rehea t

cycles the exhaust steam condensers the

generator design and all these things apply

to each of the three turbines

And at the end of the day in step

five whats the purpose of step five The

purpose of step five is to take that

progression and look at the emission unit

being proposed and develop an enforceable BACT

limit BACT is a limit based on technology

thats being identified through the step one

through four

JUDGE HILL Thats basically the

three separate applications argument am I

correct

MR ALONSO At the end of the

day we could have possibly submitted three

different applications and you would have had

to - - to do otherwise you would be basically

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setting sort of like an NSPS where you say all

combined cycles need to meet this one limit

across the board No matter where you are l

who you are l which manufacturer you use l what

color your turbine iS you need to meet thisI

limit Thats not what BACT is

JUDGE MCCABE Well the problem

with that analysis of course Mr Alonso isl

that if we take it to the full ent of what

youre suggesting you get to pick the

emission limit according to which turbine you

pick And I dont believe thats what the

permitting authority is supposed to do But

we dont need to debate this issue further

Wed like to turn before we leave

you and go to EPA 1 to the solar issue And my

question to you is is it possible -- again

here were talking facts not legal conclusion

to install some solar-generating capacity

at this proposed facility And what

information in the record can you cite us to

support your answer l whatever that answer is

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MR ALONSO On the solar pre-heat

issuel first of alII solar pre-heat is not a

control device to be identified in step one

Your factual question l can it be inst led at

this ilitYI in a meaningful waYI no We

only have 20 acres left over after we build

this proj ect

JUDGE HILL Is that in the

record

JUDGE MCCABE Is that in the

record

MR ALONSO NO I it is not Its

not in the record because againl what is in

the record is that Region 6 determined that

installing based on this boards precedent l

installing solar pre-heat or using solar as

some type of alternative fuel for this plant

would be re-designing the source

JUDGE MCCABE Well go back to

your explanation about the 20 acres Explain

to us

IMR ALONSO Okay First theres

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the 20 acres There s not enough space I landI

to make solar pre-heat a feasible or economic

technology Palmdale had 250 - something acres I

you know l a vast amount of land

Second l this plant is pretty close

to the Texas coast vulnerable to hurricanesI

Who knows if regulators of local communities

would even let us build such a large solar

field in this areal given the threat of

hurricanes

JUDGE MCCABE Is there anything

in the record for us to look at on that

IMR ALONSO No I again in the

record solar pre-heat is defined aS I would bel

redefining the source And this board has

already ruled on this issue In Palmdale thel

petitioner sought to have Palmdale install

even more solar energy than it already had

proposed and this board said that that wouldl

be redefining the source

JUDGE MCCABE I don I t bel ieve

lthat s what we said Mr Alonso I believe we

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said that redefining the source was clear if

you were talking about making it a 100-percent

solar facility

MR ALONSO Correct

JUDGE MCCABE That is quite

different from what youre talking about here

MR ALONSO Well I point the

Board then to Sierra Pacific In that case

there was a dual fuel plant biomass as well

as natural gas and the petitioner sought to

have the permitting authority to force

installation of solar and this board there

said it was redefining the source

JUDGE MCCABE And what did they

base that on

MR ALONSO Im sorry

JUDGE MCCABE I dont believe

that the Board made such a broad statement

that any time you introduce solar that it

would be redefining the source Do you recall

in Sierra Pacific what the reason was that the

Board concluded that

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MR ALONSO I do not

JUDGE MCCABE Okay Well I

wont make you do that homework right now We

actually know that Go ahead back to if you

would to the factual question because thats

the one were most interested for todays

purposes about whether its actually possible

and what there is in the record that t Is us

yes or no on that

MR ALONSO Okay Well first Il

mentioned that theres not enough land l the

hurricane situation The second issue is

Paloma is not in the renewable business They

doni t have the resources to go out and do

solar studies They would need to retra or

redo their business model in order to look at

alternative energy or renewable energy

JUDGE MCCABE Do they build their

own turbines

MR ALONSO They build gas

turbines yes

JUDGE MCCABE They build them or

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they buy them

MR ALONSO They dont do wind

they dont do solar

JUDGE MCCABE Do they use

subcontractors

MR ALONSO I mean this is

something that they would have to develop as

a business unit and will take time to go out

and get experts hire them on staff or go get

third-party folks Its just not part of

their business plan

JUDGE MCCABE Mr Alonso what do

you think the company responded the first time

the first company was asked to put on an SCR

MR ALONSO They probably said it

was unfeasible

JUDGE MCCABE They probably did

They probably also said they werent in the

business There has to be a first time

doesnt-shy

MR ALONSO No I think that as

far as being in the business I mean theyre

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in the business of burning coal And they

know that they have to put on pollution

control -shy

JUDGE HILL And I think Sierra

Clubs argument would be that La Paloma is in

the business of generating energy as

efficiently as possible in South Texas I

mean put aside the hurricane issue for a

moment but if there were enough land you

know the stated business purpose in the

application is to produce between 637 and 735

megawatts of energy I mean thats the

stated business purpose not to produce it

per se exclusively with natural gas That

may be their preference but Im not sure

thats what the record shows

MR ALONSO I mean the purpose

of citing this plant is to use the reclaimed

water from the municipality as cooling water

Theres also a natural gas pipeline close by

to this facility That is -- and the intent

is to maximize the use of that gas pipeline

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You know shy

JUDGE HILL And that is in the

record

MR ALONSO That is in our brief

JUDGE HILL Okay

MR ALONSO But again I dont

believe that solar pre-heat would even survive

step one I mean youre king about a

redesign the source by forcing folks to

consider renewable energies at a fossil fuel

plant where thats not the intention of the

design And this board has allowed and has

recognized the ability for permit to

define the parameters of their design what

they want to build and I dont think we you

know well you guys can do what you want but

to force folks that want to build fossil fuel

natural gas plants to build wind turbines I

dont know that sounds like -shy

JUDGE MCCABE Do you know if

theres any situation where any permitting

authority has done that in the United States

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yet

MR ALONSO I have not seen a

BACT analysis resul ting in or you know to do

as an alternative particularly in step one

to consider the feasibility of a renewable

project I dont have any knowledge of that

occurring at other permitting authorities

JUDGE STEIN But what about a

hybrid pI I mean I dont think whats

being suggested here is that you convert the

principal purpose of the gas turbines I

think the question thats being asked is

whether any component of it could be solar

and I think what the Board is struggling with

is in a si tuation in which solar is not

already part of the plant design is it proper

or improper to raise questions about that If

so what is the regions obligation

I mean I dont see this as sort

of a black and white issue I see it as

youre lling us theres 20 acres Maybe

thats the record maybe its not That

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may be relevant to how you answer that

question in this case as opposed to some

other case

MR ALONSO It really goes to

whether or not solar or renewable energy

should be considered a control device in step

one And I would assert no its a different

fuel source Youre redesigning when people

go to build solar plants or hybrid plants

even hybrid plants you go in and thats what

you want to build and you have a business plan

and an engineering design for a hybrid plant

and thats what you want to get permitted

But if youre out building a gas-

fired power plant and solar is not a

component I mean nowhere in the record is

there anything about La Paloma interested in

building a solar plant We want to build a

natural gas fire plant and thats the source

that should be permitted not some alternative

design And a hybrid plant would be forcing

basically brand new engineering you have to

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study you know solar rays and the impact

whether or not its efficient in this area

It would just be a totally different design or

engineering effort to design a hybrid plant

versus the plant that were trying to permit

here

JUDGE MCCABE Okay Thank you

Mr Alonso We take your point and you may

be seated And we will hear next from EPA

and Judge Hill will take the lead on questions

for EPA but be resting assured that we will

all have questions for you

JUDGE Let me start by

asking how you pronounce your name so I dont

mess it up

MR TOMASOVIC I will generally

say Tomasovic but

JUDGE HI Tomasovic

MR TOMASOVIC - - Tomasovic is

fine if you want to go old country

JUDGE HILL What do you prefer

MR TOMASOVIC Tomasovic

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JUDGE HILL Tomasovic okay So

this is purely a hypothetical question but

in your experience or in the experience

generally of the region when does a permit

applicant decide what their you know what

their turbine is going to be or what their

size is going to be or the precise design

factors of the source Does it typically

happen before they submit the permit

application after both

MR TOMASOVIC I think it could

be a variety of things your Honor Looking

through historical permitting actions we did

find that there are a couple of cases that

happened before the Board that had permit

structured such as this that had permitted

multiple turbine options You wouldnt be

able to see it from the face of the decisions

and it wouldnt be something that you could

discern from the challenges that were raised

but the Three Mountain Power decision in 2001

is one such example and there was a case

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where a petition was dismissed for being a

minor source permit But clearly on the

face of that decision which was Carlton Inc

North Shore Plant in 2001 it described a

minor NSR permit with multiple turbine

options

JUDGE MCCABE Could you repeat

the name of that one please

MR TOMASOVIC Carlton Inc

JUDGE MCCABE Carlton Inc

MR TOMASOVI C North Shore

Plant

JUDGE HILL Do you have a cite on

that or you said it was dismissed as -shy

MR TOMASOVIC It was 2001 and

it was a published decision your Honor

JUDGE HILL Okay Now my

understanding of Three Mountain Power is that

they allowed for different equipment but they

only specified a single emission limit

MR TOMASOVIC It does show that

in the RBLC sir but we tracked down the

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permit and actually what happens is

different permit issuers will input different

data into the RBLC We gave you approximately

ten RBLC numbers and in almost all those

cases you are going to see different BACT

limits depending on what types of BACT limit

is being assigned

And under the Three Mountain Power

permit that was issued there were multiple

types of limits other than the concentration

limits So the hourly limits the pounds per

hour limits the annual ton per year limits

just as in our permit show that with each

turbine option different limits apply

JUDGE HI And what was the

control technology in those cases or can you

generalize on that I mean one of the things

that makes this a challenging case I think

in part is because the control technology is

I I mean you know is also essentially the

plant design because what youre trying to do

is simply maximize the effici use

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inherently Are those others cases are any

of those similar or are they all about add-on

technologies

MR TOMASOVIC I bel ieve these

days the conventional thing is that for add-on

control technology wi th turbines is SCR For

other limits such as PM and carbon monoxide

youre assigning limits inherent to good

combustion practices inherent to the equipment

that is selected And thats reflected in the

TCEQ permit that was issued for La Paloma in

this case which like ours followed an

application that asked for the flexibility to

consider multiple options And as a

practical matter when the permit writer is

assigning those limits they have to look at

the specs inherent to the turbine in assigning

both the worst case emissions but also those

emissions that reflect whats good operation

on an hourly basis

JUDGE HILL Does the TCEQ permit

have this condition that says that once the

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turb selection decision is made then the

permit is going to be amended to basically

take out reference to the other two turbines

MR TOMASOVI C It does and I

believe that may be a practice that varies by

permit issuer I didnt notice that when I

looked at the Three Mountain Power permi t I

also have on hand a listed RBLC number for a

orida permit in 2000 I didnt notice

provision there

For what we have as a special

condition theres no time set requirement on

when they would need to come in and modify it

Its more of a back-end cost-keeping

requirement where they indicate what their

selection would be and the permit issuer

would simplify the permit so its more

readable enforcement purposes

JUDGE HILL And thats the reason

to do it Because if you take Mr Alonsos

argument kind of to its logical conclusion

then they get to select the turbine and

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therefore they get the limit that applies to

that turb But youre saying that that

condition was put in there just to make the

permit cleaner to read in essence

MR TOMASOVIC Its not the case

as the petitioners have argued that they get

to choose their emissions rate Thats not

what they to choose They get to choose

their capacity they get to choose the

equipment and the various designs of equipment

that we couldnt differentiate for efficiency

purposes in assigning limits for a final

permit

So even as those limits look

numerically different in the permit we have

a technical decision on the part of the permit

issuer that says these are comparable and they

dont implicate a weakening of the BACT

requirement that we decided to assign the

limits this way

LL I want to come back

to the comparable because I think that thats

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an important issue But getting back to this

full issue of basically the selection

decision Sierra Clubs essential argument is

that since the control technology here is

maximum efficiency within a range and given

that La Paloma defined the business purpose as

build a plant thats between the capacity of

the smallest capacity turbine and the largest

capacity turbine that they should have to use

the most efficient control technology which

in this case would be the most efficient

turbine Do you agree Could the agency have

told La Paloma look you can pick whatever

turbine you want but youve got to run it as

if it were the most efficient because thats

BACT Does the agency have that authority

MR TOMASOVIC Speaking for

Region 6 with this permit there are multiplel

ways that I think permit issuers could have

decided to come out in the final permit We

decided l based on the design heat rates the

best data we had for the operational factor

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that would apply to this equipment plus a

consistent safety margin for all three

options that there are these three limits

that come out

And if we chose to express those

limits in their different format for instance

the net heat rate the picture would actually

be qui different So it is a distorted a

bit of a distorted picture to say that GHG

BACT on a gross output basis is the ultimate

measurement of what is efficient

JUDGE HILL Why would it look

different Please explain that further What

would happen if you use net

MR TOMASOVIC So what appears

from the of the permit is that the

largest difference in efficiency is 27

percent In our response to comments on page

II we actually provided the numbers to show

what that dif would look like on a net

basis which is I believe the format that

the limits were expressed in the Palmdale

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decision l as well as even earlier permits

issued by Region 6

And permit issuers do have

discretion at this timel in the absence of

guidance to consider the comments that comeI

in and decide which type of limit is going to

be most meaningful for putting BACT in place

But -shy

JUDGE LL So I cant do math in

my head but Im looking at those numbers So

youve got for the GE turbine the net heat

rate would be 7527 and for the Siemens it

would be 7771 Isnt that about two and a

half percent I or is it less than that

MR TOMASOVIC WeIll I think what

you want to look to is if you can see a 9452I

number -shy

JUDGE HILL Okay That I S the

emission limit

MR TOMASOVIC -- and the 9444

number

JUDGE HILL And then a 965

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number

MR TOMASOVI C I f you were to ask

what the percent difference is there you

would have one-tenth of one percent of a

difference which expressed as gross shows

up as 27 percent And this is one of the

challenges with such a narrowly-written

petition It didnt challenge the reasonable

compliance margins that we assigned to each

option and it doesnt bring up issues like

the start-up emission limits which in factiI

give a different rank order if you could usel

that terminology for each of the turbine

options

JUDGE HILL All right So are

you saying that if you I mean I based on thisI

chart on page 111 that I I mean I the response

comments references the 26 earl on butl

its also got this chart And youre saying

that that chart shows that its really tiny

MR TOMASOVIC Yes your Honor

If we chose to place a final permit final

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limits in the permit on a net basis using the

same calculation methodology it would be one-

tenth of one percent

JUDGE HILL How do you decide

whether you set the limit on a gross basis or

a net basis Because I know Ive seen both

MR TOMASOVIC In this case we

evaluated the adverse comments on the issue

we looked at what was going on for instance

with the proposed NSPS which expresses those

limits at least in a proposal form on a gross

output basis We saw that in general a lot

of the performance data that is out there is

available on a gross output basis so we

decided that for permitting purposes

permitting administration purposes and for

the benefit of other permitting actions it

seemed that gross output made sense for this

permit

JUDGE HILL Okay But you had

the discretion to pick net

MR TOMASOVI C Well we dont

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close off ourselves from choosing net base

1 imi ts in future permits if for instance the

NSPS were to on the basis of comments decide

that net basis really is a preferred way to

go But we have a reasonable basis for this

permit to say so And in saying that were

not purporting to say anything that would be

determinative of how state permitting

authorities or even other regions might choose

to assign the limits for a permit that

guarantees efficiency and control of GHGs

JUDGE MCCABE I just want to get

some clarity on again the facts I love

facts If the numbers here that were going

to be looking at when we decide whether we

agree with the regions position that these

limits are really not different that theyre

comparable or whatever language you use to

describe them how would we describe that Is

it 01 percent are you telling us now Is it

27 percent Is it a range from 01 percent

to 27 percent The world looks closely at

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the facts of what we were looking at when we

draw the conclusion l so the facts matter and

311 m a Ii Ie unclear about them right now

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MR TOMASOVIC Yes l your Honor

So 111 try and go over the notes I have on

the comparability of the limits in maybe an

orderly shy

give me a

feel free

that the

JUDGE MCCABE I was hoping youd

sound bite in the end but please

to go through the notes

MR TOMASOVIC The first thing is

permit actually assigns three

different kinds of emission limits the ton

per year the start-up limits which are on a

pound-per-hour basis and this gross output

when its sendingelectricityto the grid how

efficient is in relation to the output

So if you look at those three

different limits and were to assign a rank

order under kind of turbine model I you I re

actually going to get three different orders l

permutations I suggest thatthere dif

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the net limits was another possibility for us

You would get a fourth order if you were to

assign -- and actually nothing would have

permitted us from assigning both kinds of

limits and that limit and a gross limit but

that would have been duplicative So we

decided these are the limits for the permit

So looking just at that the basis

for the challenge which is the gross limits

you have a smallest difference of one-half of

one percent Thats the difference between

909 to 912 The largest apparent difference

is 27 percent which is the difference from

909 to 9345 And this difference is not a

difference in efficiency In the commenters

letter they do throw around the term

efficiency but sometimes thats using the

context of what is power plant efficiency

which gives you a different comparison If

youre talking about engine efficiency or

power plant efficiency the 27 percent

difference is actually 12 percent

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JUDGE HILL Why is that I was

with you until that sentence

MR TOMASOVIC So

JUDGE MCCABE I think we need a

chalkboard

MR TOMASOVIC That calculation

and I think maybe the footnotes in the comment

letter explain it as 3412 divided by the heat

rate And another issue is that the

commenters use actually lower heat value for

their descriptions of the heat rate whereas

our permit is using the high heat rate

information to get the limits

But that 12 percent difference in

efficiency that kind of efficiency power

plant efficiency were talking about is what

you may read in -shy

JUDGE HILL Can you define power

plant efficiency for that purpose for me

MR TOMASOVIC Yes sir The

definition of power plant efficiency would be

what is the heat rate value of the kilowatt

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hour divided by the heat rate for the power

plant or the turbine

JUDGE HILL Okay

MR TOMASOVIC And in our case

our limits arent just the heat rate for the

turbines as though they were in simple cycle

mode but the heat rate for those turbines in

conjunction with the heat recovery steam

generator with duct burner firing So theres

a number of things going on

And we had explained that as

turbines get larger they get more efficient

And thats actually true for several reasons

but in this case its not actually because

the GE turbine is demonstrated to be

inefficient Thats not the case Its

actually the influence of the duct burners

which wasnt something that the petitioners

raised in their appeal Because each scenario

has the same size duct burners they have a

disproportionate impact in the overall heat

rate We assigned limits that included

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everything l and thats why I when Mr Alonso

was talking about de-rating that may be a

situation where is easy to figure out that

youre just cutting into the compliance margin

if we had decided to set them all the same

limit but also might be a case where they

really put limits on their use of duct

burners which cuts into the operational

flexibility that they want to have as base

load plant that has peaking type capabilities

JUDGE HILL In other words you

cant sort of size the duct burner to the size

of the turbine or

MR TOMASOVIC No your Honor

In this case the HRSG with the duct burners

is assigned to be the same for all three

scenarios

JUDGE HILL Okay all right So

is 27 percent the largest when you talk

about tons per year startup gross output and

net heat rate is 27 the largest difference

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MR TOMASOVIC Well sir if you

were to count the annual ton per year

differences each capacity scenario is

actually about 10 percent larger than the

next If you look at the annual ton per year

limits I think the differences might be 6 or

7 percent but youre just building up your

plant with the bigger greenhouse gas impact

overall and -shy

JUDGE HILL Well the reason I

ask that question is because in your brief

you talk about that you dont need to look at

alternative control technologies that are

essentially equivalent In response to

comments it talks about these turbines are

quote highly comparable and there are

marginal differences between them So theres

a lot of words thrown around that all seem to

imply small or not significant but which one

do we use I mean the argument seems to be

essentially -- see Im coming up with a new

phrase -- essentially equivalent How do we

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judge that Well first of all is there a

single term that is most relevant from a

legal standpoint And then my second question

will be and how do we judge that

MR TOMASOVIC Well the two

explanations that we gave in the record I

think are pertinent and that is that the

differences are mere fractions of the

compl iance margin The compl iance margins we

assign to each turbine is reflective of the

uncertainties in terms of variable load

performance deviations from the iso

conditions degradation over time So if -shy

JUDGE HILL Well but how does

that cut I mean if you accept a compliance

margin at 30 percent then yes everything is

probably going to get swamped by that But if

you set the compliance margin at 2 percent

you might not

JUDGE MCCABE Or 126

MR TOMASOVIC And we set the

compliance margin at 12 percent and I think

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what that illustrates is that the difference

between the 2 percent which is approximately

a quarter of that total compliance margin

shows these are all these are all comparable

They are all going to be expected to be

performing in range of each other but we

decided that there are subtle differences that

allowed for the assignment of that reasonable

safety factor They are different sizes and

different engines but theres no fact-based

reason for us to decide to set them all at the

same limit or average them or round them up to

the nearest 50 pounds per megawatt hour

although other permit issuers may well choose

to do that in order to simplify things

JUDGE HILL If we want to give

guidance to future permit writers how would

you propose we say youve got three turbines

with different heat rates but they are

essentially equivalent How much discretion

do you think the agency has to figure out to

declare two different GHG limits to be

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essentially equivalent

MR TOMASOVI C Well I would

start your Honor with the fact that these

are all F class turbines and at the comment

period there wasnt any articulated difference

between the turbines in terms of the

technology they have You may find that in

other cases where heres a turbine that uses

dry cooling and heres a turbine that uses wet

cooling and thats a technological difference

that would allow us to elaborate on it

explain perhaps why one option is necessary

and the other isnt

But in this case where you have F

class turbines that are all modern at least

in the last several years type efficiencies

placed into an energy system that has its own

subtle impacts on what the overall limits

would be I think the way that the Board

should land on that is deference to the permit

issuers technical judgment in this case on a

case-by-case basis that this apparent

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difference of 25 pounds per megawatt hour was

not significant And we made that decision

without any written guidance from OAPPS or

OGC but it was based on our permit issuer

technical judgment And all is not as it

seems if you were to look at for instance

that net efficiency which illustrates that

that 27 percent difference which the

petitioners now complain about is only a 01

percent difference

JUDGE HILL At what point does it

become too big I mean you talk in your

brief or the response comments document talks

about well unless its poorly designed or

non-representative of the capabilities of the

technology is that the standard we should

adopt

JUDGE MCCABE Were wondering

where that came from actually

MR TOMASOVIC Well that phrase

you might find a phrase in the GHG guidance on

performance benchmarking Im not saying its

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straight transferrable to that to the way

that we used it in the brief but it does

reference performance capabilities of

technology as a starting point And we were

looking at the GHG guidance that does say in

the case of a gas-fired plant if its

considering single cycle for example you

should consider as an option combined cycle

Combined cycle isnt broken down into the

world of turbines that are available on the

market Go larger if you can if that shows

its more efficient

Instead it was more us taking

this application as it came in a conventional

combined cyc plant using modern F class

turbines with the heat recovery steam

generator and the duct burners Its a

standard type of permit It is similar to

LCRA permit that we issued It was the first

permit issued which incidentally in that

case the application came to us with the

request to permit multiple options and they

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decided before public comment that the GE 7FA

turbine was the one that they would go with

JUDGE HILL So can you cite to

any permit where EPA basically allowed the

size or model of the main emission unit to be

selected after the permit is issued as

happened here Are the -shy

MR TOMASOVIC As far as a

regionally- issued permit I sir No The

Washington State permit that is referenced in

our brief is a delegated state Sierra Club

submitted adverse comments on it and that wasl

one case where they for similar reasoning to

us decided that they would defer to the

applicants request to have multiple options

and not make them pick one of two acceptable

turbine models

JUDGE HILL Okay

JUDGE MCCABE Just going back to

your point about the F class turbines 11m

wondering if what you l re saying to us is that

it is sufficient for the permitting authority

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to look at that class of turbines and say

step one combined cycle technology is the

best available control technology here and

then when we get all the way down to step five

to set the emission limit that anything within

class F is good enough is that what youre

saying

MR TOMASOVIC No your Honor

The proj ect did come to us wi th F class

turbines You may see that in the response to

comments one of the things that Sierra Club

had said is choose larger turbines make a

bigger power plant and we quickly said that

we didnt believe that was appropriate in our

case because they had selected theyre

looking at a power plant of a certain size

using three different types of F class

turbines

But all of those were open to

commenters adverse commenters that may say

well these three turbine models of these

three turbine models this one doesnt show

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anything that shows modern day efficienc s

But at the same time its likely not a good

permit practice to say with absoluteness that

this turbine that was designed in the last

five years is not acceptable for BACT purposes

or for project purposes in other cases

because if you rest solely on that one piece

of information then the net heat rate

expresses as the pounds per megawatt hour on

a gross basis youre not necessarily

capturing all that is relevant to efficiency

JUDGE HI What if La Paloma had

said were going to build a plant thats 637

megawatts no more no less and theres only

one turbine on the market that will allow us

to do it even though there are several other

F class turbines that are much more efficient

Would the region have any authority to look

behind that

MR TOMASOVIC I think general

permit issuers do have authority to say have

you considered this or that thats so

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available In that case your Honor I think

youre presenting a case where the source is

defined binarily

JUDGE HILL Exactly

MR TOMASOVIC However it

doesn t necessarily mean that the selection of

that turbine model is unjustified If you are

to look at going back to the NSR workshop

manual I believe we cited we said in our

brief in one of our footnotes that customer

selection factors can be based on a number of

things including reliability and efficiency

experience with the equipment And all of

those are things that you can find in the NSR

in the NSR workshop manual as an example of

how you step into the BACT analysis for a

turbine Its really something that we come

in with we have a contractual commitment to

use these turbines can you see what limits

would apply to it at the front end

JUDGE HILL Let me ask if Judge

Stein or Judge McCabe has anymore questions on

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the turbine issue because then I want to move

to solar real fast

JUDGE STEIN I do

JUDGE HILL Okay

JUDGE STEIN Did I hear you say

that another facility in Region 6 that was

recently permitted is using the same turbine

as will be used by La Paloma

MR TOMASOVIC Yes your Honor

JUDGE STEIN And does the record

reflect what that BACT limit is for that

facility and how it compares to the BACT limit

here

MR TOMASOVIC s your Honor

So the name of the facility is the LCRA

Ferguson Plant And I believe that was

referenced in the statement of basis as well

as discussions sections of the response to

comments all cases looking at other

facilities that are out there including LCRA

we deemed the limits to be appropriate when

theyre placed in the appropriate context

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The Sierra Club presents Palmdale which isnt

reflective of the same design that were using

that we permitted here They referenced the

Pioneer Valley and we had to contextualize

the limits that were assigned to the Pioneer

Valley permit because that particular facility

wasnt using duct burners

JUDGE STEIN Okay So if Im

correct the BACT emissions limit for the

Lower Colorado River was 918 pounds of C02 per

megawatt hour And the limit that were

looking at here is 934 is that correct Im

not purporting to say that I have a correct

understanding Im just trying to clarify

MR TOMASOVIC Is this in the

response to comments or statement of basis

your Honor

JUDGE STEIN Oh its in my

little cheat sheet that somebody gave me

JUDGE MCCABE Its extracted

MR TOMASOVIC I may be mistaken

but I believe the limits assigned for LCRA

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were in fact on a net basis so they

wouldnt be directly comparable But we might

well have had some discussion that tried to

reconcile them

JUDGE MCCABE Yes the

comparability of all of these numbers is

somewhat perplexing to us so well address

that at the end because were thinking that we

might need some supplemental briefing to try

to get us on an agreed-on comparison table

here so that we at least understand and that

others who read the decision can understand

the import of what were deciding Do you

want to turn to solar

JUDGE HILL Yes So Mr Alonsos

argument is in essence that including any

solar into this proj ect would have been

redefining the source Do you agree wi th

that or do you think the agency has any

authority to consider some solar at an

electric plant even if it hasnt been

proposed by the applicant

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MR TOMASOVI C Your Honor I

believe that the Boards precedent on

redefinition of the source allows that a

permit issuer in their discretion may

require consideration of options that may

constitute a redefinition of the source

However if that is in conflict with the

fundamental business purpose of the applicant

then it is against our policy to do that

JUDGE HILL Do you think that the

agency has some -- okay So you believe the

agency has the authority to require

consideration Do you think the agency has

the obligation to do so if it wasnt proposed

if somebody raises it in comments as happened

here

MR TOMASOVIC I believe that the

agencys responsibilities in responding to the

comments in many ways are calibrated off of

the specificity of the comments that come to

us In this case the comments that we

received on solar are not in the same shape as

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they carne to the board in the petition in that

theyve attached the exhibits for two permits

that werent part of their comments that were

submitted to us and they specifically focused

on Palmdale and Victorville as two facilities

that we should have had a further discussion

about in our response to comments

But in terms of how the comments

carne to us which actually raised the issue of

solar in a lot of different ways where at

times it wasnt even clear whether they were

referencing photovoltaic versus stearn

auxiliary contributions to efficiency I

believe that the regions responses were

appropriate

JUDGE HILL Mr Alonso

essentially argued that our decision in

Palmdale said that it is appropriate to

classify addition of extra solar as

essentially redefining the source and he also

cites to Sierra Pacific Do you agree with

that characterization of those decisions

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MR TOMASOVIC Our decision is

based on the facts of our administrative

record and not a broad reliance on those

decisions stating that As was argued in our

br f we think the administrative record

shows that the considerationof solar options

at least as we understood it coming from the

commenters would redefine the source

The administrative record does

show l fact that the property limits are no

more than 80 acres and from that l it can be

discerned that there iS I based on the

footprint of the plant l not a lot of

additional acres which might approximate the

20 acres that the permittee was able to

substantiate with the affidavit that they gave

with their petition

JUDGE HILL So does the region

believe itl s not feasible to install any solar

capacity at the site

MR TOMASOVIC WeIll depending on

how that comment might be construel l your

l

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Honor rooftop solar is an option that

presumably is not what the commenters were

trying to talk about although its not always

clear In the case of the Palmdale decision

it does illustrate that as a rough measure to

contribute 10 percent of that plants total

capacity

JUDGE MCCABE Does someone have a

cell phone going Where is that music coming

from

(Whereupon the foregoing matter

went off the record at 450 pm

and went back on the record at

4 52 p m )

JUDGE MCCABE Okay Lets

proceed We dont have to cut Mr Ritchie

off Lovely music anyway

MR TOMASOVIC I was saying your

Honor as a background matter the Region 6

was aware of the factual setting that was

recited by the Board in the Palmdale case

which was the fact that to generate just 10

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percent of the capacity for that Palmdale

plant it required 250 acres And in fact

and I believe some lang-uage in the opinion

came close to this you need acreage to be

able to have power in a significant amount

You may well need more than 20 acres just to

get steam that could be used in the process

but you know thats a different technical

issue in any event

If we were to just sort of roughly

say 250 acres 10 percent of the plants power

reduced down to 20 or 25 acres youre talking

about something that doesnt substantially

influence the overall plant -shy

JUDGE HILL But thats not in the

analysis the region did in the record

correct

MR TOMASOVIC No your Honor

JUDGE HILL Okay

JUDGE MCCABE Is it the regions

position that as a matter of exercising its

discretion it would never consider solar it

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would always consider adding a supplemental

solar or whatever we call it here to be

redesign and therefore against at least the

regions policy if not the agencys to even

consider

MR TOMASOVI C No your Honor I

dont think anything in the regions response

was intended to cut off comments on solar

technology as a general matter for any other

permitting case

JUDGE MCCABE You just think the

comments here were insufficient to get you

where you needed to go in order to give it

serious consideration here i is that what

youre saying

MR TOMASOVIC Yes your Honor

I mean we had a bit of a technical discussion

in there that it is the case that for any

process that uses fuel to generate heat you

can get that from something else which might

be geothermal or solar And you could get

into the myriad permutations that go on

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in terms of whatever a commenter might

bring but it isl

JUDGE MCCABE Comment clearly

focused on solar in this case l so you dont

need to go there

MR TOMASOVIC However I there are

other parts of the comment which seem to

suggest that the l that l in their view l this

project was defined to be within a range of

capacity that could be energy generated by any

means I which we disagree with because this is

a combined cycle plant thats meant to use

natural gas as its fuel and take advantage of

the rastructural advantages specific to

that location including the waterl

availability of the pipelines and the local

need this particular kind of power to be

delivered for grid stability reasons

JUDGE MCCABE I hate to put you

on the sPOtl Mr Tomasovic l but do you think

you could reduce to one or two sentences the

reason the region did not consider solar here

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or considered it to be redesign that the

region would not entertain

MR TOMASOVIC In the way that

the comments came your Honor we believe that

that solar auxiliary preheat was not well

defined because it was it was actually raised

as a substitute for duct burners when duct

burners have a different purpose than solar

auxiliary preheat And Im already past my

two sentences but

JUDGE MCCABE Thats okay

Youre close enough Thank you Those are

all the questions we have for you at this

time Mr Tomasovic Thank you And Mr

Bender you have been very patient and I bet

youre watching your watch National Airport

flight at 700 You probably need to leave

here by what would folks who are

Washingtonians say given that it is Wednesday

rush hour before a storm

JUDGE HILL If you take a cab

Id say 545 at the latest

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JUDGE MCCABE Okay So 5 30 i

will that work for you Mr Bender

MR BENDER I think so your

Honor

JUDGE MCCABE Okay I would hate

to give you short shrift after you were so

gracious as to choose the last position or to

suggest that your judgment perhaps might need

to be revisited the next time youre offered

that choice

MR BENDER I wouldnt want to

miss this even if I had already gone

JUDGE MCCABE Okay

MR BENDER Is this better

Thank you your Honors I think to address

one thing that kind of permeates the briefs

from respondents and some of the discussion

here today theres kind of two pieces or two

sides of the same coin maybe Were talking

about size or capacity Were talking about

megawatts right And when were talking

about ERCOT or any other regional system

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operator the dispatch is to meet a load

Were talking about dispatching to meet a load

in megawatts

And the size of the units are

different here Its actually kind of a

combination of things turbines plus heat

recovery stearn generator turbine that adds

up to certain numbers Its 637 for the GE

combination for example Thats megawatts as

their peak You know if you throttle full

thats what youre going to get

The Siemens turbines can generate

637 Its not that you have a turbine you

turn it on and you get 637 megawatts or you

turn it off and you get zero and its a

binary on or off situation

In fact the other argument or the

other piece of this argument in the briefs was

that turbines as they get larger get more

efficient And if you want a large turbine at

a reduced rate less than full youre

decreasing its efficiency and thats simply

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not true And thats not true based on the

evidence in this record because that last

increment of power comes from duct burning

which is less efficient than the turbines and

stearn generator

And so as you throttle down or as

you de-rate or decrease your generation all

saying the same thing youre actually until

you hi t the point where the duct burners corne

off youre actually improving the efficiency

and decreasing the emission And we can see

that among other places in one of the tables

that counsel for Region 6 pointed to in the

response to comments where in addition to net

and gross theres also without duct burner

fire on page 11 of response to comments

which is Petition Exhibit 3 you can see that

the GE the smallest of the turbines piece is

75275 without duct burner firing The

biggest turbine the Siemens 5 is 77717

Less efficient right And you only get the

increased efficiency from the larger turbines

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as a system because theyre able to generate

more of their power before turning the duct

burners on

JUDGE MCCABE Well does this

mean youre happy to hear that theyve

selected the GE turbine

MR BENDER If they have a permit

limit that reflects what they could do If

the question is phrased differentlYI right

If the draft permit had come out and said our

project purpose is to build a plant thats

capable of generating 637 megawat ts you know II

this would be a different case The comments

would have been different l and we mayor may

not be here

But then wed saYI the comments

would come in among other things l something

to the effect of the Siemens I you know l 5 or

the Siemens 4 can generate 637 megawatts In

facti when it does so it does it at a reduced

emission

So were dealing with emission

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rates The final permit emission limits are

set based on operating full out But full out

is a different number of megawatts for each

right

JUDGE MCCABE Thank you for that

clarification Do you agree that the F class

turbines are among the most efficient turbines

available for combined cycle combustion

technology

MR BENDER I believe theyre

among I dont know that they are the most

efficient

JUDGE MCCABE Do you know of a

class thats more efficient

MR BENDER I dont The

question though is the emission limits too

which is the end of everything So were

talking about turbines and different turbines

but were really talking about different

turbines put in front of the same 271 megawatt

steam generator in this case

JUDGE MCCABE Well to you and to

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EPA of course the emission limit is the

ultimate most important thing here But of

course to the company the most important

thing is which turbine do they get to use and

is it the one that will fit whatever their

business purpose is

Your petition Im a little

confused about something Your pet it ion says

that youre not suggesting that the company

should be required to pick any particular

turbine but just that they should meet the

lowest GHG limit that any of the turbines

could meet But arent you in effect by

doing that forcing their choice of turbine

MR BENDER No Its not

requiring a turbine Whether youre forcing

it or not raises some other internal issues

I think at the company which is you know

their risk appetite for that headroom margin

thats built in how much theyre actually

going to operate because this is a 12-month

rolling average and assumes operating at 100

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percent including those duct burners wide

open which is one of the least efficient ways

to operate

JUDGE MCCABE So your preference

would be that they have to build a bigger

turbine and operate it at a lower load

MR BENDER Our preference is

they have to meet the emission limit that

JUDGE MCCABE But in concept

MR BENDER To build a bigger

turbine and operate it with less duct burning

and using more of the waste heat from the

turbine the way that the three options are

set up in this record is the most efficient

And

JUDGE HILL But that wasnt your

comment was it Your comment was simply to

pick the limit that reflects the lowest

emission rate Your comment wasnt

essentially to recalculate the rate based on

the lack of duct burning

MR BENDER Thats correct

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Sorry Im trying to answer a question a

direct question Im not representing that

thats what the comments were

JUDGE HILL Okay Fair enough

Im sorry to interrupt Keep going

MR BENDER I should speci fy this

is based on our understanding from the record

Because the Siemens turbines are capable of

basically more heat because theyre bigger but

theyre going into the same size heat recovery

steam generators as would the turbines

More of the total heat going in is coming from

waste heat from the turbines with the Siemens

compared to the GE so theres less need for

duct burning Thats what

JUDGE MCCABE What is your goal

Mr Bender Are you looking for the

lowest total amount of GHG emissions that can

possibly come out of this facility or are you

looking for something else

MR BENDER We I re looking for the

lowest BACT rate but were also looking for

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JUDGE MCCABE But the BACT rate

is based on efficiency yes

MR BENDER Its based on

efficiency here yes

JUDGE MCCABE Do you have any

objection to that

MR BENDER Im sorry

JUDGE MCCABE Do you have any

obj ection to EPAs basing the BACT rate on the

energy efficiency of the turbines

MR BENDER Not in this petition

JUDGE MCCABE Okay Well it is

this petition were talking about

MR BENDER Right Its

JUDGE STEIN But given that they

have indicated that depending on the timing

that theyre going to go with the GE turbine

what is your position as to what the emissions

limit should be for that turbine

MR BENDER The emission limit

for any of these turbines based on this

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record and the draft permit that we were able

to comment on should be -- Ill put it this

way If F class category of turbines

followed by heat recovery steam generator is

the control option and thats what we were

able to comment on And if thats the control

option that theyre going to treat as the same

control option through steps one through four

then in step five the emission rate should be

based on the lowest emission rate achievable

by that class And based on the record here

thats represented by the Siemens F4 at least

that line in the permit right

So depending on how your question

was intended your Honor if they came in and

said draft permitr project purpose 637

megawatts on peak 100-percent capacity you

know r we would look at what combination of

turbine heat recovery steam generator gives

you the lowest emission rate at that But

want to be clear thats not this case thats

not this record

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JUDGE STEIN Well Im a little

confused I mean Im with you to a point

but what I thought I heard the region say is

that when they chose the BACT limit that they

chose that they couldnt necessarily translate

between these different turbines in quite the

same way that you were doing the translation

And I mean if for example youre saying

that they need to meet emissions rate X what

if they cant meet that with this equipment

Does that mean that they cant install the

equipment

MR BENDER If La Paloma cannot

meet 909 pounds per megawatt hour gross with

the GE equipment is the hypothetical

JUDGE STEIN Yes

MR BENDER Yes then they cant

install that equipment

JUDGE MCCABE So you are forcing

their choice of turbine in effect

MR BENDER Only as a secondary

effect But just like if you cannot meet a

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BACT limit for 802 on a coal fire power plant

wi th a dry scrubber are you forcing the

selection of a more efficient wet scrubber as

a secondary effect Thats true

JUDGE MCCABE Do you think thats

a fair analogy Were talking here about the

main emitting unit and the main unit that

produces the capacity of product that the

facility wants to produce The choice between

a wet and dry scrubber doesnt affect that

MR BENDER Well according to

the region its a category and its not

affecting the category If the category as

a region says is combined cycle turbine with

heat recovery stearn generator then youre not

changing anything You may be foreclosing

business choices that are made later but I

would suggest thats true with every BACT

limit There are choices that a permittee may

want to make but cannot make because they have

to comply with their BACT limit

JUDGE HILL 80 Mr Tomasovic says

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108

that pointed out that the Siemens

going to get it wrong the Siemens 4 turbine

has the lowest emission limit hourly but that

the GE turbine has the lowest annual tons per

year primarily because its operating at a

lower capacity Is your argument that the

limit that the region should have set have

been the lowest of each of those or is your

argument that they should use the limits that

they got for the most efficient turbine which

was the Siemens 4

MR BENDER I believe that the

BACT limit is the primary driver BACT limit

is the pounds per megawatt hour and thats

the limit that we think that the La Paloma

facility whatever equipment it ultimately

chooses should meet That will result in

different tons on an annual basis but tons on

an annual basis is I would submitt not a

limiting limit It assumes 100 percent

operation You know t itts basicallYt itts

JUDGE HILL Wellt but heres my

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point If Mr Alonso had gotten up and said

its most likely were going to pick the

Siemens 5 or Im sorry the Siemens 4 then

theres going to be more total emissions of

GHGs a lower rate but more total emissions

So by your argument should the region have

had to pick the lowest limit for each of the

three parameters on which they set the limit

And if not why not

MR BENDER We didnt address the

total tons because we dont feel that its

going to limit If they decide that they want

to generate 630 megawatts thats the number

that multiplied by the emission rate is

going to generate the tons

JUDGE HILL But if they had

picked the Siemens 4 or the Siemens 5 they

could be operating at 735

MR BENDER They could be

operating at 735 but there are other things

that go into it obviously your Honor as Im

sure youre aware of when theyre dispatched

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how theyre dispatched And the focus here is

the per megawatt hours because thats the one

that the Sierra Club sees as actually limiting

emissions here because the annual caps are set

such a high rate that theyre not going to

be approached Even the lowest is not going

to be approached

JUDGE MCCABE Let me bring you

back to this table thats I dont know if

you have it Its page 11 of the response to

comments These numbers are all starting to

sound fungible so lets try to anchor

ourselves again Im looking at the middle

column here that says output-based emission

limit which is net without duct burning And

the GE turbine that limit is 894 and for

the Siemens 4 turbine is 909 Theyre picking

the GE turbine What limit do you want

MR BENDER Well first of all

question the accuracy of these numbers because

some of them are the same as the gross with

duct burning

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JUDGE MCCABE Theyre saying

what

MR BENDER The Siemens F4 number

in that column is the same as the permit limit

for that turbine which is expressed as gross

wi th duct burning So looking at these right

now I suspect that theyre not correct Some

of them may not be correct

JUDGE MCCABE Can we assume for

the moment that these numbers are correct

MR BENDER Yes

JUDGE MCCABE And if that turns

it into a hypothetical question so be it

Im trying to understand where youre going

there conceptually Im looking at a lower

number 894 you know its C02 equivalence of

per megawatt hour without duct burning net

wi thout duct burning Its 894 for the

turbine they want Its 909 for the one that

you were saying was the most efficient

turbine Which limit do you want for the GE

turbine Do you want the 894 or do you want

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the 909

MR BENDER It depends on this

your Honor It depends on whether were going

to set this as the ultimate rate or if were

going to s another limit as the ultimate

rate because this is a part this is without

duct burning right But the permit allows

duct burning So if we say we want 8947

without duct burning and then well leave the

duct-burning caused emissions kind

unmeasured and unregulated as a different

JUDGE MCCABE Okay Go to

next column with duct burning Youve got

9452-shy

MR BENDER Yes

JUDGE MCCABE for the GE

turbine And just a hair under that youve

got 9444 for the Siemens 4 Are you telling

us thats what you want Board to do to

tell the region that that kind of difference

is significant and that they should force this

company when it installs the GE turbine to

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meet the 944 limit for the Siemens 4 Is that

what youre asking us to do

MR BENDER Your Honor if that

if the limits were set based on this as final

enforceable limits based on that Im not

sure that we would be here on this issue

JUDGE HILL So how much of a

margin is too big Because the regions

initial submission is that even with the

limits that they actually set the difference

is 26 percent and thats just not that big

JUDGE MCCABE And looking at

these latest numbers they actually said the

range for all three turbines there was on

that net with duct burning column that the

total range was 01 percent So seeing how

close those numbers are between 945 and 944

thats obviously a lot less than 01 percent

Is that a significant difference that the

agency should be concerned about

MR BENDER The limits were

talking about are the ones in the final

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permit which are gross And they are -shy

JUDGE MCCABE Okay Would you

like to point us to a different table to look

at

MR BENDER Sure Ill point you

to the permit which is Exhibit 1 to our

petition and the permit limits themselves

Because the permits measured we commented

that the region should be looking at net

among other things And the region said no

It made that choice It made this permit the

way it did and so were addressing it the way

it came out What we and EPA and the state

can enforce are the limits and the limits are

what drive what we can count on as enforceable

emission reductions

JUDGE MCCABE Wait a minute You

wanted the limits to be based on net

MR BENDER We commented that you

should look at the net emission rates and the

region said no were going to base this on

gross

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JUDGE HILL Okay But my

question is how do you respond to the argument

the region made in its brief and that Mr

Tomasovic stated here which is okay so the

permits got gross and the difference in these

gross numbers is 26 percent and thats in the

noise

MR BENDER Its not And the

reason why I know that its too big to be

insignificant is that the region thought that

margins even around that for different

pieces because the margin is an aggregate

was significant enough to start bumping the

limit up And when they got to step five

they said thats a big enough difference

between these turbines that we cant expect

the one to meet the limit for another So I

know because its significant enough in step

five that it should be significant enough in

step one to not count them all as you know

the same

JUDGE HILL So your argument so

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if their error was at step one then what

youre really saying is that the GE turbine is

a different technology than the Siemens

turbines

MR BENDER It is a different

let me put it this way Control option in

step one should be the same as control option

in step five As counsel for La Paloma put

it its a sequence right It starts at one

it goes to five and the definition of the

control option stays the same And if and

were saying well grant the argument that

they should be treated as one option in step

one well if thats the case they should be

treated as the same option in step five and

the limit based on what that option as a

whole can achieve But if youre going to

start parsing them the appropriate time to

parse between turbines or in this case

turbine plus heat recovery generator

combination -shy

JUDGE HILL Understood

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MR BENDER is step one so

that we can look at their relative

efficiencies their relative costs what they

do emit at different levels at production

Its got to be one or the other It makes

hash out of the five-step process to look at

one definition of control option in step one

right And then look at a different

definition of control option and start

applying limits in step five Thats the

argument It has to be consistent all the way

through

I think we would get to the same

option or the same result whether we looked at

them in step one as separate or if we applied

the maximum control efficiency for that class

as a whole in step five But you run into

problems when you separate them and thats

what weve done here

JUDGE MCCABE Okay Mr Bender

could we back up again to the question that

was raised by your saying that you preferred

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and said in your comments that you preferred

limits based on gross capacity I was trying

to use the table on page 11 of the response to

comments to try to understand exactly what you

want If theyre picking the GE turbine you

said the limits these are net limits and

gross is a better measure Have you found a

place where I can look at gross limits

MR BENDER For what gross

emissions are relative to

JUDGE MCCABE Is re any place

in the record that we can look to see how

these net limits would be stated as numbers

for these turbines if it were based on gross

Is that in the record any place

MR RICHIE Your Honor if I may

this is Travis Richie Page 16 of the

statement of basis which was included I

believe as Exhibit AA of La Palomas

response I believe has that same table listed

with pounds of C02 per megawatt hour on a

gross basis with duct firing

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JUDGE MCCABE Thank you Mr

Richie So glad you stayed on the phone I

have this Do the other judges have it

Okay Its the same thing Well how are

these different They look like theyre the

same ones that we were looking at on page II

Whats the difference between the gross and

the net rates

MR BENDER Thats what I was

suggesting earlier that Im not sure that

theyre correct

JUDGE MCCABE Youre not sure

which is correct

MR BENDER I dont know

JUDGE MCCABE You dont know

MR BENDER But I dont think the

net and the gross can be the same number and

thats what I was maybe failing to highlight

before

JUDGE MCCABE But whatever the

gross is you would prefer it You just dont

know what it is or youre not sure which of

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these numbers it is is that what youre

saying

MR BENDER Your Honor there has

to be other details in the hypothetical to

know the answer It depends on if were

measuring If were measuring just whats

coming out of the turbines or if were

measuring whats coming out of the stack

because theres another pollution-causing

device in the middle and thats the duct

burner So if were saying whats the net

without duct burning and were measuring it

but were still allowing duct burning its a

different question

JUDGE MCCABE Yes I understand

This gets very complicated which is why

judges usually defer to the technical

expertise of the EPA people that are charged

with this Now in this case lets try to

bring it back to sort of principles that the

Board can focus on more appropriately I was

hoping through this argument that people

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would be able to give us the numbers that we

should be looking at to consider this argument

that I understand the region to be making that

whatever the variation among these turbines is

so close the variation in the heat rates and

accordingly the GHG limits is so close that

it is something that is essentially

equivalent to use one phraseology another

negligible difference marginal difference

Do you agree that these are so close that they

are marginally different or essentially

equivalent

MR BENDER Two answers your

Honor They are not What the permit

includes is the gross with duct burning and

that number again I would say those are

different enough that the region thought

necessary to differentiate between them And

if thats true then its not negligible and

its not inconsequential

JUDGE HILL So let me ask you a

question So if the region had said theyre

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close enough I so weI re going to set the

highest one and if they happen to pick al

turbine that we could limit more closely I

were comfortable with that

In other words I based on that

argument I okay so if the region had instead

concluded they are negligible GE looked good

enough and so were going to set the limits

based on GE And if they pick Siemens I they

get a bennie out of it would you have a basis

for challenging

MR BENDER Yes I for the same

reason Because the record says that 9092 is

achievable And then we have -shy

JUDGE HILL Well but they would

conclude that 909 is not achievable for GE

MR BENDER I think it depends on

what the record is to support that conclusion

And thats not this case and its not this

record

JUDGE HILL So the regions

mistake was setting three different limits

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MR BENDER The regions mistake

was setting three different limits for what it

says is the same control If it had

identified them as three different control

options in step one and you have a continuity

through the rest of the steps and it set three

different limits it would be a different

problem which is BACT is all limit and you

would rank them and set them based on the top

rank control option in step five But again

it depends on what happened in the prior four

steps to be able to say whether that would

have been a mistake or not and thats not

this record and its not the basis that we had

to appeal

JUDGE MCCABE Coming back to the

factual question of the variation in these

emission limits that the region has permitted

for the three turbines Mr Tomasovic

described them it may not be fair to call

this a range but he mentioned numbers that

to my mind ranged from 01 percent up to 27

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percent Is a 01 percent difference

significant enough that the agency should have

to distinguish between them in setting and

distinguish between these turbine models and

force the companys choice Point one If we

just had point one I realize theres a

range but just look at point one for a

moment Is that significant

MR BENDER I think its

contextual And I would say although you

asked that as a factual question I would

point to the Prairie State decision your

Honor

JUDGE MCCABE The what Prairie

State

MR BENDER Because its cited by

both respondents to say when theres a

negligible difference you dont have to

consider them as separate control options

And I think that Prairie State actually stands

for the opposite On page 37 in the footnote

I think its footnote 36 it rejects that

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argument that just equivalency alone is

sufficient to ignore a difference between two

different control options There has to be a

demonstrated equivalency or a negligible

difference and especially if that difference

is based on emission factors or something else

that is inherently also perhaps not specific

So if its based on an emission

factor that has a margin of error that helps

dictate what amount of difference between two

emission rates may be negligible and even if

they are exactly the same thats not enough

to ignore them You have to -shy

JUDGE MCCABE If theyre exactly

the same

MR BENDER To ignore one of the

control options because of the requirement

that you also look at what their collateral

impacts are because two different controls

options may have the same emission limit but

they may have different collateral impacts -shy

JUDGE MCCABE Thats absolutely

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true of a control option but were talking

about two different turbines here If the

turbines had the same limit would we be here

If they had the same GHG limit

MR BENDER If they had the same

GHG limit and it was -shy

JUDGE MCCABE Because thats just

the way they say that was the manufacturers

the vendors number and EPA permitted it at

that number and there was no comparable that

showed a bet ter performance why on earth

would we require them to distinguish between

those What practical difference would that

make

MR BENDER In this record and to

my knowledge there is no other distinction

between them other than emission rates But

if youre saying hypothetically the emission

rates are all the same -shy

JUDGE MCCABE No Im simply

following up on what you thought Prairie State

stood for that even if things are the same

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you cant ignore the di f f erence I just think

were doing apples and oranges here because

in Prairie State if I recall correctly and

maybe Judge Stein can help us out with this

I think they were comparing you know much

larger differences

Here Im concerned that were

getting down in the margins We are getting

dangerously close to micromanaging here on

what this GHG emission limit should be So is

o 1 percent micromanaging Is that a

difference that we dont need to worry about

Is 05 percent -- 27 percent obviously is too

much for you You think thats over the level

of significance Were wondering where is

that level of significance in difference And

Im not talking about the exact numbers Im

talking conceptually here Thats why I used

percentages to iron it out

If the range of differences

between these two turbines and their GHG

emission rates ranges somehow and depending

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on how you calculate it from 01 percent to

27 percent why should we worry about this

Why should the region be required to

distinguish

MR BENDER Your Honor the

equivalency of emission rates is an issue or

a concept thats tied together wi th the

topdown BACT analysis process and that was in

Prair State Thats the point of that

footnote that I cited to If you did this

again this is not what was done so in the

hypothetical if they had ranked them as

separate control options and they had assigned

emission rates and there was somewhere

between I think it was 01 in your

hypothetical difference and there was no other

collateral impacts differences between them

would that be enough to say -- and it was not

and it was based on you know some emission

calculations that themselves have some

variable in them I think in that

hypotheti this would not be the issue for

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appeal It wouldnt be because you know

were assuming were assuming away all of the

problems with this particular decision which

is theyre not treated as separate theyre

not distinguished in the first few steps we

dont know if theres collateral impact

differences and theres no record made to

support those findings at each of the rest of

the steps

JUDGE MCCABE So is the critical

piece of your argument that they didnt

differentiate between the turbines at step

one Is that really what Sierra Clubs

concerned about

MR BENDER If theyre going to

differentiate between them in step five they

need to differentiate between them in step I

guess it would be one through four because

then wed have an opportunity to look at

whether or not there are differences in

emissions at that point and under what

scenario and everything else that goes into a

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five-step BACT process And that was just

shunted all to the side and we only looked at

the difference between them when we got to

step five after the opportunity to address all

those other issues had passed

JUDGE MCCABE Okay Lets turn

quickly because Im watching your flight time

here to solar Is it your position that

solar is feasible on this site Supplemental

solar as youve described it And if so

please explain how

MR BENDER Your Honor the

comment was step one you need to cast as big

a net as possible to identify potentially

feasible available and applicable and we

say yes its available its applicable Is

it feasible Well we dont know the acreage

They say 20 We dont - - because we never got

to this

JUDGE MCCABE Theres a site plan

in the record isnt there

MR BENDER There are some maps

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in the record We dont know

JUDGE MCCABE Have you looked at

them

MR BENDER Ive looked at some

of the maps in the record yes

JUDGE MCCABE Have you looked at

the site plan

MR BENDER Im not sure -shy

JUDGE MCCABE The site plans

shows where things are situated on the si

where the turbines will go and the other

equipment what the footprint of the si te is

how much space is open or not

MR BENDER Im envisioning a

color map with I think that information

JUDGE MCCABE Mine is not in

color but I saw one like that Have you

looked at that and considering that is it

feasible And Judge Stein please add your

question

JUDGE STEIN If these maps show

or you can deduce from whats in the record

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that what is at play here is approximately 20

acres do you still contend that solar is

ible at this site

MR BENDER I would say to the

extent its scalable its feasible Whether

its cost effective and whether it achieves

emission reductions I dont think I dont

know and I dont think any of us know and

thats the point Thats why you go through

the five steps because you gather that

information at the later steps It was -shy

JUDGE STEIN So Im sorry

Finish I didnt mean to interrupt

MR BENDER It was excluded from

step one as not as redefining the source

And I think it would be inappropriate to

assume fact findings from what we have the

limited amount of information we have in the

record to say it would necessarily be rej ected

in the following steps unlike in Palmdale

where the issue of incremental increase was

looked at and the record was clear that there

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was zero space And the difference between

zero space for no addition and where to draw

the line when theres some space but it mayor

may not be enough to make it feasible cost

effective and everything else is something

that needs to be done by a fact finder with

the public input

JUDGE STEIN But how much effort

and work must a permit applicant go through

when theyre primarily building a particular

kind of plant and theres fairly limited

space I mean do they need to go do a I

scale investigation and develop models

space if what youre dealing with is a very

small area I mean thats a question Im

struggling with because you know this is not

lmdale and I dont buy the characterization

what Mr Alonso said about what Palmdale

stood for in terms of redefining the source

But I am troubled by what may be in the

record perhaps not as fulsome as someone

would like but there may be sufficient

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information in the record to establish that

theres only a very limited amount of space

there And if thats the case are you still

insisting that people do a full-scale analysis

of solar under those circumstances

MR BENDER I think that when

you get into the later steps two three

four the scale of the analysis is probably

relative to you know some reasonableness

right But in step one the whole point is

you cast the net and then you start doing that

analysis And it would be inappropriate to

start making assumptions because we dont

agree with all the assumptions in La Paloma

about hurricanes about other things and wed

like the ability to develop the record in

response depending on what is said about

feasibility

But feasibility wasnt discussed

until the response to comments And then it

was discussed as not not that it was not

technically feasible but it was redefining the

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source And based on in our mind in one of

the main reasons that we brought this appeal

is based on a very problematic definition of

redefining the source

JUDGE HILL Mr Bender the region

argues that Sierra Clubs comments on this

didnt ly raise this issue to any level of

specificity that youre now raising it in your

brief or here How do you respond to that

MR BENDER When they say that

they point to one of the multiple comments

looking at solar hybrid And they say it was

mentioned as an al ternative to duct burning

in addition to other things that could be

looked as alternative to duct burning

Earlier in the comments is the Palmdale

permit and the C02 BACT emission limit saying

its conservatively lower they get that and

they get a chunk of it from solar you need to

look at solar because its available its

applicable it meets the step one criteria

lets look at it And that I s what was

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ected

Elsewhere we said instead of

duct burning did you consider these other

things And yes theyre talking about the

same concept but theyre talking about two

different areas So its inappropriate to

look at only one comment and say well that

one comment about solar didnt raise this

other issue when the other comment did

JUDGE MCCABE Are you suggesting

that permitting authorities whenever theyre

faced with a PSD application by someone who

wants to build a power plant have to analyze

solar in all cases if theyre not proposing it

to begin with

MR BENDER Solar hybrid in a

combined cycle plant when it I S raised by the

public-shy

JUDGE MCCABE Okay And that -shy

MR BENDER Then the region has

an obligation to look at it

JUDGE MCCABE Expand on that

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please What do you mean by look at it

MR BENDER Include it in step

one or deem it redefining the source based on

a correct interpretation of redefining the

source And here it was an incorrect

interpretation of redefining the source It

should have made it into step one when raised

by the public And to go to your question

Judge Stein how much detail they need to do

to develop whether to reject it in later

steps I would agree theres some

reasonableness to it But I dont agree that

even assuming that 20 acres is all that there

is that we can say based on this record

that its reasonable that thats not enough to

generate solar

JUDGE STEIN But if you have a

circumstance where the BACT analysis has been

done the regions looked at it theres been

back and forth between the permit applicant

and the permittee I mean and the region

they proposed the permit for comment and a

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comment comes in about solar youre

suggesting that they have to go redo the BACT

analysis or cant they simply respond to the

comment by saying on this particular site on

these facts we dont think solar is feasible

for X Y and Z reason

MR BENDER Thats different than

the answer here

JUDGE STEIN Why is it different

than here I mean I understand what the

region did in its analysis of redefining the

source you know didnt do exactly what Im

describing here but Im concerned about

taking us to a place where in responding to

a publ ic comment where there may be an answer

that you have to go back to square one on the

BACT analysis because I dont think you do

I think you need to respond to the comment

I think you need to respond fairly to the

comment But wed never I mean how in the

world would we ever get a permit out if every

time theres a public comment that relates to

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the BACT analysis youve got to go back and

redo the BACT analysis Yes t may be

cases where you need to supplement it but I

dont think we go back to square one

MR BENDER Well two responses

your Honor Here we had raising solar in the

context of another facility a similar

facility that has solar hybrid and has a

permi t wi th lower limi ts Thats the context

So to the extent were talking about you

know how much or how real does this have to

be to generate a more substantive response

thats the context

In Knauf Fiberglass I believe Kshy

N-A-U-F however thats pronounced

JUDGE MCCABE Knauf

MR BENDER Knauf Fiberglass

The first the 1999 decision a comment was

raised another production process for

fiberglass The response was thats

proprietary to a competi tor We dont have to

look at it because well reject it later

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anyways so you know why look at it And

the Board reversed and said you cant preshy

judge Thats the point of the process You

cant pre-judge the process Go back look at

it and make a record so we know and the

public knows that you really did look at it

and you really did document your analysis and

we know you did your procedural job

Thats what should be done here

and it follows that precedent And I would

suggest if its distinguishable this is even

a clearer case than Knauf because its not

proprietary that we know of You can go out

and buy it So to the extent theres a line

this is even further on the petitioners side

of the line

JUDGE MCCABE Mr Bender Im

worried about your plane If you would like

to take a minute to just wrap up please do

And then we will let you go on your way Its

getting late

MR BENDER Sure Thank you

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your Honors I and thank you for the opportuni ty

to address these issues From Sierra Clubs

perspective this is an important permit tol

get right on these issues raised And there

are other issues that were commented on l

potent lyother issues that could have been

raised You know I dont want to suggest

that Sierra Club loves this permit even if

its corrected but this issue of what you

have to consider and how you consider

efficiency and how you consider supplemental I

in this case solari that helps improve the

efficiencyof a plant is critically important r

especially as we start into greenhouse gas PSD

permits and getting the definition of what is

the control option were looking at correct

and making sure that thats consistent all the

way through the process and that were

correctly addressing efficiency Its going

to be critical especiallyuntil we develop an

end of the pipe technology that facilities

s installing

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142

The other is this now perennial

redefinition of the source issue I

understand the Boards prior precedents and

in some cases unfortunately theyre being

applied incorrectly And this is one of those

cases And when that happens its important

to correct it make it clear and give guidance

to not only Region 6 but other permitting

authorities what redefining the source means

and whatit doesnt mean And here it doesnt

mean that if a control option is not within

the two-sentence description of the

application of the project purpose that it

cant be considered because that opens a door

to all kinds of problems not just greenhouse

gasses but every - - I mean and SCR al so

wasnt in that two-sentence description

Thank you your Honor

JUDGE MCCABE Thank you very much

Well thank you all for your presentations and

for your valiant efforts to answer our very

often detailed questions

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I would make one observation that

theres such factual confusion l at least in

the argument around the issue of how do we

compare apples to apples with the emission

numbers that we really should be looking at

for these turbines that there is a

possibility and I regret to say this because

I know its a PSD case and we are in a big

hurry but theres a possibility that we will

ask you to do a supplemental briefing on that

or ask you all perhaps to confer to get on one

sheet if its possible to give us some basisl

comparison so that we have the facts

straight in our opinion It is a lot to ask

judges like us We have some technical

training l but we are not engineers I and it is

really quite difficult for us to understand

which numbers we should be comparing to which

here

We will however make a valiant

effort to go back and to see if we can figure

that out And weill only ask you to do a

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supplemental briefing if we think its very

necessary If we do do that we will get to

you quickly on that because we do intend to

move quickly on making this decision These

are not easy issues They are important

issues and we take your point Mr Bender

that as we are entering the world of GHG BACT

permitting we do need to be careful about

what precedent were setting But we also are

very very cognizant of the need for speed

here because we dont want to hold up the

building of something that should proceed

unnecessarily

So with that well take this

matter under submission with the caveat that

you may get a request for a supplemental

briefing And we will wish you all

travels home those of you who are traveling

far especially And good luck catching that

plane Mr Bender

(Whereupon the foregoing matter

was concluded at 547 pm)

NEAL R GROSS COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE NW (202) 234-4433 WASHINGTON DC 20005-3701 wwwnealrgrosscom

- ------

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C E R T I F I CAT E

This is to certify that the foregoing transcript

In the matter of La Paloma Energy Center

Before US EPA

Date 02-12-14

Place Washington DC

was duly recorded and accurately transcribed under

my direction further that said transcript is a

true and accurate record of the proceedings

Court Reporter

NEAL R GROSS COURT REPORTERS AND TRANSCRIBERS

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Page 2: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us

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bull APPEARANCES

LLC

bull and

Energy -=-=-==-=-=-shy

RICHARD ALONSO ESQ SANDRA Y SNYDER ESQ Bracewell amp Giuliani LLP 2000 K Street NW Suite 500 Washington DC 20006 (202) 828-5861 (202) 857-4824 fax

Club

DAVID C BENDER ESQ McGillivray Westerberg amp Bender 211 S Paterson Street Suite 320 Madison WI 53703 (608) 310-3566 (608) 310-3561 fax

TRAVIS RITCHIE ESQ Sierra Club Environmental Law Program

2nd85 Street 2nd Floor San Francisco CA 94105 (415) 977-5727

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3

On Behalf Environmental Protection Agency Region Q

BRIAN TOMASOVIC ESQ US Environmental Protection Agency Office of Regional Counsel Region 6 1455 Ross Avenue Dallas TX 75202 (214) 665-9725 (214) 665-2182 fax

and

MATTHEW MARKS ESQ BRIAN DOSTER ESQ US Environmental Protection Agency Office of General Counsel Air and Radiation Law Office 1200 Pennsylvania Avenue NW Washington DC 20460 (202) 564-3276 (202) 564-5603 fax

PRESENT

Eurika Durr Clerk of the Board

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P-R-O-C-E-E D-I-N-G-S

323 pm

MS DURR All rise Environmental

Appeals Board of the United States

Environmental Protection Agency is now in

session for a status conferenceexpeditedoral

argument in re La Paloma Energy Center l LLC

rmit Number PAS-TX-1288-GHG PSD Appeal

Number 13-10 The Honorable Judges Kathie

Stein l Catherine McCabe Randolph Hill

presiding

Please turn off all cell phones

and no recording devices lowed Please be

seated

JUDGE MCCABE Good afternoon I

am Judge McCabe On my right is Judge Stein

and on my left is Judge Hill We are the

three panel members for this case

Id I ike to welcome you all to

Washington on this non-snowy day But first

why dont we take appearances of counsel who

will be presenting for each of the parties

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MR BENDER Good ternoon

David Bender for petitioners the Sierra Club

JUDGE MCCABE Okay Welcome

MR ALONSO Good ternoon

Richard Alonso on behalf of La Paloma

JUDGE MCCABE Welcome

MR TOMASOVI C Good afternoon

Brian Tomasovic from the EPA Region 6 Dallas

Office l joined at table by from the Office of

General Counsel Matthew Marks and Brian

Doster

JUDGE MCCABE Thank you And do

we have anyone else on the phone

MR RI E Yes I your Honor

This is Travis Richie with the Sierra Club

JUDGE MCCABE Okay Before we

beginl let me ask who will be speaking for

Sierra Club Is that just Mr Bender I or will

Mr Richie also be speaking Okay I thank you

Well first of all I would really like to

thank you all those of you especially who had

to change travel plans l for being here today

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on short notice and I realize that not only

disturbs flight arrangements but probably

disturbs your preparation time The good news

for all of you of course is that we are

going to do this a little differently today

so hope ly that wont make as much a

difference as it might in the ordinary case

Before we begin let me do a

travel check as to what time your flights on

leaving I understand a number of you are

eager to be back out of town and ahead of the

snow this evening Mr Bender

MR BENDER I f everything goes as

planned 700

JUDGE MCCABE Seven 0 clock is

your flight time And whats your airport

MR BENDER National

JUDGE MCCABE National Okay

Mr Alonso can I assume youre remaining in

town

MR ALONSO Yes

JUDGE MCCABE I assume this is a

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representative of a company with you

MR ALONSO Yes Im sorry This

is Sandra Snyder with Bracewell also

representing La Paloma and we do not have any

travel restrictions tonight

JUDGE MCCABE Thank you And

from the EPA side

MR TOMASOVIC My flight departs

at 8 pm

JUDGE MCCABE All right Then I

think we should have plenty of time Weve

scheduled an hour and a half for this We

will try our best to get you out on timel so

you can run for the airports Snow is not

supposed to begin until later this evening

We are doing this slightly

differently than our normal procedure because

this is a status conference as well as an

expedited oral argument As usual well go

ahead and allocate one half an hour

approximately to each party But the order

the parties will be slightly different than

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usual

We will start in this case with

the permitee with La Paloma Energy Center

who I will refer to briefly as La Paloma I

suspect the other judges will be doing that

too for the record Because we have some

status questions for you which I assume will

not surprise you given our scheduling order

Those answers to those questions may inform

the rest of the discussion that we have here

today so we thought it best to begin with La

Paloma

Normally of course our practice

would be to begin with the petitioner the

Sierra Club So in this case Mr Bender Im

going to give you your choice as to whether

you would like to go second or third Some

people like to have the first word some

people like to have the last word

You also have the option if you

choose to go second after La Paloma to

reserve five minutes of your time for rebuttal

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after EPA What would you like to do

MR BENDER I I 11 combine both and

do it all together

JUDGE MCCABE Okay Thats the

way weIll proceed then WeIll begin first

with La Paloma

mentioned l if we didnt we should have in ourI

order to you l were not expecting you or

asking you to make any formal presentations

today I as you would in the normal oral

argument

In the interest of timel please

presume that weve read your briefs l that

were famil with the records And in the

interest of saving time and getting you out of

here weld like to focus right away on the

judges questions If you have anything that

you would like to say very briefly first l

thoughl please 1 us know that and feel free

Mr onso

MR ALONSO Thank you Judges

And we just want to first start off by

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recognizing and thanking you for expediting

this appeal I believe the briefs were

submitted on December 27th and the Board

reached out to us just a couple of weeks later

to schedule this argument So were really

appreciative of that We are prepared to

answer your questions presented in your order

as well as any other issue thats before the

Court

As to your first issue you asked

us to report on the status of the projects

First 1 me address the construction time

line We currently have all government

approvals that are required for pre-

construction as well as agreements that we

need wi th governments We have tax agreements

that were completed We have a water supply

agreement with the local water works We have

land agreements in place We have our TCEQ

Air Permit that was finali in February of

2013

The two main components that we

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are missing right now is number one

financing Financing is contingent on

receiving a final PSD permit Once we receive

a final agency action on the permit we expect

to close that financing in short order right

ter that

As far as construction we have in

EPC the engineering procurement and

construction contract completed That was

executed in September of 2013 So shortly

er this closing we can start construction

shortly right after that That was wi th

Bechtel Power Corporation and again they are

standing by ready to start construction

JUDGE MCCABE Most importantly

Mr Alonso could you address whether youve

selected your turbine yet

MR ALONSO Yes we are prepared

to talk about that We have preliminarily

identified the preferred turbine that we would

like to install at this site It is the GE

7FA turbine However we are currently

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various escalation clauses of our existing

contracts including for the turbine in the

sense that we have planned to be done with

this process on January 1st Not just the

contract for the turbine but for other

components of the site every day that goes on

the cl is paying escalation fees on that

contract

JUDGE MCCABE So do you have a

turb contract or not

MR ALONSO We do have a spot for

manufacturing of the turbine

JUDGE MCCABE So is that like

reserving a place in case you decide to put in

your order

MR ALONSO Correct And that

deadline is April 1st On April 1st we have

what happened ter January is that we

negotiated our escalation clauses through

April 1st Come April 1st I think that the

weIll come April 1st I we would have to

renegotiate that contract And most likely I

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we can maybe even consider selecting one of

the other turbines that are in this permit

So if we dont have a final permit

in the next you know -- and Im not putting

any pressure on you guys but as of April

1st I think that the well I know the

developer would like the flexibility to

install anyone of these three turbines

JUDGE MCCABE Im not sure Im

completely following you What happens -shy

lets try it this way What happens if you

get your permit tomorrow

MR ALONSO If we get our permit

tomorrow we would close our financing a

couple of weeks later and we could start and

then we would put in a notice for the

procurement finalizing the GE 7FA turbine

contract

JUDGE MCCABE And how soon could

that happen or would that happen

MR ALONSO That would happen

upon closing and we would -shy

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JUDGE MCCABE So are we talking

about a week two weeks a month

MR ALONSO Yes My

understanding the information that I have is

that closing can happen in its a matter of

weeks a couple of weeks after we receive a

final permit

JUDGE MCCABE Okay So when you

say youve preliminary picked this GE 7FA

turbine -- can we just refer to that as the GE

turbine

MR ALONSO Sure

JUDGE MCCABE Its the only one

right thats a GE Okay Well call this

the GE turbine Youve preliminary selected

that If you get your permit tomorrow is

there any reason that youll change that

choice

MR ALONSO Most likely not If

we get our permit tomorrow if we get it

before April 1st we are probably we are most

likely yes going to select we are going to

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select the turbine

JUDGE MCCABE Okay If you get

your permit before April 1st you will select

the GE turbine is that correct

MR ALONSO That is yes

JUDGE MCCABE And my

understanding of this turbine is that its the

smallest of the three and according to heat

rates the least efficient the one to which

the region has assigned the highest GHG

ssion limit is that correct

MR ALONSO That is correct

JUDGE MCCABE Okay That will

very much inform the rest of our discussion

Thank you Mr Alonso Do you know yet

another question on your preparation here do

you know yet where the facility will be placed

in the ERCOT dispatch order and whether it

will be operated as a baseload or load cycling

facility

MR ALONSO Our plan is to

operate this as a baseload uni t However we

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will respond to the ERCOT orders as they come

I mean in Texas our business plan is to

operate this as a baseload unit

JUDGE MCCABE Does ERCOT give you

any preview of that

MR ALONSO Excuse me

JUDGE MCCABE Does ERCOT give you

any advanced notice as to whether youre going

to be likely operated as a baseload or not

MR ALONSO Our intention is to

operate it as a baseload Im not qui sure

about we can follow up with you on that as

far as ERCOT notices Im not prepared to

talk about the ERCOT notices But to the

extent that ERCOT manages dispatching we will

comply with their orders

JUDGE MCCABE Okay And you

expect at this point based on current

condi ons which I understand can change if

other plants come online or other things

happen you expect based on current

conditions that youll be dispatched high

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enough in the order that this will be a

baseload plant and therefore it will be

operated at 100-percent capacity

MR ALONSO Pretty close to it

JUDGE MCCABE On a regular basis

MR ALONSO On a regular basis

we would like to have you know utilize this

as much as possible Keep in mind though

while we do have the you know as an EPA

administrative record yes larger turbines

may be more efficient But at the end of the

day they also have higher mass emissions

And so when you look at it from an

environmental perspective to the ent that

an environmental impact plays into that the

environment really feels the impact of the

mass limit more than anything else I believe

JUDGE MCCABE Understood Okay

Can you tell us a little bit about what was

the chief factor that drove the companys

selection of the turbine how important was

the capacity or size for example

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MR ALONSO I dont know the ins

and outs why they selected that turbine

I believe its just commercial terms It was

the better commercial term -shy

JUDGE MCCABE Would you like to

consult with your client at all to see if you

can clarify that answer

MR ALONSO Sure Shes here

JUDGE MCCABE This may help you

Some of the questions that were also

interested in are how important was the

capacity or size the uni t in terms of your

decision to s the GE turbine and how do

the relative heat rates or the GHG emission

rates affect decision Did they affect

that decision if its made

MR ALONSO The way that this

project was developed is that we went out for

competitive bids of at least three turbines

And based on the necessary heat rate the

forecast of demand that was the basis of the

select ion It was not based on you know any

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other factors except for trying to meet the

purpose of the proj ect which is to supply the

load and the heat rates and the financial

arrangements that resulted from that bid

process

JUDGE HILL Was that forecast of

demand strictly internal or was it something

dictated by either EReOT or some other

external entity

MR ALONSO La Paloma is a

merchant power plant Wei re not regulated so

its not that wei to extent that your

question is to whether or not we had any

regulatory oversight -shy

JUDGE HILL Or just external

information or some sort of external driver

I guess

MR ALONSO me consul t wi th

- sorrYI I just wasnt prepared

JUDGE HILL No thats okay

MR ALONSO So specific

questions Okay

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JUDGE MCCABE But we appreciate

your corning

MR ALONSO But Im glad that

Kathleen the proj ect developer Kathleen

Smi th is here wi th us today When you develop

these projects yes they went out they had

third party evaluations of load demand and

what would fit for this market absolutely

JUDGE HILL Okay

MR ALONSO I mean its -shy

JUDGE HILL Let me ask one other

follow-up You said at the very outset Mr

Alonso that you had preliminarily identified

the GE turbine and the record before us is

that certainly at the time of the application

that decision hadnt been made Im not

asking for a specific date but roughly when

was that determination made relative

because Im curious how it relates to this

proceeding

MR ALONSO So again we made

the selection based on closing in January but

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the selection of the turbine was made in

August expecting to be you know

manufactured and installed in January So to

answer your question it was August of 2013

JUDGE HILL Did you communicate

that to the region at that time

MR ALONSO No because again

because of the timing of this permit it is a

preliminary determination At that time in

August if we were 100-percent certain that we

would get a permi t in January sure we

probably would have you know told the region

and maybe the final permit may have looked

differently But we couldnt put our eggs

all our eggs in that one basket at that time

JUDGE MCCABE What was your

understanding Mr Alonso of what the region

planned to do once you made your turbine

section Will they revise your permit or

leave in those three original limits

MR ALONSO We have a special

condition in the permit that requires that La

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Paloma submit an amended permit application to

remove the other two turbines that are not

selected from the permit So it would be a

deletion of the two other turbines that are

not selected

JUDGE STEIN Why if youve made

the decision to proceed with this particular

turbine if you receive your permit within the

time frame that is necessary for you would

you be revisiting that question if you dont

get the permit until May

MR ALONSO If we -shy

JUDGE STEIN Just hypothetically

if you get the permit a month after why is it

that suddenly thats an open question again

Im having difficulty understanding that

MR ALONSO Correct Our current

negotiations on the escalation clauses of the

contracts we have currently negotiated terms

through April 1st At that point youre

right we would have an option to negotiate

further or more likely than not we could we

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might go through another bid process to

determine whether or not maybe another turbine

might be more beneficial from an economic

perspective to install

JUDGE STEIN Thank you

JUDGE MCCABE Just to make sure

the record is clear on this though at this

point youre telling us that if the company

gets its final PSD permit from EPA before

April 1st it will be the GE turbine

MR ALONSO That is my

understanding

JUDGE MCCABE Okay Would you

like to qualify that statement

MR ALONSO Right The problem

is that again we cannot make a final

decision on the turbine until after we get the

permit because youre only going to reserve

your place line for a certain amount of

time at the manufacturing plant

JUDGE MCCABE But if you get your

permit tomorrow or anytime before April 1st

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or perhaps you need a week advanced notice

then you would be choosing the GE turbine We

can rely on that

MR ALONSO Yes

JUDGE MCCABE Is that correct

MR ALONSO More likely than not

we will be selecting that turbine

JUDGE MCCABE When you say more

likely than not or preliminary then Im not

sure what youre telling me Mr Alonso

Which is it Will you have that GE turbine be

your selection

JUDGE HILL What else might

prevent you from going ahead with the GE

turbine if there were a decision before April

1st is another way to ask the question

MR ALONSO To maintain

flexibility I mean thats one of the

purpose were here I mean if we get a call

tomorrow from Siemens saying that theyre

going to give us the turbine at five cents

maybe wed go with the Siemens

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JUDGE MCCABE So price matters

MR ALONSO Absolutely

JUDGE HILL Price really I I meant

but

MR ALONSO The likelihood of

that is minimal

IJUDGE HILL But let s explore

that for a second because it sort of takes us

to the other direction So if you so ifl

Siemens were tOI you know I mean I and I can

certainly relate to this 11m trying to do

some home maintenance But so they come in

with a bid youre not expecting l and you saYI

You know what That I s the one we should go

with thats going to be one of the larger

turbines So what will happen in terms of

your demand forecast or I I meanl how will you

operate that plan

MR ALONSO It may not fit the

business plan at the time I meanl we would

like to maintain the flexibility of selecting

the turbine as much as we can in this final

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permit Everything is in place that if we

were to get a final permit tomorrow that the

GE turbine would be used However we still

want I dont want to tell you that its 100shy

percent guaranteed We would like to maintain

that flexibility

JUDGE MCCABE But you understand

s your very desire to maintain that

flexibility that leads us all to be here

today right As I understand it the main

issue that the petitioners have with the limit

that was chosen in this case is the fact that

you are reserving flexibility to make this

choice after you get your permit

MR ALONSO But the limit is the

limit doesnt satisfy region as appropriate

and valid under BACT What the permitee is

arguing here today is that somehow we start

off with a class of control devices The

region has identified combustion combined

cycle turbines as a control class That is

your step one BACT is an evolution all the

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way through step five Once you get to step

five the purpose and the intent of step five

is to impose an emission limit looking at

those control devices and its not just

combined cycle We have a whole list of

technologies that were identified by the

region that apply to each of these turbines

At that point you look at the

ssion unit and you develop a unit-specific

emission rate that reflects the technology as

its supplied to that particular emission

unit

JUDGE MCCABE Dont you also look

at comparable units located at other

facilities when the permitting authority makes

that decision

MR ALONSO Absolutely You look

at technologies at other through the

clearinghouse and other technical information

That is your step two analysis absolutely

JUDGE MCCABE Then why wouldnt

you look at other turbines that are available

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MR ALONSO Im sorry

JUDGE MCCABE Then why wouldnt

you look at these other turbines that are

available

MR ALONSO You look at the other

turbines as - - well f are you saying the other

turbines that are mentioned

JUDGE MCCABE The Siemens

turbines

MR ALONSO The Siemens turbines

and the GE turbines have the exact same

technology installed Again at the end

and Siemens does not make the identical

products Theres going to be some

variability amongst those products and I

would argue that the actual impact of these

units or these emission rates arent that

off from each other But in step five the

region looked at the turbines and looked at

as this board has approved in the past and in

particular in Prairie State the ability to

take into consideration operational

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variability compliance headroom and other

factors made to ensure that the BACT limit at

the end of the day is workable and something

that can be achievable from a compliance

perspective

JUDGE MCCABE Mr Alonso wed

like to go on to that subject of the relative

heat rates and therefore the GHG emission

rates of these three turbines But before we

leave the subj ect that we are on of the

criteria that the company used perhaps past

tense or might in the future if something

unexpected happens use in the future to

select the turbine I heard you say two

primary things And I know were several

beats back on the questioning now But I

heard you say the forecast of demand how much

power you can 1 -- Im sure where ERCOT

will dispatch you is part of that equation -shy

and the heat rates Are those the two most

important factors to the company in selecting

the turbine Price obviously has something

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to do with this too

MR ALONSO Yes I mean and the

result of the bidding process and how that

and the third-party analysis of the energy

demand and everything else Absolutely

JUDGE HILL So are you really

saying to a large extent price is the

primary driver

MR ALONSO No not necessarily

I mean its what fits for this particular

you know looking at the forecast -shy

JUDGE HILL But its the balance

of price to demand to efficiency

MR ALONSO Sure Im sure

There is a cost component to this but its

not a cost component as specified in step four

of the BACT analysis

JUDGE HILL No Im not doing

BACT right now Im talking about just the

decision of which one to install

MR ALONSO Sure Its a

business decision and the product developer

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would like to maintain that flexibility At

the time the permit was submitted we

concurrently went and did basically a dual

process of trying to get a PSD permi t and try

to come to terms with all these agreements

whether the turbine or your tax agreement

your water use agreement And thats why our

initial application had three turb s in it

To say that we had to do I that

work up-front and then wait another two years

to get a PSD permit it would really delay the

proj ect and lose a window opportunity

currently right now at ERCOT where there are

some energy constraints in Texas This is a

very good time to build a gas-fired power

plant in Texas

JUDGE STEIN I want to follow up

Are you -shy

JUDGE HILL Yes yes

JUDGE STEIN I wanted to follow

up on your decision of the ous steps of

the BACT process I understand your wanting

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to have flexibility to the last possible

moment At the same time ordinarily in the

step two analysis you would be looking at

whether technologies are available and

applicable And if somebody was going to

drive the company to say you should build a

size thats too small or too large its my

understanding that there would be an

opportunity at that point for commenters to

explain why a different size unit might be

appropriate and you in turn would have an

opportunity to say well that doesnt work

for us

But by keeping the flexibility

until the end of the process my question is

whether you have deprived either citizens

groups or other comn1enters of the opportunity

to meaningfully comment at an earlier phase of

the process And therefore by keeping your

flexibility to the last moment you are

perhaps you should assume the risk for having

done that

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I mean in pio Pico we briefly

talked about the sizing issues Weve

acknowledged I understand your points on you

get to pick the size But if you pick it so

late in the process that nobody else can

meaningfullycomment notwithstandingthe size

you want to pick if you pick it a little

bigger its much more efficient how can that

happen if you wait until the end the

process to choose to say what technology you

the company want to go with

MR ALONSO First of 1 you

know recognizing BACT and step two Im not

aware of any precedent in PSD permitting or

from this board that somehow size and

itself is a control device Step two and to

a certain extent I step one is to identify

control devices you know technology that

would be applied to a given emission unit or

a given source And I believe that its been

pretty well established that the permittee has

a lot of flexibility in deciding the design

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factors in how the plant is designed I

would you know ask the Board to consider

that size is not a control device its more

a design criteria that is used by permittees

when they go to design a source

IJUDGE STEIN Yes I m not

thinking of size as a control technology I

see the control technology as combined cycle

turbines But when you look at combined cycle

turbines youve looked at three different

models They have different efficiencies We

can get later people can tell us whether

theyre comparable or theyre not But if the

company is headed towards a particular

efficiency and the agency or other commenters

think they should be headed elsewhere that

this particular technology combined cycle

turbines can get you a more efficient

process where in the process are they

supposed to raise that

MR ALONSO They could raise that

in how the technologies are defined and

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developed in step two

JUDGE MCCABE You may be hurting

Mr Richies ears doing that so

MR ALONSO Sorry sorry Region

6 identified roughly four different energy

efficiency and processes or practices that

apply to the class of this technology which

is a combined cycle class The public has

full opportunity and they had in this permit

to comment on exactly that whether its

installation whether its installing an

efficient heat exchanger design economizer

exhaust steam These are the control devices

that apply to the class of technology which is

whats known as combined cycle

That list today is what we have

today That list was different ten years ago

and its going to be different ten years from

now because BACT evolves That is where the

public has its say

To set a one-level you know all-

combined cycle must be 90 the 9092 pound

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I Iper C02 megawatt hour that s not BACT BACT

is set on a case-by-case emission unit-

specific basis What Sierra Club is basically

asking this board to consider is taking that

one limitl the 90921 and apply it to two

other totally different combined cycle

turbines I and I dont see that as what is

intended by BACT

JUDGE MCCABE That brings us to

an interesting question Can the GE turbine l

which you are most likely to select l to quote

you l achieve the GHG emissions rate that the

region established the Siemens turbine

MR ALONSO First of all weI

think that to require the GE turbine to meet

that limit would be asking the permittee to

over comply with an adequately-developedBACT

limit We dont think -shy

JUDGE MCCABE 11m asking you for

a factual answer l Mr Alonso

MR ALONSO From a factual

question l I mean l 1 1 m not

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JUDGE MCCABE Would you like to

consult with your client

MR ALONSO Yes okay We are

not prepared at this time to say 100 percent

whether or not we can meet that limit What

we would have to do is possibly de-rate We

might have shy

JUDGE MCCABE Possibly what

MR ALONSO De-rate the unit

JUDGE MCCABE De

MR ALONSO The unit may be not

at its maximum capacity

JUDGE MCCABE What would that do

Explain that

JUDGE HILL You mean run it

greater than capacity

JUDGE MCCABE Yes he means if

they de-rate it that they would operate it at

less than its 1 capacity What would that

do to your heat rate

MR ALONSO Probably not much

But they would have to do something

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operational to unit to basically comply

with that limit Plus we would not have the

compliance headroom that was developed for

degradation factors We might be able to meet

it day one but who knows in ten years And

just operation flexibility It would be

really difficult to commit to that limit

JUDGE MCCABE Let me see if Im

understanding you correctly I hear you say

that de-rating it would be one option to meet

that GHG emissions limit because its a total

limit even though your efficiency rate would

clearly go down if you de-rated it I hear

you saying that option number two would

essentially be to take it out of your

compliance margin which the petitioner has

characterized as generous I believe in its

comments on this permit Are those the only

two ways that the company could meet the heat

or the GHG emission limit that the region set

for the Siemens turbines in using the GE

turbine

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MR ALONSO I mean we can follow

up wi th the Board on this but to the extent

of whether or not theres other engineering

solutions or modifications to that turbine

that could be done tOI you know l basically

change the design of this unitl I meanl I

think that I s why we went through the BACT

process l though I meanl the end-of -day

emission limit is based on vendor information

that we obtain from GEl and the region took

that and applied the control technologies to

those numbers I and thats how we establish

BACT limits at the end of the day is you take

those control technologies and you impose them

onto the uni t that s supposed to be buil t I youI

work in compliance headroom l and it wasl you

know I and this board is generally deferred to

EPA techni staff on issues about compliance

headroom and whats -shy

JUDGE MCCABE I dont even think

thats an issue on this appeal l so you dont

need to go there

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MR ALONSO Well no no no To

the extent that you said that the Sierra Club

thinks that compliance headrooms are generous

JUDGE MCCABE That was just a

comment They didnt raise it on appeal

MR ALONSO Okay

JUDGE MCCABE But let me ask you

this Mr Alonso Im hearing essentially

that the only two ways that you could that

the company could meet the limit on the GE

turbine would be to either de-rate it in

which case youre not getting the power that

you want out it or to take it out of your

compliance margin which is effectively

somewhat lowering your limit really

But Im puzzled about one thing

Didnt the company in its original permit

application propose to use the average of

propose to set the permit limit at the average

the GHG emission rates or heat rates of the

three uni ts the three turbines And if

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thats the case isnt that an admission that

you can actually meet the more-demanding

emission limit on the less efficient unit

MR ALONSO Let me just say when

we initially submitted this permit

application we used the LCRA permit that

Region 6 had processed and finalized in a

period of six months

JUDGE HILL Im sorry What is

LCRA

MR ALONSO The Lower River

Colorado Authority They permitted a gas

plant in Region 6 It was not appealed to

this board So we modeled it after that

application

JUDGE MCCABE You modeled your

application after theirs

MR ALONSO To a certain extent

because it worked at Region 6 as far as this

averaging It turns out that once between

draft and final LCRA was able to select the

turbine and they selected a turbine The

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timing worked for them given their

development path

JUDGE MCCABE Im sorry You

said they selected theirs between the draft

and final permits

MR ALONSO They did And ir

final permit came out with one turbine But

thats a different project dif

development path

JUDGE HILL Well but I think the

question is youre saying that if you were to

apply the Siemens emission limit to the GE

turbine that that would over comply But if

the permit limit were set at the average of

the three and you would as you apparently are

almost likely to do select the GE turbine

then youre going to meet a lower limit than

the limit that would have been set on the GE

turbine alone So would you have been arguing

that that was over-compliance as well

MR ALONSO I mean the record

speaks for itself I mean obviously if we

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submit a permit application agreeing to a

certain limit we would have to you know

probably shave our compliance headroom But

it doesnt it doesnt I mean the issue

before the Board though I believe is whether

or not Region 6 acted properly in its BACT

analysis of these three turbines of these

particular emission units Whether or not a

unit can over comply or whether a permittee

can take a voluntarily limit to reduce its

emissions I believe thats outside of the

BACT process

JUDGE STEIN But I think what is

inside the BACT process is whether or not the

emissions limit that the region has selected

is in fact BACT And thats what Im

struggling with This case comes to us in a

somewhat unusual setting in that I dont

recall in my many years on the Board ever

seeing a situation and its possible that we

did in which three different emissions limits

were picked for the same unit

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Now Im not saying its not

happening Im simply saying that I dont

have any experience with that And what Im

more famil with is a control technology

being p whether its I you know a

scrubber or something else and within thatl

technology I the company being called upon

through the BACT process to meet an emissions

limit that reflects the best emissions limit

that that technology can achieve

And if the technology is combined

cycle then clearly there are certain sizes

of combined cycle that may be able to achieve

a better emissions than the unit that youre

picking And I dont have a problem with

somebody saying to me well we can I t do that

because of A B and C But my problem is

whether BACT automatically gets picked by

size rather than what the class of technology

is capable of performing

MR ALONSO Again I think two

points as to previous practices I meanl we

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have identified seven GHG permits or Im

sorry PSD permits that have throughout the

country and different permitting authorities

further research identified five more where

you have two or three emission units and all

units have dif rates They range from

California Arizona Florida Oregon North

Carolina So it is an established

practice out there in the permitting

JUDGE STEIN Were those

federally-issued permits or state-issued

permits if you know

MR ALONSO They were well you

know they were all state-issued permits but

some of those were in delegated states such

as Washington the s of Florida so they

are federal permits I agree that I dont

believe that this issue has come before the

Board but keep in mind BACT is a progression

And I think in step one the technology is

combined cycle And you take that technology

and you run it through the five steps But at

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the end of the day in step five if you take

the design of the emission unit thats being

proposed to be installed and you take those

technologies you know the use of rehea t

cycles the exhaust steam condensers the

generator design and all these things apply

to each of the three turbines

And at the end of the day in step

five whats the purpose of step five The

purpose of step five is to take that

progression and look at the emission unit

being proposed and develop an enforceable BACT

limit BACT is a limit based on technology

thats being identified through the step one

through four

JUDGE HILL Thats basically the

three separate applications argument am I

correct

MR ALONSO At the end of the

day we could have possibly submitted three

different applications and you would have had

to - - to do otherwise you would be basically

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setting sort of like an NSPS where you say all

combined cycles need to meet this one limit

across the board No matter where you are l

who you are l which manufacturer you use l what

color your turbine iS you need to meet thisI

limit Thats not what BACT is

JUDGE MCCABE Well the problem

with that analysis of course Mr Alonso isl

that if we take it to the full ent of what

youre suggesting you get to pick the

emission limit according to which turbine you

pick And I dont believe thats what the

permitting authority is supposed to do But

we dont need to debate this issue further

Wed like to turn before we leave

you and go to EPA 1 to the solar issue And my

question to you is is it possible -- again

here were talking facts not legal conclusion

to install some solar-generating capacity

at this proposed facility And what

information in the record can you cite us to

support your answer l whatever that answer is

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MR ALONSO On the solar pre-heat

issuel first of alII solar pre-heat is not a

control device to be identified in step one

Your factual question l can it be inst led at

this ilitYI in a meaningful waYI no We

only have 20 acres left over after we build

this proj ect

JUDGE HILL Is that in the

record

JUDGE MCCABE Is that in the

record

MR ALONSO NO I it is not Its

not in the record because againl what is in

the record is that Region 6 determined that

installing based on this boards precedent l

installing solar pre-heat or using solar as

some type of alternative fuel for this plant

would be re-designing the source

JUDGE MCCABE Well go back to

your explanation about the 20 acres Explain

to us

IMR ALONSO Okay First theres

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the 20 acres There s not enough space I landI

to make solar pre-heat a feasible or economic

technology Palmdale had 250 - something acres I

you know l a vast amount of land

Second l this plant is pretty close

to the Texas coast vulnerable to hurricanesI

Who knows if regulators of local communities

would even let us build such a large solar

field in this areal given the threat of

hurricanes

JUDGE MCCABE Is there anything

in the record for us to look at on that

IMR ALONSO No I again in the

record solar pre-heat is defined aS I would bel

redefining the source And this board has

already ruled on this issue In Palmdale thel

petitioner sought to have Palmdale install

even more solar energy than it already had

proposed and this board said that that wouldl

be redefining the source

JUDGE MCCABE I don I t bel ieve

lthat s what we said Mr Alonso I believe we

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said that redefining the source was clear if

you were talking about making it a 100-percent

solar facility

MR ALONSO Correct

JUDGE MCCABE That is quite

different from what youre talking about here

MR ALONSO Well I point the

Board then to Sierra Pacific In that case

there was a dual fuel plant biomass as well

as natural gas and the petitioner sought to

have the permitting authority to force

installation of solar and this board there

said it was redefining the source

JUDGE MCCABE And what did they

base that on

MR ALONSO Im sorry

JUDGE MCCABE I dont believe

that the Board made such a broad statement

that any time you introduce solar that it

would be redefining the source Do you recall

in Sierra Pacific what the reason was that the

Board concluded that

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MR ALONSO I do not

JUDGE MCCABE Okay Well I

wont make you do that homework right now We

actually know that Go ahead back to if you

would to the factual question because thats

the one were most interested for todays

purposes about whether its actually possible

and what there is in the record that t Is us

yes or no on that

MR ALONSO Okay Well first Il

mentioned that theres not enough land l the

hurricane situation The second issue is

Paloma is not in the renewable business They

doni t have the resources to go out and do

solar studies They would need to retra or

redo their business model in order to look at

alternative energy or renewable energy

JUDGE MCCABE Do they build their

own turbines

MR ALONSO They build gas

turbines yes

JUDGE MCCABE They build them or

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they buy them

MR ALONSO They dont do wind

they dont do solar

JUDGE MCCABE Do they use

subcontractors

MR ALONSO I mean this is

something that they would have to develop as

a business unit and will take time to go out

and get experts hire them on staff or go get

third-party folks Its just not part of

their business plan

JUDGE MCCABE Mr Alonso what do

you think the company responded the first time

the first company was asked to put on an SCR

MR ALONSO They probably said it

was unfeasible

JUDGE MCCABE They probably did

They probably also said they werent in the

business There has to be a first time

doesnt-shy

MR ALONSO No I think that as

far as being in the business I mean theyre

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in the business of burning coal And they

know that they have to put on pollution

control -shy

JUDGE HILL And I think Sierra

Clubs argument would be that La Paloma is in

the business of generating energy as

efficiently as possible in South Texas I

mean put aside the hurricane issue for a

moment but if there were enough land you

know the stated business purpose in the

application is to produce between 637 and 735

megawatts of energy I mean thats the

stated business purpose not to produce it

per se exclusively with natural gas That

may be their preference but Im not sure

thats what the record shows

MR ALONSO I mean the purpose

of citing this plant is to use the reclaimed

water from the municipality as cooling water

Theres also a natural gas pipeline close by

to this facility That is -- and the intent

is to maximize the use of that gas pipeline

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You know shy

JUDGE HILL And that is in the

record

MR ALONSO That is in our brief

JUDGE HILL Okay

MR ALONSO But again I dont

believe that solar pre-heat would even survive

step one I mean youre king about a

redesign the source by forcing folks to

consider renewable energies at a fossil fuel

plant where thats not the intention of the

design And this board has allowed and has

recognized the ability for permit to

define the parameters of their design what

they want to build and I dont think we you

know well you guys can do what you want but

to force folks that want to build fossil fuel

natural gas plants to build wind turbines I

dont know that sounds like -shy

JUDGE MCCABE Do you know if

theres any situation where any permitting

authority has done that in the United States

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yet

MR ALONSO I have not seen a

BACT analysis resul ting in or you know to do

as an alternative particularly in step one

to consider the feasibility of a renewable

project I dont have any knowledge of that

occurring at other permitting authorities

JUDGE STEIN But what about a

hybrid pI I mean I dont think whats

being suggested here is that you convert the

principal purpose of the gas turbines I

think the question thats being asked is

whether any component of it could be solar

and I think what the Board is struggling with

is in a si tuation in which solar is not

already part of the plant design is it proper

or improper to raise questions about that If

so what is the regions obligation

I mean I dont see this as sort

of a black and white issue I see it as

youre lling us theres 20 acres Maybe

thats the record maybe its not That

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may be relevant to how you answer that

question in this case as opposed to some

other case

MR ALONSO It really goes to

whether or not solar or renewable energy

should be considered a control device in step

one And I would assert no its a different

fuel source Youre redesigning when people

go to build solar plants or hybrid plants

even hybrid plants you go in and thats what

you want to build and you have a business plan

and an engineering design for a hybrid plant

and thats what you want to get permitted

But if youre out building a gas-

fired power plant and solar is not a

component I mean nowhere in the record is

there anything about La Paloma interested in

building a solar plant We want to build a

natural gas fire plant and thats the source

that should be permitted not some alternative

design And a hybrid plant would be forcing

basically brand new engineering you have to

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study you know solar rays and the impact

whether or not its efficient in this area

It would just be a totally different design or

engineering effort to design a hybrid plant

versus the plant that were trying to permit

here

JUDGE MCCABE Okay Thank you

Mr Alonso We take your point and you may

be seated And we will hear next from EPA

and Judge Hill will take the lead on questions

for EPA but be resting assured that we will

all have questions for you

JUDGE Let me start by

asking how you pronounce your name so I dont

mess it up

MR TOMASOVIC I will generally

say Tomasovic but

JUDGE HI Tomasovic

MR TOMASOVIC - - Tomasovic is

fine if you want to go old country

JUDGE HILL What do you prefer

MR TOMASOVIC Tomasovic

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JUDGE HILL Tomasovic okay So

this is purely a hypothetical question but

in your experience or in the experience

generally of the region when does a permit

applicant decide what their you know what

their turbine is going to be or what their

size is going to be or the precise design

factors of the source Does it typically

happen before they submit the permit

application after both

MR TOMASOVIC I think it could

be a variety of things your Honor Looking

through historical permitting actions we did

find that there are a couple of cases that

happened before the Board that had permit

structured such as this that had permitted

multiple turbine options You wouldnt be

able to see it from the face of the decisions

and it wouldnt be something that you could

discern from the challenges that were raised

but the Three Mountain Power decision in 2001

is one such example and there was a case

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where a petition was dismissed for being a

minor source permit But clearly on the

face of that decision which was Carlton Inc

North Shore Plant in 2001 it described a

minor NSR permit with multiple turbine

options

JUDGE MCCABE Could you repeat

the name of that one please

MR TOMASOVIC Carlton Inc

JUDGE MCCABE Carlton Inc

MR TOMASOVI C North Shore

Plant

JUDGE HILL Do you have a cite on

that or you said it was dismissed as -shy

MR TOMASOVIC It was 2001 and

it was a published decision your Honor

JUDGE HILL Okay Now my

understanding of Three Mountain Power is that

they allowed for different equipment but they

only specified a single emission limit

MR TOMASOVIC It does show that

in the RBLC sir but we tracked down the

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permit and actually what happens is

different permit issuers will input different

data into the RBLC We gave you approximately

ten RBLC numbers and in almost all those

cases you are going to see different BACT

limits depending on what types of BACT limit

is being assigned

And under the Three Mountain Power

permit that was issued there were multiple

types of limits other than the concentration

limits So the hourly limits the pounds per

hour limits the annual ton per year limits

just as in our permit show that with each

turbine option different limits apply

JUDGE HI And what was the

control technology in those cases or can you

generalize on that I mean one of the things

that makes this a challenging case I think

in part is because the control technology is

I I mean you know is also essentially the

plant design because what youre trying to do

is simply maximize the effici use

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inherently Are those others cases are any

of those similar or are they all about add-on

technologies

MR TOMASOVIC I bel ieve these

days the conventional thing is that for add-on

control technology wi th turbines is SCR For

other limits such as PM and carbon monoxide

youre assigning limits inherent to good

combustion practices inherent to the equipment

that is selected And thats reflected in the

TCEQ permit that was issued for La Paloma in

this case which like ours followed an

application that asked for the flexibility to

consider multiple options And as a

practical matter when the permit writer is

assigning those limits they have to look at

the specs inherent to the turbine in assigning

both the worst case emissions but also those

emissions that reflect whats good operation

on an hourly basis

JUDGE HILL Does the TCEQ permit

have this condition that says that once the

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turb selection decision is made then the

permit is going to be amended to basically

take out reference to the other two turbines

MR TOMASOVI C It does and I

believe that may be a practice that varies by

permit issuer I didnt notice that when I

looked at the Three Mountain Power permi t I

also have on hand a listed RBLC number for a

orida permit in 2000 I didnt notice

provision there

For what we have as a special

condition theres no time set requirement on

when they would need to come in and modify it

Its more of a back-end cost-keeping

requirement where they indicate what their

selection would be and the permit issuer

would simplify the permit so its more

readable enforcement purposes

JUDGE HILL And thats the reason

to do it Because if you take Mr Alonsos

argument kind of to its logical conclusion

then they get to select the turbine and

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therefore they get the limit that applies to

that turb But youre saying that that

condition was put in there just to make the

permit cleaner to read in essence

MR TOMASOVIC Its not the case

as the petitioners have argued that they get

to choose their emissions rate Thats not

what they to choose They get to choose

their capacity they get to choose the

equipment and the various designs of equipment

that we couldnt differentiate for efficiency

purposes in assigning limits for a final

permit

So even as those limits look

numerically different in the permit we have

a technical decision on the part of the permit

issuer that says these are comparable and they

dont implicate a weakening of the BACT

requirement that we decided to assign the

limits this way

LL I want to come back

to the comparable because I think that thats

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an important issue But getting back to this

full issue of basically the selection

decision Sierra Clubs essential argument is

that since the control technology here is

maximum efficiency within a range and given

that La Paloma defined the business purpose as

build a plant thats between the capacity of

the smallest capacity turbine and the largest

capacity turbine that they should have to use

the most efficient control technology which

in this case would be the most efficient

turbine Do you agree Could the agency have

told La Paloma look you can pick whatever

turbine you want but youve got to run it as

if it were the most efficient because thats

BACT Does the agency have that authority

MR TOMASOVIC Speaking for

Region 6 with this permit there are multiplel

ways that I think permit issuers could have

decided to come out in the final permit We

decided l based on the design heat rates the

best data we had for the operational factor

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that would apply to this equipment plus a

consistent safety margin for all three

options that there are these three limits

that come out

And if we chose to express those

limits in their different format for instance

the net heat rate the picture would actually

be qui different So it is a distorted a

bit of a distorted picture to say that GHG

BACT on a gross output basis is the ultimate

measurement of what is efficient

JUDGE HILL Why would it look

different Please explain that further What

would happen if you use net

MR TOMASOVIC So what appears

from the of the permit is that the

largest difference in efficiency is 27

percent In our response to comments on page

II we actually provided the numbers to show

what that dif would look like on a net

basis which is I believe the format that

the limits were expressed in the Palmdale

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decision l as well as even earlier permits

issued by Region 6

And permit issuers do have

discretion at this timel in the absence of

guidance to consider the comments that comeI

in and decide which type of limit is going to

be most meaningful for putting BACT in place

But -shy

JUDGE LL So I cant do math in

my head but Im looking at those numbers So

youve got for the GE turbine the net heat

rate would be 7527 and for the Siemens it

would be 7771 Isnt that about two and a

half percent I or is it less than that

MR TOMASOVIC WeIll I think what

you want to look to is if you can see a 9452I

number -shy

JUDGE HILL Okay That I S the

emission limit

MR TOMASOVIC -- and the 9444

number

JUDGE HILL And then a 965

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number

MR TOMASOVI C I f you were to ask

what the percent difference is there you

would have one-tenth of one percent of a

difference which expressed as gross shows

up as 27 percent And this is one of the

challenges with such a narrowly-written

petition It didnt challenge the reasonable

compliance margins that we assigned to each

option and it doesnt bring up issues like

the start-up emission limits which in factiI

give a different rank order if you could usel

that terminology for each of the turbine

options

JUDGE HILL All right So are

you saying that if you I mean I based on thisI

chart on page 111 that I I mean I the response

comments references the 26 earl on butl

its also got this chart And youre saying

that that chart shows that its really tiny

MR TOMASOVIC Yes your Honor

If we chose to place a final permit final

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limits in the permit on a net basis using the

same calculation methodology it would be one-

tenth of one percent

JUDGE HILL How do you decide

whether you set the limit on a gross basis or

a net basis Because I know Ive seen both

MR TOMASOVIC In this case we

evaluated the adverse comments on the issue

we looked at what was going on for instance

with the proposed NSPS which expresses those

limits at least in a proposal form on a gross

output basis We saw that in general a lot

of the performance data that is out there is

available on a gross output basis so we

decided that for permitting purposes

permitting administration purposes and for

the benefit of other permitting actions it

seemed that gross output made sense for this

permit

JUDGE HILL Okay But you had

the discretion to pick net

MR TOMASOVI C Well we dont

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close off ourselves from choosing net base

1 imi ts in future permits if for instance the

NSPS were to on the basis of comments decide

that net basis really is a preferred way to

go But we have a reasonable basis for this

permit to say so And in saying that were

not purporting to say anything that would be

determinative of how state permitting

authorities or even other regions might choose

to assign the limits for a permit that

guarantees efficiency and control of GHGs

JUDGE MCCABE I just want to get

some clarity on again the facts I love

facts If the numbers here that were going

to be looking at when we decide whether we

agree with the regions position that these

limits are really not different that theyre

comparable or whatever language you use to

describe them how would we describe that Is

it 01 percent are you telling us now Is it

27 percent Is it a range from 01 percent

to 27 percent The world looks closely at

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the facts of what we were looking at when we

draw the conclusion l so the facts matter and

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MR TOMASOVIC Yes l your Honor

So 111 try and go over the notes I have on

the comparability of the limits in maybe an

orderly shy

give me a

feel free

that the

JUDGE MCCABE I was hoping youd

sound bite in the end but please

to go through the notes

MR TOMASOVIC The first thing is

permit actually assigns three

different kinds of emission limits the ton

per year the start-up limits which are on a

pound-per-hour basis and this gross output

when its sendingelectricityto the grid how

efficient is in relation to the output

So if you look at those three

different limits and were to assign a rank

order under kind of turbine model I you I re

actually going to get three different orders l

permutations I suggest thatthere dif

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the net limits was another possibility for us

You would get a fourth order if you were to

assign -- and actually nothing would have

permitted us from assigning both kinds of

limits and that limit and a gross limit but

that would have been duplicative So we

decided these are the limits for the permit

So looking just at that the basis

for the challenge which is the gross limits

you have a smallest difference of one-half of

one percent Thats the difference between

909 to 912 The largest apparent difference

is 27 percent which is the difference from

909 to 9345 And this difference is not a

difference in efficiency In the commenters

letter they do throw around the term

efficiency but sometimes thats using the

context of what is power plant efficiency

which gives you a different comparison If

youre talking about engine efficiency or

power plant efficiency the 27 percent

difference is actually 12 percent

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JUDGE HILL Why is that I was

with you until that sentence

MR TOMASOVIC So

JUDGE MCCABE I think we need a

chalkboard

MR TOMASOVIC That calculation

and I think maybe the footnotes in the comment

letter explain it as 3412 divided by the heat

rate And another issue is that the

commenters use actually lower heat value for

their descriptions of the heat rate whereas

our permit is using the high heat rate

information to get the limits

But that 12 percent difference in

efficiency that kind of efficiency power

plant efficiency were talking about is what

you may read in -shy

JUDGE HILL Can you define power

plant efficiency for that purpose for me

MR TOMASOVIC Yes sir The

definition of power plant efficiency would be

what is the heat rate value of the kilowatt

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hour divided by the heat rate for the power

plant or the turbine

JUDGE HILL Okay

MR TOMASOVIC And in our case

our limits arent just the heat rate for the

turbines as though they were in simple cycle

mode but the heat rate for those turbines in

conjunction with the heat recovery steam

generator with duct burner firing So theres

a number of things going on

And we had explained that as

turbines get larger they get more efficient

And thats actually true for several reasons

but in this case its not actually because

the GE turbine is demonstrated to be

inefficient Thats not the case Its

actually the influence of the duct burners

which wasnt something that the petitioners

raised in their appeal Because each scenario

has the same size duct burners they have a

disproportionate impact in the overall heat

rate We assigned limits that included

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everything l and thats why I when Mr Alonso

was talking about de-rating that may be a

situation where is easy to figure out that

youre just cutting into the compliance margin

if we had decided to set them all the same

limit but also might be a case where they

really put limits on their use of duct

burners which cuts into the operational

flexibility that they want to have as base

load plant that has peaking type capabilities

JUDGE HILL In other words you

cant sort of size the duct burner to the size

of the turbine or

MR TOMASOVIC No your Honor

In this case the HRSG with the duct burners

is assigned to be the same for all three

scenarios

JUDGE HILL Okay all right So

is 27 percent the largest when you talk

about tons per year startup gross output and

net heat rate is 27 the largest difference

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MR TOMASOVIC Well sir if you

were to count the annual ton per year

differences each capacity scenario is

actually about 10 percent larger than the

next If you look at the annual ton per year

limits I think the differences might be 6 or

7 percent but youre just building up your

plant with the bigger greenhouse gas impact

overall and -shy

JUDGE HILL Well the reason I

ask that question is because in your brief

you talk about that you dont need to look at

alternative control technologies that are

essentially equivalent In response to

comments it talks about these turbines are

quote highly comparable and there are

marginal differences between them So theres

a lot of words thrown around that all seem to

imply small or not significant but which one

do we use I mean the argument seems to be

essentially -- see Im coming up with a new

phrase -- essentially equivalent How do we

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judge that Well first of all is there a

single term that is most relevant from a

legal standpoint And then my second question

will be and how do we judge that

MR TOMASOVIC Well the two

explanations that we gave in the record I

think are pertinent and that is that the

differences are mere fractions of the

compl iance margin The compl iance margins we

assign to each turbine is reflective of the

uncertainties in terms of variable load

performance deviations from the iso

conditions degradation over time So if -shy

JUDGE HILL Well but how does

that cut I mean if you accept a compliance

margin at 30 percent then yes everything is

probably going to get swamped by that But if

you set the compliance margin at 2 percent

you might not

JUDGE MCCABE Or 126

MR TOMASOVIC And we set the

compliance margin at 12 percent and I think

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what that illustrates is that the difference

between the 2 percent which is approximately

a quarter of that total compliance margin

shows these are all these are all comparable

They are all going to be expected to be

performing in range of each other but we

decided that there are subtle differences that

allowed for the assignment of that reasonable

safety factor They are different sizes and

different engines but theres no fact-based

reason for us to decide to set them all at the

same limit or average them or round them up to

the nearest 50 pounds per megawatt hour

although other permit issuers may well choose

to do that in order to simplify things

JUDGE HILL If we want to give

guidance to future permit writers how would

you propose we say youve got three turbines

with different heat rates but they are

essentially equivalent How much discretion

do you think the agency has to figure out to

declare two different GHG limits to be

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essentially equivalent

MR TOMASOVI C Well I would

start your Honor with the fact that these

are all F class turbines and at the comment

period there wasnt any articulated difference

between the turbines in terms of the

technology they have You may find that in

other cases where heres a turbine that uses

dry cooling and heres a turbine that uses wet

cooling and thats a technological difference

that would allow us to elaborate on it

explain perhaps why one option is necessary

and the other isnt

But in this case where you have F

class turbines that are all modern at least

in the last several years type efficiencies

placed into an energy system that has its own

subtle impacts on what the overall limits

would be I think the way that the Board

should land on that is deference to the permit

issuers technical judgment in this case on a

case-by-case basis that this apparent

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difference of 25 pounds per megawatt hour was

not significant And we made that decision

without any written guidance from OAPPS or

OGC but it was based on our permit issuer

technical judgment And all is not as it

seems if you were to look at for instance

that net efficiency which illustrates that

that 27 percent difference which the

petitioners now complain about is only a 01

percent difference

JUDGE HILL At what point does it

become too big I mean you talk in your

brief or the response comments document talks

about well unless its poorly designed or

non-representative of the capabilities of the

technology is that the standard we should

adopt

JUDGE MCCABE Were wondering

where that came from actually

MR TOMASOVIC Well that phrase

you might find a phrase in the GHG guidance on

performance benchmarking Im not saying its

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straight transferrable to that to the way

that we used it in the brief but it does

reference performance capabilities of

technology as a starting point And we were

looking at the GHG guidance that does say in

the case of a gas-fired plant if its

considering single cycle for example you

should consider as an option combined cycle

Combined cycle isnt broken down into the

world of turbines that are available on the

market Go larger if you can if that shows

its more efficient

Instead it was more us taking

this application as it came in a conventional

combined cyc plant using modern F class

turbines with the heat recovery steam

generator and the duct burners Its a

standard type of permit It is similar to

LCRA permit that we issued It was the first

permit issued which incidentally in that

case the application came to us with the

request to permit multiple options and they

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decided before public comment that the GE 7FA

turbine was the one that they would go with

JUDGE HILL So can you cite to

any permit where EPA basically allowed the

size or model of the main emission unit to be

selected after the permit is issued as

happened here Are the -shy

MR TOMASOVIC As far as a

regionally- issued permit I sir No The

Washington State permit that is referenced in

our brief is a delegated state Sierra Club

submitted adverse comments on it and that wasl

one case where they for similar reasoning to

us decided that they would defer to the

applicants request to have multiple options

and not make them pick one of two acceptable

turbine models

JUDGE HILL Okay

JUDGE MCCABE Just going back to

your point about the F class turbines 11m

wondering if what you l re saying to us is that

it is sufficient for the permitting authority

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to look at that class of turbines and say

step one combined cycle technology is the

best available control technology here and

then when we get all the way down to step five

to set the emission limit that anything within

class F is good enough is that what youre

saying

MR TOMASOVIC No your Honor

The proj ect did come to us wi th F class

turbines You may see that in the response to

comments one of the things that Sierra Club

had said is choose larger turbines make a

bigger power plant and we quickly said that

we didnt believe that was appropriate in our

case because they had selected theyre

looking at a power plant of a certain size

using three different types of F class

turbines

But all of those were open to

commenters adverse commenters that may say

well these three turbine models of these

three turbine models this one doesnt show

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anything that shows modern day efficienc s

But at the same time its likely not a good

permit practice to say with absoluteness that

this turbine that was designed in the last

five years is not acceptable for BACT purposes

or for project purposes in other cases

because if you rest solely on that one piece

of information then the net heat rate

expresses as the pounds per megawatt hour on

a gross basis youre not necessarily

capturing all that is relevant to efficiency

JUDGE HI What if La Paloma had

said were going to build a plant thats 637

megawatts no more no less and theres only

one turbine on the market that will allow us

to do it even though there are several other

F class turbines that are much more efficient

Would the region have any authority to look

behind that

MR TOMASOVIC I think general

permit issuers do have authority to say have

you considered this or that thats so

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available In that case your Honor I think

youre presenting a case where the source is

defined binarily

JUDGE HILL Exactly

MR TOMASOVIC However it

doesn t necessarily mean that the selection of

that turbine model is unjustified If you are

to look at going back to the NSR workshop

manual I believe we cited we said in our

brief in one of our footnotes that customer

selection factors can be based on a number of

things including reliability and efficiency

experience with the equipment And all of

those are things that you can find in the NSR

in the NSR workshop manual as an example of

how you step into the BACT analysis for a

turbine Its really something that we come

in with we have a contractual commitment to

use these turbines can you see what limits

would apply to it at the front end

JUDGE HILL Let me ask if Judge

Stein or Judge McCabe has anymore questions on

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the turbine issue because then I want to move

to solar real fast

JUDGE STEIN I do

JUDGE HILL Okay

JUDGE STEIN Did I hear you say

that another facility in Region 6 that was

recently permitted is using the same turbine

as will be used by La Paloma

MR TOMASOVIC Yes your Honor

JUDGE STEIN And does the record

reflect what that BACT limit is for that

facility and how it compares to the BACT limit

here

MR TOMASOVIC s your Honor

So the name of the facility is the LCRA

Ferguson Plant And I believe that was

referenced in the statement of basis as well

as discussions sections of the response to

comments all cases looking at other

facilities that are out there including LCRA

we deemed the limits to be appropriate when

theyre placed in the appropriate context

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The Sierra Club presents Palmdale which isnt

reflective of the same design that were using

that we permitted here They referenced the

Pioneer Valley and we had to contextualize

the limits that were assigned to the Pioneer

Valley permit because that particular facility

wasnt using duct burners

JUDGE STEIN Okay So if Im

correct the BACT emissions limit for the

Lower Colorado River was 918 pounds of C02 per

megawatt hour And the limit that were

looking at here is 934 is that correct Im

not purporting to say that I have a correct

understanding Im just trying to clarify

MR TOMASOVIC Is this in the

response to comments or statement of basis

your Honor

JUDGE STEIN Oh its in my

little cheat sheet that somebody gave me

JUDGE MCCABE Its extracted

MR TOMASOVIC I may be mistaken

but I believe the limits assigned for LCRA

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were in fact on a net basis so they

wouldnt be directly comparable But we might

well have had some discussion that tried to

reconcile them

JUDGE MCCABE Yes the

comparability of all of these numbers is

somewhat perplexing to us so well address

that at the end because were thinking that we

might need some supplemental briefing to try

to get us on an agreed-on comparison table

here so that we at least understand and that

others who read the decision can understand

the import of what were deciding Do you

want to turn to solar

JUDGE HILL Yes So Mr Alonsos

argument is in essence that including any

solar into this proj ect would have been

redefining the source Do you agree wi th

that or do you think the agency has any

authority to consider some solar at an

electric plant even if it hasnt been

proposed by the applicant

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MR TOMASOVI C Your Honor I

believe that the Boards precedent on

redefinition of the source allows that a

permit issuer in their discretion may

require consideration of options that may

constitute a redefinition of the source

However if that is in conflict with the

fundamental business purpose of the applicant

then it is against our policy to do that

JUDGE HILL Do you think that the

agency has some -- okay So you believe the

agency has the authority to require

consideration Do you think the agency has

the obligation to do so if it wasnt proposed

if somebody raises it in comments as happened

here

MR TOMASOVIC I believe that the

agencys responsibilities in responding to the

comments in many ways are calibrated off of

the specificity of the comments that come to

us In this case the comments that we

received on solar are not in the same shape as

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they carne to the board in the petition in that

theyve attached the exhibits for two permits

that werent part of their comments that were

submitted to us and they specifically focused

on Palmdale and Victorville as two facilities

that we should have had a further discussion

about in our response to comments

But in terms of how the comments

carne to us which actually raised the issue of

solar in a lot of different ways where at

times it wasnt even clear whether they were

referencing photovoltaic versus stearn

auxiliary contributions to efficiency I

believe that the regions responses were

appropriate

JUDGE HILL Mr Alonso

essentially argued that our decision in

Palmdale said that it is appropriate to

classify addition of extra solar as

essentially redefining the source and he also

cites to Sierra Pacific Do you agree with

that characterization of those decisions

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MR TOMASOVIC Our decision is

based on the facts of our administrative

record and not a broad reliance on those

decisions stating that As was argued in our

br f we think the administrative record

shows that the considerationof solar options

at least as we understood it coming from the

commenters would redefine the source

The administrative record does

show l fact that the property limits are no

more than 80 acres and from that l it can be

discerned that there iS I based on the

footprint of the plant l not a lot of

additional acres which might approximate the

20 acres that the permittee was able to

substantiate with the affidavit that they gave

with their petition

JUDGE HILL So does the region

believe itl s not feasible to install any solar

capacity at the site

MR TOMASOVIC WeIll depending on

how that comment might be construel l your

l

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Honor rooftop solar is an option that

presumably is not what the commenters were

trying to talk about although its not always

clear In the case of the Palmdale decision

it does illustrate that as a rough measure to

contribute 10 percent of that plants total

capacity

JUDGE MCCABE Does someone have a

cell phone going Where is that music coming

from

(Whereupon the foregoing matter

went off the record at 450 pm

and went back on the record at

4 52 p m )

JUDGE MCCABE Okay Lets

proceed We dont have to cut Mr Ritchie

off Lovely music anyway

MR TOMASOVIC I was saying your

Honor as a background matter the Region 6

was aware of the factual setting that was

recited by the Board in the Palmdale case

which was the fact that to generate just 10

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percent of the capacity for that Palmdale

plant it required 250 acres And in fact

and I believe some lang-uage in the opinion

came close to this you need acreage to be

able to have power in a significant amount

You may well need more than 20 acres just to

get steam that could be used in the process

but you know thats a different technical

issue in any event

If we were to just sort of roughly

say 250 acres 10 percent of the plants power

reduced down to 20 or 25 acres youre talking

about something that doesnt substantially

influence the overall plant -shy

JUDGE HILL But thats not in the

analysis the region did in the record

correct

MR TOMASOVIC No your Honor

JUDGE HILL Okay

JUDGE MCCABE Is it the regions

position that as a matter of exercising its

discretion it would never consider solar it

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would always consider adding a supplemental

solar or whatever we call it here to be

redesign and therefore against at least the

regions policy if not the agencys to even

consider

MR TOMASOVI C No your Honor I

dont think anything in the regions response

was intended to cut off comments on solar

technology as a general matter for any other

permitting case

JUDGE MCCABE You just think the

comments here were insufficient to get you

where you needed to go in order to give it

serious consideration here i is that what

youre saying

MR TOMASOVIC Yes your Honor

I mean we had a bit of a technical discussion

in there that it is the case that for any

process that uses fuel to generate heat you

can get that from something else which might

be geothermal or solar And you could get

into the myriad permutations that go on

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in terms of whatever a commenter might

bring but it isl

JUDGE MCCABE Comment clearly

focused on solar in this case l so you dont

need to go there

MR TOMASOVIC However I there are

other parts of the comment which seem to

suggest that the l that l in their view l this

project was defined to be within a range of

capacity that could be energy generated by any

means I which we disagree with because this is

a combined cycle plant thats meant to use

natural gas as its fuel and take advantage of

the rastructural advantages specific to

that location including the waterl

availability of the pipelines and the local

need this particular kind of power to be

delivered for grid stability reasons

JUDGE MCCABE I hate to put you

on the sPOtl Mr Tomasovic l but do you think

you could reduce to one or two sentences the

reason the region did not consider solar here

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95

or considered it to be redesign that the

region would not entertain

MR TOMASOVIC In the way that

the comments came your Honor we believe that

that solar auxiliary preheat was not well

defined because it was it was actually raised

as a substitute for duct burners when duct

burners have a different purpose than solar

auxiliary preheat And Im already past my

two sentences but

JUDGE MCCABE Thats okay

Youre close enough Thank you Those are

all the questions we have for you at this

time Mr Tomasovic Thank you And Mr

Bender you have been very patient and I bet

youre watching your watch National Airport

flight at 700 You probably need to leave

here by what would folks who are

Washingtonians say given that it is Wednesday

rush hour before a storm

JUDGE HILL If you take a cab

Id say 545 at the latest

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JUDGE MCCABE Okay So 5 30 i

will that work for you Mr Bender

MR BENDER I think so your

Honor

JUDGE MCCABE Okay I would hate

to give you short shrift after you were so

gracious as to choose the last position or to

suggest that your judgment perhaps might need

to be revisited the next time youre offered

that choice

MR BENDER I wouldnt want to

miss this even if I had already gone

JUDGE MCCABE Okay

MR BENDER Is this better

Thank you your Honors I think to address

one thing that kind of permeates the briefs

from respondents and some of the discussion

here today theres kind of two pieces or two

sides of the same coin maybe Were talking

about size or capacity Were talking about

megawatts right And when were talking

about ERCOT or any other regional system

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operator the dispatch is to meet a load

Were talking about dispatching to meet a load

in megawatts

And the size of the units are

different here Its actually kind of a

combination of things turbines plus heat

recovery stearn generator turbine that adds

up to certain numbers Its 637 for the GE

combination for example Thats megawatts as

their peak You know if you throttle full

thats what youre going to get

The Siemens turbines can generate

637 Its not that you have a turbine you

turn it on and you get 637 megawatts or you

turn it off and you get zero and its a

binary on or off situation

In fact the other argument or the

other piece of this argument in the briefs was

that turbines as they get larger get more

efficient And if you want a large turbine at

a reduced rate less than full youre

decreasing its efficiency and thats simply

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not true And thats not true based on the

evidence in this record because that last

increment of power comes from duct burning

which is less efficient than the turbines and

stearn generator

And so as you throttle down or as

you de-rate or decrease your generation all

saying the same thing youre actually until

you hi t the point where the duct burners corne

off youre actually improving the efficiency

and decreasing the emission And we can see

that among other places in one of the tables

that counsel for Region 6 pointed to in the

response to comments where in addition to net

and gross theres also without duct burner

fire on page 11 of response to comments

which is Petition Exhibit 3 you can see that

the GE the smallest of the turbines piece is

75275 without duct burner firing The

biggest turbine the Siemens 5 is 77717

Less efficient right And you only get the

increased efficiency from the larger turbines

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as a system because theyre able to generate

more of their power before turning the duct

burners on

JUDGE MCCABE Well does this

mean youre happy to hear that theyve

selected the GE turbine

MR BENDER If they have a permit

limit that reflects what they could do If

the question is phrased differentlYI right

If the draft permit had come out and said our

project purpose is to build a plant thats

capable of generating 637 megawat ts you know II

this would be a different case The comments

would have been different l and we mayor may

not be here

But then wed saYI the comments

would come in among other things l something

to the effect of the Siemens I you know l 5 or

the Siemens 4 can generate 637 megawatts In

facti when it does so it does it at a reduced

emission

So were dealing with emission

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rates The final permit emission limits are

set based on operating full out But full out

is a different number of megawatts for each

right

JUDGE MCCABE Thank you for that

clarification Do you agree that the F class

turbines are among the most efficient turbines

available for combined cycle combustion

technology

MR BENDER I believe theyre

among I dont know that they are the most

efficient

JUDGE MCCABE Do you know of a

class thats more efficient

MR BENDER I dont The

question though is the emission limits too

which is the end of everything So were

talking about turbines and different turbines

but were really talking about different

turbines put in front of the same 271 megawatt

steam generator in this case

JUDGE MCCABE Well to you and to

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EPA of course the emission limit is the

ultimate most important thing here But of

course to the company the most important

thing is which turbine do they get to use and

is it the one that will fit whatever their

business purpose is

Your petition Im a little

confused about something Your pet it ion says

that youre not suggesting that the company

should be required to pick any particular

turbine but just that they should meet the

lowest GHG limit that any of the turbines

could meet But arent you in effect by

doing that forcing their choice of turbine

MR BENDER No Its not

requiring a turbine Whether youre forcing

it or not raises some other internal issues

I think at the company which is you know

their risk appetite for that headroom margin

thats built in how much theyre actually

going to operate because this is a 12-month

rolling average and assumes operating at 100

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percent including those duct burners wide

open which is one of the least efficient ways

to operate

JUDGE MCCABE So your preference

would be that they have to build a bigger

turbine and operate it at a lower load

MR BENDER Our preference is

they have to meet the emission limit that

JUDGE MCCABE But in concept

MR BENDER To build a bigger

turbine and operate it with less duct burning

and using more of the waste heat from the

turbine the way that the three options are

set up in this record is the most efficient

And

JUDGE HILL But that wasnt your

comment was it Your comment was simply to

pick the limit that reflects the lowest

emission rate Your comment wasnt

essentially to recalculate the rate based on

the lack of duct burning

MR BENDER Thats correct

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Sorry Im trying to answer a question a

direct question Im not representing that

thats what the comments were

JUDGE HILL Okay Fair enough

Im sorry to interrupt Keep going

MR BENDER I should speci fy this

is based on our understanding from the record

Because the Siemens turbines are capable of

basically more heat because theyre bigger but

theyre going into the same size heat recovery

steam generators as would the turbines

More of the total heat going in is coming from

waste heat from the turbines with the Siemens

compared to the GE so theres less need for

duct burning Thats what

JUDGE MCCABE What is your goal

Mr Bender Are you looking for the

lowest total amount of GHG emissions that can

possibly come out of this facility or are you

looking for something else

MR BENDER We I re looking for the

lowest BACT rate but were also looking for

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JUDGE MCCABE But the BACT rate

is based on efficiency yes

MR BENDER Its based on

efficiency here yes

JUDGE MCCABE Do you have any

objection to that

MR BENDER Im sorry

JUDGE MCCABE Do you have any

obj ection to EPAs basing the BACT rate on the

energy efficiency of the turbines

MR BENDER Not in this petition

JUDGE MCCABE Okay Well it is

this petition were talking about

MR BENDER Right Its

JUDGE STEIN But given that they

have indicated that depending on the timing

that theyre going to go with the GE turbine

what is your position as to what the emissions

limit should be for that turbine

MR BENDER The emission limit

for any of these turbines based on this

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record and the draft permit that we were able

to comment on should be -- Ill put it this

way If F class category of turbines

followed by heat recovery steam generator is

the control option and thats what we were

able to comment on And if thats the control

option that theyre going to treat as the same

control option through steps one through four

then in step five the emission rate should be

based on the lowest emission rate achievable

by that class And based on the record here

thats represented by the Siemens F4 at least

that line in the permit right

So depending on how your question

was intended your Honor if they came in and

said draft permitr project purpose 637

megawatts on peak 100-percent capacity you

know r we would look at what combination of

turbine heat recovery steam generator gives

you the lowest emission rate at that But

want to be clear thats not this case thats

not this record

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JUDGE STEIN Well Im a little

confused I mean Im with you to a point

but what I thought I heard the region say is

that when they chose the BACT limit that they

chose that they couldnt necessarily translate

between these different turbines in quite the

same way that you were doing the translation

And I mean if for example youre saying

that they need to meet emissions rate X what

if they cant meet that with this equipment

Does that mean that they cant install the

equipment

MR BENDER If La Paloma cannot

meet 909 pounds per megawatt hour gross with

the GE equipment is the hypothetical

JUDGE STEIN Yes

MR BENDER Yes then they cant

install that equipment

JUDGE MCCABE So you are forcing

their choice of turbine in effect

MR BENDER Only as a secondary

effect But just like if you cannot meet a

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BACT limit for 802 on a coal fire power plant

wi th a dry scrubber are you forcing the

selection of a more efficient wet scrubber as

a secondary effect Thats true

JUDGE MCCABE Do you think thats

a fair analogy Were talking here about the

main emitting unit and the main unit that

produces the capacity of product that the

facility wants to produce The choice between

a wet and dry scrubber doesnt affect that

MR BENDER Well according to

the region its a category and its not

affecting the category If the category as

a region says is combined cycle turbine with

heat recovery stearn generator then youre not

changing anything You may be foreclosing

business choices that are made later but I

would suggest thats true with every BACT

limit There are choices that a permittee may

want to make but cannot make because they have

to comply with their BACT limit

JUDGE HILL 80 Mr Tomasovic says

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that pointed out that the Siemens

going to get it wrong the Siemens 4 turbine

has the lowest emission limit hourly but that

the GE turbine has the lowest annual tons per

year primarily because its operating at a

lower capacity Is your argument that the

limit that the region should have set have

been the lowest of each of those or is your

argument that they should use the limits that

they got for the most efficient turbine which

was the Siemens 4

MR BENDER I believe that the

BACT limit is the primary driver BACT limit

is the pounds per megawatt hour and thats

the limit that we think that the La Paloma

facility whatever equipment it ultimately

chooses should meet That will result in

different tons on an annual basis but tons on

an annual basis is I would submitt not a

limiting limit It assumes 100 percent

operation You know t itts basicallYt itts

JUDGE HILL Wellt but heres my

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point If Mr Alonso had gotten up and said

its most likely were going to pick the

Siemens 5 or Im sorry the Siemens 4 then

theres going to be more total emissions of

GHGs a lower rate but more total emissions

So by your argument should the region have

had to pick the lowest limit for each of the

three parameters on which they set the limit

And if not why not

MR BENDER We didnt address the

total tons because we dont feel that its

going to limit If they decide that they want

to generate 630 megawatts thats the number

that multiplied by the emission rate is

going to generate the tons

JUDGE HILL But if they had

picked the Siemens 4 or the Siemens 5 they

could be operating at 735

MR BENDER They could be

operating at 735 but there are other things

that go into it obviously your Honor as Im

sure youre aware of when theyre dispatched

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how theyre dispatched And the focus here is

the per megawatt hours because thats the one

that the Sierra Club sees as actually limiting

emissions here because the annual caps are set

such a high rate that theyre not going to

be approached Even the lowest is not going

to be approached

JUDGE MCCABE Let me bring you

back to this table thats I dont know if

you have it Its page 11 of the response to

comments These numbers are all starting to

sound fungible so lets try to anchor

ourselves again Im looking at the middle

column here that says output-based emission

limit which is net without duct burning And

the GE turbine that limit is 894 and for

the Siemens 4 turbine is 909 Theyre picking

the GE turbine What limit do you want

MR BENDER Well first of all

question the accuracy of these numbers because

some of them are the same as the gross with

duct burning

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JUDGE MCCABE Theyre saying

what

MR BENDER The Siemens F4 number

in that column is the same as the permit limit

for that turbine which is expressed as gross

wi th duct burning So looking at these right

now I suspect that theyre not correct Some

of them may not be correct

JUDGE MCCABE Can we assume for

the moment that these numbers are correct

MR BENDER Yes

JUDGE MCCABE And if that turns

it into a hypothetical question so be it

Im trying to understand where youre going

there conceptually Im looking at a lower

number 894 you know its C02 equivalence of

per megawatt hour without duct burning net

wi thout duct burning Its 894 for the

turbine they want Its 909 for the one that

you were saying was the most efficient

turbine Which limit do you want for the GE

turbine Do you want the 894 or do you want

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the 909

MR BENDER It depends on this

your Honor It depends on whether were going

to set this as the ultimate rate or if were

going to s another limit as the ultimate

rate because this is a part this is without

duct burning right But the permit allows

duct burning So if we say we want 8947

without duct burning and then well leave the

duct-burning caused emissions kind

unmeasured and unregulated as a different

JUDGE MCCABE Okay Go to

next column with duct burning Youve got

9452-shy

MR BENDER Yes

JUDGE MCCABE for the GE

turbine And just a hair under that youve

got 9444 for the Siemens 4 Are you telling

us thats what you want Board to do to

tell the region that that kind of difference

is significant and that they should force this

company when it installs the GE turbine to

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meet the 944 limit for the Siemens 4 Is that

what youre asking us to do

MR BENDER Your Honor if that

if the limits were set based on this as final

enforceable limits based on that Im not

sure that we would be here on this issue

JUDGE HILL So how much of a

margin is too big Because the regions

initial submission is that even with the

limits that they actually set the difference

is 26 percent and thats just not that big

JUDGE MCCABE And looking at

these latest numbers they actually said the

range for all three turbines there was on

that net with duct burning column that the

total range was 01 percent So seeing how

close those numbers are between 945 and 944

thats obviously a lot less than 01 percent

Is that a significant difference that the

agency should be concerned about

MR BENDER The limits were

talking about are the ones in the final

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permit which are gross And they are -shy

JUDGE MCCABE Okay Would you

like to point us to a different table to look

at

MR BENDER Sure Ill point you

to the permit which is Exhibit 1 to our

petition and the permit limits themselves

Because the permits measured we commented

that the region should be looking at net

among other things And the region said no

It made that choice It made this permit the

way it did and so were addressing it the way

it came out What we and EPA and the state

can enforce are the limits and the limits are

what drive what we can count on as enforceable

emission reductions

JUDGE MCCABE Wait a minute You

wanted the limits to be based on net

MR BENDER We commented that you

should look at the net emission rates and the

region said no were going to base this on

gross

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JUDGE HILL Okay But my

question is how do you respond to the argument

the region made in its brief and that Mr

Tomasovic stated here which is okay so the

permits got gross and the difference in these

gross numbers is 26 percent and thats in the

noise

MR BENDER Its not And the

reason why I know that its too big to be

insignificant is that the region thought that

margins even around that for different

pieces because the margin is an aggregate

was significant enough to start bumping the

limit up And when they got to step five

they said thats a big enough difference

between these turbines that we cant expect

the one to meet the limit for another So I

know because its significant enough in step

five that it should be significant enough in

step one to not count them all as you know

the same

JUDGE HILL So your argument so

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if their error was at step one then what

youre really saying is that the GE turbine is

a different technology than the Siemens

turbines

MR BENDER It is a different

let me put it this way Control option in

step one should be the same as control option

in step five As counsel for La Paloma put

it its a sequence right It starts at one

it goes to five and the definition of the

control option stays the same And if and

were saying well grant the argument that

they should be treated as one option in step

one well if thats the case they should be

treated as the same option in step five and

the limit based on what that option as a

whole can achieve But if youre going to

start parsing them the appropriate time to

parse between turbines or in this case

turbine plus heat recovery generator

combination -shy

JUDGE HILL Understood

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MR BENDER is step one so

that we can look at their relative

efficiencies their relative costs what they

do emit at different levels at production

Its got to be one or the other It makes

hash out of the five-step process to look at

one definition of control option in step one

right And then look at a different

definition of control option and start

applying limits in step five Thats the

argument It has to be consistent all the way

through

I think we would get to the same

option or the same result whether we looked at

them in step one as separate or if we applied

the maximum control efficiency for that class

as a whole in step five But you run into

problems when you separate them and thats

what weve done here

JUDGE MCCABE Okay Mr Bender

could we back up again to the question that

was raised by your saying that you preferred

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and said in your comments that you preferred

limits based on gross capacity I was trying

to use the table on page 11 of the response to

comments to try to understand exactly what you

want If theyre picking the GE turbine you

said the limits these are net limits and

gross is a better measure Have you found a

place where I can look at gross limits

MR BENDER For what gross

emissions are relative to

JUDGE MCCABE Is re any place

in the record that we can look to see how

these net limits would be stated as numbers

for these turbines if it were based on gross

Is that in the record any place

MR RICHIE Your Honor if I may

this is Travis Richie Page 16 of the

statement of basis which was included I

believe as Exhibit AA of La Palomas

response I believe has that same table listed

with pounds of C02 per megawatt hour on a

gross basis with duct firing

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JUDGE MCCABE Thank you Mr

Richie So glad you stayed on the phone I

have this Do the other judges have it

Okay Its the same thing Well how are

these different They look like theyre the

same ones that we were looking at on page II

Whats the difference between the gross and

the net rates

MR BENDER Thats what I was

suggesting earlier that Im not sure that

theyre correct

JUDGE MCCABE Youre not sure

which is correct

MR BENDER I dont know

JUDGE MCCABE You dont know

MR BENDER But I dont think the

net and the gross can be the same number and

thats what I was maybe failing to highlight

before

JUDGE MCCABE But whatever the

gross is you would prefer it You just dont

know what it is or youre not sure which of

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these numbers it is is that what youre

saying

MR BENDER Your Honor there has

to be other details in the hypothetical to

know the answer It depends on if were

measuring If were measuring just whats

coming out of the turbines or if were

measuring whats coming out of the stack

because theres another pollution-causing

device in the middle and thats the duct

burner So if were saying whats the net

without duct burning and were measuring it

but were still allowing duct burning its a

different question

JUDGE MCCABE Yes I understand

This gets very complicated which is why

judges usually defer to the technical

expertise of the EPA people that are charged

with this Now in this case lets try to

bring it back to sort of principles that the

Board can focus on more appropriately I was

hoping through this argument that people

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would be able to give us the numbers that we

should be looking at to consider this argument

that I understand the region to be making that

whatever the variation among these turbines is

so close the variation in the heat rates and

accordingly the GHG limits is so close that

it is something that is essentially

equivalent to use one phraseology another

negligible difference marginal difference

Do you agree that these are so close that they

are marginally different or essentially

equivalent

MR BENDER Two answers your

Honor They are not What the permit

includes is the gross with duct burning and

that number again I would say those are

different enough that the region thought

necessary to differentiate between them And

if thats true then its not negligible and

its not inconsequential

JUDGE HILL So let me ask you a

question So if the region had said theyre

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close enough I so weI re going to set the

highest one and if they happen to pick al

turbine that we could limit more closely I

were comfortable with that

In other words I based on that

argument I okay so if the region had instead

concluded they are negligible GE looked good

enough and so were going to set the limits

based on GE And if they pick Siemens I they

get a bennie out of it would you have a basis

for challenging

MR BENDER Yes I for the same

reason Because the record says that 9092 is

achievable And then we have -shy

JUDGE HILL Well but they would

conclude that 909 is not achievable for GE

MR BENDER I think it depends on

what the record is to support that conclusion

And thats not this case and its not this

record

JUDGE HILL So the regions

mistake was setting three different limits

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MR BENDER The regions mistake

was setting three different limits for what it

says is the same control If it had

identified them as three different control

options in step one and you have a continuity

through the rest of the steps and it set three

different limits it would be a different

problem which is BACT is all limit and you

would rank them and set them based on the top

rank control option in step five But again

it depends on what happened in the prior four

steps to be able to say whether that would

have been a mistake or not and thats not

this record and its not the basis that we had

to appeal

JUDGE MCCABE Coming back to the

factual question of the variation in these

emission limits that the region has permitted

for the three turbines Mr Tomasovic

described them it may not be fair to call

this a range but he mentioned numbers that

to my mind ranged from 01 percent up to 27

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percent Is a 01 percent difference

significant enough that the agency should have

to distinguish between them in setting and

distinguish between these turbine models and

force the companys choice Point one If we

just had point one I realize theres a

range but just look at point one for a

moment Is that significant

MR BENDER I think its

contextual And I would say although you

asked that as a factual question I would

point to the Prairie State decision your

Honor

JUDGE MCCABE The what Prairie

State

MR BENDER Because its cited by

both respondents to say when theres a

negligible difference you dont have to

consider them as separate control options

And I think that Prairie State actually stands

for the opposite On page 37 in the footnote

I think its footnote 36 it rejects that

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argument that just equivalency alone is

sufficient to ignore a difference between two

different control options There has to be a

demonstrated equivalency or a negligible

difference and especially if that difference

is based on emission factors or something else

that is inherently also perhaps not specific

So if its based on an emission

factor that has a margin of error that helps

dictate what amount of difference between two

emission rates may be negligible and even if

they are exactly the same thats not enough

to ignore them You have to -shy

JUDGE MCCABE If theyre exactly

the same

MR BENDER To ignore one of the

control options because of the requirement

that you also look at what their collateral

impacts are because two different controls

options may have the same emission limit but

they may have different collateral impacts -shy

JUDGE MCCABE Thats absolutely

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true of a control option but were talking

about two different turbines here If the

turbines had the same limit would we be here

If they had the same GHG limit

MR BENDER If they had the same

GHG limit and it was -shy

JUDGE MCCABE Because thats just

the way they say that was the manufacturers

the vendors number and EPA permitted it at

that number and there was no comparable that

showed a bet ter performance why on earth

would we require them to distinguish between

those What practical difference would that

make

MR BENDER In this record and to

my knowledge there is no other distinction

between them other than emission rates But

if youre saying hypothetically the emission

rates are all the same -shy

JUDGE MCCABE No Im simply

following up on what you thought Prairie State

stood for that even if things are the same

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you cant ignore the di f f erence I just think

were doing apples and oranges here because

in Prairie State if I recall correctly and

maybe Judge Stein can help us out with this

I think they were comparing you know much

larger differences

Here Im concerned that were

getting down in the margins We are getting

dangerously close to micromanaging here on

what this GHG emission limit should be So is

o 1 percent micromanaging Is that a

difference that we dont need to worry about

Is 05 percent -- 27 percent obviously is too

much for you You think thats over the level

of significance Were wondering where is

that level of significance in difference And

Im not talking about the exact numbers Im

talking conceptually here Thats why I used

percentages to iron it out

If the range of differences

between these two turbines and their GHG

emission rates ranges somehow and depending

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on how you calculate it from 01 percent to

27 percent why should we worry about this

Why should the region be required to

distinguish

MR BENDER Your Honor the

equivalency of emission rates is an issue or

a concept thats tied together wi th the

topdown BACT analysis process and that was in

Prair State Thats the point of that

footnote that I cited to If you did this

again this is not what was done so in the

hypothetical if they had ranked them as

separate control options and they had assigned

emission rates and there was somewhere

between I think it was 01 in your

hypothetical difference and there was no other

collateral impacts differences between them

would that be enough to say -- and it was not

and it was based on you know some emission

calculations that themselves have some

variable in them I think in that

hypotheti this would not be the issue for

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appeal It wouldnt be because you know

were assuming were assuming away all of the

problems with this particular decision which

is theyre not treated as separate theyre

not distinguished in the first few steps we

dont know if theres collateral impact

differences and theres no record made to

support those findings at each of the rest of

the steps

JUDGE MCCABE So is the critical

piece of your argument that they didnt

differentiate between the turbines at step

one Is that really what Sierra Clubs

concerned about

MR BENDER If theyre going to

differentiate between them in step five they

need to differentiate between them in step I

guess it would be one through four because

then wed have an opportunity to look at

whether or not there are differences in

emissions at that point and under what

scenario and everything else that goes into a

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five-step BACT process And that was just

shunted all to the side and we only looked at

the difference between them when we got to

step five after the opportunity to address all

those other issues had passed

JUDGE MCCABE Okay Lets turn

quickly because Im watching your flight time

here to solar Is it your position that

solar is feasible on this site Supplemental

solar as youve described it And if so

please explain how

MR BENDER Your Honor the

comment was step one you need to cast as big

a net as possible to identify potentially

feasible available and applicable and we

say yes its available its applicable Is

it feasible Well we dont know the acreage

They say 20 We dont - - because we never got

to this

JUDGE MCCABE Theres a site plan

in the record isnt there

MR BENDER There are some maps

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in the record We dont know

JUDGE MCCABE Have you looked at

them

MR BENDER Ive looked at some

of the maps in the record yes

JUDGE MCCABE Have you looked at

the site plan

MR BENDER Im not sure -shy

JUDGE MCCABE The site plans

shows where things are situated on the si

where the turbines will go and the other

equipment what the footprint of the si te is

how much space is open or not

MR BENDER Im envisioning a

color map with I think that information

JUDGE MCCABE Mine is not in

color but I saw one like that Have you

looked at that and considering that is it

feasible And Judge Stein please add your

question

JUDGE STEIN If these maps show

or you can deduce from whats in the record

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that what is at play here is approximately 20

acres do you still contend that solar is

ible at this site

MR BENDER I would say to the

extent its scalable its feasible Whether

its cost effective and whether it achieves

emission reductions I dont think I dont

know and I dont think any of us know and

thats the point Thats why you go through

the five steps because you gather that

information at the later steps It was -shy

JUDGE STEIN So Im sorry

Finish I didnt mean to interrupt

MR BENDER It was excluded from

step one as not as redefining the source

And I think it would be inappropriate to

assume fact findings from what we have the

limited amount of information we have in the

record to say it would necessarily be rej ected

in the following steps unlike in Palmdale

where the issue of incremental increase was

looked at and the record was clear that there

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was zero space And the difference between

zero space for no addition and where to draw

the line when theres some space but it mayor

may not be enough to make it feasible cost

effective and everything else is something

that needs to be done by a fact finder with

the public input

JUDGE STEIN But how much effort

and work must a permit applicant go through

when theyre primarily building a particular

kind of plant and theres fairly limited

space I mean do they need to go do a I

scale investigation and develop models

space if what youre dealing with is a very

small area I mean thats a question Im

struggling with because you know this is not

lmdale and I dont buy the characterization

what Mr Alonso said about what Palmdale

stood for in terms of redefining the source

But I am troubled by what may be in the

record perhaps not as fulsome as someone

would like but there may be sufficient

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information in the record to establish that

theres only a very limited amount of space

there And if thats the case are you still

insisting that people do a full-scale analysis

of solar under those circumstances

MR BENDER I think that when

you get into the later steps two three

four the scale of the analysis is probably

relative to you know some reasonableness

right But in step one the whole point is

you cast the net and then you start doing that

analysis And it would be inappropriate to

start making assumptions because we dont

agree with all the assumptions in La Paloma

about hurricanes about other things and wed

like the ability to develop the record in

response depending on what is said about

feasibility

But feasibility wasnt discussed

until the response to comments And then it

was discussed as not not that it was not

technically feasible but it was redefining the

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source And based on in our mind in one of

the main reasons that we brought this appeal

is based on a very problematic definition of

redefining the source

JUDGE HILL Mr Bender the region

argues that Sierra Clubs comments on this

didnt ly raise this issue to any level of

specificity that youre now raising it in your

brief or here How do you respond to that

MR BENDER When they say that

they point to one of the multiple comments

looking at solar hybrid And they say it was

mentioned as an al ternative to duct burning

in addition to other things that could be

looked as alternative to duct burning

Earlier in the comments is the Palmdale

permit and the C02 BACT emission limit saying

its conservatively lower they get that and

they get a chunk of it from solar you need to

look at solar because its available its

applicable it meets the step one criteria

lets look at it And that I s what was

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ected

Elsewhere we said instead of

duct burning did you consider these other

things And yes theyre talking about the

same concept but theyre talking about two

different areas So its inappropriate to

look at only one comment and say well that

one comment about solar didnt raise this

other issue when the other comment did

JUDGE MCCABE Are you suggesting

that permitting authorities whenever theyre

faced with a PSD application by someone who

wants to build a power plant have to analyze

solar in all cases if theyre not proposing it

to begin with

MR BENDER Solar hybrid in a

combined cycle plant when it I S raised by the

public-shy

JUDGE MCCABE Okay And that -shy

MR BENDER Then the region has

an obligation to look at it

JUDGE MCCABE Expand on that

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please What do you mean by look at it

MR BENDER Include it in step

one or deem it redefining the source based on

a correct interpretation of redefining the

source And here it was an incorrect

interpretation of redefining the source It

should have made it into step one when raised

by the public And to go to your question

Judge Stein how much detail they need to do

to develop whether to reject it in later

steps I would agree theres some

reasonableness to it But I dont agree that

even assuming that 20 acres is all that there

is that we can say based on this record

that its reasonable that thats not enough to

generate solar

JUDGE STEIN But if you have a

circumstance where the BACT analysis has been

done the regions looked at it theres been

back and forth between the permit applicant

and the permittee I mean and the region

they proposed the permit for comment and a

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comment comes in about solar youre

suggesting that they have to go redo the BACT

analysis or cant they simply respond to the

comment by saying on this particular site on

these facts we dont think solar is feasible

for X Y and Z reason

MR BENDER Thats different than

the answer here

JUDGE STEIN Why is it different

than here I mean I understand what the

region did in its analysis of redefining the

source you know didnt do exactly what Im

describing here but Im concerned about

taking us to a place where in responding to

a publ ic comment where there may be an answer

that you have to go back to square one on the

BACT analysis because I dont think you do

I think you need to respond to the comment

I think you need to respond fairly to the

comment But wed never I mean how in the

world would we ever get a permit out if every

time theres a public comment that relates to

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the BACT analysis youve got to go back and

redo the BACT analysis Yes t may be

cases where you need to supplement it but I

dont think we go back to square one

MR BENDER Well two responses

your Honor Here we had raising solar in the

context of another facility a similar

facility that has solar hybrid and has a

permi t wi th lower limi ts Thats the context

So to the extent were talking about you

know how much or how real does this have to

be to generate a more substantive response

thats the context

In Knauf Fiberglass I believe Kshy

N-A-U-F however thats pronounced

JUDGE MCCABE Knauf

MR BENDER Knauf Fiberglass

The first the 1999 decision a comment was

raised another production process for

fiberglass The response was thats

proprietary to a competi tor We dont have to

look at it because well reject it later

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anyways so you know why look at it And

the Board reversed and said you cant preshy

judge Thats the point of the process You

cant pre-judge the process Go back look at

it and make a record so we know and the

public knows that you really did look at it

and you really did document your analysis and

we know you did your procedural job

Thats what should be done here

and it follows that precedent And I would

suggest if its distinguishable this is even

a clearer case than Knauf because its not

proprietary that we know of You can go out

and buy it So to the extent theres a line

this is even further on the petitioners side

of the line

JUDGE MCCABE Mr Bender Im

worried about your plane If you would like

to take a minute to just wrap up please do

And then we will let you go on your way Its

getting late

MR BENDER Sure Thank you

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your Honors I and thank you for the opportuni ty

to address these issues From Sierra Clubs

perspective this is an important permit tol

get right on these issues raised And there

are other issues that were commented on l

potent lyother issues that could have been

raised You know I dont want to suggest

that Sierra Club loves this permit even if

its corrected but this issue of what you

have to consider and how you consider

efficiency and how you consider supplemental I

in this case solari that helps improve the

efficiencyof a plant is critically important r

especially as we start into greenhouse gas PSD

permits and getting the definition of what is

the control option were looking at correct

and making sure that thats consistent all the

way through the process and that were

correctly addressing efficiency Its going

to be critical especiallyuntil we develop an

end of the pipe technology that facilities

s installing

NEAL R GROSS COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE NW (202) 234-4433 WASHINGTON DC 20005-3701 wwwnealrgrosscom

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The other is this now perennial

redefinition of the source issue I

understand the Boards prior precedents and

in some cases unfortunately theyre being

applied incorrectly And this is one of those

cases And when that happens its important

to correct it make it clear and give guidance

to not only Region 6 but other permitting

authorities what redefining the source means

and whatit doesnt mean And here it doesnt

mean that if a control option is not within

the two-sentence description of the

application of the project purpose that it

cant be considered because that opens a door

to all kinds of problems not just greenhouse

gasses but every - - I mean and SCR al so

wasnt in that two-sentence description

Thank you your Honor

JUDGE MCCABE Thank you very much

Well thank you all for your presentations and

for your valiant efforts to answer our very

often detailed questions

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I would make one observation that

theres such factual confusion l at least in

the argument around the issue of how do we

compare apples to apples with the emission

numbers that we really should be looking at

for these turbines that there is a

possibility and I regret to say this because

I know its a PSD case and we are in a big

hurry but theres a possibility that we will

ask you to do a supplemental briefing on that

or ask you all perhaps to confer to get on one

sheet if its possible to give us some basisl

comparison so that we have the facts

straight in our opinion It is a lot to ask

judges like us We have some technical

training l but we are not engineers I and it is

really quite difficult for us to understand

which numbers we should be comparing to which

here

We will however make a valiant

effort to go back and to see if we can figure

that out And weill only ask you to do a

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supplemental briefing if we think its very

necessary If we do do that we will get to

you quickly on that because we do intend to

move quickly on making this decision These

are not easy issues They are important

issues and we take your point Mr Bender

that as we are entering the world of GHG BACT

permitting we do need to be careful about

what precedent were setting But we also are

very very cognizant of the need for speed

here because we dont want to hold up the

building of something that should proceed

unnecessarily

So with that well take this

matter under submission with the caveat that

you may get a request for a supplemental

briefing And we will wish you all

travels home those of you who are traveling

far especially And good luck catching that

plane Mr Bender

(Whereupon the foregoing matter

was concluded at 547 pm)

NEAL R GROSS COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE NW (202) 234-4433 WASHINGTON DC 20005-3701 wwwnealrgrosscom

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194 9317962311149978010 823 841 6421 6716794 articulated 785 bite 709 1001015 10115 1008 1301516 84 11 90212

black 5520aside 538 10271022 1036 13520 98 1 1002 10220 board 1 1 3 22 44 asked 1010 5214 Avenue 114 3414 1031721 10448 1037 1043422

55126113 103 2820 3315 average 40 1920 104 121521105 1011 113 45 124 11 342 364 39217 42147712 1061317211141811616

asking 9920 17 411443519101 22 10711 10812118214 12259 36416195714 4519473 4915 averaging 41 20 109 1 0 19 110 191239 12568 1132 49 19 5081218aware33149120 111311 112215 12819 13513

assert 567 5022 5412 5514 10922 113321 114519 137314 assign 63 19 69 10 581578198911158 1165 1171 baseload 15 1922

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4819514632174 17 86522 1423123 1 124916 4622 5622 622 641 8119848 Bracewell 25 73 128 13 12516 126515642814 1039 9113 1109assigning 61 816 brand 56221285 129 1510821 11721 12020 Brian 3210581061 176312 714 1301222 13148 basing 104 10 12316 13720 brief5447511assignment 778 13114 132414basis 1756 1821 13816 13914assigns 70 12 7913 80281111346 13551036361206510 1404 14321assume 61922 87 841090511531361620 1372 6521 6815612

back-end 62 143221 1119 13591387 139517681469345 background 91 1913217 briefing 879 1401722 1446 70 15 718 7822 BACT 261722assumes 101 22 143 1 0 144 1 1 7 14420831085178616

29230171910820 briefly 84 9 18beneficial 23 3871 1081819 312233133519assuming 12922 331benefit 68 17 1 1 8 1 822 122 1 0 361181739713713 briefs 913 102 bennie 122 10123 14 143 12 39134361214assumptions 9616 9718best713 811 449 basket 21 15

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automatically 1447 building 114 5614 8213 10251010010 10812 4418 balance 30 12 5618757 13310 103911 8 1920 139 14

auxiliary 8913 base 50 15 69 1 14412biggest 9820 benchmarking

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98151912011 burners 731720

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932 12320 called 447 capabilities 74 1 0

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107810861182 caps 1104 capturing 83 11 carbon 617 careful 1448 Carlton 593910 Carolina 458 case418 67 8215

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case-by-case 362 7822

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cast 13013 13411 catching 14419 category 1053

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comment 32 18 3363510406 727784811 9022 9437 102171719 10526 13013 136789 13722 13814151820 13822 139 18

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commenter 94 1 commenters 329

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comments 3818 65186656718 688693 7515 791381128211 851986168815 88 192021 893 8978 93812 954981416 991316 1033 1101111814 13420 135611 13516

commercial 1834 commit 387 commitment 8418 communicate 215 communities 497 company 71 238

291121 326 33 11 34 14 38 19 401118447 521314 10139 101 18 112 22

1245 comparability 706

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3413631722 69187516774 872 12610

compare 1434 compared 10314 compares 8512 comparing 1275

14318 comparison 71 19

8710 14313 competitive 1819 competitor 13921 complain 799 completed 10 17

11 9 com pletely 13 1 0 compliance 29 14

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companys 1720

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complicated 120 16

comply 1616 3617381 4213 439 10721

component 30 15 301655135616

components 1022 126

concentration 6010

concept 1029 1287 1365

conceptually 11115 12718

concerned 113 20 1277 129 14 13813

conclude 122 16 concluded 5022

1227 14422 conclusion 47 18

6221 702 12218 concurrently 313 condensers 465 condition 21 22

61 22 6212633 conditions 16 19

16227613 confer 14311 conference 14

718 conferenceexpe

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1062 confusion 1432 conjunction 738 conservatively

13518 consider 131 342

364 5410 555 6114665 808 87209222931

935 9422 1212 124 19 1363 141101011

consideration 2822 88513 906 9314

considered 566 8322951 14214

considering 807 13118

consistent 652 11711 14117

constitute 886 Constitution 1 14 constraints 31 14 construction 1012

1015 117911 11 14

construed 9022 consult 186 19 18

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controls 125 19 conventional 61 5

8014 convert 55 10 cooling 5319789

7810 Corporation 11 13 correct 1216 154

15 11 12 22 1 7 245 46 18 504 86912139217 10222 111 78 1 0 1191113 1374 14116 1427

corrected 1419 correctly 389

1273 14119 cost 30 15 16 1326

1334 cost-keeping 62 14 costs 1173 counsel 33 12421

5109813 1168 count 752 11415

11520 country 453 5720 couple 104 1315

146 5814 course 64 813

478 10113 Court 109 Courtroom 1 13 criteria 29 11 344

13521 critical 129 1 0

141 20 critically 141 13 curious 20 19 current 16 1821

2217 currently 10 13

11 22 22 19 31 13 customer 8410 cut 7615 91 16

938 cuts 748 cutting 744 cycle 2621 275

34891735815 352236644 12 44134521 736 8078915 822 9412 1008 107 14 136 1 7

cycles 465 472 cycling 15 19

DC 1226315 Dallas 35 58 dangerously 1279 data 603 6422

6813 date 2017 David 2 1052 day 420 126 1712

293 385 39 13 461820 831

days615 DC 115 de-rate 376910

37184012987 de-rated 38 13 de-rating 3810

742 deadline 12 17 dealing 9922

133 14 debate 47 14 December 103 decide 1214 585

666 684 69315 7711 10912

decided 63 19 642021 6815 717 745 777 81114

deciding 3322 8713

decision 181315 18162016227

202-234-4433

bull

bull

bull

231724152716 302022 31 21 5821 59316 621 6316643 66 1 792 87 12 89]7901 914 124 12 1293 139 18 144 4

decisions 58 18 8922904

declare 77 22 decrease 987 decreasing 97 22

9811 deduce 131 22 deem 1373 deemed 85 21 defer811412017 deference 7820 deferred 39 17 define 54 14 72 18 defined 34 22

4914646 843 949956

definition 72 21 11610 11779 1353 14115

degradation 384 76 13

delay 3111 delegated 45 15

81 11 deletion 224 delivered 94 18 demand 1821 197

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demonstrated 7315 1254

departs 78 depending 606

9021 104 17 10514 12722 134 17

depends 11223 1205 12217 123 11

deprived 32 16 describe 69 19 19 described 594

12320 13010 describing 13813 description 142 12

142 17 descriptions 72 11 design 3322 3445

35 12 396 4626 54 1214 55 16 56 1221 5734 587 6021 6421 862

designed 34 1 79 14 834

designs 6310 desire 268 detail 1379 detailed 14222 details 1204 determination

2018219 determinative 698 determine 232 determined 48 14 develop 205 279

4612527 13313 13416 13710 141 20

developed 18 18 351 383

developer 137 2043022

development 422 429

deviations 7612 device 33] 6343

483 566 120 10 devices 4 13 26 19

27433183513 dictate 125 10 dictated 198 difference 67

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differences 7536 75 17768 777 127620 128 17 129720

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differentiate 63 1 1 12118 1291216 129 17

differently 65 7 17 2114999

difficult 387 143 17

difficulty 22 16 direct 1032 direction 259 directly 872 disagree 94 11

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discern 5820 discerned 90 12 discretion 664

6821 7720 884 9222

discussed 134 19 13421

discussion 8 1 0 1514 873 896 93179617

discussions 85 18 dismissed 59114 dispatch 1518

2919 971 dispatched 1622

109 22 110 1 dispatching 1615

972 disproportionate

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126 12 1284 distinguishable

140 11 distinguished

1295 distorted 6589 disturbs 623 divided 728 731 document 79 13

1407 doing 7 16 85

3018353 10114 1067 1272 134 11

door 14214 Doster 3 1 0 5 11 draft 41 21 424

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C E R T I F I CAT E

This is to certify that the foregoing transcript

In the matter of La Paloma Energy Center

Before US EPA

Date 02-12-14

Place Washington DC

was duly recorded and accurately transcribed under

my direction further that said transcript is a

true and accurate record of the proceedings

Court Reporter

NEAL R GROSS COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE NW

(202) 234-4433 WASHINGTON DC 20005-3701 wwwneairgrosscom

Page 3: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us

3

On Behalf Environmental Protection Agency Region Q

BRIAN TOMASOVIC ESQ US Environmental Protection Agency Office of Regional Counsel Region 6 1455 Ross Avenue Dallas TX 75202 (214) 665-9725 (214) 665-2182 fax

and

MATTHEW MARKS ESQ BRIAN DOSTER ESQ US Environmental Protection Agency Office of General Counsel Air and Radiation Law Office 1200 Pennsylvania Avenue NW Washington DC 20460 (202) 564-3276 (202) 564-5603 fax

PRESENT

Eurika Durr Clerk of the Board

NEAL R GROSS COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE NW (202) 234-4433 WASHINGTON DC 20005-3701 wwwnealrgrosscom

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P-R-O-C-E-E D-I-N-G-S

323 pm

MS DURR All rise Environmental

Appeals Board of the United States

Environmental Protection Agency is now in

session for a status conferenceexpeditedoral

argument in re La Paloma Energy Center l LLC

rmit Number PAS-TX-1288-GHG PSD Appeal

Number 13-10 The Honorable Judges Kathie

Stein l Catherine McCabe Randolph Hill

presiding

Please turn off all cell phones

and no recording devices lowed Please be

seated

JUDGE MCCABE Good afternoon I

am Judge McCabe On my right is Judge Stein

and on my left is Judge Hill We are the

three panel members for this case

Id I ike to welcome you all to

Washington on this non-snowy day But first

why dont we take appearances of counsel who

will be presenting for each of the parties

NEAL R GROSS COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE NW (202) 234-4433 WASHINGTON DC 20005-3701 wwwnealrgrosscom

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MR BENDER Good ternoon

David Bender for petitioners the Sierra Club

JUDGE MCCABE Okay Welcome

MR ALONSO Good ternoon

Richard Alonso on behalf of La Paloma

JUDGE MCCABE Welcome

MR TOMASOVI C Good afternoon

Brian Tomasovic from the EPA Region 6 Dallas

Office l joined at table by from the Office of

General Counsel Matthew Marks and Brian

Doster

JUDGE MCCABE Thank you And do

we have anyone else on the phone

MR RI E Yes I your Honor

This is Travis Richie with the Sierra Club

JUDGE MCCABE Okay Before we

beginl let me ask who will be speaking for

Sierra Club Is that just Mr Bender I or will

Mr Richie also be speaking Okay I thank you

Well first of all I would really like to

thank you all those of you especially who had

to change travel plans l for being here today

NEAL R GROSS COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE NW (202) 234-4433 WASHINGTON DC 20005-3701 wwwnealrgrosscom

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on short notice and I realize that not only

disturbs flight arrangements but probably

disturbs your preparation time The good news

for all of you of course is that we are

going to do this a little differently today

so hope ly that wont make as much a

difference as it might in the ordinary case

Before we begin let me do a

travel check as to what time your flights on

leaving I understand a number of you are

eager to be back out of town and ahead of the

snow this evening Mr Bender

MR BENDER I f everything goes as

planned 700

JUDGE MCCABE Seven 0 clock is

your flight time And whats your airport

MR BENDER National

JUDGE MCCABE National Okay

Mr Alonso can I assume youre remaining in

town

MR ALONSO Yes

JUDGE MCCABE I assume this is a

NEAL R GROSS COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE NW (202) 234-4433 WASHINGTON DC 20005-3701 wwwnealrgrosscom

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representative of a company with you

MR ALONSO Yes Im sorry This

is Sandra Snyder with Bracewell also

representing La Paloma and we do not have any

travel restrictions tonight

JUDGE MCCABE Thank you And

from the EPA side

MR TOMASOVIC My flight departs

at 8 pm

JUDGE MCCABE All right Then I

think we should have plenty of time Weve

scheduled an hour and a half for this We

will try our best to get you out on timel so

you can run for the airports Snow is not

supposed to begin until later this evening

We are doing this slightly

differently than our normal procedure because

this is a status conference as well as an

expedited oral argument As usual well go

ahead and allocate one half an hour

approximately to each party But the order

the parties will be slightly different than

NEAL R GROSS COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE NW (202) 234-4433 WASHINGTON DC 20005-3701 wwwnealrgrosscom

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usual

We will start in this case with

the permitee with La Paloma Energy Center

who I will refer to briefly as La Paloma I

suspect the other judges will be doing that

too for the record Because we have some

status questions for you which I assume will

not surprise you given our scheduling order

Those answers to those questions may inform

the rest of the discussion that we have here

today so we thought it best to begin with La

Paloma

Normally of course our practice

would be to begin with the petitioner the

Sierra Club So in this case Mr Bender Im

going to give you your choice as to whether

you would like to go second or third Some

people like to have the first word some

people like to have the last word

You also have the option if you

choose to go second after La Paloma to

reserve five minutes of your time for rebuttal

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after EPA What would you like to do

MR BENDER I I 11 combine both and

do it all together

JUDGE MCCABE Okay Thats the

way weIll proceed then WeIll begin first

with La Paloma

mentioned l if we didnt we should have in ourI

order to you l were not expecting you or

asking you to make any formal presentations

today I as you would in the normal oral

argument

In the interest of timel please

presume that weve read your briefs l that

were famil with the records And in the

interest of saving time and getting you out of

here weld like to focus right away on the

judges questions If you have anything that

you would like to say very briefly first l

thoughl please 1 us know that and feel free

Mr onso

MR ALONSO Thank you Judges

And we just want to first start off by

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recognizing and thanking you for expediting

this appeal I believe the briefs were

submitted on December 27th and the Board

reached out to us just a couple of weeks later

to schedule this argument So were really

appreciative of that We are prepared to

answer your questions presented in your order

as well as any other issue thats before the

Court

As to your first issue you asked

us to report on the status of the projects

First 1 me address the construction time

line We currently have all government

approvals that are required for pre-

construction as well as agreements that we

need wi th governments We have tax agreements

that were completed We have a water supply

agreement with the local water works We have

land agreements in place We have our TCEQ

Air Permit that was finali in February of

2013

The two main components that we

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are missing right now is number one

financing Financing is contingent on

receiving a final PSD permit Once we receive

a final agency action on the permit we expect

to close that financing in short order right

ter that

As far as construction we have in

EPC the engineering procurement and

construction contract completed That was

executed in September of 2013 So shortly

er this closing we can start construction

shortly right after that That was wi th

Bechtel Power Corporation and again they are

standing by ready to start construction

JUDGE MCCABE Most importantly

Mr Alonso could you address whether youve

selected your turbine yet

MR ALONSO Yes we are prepared

to talk about that We have preliminarily

identified the preferred turbine that we would

like to install at this site It is the GE

7FA turbine However we are currently

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various escalation clauses of our existing

contracts including for the turbine in the

sense that we have planned to be done with

this process on January 1st Not just the

contract for the turbine but for other

components of the site every day that goes on

the cl is paying escalation fees on that

contract

JUDGE MCCABE So do you have a

turb contract or not

MR ALONSO We do have a spot for

manufacturing of the turbine

JUDGE MCCABE So is that like

reserving a place in case you decide to put in

your order

MR ALONSO Correct And that

deadline is April 1st On April 1st we have

what happened ter January is that we

negotiated our escalation clauses through

April 1st Come April 1st I think that the

weIll come April 1st I we would have to

renegotiate that contract And most likely I

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we can maybe even consider selecting one of

the other turbines that are in this permit

So if we dont have a final permit

in the next you know -- and Im not putting

any pressure on you guys but as of April

1st I think that the well I know the

developer would like the flexibility to

install anyone of these three turbines

JUDGE MCCABE Im not sure Im

completely following you What happens -shy

lets try it this way What happens if you

get your permit tomorrow

MR ALONSO If we get our permit

tomorrow we would close our financing a

couple of weeks later and we could start and

then we would put in a notice for the

procurement finalizing the GE 7FA turbine

contract

JUDGE MCCABE And how soon could

that happen or would that happen

MR ALONSO That would happen

upon closing and we would -shy

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JUDGE MCCABE So are we talking

about a week two weeks a month

MR ALONSO Yes My

understanding the information that I have is

that closing can happen in its a matter of

weeks a couple of weeks after we receive a

final permit

JUDGE MCCABE Okay So when you

say youve preliminary picked this GE 7FA

turbine -- can we just refer to that as the GE

turbine

MR ALONSO Sure

JUDGE MCCABE Its the only one

right thats a GE Okay Well call this

the GE turbine Youve preliminary selected

that If you get your permit tomorrow is

there any reason that youll change that

choice

MR ALONSO Most likely not If

we get our permit tomorrow if we get it

before April 1st we are probably we are most

likely yes going to select we are going to

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select the turbine

JUDGE MCCABE Okay If you get

your permit before April 1st you will select

the GE turbine is that correct

MR ALONSO That is yes

JUDGE MCCABE And my

understanding of this turbine is that its the

smallest of the three and according to heat

rates the least efficient the one to which

the region has assigned the highest GHG

ssion limit is that correct

MR ALONSO That is correct

JUDGE MCCABE Okay That will

very much inform the rest of our discussion

Thank you Mr Alonso Do you know yet

another question on your preparation here do

you know yet where the facility will be placed

in the ERCOT dispatch order and whether it

will be operated as a baseload or load cycling

facility

MR ALONSO Our plan is to

operate this as a baseload uni t However we

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will respond to the ERCOT orders as they come

I mean in Texas our business plan is to

operate this as a baseload unit

JUDGE MCCABE Does ERCOT give you

any preview of that

MR ALONSO Excuse me

JUDGE MCCABE Does ERCOT give you

any advanced notice as to whether youre going

to be likely operated as a baseload or not

MR ALONSO Our intention is to

operate it as a baseload Im not qui sure

about we can follow up with you on that as

far as ERCOT notices Im not prepared to

talk about the ERCOT notices But to the

extent that ERCOT manages dispatching we will

comply with their orders

JUDGE MCCABE Okay And you

expect at this point based on current

condi ons which I understand can change if

other plants come online or other things

happen you expect based on current

conditions that youll be dispatched high

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enough in the order that this will be a

baseload plant and therefore it will be

operated at 100-percent capacity

MR ALONSO Pretty close to it

JUDGE MCCABE On a regular basis

MR ALONSO On a regular basis

we would like to have you know utilize this

as much as possible Keep in mind though

while we do have the you know as an EPA

administrative record yes larger turbines

may be more efficient But at the end of the

day they also have higher mass emissions

And so when you look at it from an

environmental perspective to the ent that

an environmental impact plays into that the

environment really feels the impact of the

mass limit more than anything else I believe

JUDGE MCCABE Understood Okay

Can you tell us a little bit about what was

the chief factor that drove the companys

selection of the turbine how important was

the capacity or size for example

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MR ALONSO I dont know the ins

and outs why they selected that turbine

I believe its just commercial terms It was

the better commercial term -shy

JUDGE MCCABE Would you like to

consult with your client at all to see if you

can clarify that answer

MR ALONSO Sure Shes here

JUDGE MCCABE This may help you

Some of the questions that were also

interested in are how important was the

capacity or size the uni t in terms of your

decision to s the GE turbine and how do

the relative heat rates or the GHG emission

rates affect decision Did they affect

that decision if its made

MR ALONSO The way that this

project was developed is that we went out for

competitive bids of at least three turbines

And based on the necessary heat rate the

forecast of demand that was the basis of the

select ion It was not based on you know any

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other factors except for trying to meet the

purpose of the proj ect which is to supply the

load and the heat rates and the financial

arrangements that resulted from that bid

process

JUDGE HILL Was that forecast of

demand strictly internal or was it something

dictated by either EReOT or some other

external entity

MR ALONSO La Paloma is a

merchant power plant Wei re not regulated so

its not that wei to extent that your

question is to whether or not we had any

regulatory oversight -shy

JUDGE HILL Or just external

information or some sort of external driver

I guess

MR ALONSO me consul t wi th

- sorrYI I just wasnt prepared

JUDGE HILL No thats okay

MR ALONSO So specific

questions Okay

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JUDGE MCCABE But we appreciate

your corning

MR ALONSO But Im glad that

Kathleen the proj ect developer Kathleen

Smi th is here wi th us today When you develop

these projects yes they went out they had

third party evaluations of load demand and

what would fit for this market absolutely

JUDGE HILL Okay

MR ALONSO I mean its -shy

JUDGE HILL Let me ask one other

follow-up You said at the very outset Mr

Alonso that you had preliminarily identified

the GE turbine and the record before us is

that certainly at the time of the application

that decision hadnt been made Im not

asking for a specific date but roughly when

was that determination made relative

because Im curious how it relates to this

proceeding

MR ALONSO So again we made

the selection based on closing in January but

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the selection of the turbine was made in

August expecting to be you know

manufactured and installed in January So to

answer your question it was August of 2013

JUDGE HILL Did you communicate

that to the region at that time

MR ALONSO No because again

because of the timing of this permit it is a

preliminary determination At that time in

August if we were 100-percent certain that we

would get a permi t in January sure we

probably would have you know told the region

and maybe the final permit may have looked

differently But we couldnt put our eggs

all our eggs in that one basket at that time

JUDGE MCCABE What was your

understanding Mr Alonso of what the region

planned to do once you made your turbine

section Will they revise your permit or

leave in those three original limits

MR ALONSO We have a special

condition in the permit that requires that La

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Paloma submit an amended permit application to

remove the other two turbines that are not

selected from the permit So it would be a

deletion of the two other turbines that are

not selected

JUDGE STEIN Why if youve made

the decision to proceed with this particular

turbine if you receive your permit within the

time frame that is necessary for you would

you be revisiting that question if you dont

get the permit until May

MR ALONSO If we -shy

JUDGE STEIN Just hypothetically

if you get the permit a month after why is it

that suddenly thats an open question again

Im having difficulty understanding that

MR ALONSO Correct Our current

negotiations on the escalation clauses of the

contracts we have currently negotiated terms

through April 1st At that point youre

right we would have an option to negotiate

further or more likely than not we could we

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might go through another bid process to

determine whether or not maybe another turbine

might be more beneficial from an economic

perspective to install

JUDGE STEIN Thank you

JUDGE MCCABE Just to make sure

the record is clear on this though at this

point youre telling us that if the company

gets its final PSD permit from EPA before

April 1st it will be the GE turbine

MR ALONSO That is my

understanding

JUDGE MCCABE Okay Would you

like to qualify that statement

MR ALONSO Right The problem

is that again we cannot make a final

decision on the turbine until after we get the

permit because youre only going to reserve

your place line for a certain amount of

time at the manufacturing plant

JUDGE MCCABE But if you get your

permit tomorrow or anytime before April 1st

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or perhaps you need a week advanced notice

then you would be choosing the GE turbine We

can rely on that

MR ALONSO Yes

JUDGE MCCABE Is that correct

MR ALONSO More likely than not

we will be selecting that turbine

JUDGE MCCABE When you say more

likely than not or preliminary then Im not

sure what youre telling me Mr Alonso

Which is it Will you have that GE turbine be

your selection

JUDGE HILL What else might

prevent you from going ahead with the GE

turbine if there were a decision before April

1st is another way to ask the question

MR ALONSO To maintain

flexibility I mean thats one of the

purpose were here I mean if we get a call

tomorrow from Siemens saying that theyre

going to give us the turbine at five cents

maybe wed go with the Siemens

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JUDGE MCCABE So price matters

MR ALONSO Absolutely

JUDGE HILL Price really I I meant

but

MR ALONSO The likelihood of

that is minimal

IJUDGE HILL But let s explore

that for a second because it sort of takes us

to the other direction So if you so ifl

Siemens were tOI you know I mean I and I can

certainly relate to this 11m trying to do

some home maintenance But so they come in

with a bid youre not expecting l and you saYI

You know what That I s the one we should go

with thats going to be one of the larger

turbines So what will happen in terms of

your demand forecast or I I meanl how will you

operate that plan

MR ALONSO It may not fit the

business plan at the time I meanl we would

like to maintain the flexibility of selecting

the turbine as much as we can in this final

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permit Everything is in place that if we

were to get a final permit tomorrow that the

GE turbine would be used However we still

want I dont want to tell you that its 100shy

percent guaranteed We would like to maintain

that flexibility

JUDGE MCCABE But you understand

s your very desire to maintain that

flexibility that leads us all to be here

today right As I understand it the main

issue that the petitioners have with the limit

that was chosen in this case is the fact that

you are reserving flexibility to make this

choice after you get your permit

MR ALONSO But the limit is the

limit doesnt satisfy region as appropriate

and valid under BACT What the permitee is

arguing here today is that somehow we start

off with a class of control devices The

region has identified combustion combined

cycle turbines as a control class That is

your step one BACT is an evolution all the

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way through step five Once you get to step

five the purpose and the intent of step five

is to impose an emission limit looking at

those control devices and its not just

combined cycle We have a whole list of

technologies that were identified by the

region that apply to each of these turbines

At that point you look at the

ssion unit and you develop a unit-specific

emission rate that reflects the technology as

its supplied to that particular emission

unit

JUDGE MCCABE Dont you also look

at comparable units located at other

facilities when the permitting authority makes

that decision

MR ALONSO Absolutely You look

at technologies at other through the

clearinghouse and other technical information

That is your step two analysis absolutely

JUDGE MCCABE Then why wouldnt

you look at other turbines that are available

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MR ALONSO Im sorry

JUDGE MCCABE Then why wouldnt

you look at these other turbines that are

available

MR ALONSO You look at the other

turbines as - - well f are you saying the other

turbines that are mentioned

JUDGE MCCABE The Siemens

turbines

MR ALONSO The Siemens turbines

and the GE turbines have the exact same

technology installed Again at the end

and Siemens does not make the identical

products Theres going to be some

variability amongst those products and I

would argue that the actual impact of these

units or these emission rates arent that

off from each other But in step five the

region looked at the turbines and looked at

as this board has approved in the past and in

particular in Prairie State the ability to

take into consideration operational

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variability compliance headroom and other

factors made to ensure that the BACT limit at

the end of the day is workable and something

that can be achievable from a compliance

perspective

JUDGE MCCABE Mr Alonso wed

like to go on to that subject of the relative

heat rates and therefore the GHG emission

rates of these three turbines But before we

leave the subj ect that we are on of the

criteria that the company used perhaps past

tense or might in the future if something

unexpected happens use in the future to

select the turbine I heard you say two

primary things And I know were several

beats back on the questioning now But I

heard you say the forecast of demand how much

power you can 1 -- Im sure where ERCOT

will dispatch you is part of that equation -shy

and the heat rates Are those the two most

important factors to the company in selecting

the turbine Price obviously has something

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to do with this too

MR ALONSO Yes I mean and the

result of the bidding process and how that

and the third-party analysis of the energy

demand and everything else Absolutely

JUDGE HILL So are you really

saying to a large extent price is the

primary driver

MR ALONSO No not necessarily

I mean its what fits for this particular

you know looking at the forecast -shy

JUDGE HILL But its the balance

of price to demand to efficiency

MR ALONSO Sure Im sure

There is a cost component to this but its

not a cost component as specified in step four

of the BACT analysis

JUDGE HILL No Im not doing

BACT right now Im talking about just the

decision of which one to install

MR ALONSO Sure Its a

business decision and the product developer

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would like to maintain that flexibility At

the time the permit was submitted we

concurrently went and did basically a dual

process of trying to get a PSD permi t and try

to come to terms with all these agreements

whether the turbine or your tax agreement

your water use agreement And thats why our

initial application had three turb s in it

To say that we had to do I that

work up-front and then wait another two years

to get a PSD permit it would really delay the

proj ect and lose a window opportunity

currently right now at ERCOT where there are

some energy constraints in Texas This is a

very good time to build a gas-fired power

plant in Texas

JUDGE STEIN I want to follow up

Are you -shy

JUDGE HILL Yes yes

JUDGE STEIN I wanted to follow

up on your decision of the ous steps of

the BACT process I understand your wanting

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to have flexibility to the last possible

moment At the same time ordinarily in the

step two analysis you would be looking at

whether technologies are available and

applicable And if somebody was going to

drive the company to say you should build a

size thats too small or too large its my

understanding that there would be an

opportunity at that point for commenters to

explain why a different size unit might be

appropriate and you in turn would have an

opportunity to say well that doesnt work

for us

But by keeping the flexibility

until the end of the process my question is

whether you have deprived either citizens

groups or other comn1enters of the opportunity

to meaningfully comment at an earlier phase of

the process And therefore by keeping your

flexibility to the last moment you are

perhaps you should assume the risk for having

done that

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I mean in pio Pico we briefly

talked about the sizing issues Weve

acknowledged I understand your points on you

get to pick the size But if you pick it so

late in the process that nobody else can

meaningfullycomment notwithstandingthe size

you want to pick if you pick it a little

bigger its much more efficient how can that

happen if you wait until the end the

process to choose to say what technology you

the company want to go with

MR ALONSO First of 1 you

know recognizing BACT and step two Im not

aware of any precedent in PSD permitting or

from this board that somehow size and

itself is a control device Step two and to

a certain extent I step one is to identify

control devices you know technology that

would be applied to a given emission unit or

a given source And I believe that its been

pretty well established that the permittee has

a lot of flexibility in deciding the design

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factors in how the plant is designed I

would you know ask the Board to consider

that size is not a control device its more

a design criteria that is used by permittees

when they go to design a source

IJUDGE STEIN Yes I m not

thinking of size as a control technology I

see the control technology as combined cycle

turbines But when you look at combined cycle

turbines youve looked at three different

models They have different efficiencies We

can get later people can tell us whether

theyre comparable or theyre not But if the

company is headed towards a particular

efficiency and the agency or other commenters

think they should be headed elsewhere that

this particular technology combined cycle

turbines can get you a more efficient

process where in the process are they

supposed to raise that

MR ALONSO They could raise that

in how the technologies are defined and

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developed in step two

JUDGE MCCABE You may be hurting

Mr Richies ears doing that so

MR ALONSO Sorry sorry Region

6 identified roughly four different energy

efficiency and processes or practices that

apply to the class of this technology which

is a combined cycle class The public has

full opportunity and they had in this permit

to comment on exactly that whether its

installation whether its installing an

efficient heat exchanger design economizer

exhaust steam These are the control devices

that apply to the class of technology which is

whats known as combined cycle

That list today is what we have

today That list was different ten years ago

and its going to be different ten years from

now because BACT evolves That is where the

public has its say

To set a one-level you know all-

combined cycle must be 90 the 9092 pound

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I Iper C02 megawatt hour that s not BACT BACT

is set on a case-by-case emission unit-

specific basis What Sierra Club is basically

asking this board to consider is taking that

one limitl the 90921 and apply it to two

other totally different combined cycle

turbines I and I dont see that as what is

intended by BACT

JUDGE MCCABE That brings us to

an interesting question Can the GE turbine l

which you are most likely to select l to quote

you l achieve the GHG emissions rate that the

region established the Siemens turbine

MR ALONSO First of all weI

think that to require the GE turbine to meet

that limit would be asking the permittee to

over comply with an adequately-developedBACT

limit We dont think -shy

JUDGE MCCABE 11m asking you for

a factual answer l Mr Alonso

MR ALONSO From a factual

question l I mean l 1 1 m not

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JUDGE MCCABE Would you like to

consult with your client

MR ALONSO Yes okay We are

not prepared at this time to say 100 percent

whether or not we can meet that limit What

we would have to do is possibly de-rate We

might have shy

JUDGE MCCABE Possibly what

MR ALONSO De-rate the unit

JUDGE MCCABE De

MR ALONSO The unit may be not

at its maximum capacity

JUDGE MCCABE What would that do

Explain that

JUDGE HILL You mean run it

greater than capacity

JUDGE MCCABE Yes he means if

they de-rate it that they would operate it at

less than its 1 capacity What would that

do to your heat rate

MR ALONSO Probably not much

But they would have to do something

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operational to unit to basically comply

with that limit Plus we would not have the

compliance headroom that was developed for

degradation factors We might be able to meet

it day one but who knows in ten years And

just operation flexibility It would be

really difficult to commit to that limit

JUDGE MCCABE Let me see if Im

understanding you correctly I hear you say

that de-rating it would be one option to meet

that GHG emissions limit because its a total

limit even though your efficiency rate would

clearly go down if you de-rated it I hear

you saying that option number two would

essentially be to take it out of your

compliance margin which the petitioner has

characterized as generous I believe in its

comments on this permit Are those the only

two ways that the company could meet the heat

or the GHG emission limit that the region set

for the Siemens turbines in using the GE

turbine

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MR ALONSO I mean we can follow

up wi th the Board on this but to the extent

of whether or not theres other engineering

solutions or modifications to that turbine

that could be done tOI you know l basically

change the design of this unitl I meanl I

think that I s why we went through the BACT

process l though I meanl the end-of -day

emission limit is based on vendor information

that we obtain from GEl and the region took

that and applied the control technologies to

those numbers I and thats how we establish

BACT limits at the end of the day is you take

those control technologies and you impose them

onto the uni t that s supposed to be buil t I youI

work in compliance headroom l and it wasl you

know I and this board is generally deferred to

EPA techni staff on issues about compliance

headroom and whats -shy

JUDGE MCCABE I dont even think

thats an issue on this appeal l so you dont

need to go there

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MR ALONSO Well no no no To

the extent that you said that the Sierra Club

thinks that compliance headrooms are generous

JUDGE MCCABE That was just a

comment They didnt raise it on appeal

MR ALONSO Okay

JUDGE MCCABE But let me ask you

this Mr Alonso Im hearing essentially

that the only two ways that you could that

the company could meet the limit on the GE

turbine would be to either de-rate it in

which case youre not getting the power that

you want out it or to take it out of your

compliance margin which is effectively

somewhat lowering your limit really

But Im puzzled about one thing

Didnt the company in its original permit

application propose to use the average of

propose to set the permit limit at the average

the GHG emission rates or heat rates of the

three uni ts the three turbines And if

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thats the case isnt that an admission that

you can actually meet the more-demanding

emission limit on the less efficient unit

MR ALONSO Let me just say when

we initially submitted this permit

application we used the LCRA permit that

Region 6 had processed and finalized in a

period of six months

JUDGE HILL Im sorry What is

LCRA

MR ALONSO The Lower River

Colorado Authority They permitted a gas

plant in Region 6 It was not appealed to

this board So we modeled it after that

application

JUDGE MCCABE You modeled your

application after theirs

MR ALONSO To a certain extent

because it worked at Region 6 as far as this

averaging It turns out that once between

draft and final LCRA was able to select the

turbine and they selected a turbine The

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timing worked for them given their

development path

JUDGE MCCABE Im sorry You

said they selected theirs between the draft

and final permits

MR ALONSO They did And ir

final permit came out with one turbine But

thats a different project dif

development path

JUDGE HILL Well but I think the

question is youre saying that if you were to

apply the Siemens emission limit to the GE

turbine that that would over comply But if

the permit limit were set at the average of

the three and you would as you apparently are

almost likely to do select the GE turbine

then youre going to meet a lower limit than

the limit that would have been set on the GE

turbine alone So would you have been arguing

that that was over-compliance as well

MR ALONSO I mean the record

speaks for itself I mean obviously if we

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submit a permit application agreeing to a

certain limit we would have to you know

probably shave our compliance headroom But

it doesnt it doesnt I mean the issue

before the Board though I believe is whether

or not Region 6 acted properly in its BACT

analysis of these three turbines of these

particular emission units Whether or not a

unit can over comply or whether a permittee

can take a voluntarily limit to reduce its

emissions I believe thats outside of the

BACT process

JUDGE STEIN But I think what is

inside the BACT process is whether or not the

emissions limit that the region has selected

is in fact BACT And thats what Im

struggling with This case comes to us in a

somewhat unusual setting in that I dont

recall in my many years on the Board ever

seeing a situation and its possible that we

did in which three different emissions limits

were picked for the same unit

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Now Im not saying its not

happening Im simply saying that I dont

have any experience with that And what Im

more famil with is a control technology

being p whether its I you know a

scrubber or something else and within thatl

technology I the company being called upon

through the BACT process to meet an emissions

limit that reflects the best emissions limit

that that technology can achieve

And if the technology is combined

cycle then clearly there are certain sizes

of combined cycle that may be able to achieve

a better emissions than the unit that youre

picking And I dont have a problem with

somebody saying to me well we can I t do that

because of A B and C But my problem is

whether BACT automatically gets picked by

size rather than what the class of technology

is capable of performing

MR ALONSO Again I think two

points as to previous practices I meanl we

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have identified seven GHG permits or Im

sorry PSD permits that have throughout the

country and different permitting authorities

further research identified five more where

you have two or three emission units and all

units have dif rates They range from

California Arizona Florida Oregon North

Carolina So it is an established

practice out there in the permitting

JUDGE STEIN Were those

federally-issued permits or state-issued

permits if you know

MR ALONSO They were well you

know they were all state-issued permits but

some of those were in delegated states such

as Washington the s of Florida so they

are federal permits I agree that I dont

believe that this issue has come before the

Board but keep in mind BACT is a progression

And I think in step one the technology is

combined cycle And you take that technology

and you run it through the five steps But at

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the end of the day in step five if you take

the design of the emission unit thats being

proposed to be installed and you take those

technologies you know the use of rehea t

cycles the exhaust steam condensers the

generator design and all these things apply

to each of the three turbines

And at the end of the day in step

five whats the purpose of step five The

purpose of step five is to take that

progression and look at the emission unit

being proposed and develop an enforceable BACT

limit BACT is a limit based on technology

thats being identified through the step one

through four

JUDGE HILL Thats basically the

three separate applications argument am I

correct

MR ALONSO At the end of the

day we could have possibly submitted three

different applications and you would have had

to - - to do otherwise you would be basically

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setting sort of like an NSPS where you say all

combined cycles need to meet this one limit

across the board No matter where you are l

who you are l which manufacturer you use l what

color your turbine iS you need to meet thisI

limit Thats not what BACT is

JUDGE MCCABE Well the problem

with that analysis of course Mr Alonso isl

that if we take it to the full ent of what

youre suggesting you get to pick the

emission limit according to which turbine you

pick And I dont believe thats what the

permitting authority is supposed to do But

we dont need to debate this issue further

Wed like to turn before we leave

you and go to EPA 1 to the solar issue And my

question to you is is it possible -- again

here were talking facts not legal conclusion

to install some solar-generating capacity

at this proposed facility And what

information in the record can you cite us to

support your answer l whatever that answer is

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MR ALONSO On the solar pre-heat

issuel first of alII solar pre-heat is not a

control device to be identified in step one

Your factual question l can it be inst led at

this ilitYI in a meaningful waYI no We

only have 20 acres left over after we build

this proj ect

JUDGE HILL Is that in the

record

JUDGE MCCABE Is that in the

record

MR ALONSO NO I it is not Its

not in the record because againl what is in

the record is that Region 6 determined that

installing based on this boards precedent l

installing solar pre-heat or using solar as

some type of alternative fuel for this plant

would be re-designing the source

JUDGE MCCABE Well go back to

your explanation about the 20 acres Explain

to us

IMR ALONSO Okay First theres

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the 20 acres There s not enough space I landI

to make solar pre-heat a feasible or economic

technology Palmdale had 250 - something acres I

you know l a vast amount of land

Second l this plant is pretty close

to the Texas coast vulnerable to hurricanesI

Who knows if regulators of local communities

would even let us build such a large solar

field in this areal given the threat of

hurricanes

JUDGE MCCABE Is there anything

in the record for us to look at on that

IMR ALONSO No I again in the

record solar pre-heat is defined aS I would bel

redefining the source And this board has

already ruled on this issue In Palmdale thel

petitioner sought to have Palmdale install

even more solar energy than it already had

proposed and this board said that that wouldl

be redefining the source

JUDGE MCCABE I don I t bel ieve

lthat s what we said Mr Alonso I believe we

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said that redefining the source was clear if

you were talking about making it a 100-percent

solar facility

MR ALONSO Correct

JUDGE MCCABE That is quite

different from what youre talking about here

MR ALONSO Well I point the

Board then to Sierra Pacific In that case

there was a dual fuel plant biomass as well

as natural gas and the petitioner sought to

have the permitting authority to force

installation of solar and this board there

said it was redefining the source

JUDGE MCCABE And what did they

base that on

MR ALONSO Im sorry

JUDGE MCCABE I dont believe

that the Board made such a broad statement

that any time you introduce solar that it

would be redefining the source Do you recall

in Sierra Pacific what the reason was that the

Board concluded that

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MR ALONSO I do not

JUDGE MCCABE Okay Well I

wont make you do that homework right now We

actually know that Go ahead back to if you

would to the factual question because thats

the one were most interested for todays

purposes about whether its actually possible

and what there is in the record that t Is us

yes or no on that

MR ALONSO Okay Well first Il

mentioned that theres not enough land l the

hurricane situation The second issue is

Paloma is not in the renewable business They

doni t have the resources to go out and do

solar studies They would need to retra or

redo their business model in order to look at

alternative energy or renewable energy

JUDGE MCCABE Do they build their

own turbines

MR ALONSO They build gas

turbines yes

JUDGE MCCABE They build them or

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they buy them

MR ALONSO They dont do wind

they dont do solar

JUDGE MCCABE Do they use

subcontractors

MR ALONSO I mean this is

something that they would have to develop as

a business unit and will take time to go out

and get experts hire them on staff or go get

third-party folks Its just not part of

their business plan

JUDGE MCCABE Mr Alonso what do

you think the company responded the first time

the first company was asked to put on an SCR

MR ALONSO They probably said it

was unfeasible

JUDGE MCCABE They probably did

They probably also said they werent in the

business There has to be a first time

doesnt-shy

MR ALONSO No I think that as

far as being in the business I mean theyre

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in the business of burning coal And they

know that they have to put on pollution

control -shy

JUDGE HILL And I think Sierra

Clubs argument would be that La Paloma is in

the business of generating energy as

efficiently as possible in South Texas I

mean put aside the hurricane issue for a

moment but if there were enough land you

know the stated business purpose in the

application is to produce between 637 and 735

megawatts of energy I mean thats the

stated business purpose not to produce it

per se exclusively with natural gas That

may be their preference but Im not sure

thats what the record shows

MR ALONSO I mean the purpose

of citing this plant is to use the reclaimed

water from the municipality as cooling water

Theres also a natural gas pipeline close by

to this facility That is -- and the intent

is to maximize the use of that gas pipeline

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You know shy

JUDGE HILL And that is in the

record

MR ALONSO That is in our brief

JUDGE HILL Okay

MR ALONSO But again I dont

believe that solar pre-heat would even survive

step one I mean youre king about a

redesign the source by forcing folks to

consider renewable energies at a fossil fuel

plant where thats not the intention of the

design And this board has allowed and has

recognized the ability for permit to

define the parameters of their design what

they want to build and I dont think we you

know well you guys can do what you want but

to force folks that want to build fossil fuel

natural gas plants to build wind turbines I

dont know that sounds like -shy

JUDGE MCCABE Do you know if

theres any situation where any permitting

authority has done that in the United States

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yet

MR ALONSO I have not seen a

BACT analysis resul ting in or you know to do

as an alternative particularly in step one

to consider the feasibility of a renewable

project I dont have any knowledge of that

occurring at other permitting authorities

JUDGE STEIN But what about a

hybrid pI I mean I dont think whats

being suggested here is that you convert the

principal purpose of the gas turbines I

think the question thats being asked is

whether any component of it could be solar

and I think what the Board is struggling with

is in a si tuation in which solar is not

already part of the plant design is it proper

or improper to raise questions about that If

so what is the regions obligation

I mean I dont see this as sort

of a black and white issue I see it as

youre lling us theres 20 acres Maybe

thats the record maybe its not That

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may be relevant to how you answer that

question in this case as opposed to some

other case

MR ALONSO It really goes to

whether or not solar or renewable energy

should be considered a control device in step

one And I would assert no its a different

fuel source Youre redesigning when people

go to build solar plants or hybrid plants

even hybrid plants you go in and thats what

you want to build and you have a business plan

and an engineering design for a hybrid plant

and thats what you want to get permitted

But if youre out building a gas-

fired power plant and solar is not a

component I mean nowhere in the record is

there anything about La Paloma interested in

building a solar plant We want to build a

natural gas fire plant and thats the source

that should be permitted not some alternative

design And a hybrid plant would be forcing

basically brand new engineering you have to

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study you know solar rays and the impact

whether or not its efficient in this area

It would just be a totally different design or

engineering effort to design a hybrid plant

versus the plant that were trying to permit

here

JUDGE MCCABE Okay Thank you

Mr Alonso We take your point and you may

be seated And we will hear next from EPA

and Judge Hill will take the lead on questions

for EPA but be resting assured that we will

all have questions for you

JUDGE Let me start by

asking how you pronounce your name so I dont

mess it up

MR TOMASOVIC I will generally

say Tomasovic but

JUDGE HI Tomasovic

MR TOMASOVIC - - Tomasovic is

fine if you want to go old country

JUDGE HILL What do you prefer

MR TOMASOVIC Tomasovic

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JUDGE HILL Tomasovic okay So

this is purely a hypothetical question but

in your experience or in the experience

generally of the region when does a permit

applicant decide what their you know what

their turbine is going to be or what their

size is going to be or the precise design

factors of the source Does it typically

happen before they submit the permit

application after both

MR TOMASOVIC I think it could

be a variety of things your Honor Looking

through historical permitting actions we did

find that there are a couple of cases that

happened before the Board that had permit

structured such as this that had permitted

multiple turbine options You wouldnt be

able to see it from the face of the decisions

and it wouldnt be something that you could

discern from the challenges that were raised

but the Three Mountain Power decision in 2001

is one such example and there was a case

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where a petition was dismissed for being a

minor source permit But clearly on the

face of that decision which was Carlton Inc

North Shore Plant in 2001 it described a

minor NSR permit with multiple turbine

options

JUDGE MCCABE Could you repeat

the name of that one please

MR TOMASOVIC Carlton Inc

JUDGE MCCABE Carlton Inc

MR TOMASOVI C North Shore

Plant

JUDGE HILL Do you have a cite on

that or you said it was dismissed as -shy

MR TOMASOVIC It was 2001 and

it was a published decision your Honor

JUDGE HILL Okay Now my

understanding of Three Mountain Power is that

they allowed for different equipment but they

only specified a single emission limit

MR TOMASOVIC It does show that

in the RBLC sir but we tracked down the

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permit and actually what happens is

different permit issuers will input different

data into the RBLC We gave you approximately

ten RBLC numbers and in almost all those

cases you are going to see different BACT

limits depending on what types of BACT limit

is being assigned

And under the Three Mountain Power

permit that was issued there were multiple

types of limits other than the concentration

limits So the hourly limits the pounds per

hour limits the annual ton per year limits

just as in our permit show that with each

turbine option different limits apply

JUDGE HI And what was the

control technology in those cases or can you

generalize on that I mean one of the things

that makes this a challenging case I think

in part is because the control technology is

I I mean you know is also essentially the

plant design because what youre trying to do

is simply maximize the effici use

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inherently Are those others cases are any

of those similar or are they all about add-on

technologies

MR TOMASOVIC I bel ieve these

days the conventional thing is that for add-on

control technology wi th turbines is SCR For

other limits such as PM and carbon monoxide

youre assigning limits inherent to good

combustion practices inherent to the equipment

that is selected And thats reflected in the

TCEQ permit that was issued for La Paloma in

this case which like ours followed an

application that asked for the flexibility to

consider multiple options And as a

practical matter when the permit writer is

assigning those limits they have to look at

the specs inherent to the turbine in assigning

both the worst case emissions but also those

emissions that reflect whats good operation

on an hourly basis

JUDGE HILL Does the TCEQ permit

have this condition that says that once the

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turb selection decision is made then the

permit is going to be amended to basically

take out reference to the other two turbines

MR TOMASOVI C It does and I

believe that may be a practice that varies by

permit issuer I didnt notice that when I

looked at the Three Mountain Power permi t I

also have on hand a listed RBLC number for a

orida permit in 2000 I didnt notice

provision there

For what we have as a special

condition theres no time set requirement on

when they would need to come in and modify it

Its more of a back-end cost-keeping

requirement where they indicate what their

selection would be and the permit issuer

would simplify the permit so its more

readable enforcement purposes

JUDGE HILL And thats the reason

to do it Because if you take Mr Alonsos

argument kind of to its logical conclusion

then they get to select the turbine and

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therefore they get the limit that applies to

that turb But youre saying that that

condition was put in there just to make the

permit cleaner to read in essence

MR TOMASOVIC Its not the case

as the petitioners have argued that they get

to choose their emissions rate Thats not

what they to choose They get to choose

their capacity they get to choose the

equipment and the various designs of equipment

that we couldnt differentiate for efficiency

purposes in assigning limits for a final

permit

So even as those limits look

numerically different in the permit we have

a technical decision on the part of the permit

issuer that says these are comparable and they

dont implicate a weakening of the BACT

requirement that we decided to assign the

limits this way

LL I want to come back

to the comparable because I think that thats

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an important issue But getting back to this

full issue of basically the selection

decision Sierra Clubs essential argument is

that since the control technology here is

maximum efficiency within a range and given

that La Paloma defined the business purpose as

build a plant thats between the capacity of

the smallest capacity turbine and the largest

capacity turbine that they should have to use

the most efficient control technology which

in this case would be the most efficient

turbine Do you agree Could the agency have

told La Paloma look you can pick whatever

turbine you want but youve got to run it as

if it were the most efficient because thats

BACT Does the agency have that authority

MR TOMASOVIC Speaking for

Region 6 with this permit there are multiplel

ways that I think permit issuers could have

decided to come out in the final permit We

decided l based on the design heat rates the

best data we had for the operational factor

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that would apply to this equipment plus a

consistent safety margin for all three

options that there are these three limits

that come out

And if we chose to express those

limits in their different format for instance

the net heat rate the picture would actually

be qui different So it is a distorted a

bit of a distorted picture to say that GHG

BACT on a gross output basis is the ultimate

measurement of what is efficient

JUDGE HILL Why would it look

different Please explain that further What

would happen if you use net

MR TOMASOVIC So what appears

from the of the permit is that the

largest difference in efficiency is 27

percent In our response to comments on page

II we actually provided the numbers to show

what that dif would look like on a net

basis which is I believe the format that

the limits were expressed in the Palmdale

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decision l as well as even earlier permits

issued by Region 6

And permit issuers do have

discretion at this timel in the absence of

guidance to consider the comments that comeI

in and decide which type of limit is going to

be most meaningful for putting BACT in place

But -shy

JUDGE LL So I cant do math in

my head but Im looking at those numbers So

youve got for the GE turbine the net heat

rate would be 7527 and for the Siemens it

would be 7771 Isnt that about two and a

half percent I or is it less than that

MR TOMASOVIC WeIll I think what

you want to look to is if you can see a 9452I

number -shy

JUDGE HILL Okay That I S the

emission limit

MR TOMASOVIC -- and the 9444

number

JUDGE HILL And then a 965

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number

MR TOMASOVI C I f you were to ask

what the percent difference is there you

would have one-tenth of one percent of a

difference which expressed as gross shows

up as 27 percent And this is one of the

challenges with such a narrowly-written

petition It didnt challenge the reasonable

compliance margins that we assigned to each

option and it doesnt bring up issues like

the start-up emission limits which in factiI

give a different rank order if you could usel

that terminology for each of the turbine

options

JUDGE HILL All right So are

you saying that if you I mean I based on thisI

chart on page 111 that I I mean I the response

comments references the 26 earl on butl

its also got this chart And youre saying

that that chart shows that its really tiny

MR TOMASOVIC Yes your Honor

If we chose to place a final permit final

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limits in the permit on a net basis using the

same calculation methodology it would be one-

tenth of one percent

JUDGE HILL How do you decide

whether you set the limit on a gross basis or

a net basis Because I know Ive seen both

MR TOMASOVIC In this case we

evaluated the adverse comments on the issue

we looked at what was going on for instance

with the proposed NSPS which expresses those

limits at least in a proposal form on a gross

output basis We saw that in general a lot

of the performance data that is out there is

available on a gross output basis so we

decided that for permitting purposes

permitting administration purposes and for

the benefit of other permitting actions it

seemed that gross output made sense for this

permit

JUDGE HILL Okay But you had

the discretion to pick net

MR TOMASOVI C Well we dont

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close off ourselves from choosing net base

1 imi ts in future permits if for instance the

NSPS were to on the basis of comments decide

that net basis really is a preferred way to

go But we have a reasonable basis for this

permit to say so And in saying that were

not purporting to say anything that would be

determinative of how state permitting

authorities or even other regions might choose

to assign the limits for a permit that

guarantees efficiency and control of GHGs

JUDGE MCCABE I just want to get

some clarity on again the facts I love

facts If the numbers here that were going

to be looking at when we decide whether we

agree with the regions position that these

limits are really not different that theyre

comparable or whatever language you use to

describe them how would we describe that Is

it 01 percent are you telling us now Is it

27 percent Is it a range from 01 percent

to 27 percent The world looks closely at

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the facts of what we were looking at when we

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MR TOMASOVIC Yes l your Honor

So 111 try and go over the notes I have on

the comparability of the limits in maybe an

orderly shy

give me a

feel free

that the

JUDGE MCCABE I was hoping youd

sound bite in the end but please

to go through the notes

MR TOMASOVIC The first thing is

permit actually assigns three

different kinds of emission limits the ton

per year the start-up limits which are on a

pound-per-hour basis and this gross output

when its sendingelectricityto the grid how

efficient is in relation to the output

So if you look at those three

different limits and were to assign a rank

order under kind of turbine model I you I re

actually going to get three different orders l

permutations I suggest thatthere dif

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the net limits was another possibility for us

You would get a fourth order if you were to

assign -- and actually nothing would have

permitted us from assigning both kinds of

limits and that limit and a gross limit but

that would have been duplicative So we

decided these are the limits for the permit

So looking just at that the basis

for the challenge which is the gross limits

you have a smallest difference of one-half of

one percent Thats the difference between

909 to 912 The largest apparent difference

is 27 percent which is the difference from

909 to 9345 And this difference is not a

difference in efficiency In the commenters

letter they do throw around the term

efficiency but sometimes thats using the

context of what is power plant efficiency

which gives you a different comparison If

youre talking about engine efficiency or

power plant efficiency the 27 percent

difference is actually 12 percent

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JUDGE HILL Why is that I was

with you until that sentence

MR TOMASOVIC So

JUDGE MCCABE I think we need a

chalkboard

MR TOMASOVIC That calculation

and I think maybe the footnotes in the comment

letter explain it as 3412 divided by the heat

rate And another issue is that the

commenters use actually lower heat value for

their descriptions of the heat rate whereas

our permit is using the high heat rate

information to get the limits

But that 12 percent difference in

efficiency that kind of efficiency power

plant efficiency were talking about is what

you may read in -shy

JUDGE HILL Can you define power

plant efficiency for that purpose for me

MR TOMASOVIC Yes sir The

definition of power plant efficiency would be

what is the heat rate value of the kilowatt

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hour divided by the heat rate for the power

plant or the turbine

JUDGE HILL Okay

MR TOMASOVIC And in our case

our limits arent just the heat rate for the

turbines as though they were in simple cycle

mode but the heat rate for those turbines in

conjunction with the heat recovery steam

generator with duct burner firing So theres

a number of things going on

And we had explained that as

turbines get larger they get more efficient

And thats actually true for several reasons

but in this case its not actually because

the GE turbine is demonstrated to be

inefficient Thats not the case Its

actually the influence of the duct burners

which wasnt something that the petitioners

raised in their appeal Because each scenario

has the same size duct burners they have a

disproportionate impact in the overall heat

rate We assigned limits that included

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everything l and thats why I when Mr Alonso

was talking about de-rating that may be a

situation where is easy to figure out that

youre just cutting into the compliance margin

if we had decided to set them all the same

limit but also might be a case where they

really put limits on their use of duct

burners which cuts into the operational

flexibility that they want to have as base

load plant that has peaking type capabilities

JUDGE HILL In other words you

cant sort of size the duct burner to the size

of the turbine or

MR TOMASOVIC No your Honor

In this case the HRSG with the duct burners

is assigned to be the same for all three

scenarios

JUDGE HILL Okay all right So

is 27 percent the largest when you talk

about tons per year startup gross output and

net heat rate is 27 the largest difference

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MR TOMASOVIC Well sir if you

were to count the annual ton per year

differences each capacity scenario is

actually about 10 percent larger than the

next If you look at the annual ton per year

limits I think the differences might be 6 or

7 percent but youre just building up your

plant with the bigger greenhouse gas impact

overall and -shy

JUDGE HILL Well the reason I

ask that question is because in your brief

you talk about that you dont need to look at

alternative control technologies that are

essentially equivalent In response to

comments it talks about these turbines are

quote highly comparable and there are

marginal differences between them So theres

a lot of words thrown around that all seem to

imply small or not significant but which one

do we use I mean the argument seems to be

essentially -- see Im coming up with a new

phrase -- essentially equivalent How do we

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judge that Well first of all is there a

single term that is most relevant from a

legal standpoint And then my second question

will be and how do we judge that

MR TOMASOVIC Well the two

explanations that we gave in the record I

think are pertinent and that is that the

differences are mere fractions of the

compl iance margin The compl iance margins we

assign to each turbine is reflective of the

uncertainties in terms of variable load

performance deviations from the iso

conditions degradation over time So if -shy

JUDGE HILL Well but how does

that cut I mean if you accept a compliance

margin at 30 percent then yes everything is

probably going to get swamped by that But if

you set the compliance margin at 2 percent

you might not

JUDGE MCCABE Or 126

MR TOMASOVIC And we set the

compliance margin at 12 percent and I think

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what that illustrates is that the difference

between the 2 percent which is approximately

a quarter of that total compliance margin

shows these are all these are all comparable

They are all going to be expected to be

performing in range of each other but we

decided that there are subtle differences that

allowed for the assignment of that reasonable

safety factor They are different sizes and

different engines but theres no fact-based

reason for us to decide to set them all at the

same limit or average them or round them up to

the nearest 50 pounds per megawatt hour

although other permit issuers may well choose

to do that in order to simplify things

JUDGE HILL If we want to give

guidance to future permit writers how would

you propose we say youve got three turbines

with different heat rates but they are

essentially equivalent How much discretion

do you think the agency has to figure out to

declare two different GHG limits to be

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essentially equivalent

MR TOMASOVI C Well I would

start your Honor with the fact that these

are all F class turbines and at the comment

period there wasnt any articulated difference

between the turbines in terms of the

technology they have You may find that in

other cases where heres a turbine that uses

dry cooling and heres a turbine that uses wet

cooling and thats a technological difference

that would allow us to elaborate on it

explain perhaps why one option is necessary

and the other isnt

But in this case where you have F

class turbines that are all modern at least

in the last several years type efficiencies

placed into an energy system that has its own

subtle impacts on what the overall limits

would be I think the way that the Board

should land on that is deference to the permit

issuers technical judgment in this case on a

case-by-case basis that this apparent

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difference of 25 pounds per megawatt hour was

not significant And we made that decision

without any written guidance from OAPPS or

OGC but it was based on our permit issuer

technical judgment And all is not as it

seems if you were to look at for instance

that net efficiency which illustrates that

that 27 percent difference which the

petitioners now complain about is only a 01

percent difference

JUDGE HILL At what point does it

become too big I mean you talk in your

brief or the response comments document talks

about well unless its poorly designed or

non-representative of the capabilities of the

technology is that the standard we should

adopt

JUDGE MCCABE Were wondering

where that came from actually

MR TOMASOVIC Well that phrase

you might find a phrase in the GHG guidance on

performance benchmarking Im not saying its

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straight transferrable to that to the way

that we used it in the brief but it does

reference performance capabilities of

technology as a starting point And we were

looking at the GHG guidance that does say in

the case of a gas-fired plant if its

considering single cycle for example you

should consider as an option combined cycle

Combined cycle isnt broken down into the

world of turbines that are available on the

market Go larger if you can if that shows

its more efficient

Instead it was more us taking

this application as it came in a conventional

combined cyc plant using modern F class

turbines with the heat recovery steam

generator and the duct burners Its a

standard type of permit It is similar to

LCRA permit that we issued It was the first

permit issued which incidentally in that

case the application came to us with the

request to permit multiple options and they

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decided before public comment that the GE 7FA

turbine was the one that they would go with

JUDGE HILL So can you cite to

any permit where EPA basically allowed the

size or model of the main emission unit to be

selected after the permit is issued as

happened here Are the -shy

MR TOMASOVIC As far as a

regionally- issued permit I sir No The

Washington State permit that is referenced in

our brief is a delegated state Sierra Club

submitted adverse comments on it and that wasl

one case where they for similar reasoning to

us decided that they would defer to the

applicants request to have multiple options

and not make them pick one of two acceptable

turbine models

JUDGE HILL Okay

JUDGE MCCABE Just going back to

your point about the F class turbines 11m

wondering if what you l re saying to us is that

it is sufficient for the permitting authority

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to look at that class of turbines and say

step one combined cycle technology is the

best available control technology here and

then when we get all the way down to step five

to set the emission limit that anything within

class F is good enough is that what youre

saying

MR TOMASOVIC No your Honor

The proj ect did come to us wi th F class

turbines You may see that in the response to

comments one of the things that Sierra Club

had said is choose larger turbines make a

bigger power plant and we quickly said that

we didnt believe that was appropriate in our

case because they had selected theyre

looking at a power plant of a certain size

using three different types of F class

turbines

But all of those were open to

commenters adverse commenters that may say

well these three turbine models of these

three turbine models this one doesnt show

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anything that shows modern day efficienc s

But at the same time its likely not a good

permit practice to say with absoluteness that

this turbine that was designed in the last

five years is not acceptable for BACT purposes

or for project purposes in other cases

because if you rest solely on that one piece

of information then the net heat rate

expresses as the pounds per megawatt hour on

a gross basis youre not necessarily

capturing all that is relevant to efficiency

JUDGE HI What if La Paloma had

said were going to build a plant thats 637

megawatts no more no less and theres only

one turbine on the market that will allow us

to do it even though there are several other

F class turbines that are much more efficient

Would the region have any authority to look

behind that

MR TOMASOVIC I think general

permit issuers do have authority to say have

you considered this or that thats so

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available In that case your Honor I think

youre presenting a case where the source is

defined binarily

JUDGE HILL Exactly

MR TOMASOVIC However it

doesn t necessarily mean that the selection of

that turbine model is unjustified If you are

to look at going back to the NSR workshop

manual I believe we cited we said in our

brief in one of our footnotes that customer

selection factors can be based on a number of

things including reliability and efficiency

experience with the equipment And all of

those are things that you can find in the NSR

in the NSR workshop manual as an example of

how you step into the BACT analysis for a

turbine Its really something that we come

in with we have a contractual commitment to

use these turbines can you see what limits

would apply to it at the front end

JUDGE HILL Let me ask if Judge

Stein or Judge McCabe has anymore questions on

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the turbine issue because then I want to move

to solar real fast

JUDGE STEIN I do

JUDGE HILL Okay

JUDGE STEIN Did I hear you say

that another facility in Region 6 that was

recently permitted is using the same turbine

as will be used by La Paloma

MR TOMASOVIC Yes your Honor

JUDGE STEIN And does the record

reflect what that BACT limit is for that

facility and how it compares to the BACT limit

here

MR TOMASOVIC s your Honor

So the name of the facility is the LCRA

Ferguson Plant And I believe that was

referenced in the statement of basis as well

as discussions sections of the response to

comments all cases looking at other

facilities that are out there including LCRA

we deemed the limits to be appropriate when

theyre placed in the appropriate context

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The Sierra Club presents Palmdale which isnt

reflective of the same design that were using

that we permitted here They referenced the

Pioneer Valley and we had to contextualize

the limits that were assigned to the Pioneer

Valley permit because that particular facility

wasnt using duct burners

JUDGE STEIN Okay So if Im

correct the BACT emissions limit for the

Lower Colorado River was 918 pounds of C02 per

megawatt hour And the limit that were

looking at here is 934 is that correct Im

not purporting to say that I have a correct

understanding Im just trying to clarify

MR TOMASOVIC Is this in the

response to comments or statement of basis

your Honor

JUDGE STEIN Oh its in my

little cheat sheet that somebody gave me

JUDGE MCCABE Its extracted

MR TOMASOVIC I may be mistaken

but I believe the limits assigned for LCRA

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were in fact on a net basis so they

wouldnt be directly comparable But we might

well have had some discussion that tried to

reconcile them

JUDGE MCCABE Yes the

comparability of all of these numbers is

somewhat perplexing to us so well address

that at the end because were thinking that we

might need some supplemental briefing to try

to get us on an agreed-on comparison table

here so that we at least understand and that

others who read the decision can understand

the import of what were deciding Do you

want to turn to solar

JUDGE HILL Yes So Mr Alonsos

argument is in essence that including any

solar into this proj ect would have been

redefining the source Do you agree wi th

that or do you think the agency has any

authority to consider some solar at an

electric plant even if it hasnt been

proposed by the applicant

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88

MR TOMASOVI C Your Honor I

believe that the Boards precedent on

redefinition of the source allows that a

permit issuer in their discretion may

require consideration of options that may

constitute a redefinition of the source

However if that is in conflict with the

fundamental business purpose of the applicant

then it is against our policy to do that

JUDGE HILL Do you think that the

agency has some -- okay So you believe the

agency has the authority to require

consideration Do you think the agency has

the obligation to do so if it wasnt proposed

if somebody raises it in comments as happened

here

MR TOMASOVIC I believe that the

agencys responsibilities in responding to the

comments in many ways are calibrated off of

the specificity of the comments that come to

us In this case the comments that we

received on solar are not in the same shape as

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they carne to the board in the petition in that

theyve attached the exhibits for two permits

that werent part of their comments that were

submitted to us and they specifically focused

on Palmdale and Victorville as two facilities

that we should have had a further discussion

about in our response to comments

But in terms of how the comments

carne to us which actually raised the issue of

solar in a lot of different ways where at

times it wasnt even clear whether they were

referencing photovoltaic versus stearn

auxiliary contributions to efficiency I

believe that the regions responses were

appropriate

JUDGE HILL Mr Alonso

essentially argued that our decision in

Palmdale said that it is appropriate to

classify addition of extra solar as

essentially redefining the source and he also

cites to Sierra Pacific Do you agree with

that characterization of those decisions

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MR TOMASOVIC Our decision is

based on the facts of our administrative

record and not a broad reliance on those

decisions stating that As was argued in our

br f we think the administrative record

shows that the considerationof solar options

at least as we understood it coming from the

commenters would redefine the source

The administrative record does

show l fact that the property limits are no

more than 80 acres and from that l it can be

discerned that there iS I based on the

footprint of the plant l not a lot of

additional acres which might approximate the

20 acres that the permittee was able to

substantiate with the affidavit that they gave

with their petition

JUDGE HILL So does the region

believe itl s not feasible to install any solar

capacity at the site

MR TOMASOVIC WeIll depending on

how that comment might be construel l your

l

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Honor rooftop solar is an option that

presumably is not what the commenters were

trying to talk about although its not always

clear In the case of the Palmdale decision

it does illustrate that as a rough measure to

contribute 10 percent of that plants total

capacity

JUDGE MCCABE Does someone have a

cell phone going Where is that music coming

from

(Whereupon the foregoing matter

went off the record at 450 pm

and went back on the record at

4 52 p m )

JUDGE MCCABE Okay Lets

proceed We dont have to cut Mr Ritchie

off Lovely music anyway

MR TOMASOVIC I was saying your

Honor as a background matter the Region 6

was aware of the factual setting that was

recited by the Board in the Palmdale case

which was the fact that to generate just 10

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percent of the capacity for that Palmdale

plant it required 250 acres And in fact

and I believe some lang-uage in the opinion

came close to this you need acreage to be

able to have power in a significant amount

You may well need more than 20 acres just to

get steam that could be used in the process

but you know thats a different technical

issue in any event

If we were to just sort of roughly

say 250 acres 10 percent of the plants power

reduced down to 20 or 25 acres youre talking

about something that doesnt substantially

influence the overall plant -shy

JUDGE HILL But thats not in the

analysis the region did in the record

correct

MR TOMASOVIC No your Honor

JUDGE HILL Okay

JUDGE MCCABE Is it the regions

position that as a matter of exercising its

discretion it would never consider solar it

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would always consider adding a supplemental

solar or whatever we call it here to be

redesign and therefore against at least the

regions policy if not the agencys to even

consider

MR TOMASOVI C No your Honor I

dont think anything in the regions response

was intended to cut off comments on solar

technology as a general matter for any other

permitting case

JUDGE MCCABE You just think the

comments here were insufficient to get you

where you needed to go in order to give it

serious consideration here i is that what

youre saying

MR TOMASOVIC Yes your Honor

I mean we had a bit of a technical discussion

in there that it is the case that for any

process that uses fuel to generate heat you

can get that from something else which might

be geothermal or solar And you could get

into the myriad permutations that go on

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in terms of whatever a commenter might

bring but it isl

JUDGE MCCABE Comment clearly

focused on solar in this case l so you dont

need to go there

MR TOMASOVIC However I there are

other parts of the comment which seem to

suggest that the l that l in their view l this

project was defined to be within a range of

capacity that could be energy generated by any

means I which we disagree with because this is

a combined cycle plant thats meant to use

natural gas as its fuel and take advantage of

the rastructural advantages specific to

that location including the waterl

availability of the pipelines and the local

need this particular kind of power to be

delivered for grid stability reasons

JUDGE MCCABE I hate to put you

on the sPOtl Mr Tomasovic l but do you think

you could reduce to one or two sentences the

reason the region did not consider solar here

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or considered it to be redesign that the

region would not entertain

MR TOMASOVIC In the way that

the comments came your Honor we believe that

that solar auxiliary preheat was not well

defined because it was it was actually raised

as a substitute for duct burners when duct

burners have a different purpose than solar

auxiliary preheat And Im already past my

two sentences but

JUDGE MCCABE Thats okay

Youre close enough Thank you Those are

all the questions we have for you at this

time Mr Tomasovic Thank you And Mr

Bender you have been very patient and I bet

youre watching your watch National Airport

flight at 700 You probably need to leave

here by what would folks who are

Washingtonians say given that it is Wednesday

rush hour before a storm

JUDGE HILL If you take a cab

Id say 545 at the latest

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JUDGE MCCABE Okay So 5 30 i

will that work for you Mr Bender

MR BENDER I think so your

Honor

JUDGE MCCABE Okay I would hate

to give you short shrift after you were so

gracious as to choose the last position or to

suggest that your judgment perhaps might need

to be revisited the next time youre offered

that choice

MR BENDER I wouldnt want to

miss this even if I had already gone

JUDGE MCCABE Okay

MR BENDER Is this better

Thank you your Honors I think to address

one thing that kind of permeates the briefs

from respondents and some of the discussion

here today theres kind of two pieces or two

sides of the same coin maybe Were talking

about size or capacity Were talking about

megawatts right And when were talking

about ERCOT or any other regional system

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operator the dispatch is to meet a load

Were talking about dispatching to meet a load

in megawatts

And the size of the units are

different here Its actually kind of a

combination of things turbines plus heat

recovery stearn generator turbine that adds

up to certain numbers Its 637 for the GE

combination for example Thats megawatts as

their peak You know if you throttle full

thats what youre going to get

The Siemens turbines can generate

637 Its not that you have a turbine you

turn it on and you get 637 megawatts or you

turn it off and you get zero and its a

binary on or off situation

In fact the other argument or the

other piece of this argument in the briefs was

that turbines as they get larger get more

efficient And if you want a large turbine at

a reduced rate less than full youre

decreasing its efficiency and thats simply

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not true And thats not true based on the

evidence in this record because that last

increment of power comes from duct burning

which is less efficient than the turbines and

stearn generator

And so as you throttle down or as

you de-rate or decrease your generation all

saying the same thing youre actually until

you hi t the point where the duct burners corne

off youre actually improving the efficiency

and decreasing the emission And we can see

that among other places in one of the tables

that counsel for Region 6 pointed to in the

response to comments where in addition to net

and gross theres also without duct burner

fire on page 11 of response to comments

which is Petition Exhibit 3 you can see that

the GE the smallest of the turbines piece is

75275 without duct burner firing The

biggest turbine the Siemens 5 is 77717

Less efficient right And you only get the

increased efficiency from the larger turbines

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as a system because theyre able to generate

more of their power before turning the duct

burners on

JUDGE MCCABE Well does this

mean youre happy to hear that theyve

selected the GE turbine

MR BENDER If they have a permit

limit that reflects what they could do If

the question is phrased differentlYI right

If the draft permit had come out and said our

project purpose is to build a plant thats

capable of generating 637 megawat ts you know II

this would be a different case The comments

would have been different l and we mayor may

not be here

But then wed saYI the comments

would come in among other things l something

to the effect of the Siemens I you know l 5 or

the Siemens 4 can generate 637 megawatts In

facti when it does so it does it at a reduced

emission

So were dealing with emission

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rates The final permit emission limits are

set based on operating full out But full out

is a different number of megawatts for each

right

JUDGE MCCABE Thank you for that

clarification Do you agree that the F class

turbines are among the most efficient turbines

available for combined cycle combustion

technology

MR BENDER I believe theyre

among I dont know that they are the most

efficient

JUDGE MCCABE Do you know of a

class thats more efficient

MR BENDER I dont The

question though is the emission limits too

which is the end of everything So were

talking about turbines and different turbines

but were really talking about different

turbines put in front of the same 271 megawatt

steam generator in this case

JUDGE MCCABE Well to you and to

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EPA of course the emission limit is the

ultimate most important thing here But of

course to the company the most important

thing is which turbine do they get to use and

is it the one that will fit whatever their

business purpose is

Your petition Im a little

confused about something Your pet it ion says

that youre not suggesting that the company

should be required to pick any particular

turbine but just that they should meet the

lowest GHG limit that any of the turbines

could meet But arent you in effect by

doing that forcing their choice of turbine

MR BENDER No Its not

requiring a turbine Whether youre forcing

it or not raises some other internal issues

I think at the company which is you know

their risk appetite for that headroom margin

thats built in how much theyre actually

going to operate because this is a 12-month

rolling average and assumes operating at 100

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percent including those duct burners wide

open which is one of the least efficient ways

to operate

JUDGE MCCABE So your preference

would be that they have to build a bigger

turbine and operate it at a lower load

MR BENDER Our preference is

they have to meet the emission limit that

JUDGE MCCABE But in concept

MR BENDER To build a bigger

turbine and operate it with less duct burning

and using more of the waste heat from the

turbine the way that the three options are

set up in this record is the most efficient

And

JUDGE HILL But that wasnt your

comment was it Your comment was simply to

pick the limit that reflects the lowest

emission rate Your comment wasnt

essentially to recalculate the rate based on

the lack of duct burning

MR BENDER Thats correct

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Sorry Im trying to answer a question a

direct question Im not representing that

thats what the comments were

JUDGE HILL Okay Fair enough

Im sorry to interrupt Keep going

MR BENDER I should speci fy this

is based on our understanding from the record

Because the Siemens turbines are capable of

basically more heat because theyre bigger but

theyre going into the same size heat recovery

steam generators as would the turbines

More of the total heat going in is coming from

waste heat from the turbines with the Siemens

compared to the GE so theres less need for

duct burning Thats what

JUDGE MCCABE What is your goal

Mr Bender Are you looking for the

lowest total amount of GHG emissions that can

possibly come out of this facility or are you

looking for something else

MR BENDER We I re looking for the

lowest BACT rate but were also looking for

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JUDGE MCCABE But the BACT rate

is based on efficiency yes

MR BENDER Its based on

efficiency here yes

JUDGE MCCABE Do you have any

objection to that

MR BENDER Im sorry

JUDGE MCCABE Do you have any

obj ection to EPAs basing the BACT rate on the

energy efficiency of the turbines

MR BENDER Not in this petition

JUDGE MCCABE Okay Well it is

this petition were talking about

MR BENDER Right Its

JUDGE STEIN But given that they

have indicated that depending on the timing

that theyre going to go with the GE turbine

what is your position as to what the emissions

limit should be for that turbine

MR BENDER The emission limit

for any of these turbines based on this

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record and the draft permit that we were able

to comment on should be -- Ill put it this

way If F class category of turbines

followed by heat recovery steam generator is

the control option and thats what we were

able to comment on And if thats the control

option that theyre going to treat as the same

control option through steps one through four

then in step five the emission rate should be

based on the lowest emission rate achievable

by that class And based on the record here

thats represented by the Siemens F4 at least

that line in the permit right

So depending on how your question

was intended your Honor if they came in and

said draft permitr project purpose 637

megawatts on peak 100-percent capacity you

know r we would look at what combination of

turbine heat recovery steam generator gives

you the lowest emission rate at that But

want to be clear thats not this case thats

not this record

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JUDGE STEIN Well Im a little

confused I mean Im with you to a point

but what I thought I heard the region say is

that when they chose the BACT limit that they

chose that they couldnt necessarily translate

between these different turbines in quite the

same way that you were doing the translation

And I mean if for example youre saying

that they need to meet emissions rate X what

if they cant meet that with this equipment

Does that mean that they cant install the

equipment

MR BENDER If La Paloma cannot

meet 909 pounds per megawatt hour gross with

the GE equipment is the hypothetical

JUDGE STEIN Yes

MR BENDER Yes then they cant

install that equipment

JUDGE MCCABE So you are forcing

their choice of turbine in effect

MR BENDER Only as a secondary

effect But just like if you cannot meet a

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BACT limit for 802 on a coal fire power plant

wi th a dry scrubber are you forcing the

selection of a more efficient wet scrubber as

a secondary effect Thats true

JUDGE MCCABE Do you think thats

a fair analogy Were talking here about the

main emitting unit and the main unit that

produces the capacity of product that the

facility wants to produce The choice between

a wet and dry scrubber doesnt affect that

MR BENDER Well according to

the region its a category and its not

affecting the category If the category as

a region says is combined cycle turbine with

heat recovery stearn generator then youre not

changing anything You may be foreclosing

business choices that are made later but I

would suggest thats true with every BACT

limit There are choices that a permittee may

want to make but cannot make because they have

to comply with their BACT limit

JUDGE HILL 80 Mr Tomasovic says

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that pointed out that the Siemens

going to get it wrong the Siemens 4 turbine

has the lowest emission limit hourly but that

the GE turbine has the lowest annual tons per

year primarily because its operating at a

lower capacity Is your argument that the

limit that the region should have set have

been the lowest of each of those or is your

argument that they should use the limits that

they got for the most efficient turbine which

was the Siemens 4

MR BENDER I believe that the

BACT limit is the primary driver BACT limit

is the pounds per megawatt hour and thats

the limit that we think that the La Paloma

facility whatever equipment it ultimately

chooses should meet That will result in

different tons on an annual basis but tons on

an annual basis is I would submitt not a

limiting limit It assumes 100 percent

operation You know t itts basicallYt itts

JUDGE HILL Wellt but heres my

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point If Mr Alonso had gotten up and said

its most likely were going to pick the

Siemens 5 or Im sorry the Siemens 4 then

theres going to be more total emissions of

GHGs a lower rate but more total emissions

So by your argument should the region have

had to pick the lowest limit for each of the

three parameters on which they set the limit

And if not why not

MR BENDER We didnt address the

total tons because we dont feel that its

going to limit If they decide that they want

to generate 630 megawatts thats the number

that multiplied by the emission rate is

going to generate the tons

JUDGE HILL But if they had

picked the Siemens 4 or the Siemens 5 they

could be operating at 735

MR BENDER They could be

operating at 735 but there are other things

that go into it obviously your Honor as Im

sure youre aware of when theyre dispatched

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how theyre dispatched And the focus here is

the per megawatt hours because thats the one

that the Sierra Club sees as actually limiting

emissions here because the annual caps are set

such a high rate that theyre not going to

be approached Even the lowest is not going

to be approached

JUDGE MCCABE Let me bring you

back to this table thats I dont know if

you have it Its page 11 of the response to

comments These numbers are all starting to

sound fungible so lets try to anchor

ourselves again Im looking at the middle

column here that says output-based emission

limit which is net without duct burning And

the GE turbine that limit is 894 and for

the Siemens 4 turbine is 909 Theyre picking

the GE turbine What limit do you want

MR BENDER Well first of all

question the accuracy of these numbers because

some of them are the same as the gross with

duct burning

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JUDGE MCCABE Theyre saying

what

MR BENDER The Siemens F4 number

in that column is the same as the permit limit

for that turbine which is expressed as gross

wi th duct burning So looking at these right

now I suspect that theyre not correct Some

of them may not be correct

JUDGE MCCABE Can we assume for

the moment that these numbers are correct

MR BENDER Yes

JUDGE MCCABE And if that turns

it into a hypothetical question so be it

Im trying to understand where youre going

there conceptually Im looking at a lower

number 894 you know its C02 equivalence of

per megawatt hour without duct burning net

wi thout duct burning Its 894 for the

turbine they want Its 909 for the one that

you were saying was the most efficient

turbine Which limit do you want for the GE

turbine Do you want the 894 or do you want

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the 909

MR BENDER It depends on this

your Honor It depends on whether were going

to set this as the ultimate rate or if were

going to s another limit as the ultimate

rate because this is a part this is without

duct burning right But the permit allows

duct burning So if we say we want 8947

without duct burning and then well leave the

duct-burning caused emissions kind

unmeasured and unregulated as a different

JUDGE MCCABE Okay Go to

next column with duct burning Youve got

9452-shy

MR BENDER Yes

JUDGE MCCABE for the GE

turbine And just a hair under that youve

got 9444 for the Siemens 4 Are you telling

us thats what you want Board to do to

tell the region that that kind of difference

is significant and that they should force this

company when it installs the GE turbine to

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meet the 944 limit for the Siemens 4 Is that

what youre asking us to do

MR BENDER Your Honor if that

if the limits were set based on this as final

enforceable limits based on that Im not

sure that we would be here on this issue

JUDGE HILL So how much of a

margin is too big Because the regions

initial submission is that even with the

limits that they actually set the difference

is 26 percent and thats just not that big

JUDGE MCCABE And looking at

these latest numbers they actually said the

range for all three turbines there was on

that net with duct burning column that the

total range was 01 percent So seeing how

close those numbers are between 945 and 944

thats obviously a lot less than 01 percent

Is that a significant difference that the

agency should be concerned about

MR BENDER The limits were

talking about are the ones in the final

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permit which are gross And they are -shy

JUDGE MCCABE Okay Would you

like to point us to a different table to look

at

MR BENDER Sure Ill point you

to the permit which is Exhibit 1 to our

petition and the permit limits themselves

Because the permits measured we commented

that the region should be looking at net

among other things And the region said no

It made that choice It made this permit the

way it did and so were addressing it the way

it came out What we and EPA and the state

can enforce are the limits and the limits are

what drive what we can count on as enforceable

emission reductions

JUDGE MCCABE Wait a minute You

wanted the limits to be based on net

MR BENDER We commented that you

should look at the net emission rates and the

region said no were going to base this on

gross

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JUDGE HILL Okay But my

question is how do you respond to the argument

the region made in its brief and that Mr

Tomasovic stated here which is okay so the

permits got gross and the difference in these

gross numbers is 26 percent and thats in the

noise

MR BENDER Its not And the

reason why I know that its too big to be

insignificant is that the region thought that

margins even around that for different

pieces because the margin is an aggregate

was significant enough to start bumping the

limit up And when they got to step five

they said thats a big enough difference

between these turbines that we cant expect

the one to meet the limit for another So I

know because its significant enough in step

five that it should be significant enough in

step one to not count them all as you know

the same

JUDGE HILL So your argument so

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if their error was at step one then what

youre really saying is that the GE turbine is

a different technology than the Siemens

turbines

MR BENDER It is a different

let me put it this way Control option in

step one should be the same as control option

in step five As counsel for La Paloma put

it its a sequence right It starts at one

it goes to five and the definition of the

control option stays the same And if and

were saying well grant the argument that

they should be treated as one option in step

one well if thats the case they should be

treated as the same option in step five and

the limit based on what that option as a

whole can achieve But if youre going to

start parsing them the appropriate time to

parse between turbines or in this case

turbine plus heat recovery generator

combination -shy

JUDGE HILL Understood

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MR BENDER is step one so

that we can look at their relative

efficiencies their relative costs what they

do emit at different levels at production

Its got to be one or the other It makes

hash out of the five-step process to look at

one definition of control option in step one

right And then look at a different

definition of control option and start

applying limits in step five Thats the

argument It has to be consistent all the way

through

I think we would get to the same

option or the same result whether we looked at

them in step one as separate or if we applied

the maximum control efficiency for that class

as a whole in step five But you run into

problems when you separate them and thats

what weve done here

JUDGE MCCABE Okay Mr Bender

could we back up again to the question that

was raised by your saying that you preferred

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and said in your comments that you preferred

limits based on gross capacity I was trying

to use the table on page 11 of the response to

comments to try to understand exactly what you

want If theyre picking the GE turbine you

said the limits these are net limits and

gross is a better measure Have you found a

place where I can look at gross limits

MR BENDER For what gross

emissions are relative to

JUDGE MCCABE Is re any place

in the record that we can look to see how

these net limits would be stated as numbers

for these turbines if it were based on gross

Is that in the record any place

MR RICHIE Your Honor if I may

this is Travis Richie Page 16 of the

statement of basis which was included I

believe as Exhibit AA of La Palomas

response I believe has that same table listed

with pounds of C02 per megawatt hour on a

gross basis with duct firing

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JUDGE MCCABE Thank you Mr

Richie So glad you stayed on the phone I

have this Do the other judges have it

Okay Its the same thing Well how are

these different They look like theyre the

same ones that we were looking at on page II

Whats the difference between the gross and

the net rates

MR BENDER Thats what I was

suggesting earlier that Im not sure that

theyre correct

JUDGE MCCABE Youre not sure

which is correct

MR BENDER I dont know

JUDGE MCCABE You dont know

MR BENDER But I dont think the

net and the gross can be the same number and

thats what I was maybe failing to highlight

before

JUDGE MCCABE But whatever the

gross is you would prefer it You just dont

know what it is or youre not sure which of

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these numbers it is is that what youre

saying

MR BENDER Your Honor there has

to be other details in the hypothetical to

know the answer It depends on if were

measuring If were measuring just whats

coming out of the turbines or if were

measuring whats coming out of the stack

because theres another pollution-causing

device in the middle and thats the duct

burner So if were saying whats the net

without duct burning and were measuring it

but were still allowing duct burning its a

different question

JUDGE MCCABE Yes I understand

This gets very complicated which is why

judges usually defer to the technical

expertise of the EPA people that are charged

with this Now in this case lets try to

bring it back to sort of principles that the

Board can focus on more appropriately I was

hoping through this argument that people

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would be able to give us the numbers that we

should be looking at to consider this argument

that I understand the region to be making that

whatever the variation among these turbines is

so close the variation in the heat rates and

accordingly the GHG limits is so close that

it is something that is essentially

equivalent to use one phraseology another

negligible difference marginal difference

Do you agree that these are so close that they

are marginally different or essentially

equivalent

MR BENDER Two answers your

Honor They are not What the permit

includes is the gross with duct burning and

that number again I would say those are

different enough that the region thought

necessary to differentiate between them And

if thats true then its not negligible and

its not inconsequential

JUDGE HILL So let me ask you a

question So if the region had said theyre

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close enough I so weI re going to set the

highest one and if they happen to pick al

turbine that we could limit more closely I

were comfortable with that

In other words I based on that

argument I okay so if the region had instead

concluded they are negligible GE looked good

enough and so were going to set the limits

based on GE And if they pick Siemens I they

get a bennie out of it would you have a basis

for challenging

MR BENDER Yes I for the same

reason Because the record says that 9092 is

achievable And then we have -shy

JUDGE HILL Well but they would

conclude that 909 is not achievable for GE

MR BENDER I think it depends on

what the record is to support that conclusion

And thats not this case and its not this

record

JUDGE HILL So the regions

mistake was setting three different limits

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MR BENDER The regions mistake

was setting three different limits for what it

says is the same control If it had

identified them as three different control

options in step one and you have a continuity

through the rest of the steps and it set three

different limits it would be a different

problem which is BACT is all limit and you

would rank them and set them based on the top

rank control option in step five But again

it depends on what happened in the prior four

steps to be able to say whether that would

have been a mistake or not and thats not

this record and its not the basis that we had

to appeal

JUDGE MCCABE Coming back to the

factual question of the variation in these

emission limits that the region has permitted

for the three turbines Mr Tomasovic

described them it may not be fair to call

this a range but he mentioned numbers that

to my mind ranged from 01 percent up to 27

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percent Is a 01 percent difference

significant enough that the agency should have

to distinguish between them in setting and

distinguish between these turbine models and

force the companys choice Point one If we

just had point one I realize theres a

range but just look at point one for a

moment Is that significant

MR BENDER I think its

contextual And I would say although you

asked that as a factual question I would

point to the Prairie State decision your

Honor

JUDGE MCCABE The what Prairie

State

MR BENDER Because its cited by

both respondents to say when theres a

negligible difference you dont have to

consider them as separate control options

And I think that Prairie State actually stands

for the opposite On page 37 in the footnote

I think its footnote 36 it rejects that

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argument that just equivalency alone is

sufficient to ignore a difference between two

different control options There has to be a

demonstrated equivalency or a negligible

difference and especially if that difference

is based on emission factors or something else

that is inherently also perhaps not specific

So if its based on an emission

factor that has a margin of error that helps

dictate what amount of difference between two

emission rates may be negligible and even if

they are exactly the same thats not enough

to ignore them You have to -shy

JUDGE MCCABE If theyre exactly

the same

MR BENDER To ignore one of the

control options because of the requirement

that you also look at what their collateral

impacts are because two different controls

options may have the same emission limit but

they may have different collateral impacts -shy

JUDGE MCCABE Thats absolutely

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true of a control option but were talking

about two different turbines here If the

turbines had the same limit would we be here

If they had the same GHG limit

MR BENDER If they had the same

GHG limit and it was -shy

JUDGE MCCABE Because thats just

the way they say that was the manufacturers

the vendors number and EPA permitted it at

that number and there was no comparable that

showed a bet ter performance why on earth

would we require them to distinguish between

those What practical difference would that

make

MR BENDER In this record and to

my knowledge there is no other distinction

between them other than emission rates But

if youre saying hypothetically the emission

rates are all the same -shy

JUDGE MCCABE No Im simply

following up on what you thought Prairie State

stood for that even if things are the same

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you cant ignore the di f f erence I just think

were doing apples and oranges here because

in Prairie State if I recall correctly and

maybe Judge Stein can help us out with this

I think they were comparing you know much

larger differences

Here Im concerned that were

getting down in the margins We are getting

dangerously close to micromanaging here on

what this GHG emission limit should be So is

o 1 percent micromanaging Is that a

difference that we dont need to worry about

Is 05 percent -- 27 percent obviously is too

much for you You think thats over the level

of significance Were wondering where is

that level of significance in difference And

Im not talking about the exact numbers Im

talking conceptually here Thats why I used

percentages to iron it out

If the range of differences

between these two turbines and their GHG

emission rates ranges somehow and depending

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on how you calculate it from 01 percent to

27 percent why should we worry about this

Why should the region be required to

distinguish

MR BENDER Your Honor the

equivalency of emission rates is an issue or

a concept thats tied together wi th the

topdown BACT analysis process and that was in

Prair State Thats the point of that

footnote that I cited to If you did this

again this is not what was done so in the

hypothetical if they had ranked them as

separate control options and they had assigned

emission rates and there was somewhere

between I think it was 01 in your

hypothetical difference and there was no other

collateral impacts differences between them

would that be enough to say -- and it was not

and it was based on you know some emission

calculations that themselves have some

variable in them I think in that

hypotheti this would not be the issue for

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appeal It wouldnt be because you know

were assuming were assuming away all of the

problems with this particular decision which

is theyre not treated as separate theyre

not distinguished in the first few steps we

dont know if theres collateral impact

differences and theres no record made to

support those findings at each of the rest of

the steps

JUDGE MCCABE So is the critical

piece of your argument that they didnt

differentiate between the turbines at step

one Is that really what Sierra Clubs

concerned about

MR BENDER If theyre going to

differentiate between them in step five they

need to differentiate between them in step I

guess it would be one through four because

then wed have an opportunity to look at

whether or not there are differences in

emissions at that point and under what

scenario and everything else that goes into a

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five-step BACT process And that was just

shunted all to the side and we only looked at

the difference between them when we got to

step five after the opportunity to address all

those other issues had passed

JUDGE MCCABE Okay Lets turn

quickly because Im watching your flight time

here to solar Is it your position that

solar is feasible on this site Supplemental

solar as youve described it And if so

please explain how

MR BENDER Your Honor the

comment was step one you need to cast as big

a net as possible to identify potentially

feasible available and applicable and we

say yes its available its applicable Is

it feasible Well we dont know the acreage

They say 20 We dont - - because we never got

to this

JUDGE MCCABE Theres a site plan

in the record isnt there

MR BENDER There are some maps

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in the record We dont know

JUDGE MCCABE Have you looked at

them

MR BENDER Ive looked at some

of the maps in the record yes

JUDGE MCCABE Have you looked at

the site plan

MR BENDER Im not sure -shy

JUDGE MCCABE The site plans

shows where things are situated on the si

where the turbines will go and the other

equipment what the footprint of the si te is

how much space is open or not

MR BENDER Im envisioning a

color map with I think that information

JUDGE MCCABE Mine is not in

color but I saw one like that Have you

looked at that and considering that is it

feasible And Judge Stein please add your

question

JUDGE STEIN If these maps show

or you can deduce from whats in the record

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that what is at play here is approximately 20

acres do you still contend that solar is

ible at this site

MR BENDER I would say to the

extent its scalable its feasible Whether

its cost effective and whether it achieves

emission reductions I dont think I dont

know and I dont think any of us know and

thats the point Thats why you go through

the five steps because you gather that

information at the later steps It was -shy

JUDGE STEIN So Im sorry

Finish I didnt mean to interrupt

MR BENDER It was excluded from

step one as not as redefining the source

And I think it would be inappropriate to

assume fact findings from what we have the

limited amount of information we have in the

record to say it would necessarily be rej ected

in the following steps unlike in Palmdale

where the issue of incremental increase was

looked at and the record was clear that there

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was zero space And the difference between

zero space for no addition and where to draw

the line when theres some space but it mayor

may not be enough to make it feasible cost

effective and everything else is something

that needs to be done by a fact finder with

the public input

JUDGE STEIN But how much effort

and work must a permit applicant go through

when theyre primarily building a particular

kind of plant and theres fairly limited

space I mean do they need to go do a I

scale investigation and develop models

space if what youre dealing with is a very

small area I mean thats a question Im

struggling with because you know this is not

lmdale and I dont buy the characterization

what Mr Alonso said about what Palmdale

stood for in terms of redefining the source

But I am troubled by what may be in the

record perhaps not as fulsome as someone

would like but there may be sufficient

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information in the record to establish that

theres only a very limited amount of space

there And if thats the case are you still

insisting that people do a full-scale analysis

of solar under those circumstances

MR BENDER I think that when

you get into the later steps two three

four the scale of the analysis is probably

relative to you know some reasonableness

right But in step one the whole point is

you cast the net and then you start doing that

analysis And it would be inappropriate to

start making assumptions because we dont

agree with all the assumptions in La Paloma

about hurricanes about other things and wed

like the ability to develop the record in

response depending on what is said about

feasibility

But feasibility wasnt discussed

until the response to comments And then it

was discussed as not not that it was not

technically feasible but it was redefining the

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source And based on in our mind in one of

the main reasons that we brought this appeal

is based on a very problematic definition of

redefining the source

JUDGE HILL Mr Bender the region

argues that Sierra Clubs comments on this

didnt ly raise this issue to any level of

specificity that youre now raising it in your

brief or here How do you respond to that

MR BENDER When they say that

they point to one of the multiple comments

looking at solar hybrid And they say it was

mentioned as an al ternative to duct burning

in addition to other things that could be

looked as alternative to duct burning

Earlier in the comments is the Palmdale

permit and the C02 BACT emission limit saying

its conservatively lower they get that and

they get a chunk of it from solar you need to

look at solar because its available its

applicable it meets the step one criteria

lets look at it And that I s what was

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ected

Elsewhere we said instead of

duct burning did you consider these other

things And yes theyre talking about the

same concept but theyre talking about two

different areas So its inappropriate to

look at only one comment and say well that

one comment about solar didnt raise this

other issue when the other comment did

JUDGE MCCABE Are you suggesting

that permitting authorities whenever theyre

faced with a PSD application by someone who

wants to build a power plant have to analyze

solar in all cases if theyre not proposing it

to begin with

MR BENDER Solar hybrid in a

combined cycle plant when it I S raised by the

public-shy

JUDGE MCCABE Okay And that -shy

MR BENDER Then the region has

an obligation to look at it

JUDGE MCCABE Expand on that

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please What do you mean by look at it

MR BENDER Include it in step

one or deem it redefining the source based on

a correct interpretation of redefining the

source And here it was an incorrect

interpretation of redefining the source It

should have made it into step one when raised

by the public And to go to your question

Judge Stein how much detail they need to do

to develop whether to reject it in later

steps I would agree theres some

reasonableness to it But I dont agree that

even assuming that 20 acres is all that there

is that we can say based on this record

that its reasonable that thats not enough to

generate solar

JUDGE STEIN But if you have a

circumstance where the BACT analysis has been

done the regions looked at it theres been

back and forth between the permit applicant

and the permittee I mean and the region

they proposed the permit for comment and a

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comment comes in about solar youre

suggesting that they have to go redo the BACT

analysis or cant they simply respond to the

comment by saying on this particular site on

these facts we dont think solar is feasible

for X Y and Z reason

MR BENDER Thats different than

the answer here

JUDGE STEIN Why is it different

than here I mean I understand what the

region did in its analysis of redefining the

source you know didnt do exactly what Im

describing here but Im concerned about

taking us to a place where in responding to

a publ ic comment where there may be an answer

that you have to go back to square one on the

BACT analysis because I dont think you do

I think you need to respond to the comment

I think you need to respond fairly to the

comment But wed never I mean how in the

world would we ever get a permit out if every

time theres a public comment that relates to

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the BACT analysis youve got to go back and

redo the BACT analysis Yes t may be

cases where you need to supplement it but I

dont think we go back to square one

MR BENDER Well two responses

your Honor Here we had raising solar in the

context of another facility a similar

facility that has solar hybrid and has a

permi t wi th lower limi ts Thats the context

So to the extent were talking about you

know how much or how real does this have to

be to generate a more substantive response

thats the context

In Knauf Fiberglass I believe Kshy

N-A-U-F however thats pronounced

JUDGE MCCABE Knauf

MR BENDER Knauf Fiberglass

The first the 1999 decision a comment was

raised another production process for

fiberglass The response was thats

proprietary to a competi tor We dont have to

look at it because well reject it later

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anyways so you know why look at it And

the Board reversed and said you cant preshy

judge Thats the point of the process You

cant pre-judge the process Go back look at

it and make a record so we know and the

public knows that you really did look at it

and you really did document your analysis and

we know you did your procedural job

Thats what should be done here

and it follows that precedent And I would

suggest if its distinguishable this is even

a clearer case than Knauf because its not

proprietary that we know of You can go out

and buy it So to the extent theres a line

this is even further on the petitioners side

of the line

JUDGE MCCABE Mr Bender Im

worried about your plane If you would like

to take a minute to just wrap up please do

And then we will let you go on your way Its

getting late

MR BENDER Sure Thank you

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your Honors I and thank you for the opportuni ty

to address these issues From Sierra Clubs

perspective this is an important permit tol

get right on these issues raised And there

are other issues that were commented on l

potent lyother issues that could have been

raised You know I dont want to suggest

that Sierra Club loves this permit even if

its corrected but this issue of what you

have to consider and how you consider

efficiency and how you consider supplemental I

in this case solari that helps improve the

efficiencyof a plant is critically important r

especially as we start into greenhouse gas PSD

permits and getting the definition of what is

the control option were looking at correct

and making sure that thats consistent all the

way through the process and that were

correctly addressing efficiency Its going

to be critical especiallyuntil we develop an

end of the pipe technology that facilities

s installing

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142

The other is this now perennial

redefinition of the source issue I

understand the Boards prior precedents and

in some cases unfortunately theyre being

applied incorrectly And this is one of those

cases And when that happens its important

to correct it make it clear and give guidance

to not only Region 6 but other permitting

authorities what redefining the source means

and whatit doesnt mean And here it doesnt

mean that if a control option is not within

the two-sentence description of the

application of the project purpose that it

cant be considered because that opens a door

to all kinds of problems not just greenhouse

gasses but every - - I mean and SCR al so

wasnt in that two-sentence description

Thank you your Honor

JUDGE MCCABE Thank you very much

Well thank you all for your presentations and

for your valiant efforts to answer our very

often detailed questions

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I would make one observation that

theres such factual confusion l at least in

the argument around the issue of how do we

compare apples to apples with the emission

numbers that we really should be looking at

for these turbines that there is a

possibility and I regret to say this because

I know its a PSD case and we are in a big

hurry but theres a possibility that we will

ask you to do a supplemental briefing on that

or ask you all perhaps to confer to get on one

sheet if its possible to give us some basisl

comparison so that we have the facts

straight in our opinion It is a lot to ask

judges like us We have some technical

training l but we are not engineers I and it is

really quite difficult for us to understand

which numbers we should be comparing to which

here

We will however make a valiant

effort to go back and to see if we can figure

that out And weill only ask you to do a

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supplemental briefing if we think its very

necessary If we do do that we will get to

you quickly on that because we do intend to

move quickly on making this decision These

are not easy issues They are important

issues and we take your point Mr Bender

that as we are entering the world of GHG BACT

permitting we do need to be careful about

what precedent were setting But we also are

very very cognizant of the need for speed

here because we dont want to hold up the

building of something that should proceed

unnecessarily

So with that well take this

matter under submission with the caveat that

you may get a request for a supplemental

briefing And we will wish you all

travels home those of you who are traveling

far especially And good luck catching that

plane Mr Bender

(Whereupon the foregoing matter

was concluded at 547 pm)

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assert 567 5022 5412 5514 10922 113321 114519 137314 assign 63 19 69 10 581578198911158 1165 1171 baseload 15 1922

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164

C E R T I F I CAT E

This is to certify that the foregoing transcript

In the matter of La Paloma Energy Center

Before US EPA

Date 02-12-14

Place Washington DC

was duly recorded and accurately transcribed under

my direction further that said transcript is a

true and accurate record of the proceedings

Court Reporter

NEAL R GROSS COURT REPORTERS AND TRANSCRIBERS

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Page 4: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us

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P-R-O-C-E-E D-I-N-G-S

323 pm

MS DURR All rise Environmental

Appeals Board of the United States

Environmental Protection Agency is now in

session for a status conferenceexpeditedoral

argument in re La Paloma Energy Center l LLC

rmit Number PAS-TX-1288-GHG PSD Appeal

Number 13-10 The Honorable Judges Kathie

Stein l Catherine McCabe Randolph Hill

presiding

Please turn off all cell phones

and no recording devices lowed Please be

seated

JUDGE MCCABE Good afternoon I

am Judge McCabe On my right is Judge Stein

and on my left is Judge Hill We are the

three panel members for this case

Id I ike to welcome you all to

Washington on this non-snowy day But first

why dont we take appearances of counsel who

will be presenting for each of the parties

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MR BENDER Good ternoon

David Bender for petitioners the Sierra Club

JUDGE MCCABE Okay Welcome

MR ALONSO Good ternoon

Richard Alonso on behalf of La Paloma

JUDGE MCCABE Welcome

MR TOMASOVI C Good afternoon

Brian Tomasovic from the EPA Region 6 Dallas

Office l joined at table by from the Office of

General Counsel Matthew Marks and Brian

Doster

JUDGE MCCABE Thank you And do

we have anyone else on the phone

MR RI E Yes I your Honor

This is Travis Richie with the Sierra Club

JUDGE MCCABE Okay Before we

beginl let me ask who will be speaking for

Sierra Club Is that just Mr Bender I or will

Mr Richie also be speaking Okay I thank you

Well first of all I would really like to

thank you all those of you especially who had

to change travel plans l for being here today

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on short notice and I realize that not only

disturbs flight arrangements but probably

disturbs your preparation time The good news

for all of you of course is that we are

going to do this a little differently today

so hope ly that wont make as much a

difference as it might in the ordinary case

Before we begin let me do a

travel check as to what time your flights on

leaving I understand a number of you are

eager to be back out of town and ahead of the

snow this evening Mr Bender

MR BENDER I f everything goes as

planned 700

JUDGE MCCABE Seven 0 clock is

your flight time And whats your airport

MR BENDER National

JUDGE MCCABE National Okay

Mr Alonso can I assume youre remaining in

town

MR ALONSO Yes

JUDGE MCCABE I assume this is a

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representative of a company with you

MR ALONSO Yes Im sorry This

is Sandra Snyder with Bracewell also

representing La Paloma and we do not have any

travel restrictions tonight

JUDGE MCCABE Thank you And

from the EPA side

MR TOMASOVIC My flight departs

at 8 pm

JUDGE MCCABE All right Then I

think we should have plenty of time Weve

scheduled an hour and a half for this We

will try our best to get you out on timel so

you can run for the airports Snow is not

supposed to begin until later this evening

We are doing this slightly

differently than our normal procedure because

this is a status conference as well as an

expedited oral argument As usual well go

ahead and allocate one half an hour

approximately to each party But the order

the parties will be slightly different than

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usual

We will start in this case with

the permitee with La Paloma Energy Center

who I will refer to briefly as La Paloma I

suspect the other judges will be doing that

too for the record Because we have some

status questions for you which I assume will

not surprise you given our scheduling order

Those answers to those questions may inform

the rest of the discussion that we have here

today so we thought it best to begin with La

Paloma

Normally of course our practice

would be to begin with the petitioner the

Sierra Club So in this case Mr Bender Im

going to give you your choice as to whether

you would like to go second or third Some

people like to have the first word some

people like to have the last word

You also have the option if you

choose to go second after La Paloma to

reserve five minutes of your time for rebuttal

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after EPA What would you like to do

MR BENDER I I 11 combine both and

do it all together

JUDGE MCCABE Okay Thats the

way weIll proceed then WeIll begin first

with La Paloma

mentioned l if we didnt we should have in ourI

order to you l were not expecting you or

asking you to make any formal presentations

today I as you would in the normal oral

argument

In the interest of timel please

presume that weve read your briefs l that

were famil with the records And in the

interest of saving time and getting you out of

here weld like to focus right away on the

judges questions If you have anything that

you would like to say very briefly first l

thoughl please 1 us know that and feel free

Mr onso

MR ALONSO Thank you Judges

And we just want to first start off by

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recognizing and thanking you for expediting

this appeal I believe the briefs were

submitted on December 27th and the Board

reached out to us just a couple of weeks later

to schedule this argument So were really

appreciative of that We are prepared to

answer your questions presented in your order

as well as any other issue thats before the

Court

As to your first issue you asked

us to report on the status of the projects

First 1 me address the construction time

line We currently have all government

approvals that are required for pre-

construction as well as agreements that we

need wi th governments We have tax agreements

that were completed We have a water supply

agreement with the local water works We have

land agreements in place We have our TCEQ

Air Permit that was finali in February of

2013

The two main components that we

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are missing right now is number one

financing Financing is contingent on

receiving a final PSD permit Once we receive

a final agency action on the permit we expect

to close that financing in short order right

ter that

As far as construction we have in

EPC the engineering procurement and

construction contract completed That was

executed in September of 2013 So shortly

er this closing we can start construction

shortly right after that That was wi th

Bechtel Power Corporation and again they are

standing by ready to start construction

JUDGE MCCABE Most importantly

Mr Alonso could you address whether youve

selected your turbine yet

MR ALONSO Yes we are prepared

to talk about that We have preliminarily

identified the preferred turbine that we would

like to install at this site It is the GE

7FA turbine However we are currently

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various escalation clauses of our existing

contracts including for the turbine in the

sense that we have planned to be done with

this process on January 1st Not just the

contract for the turbine but for other

components of the site every day that goes on

the cl is paying escalation fees on that

contract

JUDGE MCCABE So do you have a

turb contract or not

MR ALONSO We do have a spot for

manufacturing of the turbine

JUDGE MCCABE So is that like

reserving a place in case you decide to put in

your order

MR ALONSO Correct And that

deadline is April 1st On April 1st we have

what happened ter January is that we

negotiated our escalation clauses through

April 1st Come April 1st I think that the

weIll come April 1st I we would have to

renegotiate that contract And most likely I

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we can maybe even consider selecting one of

the other turbines that are in this permit

So if we dont have a final permit

in the next you know -- and Im not putting

any pressure on you guys but as of April

1st I think that the well I know the

developer would like the flexibility to

install anyone of these three turbines

JUDGE MCCABE Im not sure Im

completely following you What happens -shy

lets try it this way What happens if you

get your permit tomorrow

MR ALONSO If we get our permit

tomorrow we would close our financing a

couple of weeks later and we could start and

then we would put in a notice for the

procurement finalizing the GE 7FA turbine

contract

JUDGE MCCABE And how soon could

that happen or would that happen

MR ALONSO That would happen

upon closing and we would -shy

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JUDGE MCCABE So are we talking

about a week two weeks a month

MR ALONSO Yes My

understanding the information that I have is

that closing can happen in its a matter of

weeks a couple of weeks after we receive a

final permit

JUDGE MCCABE Okay So when you

say youve preliminary picked this GE 7FA

turbine -- can we just refer to that as the GE

turbine

MR ALONSO Sure

JUDGE MCCABE Its the only one

right thats a GE Okay Well call this

the GE turbine Youve preliminary selected

that If you get your permit tomorrow is

there any reason that youll change that

choice

MR ALONSO Most likely not If

we get our permit tomorrow if we get it

before April 1st we are probably we are most

likely yes going to select we are going to

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select the turbine

JUDGE MCCABE Okay If you get

your permit before April 1st you will select

the GE turbine is that correct

MR ALONSO That is yes

JUDGE MCCABE And my

understanding of this turbine is that its the

smallest of the three and according to heat

rates the least efficient the one to which

the region has assigned the highest GHG

ssion limit is that correct

MR ALONSO That is correct

JUDGE MCCABE Okay That will

very much inform the rest of our discussion

Thank you Mr Alonso Do you know yet

another question on your preparation here do

you know yet where the facility will be placed

in the ERCOT dispatch order and whether it

will be operated as a baseload or load cycling

facility

MR ALONSO Our plan is to

operate this as a baseload uni t However we

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will respond to the ERCOT orders as they come

I mean in Texas our business plan is to

operate this as a baseload unit

JUDGE MCCABE Does ERCOT give you

any preview of that

MR ALONSO Excuse me

JUDGE MCCABE Does ERCOT give you

any advanced notice as to whether youre going

to be likely operated as a baseload or not

MR ALONSO Our intention is to

operate it as a baseload Im not qui sure

about we can follow up with you on that as

far as ERCOT notices Im not prepared to

talk about the ERCOT notices But to the

extent that ERCOT manages dispatching we will

comply with their orders

JUDGE MCCABE Okay And you

expect at this point based on current

condi ons which I understand can change if

other plants come online or other things

happen you expect based on current

conditions that youll be dispatched high

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enough in the order that this will be a

baseload plant and therefore it will be

operated at 100-percent capacity

MR ALONSO Pretty close to it

JUDGE MCCABE On a regular basis

MR ALONSO On a regular basis

we would like to have you know utilize this

as much as possible Keep in mind though

while we do have the you know as an EPA

administrative record yes larger turbines

may be more efficient But at the end of the

day they also have higher mass emissions

And so when you look at it from an

environmental perspective to the ent that

an environmental impact plays into that the

environment really feels the impact of the

mass limit more than anything else I believe

JUDGE MCCABE Understood Okay

Can you tell us a little bit about what was

the chief factor that drove the companys

selection of the turbine how important was

the capacity or size for example

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MR ALONSO I dont know the ins

and outs why they selected that turbine

I believe its just commercial terms It was

the better commercial term -shy

JUDGE MCCABE Would you like to

consult with your client at all to see if you

can clarify that answer

MR ALONSO Sure Shes here

JUDGE MCCABE This may help you

Some of the questions that were also

interested in are how important was the

capacity or size the uni t in terms of your

decision to s the GE turbine and how do

the relative heat rates or the GHG emission

rates affect decision Did they affect

that decision if its made

MR ALONSO The way that this

project was developed is that we went out for

competitive bids of at least three turbines

And based on the necessary heat rate the

forecast of demand that was the basis of the

select ion It was not based on you know any

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other factors except for trying to meet the

purpose of the proj ect which is to supply the

load and the heat rates and the financial

arrangements that resulted from that bid

process

JUDGE HILL Was that forecast of

demand strictly internal or was it something

dictated by either EReOT or some other

external entity

MR ALONSO La Paloma is a

merchant power plant Wei re not regulated so

its not that wei to extent that your

question is to whether or not we had any

regulatory oversight -shy

JUDGE HILL Or just external

information or some sort of external driver

I guess

MR ALONSO me consul t wi th

- sorrYI I just wasnt prepared

JUDGE HILL No thats okay

MR ALONSO So specific

questions Okay

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JUDGE MCCABE But we appreciate

your corning

MR ALONSO But Im glad that

Kathleen the proj ect developer Kathleen

Smi th is here wi th us today When you develop

these projects yes they went out they had

third party evaluations of load demand and

what would fit for this market absolutely

JUDGE HILL Okay

MR ALONSO I mean its -shy

JUDGE HILL Let me ask one other

follow-up You said at the very outset Mr

Alonso that you had preliminarily identified

the GE turbine and the record before us is

that certainly at the time of the application

that decision hadnt been made Im not

asking for a specific date but roughly when

was that determination made relative

because Im curious how it relates to this

proceeding

MR ALONSO So again we made

the selection based on closing in January but

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the selection of the turbine was made in

August expecting to be you know

manufactured and installed in January So to

answer your question it was August of 2013

JUDGE HILL Did you communicate

that to the region at that time

MR ALONSO No because again

because of the timing of this permit it is a

preliminary determination At that time in

August if we were 100-percent certain that we

would get a permi t in January sure we

probably would have you know told the region

and maybe the final permit may have looked

differently But we couldnt put our eggs

all our eggs in that one basket at that time

JUDGE MCCABE What was your

understanding Mr Alonso of what the region

planned to do once you made your turbine

section Will they revise your permit or

leave in those three original limits

MR ALONSO We have a special

condition in the permit that requires that La

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Paloma submit an amended permit application to

remove the other two turbines that are not

selected from the permit So it would be a

deletion of the two other turbines that are

not selected

JUDGE STEIN Why if youve made

the decision to proceed with this particular

turbine if you receive your permit within the

time frame that is necessary for you would

you be revisiting that question if you dont

get the permit until May

MR ALONSO If we -shy

JUDGE STEIN Just hypothetically

if you get the permit a month after why is it

that suddenly thats an open question again

Im having difficulty understanding that

MR ALONSO Correct Our current

negotiations on the escalation clauses of the

contracts we have currently negotiated terms

through April 1st At that point youre

right we would have an option to negotiate

further or more likely than not we could we

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might go through another bid process to

determine whether or not maybe another turbine

might be more beneficial from an economic

perspective to install

JUDGE STEIN Thank you

JUDGE MCCABE Just to make sure

the record is clear on this though at this

point youre telling us that if the company

gets its final PSD permit from EPA before

April 1st it will be the GE turbine

MR ALONSO That is my

understanding

JUDGE MCCABE Okay Would you

like to qualify that statement

MR ALONSO Right The problem

is that again we cannot make a final

decision on the turbine until after we get the

permit because youre only going to reserve

your place line for a certain amount of

time at the manufacturing plant

JUDGE MCCABE But if you get your

permit tomorrow or anytime before April 1st

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or perhaps you need a week advanced notice

then you would be choosing the GE turbine We

can rely on that

MR ALONSO Yes

JUDGE MCCABE Is that correct

MR ALONSO More likely than not

we will be selecting that turbine

JUDGE MCCABE When you say more

likely than not or preliminary then Im not

sure what youre telling me Mr Alonso

Which is it Will you have that GE turbine be

your selection

JUDGE HILL What else might

prevent you from going ahead with the GE

turbine if there were a decision before April

1st is another way to ask the question

MR ALONSO To maintain

flexibility I mean thats one of the

purpose were here I mean if we get a call

tomorrow from Siemens saying that theyre

going to give us the turbine at five cents

maybe wed go with the Siemens

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JUDGE MCCABE So price matters

MR ALONSO Absolutely

JUDGE HILL Price really I I meant

but

MR ALONSO The likelihood of

that is minimal

IJUDGE HILL But let s explore

that for a second because it sort of takes us

to the other direction So if you so ifl

Siemens were tOI you know I mean I and I can

certainly relate to this 11m trying to do

some home maintenance But so they come in

with a bid youre not expecting l and you saYI

You know what That I s the one we should go

with thats going to be one of the larger

turbines So what will happen in terms of

your demand forecast or I I meanl how will you

operate that plan

MR ALONSO It may not fit the

business plan at the time I meanl we would

like to maintain the flexibility of selecting

the turbine as much as we can in this final

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permit Everything is in place that if we

were to get a final permit tomorrow that the

GE turbine would be used However we still

want I dont want to tell you that its 100shy

percent guaranteed We would like to maintain

that flexibility

JUDGE MCCABE But you understand

s your very desire to maintain that

flexibility that leads us all to be here

today right As I understand it the main

issue that the petitioners have with the limit

that was chosen in this case is the fact that

you are reserving flexibility to make this

choice after you get your permit

MR ALONSO But the limit is the

limit doesnt satisfy region as appropriate

and valid under BACT What the permitee is

arguing here today is that somehow we start

off with a class of control devices The

region has identified combustion combined

cycle turbines as a control class That is

your step one BACT is an evolution all the

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way through step five Once you get to step

five the purpose and the intent of step five

is to impose an emission limit looking at

those control devices and its not just

combined cycle We have a whole list of

technologies that were identified by the

region that apply to each of these turbines

At that point you look at the

ssion unit and you develop a unit-specific

emission rate that reflects the technology as

its supplied to that particular emission

unit

JUDGE MCCABE Dont you also look

at comparable units located at other

facilities when the permitting authority makes

that decision

MR ALONSO Absolutely You look

at technologies at other through the

clearinghouse and other technical information

That is your step two analysis absolutely

JUDGE MCCABE Then why wouldnt

you look at other turbines that are available

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MR ALONSO Im sorry

JUDGE MCCABE Then why wouldnt

you look at these other turbines that are

available

MR ALONSO You look at the other

turbines as - - well f are you saying the other

turbines that are mentioned

JUDGE MCCABE The Siemens

turbines

MR ALONSO The Siemens turbines

and the GE turbines have the exact same

technology installed Again at the end

and Siemens does not make the identical

products Theres going to be some

variability amongst those products and I

would argue that the actual impact of these

units or these emission rates arent that

off from each other But in step five the

region looked at the turbines and looked at

as this board has approved in the past and in

particular in Prairie State the ability to

take into consideration operational

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variability compliance headroom and other

factors made to ensure that the BACT limit at

the end of the day is workable and something

that can be achievable from a compliance

perspective

JUDGE MCCABE Mr Alonso wed

like to go on to that subject of the relative

heat rates and therefore the GHG emission

rates of these three turbines But before we

leave the subj ect that we are on of the

criteria that the company used perhaps past

tense or might in the future if something

unexpected happens use in the future to

select the turbine I heard you say two

primary things And I know were several

beats back on the questioning now But I

heard you say the forecast of demand how much

power you can 1 -- Im sure where ERCOT

will dispatch you is part of that equation -shy

and the heat rates Are those the two most

important factors to the company in selecting

the turbine Price obviously has something

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to do with this too

MR ALONSO Yes I mean and the

result of the bidding process and how that

and the third-party analysis of the energy

demand and everything else Absolutely

JUDGE HILL So are you really

saying to a large extent price is the

primary driver

MR ALONSO No not necessarily

I mean its what fits for this particular

you know looking at the forecast -shy

JUDGE HILL But its the balance

of price to demand to efficiency

MR ALONSO Sure Im sure

There is a cost component to this but its

not a cost component as specified in step four

of the BACT analysis

JUDGE HILL No Im not doing

BACT right now Im talking about just the

decision of which one to install

MR ALONSO Sure Its a

business decision and the product developer

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would like to maintain that flexibility At

the time the permit was submitted we

concurrently went and did basically a dual

process of trying to get a PSD permi t and try

to come to terms with all these agreements

whether the turbine or your tax agreement

your water use agreement And thats why our

initial application had three turb s in it

To say that we had to do I that

work up-front and then wait another two years

to get a PSD permit it would really delay the

proj ect and lose a window opportunity

currently right now at ERCOT where there are

some energy constraints in Texas This is a

very good time to build a gas-fired power

plant in Texas

JUDGE STEIN I want to follow up

Are you -shy

JUDGE HILL Yes yes

JUDGE STEIN I wanted to follow

up on your decision of the ous steps of

the BACT process I understand your wanting

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to have flexibility to the last possible

moment At the same time ordinarily in the

step two analysis you would be looking at

whether technologies are available and

applicable And if somebody was going to

drive the company to say you should build a

size thats too small or too large its my

understanding that there would be an

opportunity at that point for commenters to

explain why a different size unit might be

appropriate and you in turn would have an

opportunity to say well that doesnt work

for us

But by keeping the flexibility

until the end of the process my question is

whether you have deprived either citizens

groups or other comn1enters of the opportunity

to meaningfully comment at an earlier phase of

the process And therefore by keeping your

flexibility to the last moment you are

perhaps you should assume the risk for having

done that

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I mean in pio Pico we briefly

talked about the sizing issues Weve

acknowledged I understand your points on you

get to pick the size But if you pick it so

late in the process that nobody else can

meaningfullycomment notwithstandingthe size

you want to pick if you pick it a little

bigger its much more efficient how can that

happen if you wait until the end the

process to choose to say what technology you

the company want to go with

MR ALONSO First of 1 you

know recognizing BACT and step two Im not

aware of any precedent in PSD permitting or

from this board that somehow size and

itself is a control device Step two and to

a certain extent I step one is to identify

control devices you know technology that

would be applied to a given emission unit or

a given source And I believe that its been

pretty well established that the permittee has

a lot of flexibility in deciding the design

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factors in how the plant is designed I

would you know ask the Board to consider

that size is not a control device its more

a design criteria that is used by permittees

when they go to design a source

IJUDGE STEIN Yes I m not

thinking of size as a control technology I

see the control technology as combined cycle

turbines But when you look at combined cycle

turbines youve looked at three different

models They have different efficiencies We

can get later people can tell us whether

theyre comparable or theyre not But if the

company is headed towards a particular

efficiency and the agency or other commenters

think they should be headed elsewhere that

this particular technology combined cycle

turbines can get you a more efficient

process where in the process are they

supposed to raise that

MR ALONSO They could raise that

in how the technologies are defined and

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developed in step two

JUDGE MCCABE You may be hurting

Mr Richies ears doing that so

MR ALONSO Sorry sorry Region

6 identified roughly four different energy

efficiency and processes or practices that

apply to the class of this technology which

is a combined cycle class The public has

full opportunity and they had in this permit

to comment on exactly that whether its

installation whether its installing an

efficient heat exchanger design economizer

exhaust steam These are the control devices

that apply to the class of technology which is

whats known as combined cycle

That list today is what we have

today That list was different ten years ago

and its going to be different ten years from

now because BACT evolves That is where the

public has its say

To set a one-level you know all-

combined cycle must be 90 the 9092 pound

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I Iper C02 megawatt hour that s not BACT BACT

is set on a case-by-case emission unit-

specific basis What Sierra Club is basically

asking this board to consider is taking that

one limitl the 90921 and apply it to two

other totally different combined cycle

turbines I and I dont see that as what is

intended by BACT

JUDGE MCCABE That brings us to

an interesting question Can the GE turbine l

which you are most likely to select l to quote

you l achieve the GHG emissions rate that the

region established the Siemens turbine

MR ALONSO First of all weI

think that to require the GE turbine to meet

that limit would be asking the permittee to

over comply with an adequately-developedBACT

limit We dont think -shy

JUDGE MCCABE 11m asking you for

a factual answer l Mr Alonso

MR ALONSO From a factual

question l I mean l 1 1 m not

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JUDGE MCCABE Would you like to

consult with your client

MR ALONSO Yes okay We are

not prepared at this time to say 100 percent

whether or not we can meet that limit What

we would have to do is possibly de-rate We

might have shy

JUDGE MCCABE Possibly what

MR ALONSO De-rate the unit

JUDGE MCCABE De

MR ALONSO The unit may be not

at its maximum capacity

JUDGE MCCABE What would that do

Explain that

JUDGE HILL You mean run it

greater than capacity

JUDGE MCCABE Yes he means if

they de-rate it that they would operate it at

less than its 1 capacity What would that

do to your heat rate

MR ALONSO Probably not much

But they would have to do something

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operational to unit to basically comply

with that limit Plus we would not have the

compliance headroom that was developed for

degradation factors We might be able to meet

it day one but who knows in ten years And

just operation flexibility It would be

really difficult to commit to that limit

JUDGE MCCABE Let me see if Im

understanding you correctly I hear you say

that de-rating it would be one option to meet

that GHG emissions limit because its a total

limit even though your efficiency rate would

clearly go down if you de-rated it I hear

you saying that option number two would

essentially be to take it out of your

compliance margin which the petitioner has

characterized as generous I believe in its

comments on this permit Are those the only

two ways that the company could meet the heat

or the GHG emission limit that the region set

for the Siemens turbines in using the GE

turbine

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MR ALONSO I mean we can follow

up wi th the Board on this but to the extent

of whether or not theres other engineering

solutions or modifications to that turbine

that could be done tOI you know l basically

change the design of this unitl I meanl I

think that I s why we went through the BACT

process l though I meanl the end-of -day

emission limit is based on vendor information

that we obtain from GEl and the region took

that and applied the control technologies to

those numbers I and thats how we establish

BACT limits at the end of the day is you take

those control technologies and you impose them

onto the uni t that s supposed to be buil t I youI

work in compliance headroom l and it wasl you

know I and this board is generally deferred to

EPA techni staff on issues about compliance

headroom and whats -shy

JUDGE MCCABE I dont even think

thats an issue on this appeal l so you dont

need to go there

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MR ALONSO Well no no no To

the extent that you said that the Sierra Club

thinks that compliance headrooms are generous

JUDGE MCCABE That was just a

comment They didnt raise it on appeal

MR ALONSO Okay

JUDGE MCCABE But let me ask you

this Mr Alonso Im hearing essentially

that the only two ways that you could that

the company could meet the limit on the GE

turbine would be to either de-rate it in

which case youre not getting the power that

you want out it or to take it out of your

compliance margin which is effectively

somewhat lowering your limit really

But Im puzzled about one thing

Didnt the company in its original permit

application propose to use the average of

propose to set the permit limit at the average

the GHG emission rates or heat rates of the

three uni ts the three turbines And if

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thats the case isnt that an admission that

you can actually meet the more-demanding

emission limit on the less efficient unit

MR ALONSO Let me just say when

we initially submitted this permit

application we used the LCRA permit that

Region 6 had processed and finalized in a

period of six months

JUDGE HILL Im sorry What is

LCRA

MR ALONSO The Lower River

Colorado Authority They permitted a gas

plant in Region 6 It was not appealed to

this board So we modeled it after that

application

JUDGE MCCABE You modeled your

application after theirs

MR ALONSO To a certain extent

because it worked at Region 6 as far as this

averaging It turns out that once between

draft and final LCRA was able to select the

turbine and they selected a turbine The

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timing worked for them given their

development path

JUDGE MCCABE Im sorry You

said they selected theirs between the draft

and final permits

MR ALONSO They did And ir

final permit came out with one turbine But

thats a different project dif

development path

JUDGE HILL Well but I think the

question is youre saying that if you were to

apply the Siemens emission limit to the GE

turbine that that would over comply But if

the permit limit were set at the average of

the three and you would as you apparently are

almost likely to do select the GE turbine

then youre going to meet a lower limit than

the limit that would have been set on the GE

turbine alone So would you have been arguing

that that was over-compliance as well

MR ALONSO I mean the record

speaks for itself I mean obviously if we

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submit a permit application agreeing to a

certain limit we would have to you know

probably shave our compliance headroom But

it doesnt it doesnt I mean the issue

before the Board though I believe is whether

or not Region 6 acted properly in its BACT

analysis of these three turbines of these

particular emission units Whether or not a

unit can over comply or whether a permittee

can take a voluntarily limit to reduce its

emissions I believe thats outside of the

BACT process

JUDGE STEIN But I think what is

inside the BACT process is whether or not the

emissions limit that the region has selected

is in fact BACT And thats what Im

struggling with This case comes to us in a

somewhat unusual setting in that I dont

recall in my many years on the Board ever

seeing a situation and its possible that we

did in which three different emissions limits

were picked for the same unit

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Now Im not saying its not

happening Im simply saying that I dont

have any experience with that And what Im

more famil with is a control technology

being p whether its I you know a

scrubber or something else and within thatl

technology I the company being called upon

through the BACT process to meet an emissions

limit that reflects the best emissions limit

that that technology can achieve

And if the technology is combined

cycle then clearly there are certain sizes

of combined cycle that may be able to achieve

a better emissions than the unit that youre

picking And I dont have a problem with

somebody saying to me well we can I t do that

because of A B and C But my problem is

whether BACT automatically gets picked by

size rather than what the class of technology

is capable of performing

MR ALONSO Again I think two

points as to previous practices I meanl we

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have identified seven GHG permits or Im

sorry PSD permits that have throughout the

country and different permitting authorities

further research identified five more where

you have two or three emission units and all

units have dif rates They range from

California Arizona Florida Oregon North

Carolina So it is an established

practice out there in the permitting

JUDGE STEIN Were those

federally-issued permits or state-issued

permits if you know

MR ALONSO They were well you

know they were all state-issued permits but

some of those were in delegated states such

as Washington the s of Florida so they

are federal permits I agree that I dont

believe that this issue has come before the

Board but keep in mind BACT is a progression

And I think in step one the technology is

combined cycle And you take that technology

and you run it through the five steps But at

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the end of the day in step five if you take

the design of the emission unit thats being

proposed to be installed and you take those

technologies you know the use of rehea t

cycles the exhaust steam condensers the

generator design and all these things apply

to each of the three turbines

And at the end of the day in step

five whats the purpose of step five The

purpose of step five is to take that

progression and look at the emission unit

being proposed and develop an enforceable BACT

limit BACT is a limit based on technology

thats being identified through the step one

through four

JUDGE HILL Thats basically the

three separate applications argument am I

correct

MR ALONSO At the end of the

day we could have possibly submitted three

different applications and you would have had

to - - to do otherwise you would be basically

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setting sort of like an NSPS where you say all

combined cycles need to meet this one limit

across the board No matter where you are l

who you are l which manufacturer you use l what

color your turbine iS you need to meet thisI

limit Thats not what BACT is

JUDGE MCCABE Well the problem

with that analysis of course Mr Alonso isl

that if we take it to the full ent of what

youre suggesting you get to pick the

emission limit according to which turbine you

pick And I dont believe thats what the

permitting authority is supposed to do But

we dont need to debate this issue further

Wed like to turn before we leave

you and go to EPA 1 to the solar issue And my

question to you is is it possible -- again

here were talking facts not legal conclusion

to install some solar-generating capacity

at this proposed facility And what

information in the record can you cite us to

support your answer l whatever that answer is

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MR ALONSO On the solar pre-heat

issuel first of alII solar pre-heat is not a

control device to be identified in step one

Your factual question l can it be inst led at

this ilitYI in a meaningful waYI no We

only have 20 acres left over after we build

this proj ect

JUDGE HILL Is that in the

record

JUDGE MCCABE Is that in the

record

MR ALONSO NO I it is not Its

not in the record because againl what is in

the record is that Region 6 determined that

installing based on this boards precedent l

installing solar pre-heat or using solar as

some type of alternative fuel for this plant

would be re-designing the source

JUDGE MCCABE Well go back to

your explanation about the 20 acres Explain

to us

IMR ALONSO Okay First theres

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the 20 acres There s not enough space I landI

to make solar pre-heat a feasible or economic

technology Palmdale had 250 - something acres I

you know l a vast amount of land

Second l this plant is pretty close

to the Texas coast vulnerable to hurricanesI

Who knows if regulators of local communities

would even let us build such a large solar

field in this areal given the threat of

hurricanes

JUDGE MCCABE Is there anything

in the record for us to look at on that

IMR ALONSO No I again in the

record solar pre-heat is defined aS I would bel

redefining the source And this board has

already ruled on this issue In Palmdale thel

petitioner sought to have Palmdale install

even more solar energy than it already had

proposed and this board said that that wouldl

be redefining the source

JUDGE MCCABE I don I t bel ieve

lthat s what we said Mr Alonso I believe we

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said that redefining the source was clear if

you were talking about making it a 100-percent

solar facility

MR ALONSO Correct

JUDGE MCCABE That is quite

different from what youre talking about here

MR ALONSO Well I point the

Board then to Sierra Pacific In that case

there was a dual fuel plant biomass as well

as natural gas and the petitioner sought to

have the permitting authority to force

installation of solar and this board there

said it was redefining the source

JUDGE MCCABE And what did they

base that on

MR ALONSO Im sorry

JUDGE MCCABE I dont believe

that the Board made such a broad statement

that any time you introduce solar that it

would be redefining the source Do you recall

in Sierra Pacific what the reason was that the

Board concluded that

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MR ALONSO I do not

JUDGE MCCABE Okay Well I

wont make you do that homework right now We

actually know that Go ahead back to if you

would to the factual question because thats

the one were most interested for todays

purposes about whether its actually possible

and what there is in the record that t Is us

yes or no on that

MR ALONSO Okay Well first Il

mentioned that theres not enough land l the

hurricane situation The second issue is

Paloma is not in the renewable business They

doni t have the resources to go out and do

solar studies They would need to retra or

redo their business model in order to look at

alternative energy or renewable energy

JUDGE MCCABE Do they build their

own turbines

MR ALONSO They build gas

turbines yes

JUDGE MCCABE They build them or

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they buy them

MR ALONSO They dont do wind

they dont do solar

JUDGE MCCABE Do they use

subcontractors

MR ALONSO I mean this is

something that they would have to develop as

a business unit and will take time to go out

and get experts hire them on staff or go get

third-party folks Its just not part of

their business plan

JUDGE MCCABE Mr Alonso what do

you think the company responded the first time

the first company was asked to put on an SCR

MR ALONSO They probably said it

was unfeasible

JUDGE MCCABE They probably did

They probably also said they werent in the

business There has to be a first time

doesnt-shy

MR ALONSO No I think that as

far as being in the business I mean theyre

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in the business of burning coal And they

know that they have to put on pollution

control -shy

JUDGE HILL And I think Sierra

Clubs argument would be that La Paloma is in

the business of generating energy as

efficiently as possible in South Texas I

mean put aside the hurricane issue for a

moment but if there were enough land you

know the stated business purpose in the

application is to produce between 637 and 735

megawatts of energy I mean thats the

stated business purpose not to produce it

per se exclusively with natural gas That

may be their preference but Im not sure

thats what the record shows

MR ALONSO I mean the purpose

of citing this plant is to use the reclaimed

water from the municipality as cooling water

Theres also a natural gas pipeline close by

to this facility That is -- and the intent

is to maximize the use of that gas pipeline

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You know shy

JUDGE HILL And that is in the

record

MR ALONSO That is in our brief

JUDGE HILL Okay

MR ALONSO But again I dont

believe that solar pre-heat would even survive

step one I mean youre king about a

redesign the source by forcing folks to

consider renewable energies at a fossil fuel

plant where thats not the intention of the

design And this board has allowed and has

recognized the ability for permit to

define the parameters of their design what

they want to build and I dont think we you

know well you guys can do what you want but

to force folks that want to build fossil fuel

natural gas plants to build wind turbines I

dont know that sounds like -shy

JUDGE MCCABE Do you know if

theres any situation where any permitting

authority has done that in the United States

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yet

MR ALONSO I have not seen a

BACT analysis resul ting in or you know to do

as an alternative particularly in step one

to consider the feasibility of a renewable

project I dont have any knowledge of that

occurring at other permitting authorities

JUDGE STEIN But what about a

hybrid pI I mean I dont think whats

being suggested here is that you convert the

principal purpose of the gas turbines I

think the question thats being asked is

whether any component of it could be solar

and I think what the Board is struggling with

is in a si tuation in which solar is not

already part of the plant design is it proper

or improper to raise questions about that If

so what is the regions obligation

I mean I dont see this as sort

of a black and white issue I see it as

youre lling us theres 20 acres Maybe

thats the record maybe its not That

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may be relevant to how you answer that

question in this case as opposed to some

other case

MR ALONSO It really goes to

whether or not solar or renewable energy

should be considered a control device in step

one And I would assert no its a different

fuel source Youre redesigning when people

go to build solar plants or hybrid plants

even hybrid plants you go in and thats what

you want to build and you have a business plan

and an engineering design for a hybrid plant

and thats what you want to get permitted

But if youre out building a gas-

fired power plant and solar is not a

component I mean nowhere in the record is

there anything about La Paloma interested in

building a solar plant We want to build a

natural gas fire plant and thats the source

that should be permitted not some alternative

design And a hybrid plant would be forcing

basically brand new engineering you have to

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study you know solar rays and the impact

whether or not its efficient in this area

It would just be a totally different design or

engineering effort to design a hybrid plant

versus the plant that were trying to permit

here

JUDGE MCCABE Okay Thank you

Mr Alonso We take your point and you may

be seated And we will hear next from EPA

and Judge Hill will take the lead on questions

for EPA but be resting assured that we will

all have questions for you

JUDGE Let me start by

asking how you pronounce your name so I dont

mess it up

MR TOMASOVIC I will generally

say Tomasovic but

JUDGE HI Tomasovic

MR TOMASOVIC - - Tomasovic is

fine if you want to go old country

JUDGE HILL What do you prefer

MR TOMASOVIC Tomasovic

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JUDGE HILL Tomasovic okay So

this is purely a hypothetical question but

in your experience or in the experience

generally of the region when does a permit

applicant decide what their you know what

their turbine is going to be or what their

size is going to be or the precise design

factors of the source Does it typically

happen before they submit the permit

application after both

MR TOMASOVIC I think it could

be a variety of things your Honor Looking

through historical permitting actions we did

find that there are a couple of cases that

happened before the Board that had permit

structured such as this that had permitted

multiple turbine options You wouldnt be

able to see it from the face of the decisions

and it wouldnt be something that you could

discern from the challenges that were raised

but the Three Mountain Power decision in 2001

is one such example and there was a case

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where a petition was dismissed for being a

minor source permit But clearly on the

face of that decision which was Carlton Inc

North Shore Plant in 2001 it described a

minor NSR permit with multiple turbine

options

JUDGE MCCABE Could you repeat

the name of that one please

MR TOMASOVIC Carlton Inc

JUDGE MCCABE Carlton Inc

MR TOMASOVI C North Shore

Plant

JUDGE HILL Do you have a cite on

that or you said it was dismissed as -shy

MR TOMASOVIC It was 2001 and

it was a published decision your Honor

JUDGE HILL Okay Now my

understanding of Three Mountain Power is that

they allowed for different equipment but they

only specified a single emission limit

MR TOMASOVIC It does show that

in the RBLC sir but we tracked down the

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permit and actually what happens is

different permit issuers will input different

data into the RBLC We gave you approximately

ten RBLC numbers and in almost all those

cases you are going to see different BACT

limits depending on what types of BACT limit

is being assigned

And under the Three Mountain Power

permit that was issued there were multiple

types of limits other than the concentration

limits So the hourly limits the pounds per

hour limits the annual ton per year limits

just as in our permit show that with each

turbine option different limits apply

JUDGE HI And what was the

control technology in those cases or can you

generalize on that I mean one of the things

that makes this a challenging case I think

in part is because the control technology is

I I mean you know is also essentially the

plant design because what youre trying to do

is simply maximize the effici use

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inherently Are those others cases are any

of those similar or are they all about add-on

technologies

MR TOMASOVIC I bel ieve these

days the conventional thing is that for add-on

control technology wi th turbines is SCR For

other limits such as PM and carbon monoxide

youre assigning limits inherent to good

combustion practices inherent to the equipment

that is selected And thats reflected in the

TCEQ permit that was issued for La Paloma in

this case which like ours followed an

application that asked for the flexibility to

consider multiple options And as a

practical matter when the permit writer is

assigning those limits they have to look at

the specs inherent to the turbine in assigning

both the worst case emissions but also those

emissions that reflect whats good operation

on an hourly basis

JUDGE HILL Does the TCEQ permit

have this condition that says that once the

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turb selection decision is made then the

permit is going to be amended to basically

take out reference to the other two turbines

MR TOMASOVI C It does and I

believe that may be a practice that varies by

permit issuer I didnt notice that when I

looked at the Three Mountain Power permi t I

also have on hand a listed RBLC number for a

orida permit in 2000 I didnt notice

provision there

For what we have as a special

condition theres no time set requirement on

when they would need to come in and modify it

Its more of a back-end cost-keeping

requirement where they indicate what their

selection would be and the permit issuer

would simplify the permit so its more

readable enforcement purposes

JUDGE HILL And thats the reason

to do it Because if you take Mr Alonsos

argument kind of to its logical conclusion

then they get to select the turbine and

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therefore they get the limit that applies to

that turb But youre saying that that

condition was put in there just to make the

permit cleaner to read in essence

MR TOMASOVIC Its not the case

as the petitioners have argued that they get

to choose their emissions rate Thats not

what they to choose They get to choose

their capacity they get to choose the

equipment and the various designs of equipment

that we couldnt differentiate for efficiency

purposes in assigning limits for a final

permit

So even as those limits look

numerically different in the permit we have

a technical decision on the part of the permit

issuer that says these are comparable and they

dont implicate a weakening of the BACT

requirement that we decided to assign the

limits this way

LL I want to come back

to the comparable because I think that thats

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an important issue But getting back to this

full issue of basically the selection

decision Sierra Clubs essential argument is

that since the control technology here is

maximum efficiency within a range and given

that La Paloma defined the business purpose as

build a plant thats between the capacity of

the smallest capacity turbine and the largest

capacity turbine that they should have to use

the most efficient control technology which

in this case would be the most efficient

turbine Do you agree Could the agency have

told La Paloma look you can pick whatever

turbine you want but youve got to run it as

if it were the most efficient because thats

BACT Does the agency have that authority

MR TOMASOVIC Speaking for

Region 6 with this permit there are multiplel

ways that I think permit issuers could have

decided to come out in the final permit We

decided l based on the design heat rates the

best data we had for the operational factor

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that would apply to this equipment plus a

consistent safety margin for all three

options that there are these three limits

that come out

And if we chose to express those

limits in their different format for instance

the net heat rate the picture would actually

be qui different So it is a distorted a

bit of a distorted picture to say that GHG

BACT on a gross output basis is the ultimate

measurement of what is efficient

JUDGE HILL Why would it look

different Please explain that further What

would happen if you use net

MR TOMASOVIC So what appears

from the of the permit is that the

largest difference in efficiency is 27

percent In our response to comments on page

II we actually provided the numbers to show

what that dif would look like on a net

basis which is I believe the format that

the limits were expressed in the Palmdale

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decision l as well as even earlier permits

issued by Region 6

And permit issuers do have

discretion at this timel in the absence of

guidance to consider the comments that comeI

in and decide which type of limit is going to

be most meaningful for putting BACT in place

But -shy

JUDGE LL So I cant do math in

my head but Im looking at those numbers So

youve got for the GE turbine the net heat

rate would be 7527 and for the Siemens it

would be 7771 Isnt that about two and a

half percent I or is it less than that

MR TOMASOVIC WeIll I think what

you want to look to is if you can see a 9452I

number -shy

JUDGE HILL Okay That I S the

emission limit

MR TOMASOVIC -- and the 9444

number

JUDGE HILL And then a 965

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number

MR TOMASOVI C I f you were to ask

what the percent difference is there you

would have one-tenth of one percent of a

difference which expressed as gross shows

up as 27 percent And this is one of the

challenges with such a narrowly-written

petition It didnt challenge the reasonable

compliance margins that we assigned to each

option and it doesnt bring up issues like

the start-up emission limits which in factiI

give a different rank order if you could usel

that terminology for each of the turbine

options

JUDGE HILL All right So are

you saying that if you I mean I based on thisI

chart on page 111 that I I mean I the response

comments references the 26 earl on butl

its also got this chart And youre saying

that that chart shows that its really tiny

MR TOMASOVIC Yes your Honor

If we chose to place a final permit final

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limits in the permit on a net basis using the

same calculation methodology it would be one-

tenth of one percent

JUDGE HILL How do you decide

whether you set the limit on a gross basis or

a net basis Because I know Ive seen both

MR TOMASOVIC In this case we

evaluated the adverse comments on the issue

we looked at what was going on for instance

with the proposed NSPS which expresses those

limits at least in a proposal form on a gross

output basis We saw that in general a lot

of the performance data that is out there is

available on a gross output basis so we

decided that for permitting purposes

permitting administration purposes and for

the benefit of other permitting actions it

seemed that gross output made sense for this

permit

JUDGE HILL Okay But you had

the discretion to pick net

MR TOMASOVI C Well we dont

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close off ourselves from choosing net base

1 imi ts in future permits if for instance the

NSPS were to on the basis of comments decide

that net basis really is a preferred way to

go But we have a reasonable basis for this

permit to say so And in saying that were

not purporting to say anything that would be

determinative of how state permitting

authorities or even other regions might choose

to assign the limits for a permit that

guarantees efficiency and control of GHGs

JUDGE MCCABE I just want to get

some clarity on again the facts I love

facts If the numbers here that were going

to be looking at when we decide whether we

agree with the regions position that these

limits are really not different that theyre

comparable or whatever language you use to

describe them how would we describe that Is

it 01 percent are you telling us now Is it

27 percent Is it a range from 01 percent

to 27 percent The world looks closely at

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the facts of what we were looking at when we

draw the conclusion l so the facts matter and

311 m a Ii Ie unclear about them right now

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MR TOMASOVIC Yes l your Honor

So 111 try and go over the notes I have on

the comparability of the limits in maybe an

orderly shy

give me a

feel free

that the

JUDGE MCCABE I was hoping youd

sound bite in the end but please

to go through the notes

MR TOMASOVIC The first thing is

permit actually assigns three

different kinds of emission limits the ton

per year the start-up limits which are on a

pound-per-hour basis and this gross output

when its sendingelectricityto the grid how

efficient is in relation to the output

So if you look at those three

different limits and were to assign a rank

order under kind of turbine model I you I re

actually going to get three different orders l

permutations I suggest thatthere dif

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the net limits was another possibility for us

You would get a fourth order if you were to

assign -- and actually nothing would have

permitted us from assigning both kinds of

limits and that limit and a gross limit but

that would have been duplicative So we

decided these are the limits for the permit

So looking just at that the basis

for the challenge which is the gross limits

you have a smallest difference of one-half of

one percent Thats the difference between

909 to 912 The largest apparent difference

is 27 percent which is the difference from

909 to 9345 And this difference is not a

difference in efficiency In the commenters

letter they do throw around the term

efficiency but sometimes thats using the

context of what is power plant efficiency

which gives you a different comparison If

youre talking about engine efficiency or

power plant efficiency the 27 percent

difference is actually 12 percent

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JUDGE HILL Why is that I was

with you until that sentence

MR TOMASOVIC So

JUDGE MCCABE I think we need a

chalkboard

MR TOMASOVIC That calculation

and I think maybe the footnotes in the comment

letter explain it as 3412 divided by the heat

rate And another issue is that the

commenters use actually lower heat value for

their descriptions of the heat rate whereas

our permit is using the high heat rate

information to get the limits

But that 12 percent difference in

efficiency that kind of efficiency power

plant efficiency were talking about is what

you may read in -shy

JUDGE HILL Can you define power

plant efficiency for that purpose for me

MR TOMASOVIC Yes sir The

definition of power plant efficiency would be

what is the heat rate value of the kilowatt

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hour divided by the heat rate for the power

plant or the turbine

JUDGE HILL Okay

MR TOMASOVIC And in our case

our limits arent just the heat rate for the

turbines as though they were in simple cycle

mode but the heat rate for those turbines in

conjunction with the heat recovery steam

generator with duct burner firing So theres

a number of things going on

And we had explained that as

turbines get larger they get more efficient

And thats actually true for several reasons

but in this case its not actually because

the GE turbine is demonstrated to be

inefficient Thats not the case Its

actually the influence of the duct burners

which wasnt something that the petitioners

raised in their appeal Because each scenario

has the same size duct burners they have a

disproportionate impact in the overall heat

rate We assigned limits that included

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everything l and thats why I when Mr Alonso

was talking about de-rating that may be a

situation where is easy to figure out that

youre just cutting into the compliance margin

if we had decided to set them all the same

limit but also might be a case where they

really put limits on their use of duct

burners which cuts into the operational

flexibility that they want to have as base

load plant that has peaking type capabilities

JUDGE HILL In other words you

cant sort of size the duct burner to the size

of the turbine or

MR TOMASOVIC No your Honor

In this case the HRSG with the duct burners

is assigned to be the same for all three

scenarios

JUDGE HILL Okay all right So

is 27 percent the largest when you talk

about tons per year startup gross output and

net heat rate is 27 the largest difference

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MR TOMASOVIC Well sir if you

were to count the annual ton per year

differences each capacity scenario is

actually about 10 percent larger than the

next If you look at the annual ton per year

limits I think the differences might be 6 or

7 percent but youre just building up your

plant with the bigger greenhouse gas impact

overall and -shy

JUDGE HILL Well the reason I

ask that question is because in your brief

you talk about that you dont need to look at

alternative control technologies that are

essentially equivalent In response to

comments it talks about these turbines are

quote highly comparable and there are

marginal differences between them So theres

a lot of words thrown around that all seem to

imply small or not significant but which one

do we use I mean the argument seems to be

essentially -- see Im coming up with a new

phrase -- essentially equivalent How do we

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judge that Well first of all is there a

single term that is most relevant from a

legal standpoint And then my second question

will be and how do we judge that

MR TOMASOVIC Well the two

explanations that we gave in the record I

think are pertinent and that is that the

differences are mere fractions of the

compl iance margin The compl iance margins we

assign to each turbine is reflective of the

uncertainties in terms of variable load

performance deviations from the iso

conditions degradation over time So if -shy

JUDGE HILL Well but how does

that cut I mean if you accept a compliance

margin at 30 percent then yes everything is

probably going to get swamped by that But if

you set the compliance margin at 2 percent

you might not

JUDGE MCCABE Or 126

MR TOMASOVIC And we set the

compliance margin at 12 percent and I think

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what that illustrates is that the difference

between the 2 percent which is approximately

a quarter of that total compliance margin

shows these are all these are all comparable

They are all going to be expected to be

performing in range of each other but we

decided that there are subtle differences that

allowed for the assignment of that reasonable

safety factor They are different sizes and

different engines but theres no fact-based

reason for us to decide to set them all at the

same limit or average them or round them up to

the nearest 50 pounds per megawatt hour

although other permit issuers may well choose

to do that in order to simplify things

JUDGE HILL If we want to give

guidance to future permit writers how would

you propose we say youve got three turbines

with different heat rates but they are

essentially equivalent How much discretion

do you think the agency has to figure out to

declare two different GHG limits to be

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essentially equivalent

MR TOMASOVI C Well I would

start your Honor with the fact that these

are all F class turbines and at the comment

period there wasnt any articulated difference

between the turbines in terms of the

technology they have You may find that in

other cases where heres a turbine that uses

dry cooling and heres a turbine that uses wet

cooling and thats a technological difference

that would allow us to elaborate on it

explain perhaps why one option is necessary

and the other isnt

But in this case where you have F

class turbines that are all modern at least

in the last several years type efficiencies

placed into an energy system that has its own

subtle impacts on what the overall limits

would be I think the way that the Board

should land on that is deference to the permit

issuers technical judgment in this case on a

case-by-case basis that this apparent

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difference of 25 pounds per megawatt hour was

not significant And we made that decision

without any written guidance from OAPPS or

OGC but it was based on our permit issuer

technical judgment And all is not as it

seems if you were to look at for instance

that net efficiency which illustrates that

that 27 percent difference which the

petitioners now complain about is only a 01

percent difference

JUDGE HILL At what point does it

become too big I mean you talk in your

brief or the response comments document talks

about well unless its poorly designed or

non-representative of the capabilities of the

technology is that the standard we should

adopt

JUDGE MCCABE Were wondering

where that came from actually

MR TOMASOVIC Well that phrase

you might find a phrase in the GHG guidance on

performance benchmarking Im not saying its

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straight transferrable to that to the way

that we used it in the brief but it does

reference performance capabilities of

technology as a starting point And we were

looking at the GHG guidance that does say in

the case of a gas-fired plant if its

considering single cycle for example you

should consider as an option combined cycle

Combined cycle isnt broken down into the

world of turbines that are available on the

market Go larger if you can if that shows

its more efficient

Instead it was more us taking

this application as it came in a conventional

combined cyc plant using modern F class

turbines with the heat recovery steam

generator and the duct burners Its a

standard type of permit It is similar to

LCRA permit that we issued It was the first

permit issued which incidentally in that

case the application came to us with the

request to permit multiple options and they

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decided before public comment that the GE 7FA

turbine was the one that they would go with

JUDGE HILL So can you cite to

any permit where EPA basically allowed the

size or model of the main emission unit to be

selected after the permit is issued as

happened here Are the -shy

MR TOMASOVIC As far as a

regionally- issued permit I sir No The

Washington State permit that is referenced in

our brief is a delegated state Sierra Club

submitted adverse comments on it and that wasl

one case where they for similar reasoning to

us decided that they would defer to the

applicants request to have multiple options

and not make them pick one of two acceptable

turbine models

JUDGE HILL Okay

JUDGE MCCABE Just going back to

your point about the F class turbines 11m

wondering if what you l re saying to us is that

it is sufficient for the permitting authority

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to look at that class of turbines and say

step one combined cycle technology is the

best available control technology here and

then when we get all the way down to step five

to set the emission limit that anything within

class F is good enough is that what youre

saying

MR TOMASOVIC No your Honor

The proj ect did come to us wi th F class

turbines You may see that in the response to

comments one of the things that Sierra Club

had said is choose larger turbines make a

bigger power plant and we quickly said that

we didnt believe that was appropriate in our

case because they had selected theyre

looking at a power plant of a certain size

using three different types of F class

turbines

But all of those were open to

commenters adverse commenters that may say

well these three turbine models of these

three turbine models this one doesnt show

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83

anything that shows modern day efficienc s

But at the same time its likely not a good

permit practice to say with absoluteness that

this turbine that was designed in the last

five years is not acceptable for BACT purposes

or for project purposes in other cases

because if you rest solely on that one piece

of information then the net heat rate

expresses as the pounds per megawatt hour on

a gross basis youre not necessarily

capturing all that is relevant to efficiency

JUDGE HI What if La Paloma had

said were going to build a plant thats 637

megawatts no more no less and theres only

one turbine on the market that will allow us

to do it even though there are several other

F class turbines that are much more efficient

Would the region have any authority to look

behind that

MR TOMASOVIC I think general

permit issuers do have authority to say have

you considered this or that thats so

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84

available In that case your Honor I think

youre presenting a case where the source is

defined binarily

JUDGE HILL Exactly

MR TOMASOVIC However it

doesn t necessarily mean that the selection of

that turbine model is unjustified If you are

to look at going back to the NSR workshop

manual I believe we cited we said in our

brief in one of our footnotes that customer

selection factors can be based on a number of

things including reliability and efficiency

experience with the equipment And all of

those are things that you can find in the NSR

in the NSR workshop manual as an example of

how you step into the BACT analysis for a

turbine Its really something that we come

in with we have a contractual commitment to

use these turbines can you see what limits

would apply to it at the front end

JUDGE HILL Let me ask if Judge

Stein or Judge McCabe has anymore questions on

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the turbine issue because then I want to move

to solar real fast

JUDGE STEIN I do

JUDGE HILL Okay

JUDGE STEIN Did I hear you say

that another facility in Region 6 that was

recently permitted is using the same turbine

as will be used by La Paloma

MR TOMASOVIC Yes your Honor

JUDGE STEIN And does the record

reflect what that BACT limit is for that

facility and how it compares to the BACT limit

here

MR TOMASOVIC s your Honor

So the name of the facility is the LCRA

Ferguson Plant And I believe that was

referenced in the statement of basis as well

as discussions sections of the response to

comments all cases looking at other

facilities that are out there including LCRA

we deemed the limits to be appropriate when

theyre placed in the appropriate context

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The Sierra Club presents Palmdale which isnt

reflective of the same design that were using

that we permitted here They referenced the

Pioneer Valley and we had to contextualize

the limits that were assigned to the Pioneer

Valley permit because that particular facility

wasnt using duct burners

JUDGE STEIN Okay So if Im

correct the BACT emissions limit for the

Lower Colorado River was 918 pounds of C02 per

megawatt hour And the limit that were

looking at here is 934 is that correct Im

not purporting to say that I have a correct

understanding Im just trying to clarify

MR TOMASOVIC Is this in the

response to comments or statement of basis

your Honor

JUDGE STEIN Oh its in my

little cheat sheet that somebody gave me

JUDGE MCCABE Its extracted

MR TOMASOVIC I may be mistaken

but I believe the limits assigned for LCRA

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were in fact on a net basis so they

wouldnt be directly comparable But we might

well have had some discussion that tried to

reconcile them

JUDGE MCCABE Yes the

comparability of all of these numbers is

somewhat perplexing to us so well address

that at the end because were thinking that we

might need some supplemental briefing to try

to get us on an agreed-on comparison table

here so that we at least understand and that

others who read the decision can understand

the import of what were deciding Do you

want to turn to solar

JUDGE HILL Yes So Mr Alonsos

argument is in essence that including any

solar into this proj ect would have been

redefining the source Do you agree wi th

that or do you think the agency has any

authority to consider some solar at an

electric plant even if it hasnt been

proposed by the applicant

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88

MR TOMASOVI C Your Honor I

believe that the Boards precedent on

redefinition of the source allows that a

permit issuer in their discretion may

require consideration of options that may

constitute a redefinition of the source

However if that is in conflict with the

fundamental business purpose of the applicant

then it is against our policy to do that

JUDGE HILL Do you think that the

agency has some -- okay So you believe the

agency has the authority to require

consideration Do you think the agency has

the obligation to do so if it wasnt proposed

if somebody raises it in comments as happened

here

MR TOMASOVIC I believe that the

agencys responsibilities in responding to the

comments in many ways are calibrated off of

the specificity of the comments that come to

us In this case the comments that we

received on solar are not in the same shape as

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they carne to the board in the petition in that

theyve attached the exhibits for two permits

that werent part of their comments that were

submitted to us and they specifically focused

on Palmdale and Victorville as two facilities

that we should have had a further discussion

about in our response to comments

But in terms of how the comments

carne to us which actually raised the issue of

solar in a lot of different ways where at

times it wasnt even clear whether they were

referencing photovoltaic versus stearn

auxiliary contributions to efficiency I

believe that the regions responses were

appropriate

JUDGE HILL Mr Alonso

essentially argued that our decision in

Palmdale said that it is appropriate to

classify addition of extra solar as

essentially redefining the source and he also

cites to Sierra Pacific Do you agree with

that characterization of those decisions

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MR TOMASOVIC Our decision is

based on the facts of our administrative

record and not a broad reliance on those

decisions stating that As was argued in our

br f we think the administrative record

shows that the considerationof solar options

at least as we understood it coming from the

commenters would redefine the source

The administrative record does

show l fact that the property limits are no

more than 80 acres and from that l it can be

discerned that there iS I based on the

footprint of the plant l not a lot of

additional acres which might approximate the

20 acres that the permittee was able to

substantiate with the affidavit that they gave

with their petition

JUDGE HILL So does the region

believe itl s not feasible to install any solar

capacity at the site

MR TOMASOVIC WeIll depending on

how that comment might be construel l your

l

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Honor rooftop solar is an option that

presumably is not what the commenters were

trying to talk about although its not always

clear In the case of the Palmdale decision

it does illustrate that as a rough measure to

contribute 10 percent of that plants total

capacity

JUDGE MCCABE Does someone have a

cell phone going Where is that music coming

from

(Whereupon the foregoing matter

went off the record at 450 pm

and went back on the record at

4 52 p m )

JUDGE MCCABE Okay Lets

proceed We dont have to cut Mr Ritchie

off Lovely music anyway

MR TOMASOVIC I was saying your

Honor as a background matter the Region 6

was aware of the factual setting that was

recited by the Board in the Palmdale case

which was the fact that to generate just 10

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percent of the capacity for that Palmdale

plant it required 250 acres And in fact

and I believe some lang-uage in the opinion

came close to this you need acreage to be

able to have power in a significant amount

You may well need more than 20 acres just to

get steam that could be used in the process

but you know thats a different technical

issue in any event

If we were to just sort of roughly

say 250 acres 10 percent of the plants power

reduced down to 20 or 25 acres youre talking

about something that doesnt substantially

influence the overall plant -shy

JUDGE HILL But thats not in the

analysis the region did in the record

correct

MR TOMASOVIC No your Honor

JUDGE HILL Okay

JUDGE MCCABE Is it the regions

position that as a matter of exercising its

discretion it would never consider solar it

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would always consider adding a supplemental

solar or whatever we call it here to be

redesign and therefore against at least the

regions policy if not the agencys to even

consider

MR TOMASOVI C No your Honor I

dont think anything in the regions response

was intended to cut off comments on solar

technology as a general matter for any other

permitting case

JUDGE MCCABE You just think the

comments here were insufficient to get you

where you needed to go in order to give it

serious consideration here i is that what

youre saying

MR TOMASOVIC Yes your Honor

I mean we had a bit of a technical discussion

in there that it is the case that for any

process that uses fuel to generate heat you

can get that from something else which might

be geothermal or solar And you could get

into the myriad permutations that go on

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in terms of whatever a commenter might

bring but it isl

JUDGE MCCABE Comment clearly

focused on solar in this case l so you dont

need to go there

MR TOMASOVIC However I there are

other parts of the comment which seem to

suggest that the l that l in their view l this

project was defined to be within a range of

capacity that could be energy generated by any

means I which we disagree with because this is

a combined cycle plant thats meant to use

natural gas as its fuel and take advantage of

the rastructural advantages specific to

that location including the waterl

availability of the pipelines and the local

need this particular kind of power to be

delivered for grid stability reasons

JUDGE MCCABE I hate to put you

on the sPOtl Mr Tomasovic l but do you think

you could reduce to one or two sentences the

reason the region did not consider solar here

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or considered it to be redesign that the

region would not entertain

MR TOMASOVIC In the way that

the comments came your Honor we believe that

that solar auxiliary preheat was not well

defined because it was it was actually raised

as a substitute for duct burners when duct

burners have a different purpose than solar

auxiliary preheat And Im already past my

two sentences but

JUDGE MCCABE Thats okay

Youre close enough Thank you Those are

all the questions we have for you at this

time Mr Tomasovic Thank you And Mr

Bender you have been very patient and I bet

youre watching your watch National Airport

flight at 700 You probably need to leave

here by what would folks who are

Washingtonians say given that it is Wednesday

rush hour before a storm

JUDGE HILL If you take a cab

Id say 545 at the latest

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JUDGE MCCABE Okay So 5 30 i

will that work for you Mr Bender

MR BENDER I think so your

Honor

JUDGE MCCABE Okay I would hate

to give you short shrift after you were so

gracious as to choose the last position or to

suggest that your judgment perhaps might need

to be revisited the next time youre offered

that choice

MR BENDER I wouldnt want to

miss this even if I had already gone

JUDGE MCCABE Okay

MR BENDER Is this better

Thank you your Honors I think to address

one thing that kind of permeates the briefs

from respondents and some of the discussion

here today theres kind of two pieces or two

sides of the same coin maybe Were talking

about size or capacity Were talking about

megawatts right And when were talking

about ERCOT or any other regional system

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operator the dispatch is to meet a load

Were talking about dispatching to meet a load

in megawatts

And the size of the units are

different here Its actually kind of a

combination of things turbines plus heat

recovery stearn generator turbine that adds

up to certain numbers Its 637 for the GE

combination for example Thats megawatts as

their peak You know if you throttle full

thats what youre going to get

The Siemens turbines can generate

637 Its not that you have a turbine you

turn it on and you get 637 megawatts or you

turn it off and you get zero and its a

binary on or off situation

In fact the other argument or the

other piece of this argument in the briefs was

that turbines as they get larger get more

efficient And if you want a large turbine at

a reduced rate less than full youre

decreasing its efficiency and thats simply

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not true And thats not true based on the

evidence in this record because that last

increment of power comes from duct burning

which is less efficient than the turbines and

stearn generator

And so as you throttle down or as

you de-rate or decrease your generation all

saying the same thing youre actually until

you hi t the point where the duct burners corne

off youre actually improving the efficiency

and decreasing the emission And we can see

that among other places in one of the tables

that counsel for Region 6 pointed to in the

response to comments where in addition to net

and gross theres also without duct burner

fire on page 11 of response to comments

which is Petition Exhibit 3 you can see that

the GE the smallest of the turbines piece is

75275 without duct burner firing The

biggest turbine the Siemens 5 is 77717

Less efficient right And you only get the

increased efficiency from the larger turbines

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as a system because theyre able to generate

more of their power before turning the duct

burners on

JUDGE MCCABE Well does this

mean youre happy to hear that theyve

selected the GE turbine

MR BENDER If they have a permit

limit that reflects what they could do If

the question is phrased differentlYI right

If the draft permit had come out and said our

project purpose is to build a plant thats

capable of generating 637 megawat ts you know II

this would be a different case The comments

would have been different l and we mayor may

not be here

But then wed saYI the comments

would come in among other things l something

to the effect of the Siemens I you know l 5 or

the Siemens 4 can generate 637 megawatts In

facti when it does so it does it at a reduced

emission

So were dealing with emission

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rates The final permit emission limits are

set based on operating full out But full out

is a different number of megawatts for each

right

JUDGE MCCABE Thank you for that

clarification Do you agree that the F class

turbines are among the most efficient turbines

available for combined cycle combustion

technology

MR BENDER I believe theyre

among I dont know that they are the most

efficient

JUDGE MCCABE Do you know of a

class thats more efficient

MR BENDER I dont The

question though is the emission limits too

which is the end of everything So were

talking about turbines and different turbines

but were really talking about different

turbines put in front of the same 271 megawatt

steam generator in this case

JUDGE MCCABE Well to you and to

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EPA of course the emission limit is the

ultimate most important thing here But of

course to the company the most important

thing is which turbine do they get to use and

is it the one that will fit whatever their

business purpose is

Your petition Im a little

confused about something Your pet it ion says

that youre not suggesting that the company

should be required to pick any particular

turbine but just that they should meet the

lowest GHG limit that any of the turbines

could meet But arent you in effect by

doing that forcing their choice of turbine

MR BENDER No Its not

requiring a turbine Whether youre forcing

it or not raises some other internal issues

I think at the company which is you know

their risk appetite for that headroom margin

thats built in how much theyre actually

going to operate because this is a 12-month

rolling average and assumes operating at 100

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percent including those duct burners wide

open which is one of the least efficient ways

to operate

JUDGE MCCABE So your preference

would be that they have to build a bigger

turbine and operate it at a lower load

MR BENDER Our preference is

they have to meet the emission limit that

JUDGE MCCABE But in concept

MR BENDER To build a bigger

turbine and operate it with less duct burning

and using more of the waste heat from the

turbine the way that the three options are

set up in this record is the most efficient

And

JUDGE HILL But that wasnt your

comment was it Your comment was simply to

pick the limit that reflects the lowest

emission rate Your comment wasnt

essentially to recalculate the rate based on

the lack of duct burning

MR BENDER Thats correct

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Sorry Im trying to answer a question a

direct question Im not representing that

thats what the comments were

JUDGE HILL Okay Fair enough

Im sorry to interrupt Keep going

MR BENDER I should speci fy this

is based on our understanding from the record

Because the Siemens turbines are capable of

basically more heat because theyre bigger but

theyre going into the same size heat recovery

steam generators as would the turbines

More of the total heat going in is coming from

waste heat from the turbines with the Siemens

compared to the GE so theres less need for

duct burning Thats what

JUDGE MCCABE What is your goal

Mr Bender Are you looking for the

lowest total amount of GHG emissions that can

possibly come out of this facility or are you

looking for something else

MR BENDER We I re looking for the

lowest BACT rate but were also looking for

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JUDGE MCCABE But the BACT rate

is based on efficiency yes

MR BENDER Its based on

efficiency here yes

JUDGE MCCABE Do you have any

objection to that

MR BENDER Im sorry

JUDGE MCCABE Do you have any

obj ection to EPAs basing the BACT rate on the

energy efficiency of the turbines

MR BENDER Not in this petition

JUDGE MCCABE Okay Well it is

this petition were talking about

MR BENDER Right Its

JUDGE STEIN But given that they

have indicated that depending on the timing

that theyre going to go with the GE turbine

what is your position as to what the emissions

limit should be for that turbine

MR BENDER The emission limit

for any of these turbines based on this

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record and the draft permit that we were able

to comment on should be -- Ill put it this

way If F class category of turbines

followed by heat recovery steam generator is

the control option and thats what we were

able to comment on And if thats the control

option that theyre going to treat as the same

control option through steps one through four

then in step five the emission rate should be

based on the lowest emission rate achievable

by that class And based on the record here

thats represented by the Siemens F4 at least

that line in the permit right

So depending on how your question

was intended your Honor if they came in and

said draft permitr project purpose 637

megawatts on peak 100-percent capacity you

know r we would look at what combination of

turbine heat recovery steam generator gives

you the lowest emission rate at that But

want to be clear thats not this case thats

not this record

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JUDGE STEIN Well Im a little

confused I mean Im with you to a point

but what I thought I heard the region say is

that when they chose the BACT limit that they

chose that they couldnt necessarily translate

between these different turbines in quite the

same way that you were doing the translation

And I mean if for example youre saying

that they need to meet emissions rate X what

if they cant meet that with this equipment

Does that mean that they cant install the

equipment

MR BENDER If La Paloma cannot

meet 909 pounds per megawatt hour gross with

the GE equipment is the hypothetical

JUDGE STEIN Yes

MR BENDER Yes then they cant

install that equipment

JUDGE MCCABE So you are forcing

their choice of turbine in effect

MR BENDER Only as a secondary

effect But just like if you cannot meet a

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BACT limit for 802 on a coal fire power plant

wi th a dry scrubber are you forcing the

selection of a more efficient wet scrubber as

a secondary effect Thats true

JUDGE MCCABE Do you think thats

a fair analogy Were talking here about the

main emitting unit and the main unit that

produces the capacity of product that the

facility wants to produce The choice between

a wet and dry scrubber doesnt affect that

MR BENDER Well according to

the region its a category and its not

affecting the category If the category as

a region says is combined cycle turbine with

heat recovery stearn generator then youre not

changing anything You may be foreclosing

business choices that are made later but I

would suggest thats true with every BACT

limit There are choices that a permittee may

want to make but cannot make because they have

to comply with their BACT limit

JUDGE HILL 80 Mr Tomasovic says

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that pointed out that the Siemens

going to get it wrong the Siemens 4 turbine

has the lowest emission limit hourly but that

the GE turbine has the lowest annual tons per

year primarily because its operating at a

lower capacity Is your argument that the

limit that the region should have set have

been the lowest of each of those or is your

argument that they should use the limits that

they got for the most efficient turbine which

was the Siemens 4

MR BENDER I believe that the

BACT limit is the primary driver BACT limit

is the pounds per megawatt hour and thats

the limit that we think that the La Paloma

facility whatever equipment it ultimately

chooses should meet That will result in

different tons on an annual basis but tons on

an annual basis is I would submitt not a

limiting limit It assumes 100 percent

operation You know t itts basicallYt itts

JUDGE HILL Wellt but heres my

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point If Mr Alonso had gotten up and said

its most likely were going to pick the

Siemens 5 or Im sorry the Siemens 4 then

theres going to be more total emissions of

GHGs a lower rate but more total emissions

So by your argument should the region have

had to pick the lowest limit for each of the

three parameters on which they set the limit

And if not why not

MR BENDER We didnt address the

total tons because we dont feel that its

going to limit If they decide that they want

to generate 630 megawatts thats the number

that multiplied by the emission rate is

going to generate the tons

JUDGE HILL But if they had

picked the Siemens 4 or the Siemens 5 they

could be operating at 735

MR BENDER They could be

operating at 735 but there are other things

that go into it obviously your Honor as Im

sure youre aware of when theyre dispatched

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how theyre dispatched And the focus here is

the per megawatt hours because thats the one

that the Sierra Club sees as actually limiting

emissions here because the annual caps are set

such a high rate that theyre not going to

be approached Even the lowest is not going

to be approached

JUDGE MCCABE Let me bring you

back to this table thats I dont know if

you have it Its page 11 of the response to

comments These numbers are all starting to

sound fungible so lets try to anchor

ourselves again Im looking at the middle

column here that says output-based emission

limit which is net without duct burning And

the GE turbine that limit is 894 and for

the Siemens 4 turbine is 909 Theyre picking

the GE turbine What limit do you want

MR BENDER Well first of all

question the accuracy of these numbers because

some of them are the same as the gross with

duct burning

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JUDGE MCCABE Theyre saying

what

MR BENDER The Siemens F4 number

in that column is the same as the permit limit

for that turbine which is expressed as gross

wi th duct burning So looking at these right

now I suspect that theyre not correct Some

of them may not be correct

JUDGE MCCABE Can we assume for

the moment that these numbers are correct

MR BENDER Yes

JUDGE MCCABE And if that turns

it into a hypothetical question so be it

Im trying to understand where youre going

there conceptually Im looking at a lower

number 894 you know its C02 equivalence of

per megawatt hour without duct burning net

wi thout duct burning Its 894 for the

turbine they want Its 909 for the one that

you were saying was the most efficient

turbine Which limit do you want for the GE

turbine Do you want the 894 or do you want

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the 909

MR BENDER It depends on this

your Honor It depends on whether were going

to set this as the ultimate rate or if were

going to s another limit as the ultimate

rate because this is a part this is without

duct burning right But the permit allows

duct burning So if we say we want 8947

without duct burning and then well leave the

duct-burning caused emissions kind

unmeasured and unregulated as a different

JUDGE MCCABE Okay Go to

next column with duct burning Youve got

9452-shy

MR BENDER Yes

JUDGE MCCABE for the GE

turbine And just a hair under that youve

got 9444 for the Siemens 4 Are you telling

us thats what you want Board to do to

tell the region that that kind of difference

is significant and that they should force this

company when it installs the GE turbine to

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meet the 944 limit for the Siemens 4 Is that

what youre asking us to do

MR BENDER Your Honor if that

if the limits were set based on this as final

enforceable limits based on that Im not

sure that we would be here on this issue

JUDGE HILL So how much of a

margin is too big Because the regions

initial submission is that even with the

limits that they actually set the difference

is 26 percent and thats just not that big

JUDGE MCCABE And looking at

these latest numbers they actually said the

range for all three turbines there was on

that net with duct burning column that the

total range was 01 percent So seeing how

close those numbers are between 945 and 944

thats obviously a lot less than 01 percent

Is that a significant difference that the

agency should be concerned about

MR BENDER The limits were

talking about are the ones in the final

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permit which are gross And they are -shy

JUDGE MCCABE Okay Would you

like to point us to a different table to look

at

MR BENDER Sure Ill point you

to the permit which is Exhibit 1 to our

petition and the permit limits themselves

Because the permits measured we commented

that the region should be looking at net

among other things And the region said no

It made that choice It made this permit the

way it did and so were addressing it the way

it came out What we and EPA and the state

can enforce are the limits and the limits are

what drive what we can count on as enforceable

emission reductions

JUDGE MCCABE Wait a minute You

wanted the limits to be based on net

MR BENDER We commented that you

should look at the net emission rates and the

region said no were going to base this on

gross

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JUDGE HILL Okay But my

question is how do you respond to the argument

the region made in its brief and that Mr

Tomasovic stated here which is okay so the

permits got gross and the difference in these

gross numbers is 26 percent and thats in the

noise

MR BENDER Its not And the

reason why I know that its too big to be

insignificant is that the region thought that

margins even around that for different

pieces because the margin is an aggregate

was significant enough to start bumping the

limit up And when they got to step five

they said thats a big enough difference

between these turbines that we cant expect

the one to meet the limit for another So I

know because its significant enough in step

five that it should be significant enough in

step one to not count them all as you know

the same

JUDGE HILL So your argument so

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if their error was at step one then what

youre really saying is that the GE turbine is

a different technology than the Siemens

turbines

MR BENDER It is a different

let me put it this way Control option in

step one should be the same as control option

in step five As counsel for La Paloma put

it its a sequence right It starts at one

it goes to five and the definition of the

control option stays the same And if and

were saying well grant the argument that

they should be treated as one option in step

one well if thats the case they should be

treated as the same option in step five and

the limit based on what that option as a

whole can achieve But if youre going to

start parsing them the appropriate time to

parse between turbines or in this case

turbine plus heat recovery generator

combination -shy

JUDGE HILL Understood

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MR BENDER is step one so

that we can look at their relative

efficiencies their relative costs what they

do emit at different levels at production

Its got to be one or the other It makes

hash out of the five-step process to look at

one definition of control option in step one

right And then look at a different

definition of control option and start

applying limits in step five Thats the

argument It has to be consistent all the way

through

I think we would get to the same

option or the same result whether we looked at

them in step one as separate or if we applied

the maximum control efficiency for that class

as a whole in step five But you run into

problems when you separate them and thats

what weve done here

JUDGE MCCABE Okay Mr Bender

could we back up again to the question that

was raised by your saying that you preferred

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and said in your comments that you preferred

limits based on gross capacity I was trying

to use the table on page 11 of the response to

comments to try to understand exactly what you

want If theyre picking the GE turbine you

said the limits these are net limits and

gross is a better measure Have you found a

place where I can look at gross limits

MR BENDER For what gross

emissions are relative to

JUDGE MCCABE Is re any place

in the record that we can look to see how

these net limits would be stated as numbers

for these turbines if it were based on gross

Is that in the record any place

MR RICHIE Your Honor if I may

this is Travis Richie Page 16 of the

statement of basis which was included I

believe as Exhibit AA of La Palomas

response I believe has that same table listed

with pounds of C02 per megawatt hour on a

gross basis with duct firing

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JUDGE MCCABE Thank you Mr

Richie So glad you stayed on the phone I

have this Do the other judges have it

Okay Its the same thing Well how are

these different They look like theyre the

same ones that we were looking at on page II

Whats the difference between the gross and

the net rates

MR BENDER Thats what I was

suggesting earlier that Im not sure that

theyre correct

JUDGE MCCABE Youre not sure

which is correct

MR BENDER I dont know

JUDGE MCCABE You dont know

MR BENDER But I dont think the

net and the gross can be the same number and

thats what I was maybe failing to highlight

before

JUDGE MCCABE But whatever the

gross is you would prefer it You just dont

know what it is or youre not sure which of

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these numbers it is is that what youre

saying

MR BENDER Your Honor there has

to be other details in the hypothetical to

know the answer It depends on if were

measuring If were measuring just whats

coming out of the turbines or if were

measuring whats coming out of the stack

because theres another pollution-causing

device in the middle and thats the duct

burner So if were saying whats the net

without duct burning and were measuring it

but were still allowing duct burning its a

different question

JUDGE MCCABE Yes I understand

This gets very complicated which is why

judges usually defer to the technical

expertise of the EPA people that are charged

with this Now in this case lets try to

bring it back to sort of principles that the

Board can focus on more appropriately I was

hoping through this argument that people

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would be able to give us the numbers that we

should be looking at to consider this argument

that I understand the region to be making that

whatever the variation among these turbines is

so close the variation in the heat rates and

accordingly the GHG limits is so close that

it is something that is essentially

equivalent to use one phraseology another

negligible difference marginal difference

Do you agree that these are so close that they

are marginally different or essentially

equivalent

MR BENDER Two answers your

Honor They are not What the permit

includes is the gross with duct burning and

that number again I would say those are

different enough that the region thought

necessary to differentiate between them And

if thats true then its not negligible and

its not inconsequential

JUDGE HILL So let me ask you a

question So if the region had said theyre

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close enough I so weI re going to set the

highest one and if they happen to pick al

turbine that we could limit more closely I

were comfortable with that

In other words I based on that

argument I okay so if the region had instead

concluded they are negligible GE looked good

enough and so were going to set the limits

based on GE And if they pick Siemens I they

get a bennie out of it would you have a basis

for challenging

MR BENDER Yes I for the same

reason Because the record says that 9092 is

achievable And then we have -shy

JUDGE HILL Well but they would

conclude that 909 is not achievable for GE

MR BENDER I think it depends on

what the record is to support that conclusion

And thats not this case and its not this

record

JUDGE HILL So the regions

mistake was setting three different limits

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MR BENDER The regions mistake

was setting three different limits for what it

says is the same control If it had

identified them as three different control

options in step one and you have a continuity

through the rest of the steps and it set three

different limits it would be a different

problem which is BACT is all limit and you

would rank them and set them based on the top

rank control option in step five But again

it depends on what happened in the prior four

steps to be able to say whether that would

have been a mistake or not and thats not

this record and its not the basis that we had

to appeal

JUDGE MCCABE Coming back to the

factual question of the variation in these

emission limits that the region has permitted

for the three turbines Mr Tomasovic

described them it may not be fair to call

this a range but he mentioned numbers that

to my mind ranged from 01 percent up to 27

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percent Is a 01 percent difference

significant enough that the agency should have

to distinguish between them in setting and

distinguish between these turbine models and

force the companys choice Point one If we

just had point one I realize theres a

range but just look at point one for a

moment Is that significant

MR BENDER I think its

contextual And I would say although you

asked that as a factual question I would

point to the Prairie State decision your

Honor

JUDGE MCCABE The what Prairie

State

MR BENDER Because its cited by

both respondents to say when theres a

negligible difference you dont have to

consider them as separate control options

And I think that Prairie State actually stands

for the opposite On page 37 in the footnote

I think its footnote 36 it rejects that

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argument that just equivalency alone is

sufficient to ignore a difference between two

different control options There has to be a

demonstrated equivalency or a negligible

difference and especially if that difference

is based on emission factors or something else

that is inherently also perhaps not specific

So if its based on an emission

factor that has a margin of error that helps

dictate what amount of difference between two

emission rates may be negligible and even if

they are exactly the same thats not enough

to ignore them You have to -shy

JUDGE MCCABE If theyre exactly

the same

MR BENDER To ignore one of the

control options because of the requirement

that you also look at what their collateral

impacts are because two different controls

options may have the same emission limit but

they may have different collateral impacts -shy

JUDGE MCCABE Thats absolutely

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true of a control option but were talking

about two different turbines here If the

turbines had the same limit would we be here

If they had the same GHG limit

MR BENDER If they had the same

GHG limit and it was -shy

JUDGE MCCABE Because thats just

the way they say that was the manufacturers

the vendors number and EPA permitted it at

that number and there was no comparable that

showed a bet ter performance why on earth

would we require them to distinguish between

those What practical difference would that

make

MR BENDER In this record and to

my knowledge there is no other distinction

between them other than emission rates But

if youre saying hypothetically the emission

rates are all the same -shy

JUDGE MCCABE No Im simply

following up on what you thought Prairie State

stood for that even if things are the same

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you cant ignore the di f f erence I just think

were doing apples and oranges here because

in Prairie State if I recall correctly and

maybe Judge Stein can help us out with this

I think they were comparing you know much

larger differences

Here Im concerned that were

getting down in the margins We are getting

dangerously close to micromanaging here on

what this GHG emission limit should be So is

o 1 percent micromanaging Is that a

difference that we dont need to worry about

Is 05 percent -- 27 percent obviously is too

much for you You think thats over the level

of significance Were wondering where is

that level of significance in difference And

Im not talking about the exact numbers Im

talking conceptually here Thats why I used

percentages to iron it out

If the range of differences

between these two turbines and their GHG

emission rates ranges somehow and depending

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on how you calculate it from 01 percent to

27 percent why should we worry about this

Why should the region be required to

distinguish

MR BENDER Your Honor the

equivalency of emission rates is an issue or

a concept thats tied together wi th the

topdown BACT analysis process and that was in

Prair State Thats the point of that

footnote that I cited to If you did this

again this is not what was done so in the

hypothetical if they had ranked them as

separate control options and they had assigned

emission rates and there was somewhere

between I think it was 01 in your

hypothetical difference and there was no other

collateral impacts differences between them

would that be enough to say -- and it was not

and it was based on you know some emission

calculations that themselves have some

variable in them I think in that

hypotheti this would not be the issue for

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appeal It wouldnt be because you know

were assuming were assuming away all of the

problems with this particular decision which

is theyre not treated as separate theyre

not distinguished in the first few steps we

dont know if theres collateral impact

differences and theres no record made to

support those findings at each of the rest of

the steps

JUDGE MCCABE So is the critical

piece of your argument that they didnt

differentiate between the turbines at step

one Is that really what Sierra Clubs

concerned about

MR BENDER If theyre going to

differentiate between them in step five they

need to differentiate between them in step I

guess it would be one through four because

then wed have an opportunity to look at

whether or not there are differences in

emissions at that point and under what

scenario and everything else that goes into a

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five-step BACT process And that was just

shunted all to the side and we only looked at

the difference between them when we got to

step five after the opportunity to address all

those other issues had passed

JUDGE MCCABE Okay Lets turn

quickly because Im watching your flight time

here to solar Is it your position that

solar is feasible on this site Supplemental

solar as youve described it And if so

please explain how

MR BENDER Your Honor the

comment was step one you need to cast as big

a net as possible to identify potentially

feasible available and applicable and we

say yes its available its applicable Is

it feasible Well we dont know the acreage

They say 20 We dont - - because we never got

to this

JUDGE MCCABE Theres a site plan

in the record isnt there

MR BENDER There are some maps

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in the record We dont know

JUDGE MCCABE Have you looked at

them

MR BENDER Ive looked at some

of the maps in the record yes

JUDGE MCCABE Have you looked at

the site plan

MR BENDER Im not sure -shy

JUDGE MCCABE The site plans

shows where things are situated on the si

where the turbines will go and the other

equipment what the footprint of the si te is

how much space is open or not

MR BENDER Im envisioning a

color map with I think that information

JUDGE MCCABE Mine is not in

color but I saw one like that Have you

looked at that and considering that is it

feasible And Judge Stein please add your

question

JUDGE STEIN If these maps show

or you can deduce from whats in the record

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that what is at play here is approximately 20

acres do you still contend that solar is

ible at this site

MR BENDER I would say to the

extent its scalable its feasible Whether

its cost effective and whether it achieves

emission reductions I dont think I dont

know and I dont think any of us know and

thats the point Thats why you go through

the five steps because you gather that

information at the later steps It was -shy

JUDGE STEIN So Im sorry

Finish I didnt mean to interrupt

MR BENDER It was excluded from

step one as not as redefining the source

And I think it would be inappropriate to

assume fact findings from what we have the

limited amount of information we have in the

record to say it would necessarily be rej ected

in the following steps unlike in Palmdale

where the issue of incremental increase was

looked at and the record was clear that there

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was zero space And the difference between

zero space for no addition and where to draw

the line when theres some space but it mayor

may not be enough to make it feasible cost

effective and everything else is something

that needs to be done by a fact finder with

the public input

JUDGE STEIN But how much effort

and work must a permit applicant go through

when theyre primarily building a particular

kind of plant and theres fairly limited

space I mean do they need to go do a I

scale investigation and develop models

space if what youre dealing with is a very

small area I mean thats a question Im

struggling with because you know this is not

lmdale and I dont buy the characterization

what Mr Alonso said about what Palmdale

stood for in terms of redefining the source

But I am troubled by what may be in the

record perhaps not as fulsome as someone

would like but there may be sufficient

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information in the record to establish that

theres only a very limited amount of space

there And if thats the case are you still

insisting that people do a full-scale analysis

of solar under those circumstances

MR BENDER I think that when

you get into the later steps two three

four the scale of the analysis is probably

relative to you know some reasonableness

right But in step one the whole point is

you cast the net and then you start doing that

analysis And it would be inappropriate to

start making assumptions because we dont

agree with all the assumptions in La Paloma

about hurricanes about other things and wed

like the ability to develop the record in

response depending on what is said about

feasibility

But feasibility wasnt discussed

until the response to comments And then it

was discussed as not not that it was not

technically feasible but it was redefining the

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source And based on in our mind in one of

the main reasons that we brought this appeal

is based on a very problematic definition of

redefining the source

JUDGE HILL Mr Bender the region

argues that Sierra Clubs comments on this

didnt ly raise this issue to any level of

specificity that youre now raising it in your

brief or here How do you respond to that

MR BENDER When they say that

they point to one of the multiple comments

looking at solar hybrid And they say it was

mentioned as an al ternative to duct burning

in addition to other things that could be

looked as alternative to duct burning

Earlier in the comments is the Palmdale

permit and the C02 BACT emission limit saying

its conservatively lower they get that and

they get a chunk of it from solar you need to

look at solar because its available its

applicable it meets the step one criteria

lets look at it And that I s what was

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ected

Elsewhere we said instead of

duct burning did you consider these other

things And yes theyre talking about the

same concept but theyre talking about two

different areas So its inappropriate to

look at only one comment and say well that

one comment about solar didnt raise this

other issue when the other comment did

JUDGE MCCABE Are you suggesting

that permitting authorities whenever theyre

faced with a PSD application by someone who

wants to build a power plant have to analyze

solar in all cases if theyre not proposing it

to begin with

MR BENDER Solar hybrid in a

combined cycle plant when it I S raised by the

public-shy

JUDGE MCCABE Okay And that -shy

MR BENDER Then the region has

an obligation to look at it

JUDGE MCCABE Expand on that

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please What do you mean by look at it

MR BENDER Include it in step

one or deem it redefining the source based on

a correct interpretation of redefining the

source And here it was an incorrect

interpretation of redefining the source It

should have made it into step one when raised

by the public And to go to your question

Judge Stein how much detail they need to do

to develop whether to reject it in later

steps I would agree theres some

reasonableness to it But I dont agree that

even assuming that 20 acres is all that there

is that we can say based on this record

that its reasonable that thats not enough to

generate solar

JUDGE STEIN But if you have a

circumstance where the BACT analysis has been

done the regions looked at it theres been

back and forth between the permit applicant

and the permittee I mean and the region

they proposed the permit for comment and a

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comment comes in about solar youre

suggesting that they have to go redo the BACT

analysis or cant they simply respond to the

comment by saying on this particular site on

these facts we dont think solar is feasible

for X Y and Z reason

MR BENDER Thats different than

the answer here

JUDGE STEIN Why is it different

than here I mean I understand what the

region did in its analysis of redefining the

source you know didnt do exactly what Im

describing here but Im concerned about

taking us to a place where in responding to

a publ ic comment where there may be an answer

that you have to go back to square one on the

BACT analysis because I dont think you do

I think you need to respond to the comment

I think you need to respond fairly to the

comment But wed never I mean how in the

world would we ever get a permit out if every

time theres a public comment that relates to

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the BACT analysis youve got to go back and

redo the BACT analysis Yes t may be

cases where you need to supplement it but I

dont think we go back to square one

MR BENDER Well two responses

your Honor Here we had raising solar in the

context of another facility a similar

facility that has solar hybrid and has a

permi t wi th lower limi ts Thats the context

So to the extent were talking about you

know how much or how real does this have to

be to generate a more substantive response

thats the context

In Knauf Fiberglass I believe Kshy

N-A-U-F however thats pronounced

JUDGE MCCABE Knauf

MR BENDER Knauf Fiberglass

The first the 1999 decision a comment was

raised another production process for

fiberglass The response was thats

proprietary to a competi tor We dont have to

look at it because well reject it later

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anyways so you know why look at it And

the Board reversed and said you cant preshy

judge Thats the point of the process You

cant pre-judge the process Go back look at

it and make a record so we know and the

public knows that you really did look at it

and you really did document your analysis and

we know you did your procedural job

Thats what should be done here

and it follows that precedent And I would

suggest if its distinguishable this is even

a clearer case than Knauf because its not

proprietary that we know of You can go out

and buy it So to the extent theres a line

this is even further on the petitioners side

of the line

JUDGE MCCABE Mr Bender Im

worried about your plane If you would like

to take a minute to just wrap up please do

And then we will let you go on your way Its

getting late

MR BENDER Sure Thank you

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your Honors I and thank you for the opportuni ty

to address these issues From Sierra Clubs

perspective this is an important permit tol

get right on these issues raised And there

are other issues that were commented on l

potent lyother issues that could have been

raised You know I dont want to suggest

that Sierra Club loves this permit even if

its corrected but this issue of what you

have to consider and how you consider

efficiency and how you consider supplemental I

in this case solari that helps improve the

efficiencyof a plant is critically important r

especially as we start into greenhouse gas PSD

permits and getting the definition of what is

the control option were looking at correct

and making sure that thats consistent all the

way through the process and that were

correctly addressing efficiency Its going

to be critical especiallyuntil we develop an

end of the pipe technology that facilities

s installing

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142

The other is this now perennial

redefinition of the source issue I

understand the Boards prior precedents and

in some cases unfortunately theyre being

applied incorrectly And this is one of those

cases And when that happens its important

to correct it make it clear and give guidance

to not only Region 6 but other permitting

authorities what redefining the source means

and whatit doesnt mean And here it doesnt

mean that if a control option is not within

the two-sentence description of the

application of the project purpose that it

cant be considered because that opens a door

to all kinds of problems not just greenhouse

gasses but every - - I mean and SCR al so

wasnt in that two-sentence description

Thank you your Honor

JUDGE MCCABE Thank you very much

Well thank you all for your presentations and

for your valiant efforts to answer our very

often detailed questions

NEAL R GROSS COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE NW (202) 234-4433 WASHINGTON DC 20005-3701 wwwnealrgrosscom

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I would make one observation that

theres such factual confusion l at least in

the argument around the issue of how do we

compare apples to apples with the emission

numbers that we really should be looking at

for these turbines that there is a

possibility and I regret to say this because

I know its a PSD case and we are in a big

hurry but theres a possibility that we will

ask you to do a supplemental briefing on that

or ask you all perhaps to confer to get on one

sheet if its possible to give us some basisl

comparison so that we have the facts

straight in our opinion It is a lot to ask

judges like us We have some technical

training l but we are not engineers I and it is

really quite difficult for us to understand

which numbers we should be comparing to which

here

We will however make a valiant

effort to go back and to see if we can figure

that out And weill only ask you to do a

NEAL R GROSS COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE NW (202) 234-4433 WASHINGTON DC 20005-3701 wwwnealrgrosscom

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supplemental briefing if we think its very

necessary If we do do that we will get to

you quickly on that because we do intend to

move quickly on making this decision These

are not easy issues They are important

issues and we take your point Mr Bender

that as we are entering the world of GHG BACT

permitting we do need to be careful about

what precedent were setting But we also are

very very cognizant of the need for speed

here because we dont want to hold up the

building of something that should proceed

unnecessarily

So with that well take this

matter under submission with the caveat that

you may get a request for a supplemental

briefing And we will wish you all

travels home those of you who are traveling

far especially And good luck catching that

plane Mr Bender

(Whereupon the foregoing matter

was concluded at 547 pm)

NEAL R GROSS COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE NW (202) 234-4433 WASHINGTON DC 20005-3701 wwwnealrgrosscom

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C E R T I F I CAT E

This is to certify that the foregoing transcript

In the matter of La Paloma Energy Center

Before US EPA

Date 02-12-14

Place Washington DC

was duly recorded and accurately transcribed under

my direction further that said transcript is a

true and accurate record of the proceedings

Court Reporter

NEAL R GROSS COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE NW

(202) 234-4433 WASHINGTON DC 20005-3701 wwwneairgrosscom

Page 5: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us

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MR BENDER Good ternoon

David Bender for petitioners the Sierra Club

JUDGE MCCABE Okay Welcome

MR ALONSO Good ternoon

Richard Alonso on behalf of La Paloma

JUDGE MCCABE Welcome

MR TOMASOVI C Good afternoon

Brian Tomasovic from the EPA Region 6 Dallas

Office l joined at table by from the Office of

General Counsel Matthew Marks and Brian

Doster

JUDGE MCCABE Thank you And do

we have anyone else on the phone

MR RI E Yes I your Honor

This is Travis Richie with the Sierra Club

JUDGE MCCABE Okay Before we

beginl let me ask who will be speaking for

Sierra Club Is that just Mr Bender I or will

Mr Richie also be speaking Okay I thank you

Well first of all I would really like to

thank you all those of you especially who had

to change travel plans l for being here today

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on short notice and I realize that not only

disturbs flight arrangements but probably

disturbs your preparation time The good news

for all of you of course is that we are

going to do this a little differently today

so hope ly that wont make as much a

difference as it might in the ordinary case

Before we begin let me do a

travel check as to what time your flights on

leaving I understand a number of you are

eager to be back out of town and ahead of the

snow this evening Mr Bender

MR BENDER I f everything goes as

planned 700

JUDGE MCCABE Seven 0 clock is

your flight time And whats your airport

MR BENDER National

JUDGE MCCABE National Okay

Mr Alonso can I assume youre remaining in

town

MR ALONSO Yes

JUDGE MCCABE I assume this is a

NEAL R GROSS COURT REPORTERS AND TRANSCRIBERS

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representative of a company with you

MR ALONSO Yes Im sorry This

is Sandra Snyder with Bracewell also

representing La Paloma and we do not have any

travel restrictions tonight

JUDGE MCCABE Thank you And

from the EPA side

MR TOMASOVIC My flight departs

at 8 pm

JUDGE MCCABE All right Then I

think we should have plenty of time Weve

scheduled an hour and a half for this We

will try our best to get you out on timel so

you can run for the airports Snow is not

supposed to begin until later this evening

We are doing this slightly

differently than our normal procedure because

this is a status conference as well as an

expedited oral argument As usual well go

ahead and allocate one half an hour

approximately to each party But the order

the parties will be slightly different than

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usual

We will start in this case with

the permitee with La Paloma Energy Center

who I will refer to briefly as La Paloma I

suspect the other judges will be doing that

too for the record Because we have some

status questions for you which I assume will

not surprise you given our scheduling order

Those answers to those questions may inform

the rest of the discussion that we have here

today so we thought it best to begin with La

Paloma

Normally of course our practice

would be to begin with the petitioner the

Sierra Club So in this case Mr Bender Im

going to give you your choice as to whether

you would like to go second or third Some

people like to have the first word some

people like to have the last word

You also have the option if you

choose to go second after La Paloma to

reserve five minutes of your time for rebuttal

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after EPA What would you like to do

MR BENDER I I 11 combine both and

do it all together

JUDGE MCCABE Okay Thats the

way weIll proceed then WeIll begin first

with La Paloma

mentioned l if we didnt we should have in ourI

order to you l were not expecting you or

asking you to make any formal presentations

today I as you would in the normal oral

argument

In the interest of timel please

presume that weve read your briefs l that

were famil with the records And in the

interest of saving time and getting you out of

here weld like to focus right away on the

judges questions If you have anything that

you would like to say very briefly first l

thoughl please 1 us know that and feel free

Mr onso

MR ALONSO Thank you Judges

And we just want to first start off by

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recognizing and thanking you for expediting

this appeal I believe the briefs were

submitted on December 27th and the Board

reached out to us just a couple of weeks later

to schedule this argument So were really

appreciative of that We are prepared to

answer your questions presented in your order

as well as any other issue thats before the

Court

As to your first issue you asked

us to report on the status of the projects

First 1 me address the construction time

line We currently have all government

approvals that are required for pre-

construction as well as agreements that we

need wi th governments We have tax agreements

that were completed We have a water supply

agreement with the local water works We have

land agreements in place We have our TCEQ

Air Permit that was finali in February of

2013

The two main components that we

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are missing right now is number one

financing Financing is contingent on

receiving a final PSD permit Once we receive

a final agency action on the permit we expect

to close that financing in short order right

ter that

As far as construction we have in

EPC the engineering procurement and

construction contract completed That was

executed in September of 2013 So shortly

er this closing we can start construction

shortly right after that That was wi th

Bechtel Power Corporation and again they are

standing by ready to start construction

JUDGE MCCABE Most importantly

Mr Alonso could you address whether youve

selected your turbine yet

MR ALONSO Yes we are prepared

to talk about that We have preliminarily

identified the preferred turbine that we would

like to install at this site It is the GE

7FA turbine However we are currently

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various escalation clauses of our existing

contracts including for the turbine in the

sense that we have planned to be done with

this process on January 1st Not just the

contract for the turbine but for other

components of the site every day that goes on

the cl is paying escalation fees on that

contract

JUDGE MCCABE So do you have a

turb contract or not

MR ALONSO We do have a spot for

manufacturing of the turbine

JUDGE MCCABE So is that like

reserving a place in case you decide to put in

your order

MR ALONSO Correct And that

deadline is April 1st On April 1st we have

what happened ter January is that we

negotiated our escalation clauses through

April 1st Come April 1st I think that the

weIll come April 1st I we would have to

renegotiate that contract And most likely I

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we can maybe even consider selecting one of

the other turbines that are in this permit

So if we dont have a final permit

in the next you know -- and Im not putting

any pressure on you guys but as of April

1st I think that the well I know the

developer would like the flexibility to

install anyone of these three turbines

JUDGE MCCABE Im not sure Im

completely following you What happens -shy

lets try it this way What happens if you

get your permit tomorrow

MR ALONSO If we get our permit

tomorrow we would close our financing a

couple of weeks later and we could start and

then we would put in a notice for the

procurement finalizing the GE 7FA turbine

contract

JUDGE MCCABE And how soon could

that happen or would that happen

MR ALONSO That would happen

upon closing and we would -shy

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JUDGE MCCABE So are we talking

about a week two weeks a month

MR ALONSO Yes My

understanding the information that I have is

that closing can happen in its a matter of

weeks a couple of weeks after we receive a

final permit

JUDGE MCCABE Okay So when you

say youve preliminary picked this GE 7FA

turbine -- can we just refer to that as the GE

turbine

MR ALONSO Sure

JUDGE MCCABE Its the only one

right thats a GE Okay Well call this

the GE turbine Youve preliminary selected

that If you get your permit tomorrow is

there any reason that youll change that

choice

MR ALONSO Most likely not If

we get our permit tomorrow if we get it

before April 1st we are probably we are most

likely yes going to select we are going to

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select the turbine

JUDGE MCCABE Okay If you get

your permit before April 1st you will select

the GE turbine is that correct

MR ALONSO That is yes

JUDGE MCCABE And my

understanding of this turbine is that its the

smallest of the three and according to heat

rates the least efficient the one to which

the region has assigned the highest GHG

ssion limit is that correct

MR ALONSO That is correct

JUDGE MCCABE Okay That will

very much inform the rest of our discussion

Thank you Mr Alonso Do you know yet

another question on your preparation here do

you know yet where the facility will be placed

in the ERCOT dispatch order and whether it

will be operated as a baseload or load cycling

facility

MR ALONSO Our plan is to

operate this as a baseload uni t However we

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will respond to the ERCOT orders as they come

I mean in Texas our business plan is to

operate this as a baseload unit

JUDGE MCCABE Does ERCOT give you

any preview of that

MR ALONSO Excuse me

JUDGE MCCABE Does ERCOT give you

any advanced notice as to whether youre going

to be likely operated as a baseload or not

MR ALONSO Our intention is to

operate it as a baseload Im not qui sure

about we can follow up with you on that as

far as ERCOT notices Im not prepared to

talk about the ERCOT notices But to the

extent that ERCOT manages dispatching we will

comply with their orders

JUDGE MCCABE Okay And you

expect at this point based on current

condi ons which I understand can change if

other plants come online or other things

happen you expect based on current

conditions that youll be dispatched high

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enough in the order that this will be a

baseload plant and therefore it will be

operated at 100-percent capacity

MR ALONSO Pretty close to it

JUDGE MCCABE On a regular basis

MR ALONSO On a regular basis

we would like to have you know utilize this

as much as possible Keep in mind though

while we do have the you know as an EPA

administrative record yes larger turbines

may be more efficient But at the end of the

day they also have higher mass emissions

And so when you look at it from an

environmental perspective to the ent that

an environmental impact plays into that the

environment really feels the impact of the

mass limit more than anything else I believe

JUDGE MCCABE Understood Okay

Can you tell us a little bit about what was

the chief factor that drove the companys

selection of the turbine how important was

the capacity or size for example

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MR ALONSO I dont know the ins

and outs why they selected that turbine

I believe its just commercial terms It was

the better commercial term -shy

JUDGE MCCABE Would you like to

consult with your client at all to see if you

can clarify that answer

MR ALONSO Sure Shes here

JUDGE MCCABE This may help you

Some of the questions that were also

interested in are how important was the

capacity or size the uni t in terms of your

decision to s the GE turbine and how do

the relative heat rates or the GHG emission

rates affect decision Did they affect

that decision if its made

MR ALONSO The way that this

project was developed is that we went out for

competitive bids of at least three turbines

And based on the necessary heat rate the

forecast of demand that was the basis of the

select ion It was not based on you know any

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other factors except for trying to meet the

purpose of the proj ect which is to supply the

load and the heat rates and the financial

arrangements that resulted from that bid

process

JUDGE HILL Was that forecast of

demand strictly internal or was it something

dictated by either EReOT or some other

external entity

MR ALONSO La Paloma is a

merchant power plant Wei re not regulated so

its not that wei to extent that your

question is to whether or not we had any

regulatory oversight -shy

JUDGE HILL Or just external

information or some sort of external driver

I guess

MR ALONSO me consul t wi th

- sorrYI I just wasnt prepared

JUDGE HILL No thats okay

MR ALONSO So specific

questions Okay

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JUDGE MCCABE But we appreciate

your corning

MR ALONSO But Im glad that

Kathleen the proj ect developer Kathleen

Smi th is here wi th us today When you develop

these projects yes they went out they had

third party evaluations of load demand and

what would fit for this market absolutely

JUDGE HILL Okay

MR ALONSO I mean its -shy

JUDGE HILL Let me ask one other

follow-up You said at the very outset Mr

Alonso that you had preliminarily identified

the GE turbine and the record before us is

that certainly at the time of the application

that decision hadnt been made Im not

asking for a specific date but roughly when

was that determination made relative

because Im curious how it relates to this

proceeding

MR ALONSO So again we made

the selection based on closing in January but

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the selection of the turbine was made in

August expecting to be you know

manufactured and installed in January So to

answer your question it was August of 2013

JUDGE HILL Did you communicate

that to the region at that time

MR ALONSO No because again

because of the timing of this permit it is a

preliminary determination At that time in

August if we were 100-percent certain that we

would get a permi t in January sure we

probably would have you know told the region

and maybe the final permit may have looked

differently But we couldnt put our eggs

all our eggs in that one basket at that time

JUDGE MCCABE What was your

understanding Mr Alonso of what the region

planned to do once you made your turbine

section Will they revise your permit or

leave in those three original limits

MR ALONSO We have a special

condition in the permit that requires that La

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Paloma submit an amended permit application to

remove the other two turbines that are not

selected from the permit So it would be a

deletion of the two other turbines that are

not selected

JUDGE STEIN Why if youve made

the decision to proceed with this particular

turbine if you receive your permit within the

time frame that is necessary for you would

you be revisiting that question if you dont

get the permit until May

MR ALONSO If we -shy

JUDGE STEIN Just hypothetically

if you get the permit a month after why is it

that suddenly thats an open question again

Im having difficulty understanding that

MR ALONSO Correct Our current

negotiations on the escalation clauses of the

contracts we have currently negotiated terms

through April 1st At that point youre

right we would have an option to negotiate

further or more likely than not we could we

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might go through another bid process to

determine whether or not maybe another turbine

might be more beneficial from an economic

perspective to install

JUDGE STEIN Thank you

JUDGE MCCABE Just to make sure

the record is clear on this though at this

point youre telling us that if the company

gets its final PSD permit from EPA before

April 1st it will be the GE turbine

MR ALONSO That is my

understanding

JUDGE MCCABE Okay Would you

like to qualify that statement

MR ALONSO Right The problem

is that again we cannot make a final

decision on the turbine until after we get the

permit because youre only going to reserve

your place line for a certain amount of

time at the manufacturing plant

JUDGE MCCABE But if you get your

permit tomorrow or anytime before April 1st

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or perhaps you need a week advanced notice

then you would be choosing the GE turbine We

can rely on that

MR ALONSO Yes

JUDGE MCCABE Is that correct

MR ALONSO More likely than not

we will be selecting that turbine

JUDGE MCCABE When you say more

likely than not or preliminary then Im not

sure what youre telling me Mr Alonso

Which is it Will you have that GE turbine be

your selection

JUDGE HILL What else might

prevent you from going ahead with the GE

turbine if there were a decision before April

1st is another way to ask the question

MR ALONSO To maintain

flexibility I mean thats one of the

purpose were here I mean if we get a call

tomorrow from Siemens saying that theyre

going to give us the turbine at five cents

maybe wed go with the Siemens

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JUDGE MCCABE So price matters

MR ALONSO Absolutely

JUDGE HILL Price really I I meant

but

MR ALONSO The likelihood of

that is minimal

IJUDGE HILL But let s explore

that for a second because it sort of takes us

to the other direction So if you so ifl

Siemens were tOI you know I mean I and I can

certainly relate to this 11m trying to do

some home maintenance But so they come in

with a bid youre not expecting l and you saYI

You know what That I s the one we should go

with thats going to be one of the larger

turbines So what will happen in terms of

your demand forecast or I I meanl how will you

operate that plan

MR ALONSO It may not fit the

business plan at the time I meanl we would

like to maintain the flexibility of selecting

the turbine as much as we can in this final

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permit Everything is in place that if we

were to get a final permit tomorrow that the

GE turbine would be used However we still

want I dont want to tell you that its 100shy

percent guaranteed We would like to maintain

that flexibility

JUDGE MCCABE But you understand

s your very desire to maintain that

flexibility that leads us all to be here

today right As I understand it the main

issue that the petitioners have with the limit

that was chosen in this case is the fact that

you are reserving flexibility to make this

choice after you get your permit

MR ALONSO But the limit is the

limit doesnt satisfy region as appropriate

and valid under BACT What the permitee is

arguing here today is that somehow we start

off with a class of control devices The

region has identified combustion combined

cycle turbines as a control class That is

your step one BACT is an evolution all the

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way through step five Once you get to step

five the purpose and the intent of step five

is to impose an emission limit looking at

those control devices and its not just

combined cycle We have a whole list of

technologies that were identified by the

region that apply to each of these turbines

At that point you look at the

ssion unit and you develop a unit-specific

emission rate that reflects the technology as

its supplied to that particular emission

unit

JUDGE MCCABE Dont you also look

at comparable units located at other

facilities when the permitting authority makes

that decision

MR ALONSO Absolutely You look

at technologies at other through the

clearinghouse and other technical information

That is your step two analysis absolutely

JUDGE MCCABE Then why wouldnt

you look at other turbines that are available

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MR ALONSO Im sorry

JUDGE MCCABE Then why wouldnt

you look at these other turbines that are

available

MR ALONSO You look at the other

turbines as - - well f are you saying the other

turbines that are mentioned

JUDGE MCCABE The Siemens

turbines

MR ALONSO The Siemens turbines

and the GE turbines have the exact same

technology installed Again at the end

and Siemens does not make the identical

products Theres going to be some

variability amongst those products and I

would argue that the actual impact of these

units or these emission rates arent that

off from each other But in step five the

region looked at the turbines and looked at

as this board has approved in the past and in

particular in Prairie State the ability to

take into consideration operational

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variability compliance headroom and other

factors made to ensure that the BACT limit at

the end of the day is workable and something

that can be achievable from a compliance

perspective

JUDGE MCCABE Mr Alonso wed

like to go on to that subject of the relative

heat rates and therefore the GHG emission

rates of these three turbines But before we

leave the subj ect that we are on of the

criteria that the company used perhaps past

tense or might in the future if something

unexpected happens use in the future to

select the turbine I heard you say two

primary things And I know were several

beats back on the questioning now But I

heard you say the forecast of demand how much

power you can 1 -- Im sure where ERCOT

will dispatch you is part of that equation -shy

and the heat rates Are those the two most

important factors to the company in selecting

the turbine Price obviously has something

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to do with this too

MR ALONSO Yes I mean and the

result of the bidding process and how that

and the third-party analysis of the energy

demand and everything else Absolutely

JUDGE HILL So are you really

saying to a large extent price is the

primary driver

MR ALONSO No not necessarily

I mean its what fits for this particular

you know looking at the forecast -shy

JUDGE HILL But its the balance

of price to demand to efficiency

MR ALONSO Sure Im sure

There is a cost component to this but its

not a cost component as specified in step four

of the BACT analysis

JUDGE HILL No Im not doing

BACT right now Im talking about just the

decision of which one to install

MR ALONSO Sure Its a

business decision and the product developer

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would like to maintain that flexibility At

the time the permit was submitted we

concurrently went and did basically a dual

process of trying to get a PSD permi t and try

to come to terms with all these agreements

whether the turbine or your tax agreement

your water use agreement And thats why our

initial application had three turb s in it

To say that we had to do I that

work up-front and then wait another two years

to get a PSD permit it would really delay the

proj ect and lose a window opportunity

currently right now at ERCOT where there are

some energy constraints in Texas This is a

very good time to build a gas-fired power

plant in Texas

JUDGE STEIN I want to follow up

Are you -shy

JUDGE HILL Yes yes

JUDGE STEIN I wanted to follow

up on your decision of the ous steps of

the BACT process I understand your wanting

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to have flexibility to the last possible

moment At the same time ordinarily in the

step two analysis you would be looking at

whether technologies are available and

applicable And if somebody was going to

drive the company to say you should build a

size thats too small or too large its my

understanding that there would be an

opportunity at that point for commenters to

explain why a different size unit might be

appropriate and you in turn would have an

opportunity to say well that doesnt work

for us

But by keeping the flexibility

until the end of the process my question is

whether you have deprived either citizens

groups or other comn1enters of the opportunity

to meaningfully comment at an earlier phase of

the process And therefore by keeping your

flexibility to the last moment you are

perhaps you should assume the risk for having

done that

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I mean in pio Pico we briefly

talked about the sizing issues Weve

acknowledged I understand your points on you

get to pick the size But if you pick it so

late in the process that nobody else can

meaningfullycomment notwithstandingthe size

you want to pick if you pick it a little

bigger its much more efficient how can that

happen if you wait until the end the

process to choose to say what technology you

the company want to go with

MR ALONSO First of 1 you

know recognizing BACT and step two Im not

aware of any precedent in PSD permitting or

from this board that somehow size and

itself is a control device Step two and to

a certain extent I step one is to identify

control devices you know technology that

would be applied to a given emission unit or

a given source And I believe that its been

pretty well established that the permittee has

a lot of flexibility in deciding the design

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factors in how the plant is designed I

would you know ask the Board to consider

that size is not a control device its more

a design criteria that is used by permittees

when they go to design a source

IJUDGE STEIN Yes I m not

thinking of size as a control technology I

see the control technology as combined cycle

turbines But when you look at combined cycle

turbines youve looked at three different

models They have different efficiencies We

can get later people can tell us whether

theyre comparable or theyre not But if the

company is headed towards a particular

efficiency and the agency or other commenters

think they should be headed elsewhere that

this particular technology combined cycle

turbines can get you a more efficient

process where in the process are they

supposed to raise that

MR ALONSO They could raise that

in how the technologies are defined and

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developed in step two

JUDGE MCCABE You may be hurting

Mr Richies ears doing that so

MR ALONSO Sorry sorry Region

6 identified roughly four different energy

efficiency and processes or practices that

apply to the class of this technology which

is a combined cycle class The public has

full opportunity and they had in this permit

to comment on exactly that whether its

installation whether its installing an

efficient heat exchanger design economizer

exhaust steam These are the control devices

that apply to the class of technology which is

whats known as combined cycle

That list today is what we have

today That list was different ten years ago

and its going to be different ten years from

now because BACT evolves That is where the

public has its say

To set a one-level you know all-

combined cycle must be 90 the 9092 pound

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I Iper C02 megawatt hour that s not BACT BACT

is set on a case-by-case emission unit-

specific basis What Sierra Club is basically

asking this board to consider is taking that

one limitl the 90921 and apply it to two

other totally different combined cycle

turbines I and I dont see that as what is

intended by BACT

JUDGE MCCABE That brings us to

an interesting question Can the GE turbine l

which you are most likely to select l to quote

you l achieve the GHG emissions rate that the

region established the Siemens turbine

MR ALONSO First of all weI

think that to require the GE turbine to meet

that limit would be asking the permittee to

over comply with an adequately-developedBACT

limit We dont think -shy

JUDGE MCCABE 11m asking you for

a factual answer l Mr Alonso

MR ALONSO From a factual

question l I mean l 1 1 m not

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JUDGE MCCABE Would you like to

consult with your client

MR ALONSO Yes okay We are

not prepared at this time to say 100 percent

whether or not we can meet that limit What

we would have to do is possibly de-rate We

might have shy

JUDGE MCCABE Possibly what

MR ALONSO De-rate the unit

JUDGE MCCABE De

MR ALONSO The unit may be not

at its maximum capacity

JUDGE MCCABE What would that do

Explain that

JUDGE HILL You mean run it

greater than capacity

JUDGE MCCABE Yes he means if

they de-rate it that they would operate it at

less than its 1 capacity What would that

do to your heat rate

MR ALONSO Probably not much

But they would have to do something

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operational to unit to basically comply

with that limit Plus we would not have the

compliance headroom that was developed for

degradation factors We might be able to meet

it day one but who knows in ten years And

just operation flexibility It would be

really difficult to commit to that limit

JUDGE MCCABE Let me see if Im

understanding you correctly I hear you say

that de-rating it would be one option to meet

that GHG emissions limit because its a total

limit even though your efficiency rate would

clearly go down if you de-rated it I hear

you saying that option number two would

essentially be to take it out of your

compliance margin which the petitioner has

characterized as generous I believe in its

comments on this permit Are those the only

two ways that the company could meet the heat

or the GHG emission limit that the region set

for the Siemens turbines in using the GE

turbine

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MR ALONSO I mean we can follow

up wi th the Board on this but to the extent

of whether or not theres other engineering

solutions or modifications to that turbine

that could be done tOI you know l basically

change the design of this unitl I meanl I

think that I s why we went through the BACT

process l though I meanl the end-of -day

emission limit is based on vendor information

that we obtain from GEl and the region took

that and applied the control technologies to

those numbers I and thats how we establish

BACT limits at the end of the day is you take

those control technologies and you impose them

onto the uni t that s supposed to be buil t I youI

work in compliance headroom l and it wasl you

know I and this board is generally deferred to

EPA techni staff on issues about compliance

headroom and whats -shy

JUDGE MCCABE I dont even think

thats an issue on this appeal l so you dont

need to go there

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MR ALONSO Well no no no To

the extent that you said that the Sierra Club

thinks that compliance headrooms are generous

JUDGE MCCABE That was just a

comment They didnt raise it on appeal

MR ALONSO Okay

JUDGE MCCABE But let me ask you

this Mr Alonso Im hearing essentially

that the only two ways that you could that

the company could meet the limit on the GE

turbine would be to either de-rate it in

which case youre not getting the power that

you want out it or to take it out of your

compliance margin which is effectively

somewhat lowering your limit really

But Im puzzled about one thing

Didnt the company in its original permit

application propose to use the average of

propose to set the permit limit at the average

the GHG emission rates or heat rates of the

three uni ts the three turbines And if

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thats the case isnt that an admission that

you can actually meet the more-demanding

emission limit on the less efficient unit

MR ALONSO Let me just say when

we initially submitted this permit

application we used the LCRA permit that

Region 6 had processed and finalized in a

period of six months

JUDGE HILL Im sorry What is

LCRA

MR ALONSO The Lower River

Colorado Authority They permitted a gas

plant in Region 6 It was not appealed to

this board So we modeled it after that

application

JUDGE MCCABE You modeled your

application after theirs

MR ALONSO To a certain extent

because it worked at Region 6 as far as this

averaging It turns out that once between

draft and final LCRA was able to select the

turbine and they selected a turbine The

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timing worked for them given their

development path

JUDGE MCCABE Im sorry You

said they selected theirs between the draft

and final permits

MR ALONSO They did And ir

final permit came out with one turbine But

thats a different project dif

development path

JUDGE HILL Well but I think the

question is youre saying that if you were to

apply the Siemens emission limit to the GE

turbine that that would over comply But if

the permit limit were set at the average of

the three and you would as you apparently are

almost likely to do select the GE turbine

then youre going to meet a lower limit than

the limit that would have been set on the GE

turbine alone So would you have been arguing

that that was over-compliance as well

MR ALONSO I mean the record

speaks for itself I mean obviously if we

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submit a permit application agreeing to a

certain limit we would have to you know

probably shave our compliance headroom But

it doesnt it doesnt I mean the issue

before the Board though I believe is whether

or not Region 6 acted properly in its BACT

analysis of these three turbines of these

particular emission units Whether or not a

unit can over comply or whether a permittee

can take a voluntarily limit to reduce its

emissions I believe thats outside of the

BACT process

JUDGE STEIN But I think what is

inside the BACT process is whether or not the

emissions limit that the region has selected

is in fact BACT And thats what Im

struggling with This case comes to us in a

somewhat unusual setting in that I dont

recall in my many years on the Board ever

seeing a situation and its possible that we

did in which three different emissions limits

were picked for the same unit

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Now Im not saying its not

happening Im simply saying that I dont

have any experience with that And what Im

more famil with is a control technology

being p whether its I you know a

scrubber or something else and within thatl

technology I the company being called upon

through the BACT process to meet an emissions

limit that reflects the best emissions limit

that that technology can achieve

And if the technology is combined

cycle then clearly there are certain sizes

of combined cycle that may be able to achieve

a better emissions than the unit that youre

picking And I dont have a problem with

somebody saying to me well we can I t do that

because of A B and C But my problem is

whether BACT automatically gets picked by

size rather than what the class of technology

is capable of performing

MR ALONSO Again I think two

points as to previous practices I meanl we

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have identified seven GHG permits or Im

sorry PSD permits that have throughout the

country and different permitting authorities

further research identified five more where

you have two or three emission units and all

units have dif rates They range from

California Arizona Florida Oregon North

Carolina So it is an established

practice out there in the permitting

JUDGE STEIN Were those

federally-issued permits or state-issued

permits if you know

MR ALONSO They were well you

know they were all state-issued permits but

some of those were in delegated states such

as Washington the s of Florida so they

are federal permits I agree that I dont

believe that this issue has come before the

Board but keep in mind BACT is a progression

And I think in step one the technology is

combined cycle And you take that technology

and you run it through the five steps But at

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the end of the day in step five if you take

the design of the emission unit thats being

proposed to be installed and you take those

technologies you know the use of rehea t

cycles the exhaust steam condensers the

generator design and all these things apply

to each of the three turbines

And at the end of the day in step

five whats the purpose of step five The

purpose of step five is to take that

progression and look at the emission unit

being proposed and develop an enforceable BACT

limit BACT is a limit based on technology

thats being identified through the step one

through four

JUDGE HILL Thats basically the

three separate applications argument am I

correct

MR ALONSO At the end of the

day we could have possibly submitted three

different applications and you would have had

to - - to do otherwise you would be basically

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setting sort of like an NSPS where you say all

combined cycles need to meet this one limit

across the board No matter where you are l

who you are l which manufacturer you use l what

color your turbine iS you need to meet thisI

limit Thats not what BACT is

JUDGE MCCABE Well the problem

with that analysis of course Mr Alonso isl

that if we take it to the full ent of what

youre suggesting you get to pick the

emission limit according to which turbine you

pick And I dont believe thats what the

permitting authority is supposed to do But

we dont need to debate this issue further

Wed like to turn before we leave

you and go to EPA 1 to the solar issue And my

question to you is is it possible -- again

here were talking facts not legal conclusion

to install some solar-generating capacity

at this proposed facility And what

information in the record can you cite us to

support your answer l whatever that answer is

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MR ALONSO On the solar pre-heat

issuel first of alII solar pre-heat is not a

control device to be identified in step one

Your factual question l can it be inst led at

this ilitYI in a meaningful waYI no We

only have 20 acres left over after we build

this proj ect

JUDGE HILL Is that in the

record

JUDGE MCCABE Is that in the

record

MR ALONSO NO I it is not Its

not in the record because againl what is in

the record is that Region 6 determined that

installing based on this boards precedent l

installing solar pre-heat or using solar as

some type of alternative fuel for this plant

would be re-designing the source

JUDGE MCCABE Well go back to

your explanation about the 20 acres Explain

to us

IMR ALONSO Okay First theres

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the 20 acres There s not enough space I landI

to make solar pre-heat a feasible or economic

technology Palmdale had 250 - something acres I

you know l a vast amount of land

Second l this plant is pretty close

to the Texas coast vulnerable to hurricanesI

Who knows if regulators of local communities

would even let us build such a large solar

field in this areal given the threat of

hurricanes

JUDGE MCCABE Is there anything

in the record for us to look at on that

IMR ALONSO No I again in the

record solar pre-heat is defined aS I would bel

redefining the source And this board has

already ruled on this issue In Palmdale thel

petitioner sought to have Palmdale install

even more solar energy than it already had

proposed and this board said that that wouldl

be redefining the source

JUDGE MCCABE I don I t bel ieve

lthat s what we said Mr Alonso I believe we

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said that redefining the source was clear if

you were talking about making it a 100-percent

solar facility

MR ALONSO Correct

JUDGE MCCABE That is quite

different from what youre talking about here

MR ALONSO Well I point the

Board then to Sierra Pacific In that case

there was a dual fuel plant biomass as well

as natural gas and the petitioner sought to

have the permitting authority to force

installation of solar and this board there

said it was redefining the source

JUDGE MCCABE And what did they

base that on

MR ALONSO Im sorry

JUDGE MCCABE I dont believe

that the Board made such a broad statement

that any time you introduce solar that it

would be redefining the source Do you recall

in Sierra Pacific what the reason was that the

Board concluded that

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MR ALONSO I do not

JUDGE MCCABE Okay Well I

wont make you do that homework right now We

actually know that Go ahead back to if you

would to the factual question because thats

the one were most interested for todays

purposes about whether its actually possible

and what there is in the record that t Is us

yes or no on that

MR ALONSO Okay Well first Il

mentioned that theres not enough land l the

hurricane situation The second issue is

Paloma is not in the renewable business They

doni t have the resources to go out and do

solar studies They would need to retra or

redo their business model in order to look at

alternative energy or renewable energy

JUDGE MCCABE Do they build their

own turbines

MR ALONSO They build gas

turbines yes

JUDGE MCCABE They build them or

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they buy them

MR ALONSO They dont do wind

they dont do solar

JUDGE MCCABE Do they use

subcontractors

MR ALONSO I mean this is

something that they would have to develop as

a business unit and will take time to go out

and get experts hire them on staff or go get

third-party folks Its just not part of

their business plan

JUDGE MCCABE Mr Alonso what do

you think the company responded the first time

the first company was asked to put on an SCR

MR ALONSO They probably said it

was unfeasible

JUDGE MCCABE They probably did

They probably also said they werent in the

business There has to be a first time

doesnt-shy

MR ALONSO No I think that as

far as being in the business I mean theyre

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in the business of burning coal And they

know that they have to put on pollution

control -shy

JUDGE HILL And I think Sierra

Clubs argument would be that La Paloma is in

the business of generating energy as

efficiently as possible in South Texas I

mean put aside the hurricane issue for a

moment but if there were enough land you

know the stated business purpose in the

application is to produce between 637 and 735

megawatts of energy I mean thats the

stated business purpose not to produce it

per se exclusively with natural gas That

may be their preference but Im not sure

thats what the record shows

MR ALONSO I mean the purpose

of citing this plant is to use the reclaimed

water from the municipality as cooling water

Theres also a natural gas pipeline close by

to this facility That is -- and the intent

is to maximize the use of that gas pipeline

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You know shy

JUDGE HILL And that is in the

record

MR ALONSO That is in our brief

JUDGE HILL Okay

MR ALONSO But again I dont

believe that solar pre-heat would even survive

step one I mean youre king about a

redesign the source by forcing folks to

consider renewable energies at a fossil fuel

plant where thats not the intention of the

design And this board has allowed and has

recognized the ability for permit to

define the parameters of their design what

they want to build and I dont think we you

know well you guys can do what you want but

to force folks that want to build fossil fuel

natural gas plants to build wind turbines I

dont know that sounds like -shy

JUDGE MCCABE Do you know if

theres any situation where any permitting

authority has done that in the United States

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yet

MR ALONSO I have not seen a

BACT analysis resul ting in or you know to do

as an alternative particularly in step one

to consider the feasibility of a renewable

project I dont have any knowledge of that

occurring at other permitting authorities

JUDGE STEIN But what about a

hybrid pI I mean I dont think whats

being suggested here is that you convert the

principal purpose of the gas turbines I

think the question thats being asked is

whether any component of it could be solar

and I think what the Board is struggling with

is in a si tuation in which solar is not

already part of the plant design is it proper

or improper to raise questions about that If

so what is the regions obligation

I mean I dont see this as sort

of a black and white issue I see it as

youre lling us theres 20 acres Maybe

thats the record maybe its not That

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may be relevant to how you answer that

question in this case as opposed to some

other case

MR ALONSO It really goes to

whether or not solar or renewable energy

should be considered a control device in step

one And I would assert no its a different

fuel source Youre redesigning when people

go to build solar plants or hybrid plants

even hybrid plants you go in and thats what

you want to build and you have a business plan

and an engineering design for a hybrid plant

and thats what you want to get permitted

But if youre out building a gas-

fired power plant and solar is not a

component I mean nowhere in the record is

there anything about La Paloma interested in

building a solar plant We want to build a

natural gas fire plant and thats the source

that should be permitted not some alternative

design And a hybrid plant would be forcing

basically brand new engineering you have to

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study you know solar rays and the impact

whether or not its efficient in this area

It would just be a totally different design or

engineering effort to design a hybrid plant

versus the plant that were trying to permit

here

JUDGE MCCABE Okay Thank you

Mr Alonso We take your point and you may

be seated And we will hear next from EPA

and Judge Hill will take the lead on questions

for EPA but be resting assured that we will

all have questions for you

JUDGE Let me start by

asking how you pronounce your name so I dont

mess it up

MR TOMASOVIC I will generally

say Tomasovic but

JUDGE HI Tomasovic

MR TOMASOVIC - - Tomasovic is

fine if you want to go old country

JUDGE HILL What do you prefer

MR TOMASOVIC Tomasovic

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JUDGE HILL Tomasovic okay So

this is purely a hypothetical question but

in your experience or in the experience

generally of the region when does a permit

applicant decide what their you know what

their turbine is going to be or what their

size is going to be or the precise design

factors of the source Does it typically

happen before they submit the permit

application after both

MR TOMASOVIC I think it could

be a variety of things your Honor Looking

through historical permitting actions we did

find that there are a couple of cases that

happened before the Board that had permit

structured such as this that had permitted

multiple turbine options You wouldnt be

able to see it from the face of the decisions

and it wouldnt be something that you could

discern from the challenges that were raised

but the Three Mountain Power decision in 2001

is one such example and there was a case

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where a petition was dismissed for being a

minor source permit But clearly on the

face of that decision which was Carlton Inc

North Shore Plant in 2001 it described a

minor NSR permit with multiple turbine

options

JUDGE MCCABE Could you repeat

the name of that one please

MR TOMASOVIC Carlton Inc

JUDGE MCCABE Carlton Inc

MR TOMASOVI C North Shore

Plant

JUDGE HILL Do you have a cite on

that or you said it was dismissed as -shy

MR TOMASOVIC It was 2001 and

it was a published decision your Honor

JUDGE HILL Okay Now my

understanding of Three Mountain Power is that

they allowed for different equipment but they

only specified a single emission limit

MR TOMASOVIC It does show that

in the RBLC sir but we tracked down the

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permit and actually what happens is

different permit issuers will input different

data into the RBLC We gave you approximately

ten RBLC numbers and in almost all those

cases you are going to see different BACT

limits depending on what types of BACT limit

is being assigned

And under the Three Mountain Power

permit that was issued there were multiple

types of limits other than the concentration

limits So the hourly limits the pounds per

hour limits the annual ton per year limits

just as in our permit show that with each

turbine option different limits apply

JUDGE HI And what was the

control technology in those cases or can you

generalize on that I mean one of the things

that makes this a challenging case I think

in part is because the control technology is

I I mean you know is also essentially the

plant design because what youre trying to do

is simply maximize the effici use

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inherently Are those others cases are any

of those similar or are they all about add-on

technologies

MR TOMASOVIC I bel ieve these

days the conventional thing is that for add-on

control technology wi th turbines is SCR For

other limits such as PM and carbon monoxide

youre assigning limits inherent to good

combustion practices inherent to the equipment

that is selected And thats reflected in the

TCEQ permit that was issued for La Paloma in

this case which like ours followed an

application that asked for the flexibility to

consider multiple options And as a

practical matter when the permit writer is

assigning those limits they have to look at

the specs inherent to the turbine in assigning

both the worst case emissions but also those

emissions that reflect whats good operation

on an hourly basis

JUDGE HILL Does the TCEQ permit

have this condition that says that once the

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turb selection decision is made then the

permit is going to be amended to basically

take out reference to the other two turbines

MR TOMASOVI C It does and I

believe that may be a practice that varies by

permit issuer I didnt notice that when I

looked at the Three Mountain Power permi t I

also have on hand a listed RBLC number for a

orida permit in 2000 I didnt notice

provision there

For what we have as a special

condition theres no time set requirement on

when they would need to come in and modify it

Its more of a back-end cost-keeping

requirement where they indicate what their

selection would be and the permit issuer

would simplify the permit so its more

readable enforcement purposes

JUDGE HILL And thats the reason

to do it Because if you take Mr Alonsos

argument kind of to its logical conclusion

then they get to select the turbine and

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therefore they get the limit that applies to

that turb But youre saying that that

condition was put in there just to make the

permit cleaner to read in essence

MR TOMASOVIC Its not the case

as the petitioners have argued that they get

to choose their emissions rate Thats not

what they to choose They get to choose

their capacity they get to choose the

equipment and the various designs of equipment

that we couldnt differentiate for efficiency

purposes in assigning limits for a final

permit

So even as those limits look

numerically different in the permit we have

a technical decision on the part of the permit

issuer that says these are comparable and they

dont implicate a weakening of the BACT

requirement that we decided to assign the

limits this way

LL I want to come back

to the comparable because I think that thats

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an important issue But getting back to this

full issue of basically the selection

decision Sierra Clubs essential argument is

that since the control technology here is

maximum efficiency within a range and given

that La Paloma defined the business purpose as

build a plant thats between the capacity of

the smallest capacity turbine and the largest

capacity turbine that they should have to use

the most efficient control technology which

in this case would be the most efficient

turbine Do you agree Could the agency have

told La Paloma look you can pick whatever

turbine you want but youve got to run it as

if it were the most efficient because thats

BACT Does the agency have that authority

MR TOMASOVIC Speaking for

Region 6 with this permit there are multiplel

ways that I think permit issuers could have

decided to come out in the final permit We

decided l based on the design heat rates the

best data we had for the operational factor

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that would apply to this equipment plus a

consistent safety margin for all three

options that there are these three limits

that come out

And if we chose to express those

limits in their different format for instance

the net heat rate the picture would actually

be qui different So it is a distorted a

bit of a distorted picture to say that GHG

BACT on a gross output basis is the ultimate

measurement of what is efficient

JUDGE HILL Why would it look

different Please explain that further What

would happen if you use net

MR TOMASOVIC So what appears

from the of the permit is that the

largest difference in efficiency is 27

percent In our response to comments on page

II we actually provided the numbers to show

what that dif would look like on a net

basis which is I believe the format that

the limits were expressed in the Palmdale

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decision l as well as even earlier permits

issued by Region 6

And permit issuers do have

discretion at this timel in the absence of

guidance to consider the comments that comeI

in and decide which type of limit is going to

be most meaningful for putting BACT in place

But -shy

JUDGE LL So I cant do math in

my head but Im looking at those numbers So

youve got for the GE turbine the net heat

rate would be 7527 and for the Siemens it

would be 7771 Isnt that about two and a

half percent I or is it less than that

MR TOMASOVIC WeIll I think what

you want to look to is if you can see a 9452I

number -shy

JUDGE HILL Okay That I S the

emission limit

MR TOMASOVIC -- and the 9444

number

JUDGE HILL And then a 965

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number

MR TOMASOVI C I f you were to ask

what the percent difference is there you

would have one-tenth of one percent of a

difference which expressed as gross shows

up as 27 percent And this is one of the

challenges with such a narrowly-written

petition It didnt challenge the reasonable

compliance margins that we assigned to each

option and it doesnt bring up issues like

the start-up emission limits which in factiI

give a different rank order if you could usel

that terminology for each of the turbine

options

JUDGE HILL All right So are

you saying that if you I mean I based on thisI

chart on page 111 that I I mean I the response

comments references the 26 earl on butl

its also got this chart And youre saying

that that chart shows that its really tiny

MR TOMASOVIC Yes your Honor

If we chose to place a final permit final

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limits in the permit on a net basis using the

same calculation methodology it would be one-

tenth of one percent

JUDGE HILL How do you decide

whether you set the limit on a gross basis or

a net basis Because I know Ive seen both

MR TOMASOVIC In this case we

evaluated the adverse comments on the issue

we looked at what was going on for instance

with the proposed NSPS which expresses those

limits at least in a proposal form on a gross

output basis We saw that in general a lot

of the performance data that is out there is

available on a gross output basis so we

decided that for permitting purposes

permitting administration purposes and for

the benefit of other permitting actions it

seemed that gross output made sense for this

permit

JUDGE HILL Okay But you had

the discretion to pick net

MR TOMASOVI C Well we dont

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close off ourselves from choosing net base

1 imi ts in future permits if for instance the

NSPS were to on the basis of comments decide

that net basis really is a preferred way to

go But we have a reasonable basis for this

permit to say so And in saying that were

not purporting to say anything that would be

determinative of how state permitting

authorities or even other regions might choose

to assign the limits for a permit that

guarantees efficiency and control of GHGs

JUDGE MCCABE I just want to get

some clarity on again the facts I love

facts If the numbers here that were going

to be looking at when we decide whether we

agree with the regions position that these

limits are really not different that theyre

comparable or whatever language you use to

describe them how would we describe that Is

it 01 percent are you telling us now Is it

27 percent Is it a range from 01 percent

to 27 percent The world looks closely at

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the facts of what we were looking at when we

draw the conclusion l so the facts matter and

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MR TOMASOVIC Yes l your Honor

So 111 try and go over the notes I have on

the comparability of the limits in maybe an

orderly shy

give me a

feel free

that the

JUDGE MCCABE I was hoping youd

sound bite in the end but please

to go through the notes

MR TOMASOVIC The first thing is

permit actually assigns three

different kinds of emission limits the ton

per year the start-up limits which are on a

pound-per-hour basis and this gross output

when its sendingelectricityto the grid how

efficient is in relation to the output

So if you look at those three

different limits and were to assign a rank

order under kind of turbine model I you I re

actually going to get three different orders l

permutations I suggest thatthere dif

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the net limits was another possibility for us

You would get a fourth order if you were to

assign -- and actually nothing would have

permitted us from assigning both kinds of

limits and that limit and a gross limit but

that would have been duplicative So we

decided these are the limits for the permit

So looking just at that the basis

for the challenge which is the gross limits

you have a smallest difference of one-half of

one percent Thats the difference between

909 to 912 The largest apparent difference

is 27 percent which is the difference from

909 to 9345 And this difference is not a

difference in efficiency In the commenters

letter they do throw around the term

efficiency but sometimes thats using the

context of what is power plant efficiency

which gives you a different comparison If

youre talking about engine efficiency or

power plant efficiency the 27 percent

difference is actually 12 percent

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JUDGE HILL Why is that I was

with you until that sentence

MR TOMASOVIC So

JUDGE MCCABE I think we need a

chalkboard

MR TOMASOVIC That calculation

and I think maybe the footnotes in the comment

letter explain it as 3412 divided by the heat

rate And another issue is that the

commenters use actually lower heat value for

their descriptions of the heat rate whereas

our permit is using the high heat rate

information to get the limits

But that 12 percent difference in

efficiency that kind of efficiency power

plant efficiency were talking about is what

you may read in -shy

JUDGE HILL Can you define power

plant efficiency for that purpose for me

MR TOMASOVIC Yes sir The

definition of power plant efficiency would be

what is the heat rate value of the kilowatt

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hour divided by the heat rate for the power

plant or the turbine

JUDGE HILL Okay

MR TOMASOVIC And in our case

our limits arent just the heat rate for the

turbines as though they were in simple cycle

mode but the heat rate for those turbines in

conjunction with the heat recovery steam

generator with duct burner firing So theres

a number of things going on

And we had explained that as

turbines get larger they get more efficient

And thats actually true for several reasons

but in this case its not actually because

the GE turbine is demonstrated to be

inefficient Thats not the case Its

actually the influence of the duct burners

which wasnt something that the petitioners

raised in their appeal Because each scenario

has the same size duct burners they have a

disproportionate impact in the overall heat

rate We assigned limits that included

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everything l and thats why I when Mr Alonso

was talking about de-rating that may be a

situation where is easy to figure out that

youre just cutting into the compliance margin

if we had decided to set them all the same

limit but also might be a case where they

really put limits on their use of duct

burners which cuts into the operational

flexibility that they want to have as base

load plant that has peaking type capabilities

JUDGE HILL In other words you

cant sort of size the duct burner to the size

of the turbine or

MR TOMASOVIC No your Honor

In this case the HRSG with the duct burners

is assigned to be the same for all three

scenarios

JUDGE HILL Okay all right So

is 27 percent the largest when you talk

about tons per year startup gross output and

net heat rate is 27 the largest difference

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MR TOMASOVIC Well sir if you

were to count the annual ton per year

differences each capacity scenario is

actually about 10 percent larger than the

next If you look at the annual ton per year

limits I think the differences might be 6 or

7 percent but youre just building up your

plant with the bigger greenhouse gas impact

overall and -shy

JUDGE HILL Well the reason I

ask that question is because in your brief

you talk about that you dont need to look at

alternative control technologies that are

essentially equivalent In response to

comments it talks about these turbines are

quote highly comparable and there are

marginal differences between them So theres

a lot of words thrown around that all seem to

imply small or not significant but which one

do we use I mean the argument seems to be

essentially -- see Im coming up with a new

phrase -- essentially equivalent How do we

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judge that Well first of all is there a

single term that is most relevant from a

legal standpoint And then my second question

will be and how do we judge that

MR TOMASOVIC Well the two

explanations that we gave in the record I

think are pertinent and that is that the

differences are mere fractions of the

compl iance margin The compl iance margins we

assign to each turbine is reflective of the

uncertainties in terms of variable load

performance deviations from the iso

conditions degradation over time So if -shy

JUDGE HILL Well but how does

that cut I mean if you accept a compliance

margin at 30 percent then yes everything is

probably going to get swamped by that But if

you set the compliance margin at 2 percent

you might not

JUDGE MCCABE Or 126

MR TOMASOVIC And we set the

compliance margin at 12 percent and I think

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what that illustrates is that the difference

between the 2 percent which is approximately

a quarter of that total compliance margin

shows these are all these are all comparable

They are all going to be expected to be

performing in range of each other but we

decided that there are subtle differences that

allowed for the assignment of that reasonable

safety factor They are different sizes and

different engines but theres no fact-based

reason for us to decide to set them all at the

same limit or average them or round them up to

the nearest 50 pounds per megawatt hour

although other permit issuers may well choose

to do that in order to simplify things

JUDGE HILL If we want to give

guidance to future permit writers how would

you propose we say youve got three turbines

with different heat rates but they are

essentially equivalent How much discretion

do you think the agency has to figure out to

declare two different GHG limits to be

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essentially equivalent

MR TOMASOVI C Well I would

start your Honor with the fact that these

are all F class turbines and at the comment

period there wasnt any articulated difference

between the turbines in terms of the

technology they have You may find that in

other cases where heres a turbine that uses

dry cooling and heres a turbine that uses wet

cooling and thats a technological difference

that would allow us to elaborate on it

explain perhaps why one option is necessary

and the other isnt

But in this case where you have F

class turbines that are all modern at least

in the last several years type efficiencies

placed into an energy system that has its own

subtle impacts on what the overall limits

would be I think the way that the Board

should land on that is deference to the permit

issuers technical judgment in this case on a

case-by-case basis that this apparent

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difference of 25 pounds per megawatt hour was

not significant And we made that decision

without any written guidance from OAPPS or

OGC but it was based on our permit issuer

technical judgment And all is not as it

seems if you were to look at for instance

that net efficiency which illustrates that

that 27 percent difference which the

petitioners now complain about is only a 01

percent difference

JUDGE HILL At what point does it

become too big I mean you talk in your

brief or the response comments document talks

about well unless its poorly designed or

non-representative of the capabilities of the

technology is that the standard we should

adopt

JUDGE MCCABE Were wondering

where that came from actually

MR TOMASOVIC Well that phrase

you might find a phrase in the GHG guidance on

performance benchmarking Im not saying its

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straight transferrable to that to the way

that we used it in the brief but it does

reference performance capabilities of

technology as a starting point And we were

looking at the GHG guidance that does say in

the case of a gas-fired plant if its

considering single cycle for example you

should consider as an option combined cycle

Combined cycle isnt broken down into the

world of turbines that are available on the

market Go larger if you can if that shows

its more efficient

Instead it was more us taking

this application as it came in a conventional

combined cyc plant using modern F class

turbines with the heat recovery steam

generator and the duct burners Its a

standard type of permit It is similar to

LCRA permit that we issued It was the first

permit issued which incidentally in that

case the application came to us with the

request to permit multiple options and they

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decided before public comment that the GE 7FA

turbine was the one that they would go with

JUDGE HILL So can you cite to

any permit where EPA basically allowed the

size or model of the main emission unit to be

selected after the permit is issued as

happened here Are the -shy

MR TOMASOVIC As far as a

regionally- issued permit I sir No The

Washington State permit that is referenced in

our brief is a delegated state Sierra Club

submitted adverse comments on it and that wasl

one case where they for similar reasoning to

us decided that they would defer to the

applicants request to have multiple options

and not make them pick one of two acceptable

turbine models

JUDGE HILL Okay

JUDGE MCCABE Just going back to

your point about the F class turbines 11m

wondering if what you l re saying to us is that

it is sufficient for the permitting authority

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to look at that class of turbines and say

step one combined cycle technology is the

best available control technology here and

then when we get all the way down to step five

to set the emission limit that anything within

class F is good enough is that what youre

saying

MR TOMASOVIC No your Honor

The proj ect did come to us wi th F class

turbines You may see that in the response to

comments one of the things that Sierra Club

had said is choose larger turbines make a

bigger power plant and we quickly said that

we didnt believe that was appropriate in our

case because they had selected theyre

looking at a power plant of a certain size

using three different types of F class

turbines

But all of those were open to

commenters adverse commenters that may say

well these three turbine models of these

three turbine models this one doesnt show

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anything that shows modern day efficienc s

But at the same time its likely not a good

permit practice to say with absoluteness that

this turbine that was designed in the last

five years is not acceptable for BACT purposes

or for project purposes in other cases

because if you rest solely on that one piece

of information then the net heat rate

expresses as the pounds per megawatt hour on

a gross basis youre not necessarily

capturing all that is relevant to efficiency

JUDGE HI What if La Paloma had

said were going to build a plant thats 637

megawatts no more no less and theres only

one turbine on the market that will allow us

to do it even though there are several other

F class turbines that are much more efficient

Would the region have any authority to look

behind that

MR TOMASOVIC I think general

permit issuers do have authority to say have

you considered this or that thats so

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available In that case your Honor I think

youre presenting a case where the source is

defined binarily

JUDGE HILL Exactly

MR TOMASOVIC However it

doesn t necessarily mean that the selection of

that turbine model is unjustified If you are

to look at going back to the NSR workshop

manual I believe we cited we said in our

brief in one of our footnotes that customer

selection factors can be based on a number of

things including reliability and efficiency

experience with the equipment And all of

those are things that you can find in the NSR

in the NSR workshop manual as an example of

how you step into the BACT analysis for a

turbine Its really something that we come

in with we have a contractual commitment to

use these turbines can you see what limits

would apply to it at the front end

JUDGE HILL Let me ask if Judge

Stein or Judge McCabe has anymore questions on

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the turbine issue because then I want to move

to solar real fast

JUDGE STEIN I do

JUDGE HILL Okay

JUDGE STEIN Did I hear you say

that another facility in Region 6 that was

recently permitted is using the same turbine

as will be used by La Paloma

MR TOMASOVIC Yes your Honor

JUDGE STEIN And does the record

reflect what that BACT limit is for that

facility and how it compares to the BACT limit

here

MR TOMASOVIC s your Honor

So the name of the facility is the LCRA

Ferguson Plant And I believe that was

referenced in the statement of basis as well

as discussions sections of the response to

comments all cases looking at other

facilities that are out there including LCRA

we deemed the limits to be appropriate when

theyre placed in the appropriate context

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The Sierra Club presents Palmdale which isnt

reflective of the same design that were using

that we permitted here They referenced the

Pioneer Valley and we had to contextualize

the limits that were assigned to the Pioneer

Valley permit because that particular facility

wasnt using duct burners

JUDGE STEIN Okay So if Im

correct the BACT emissions limit for the

Lower Colorado River was 918 pounds of C02 per

megawatt hour And the limit that were

looking at here is 934 is that correct Im

not purporting to say that I have a correct

understanding Im just trying to clarify

MR TOMASOVIC Is this in the

response to comments or statement of basis

your Honor

JUDGE STEIN Oh its in my

little cheat sheet that somebody gave me

JUDGE MCCABE Its extracted

MR TOMASOVIC I may be mistaken

but I believe the limits assigned for LCRA

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were in fact on a net basis so they

wouldnt be directly comparable But we might

well have had some discussion that tried to

reconcile them

JUDGE MCCABE Yes the

comparability of all of these numbers is

somewhat perplexing to us so well address

that at the end because were thinking that we

might need some supplemental briefing to try

to get us on an agreed-on comparison table

here so that we at least understand and that

others who read the decision can understand

the import of what were deciding Do you

want to turn to solar

JUDGE HILL Yes So Mr Alonsos

argument is in essence that including any

solar into this proj ect would have been

redefining the source Do you agree wi th

that or do you think the agency has any

authority to consider some solar at an

electric plant even if it hasnt been

proposed by the applicant

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MR TOMASOVI C Your Honor I

believe that the Boards precedent on

redefinition of the source allows that a

permit issuer in their discretion may

require consideration of options that may

constitute a redefinition of the source

However if that is in conflict with the

fundamental business purpose of the applicant

then it is against our policy to do that

JUDGE HILL Do you think that the

agency has some -- okay So you believe the

agency has the authority to require

consideration Do you think the agency has

the obligation to do so if it wasnt proposed

if somebody raises it in comments as happened

here

MR TOMASOVIC I believe that the

agencys responsibilities in responding to the

comments in many ways are calibrated off of

the specificity of the comments that come to

us In this case the comments that we

received on solar are not in the same shape as

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they carne to the board in the petition in that

theyve attached the exhibits for two permits

that werent part of their comments that were

submitted to us and they specifically focused

on Palmdale and Victorville as two facilities

that we should have had a further discussion

about in our response to comments

But in terms of how the comments

carne to us which actually raised the issue of

solar in a lot of different ways where at

times it wasnt even clear whether they were

referencing photovoltaic versus stearn

auxiliary contributions to efficiency I

believe that the regions responses were

appropriate

JUDGE HILL Mr Alonso

essentially argued that our decision in

Palmdale said that it is appropriate to

classify addition of extra solar as

essentially redefining the source and he also

cites to Sierra Pacific Do you agree with

that characterization of those decisions

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MR TOMASOVIC Our decision is

based on the facts of our administrative

record and not a broad reliance on those

decisions stating that As was argued in our

br f we think the administrative record

shows that the considerationof solar options

at least as we understood it coming from the

commenters would redefine the source

The administrative record does

show l fact that the property limits are no

more than 80 acres and from that l it can be

discerned that there iS I based on the

footprint of the plant l not a lot of

additional acres which might approximate the

20 acres that the permittee was able to

substantiate with the affidavit that they gave

with their petition

JUDGE HILL So does the region

believe itl s not feasible to install any solar

capacity at the site

MR TOMASOVIC WeIll depending on

how that comment might be construel l your

l

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Honor rooftop solar is an option that

presumably is not what the commenters were

trying to talk about although its not always

clear In the case of the Palmdale decision

it does illustrate that as a rough measure to

contribute 10 percent of that plants total

capacity

JUDGE MCCABE Does someone have a

cell phone going Where is that music coming

from

(Whereupon the foregoing matter

went off the record at 450 pm

and went back on the record at

4 52 p m )

JUDGE MCCABE Okay Lets

proceed We dont have to cut Mr Ritchie

off Lovely music anyway

MR TOMASOVIC I was saying your

Honor as a background matter the Region 6

was aware of the factual setting that was

recited by the Board in the Palmdale case

which was the fact that to generate just 10

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percent of the capacity for that Palmdale

plant it required 250 acres And in fact

and I believe some lang-uage in the opinion

came close to this you need acreage to be

able to have power in a significant amount

You may well need more than 20 acres just to

get steam that could be used in the process

but you know thats a different technical

issue in any event

If we were to just sort of roughly

say 250 acres 10 percent of the plants power

reduced down to 20 or 25 acres youre talking

about something that doesnt substantially

influence the overall plant -shy

JUDGE HILL But thats not in the

analysis the region did in the record

correct

MR TOMASOVIC No your Honor

JUDGE HILL Okay

JUDGE MCCABE Is it the regions

position that as a matter of exercising its

discretion it would never consider solar it

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would always consider adding a supplemental

solar or whatever we call it here to be

redesign and therefore against at least the

regions policy if not the agencys to even

consider

MR TOMASOVI C No your Honor I

dont think anything in the regions response

was intended to cut off comments on solar

technology as a general matter for any other

permitting case

JUDGE MCCABE You just think the

comments here were insufficient to get you

where you needed to go in order to give it

serious consideration here i is that what

youre saying

MR TOMASOVIC Yes your Honor

I mean we had a bit of a technical discussion

in there that it is the case that for any

process that uses fuel to generate heat you

can get that from something else which might

be geothermal or solar And you could get

into the myriad permutations that go on

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in terms of whatever a commenter might

bring but it isl

JUDGE MCCABE Comment clearly

focused on solar in this case l so you dont

need to go there

MR TOMASOVIC However I there are

other parts of the comment which seem to

suggest that the l that l in their view l this

project was defined to be within a range of

capacity that could be energy generated by any

means I which we disagree with because this is

a combined cycle plant thats meant to use

natural gas as its fuel and take advantage of

the rastructural advantages specific to

that location including the waterl

availability of the pipelines and the local

need this particular kind of power to be

delivered for grid stability reasons

JUDGE MCCABE I hate to put you

on the sPOtl Mr Tomasovic l but do you think

you could reduce to one or two sentences the

reason the region did not consider solar here

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95

or considered it to be redesign that the

region would not entertain

MR TOMASOVIC In the way that

the comments came your Honor we believe that

that solar auxiliary preheat was not well

defined because it was it was actually raised

as a substitute for duct burners when duct

burners have a different purpose than solar

auxiliary preheat And Im already past my

two sentences but

JUDGE MCCABE Thats okay

Youre close enough Thank you Those are

all the questions we have for you at this

time Mr Tomasovic Thank you And Mr

Bender you have been very patient and I bet

youre watching your watch National Airport

flight at 700 You probably need to leave

here by what would folks who are

Washingtonians say given that it is Wednesday

rush hour before a storm

JUDGE HILL If you take a cab

Id say 545 at the latest

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JUDGE MCCABE Okay So 5 30 i

will that work for you Mr Bender

MR BENDER I think so your

Honor

JUDGE MCCABE Okay I would hate

to give you short shrift after you were so

gracious as to choose the last position or to

suggest that your judgment perhaps might need

to be revisited the next time youre offered

that choice

MR BENDER I wouldnt want to

miss this even if I had already gone

JUDGE MCCABE Okay

MR BENDER Is this better

Thank you your Honors I think to address

one thing that kind of permeates the briefs

from respondents and some of the discussion

here today theres kind of two pieces or two

sides of the same coin maybe Were talking

about size or capacity Were talking about

megawatts right And when were talking

about ERCOT or any other regional system

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operator the dispatch is to meet a load

Were talking about dispatching to meet a load

in megawatts

And the size of the units are

different here Its actually kind of a

combination of things turbines plus heat

recovery stearn generator turbine that adds

up to certain numbers Its 637 for the GE

combination for example Thats megawatts as

their peak You know if you throttle full

thats what youre going to get

The Siemens turbines can generate

637 Its not that you have a turbine you

turn it on and you get 637 megawatts or you

turn it off and you get zero and its a

binary on or off situation

In fact the other argument or the

other piece of this argument in the briefs was

that turbines as they get larger get more

efficient And if you want a large turbine at

a reduced rate less than full youre

decreasing its efficiency and thats simply

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not true And thats not true based on the

evidence in this record because that last

increment of power comes from duct burning

which is less efficient than the turbines and

stearn generator

And so as you throttle down or as

you de-rate or decrease your generation all

saying the same thing youre actually until

you hi t the point where the duct burners corne

off youre actually improving the efficiency

and decreasing the emission And we can see

that among other places in one of the tables

that counsel for Region 6 pointed to in the

response to comments where in addition to net

and gross theres also without duct burner

fire on page 11 of response to comments

which is Petition Exhibit 3 you can see that

the GE the smallest of the turbines piece is

75275 without duct burner firing The

biggest turbine the Siemens 5 is 77717

Less efficient right And you only get the

increased efficiency from the larger turbines

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as a system because theyre able to generate

more of their power before turning the duct

burners on

JUDGE MCCABE Well does this

mean youre happy to hear that theyve

selected the GE turbine

MR BENDER If they have a permit

limit that reflects what they could do If

the question is phrased differentlYI right

If the draft permit had come out and said our

project purpose is to build a plant thats

capable of generating 637 megawat ts you know II

this would be a different case The comments

would have been different l and we mayor may

not be here

But then wed saYI the comments

would come in among other things l something

to the effect of the Siemens I you know l 5 or

the Siemens 4 can generate 637 megawatts In

facti when it does so it does it at a reduced

emission

So were dealing with emission

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rates The final permit emission limits are

set based on operating full out But full out

is a different number of megawatts for each

right

JUDGE MCCABE Thank you for that

clarification Do you agree that the F class

turbines are among the most efficient turbines

available for combined cycle combustion

technology

MR BENDER I believe theyre

among I dont know that they are the most

efficient

JUDGE MCCABE Do you know of a

class thats more efficient

MR BENDER I dont The

question though is the emission limits too

which is the end of everything So were

talking about turbines and different turbines

but were really talking about different

turbines put in front of the same 271 megawatt

steam generator in this case

JUDGE MCCABE Well to you and to

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EPA of course the emission limit is the

ultimate most important thing here But of

course to the company the most important

thing is which turbine do they get to use and

is it the one that will fit whatever their

business purpose is

Your petition Im a little

confused about something Your pet it ion says

that youre not suggesting that the company

should be required to pick any particular

turbine but just that they should meet the

lowest GHG limit that any of the turbines

could meet But arent you in effect by

doing that forcing their choice of turbine

MR BENDER No Its not

requiring a turbine Whether youre forcing

it or not raises some other internal issues

I think at the company which is you know

their risk appetite for that headroom margin

thats built in how much theyre actually

going to operate because this is a 12-month

rolling average and assumes operating at 100

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percent including those duct burners wide

open which is one of the least efficient ways

to operate

JUDGE MCCABE So your preference

would be that they have to build a bigger

turbine and operate it at a lower load

MR BENDER Our preference is

they have to meet the emission limit that

JUDGE MCCABE But in concept

MR BENDER To build a bigger

turbine and operate it with less duct burning

and using more of the waste heat from the

turbine the way that the three options are

set up in this record is the most efficient

And

JUDGE HILL But that wasnt your

comment was it Your comment was simply to

pick the limit that reflects the lowest

emission rate Your comment wasnt

essentially to recalculate the rate based on

the lack of duct burning

MR BENDER Thats correct

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Sorry Im trying to answer a question a

direct question Im not representing that

thats what the comments were

JUDGE HILL Okay Fair enough

Im sorry to interrupt Keep going

MR BENDER I should speci fy this

is based on our understanding from the record

Because the Siemens turbines are capable of

basically more heat because theyre bigger but

theyre going into the same size heat recovery

steam generators as would the turbines

More of the total heat going in is coming from

waste heat from the turbines with the Siemens

compared to the GE so theres less need for

duct burning Thats what

JUDGE MCCABE What is your goal

Mr Bender Are you looking for the

lowest total amount of GHG emissions that can

possibly come out of this facility or are you

looking for something else

MR BENDER We I re looking for the

lowest BACT rate but were also looking for

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JUDGE MCCABE But the BACT rate

is based on efficiency yes

MR BENDER Its based on

efficiency here yes

JUDGE MCCABE Do you have any

objection to that

MR BENDER Im sorry

JUDGE MCCABE Do you have any

obj ection to EPAs basing the BACT rate on the

energy efficiency of the turbines

MR BENDER Not in this petition

JUDGE MCCABE Okay Well it is

this petition were talking about

MR BENDER Right Its

JUDGE STEIN But given that they

have indicated that depending on the timing

that theyre going to go with the GE turbine

what is your position as to what the emissions

limit should be for that turbine

MR BENDER The emission limit

for any of these turbines based on this

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record and the draft permit that we were able

to comment on should be -- Ill put it this

way If F class category of turbines

followed by heat recovery steam generator is

the control option and thats what we were

able to comment on And if thats the control

option that theyre going to treat as the same

control option through steps one through four

then in step five the emission rate should be

based on the lowest emission rate achievable

by that class And based on the record here

thats represented by the Siemens F4 at least

that line in the permit right

So depending on how your question

was intended your Honor if they came in and

said draft permitr project purpose 637

megawatts on peak 100-percent capacity you

know r we would look at what combination of

turbine heat recovery steam generator gives

you the lowest emission rate at that But

want to be clear thats not this case thats

not this record

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JUDGE STEIN Well Im a little

confused I mean Im with you to a point

but what I thought I heard the region say is

that when they chose the BACT limit that they

chose that they couldnt necessarily translate

between these different turbines in quite the

same way that you were doing the translation

And I mean if for example youre saying

that they need to meet emissions rate X what

if they cant meet that with this equipment

Does that mean that they cant install the

equipment

MR BENDER If La Paloma cannot

meet 909 pounds per megawatt hour gross with

the GE equipment is the hypothetical

JUDGE STEIN Yes

MR BENDER Yes then they cant

install that equipment

JUDGE MCCABE So you are forcing

their choice of turbine in effect

MR BENDER Only as a secondary

effect But just like if you cannot meet a

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BACT limit for 802 on a coal fire power plant

wi th a dry scrubber are you forcing the

selection of a more efficient wet scrubber as

a secondary effect Thats true

JUDGE MCCABE Do you think thats

a fair analogy Were talking here about the

main emitting unit and the main unit that

produces the capacity of product that the

facility wants to produce The choice between

a wet and dry scrubber doesnt affect that

MR BENDER Well according to

the region its a category and its not

affecting the category If the category as

a region says is combined cycle turbine with

heat recovery stearn generator then youre not

changing anything You may be foreclosing

business choices that are made later but I

would suggest thats true with every BACT

limit There are choices that a permittee may

want to make but cannot make because they have

to comply with their BACT limit

JUDGE HILL 80 Mr Tomasovic says

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that pointed out that the Siemens

going to get it wrong the Siemens 4 turbine

has the lowest emission limit hourly but that

the GE turbine has the lowest annual tons per

year primarily because its operating at a

lower capacity Is your argument that the

limit that the region should have set have

been the lowest of each of those or is your

argument that they should use the limits that

they got for the most efficient turbine which

was the Siemens 4

MR BENDER I believe that the

BACT limit is the primary driver BACT limit

is the pounds per megawatt hour and thats

the limit that we think that the La Paloma

facility whatever equipment it ultimately

chooses should meet That will result in

different tons on an annual basis but tons on

an annual basis is I would submitt not a

limiting limit It assumes 100 percent

operation You know t itts basicallYt itts

JUDGE HILL Wellt but heres my

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point If Mr Alonso had gotten up and said

its most likely were going to pick the

Siemens 5 or Im sorry the Siemens 4 then

theres going to be more total emissions of

GHGs a lower rate but more total emissions

So by your argument should the region have

had to pick the lowest limit for each of the

three parameters on which they set the limit

And if not why not

MR BENDER We didnt address the

total tons because we dont feel that its

going to limit If they decide that they want

to generate 630 megawatts thats the number

that multiplied by the emission rate is

going to generate the tons

JUDGE HILL But if they had

picked the Siemens 4 or the Siemens 5 they

could be operating at 735

MR BENDER They could be

operating at 735 but there are other things

that go into it obviously your Honor as Im

sure youre aware of when theyre dispatched

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how theyre dispatched And the focus here is

the per megawatt hours because thats the one

that the Sierra Club sees as actually limiting

emissions here because the annual caps are set

such a high rate that theyre not going to

be approached Even the lowest is not going

to be approached

JUDGE MCCABE Let me bring you

back to this table thats I dont know if

you have it Its page 11 of the response to

comments These numbers are all starting to

sound fungible so lets try to anchor

ourselves again Im looking at the middle

column here that says output-based emission

limit which is net without duct burning And

the GE turbine that limit is 894 and for

the Siemens 4 turbine is 909 Theyre picking

the GE turbine What limit do you want

MR BENDER Well first of all

question the accuracy of these numbers because

some of them are the same as the gross with

duct burning

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JUDGE MCCABE Theyre saying

what

MR BENDER The Siemens F4 number

in that column is the same as the permit limit

for that turbine which is expressed as gross

wi th duct burning So looking at these right

now I suspect that theyre not correct Some

of them may not be correct

JUDGE MCCABE Can we assume for

the moment that these numbers are correct

MR BENDER Yes

JUDGE MCCABE And if that turns

it into a hypothetical question so be it

Im trying to understand where youre going

there conceptually Im looking at a lower

number 894 you know its C02 equivalence of

per megawatt hour without duct burning net

wi thout duct burning Its 894 for the

turbine they want Its 909 for the one that

you were saying was the most efficient

turbine Which limit do you want for the GE

turbine Do you want the 894 or do you want

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the 909

MR BENDER It depends on this

your Honor It depends on whether were going

to set this as the ultimate rate or if were

going to s another limit as the ultimate

rate because this is a part this is without

duct burning right But the permit allows

duct burning So if we say we want 8947

without duct burning and then well leave the

duct-burning caused emissions kind

unmeasured and unregulated as a different

JUDGE MCCABE Okay Go to

next column with duct burning Youve got

9452-shy

MR BENDER Yes

JUDGE MCCABE for the GE

turbine And just a hair under that youve

got 9444 for the Siemens 4 Are you telling

us thats what you want Board to do to

tell the region that that kind of difference

is significant and that they should force this

company when it installs the GE turbine to

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meet the 944 limit for the Siemens 4 Is that

what youre asking us to do

MR BENDER Your Honor if that

if the limits were set based on this as final

enforceable limits based on that Im not

sure that we would be here on this issue

JUDGE HILL So how much of a

margin is too big Because the regions

initial submission is that even with the

limits that they actually set the difference

is 26 percent and thats just not that big

JUDGE MCCABE And looking at

these latest numbers they actually said the

range for all three turbines there was on

that net with duct burning column that the

total range was 01 percent So seeing how

close those numbers are between 945 and 944

thats obviously a lot less than 01 percent

Is that a significant difference that the

agency should be concerned about

MR BENDER The limits were

talking about are the ones in the final

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permit which are gross And they are -shy

JUDGE MCCABE Okay Would you

like to point us to a different table to look

at

MR BENDER Sure Ill point you

to the permit which is Exhibit 1 to our

petition and the permit limits themselves

Because the permits measured we commented

that the region should be looking at net

among other things And the region said no

It made that choice It made this permit the

way it did and so were addressing it the way

it came out What we and EPA and the state

can enforce are the limits and the limits are

what drive what we can count on as enforceable

emission reductions

JUDGE MCCABE Wait a minute You

wanted the limits to be based on net

MR BENDER We commented that you

should look at the net emission rates and the

region said no were going to base this on

gross

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JUDGE HILL Okay But my

question is how do you respond to the argument

the region made in its brief and that Mr

Tomasovic stated here which is okay so the

permits got gross and the difference in these

gross numbers is 26 percent and thats in the

noise

MR BENDER Its not And the

reason why I know that its too big to be

insignificant is that the region thought that

margins even around that for different

pieces because the margin is an aggregate

was significant enough to start bumping the

limit up And when they got to step five

they said thats a big enough difference

between these turbines that we cant expect

the one to meet the limit for another So I

know because its significant enough in step

five that it should be significant enough in

step one to not count them all as you know

the same

JUDGE HILL So your argument so

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if their error was at step one then what

youre really saying is that the GE turbine is

a different technology than the Siemens

turbines

MR BENDER It is a different

let me put it this way Control option in

step one should be the same as control option

in step five As counsel for La Paloma put

it its a sequence right It starts at one

it goes to five and the definition of the

control option stays the same And if and

were saying well grant the argument that

they should be treated as one option in step

one well if thats the case they should be

treated as the same option in step five and

the limit based on what that option as a

whole can achieve But if youre going to

start parsing them the appropriate time to

parse between turbines or in this case

turbine plus heat recovery generator

combination -shy

JUDGE HILL Understood

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MR BENDER is step one so

that we can look at their relative

efficiencies their relative costs what they

do emit at different levels at production

Its got to be one or the other It makes

hash out of the five-step process to look at

one definition of control option in step one

right And then look at a different

definition of control option and start

applying limits in step five Thats the

argument It has to be consistent all the way

through

I think we would get to the same

option or the same result whether we looked at

them in step one as separate or if we applied

the maximum control efficiency for that class

as a whole in step five But you run into

problems when you separate them and thats

what weve done here

JUDGE MCCABE Okay Mr Bender

could we back up again to the question that

was raised by your saying that you preferred

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and said in your comments that you preferred

limits based on gross capacity I was trying

to use the table on page 11 of the response to

comments to try to understand exactly what you

want If theyre picking the GE turbine you

said the limits these are net limits and

gross is a better measure Have you found a

place where I can look at gross limits

MR BENDER For what gross

emissions are relative to

JUDGE MCCABE Is re any place

in the record that we can look to see how

these net limits would be stated as numbers

for these turbines if it were based on gross

Is that in the record any place

MR RICHIE Your Honor if I may

this is Travis Richie Page 16 of the

statement of basis which was included I

believe as Exhibit AA of La Palomas

response I believe has that same table listed

with pounds of C02 per megawatt hour on a

gross basis with duct firing

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JUDGE MCCABE Thank you Mr

Richie So glad you stayed on the phone I

have this Do the other judges have it

Okay Its the same thing Well how are

these different They look like theyre the

same ones that we were looking at on page II

Whats the difference between the gross and

the net rates

MR BENDER Thats what I was

suggesting earlier that Im not sure that

theyre correct

JUDGE MCCABE Youre not sure

which is correct

MR BENDER I dont know

JUDGE MCCABE You dont know

MR BENDER But I dont think the

net and the gross can be the same number and

thats what I was maybe failing to highlight

before

JUDGE MCCABE But whatever the

gross is you would prefer it You just dont

know what it is or youre not sure which of

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these numbers it is is that what youre

saying

MR BENDER Your Honor there has

to be other details in the hypothetical to

know the answer It depends on if were

measuring If were measuring just whats

coming out of the turbines or if were

measuring whats coming out of the stack

because theres another pollution-causing

device in the middle and thats the duct

burner So if were saying whats the net

without duct burning and were measuring it

but were still allowing duct burning its a

different question

JUDGE MCCABE Yes I understand

This gets very complicated which is why

judges usually defer to the technical

expertise of the EPA people that are charged

with this Now in this case lets try to

bring it back to sort of principles that the

Board can focus on more appropriately I was

hoping through this argument that people

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would be able to give us the numbers that we

should be looking at to consider this argument

that I understand the region to be making that

whatever the variation among these turbines is

so close the variation in the heat rates and

accordingly the GHG limits is so close that

it is something that is essentially

equivalent to use one phraseology another

negligible difference marginal difference

Do you agree that these are so close that they

are marginally different or essentially

equivalent

MR BENDER Two answers your

Honor They are not What the permit

includes is the gross with duct burning and

that number again I would say those are

different enough that the region thought

necessary to differentiate between them And

if thats true then its not negligible and

its not inconsequential

JUDGE HILL So let me ask you a

question So if the region had said theyre

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close enough I so weI re going to set the

highest one and if they happen to pick al

turbine that we could limit more closely I

were comfortable with that

In other words I based on that

argument I okay so if the region had instead

concluded they are negligible GE looked good

enough and so were going to set the limits

based on GE And if they pick Siemens I they

get a bennie out of it would you have a basis

for challenging

MR BENDER Yes I for the same

reason Because the record says that 9092 is

achievable And then we have -shy

JUDGE HILL Well but they would

conclude that 909 is not achievable for GE

MR BENDER I think it depends on

what the record is to support that conclusion

And thats not this case and its not this

record

JUDGE HILL So the regions

mistake was setting three different limits

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MR BENDER The regions mistake

was setting three different limits for what it

says is the same control If it had

identified them as three different control

options in step one and you have a continuity

through the rest of the steps and it set three

different limits it would be a different

problem which is BACT is all limit and you

would rank them and set them based on the top

rank control option in step five But again

it depends on what happened in the prior four

steps to be able to say whether that would

have been a mistake or not and thats not

this record and its not the basis that we had

to appeal

JUDGE MCCABE Coming back to the

factual question of the variation in these

emission limits that the region has permitted

for the three turbines Mr Tomasovic

described them it may not be fair to call

this a range but he mentioned numbers that

to my mind ranged from 01 percent up to 27

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percent Is a 01 percent difference

significant enough that the agency should have

to distinguish between them in setting and

distinguish between these turbine models and

force the companys choice Point one If we

just had point one I realize theres a

range but just look at point one for a

moment Is that significant

MR BENDER I think its

contextual And I would say although you

asked that as a factual question I would

point to the Prairie State decision your

Honor

JUDGE MCCABE The what Prairie

State

MR BENDER Because its cited by

both respondents to say when theres a

negligible difference you dont have to

consider them as separate control options

And I think that Prairie State actually stands

for the opposite On page 37 in the footnote

I think its footnote 36 it rejects that

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argument that just equivalency alone is

sufficient to ignore a difference between two

different control options There has to be a

demonstrated equivalency or a negligible

difference and especially if that difference

is based on emission factors or something else

that is inherently also perhaps not specific

So if its based on an emission

factor that has a margin of error that helps

dictate what amount of difference between two

emission rates may be negligible and even if

they are exactly the same thats not enough

to ignore them You have to -shy

JUDGE MCCABE If theyre exactly

the same

MR BENDER To ignore one of the

control options because of the requirement

that you also look at what their collateral

impacts are because two different controls

options may have the same emission limit but

they may have different collateral impacts -shy

JUDGE MCCABE Thats absolutely

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true of a control option but were talking

about two different turbines here If the

turbines had the same limit would we be here

If they had the same GHG limit

MR BENDER If they had the same

GHG limit and it was -shy

JUDGE MCCABE Because thats just

the way they say that was the manufacturers

the vendors number and EPA permitted it at

that number and there was no comparable that

showed a bet ter performance why on earth

would we require them to distinguish between

those What practical difference would that

make

MR BENDER In this record and to

my knowledge there is no other distinction

between them other than emission rates But

if youre saying hypothetically the emission

rates are all the same -shy

JUDGE MCCABE No Im simply

following up on what you thought Prairie State

stood for that even if things are the same

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you cant ignore the di f f erence I just think

were doing apples and oranges here because

in Prairie State if I recall correctly and

maybe Judge Stein can help us out with this

I think they were comparing you know much

larger differences

Here Im concerned that were

getting down in the margins We are getting

dangerously close to micromanaging here on

what this GHG emission limit should be So is

o 1 percent micromanaging Is that a

difference that we dont need to worry about

Is 05 percent -- 27 percent obviously is too

much for you You think thats over the level

of significance Were wondering where is

that level of significance in difference And

Im not talking about the exact numbers Im

talking conceptually here Thats why I used

percentages to iron it out

If the range of differences

between these two turbines and their GHG

emission rates ranges somehow and depending

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on how you calculate it from 01 percent to

27 percent why should we worry about this

Why should the region be required to

distinguish

MR BENDER Your Honor the

equivalency of emission rates is an issue or

a concept thats tied together wi th the

topdown BACT analysis process and that was in

Prair State Thats the point of that

footnote that I cited to If you did this

again this is not what was done so in the

hypothetical if they had ranked them as

separate control options and they had assigned

emission rates and there was somewhere

between I think it was 01 in your

hypothetical difference and there was no other

collateral impacts differences between them

would that be enough to say -- and it was not

and it was based on you know some emission

calculations that themselves have some

variable in them I think in that

hypotheti this would not be the issue for

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appeal It wouldnt be because you know

were assuming were assuming away all of the

problems with this particular decision which

is theyre not treated as separate theyre

not distinguished in the first few steps we

dont know if theres collateral impact

differences and theres no record made to

support those findings at each of the rest of

the steps

JUDGE MCCABE So is the critical

piece of your argument that they didnt

differentiate between the turbines at step

one Is that really what Sierra Clubs

concerned about

MR BENDER If theyre going to

differentiate between them in step five they

need to differentiate between them in step I

guess it would be one through four because

then wed have an opportunity to look at

whether or not there are differences in

emissions at that point and under what

scenario and everything else that goes into a

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five-step BACT process And that was just

shunted all to the side and we only looked at

the difference between them when we got to

step five after the opportunity to address all

those other issues had passed

JUDGE MCCABE Okay Lets turn

quickly because Im watching your flight time

here to solar Is it your position that

solar is feasible on this site Supplemental

solar as youve described it And if so

please explain how

MR BENDER Your Honor the

comment was step one you need to cast as big

a net as possible to identify potentially

feasible available and applicable and we

say yes its available its applicable Is

it feasible Well we dont know the acreage

They say 20 We dont - - because we never got

to this

JUDGE MCCABE Theres a site plan

in the record isnt there

MR BENDER There are some maps

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in the record We dont know

JUDGE MCCABE Have you looked at

them

MR BENDER Ive looked at some

of the maps in the record yes

JUDGE MCCABE Have you looked at

the site plan

MR BENDER Im not sure -shy

JUDGE MCCABE The site plans

shows where things are situated on the si

where the turbines will go and the other

equipment what the footprint of the si te is

how much space is open or not

MR BENDER Im envisioning a

color map with I think that information

JUDGE MCCABE Mine is not in

color but I saw one like that Have you

looked at that and considering that is it

feasible And Judge Stein please add your

question

JUDGE STEIN If these maps show

or you can deduce from whats in the record

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that what is at play here is approximately 20

acres do you still contend that solar is

ible at this site

MR BENDER I would say to the

extent its scalable its feasible Whether

its cost effective and whether it achieves

emission reductions I dont think I dont

know and I dont think any of us know and

thats the point Thats why you go through

the five steps because you gather that

information at the later steps It was -shy

JUDGE STEIN So Im sorry

Finish I didnt mean to interrupt

MR BENDER It was excluded from

step one as not as redefining the source

And I think it would be inappropriate to

assume fact findings from what we have the

limited amount of information we have in the

record to say it would necessarily be rej ected

in the following steps unlike in Palmdale

where the issue of incremental increase was

looked at and the record was clear that there

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was zero space And the difference between

zero space for no addition and where to draw

the line when theres some space but it mayor

may not be enough to make it feasible cost

effective and everything else is something

that needs to be done by a fact finder with

the public input

JUDGE STEIN But how much effort

and work must a permit applicant go through

when theyre primarily building a particular

kind of plant and theres fairly limited

space I mean do they need to go do a I

scale investigation and develop models

space if what youre dealing with is a very

small area I mean thats a question Im

struggling with because you know this is not

lmdale and I dont buy the characterization

what Mr Alonso said about what Palmdale

stood for in terms of redefining the source

But I am troubled by what may be in the

record perhaps not as fulsome as someone

would like but there may be sufficient

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information in the record to establish that

theres only a very limited amount of space

there And if thats the case are you still

insisting that people do a full-scale analysis

of solar under those circumstances

MR BENDER I think that when

you get into the later steps two three

four the scale of the analysis is probably

relative to you know some reasonableness

right But in step one the whole point is

you cast the net and then you start doing that

analysis And it would be inappropriate to

start making assumptions because we dont

agree with all the assumptions in La Paloma

about hurricanes about other things and wed

like the ability to develop the record in

response depending on what is said about

feasibility

But feasibility wasnt discussed

until the response to comments And then it

was discussed as not not that it was not

technically feasible but it was redefining the

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source And based on in our mind in one of

the main reasons that we brought this appeal

is based on a very problematic definition of

redefining the source

JUDGE HILL Mr Bender the region

argues that Sierra Clubs comments on this

didnt ly raise this issue to any level of

specificity that youre now raising it in your

brief or here How do you respond to that

MR BENDER When they say that

they point to one of the multiple comments

looking at solar hybrid And they say it was

mentioned as an al ternative to duct burning

in addition to other things that could be

looked as alternative to duct burning

Earlier in the comments is the Palmdale

permit and the C02 BACT emission limit saying

its conservatively lower they get that and

they get a chunk of it from solar you need to

look at solar because its available its

applicable it meets the step one criteria

lets look at it And that I s what was

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ected

Elsewhere we said instead of

duct burning did you consider these other

things And yes theyre talking about the

same concept but theyre talking about two

different areas So its inappropriate to

look at only one comment and say well that

one comment about solar didnt raise this

other issue when the other comment did

JUDGE MCCABE Are you suggesting

that permitting authorities whenever theyre

faced with a PSD application by someone who

wants to build a power plant have to analyze

solar in all cases if theyre not proposing it

to begin with

MR BENDER Solar hybrid in a

combined cycle plant when it I S raised by the

public-shy

JUDGE MCCABE Okay And that -shy

MR BENDER Then the region has

an obligation to look at it

JUDGE MCCABE Expand on that

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please What do you mean by look at it

MR BENDER Include it in step

one or deem it redefining the source based on

a correct interpretation of redefining the

source And here it was an incorrect

interpretation of redefining the source It

should have made it into step one when raised

by the public And to go to your question

Judge Stein how much detail they need to do

to develop whether to reject it in later

steps I would agree theres some

reasonableness to it But I dont agree that

even assuming that 20 acres is all that there

is that we can say based on this record

that its reasonable that thats not enough to

generate solar

JUDGE STEIN But if you have a

circumstance where the BACT analysis has been

done the regions looked at it theres been

back and forth between the permit applicant

and the permittee I mean and the region

they proposed the permit for comment and a

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comment comes in about solar youre

suggesting that they have to go redo the BACT

analysis or cant they simply respond to the

comment by saying on this particular site on

these facts we dont think solar is feasible

for X Y and Z reason

MR BENDER Thats different than

the answer here

JUDGE STEIN Why is it different

than here I mean I understand what the

region did in its analysis of redefining the

source you know didnt do exactly what Im

describing here but Im concerned about

taking us to a place where in responding to

a publ ic comment where there may be an answer

that you have to go back to square one on the

BACT analysis because I dont think you do

I think you need to respond to the comment

I think you need to respond fairly to the

comment But wed never I mean how in the

world would we ever get a permit out if every

time theres a public comment that relates to

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the BACT analysis youve got to go back and

redo the BACT analysis Yes t may be

cases where you need to supplement it but I

dont think we go back to square one

MR BENDER Well two responses

your Honor Here we had raising solar in the

context of another facility a similar

facility that has solar hybrid and has a

permi t wi th lower limi ts Thats the context

So to the extent were talking about you

know how much or how real does this have to

be to generate a more substantive response

thats the context

In Knauf Fiberglass I believe Kshy

N-A-U-F however thats pronounced

JUDGE MCCABE Knauf

MR BENDER Knauf Fiberglass

The first the 1999 decision a comment was

raised another production process for

fiberglass The response was thats

proprietary to a competi tor We dont have to

look at it because well reject it later

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anyways so you know why look at it And

the Board reversed and said you cant preshy

judge Thats the point of the process You

cant pre-judge the process Go back look at

it and make a record so we know and the

public knows that you really did look at it

and you really did document your analysis and

we know you did your procedural job

Thats what should be done here

and it follows that precedent And I would

suggest if its distinguishable this is even

a clearer case than Knauf because its not

proprietary that we know of You can go out

and buy it So to the extent theres a line

this is even further on the petitioners side

of the line

JUDGE MCCABE Mr Bender Im

worried about your plane If you would like

to take a minute to just wrap up please do

And then we will let you go on your way Its

getting late

MR BENDER Sure Thank you

NEAL R GROSS COURT REPORTERS AND TRANSCRIBERS

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your Honors I and thank you for the opportuni ty

to address these issues From Sierra Clubs

perspective this is an important permit tol

get right on these issues raised And there

are other issues that were commented on l

potent lyother issues that could have been

raised You know I dont want to suggest

that Sierra Club loves this permit even if

its corrected but this issue of what you

have to consider and how you consider

efficiency and how you consider supplemental I

in this case solari that helps improve the

efficiencyof a plant is critically important r

especially as we start into greenhouse gas PSD

permits and getting the definition of what is

the control option were looking at correct

and making sure that thats consistent all the

way through the process and that were

correctly addressing efficiency Its going

to be critical especiallyuntil we develop an

end of the pipe technology that facilities

s installing

NEAL R GROSS COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE NW (202) 234-4433 WASHINGTON DC 20005-3701 wwwnealrgrosscom

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The other is this now perennial

redefinition of the source issue I

understand the Boards prior precedents and

in some cases unfortunately theyre being

applied incorrectly And this is one of those

cases And when that happens its important

to correct it make it clear and give guidance

to not only Region 6 but other permitting

authorities what redefining the source means

and whatit doesnt mean And here it doesnt

mean that if a control option is not within

the two-sentence description of the

application of the project purpose that it

cant be considered because that opens a door

to all kinds of problems not just greenhouse

gasses but every - - I mean and SCR al so

wasnt in that two-sentence description

Thank you your Honor

JUDGE MCCABE Thank you very much

Well thank you all for your presentations and

for your valiant efforts to answer our very

often detailed questions

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I would make one observation that

theres such factual confusion l at least in

the argument around the issue of how do we

compare apples to apples with the emission

numbers that we really should be looking at

for these turbines that there is a

possibility and I regret to say this because

I know its a PSD case and we are in a big

hurry but theres a possibility that we will

ask you to do a supplemental briefing on that

or ask you all perhaps to confer to get on one

sheet if its possible to give us some basisl

comparison so that we have the facts

straight in our opinion It is a lot to ask

judges like us We have some technical

training l but we are not engineers I and it is

really quite difficult for us to understand

which numbers we should be comparing to which

here

We will however make a valiant

effort to go back and to see if we can figure

that out And weill only ask you to do a

NEAL R GROSS COURT REPORTERS AND TRANSCRIBERS

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supplemental briefing if we think its very

necessary If we do do that we will get to

you quickly on that because we do intend to

move quickly on making this decision These

are not easy issues They are important

issues and we take your point Mr Bender

that as we are entering the world of GHG BACT

permitting we do need to be careful about

what precedent were setting But we also are

very very cognizant of the need for speed

here because we dont want to hold up the

building of something that should proceed

unnecessarily

So with that well take this

matter under submission with the caveat that

you may get a request for a supplemental

briefing And we will wish you all

travels home those of you who are traveling

far especially And good luck catching that

plane Mr Bender

(Whereupon the foregoing matter

was concluded at 547 pm)

NEAL R GROSS COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE NW (202) 234-4433 WASHINGTON DC 20005-3701 wwwnealrgrosscom

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24 14 514 4617 535 6221 application 20 15 i12510 13218additional 90 14 643 7520 8716 ibullAir3131020 22131840191342address 10 12 971718 10869 iairport 616 9516 4161517431analogy 1076 11 16 877 96 15 1096 115 222 Iairports 7 14 5311 58106113analysis 2720 304 109]0 1304 1161211711allocate 720 8014211361230 17 323 437 1412 12022 1212allow 7811 8315 14213478 553 8416 addressing 11412

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194 9317962311149978010 823 841 6421 6716794 articulated 785 bite 709 1001015 10115 1008 1301516 84 11 90212

black 5520aside 538 10271022 1036 13520 98 1 1002 10220 board 1 1 3 22 44 asked 1010 5214 Avenue 114 3414 1031721 10448 1037 1043422

55126113 103 2820 3315 average 40 1920 104 121521105 1011 113 45 124 11 342 364 39217 42147712 1061317211141811616

asking 9920 17 411443519101 22 10711 10812118214 12259 36416195714 4519473 4915 averaging 41 20 109 1 0 19 110 191239 12568 1132 49 19 5081218aware33149120 111311 112215 12819 13513

assert 567 5022 5412 5514 10922 113321 114519 137314 assign 63 19 69 10 581578198911158 1165 1171 baseload 15 1922

B70197137610 9121 1121911720 1189163911 172 B4417assigned 15 1 0 12021 140211991416 1203 basically 313 363 back6112916607679 7322 boards 48 15 88212113 122121738 1 395 46 16

4819514632174 17 86522 1423123 1 124916 4622 5622 622 641 8119848 Bracewell 25 73 128 13 12516 126515642814 1039 9113 1109assigning 61 816 brand 56221285 129 1510821 11721 12020 Brian 3210581061 176312 714 1301222 13148 basing 104 10 12316 13720 brief5447511assignment 778 13114 132414basis 1756 1821 13816 13914assigns 70 12 7913 80281111346 13551036361206510 1404 14321assume 61922 87 841090511531361620 1372 6521 6815612

back-end 62 143221 1119 13591387 139517681469345 background 91 1913217 briefing 879 1401722 1446 70 15 718 7822 BACT 261722assumes 101 22 143 1 0 144 1 1 7 14420831085178616

29230171910820 briefly 84 9 18beneficial 23 3871 1081819 312233133519assuming 12922 331benefit 68 17 1 1 8 1 822 122 1 0 361181739713713 briefs 913 102 bennie 122 10123 14 143 12 39134361214assumptions 9616 9718best713 811 449 basket 21 15

1341314 431644818 bring 6710 942 6422 823beats 2916 assured 57 11 45 19 46 1213 1108 12020bet 9515Bechtel 11 13 attached 892 476 553 6056 brings 369better 184 44 14behalf2293155 August 21 2410 631864166510 broad 501890396141187believe 102 17 17 authorities 453 667835 8416 broken 809126 11183 33203817

557699 13611 851112869 brought 1352bid 194231 2513 43511 4518 1429 10322 104210 build3115326bidding 30347 12 492122

authority 27 15 1064 10711821 4864985118bids 1819 5017 547 614 411247135011 1081313 1238 512022541517big7912113811625 6521 82 14 542264168122 1288 1301 54185691118115915 13013 849 8516 8622 83 1821 8720 13517 13718 6478313 991188211178914 1438 8812 138217 13912 1 02 5 1 0 136 13bigger 338 758 90 19 923 954

automatically 1447 building 114 5614 8213 10251010010 10812 4418 balance 30 12 5618757 13310 103911 8 1920 139 14

auxiliary 8913 base 50 15 69 1 14412biggest 9820 benchmarking

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e built 3915 101 20 bumping 11513 burner 739 7413

98151912011 burners 731720

748168017 8679578 989 993 1021

burning 53 1 983 1021121 10315 1101522 1116 1111718 11278 112913 11315 1201213 12115 1351315 1363

business 162 2520 3022511316 528111922 53161013 56 11 646 888 101610717

buy52113317 140 14

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726 calculations 12820 calibrated 8819 California 457 call 1414 2419

932 12320 called 447 capabilities 74 1 0

79 15 803 capable 4420

9912 1038 capacity 17322

181237121619 47 19639 6478 649 753 9020 91 7 92 1 94 10 9620 10517

107810861182 caps 1104 capturing 83 11 carbon 617 careful 1448 Carlton 593910 Carolina 458 case418 67 8215

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case-by-case 362 7822

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cast 13013 13411 catching 14419 category 1053

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class 261921 357 358144419 78415 8015 81208216917 8317 100614 10531111716

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2218 cleaner 634 clear 237 50 1

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clearer 140 12 c1earingho use

2719 clearly 38 13 44 12

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closely 6922 1223 closing 11 11 13 22

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coaI5311071 coast 496 cognizant 144 10 coin 96 19 collateral 12518

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combination 9769 10518 11621

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combustion 2620 619 1008

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907 919 103 12 12078 12316

comment 32 18 3363510406 727784811 9022 9437 102171719 10526 13013 136789 13722 13814151820 13822 139 18

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commenter 94 1 commenters 329

321734157115 72 10 822020 908 912

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comments 3818 65186656718 688693 7515 791381128211 851986168815 88 192021 893 8978 93812 954981416 991316 1033 1101111814 13420 135611 13516

commercial 1834 commit 387 commitment 8418 communicate 215 communities 497 company 71 238

291121 326 33 11 34 14 38 19 401118447 521314 10139 101 18 112 22

1245 comparability 706

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3413631722 69187516774 872 12610

compare 1434 compared 10314 compares 8512 comparing 1275

14318 comparison 71 19

8710 14313 competitive 1819 competitor 13921 complain 799 completed 10 17

11 9 com pletely 13 1 0 compliance 29 14

38316391618 40315 433 679

companys 1720

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complicated 120 16

comply 1616 3617381 4213 439 10721

component 30 15 301655135616

components 1022 126

concentration 6010

concept 1029 1287 1365

conceptually 11115 12718

concerned 113 20 1277 129 14 13813

conclude 122 16 concluded 5022

1227 14422 conclusion 47 18

6221 702 12218 concurrently 313 condensers 465 condition 21 22

61 22 6212633 conditions 16 19

16227613 confer 14311 conference 14

718 conferenceexpe

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1062 confusion 1432 conjunction 738 conservatively

13518 consider 131 342

364 5410 555 6114665 808 87209222931

935 9422 1212 124 19 1363 141101011

consideration 2822 88513 906 9314

considered 566 8322951 14214

considering 807 13118

consistent 652 11711 14117

constitute 886 Constitution 1 14 constraints 31 14 construction 1012

1015 117911 11 14

construed 9022 consult 186 19 18

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1281022 1318 contracts 122

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274331618 343783513 39 11 14 444 483 533 566 601619616 64410 69 11 75 13 823 1055 10568 11667 11611 1177916 1233410 12419

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controls 125 19 conventional 61 5

8014 convert 55 10 cooling 5319789

7810 Corporation 11 13 correct 1216 154

15 11 12 22 1 7 245 46 18 504 86912139217 10222 111 78 1 0 1191113 1374 14116 1427

corrected 1419 correctly 389

1273 14119 cost 30 15 16 1326

1334 cost-keeping 62 14 costs 1173 counsel 33 12421

5109813 1168 count 752 11415

11520 country 453 5720 couple 104 1315

146 5814 course 64 813

478 10113 Court 109 Courtroom 1 13 criteria 29 11 344

13521 critical 129 1 0

141 20 critically 141 13 curious 20 19 current 16 1821

2217 currently 10 13

11 22 22 19 31 13 customer 8410 cut 7615 91 16

938 cuts 748 cutting 744 cycle 2621 275

34891735815 352236644 12 44134521 736 8078915 822 9412 1008 107 14 136 1 7

cycles 465 472 cycling 15 19

DC 1226315 Dallas 35 58 dangerously 1279 data 603 6422

6813 date 2017 David 2 1052 day 420 126 1712

293 385 39 13 461820 831

days615 DC 115 de-rate 376910

37184012987 de-rated 38 13 de-rating 3810

742 deadline 12 17 dealing 9922

133 14 debate 47 14 December 103 decide 1214 585

666 684 69315 7711 10912

decided 63 19 642021 6815 717 745 777 81114

deciding 3322 8713

decision 181315 18162016227

202-234-4433

bull

bull

bull

231724152716 302022 31 21 5821 59316 621 6316643 66 1 792 87 12 89]7901 914 124 12 1293 139 18 144 4

decisions 58 18 8922904

declare 77 22 decrease 987 decreasing 97 22

9811 deduce 131 22 deem 1373 deemed 85 21 defer811412017 deference 7820 deferred 39 17 define 54 14 72 18 defined 34 22

4914646 843 949956

definition 72 21 11610 11779 1353 14115

degradation 384 76 13

delay 3111 delegated 45 15

81 11 deletion 224 delivered 94 18 demand 1821 197

20725172917 30513

demonstrated 7315 1254

departs 78 depending 606

9021 104 17 10514 12722 134 17

depends 11223 1205 12217 123 11

deprived 32 16 describe 69 19 19 described 594

12320 13010 describing 13813 description 142 12

142 17 descriptions 72 11 design 3322 3445

35 12 396 4626 54 1214 55 16 56 1221 5734 587 6021 6421 862

designed 34 1 79 14 834

designs 6310 desire 268 detail 1379 detailed 14222 details 1204 determination

2018219 determinative 698 determine 232 determined 48 14 develop 205 279

4612527 13313 13416 13710 141 20

developed 18 18 351 383

developer 137 2043022

development 422 429

deviations 7612 device 33] 6343

483 566 120 10 devices 4 13 26 19

27433183513 dictate 125 10 dictated 198 difference 67

65 1720 6735 711011121314 71 1522 7214

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differences 7536 75 17768 777 127620 128 17 129720

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differentiate 63 1 1 12118 1291216 129 17

differently 65 7 17 2114999

difficult 387 143 17

difficulty 22 16 direct 1032 direction 259 directly 872 disagree 94 11

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discern 5820 discerned 90 12 discretion 664

6821 7720 884 9222

discussed 134 19 13421

discussion 8 1 0 1514 873 896 93179617

discussions 85 18 dismissed 59114 dispatch 1518

2919 971 dispatched 1622

109 22 110 1 dispatching 1615

972 disproportionate

7321 distinction 126 16 distinguish 12434

126 12 1284 distinguishable

140 11 distinguished

1295 distorted 6589 disturbs 623 divided 728 731 document 79 13

1407 doing 7 16 85

3018353 10114 1067 1272 134 11

door 14214 Doster 3 1 0 5 11 draft 41 21 424

99 10 105 1 16 draw 702 1332 drive 326 114 15 driver 19 16 308

10813 drove 1720 dry 789 107210 dua1313 509

duct 7391720 7471316 80 17 86795779839 981519992 1 02 1 11 2 1 10315 1101522 111617181127 112891311315 11822 1201012 12013 12115 1351315 1363

duct-burning 11210

duplicative 716 Durr 32243

eager611 earlier 32 18 66 1

6718 11910 13516

ears 353 earth 126 11 East 1 14 easy 743 1445 economic 233 492 economizer 35 12 effect 99 18 101 13

1062022 1074 effective 1326

1335 effectively 40 15 efficiencies 34 11

7816831 1173 efficiency 30 13

3415 3563812 6311 645 6517 6911 71151718 712021 721515 72161921 797 8311 84128913 9722981022 1 04 35 11 11 7 16 141 111319

efficient 159 17 11 33834183512 413 572 6022

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C E R T I F I CAT E

This is to certify that the foregoing transcript

In the matter of La Paloma Energy Center

Before US EPA

Date 02-12-14

Place Washington DC

was duly recorded and accurately transcribed under

my direction further that said transcript is a

true and accurate record of the proceedings

Court Reporter

NEAL R GROSS COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE NW

(202) 234-4433 WASHINGTON DC 20005-3701 wwwneairgrosscom

Page 6: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us

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on short notice and I realize that not only

disturbs flight arrangements but probably

disturbs your preparation time The good news

for all of you of course is that we are

going to do this a little differently today

so hope ly that wont make as much a

difference as it might in the ordinary case

Before we begin let me do a

travel check as to what time your flights on

leaving I understand a number of you are

eager to be back out of town and ahead of the

snow this evening Mr Bender

MR BENDER I f everything goes as

planned 700

JUDGE MCCABE Seven 0 clock is

your flight time And whats your airport

MR BENDER National

JUDGE MCCABE National Okay

Mr Alonso can I assume youre remaining in

town

MR ALONSO Yes

JUDGE MCCABE I assume this is a

NEAL R GROSS COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE NW (202) 234-4433 WASHINGTON DC 20005-3701 wwwnealrgrosscom

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representative of a company with you

MR ALONSO Yes Im sorry This

is Sandra Snyder with Bracewell also

representing La Paloma and we do not have any

travel restrictions tonight

JUDGE MCCABE Thank you And

from the EPA side

MR TOMASOVIC My flight departs

at 8 pm

JUDGE MCCABE All right Then I

think we should have plenty of time Weve

scheduled an hour and a half for this We

will try our best to get you out on timel so

you can run for the airports Snow is not

supposed to begin until later this evening

We are doing this slightly

differently than our normal procedure because

this is a status conference as well as an

expedited oral argument As usual well go

ahead and allocate one half an hour

approximately to each party But the order

the parties will be slightly different than

NEAL R GROSS COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE NW (202) 234-4433 WASHINGTON DC 20005-3701 wwwnealrgrosscom

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usual

We will start in this case with

the permitee with La Paloma Energy Center

who I will refer to briefly as La Paloma I

suspect the other judges will be doing that

too for the record Because we have some

status questions for you which I assume will

not surprise you given our scheduling order

Those answers to those questions may inform

the rest of the discussion that we have here

today so we thought it best to begin with La

Paloma

Normally of course our practice

would be to begin with the petitioner the

Sierra Club So in this case Mr Bender Im

going to give you your choice as to whether

you would like to go second or third Some

people like to have the first word some

people like to have the last word

You also have the option if you

choose to go second after La Paloma to

reserve five minutes of your time for rebuttal

NEAL R GROSS COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE NW (202) 234-4433 WASHINGTON DC 20005-3701 wwwnealrgrosscom

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after EPA What would you like to do

MR BENDER I I 11 combine both and

do it all together

JUDGE MCCABE Okay Thats the

way weIll proceed then WeIll begin first

with La Paloma

mentioned l if we didnt we should have in ourI

order to you l were not expecting you or

asking you to make any formal presentations

today I as you would in the normal oral

argument

In the interest of timel please

presume that weve read your briefs l that

were famil with the records And in the

interest of saving time and getting you out of

here weld like to focus right away on the

judges questions If you have anything that

you would like to say very briefly first l

thoughl please 1 us know that and feel free

Mr onso

MR ALONSO Thank you Judges

And we just want to first start off by

NEAL R GROSS COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE NW (202) 234-4433 WASHINGTON DC 20005-3701 wwwnealrgrosscom

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recognizing and thanking you for expediting

this appeal I believe the briefs were

submitted on December 27th and the Board

reached out to us just a couple of weeks later

to schedule this argument So were really

appreciative of that We are prepared to

answer your questions presented in your order

as well as any other issue thats before the

Court

As to your first issue you asked

us to report on the status of the projects

First 1 me address the construction time

line We currently have all government

approvals that are required for pre-

construction as well as agreements that we

need wi th governments We have tax agreements

that were completed We have a water supply

agreement with the local water works We have

land agreements in place We have our TCEQ

Air Permit that was finali in February of

2013

The two main components that we

NEAL R GROSS COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE NW (202) 234-4433 WASHINGTON DC 20005-3701 wwwnealrgrosscom

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are missing right now is number one

financing Financing is contingent on

receiving a final PSD permit Once we receive

a final agency action on the permit we expect

to close that financing in short order right

ter that

As far as construction we have in

EPC the engineering procurement and

construction contract completed That was

executed in September of 2013 So shortly

er this closing we can start construction

shortly right after that That was wi th

Bechtel Power Corporation and again they are

standing by ready to start construction

JUDGE MCCABE Most importantly

Mr Alonso could you address whether youve

selected your turbine yet

MR ALONSO Yes we are prepared

to talk about that We have preliminarily

identified the preferred turbine that we would

like to install at this site It is the GE

7FA turbine However we are currently

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various escalation clauses of our existing

contracts including for the turbine in the

sense that we have planned to be done with

this process on January 1st Not just the

contract for the turbine but for other

components of the site every day that goes on

the cl is paying escalation fees on that

contract

JUDGE MCCABE So do you have a

turb contract or not

MR ALONSO We do have a spot for

manufacturing of the turbine

JUDGE MCCABE So is that like

reserving a place in case you decide to put in

your order

MR ALONSO Correct And that

deadline is April 1st On April 1st we have

what happened ter January is that we

negotiated our escalation clauses through

April 1st Come April 1st I think that the

weIll come April 1st I we would have to

renegotiate that contract And most likely I

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we can maybe even consider selecting one of

the other turbines that are in this permit

So if we dont have a final permit

in the next you know -- and Im not putting

any pressure on you guys but as of April

1st I think that the well I know the

developer would like the flexibility to

install anyone of these three turbines

JUDGE MCCABE Im not sure Im

completely following you What happens -shy

lets try it this way What happens if you

get your permit tomorrow

MR ALONSO If we get our permit

tomorrow we would close our financing a

couple of weeks later and we could start and

then we would put in a notice for the

procurement finalizing the GE 7FA turbine

contract

JUDGE MCCABE And how soon could

that happen or would that happen

MR ALONSO That would happen

upon closing and we would -shy

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JUDGE MCCABE So are we talking

about a week two weeks a month

MR ALONSO Yes My

understanding the information that I have is

that closing can happen in its a matter of

weeks a couple of weeks after we receive a

final permit

JUDGE MCCABE Okay So when you

say youve preliminary picked this GE 7FA

turbine -- can we just refer to that as the GE

turbine

MR ALONSO Sure

JUDGE MCCABE Its the only one

right thats a GE Okay Well call this

the GE turbine Youve preliminary selected

that If you get your permit tomorrow is

there any reason that youll change that

choice

MR ALONSO Most likely not If

we get our permit tomorrow if we get it

before April 1st we are probably we are most

likely yes going to select we are going to

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select the turbine

JUDGE MCCABE Okay If you get

your permit before April 1st you will select

the GE turbine is that correct

MR ALONSO That is yes

JUDGE MCCABE And my

understanding of this turbine is that its the

smallest of the three and according to heat

rates the least efficient the one to which

the region has assigned the highest GHG

ssion limit is that correct

MR ALONSO That is correct

JUDGE MCCABE Okay That will

very much inform the rest of our discussion

Thank you Mr Alonso Do you know yet

another question on your preparation here do

you know yet where the facility will be placed

in the ERCOT dispatch order and whether it

will be operated as a baseload or load cycling

facility

MR ALONSO Our plan is to

operate this as a baseload uni t However we

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will respond to the ERCOT orders as they come

I mean in Texas our business plan is to

operate this as a baseload unit

JUDGE MCCABE Does ERCOT give you

any preview of that

MR ALONSO Excuse me

JUDGE MCCABE Does ERCOT give you

any advanced notice as to whether youre going

to be likely operated as a baseload or not

MR ALONSO Our intention is to

operate it as a baseload Im not qui sure

about we can follow up with you on that as

far as ERCOT notices Im not prepared to

talk about the ERCOT notices But to the

extent that ERCOT manages dispatching we will

comply with their orders

JUDGE MCCABE Okay And you

expect at this point based on current

condi ons which I understand can change if

other plants come online or other things

happen you expect based on current

conditions that youll be dispatched high

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enough in the order that this will be a

baseload plant and therefore it will be

operated at 100-percent capacity

MR ALONSO Pretty close to it

JUDGE MCCABE On a regular basis

MR ALONSO On a regular basis

we would like to have you know utilize this

as much as possible Keep in mind though

while we do have the you know as an EPA

administrative record yes larger turbines

may be more efficient But at the end of the

day they also have higher mass emissions

And so when you look at it from an

environmental perspective to the ent that

an environmental impact plays into that the

environment really feels the impact of the

mass limit more than anything else I believe

JUDGE MCCABE Understood Okay

Can you tell us a little bit about what was

the chief factor that drove the companys

selection of the turbine how important was

the capacity or size for example

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MR ALONSO I dont know the ins

and outs why they selected that turbine

I believe its just commercial terms It was

the better commercial term -shy

JUDGE MCCABE Would you like to

consult with your client at all to see if you

can clarify that answer

MR ALONSO Sure Shes here

JUDGE MCCABE This may help you

Some of the questions that were also

interested in are how important was the

capacity or size the uni t in terms of your

decision to s the GE turbine and how do

the relative heat rates or the GHG emission

rates affect decision Did they affect

that decision if its made

MR ALONSO The way that this

project was developed is that we went out for

competitive bids of at least three turbines

And based on the necessary heat rate the

forecast of demand that was the basis of the

select ion It was not based on you know any

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other factors except for trying to meet the

purpose of the proj ect which is to supply the

load and the heat rates and the financial

arrangements that resulted from that bid

process

JUDGE HILL Was that forecast of

demand strictly internal or was it something

dictated by either EReOT or some other

external entity

MR ALONSO La Paloma is a

merchant power plant Wei re not regulated so

its not that wei to extent that your

question is to whether or not we had any

regulatory oversight -shy

JUDGE HILL Or just external

information or some sort of external driver

I guess

MR ALONSO me consul t wi th

- sorrYI I just wasnt prepared

JUDGE HILL No thats okay

MR ALONSO So specific

questions Okay

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JUDGE MCCABE But we appreciate

your corning

MR ALONSO But Im glad that

Kathleen the proj ect developer Kathleen

Smi th is here wi th us today When you develop

these projects yes they went out they had

third party evaluations of load demand and

what would fit for this market absolutely

JUDGE HILL Okay

MR ALONSO I mean its -shy

JUDGE HILL Let me ask one other

follow-up You said at the very outset Mr

Alonso that you had preliminarily identified

the GE turbine and the record before us is

that certainly at the time of the application

that decision hadnt been made Im not

asking for a specific date but roughly when

was that determination made relative

because Im curious how it relates to this

proceeding

MR ALONSO So again we made

the selection based on closing in January but

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the selection of the turbine was made in

August expecting to be you know

manufactured and installed in January So to

answer your question it was August of 2013

JUDGE HILL Did you communicate

that to the region at that time

MR ALONSO No because again

because of the timing of this permit it is a

preliminary determination At that time in

August if we were 100-percent certain that we

would get a permi t in January sure we

probably would have you know told the region

and maybe the final permit may have looked

differently But we couldnt put our eggs

all our eggs in that one basket at that time

JUDGE MCCABE What was your

understanding Mr Alonso of what the region

planned to do once you made your turbine

section Will they revise your permit or

leave in those three original limits

MR ALONSO We have a special

condition in the permit that requires that La

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Paloma submit an amended permit application to

remove the other two turbines that are not

selected from the permit So it would be a

deletion of the two other turbines that are

not selected

JUDGE STEIN Why if youve made

the decision to proceed with this particular

turbine if you receive your permit within the

time frame that is necessary for you would

you be revisiting that question if you dont

get the permit until May

MR ALONSO If we -shy

JUDGE STEIN Just hypothetically

if you get the permit a month after why is it

that suddenly thats an open question again

Im having difficulty understanding that

MR ALONSO Correct Our current

negotiations on the escalation clauses of the

contracts we have currently negotiated terms

through April 1st At that point youre

right we would have an option to negotiate

further or more likely than not we could we

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might go through another bid process to

determine whether or not maybe another turbine

might be more beneficial from an economic

perspective to install

JUDGE STEIN Thank you

JUDGE MCCABE Just to make sure

the record is clear on this though at this

point youre telling us that if the company

gets its final PSD permit from EPA before

April 1st it will be the GE turbine

MR ALONSO That is my

understanding

JUDGE MCCABE Okay Would you

like to qualify that statement

MR ALONSO Right The problem

is that again we cannot make a final

decision on the turbine until after we get the

permit because youre only going to reserve

your place line for a certain amount of

time at the manufacturing plant

JUDGE MCCABE But if you get your

permit tomorrow or anytime before April 1st

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or perhaps you need a week advanced notice

then you would be choosing the GE turbine We

can rely on that

MR ALONSO Yes

JUDGE MCCABE Is that correct

MR ALONSO More likely than not

we will be selecting that turbine

JUDGE MCCABE When you say more

likely than not or preliminary then Im not

sure what youre telling me Mr Alonso

Which is it Will you have that GE turbine be

your selection

JUDGE HILL What else might

prevent you from going ahead with the GE

turbine if there were a decision before April

1st is another way to ask the question

MR ALONSO To maintain

flexibility I mean thats one of the

purpose were here I mean if we get a call

tomorrow from Siemens saying that theyre

going to give us the turbine at five cents

maybe wed go with the Siemens

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JUDGE MCCABE So price matters

MR ALONSO Absolutely

JUDGE HILL Price really I I meant

but

MR ALONSO The likelihood of

that is minimal

IJUDGE HILL But let s explore

that for a second because it sort of takes us

to the other direction So if you so ifl

Siemens were tOI you know I mean I and I can

certainly relate to this 11m trying to do

some home maintenance But so they come in

with a bid youre not expecting l and you saYI

You know what That I s the one we should go

with thats going to be one of the larger

turbines So what will happen in terms of

your demand forecast or I I meanl how will you

operate that plan

MR ALONSO It may not fit the

business plan at the time I meanl we would

like to maintain the flexibility of selecting

the turbine as much as we can in this final

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permit Everything is in place that if we

were to get a final permit tomorrow that the

GE turbine would be used However we still

want I dont want to tell you that its 100shy

percent guaranteed We would like to maintain

that flexibility

JUDGE MCCABE But you understand

s your very desire to maintain that

flexibility that leads us all to be here

today right As I understand it the main

issue that the petitioners have with the limit

that was chosen in this case is the fact that

you are reserving flexibility to make this

choice after you get your permit

MR ALONSO But the limit is the

limit doesnt satisfy region as appropriate

and valid under BACT What the permitee is

arguing here today is that somehow we start

off with a class of control devices The

region has identified combustion combined

cycle turbines as a control class That is

your step one BACT is an evolution all the

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way through step five Once you get to step

five the purpose and the intent of step five

is to impose an emission limit looking at

those control devices and its not just

combined cycle We have a whole list of

technologies that were identified by the

region that apply to each of these turbines

At that point you look at the

ssion unit and you develop a unit-specific

emission rate that reflects the technology as

its supplied to that particular emission

unit

JUDGE MCCABE Dont you also look

at comparable units located at other

facilities when the permitting authority makes

that decision

MR ALONSO Absolutely You look

at technologies at other through the

clearinghouse and other technical information

That is your step two analysis absolutely

JUDGE MCCABE Then why wouldnt

you look at other turbines that are available

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MR ALONSO Im sorry

JUDGE MCCABE Then why wouldnt

you look at these other turbines that are

available

MR ALONSO You look at the other

turbines as - - well f are you saying the other

turbines that are mentioned

JUDGE MCCABE The Siemens

turbines

MR ALONSO The Siemens turbines

and the GE turbines have the exact same

technology installed Again at the end

and Siemens does not make the identical

products Theres going to be some

variability amongst those products and I

would argue that the actual impact of these

units or these emission rates arent that

off from each other But in step five the

region looked at the turbines and looked at

as this board has approved in the past and in

particular in Prairie State the ability to

take into consideration operational

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variability compliance headroom and other

factors made to ensure that the BACT limit at

the end of the day is workable and something

that can be achievable from a compliance

perspective

JUDGE MCCABE Mr Alonso wed

like to go on to that subject of the relative

heat rates and therefore the GHG emission

rates of these three turbines But before we

leave the subj ect that we are on of the

criteria that the company used perhaps past

tense or might in the future if something

unexpected happens use in the future to

select the turbine I heard you say two

primary things And I know were several

beats back on the questioning now But I

heard you say the forecast of demand how much

power you can 1 -- Im sure where ERCOT

will dispatch you is part of that equation -shy

and the heat rates Are those the two most

important factors to the company in selecting

the turbine Price obviously has something

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to do with this too

MR ALONSO Yes I mean and the

result of the bidding process and how that

and the third-party analysis of the energy

demand and everything else Absolutely

JUDGE HILL So are you really

saying to a large extent price is the

primary driver

MR ALONSO No not necessarily

I mean its what fits for this particular

you know looking at the forecast -shy

JUDGE HILL But its the balance

of price to demand to efficiency

MR ALONSO Sure Im sure

There is a cost component to this but its

not a cost component as specified in step four

of the BACT analysis

JUDGE HILL No Im not doing

BACT right now Im talking about just the

decision of which one to install

MR ALONSO Sure Its a

business decision and the product developer

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would like to maintain that flexibility At

the time the permit was submitted we

concurrently went and did basically a dual

process of trying to get a PSD permi t and try

to come to terms with all these agreements

whether the turbine or your tax agreement

your water use agreement And thats why our

initial application had three turb s in it

To say that we had to do I that

work up-front and then wait another two years

to get a PSD permit it would really delay the

proj ect and lose a window opportunity

currently right now at ERCOT where there are

some energy constraints in Texas This is a

very good time to build a gas-fired power

plant in Texas

JUDGE STEIN I want to follow up

Are you -shy

JUDGE HILL Yes yes

JUDGE STEIN I wanted to follow

up on your decision of the ous steps of

the BACT process I understand your wanting

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to have flexibility to the last possible

moment At the same time ordinarily in the

step two analysis you would be looking at

whether technologies are available and

applicable And if somebody was going to

drive the company to say you should build a

size thats too small or too large its my

understanding that there would be an

opportunity at that point for commenters to

explain why a different size unit might be

appropriate and you in turn would have an

opportunity to say well that doesnt work

for us

But by keeping the flexibility

until the end of the process my question is

whether you have deprived either citizens

groups or other comn1enters of the opportunity

to meaningfully comment at an earlier phase of

the process And therefore by keeping your

flexibility to the last moment you are

perhaps you should assume the risk for having

done that

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I mean in pio Pico we briefly

talked about the sizing issues Weve

acknowledged I understand your points on you

get to pick the size But if you pick it so

late in the process that nobody else can

meaningfullycomment notwithstandingthe size

you want to pick if you pick it a little

bigger its much more efficient how can that

happen if you wait until the end the

process to choose to say what technology you

the company want to go with

MR ALONSO First of 1 you

know recognizing BACT and step two Im not

aware of any precedent in PSD permitting or

from this board that somehow size and

itself is a control device Step two and to

a certain extent I step one is to identify

control devices you know technology that

would be applied to a given emission unit or

a given source And I believe that its been

pretty well established that the permittee has

a lot of flexibility in deciding the design

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factors in how the plant is designed I

would you know ask the Board to consider

that size is not a control device its more

a design criteria that is used by permittees

when they go to design a source

IJUDGE STEIN Yes I m not

thinking of size as a control technology I

see the control technology as combined cycle

turbines But when you look at combined cycle

turbines youve looked at three different

models They have different efficiencies We

can get later people can tell us whether

theyre comparable or theyre not But if the

company is headed towards a particular

efficiency and the agency or other commenters

think they should be headed elsewhere that

this particular technology combined cycle

turbines can get you a more efficient

process where in the process are they

supposed to raise that

MR ALONSO They could raise that

in how the technologies are defined and

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developed in step two

JUDGE MCCABE You may be hurting

Mr Richies ears doing that so

MR ALONSO Sorry sorry Region

6 identified roughly four different energy

efficiency and processes or practices that

apply to the class of this technology which

is a combined cycle class The public has

full opportunity and they had in this permit

to comment on exactly that whether its

installation whether its installing an

efficient heat exchanger design economizer

exhaust steam These are the control devices

that apply to the class of technology which is

whats known as combined cycle

That list today is what we have

today That list was different ten years ago

and its going to be different ten years from

now because BACT evolves That is where the

public has its say

To set a one-level you know all-

combined cycle must be 90 the 9092 pound

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I Iper C02 megawatt hour that s not BACT BACT

is set on a case-by-case emission unit-

specific basis What Sierra Club is basically

asking this board to consider is taking that

one limitl the 90921 and apply it to two

other totally different combined cycle

turbines I and I dont see that as what is

intended by BACT

JUDGE MCCABE That brings us to

an interesting question Can the GE turbine l

which you are most likely to select l to quote

you l achieve the GHG emissions rate that the

region established the Siemens turbine

MR ALONSO First of all weI

think that to require the GE turbine to meet

that limit would be asking the permittee to

over comply with an adequately-developedBACT

limit We dont think -shy

JUDGE MCCABE 11m asking you for

a factual answer l Mr Alonso

MR ALONSO From a factual

question l I mean l 1 1 m not

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JUDGE MCCABE Would you like to

consult with your client

MR ALONSO Yes okay We are

not prepared at this time to say 100 percent

whether or not we can meet that limit What

we would have to do is possibly de-rate We

might have shy

JUDGE MCCABE Possibly what

MR ALONSO De-rate the unit

JUDGE MCCABE De

MR ALONSO The unit may be not

at its maximum capacity

JUDGE MCCABE What would that do

Explain that

JUDGE HILL You mean run it

greater than capacity

JUDGE MCCABE Yes he means if

they de-rate it that they would operate it at

less than its 1 capacity What would that

do to your heat rate

MR ALONSO Probably not much

But they would have to do something

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operational to unit to basically comply

with that limit Plus we would not have the

compliance headroom that was developed for

degradation factors We might be able to meet

it day one but who knows in ten years And

just operation flexibility It would be

really difficult to commit to that limit

JUDGE MCCABE Let me see if Im

understanding you correctly I hear you say

that de-rating it would be one option to meet

that GHG emissions limit because its a total

limit even though your efficiency rate would

clearly go down if you de-rated it I hear

you saying that option number two would

essentially be to take it out of your

compliance margin which the petitioner has

characterized as generous I believe in its

comments on this permit Are those the only

two ways that the company could meet the heat

or the GHG emission limit that the region set

for the Siemens turbines in using the GE

turbine

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MR ALONSO I mean we can follow

up wi th the Board on this but to the extent

of whether or not theres other engineering

solutions or modifications to that turbine

that could be done tOI you know l basically

change the design of this unitl I meanl I

think that I s why we went through the BACT

process l though I meanl the end-of -day

emission limit is based on vendor information

that we obtain from GEl and the region took

that and applied the control technologies to

those numbers I and thats how we establish

BACT limits at the end of the day is you take

those control technologies and you impose them

onto the uni t that s supposed to be buil t I youI

work in compliance headroom l and it wasl you

know I and this board is generally deferred to

EPA techni staff on issues about compliance

headroom and whats -shy

JUDGE MCCABE I dont even think

thats an issue on this appeal l so you dont

need to go there

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MR ALONSO Well no no no To

the extent that you said that the Sierra Club

thinks that compliance headrooms are generous

JUDGE MCCABE That was just a

comment They didnt raise it on appeal

MR ALONSO Okay

JUDGE MCCABE But let me ask you

this Mr Alonso Im hearing essentially

that the only two ways that you could that

the company could meet the limit on the GE

turbine would be to either de-rate it in

which case youre not getting the power that

you want out it or to take it out of your

compliance margin which is effectively

somewhat lowering your limit really

But Im puzzled about one thing

Didnt the company in its original permit

application propose to use the average of

propose to set the permit limit at the average

the GHG emission rates or heat rates of the

three uni ts the three turbines And if

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thats the case isnt that an admission that

you can actually meet the more-demanding

emission limit on the less efficient unit

MR ALONSO Let me just say when

we initially submitted this permit

application we used the LCRA permit that

Region 6 had processed and finalized in a

period of six months

JUDGE HILL Im sorry What is

LCRA

MR ALONSO The Lower River

Colorado Authority They permitted a gas

plant in Region 6 It was not appealed to

this board So we modeled it after that

application

JUDGE MCCABE You modeled your

application after theirs

MR ALONSO To a certain extent

because it worked at Region 6 as far as this

averaging It turns out that once between

draft and final LCRA was able to select the

turbine and they selected a turbine The

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timing worked for them given their

development path

JUDGE MCCABE Im sorry You

said they selected theirs between the draft

and final permits

MR ALONSO They did And ir

final permit came out with one turbine But

thats a different project dif

development path

JUDGE HILL Well but I think the

question is youre saying that if you were to

apply the Siemens emission limit to the GE

turbine that that would over comply But if

the permit limit were set at the average of

the three and you would as you apparently are

almost likely to do select the GE turbine

then youre going to meet a lower limit than

the limit that would have been set on the GE

turbine alone So would you have been arguing

that that was over-compliance as well

MR ALONSO I mean the record

speaks for itself I mean obviously if we

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submit a permit application agreeing to a

certain limit we would have to you know

probably shave our compliance headroom But

it doesnt it doesnt I mean the issue

before the Board though I believe is whether

or not Region 6 acted properly in its BACT

analysis of these three turbines of these

particular emission units Whether or not a

unit can over comply or whether a permittee

can take a voluntarily limit to reduce its

emissions I believe thats outside of the

BACT process

JUDGE STEIN But I think what is

inside the BACT process is whether or not the

emissions limit that the region has selected

is in fact BACT And thats what Im

struggling with This case comes to us in a

somewhat unusual setting in that I dont

recall in my many years on the Board ever

seeing a situation and its possible that we

did in which three different emissions limits

were picked for the same unit

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Now Im not saying its not

happening Im simply saying that I dont

have any experience with that And what Im

more famil with is a control technology

being p whether its I you know a

scrubber or something else and within thatl

technology I the company being called upon

through the BACT process to meet an emissions

limit that reflects the best emissions limit

that that technology can achieve

And if the technology is combined

cycle then clearly there are certain sizes

of combined cycle that may be able to achieve

a better emissions than the unit that youre

picking And I dont have a problem with

somebody saying to me well we can I t do that

because of A B and C But my problem is

whether BACT automatically gets picked by

size rather than what the class of technology

is capable of performing

MR ALONSO Again I think two

points as to previous practices I meanl we

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have identified seven GHG permits or Im

sorry PSD permits that have throughout the

country and different permitting authorities

further research identified five more where

you have two or three emission units and all

units have dif rates They range from

California Arizona Florida Oregon North

Carolina So it is an established

practice out there in the permitting

JUDGE STEIN Were those

federally-issued permits or state-issued

permits if you know

MR ALONSO They were well you

know they were all state-issued permits but

some of those were in delegated states such

as Washington the s of Florida so they

are federal permits I agree that I dont

believe that this issue has come before the

Board but keep in mind BACT is a progression

And I think in step one the technology is

combined cycle And you take that technology

and you run it through the five steps But at

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the end of the day in step five if you take

the design of the emission unit thats being

proposed to be installed and you take those

technologies you know the use of rehea t

cycles the exhaust steam condensers the

generator design and all these things apply

to each of the three turbines

And at the end of the day in step

five whats the purpose of step five The

purpose of step five is to take that

progression and look at the emission unit

being proposed and develop an enforceable BACT

limit BACT is a limit based on technology

thats being identified through the step one

through four

JUDGE HILL Thats basically the

three separate applications argument am I

correct

MR ALONSO At the end of the

day we could have possibly submitted three

different applications and you would have had

to - - to do otherwise you would be basically

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setting sort of like an NSPS where you say all

combined cycles need to meet this one limit

across the board No matter where you are l

who you are l which manufacturer you use l what

color your turbine iS you need to meet thisI

limit Thats not what BACT is

JUDGE MCCABE Well the problem

with that analysis of course Mr Alonso isl

that if we take it to the full ent of what

youre suggesting you get to pick the

emission limit according to which turbine you

pick And I dont believe thats what the

permitting authority is supposed to do But

we dont need to debate this issue further

Wed like to turn before we leave

you and go to EPA 1 to the solar issue And my

question to you is is it possible -- again

here were talking facts not legal conclusion

to install some solar-generating capacity

at this proposed facility And what

information in the record can you cite us to

support your answer l whatever that answer is

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MR ALONSO On the solar pre-heat

issuel first of alII solar pre-heat is not a

control device to be identified in step one

Your factual question l can it be inst led at

this ilitYI in a meaningful waYI no We

only have 20 acres left over after we build

this proj ect

JUDGE HILL Is that in the

record

JUDGE MCCABE Is that in the

record

MR ALONSO NO I it is not Its

not in the record because againl what is in

the record is that Region 6 determined that

installing based on this boards precedent l

installing solar pre-heat or using solar as

some type of alternative fuel for this plant

would be re-designing the source

JUDGE MCCABE Well go back to

your explanation about the 20 acres Explain

to us

IMR ALONSO Okay First theres

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the 20 acres There s not enough space I landI

to make solar pre-heat a feasible or economic

technology Palmdale had 250 - something acres I

you know l a vast amount of land

Second l this plant is pretty close

to the Texas coast vulnerable to hurricanesI

Who knows if regulators of local communities

would even let us build such a large solar

field in this areal given the threat of

hurricanes

JUDGE MCCABE Is there anything

in the record for us to look at on that

IMR ALONSO No I again in the

record solar pre-heat is defined aS I would bel

redefining the source And this board has

already ruled on this issue In Palmdale thel

petitioner sought to have Palmdale install

even more solar energy than it already had

proposed and this board said that that wouldl

be redefining the source

JUDGE MCCABE I don I t bel ieve

lthat s what we said Mr Alonso I believe we

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said that redefining the source was clear if

you were talking about making it a 100-percent

solar facility

MR ALONSO Correct

JUDGE MCCABE That is quite

different from what youre talking about here

MR ALONSO Well I point the

Board then to Sierra Pacific In that case

there was a dual fuel plant biomass as well

as natural gas and the petitioner sought to

have the permitting authority to force

installation of solar and this board there

said it was redefining the source

JUDGE MCCABE And what did they

base that on

MR ALONSO Im sorry

JUDGE MCCABE I dont believe

that the Board made such a broad statement

that any time you introduce solar that it

would be redefining the source Do you recall

in Sierra Pacific what the reason was that the

Board concluded that

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MR ALONSO I do not

JUDGE MCCABE Okay Well I

wont make you do that homework right now We

actually know that Go ahead back to if you

would to the factual question because thats

the one were most interested for todays

purposes about whether its actually possible

and what there is in the record that t Is us

yes or no on that

MR ALONSO Okay Well first Il

mentioned that theres not enough land l the

hurricane situation The second issue is

Paloma is not in the renewable business They

doni t have the resources to go out and do

solar studies They would need to retra or

redo their business model in order to look at

alternative energy or renewable energy

JUDGE MCCABE Do they build their

own turbines

MR ALONSO They build gas

turbines yes

JUDGE MCCABE They build them or

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they buy them

MR ALONSO They dont do wind

they dont do solar

JUDGE MCCABE Do they use

subcontractors

MR ALONSO I mean this is

something that they would have to develop as

a business unit and will take time to go out

and get experts hire them on staff or go get

third-party folks Its just not part of

their business plan

JUDGE MCCABE Mr Alonso what do

you think the company responded the first time

the first company was asked to put on an SCR

MR ALONSO They probably said it

was unfeasible

JUDGE MCCABE They probably did

They probably also said they werent in the

business There has to be a first time

doesnt-shy

MR ALONSO No I think that as

far as being in the business I mean theyre

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in the business of burning coal And they

know that they have to put on pollution

control -shy

JUDGE HILL And I think Sierra

Clubs argument would be that La Paloma is in

the business of generating energy as

efficiently as possible in South Texas I

mean put aside the hurricane issue for a

moment but if there were enough land you

know the stated business purpose in the

application is to produce between 637 and 735

megawatts of energy I mean thats the

stated business purpose not to produce it

per se exclusively with natural gas That

may be their preference but Im not sure

thats what the record shows

MR ALONSO I mean the purpose

of citing this plant is to use the reclaimed

water from the municipality as cooling water

Theres also a natural gas pipeline close by

to this facility That is -- and the intent

is to maximize the use of that gas pipeline

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You know shy

JUDGE HILL And that is in the

record

MR ALONSO That is in our brief

JUDGE HILL Okay

MR ALONSO But again I dont

believe that solar pre-heat would even survive

step one I mean youre king about a

redesign the source by forcing folks to

consider renewable energies at a fossil fuel

plant where thats not the intention of the

design And this board has allowed and has

recognized the ability for permit to

define the parameters of their design what

they want to build and I dont think we you

know well you guys can do what you want but

to force folks that want to build fossil fuel

natural gas plants to build wind turbines I

dont know that sounds like -shy

JUDGE MCCABE Do you know if

theres any situation where any permitting

authority has done that in the United States

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yet

MR ALONSO I have not seen a

BACT analysis resul ting in or you know to do

as an alternative particularly in step one

to consider the feasibility of a renewable

project I dont have any knowledge of that

occurring at other permitting authorities

JUDGE STEIN But what about a

hybrid pI I mean I dont think whats

being suggested here is that you convert the

principal purpose of the gas turbines I

think the question thats being asked is

whether any component of it could be solar

and I think what the Board is struggling with

is in a si tuation in which solar is not

already part of the plant design is it proper

or improper to raise questions about that If

so what is the regions obligation

I mean I dont see this as sort

of a black and white issue I see it as

youre lling us theres 20 acres Maybe

thats the record maybe its not That

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may be relevant to how you answer that

question in this case as opposed to some

other case

MR ALONSO It really goes to

whether or not solar or renewable energy

should be considered a control device in step

one And I would assert no its a different

fuel source Youre redesigning when people

go to build solar plants or hybrid plants

even hybrid plants you go in and thats what

you want to build and you have a business plan

and an engineering design for a hybrid plant

and thats what you want to get permitted

But if youre out building a gas-

fired power plant and solar is not a

component I mean nowhere in the record is

there anything about La Paloma interested in

building a solar plant We want to build a

natural gas fire plant and thats the source

that should be permitted not some alternative

design And a hybrid plant would be forcing

basically brand new engineering you have to

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study you know solar rays and the impact

whether or not its efficient in this area

It would just be a totally different design or

engineering effort to design a hybrid plant

versus the plant that were trying to permit

here

JUDGE MCCABE Okay Thank you

Mr Alonso We take your point and you may

be seated And we will hear next from EPA

and Judge Hill will take the lead on questions

for EPA but be resting assured that we will

all have questions for you

JUDGE Let me start by

asking how you pronounce your name so I dont

mess it up

MR TOMASOVIC I will generally

say Tomasovic but

JUDGE HI Tomasovic

MR TOMASOVIC - - Tomasovic is

fine if you want to go old country

JUDGE HILL What do you prefer

MR TOMASOVIC Tomasovic

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JUDGE HILL Tomasovic okay So

this is purely a hypothetical question but

in your experience or in the experience

generally of the region when does a permit

applicant decide what their you know what

their turbine is going to be or what their

size is going to be or the precise design

factors of the source Does it typically

happen before they submit the permit

application after both

MR TOMASOVIC I think it could

be a variety of things your Honor Looking

through historical permitting actions we did

find that there are a couple of cases that

happened before the Board that had permit

structured such as this that had permitted

multiple turbine options You wouldnt be

able to see it from the face of the decisions

and it wouldnt be something that you could

discern from the challenges that were raised

but the Three Mountain Power decision in 2001

is one such example and there was a case

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where a petition was dismissed for being a

minor source permit But clearly on the

face of that decision which was Carlton Inc

North Shore Plant in 2001 it described a

minor NSR permit with multiple turbine

options

JUDGE MCCABE Could you repeat

the name of that one please

MR TOMASOVIC Carlton Inc

JUDGE MCCABE Carlton Inc

MR TOMASOVI C North Shore

Plant

JUDGE HILL Do you have a cite on

that or you said it was dismissed as -shy

MR TOMASOVIC It was 2001 and

it was a published decision your Honor

JUDGE HILL Okay Now my

understanding of Three Mountain Power is that

they allowed for different equipment but they

only specified a single emission limit

MR TOMASOVIC It does show that

in the RBLC sir but we tracked down the

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permit and actually what happens is

different permit issuers will input different

data into the RBLC We gave you approximately

ten RBLC numbers and in almost all those

cases you are going to see different BACT

limits depending on what types of BACT limit

is being assigned

And under the Three Mountain Power

permit that was issued there were multiple

types of limits other than the concentration

limits So the hourly limits the pounds per

hour limits the annual ton per year limits

just as in our permit show that with each

turbine option different limits apply

JUDGE HI And what was the

control technology in those cases or can you

generalize on that I mean one of the things

that makes this a challenging case I think

in part is because the control technology is

I I mean you know is also essentially the

plant design because what youre trying to do

is simply maximize the effici use

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inherently Are those others cases are any

of those similar or are they all about add-on

technologies

MR TOMASOVIC I bel ieve these

days the conventional thing is that for add-on

control technology wi th turbines is SCR For

other limits such as PM and carbon monoxide

youre assigning limits inherent to good

combustion practices inherent to the equipment

that is selected And thats reflected in the

TCEQ permit that was issued for La Paloma in

this case which like ours followed an

application that asked for the flexibility to

consider multiple options And as a

practical matter when the permit writer is

assigning those limits they have to look at

the specs inherent to the turbine in assigning

both the worst case emissions but also those

emissions that reflect whats good operation

on an hourly basis

JUDGE HILL Does the TCEQ permit

have this condition that says that once the

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turb selection decision is made then the

permit is going to be amended to basically

take out reference to the other two turbines

MR TOMASOVI C It does and I

believe that may be a practice that varies by

permit issuer I didnt notice that when I

looked at the Three Mountain Power permi t I

also have on hand a listed RBLC number for a

orida permit in 2000 I didnt notice

provision there

For what we have as a special

condition theres no time set requirement on

when they would need to come in and modify it

Its more of a back-end cost-keeping

requirement where they indicate what their

selection would be and the permit issuer

would simplify the permit so its more

readable enforcement purposes

JUDGE HILL And thats the reason

to do it Because if you take Mr Alonsos

argument kind of to its logical conclusion

then they get to select the turbine and

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therefore they get the limit that applies to

that turb But youre saying that that

condition was put in there just to make the

permit cleaner to read in essence

MR TOMASOVIC Its not the case

as the petitioners have argued that they get

to choose their emissions rate Thats not

what they to choose They get to choose

their capacity they get to choose the

equipment and the various designs of equipment

that we couldnt differentiate for efficiency

purposes in assigning limits for a final

permit

So even as those limits look

numerically different in the permit we have

a technical decision on the part of the permit

issuer that says these are comparable and they

dont implicate a weakening of the BACT

requirement that we decided to assign the

limits this way

LL I want to come back

to the comparable because I think that thats

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an important issue But getting back to this

full issue of basically the selection

decision Sierra Clubs essential argument is

that since the control technology here is

maximum efficiency within a range and given

that La Paloma defined the business purpose as

build a plant thats between the capacity of

the smallest capacity turbine and the largest

capacity turbine that they should have to use

the most efficient control technology which

in this case would be the most efficient

turbine Do you agree Could the agency have

told La Paloma look you can pick whatever

turbine you want but youve got to run it as

if it were the most efficient because thats

BACT Does the agency have that authority

MR TOMASOVIC Speaking for

Region 6 with this permit there are multiplel

ways that I think permit issuers could have

decided to come out in the final permit We

decided l based on the design heat rates the

best data we had for the operational factor

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that would apply to this equipment plus a

consistent safety margin for all three

options that there are these three limits

that come out

And if we chose to express those

limits in their different format for instance

the net heat rate the picture would actually

be qui different So it is a distorted a

bit of a distorted picture to say that GHG

BACT on a gross output basis is the ultimate

measurement of what is efficient

JUDGE HILL Why would it look

different Please explain that further What

would happen if you use net

MR TOMASOVIC So what appears

from the of the permit is that the

largest difference in efficiency is 27

percent In our response to comments on page

II we actually provided the numbers to show

what that dif would look like on a net

basis which is I believe the format that

the limits were expressed in the Palmdale

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decision l as well as even earlier permits

issued by Region 6

And permit issuers do have

discretion at this timel in the absence of

guidance to consider the comments that comeI

in and decide which type of limit is going to

be most meaningful for putting BACT in place

But -shy

JUDGE LL So I cant do math in

my head but Im looking at those numbers So

youve got for the GE turbine the net heat

rate would be 7527 and for the Siemens it

would be 7771 Isnt that about two and a

half percent I or is it less than that

MR TOMASOVIC WeIll I think what

you want to look to is if you can see a 9452I

number -shy

JUDGE HILL Okay That I S the

emission limit

MR TOMASOVIC -- and the 9444

number

JUDGE HILL And then a 965

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number

MR TOMASOVI C I f you were to ask

what the percent difference is there you

would have one-tenth of one percent of a

difference which expressed as gross shows

up as 27 percent And this is one of the

challenges with such a narrowly-written

petition It didnt challenge the reasonable

compliance margins that we assigned to each

option and it doesnt bring up issues like

the start-up emission limits which in factiI

give a different rank order if you could usel

that terminology for each of the turbine

options

JUDGE HILL All right So are

you saying that if you I mean I based on thisI

chart on page 111 that I I mean I the response

comments references the 26 earl on butl

its also got this chart And youre saying

that that chart shows that its really tiny

MR TOMASOVIC Yes your Honor

If we chose to place a final permit final

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limits in the permit on a net basis using the

same calculation methodology it would be one-

tenth of one percent

JUDGE HILL How do you decide

whether you set the limit on a gross basis or

a net basis Because I know Ive seen both

MR TOMASOVIC In this case we

evaluated the adverse comments on the issue

we looked at what was going on for instance

with the proposed NSPS which expresses those

limits at least in a proposal form on a gross

output basis We saw that in general a lot

of the performance data that is out there is

available on a gross output basis so we

decided that for permitting purposes

permitting administration purposes and for

the benefit of other permitting actions it

seemed that gross output made sense for this

permit

JUDGE HILL Okay But you had

the discretion to pick net

MR TOMASOVI C Well we dont

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close off ourselves from choosing net base

1 imi ts in future permits if for instance the

NSPS were to on the basis of comments decide

that net basis really is a preferred way to

go But we have a reasonable basis for this

permit to say so And in saying that were

not purporting to say anything that would be

determinative of how state permitting

authorities or even other regions might choose

to assign the limits for a permit that

guarantees efficiency and control of GHGs

JUDGE MCCABE I just want to get

some clarity on again the facts I love

facts If the numbers here that were going

to be looking at when we decide whether we

agree with the regions position that these

limits are really not different that theyre

comparable or whatever language you use to

describe them how would we describe that Is

it 01 percent are you telling us now Is it

27 percent Is it a range from 01 percent

to 27 percent The world looks closely at

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the facts of what we were looking at when we

draw the conclusion l so the facts matter and

311 m a Ii Ie unclear about them right now

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MR TOMASOVIC Yes l your Honor

So 111 try and go over the notes I have on

the comparability of the limits in maybe an

orderly shy

give me a

feel free

that the

JUDGE MCCABE I was hoping youd

sound bite in the end but please

to go through the notes

MR TOMASOVIC The first thing is

permit actually assigns three

different kinds of emission limits the ton

per year the start-up limits which are on a

pound-per-hour basis and this gross output

when its sendingelectricityto the grid how

efficient is in relation to the output

So if you look at those three

different limits and were to assign a rank

order under kind of turbine model I you I re

actually going to get three different orders l

permutations I suggest thatthere dif

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the net limits was another possibility for us

You would get a fourth order if you were to

assign -- and actually nothing would have

permitted us from assigning both kinds of

limits and that limit and a gross limit but

that would have been duplicative So we

decided these are the limits for the permit

So looking just at that the basis

for the challenge which is the gross limits

you have a smallest difference of one-half of

one percent Thats the difference between

909 to 912 The largest apparent difference

is 27 percent which is the difference from

909 to 9345 And this difference is not a

difference in efficiency In the commenters

letter they do throw around the term

efficiency but sometimes thats using the

context of what is power plant efficiency

which gives you a different comparison If

youre talking about engine efficiency or

power plant efficiency the 27 percent

difference is actually 12 percent

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JUDGE HILL Why is that I was

with you until that sentence

MR TOMASOVIC So

JUDGE MCCABE I think we need a

chalkboard

MR TOMASOVIC That calculation

and I think maybe the footnotes in the comment

letter explain it as 3412 divided by the heat

rate And another issue is that the

commenters use actually lower heat value for

their descriptions of the heat rate whereas

our permit is using the high heat rate

information to get the limits

But that 12 percent difference in

efficiency that kind of efficiency power

plant efficiency were talking about is what

you may read in -shy

JUDGE HILL Can you define power

plant efficiency for that purpose for me

MR TOMASOVIC Yes sir The

definition of power plant efficiency would be

what is the heat rate value of the kilowatt

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hour divided by the heat rate for the power

plant or the turbine

JUDGE HILL Okay

MR TOMASOVIC And in our case

our limits arent just the heat rate for the

turbines as though they were in simple cycle

mode but the heat rate for those turbines in

conjunction with the heat recovery steam

generator with duct burner firing So theres

a number of things going on

And we had explained that as

turbines get larger they get more efficient

And thats actually true for several reasons

but in this case its not actually because

the GE turbine is demonstrated to be

inefficient Thats not the case Its

actually the influence of the duct burners

which wasnt something that the petitioners

raised in their appeal Because each scenario

has the same size duct burners they have a

disproportionate impact in the overall heat

rate We assigned limits that included

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everything l and thats why I when Mr Alonso

was talking about de-rating that may be a

situation where is easy to figure out that

youre just cutting into the compliance margin

if we had decided to set them all the same

limit but also might be a case where they

really put limits on their use of duct

burners which cuts into the operational

flexibility that they want to have as base

load plant that has peaking type capabilities

JUDGE HILL In other words you

cant sort of size the duct burner to the size

of the turbine or

MR TOMASOVIC No your Honor

In this case the HRSG with the duct burners

is assigned to be the same for all three

scenarios

JUDGE HILL Okay all right So

is 27 percent the largest when you talk

about tons per year startup gross output and

net heat rate is 27 the largest difference

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MR TOMASOVIC Well sir if you

were to count the annual ton per year

differences each capacity scenario is

actually about 10 percent larger than the

next If you look at the annual ton per year

limits I think the differences might be 6 or

7 percent but youre just building up your

plant with the bigger greenhouse gas impact

overall and -shy

JUDGE HILL Well the reason I

ask that question is because in your brief

you talk about that you dont need to look at

alternative control technologies that are

essentially equivalent In response to

comments it talks about these turbines are

quote highly comparable and there are

marginal differences between them So theres

a lot of words thrown around that all seem to

imply small or not significant but which one

do we use I mean the argument seems to be

essentially -- see Im coming up with a new

phrase -- essentially equivalent How do we

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judge that Well first of all is there a

single term that is most relevant from a

legal standpoint And then my second question

will be and how do we judge that

MR TOMASOVIC Well the two

explanations that we gave in the record I

think are pertinent and that is that the

differences are mere fractions of the

compl iance margin The compl iance margins we

assign to each turbine is reflective of the

uncertainties in terms of variable load

performance deviations from the iso

conditions degradation over time So if -shy

JUDGE HILL Well but how does

that cut I mean if you accept a compliance

margin at 30 percent then yes everything is

probably going to get swamped by that But if

you set the compliance margin at 2 percent

you might not

JUDGE MCCABE Or 126

MR TOMASOVIC And we set the

compliance margin at 12 percent and I think

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what that illustrates is that the difference

between the 2 percent which is approximately

a quarter of that total compliance margin

shows these are all these are all comparable

They are all going to be expected to be

performing in range of each other but we

decided that there are subtle differences that

allowed for the assignment of that reasonable

safety factor They are different sizes and

different engines but theres no fact-based

reason for us to decide to set them all at the

same limit or average them or round them up to

the nearest 50 pounds per megawatt hour

although other permit issuers may well choose

to do that in order to simplify things

JUDGE HILL If we want to give

guidance to future permit writers how would

you propose we say youve got three turbines

with different heat rates but they are

essentially equivalent How much discretion

do you think the agency has to figure out to

declare two different GHG limits to be

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essentially equivalent

MR TOMASOVI C Well I would

start your Honor with the fact that these

are all F class turbines and at the comment

period there wasnt any articulated difference

between the turbines in terms of the

technology they have You may find that in

other cases where heres a turbine that uses

dry cooling and heres a turbine that uses wet

cooling and thats a technological difference

that would allow us to elaborate on it

explain perhaps why one option is necessary

and the other isnt

But in this case where you have F

class turbines that are all modern at least

in the last several years type efficiencies

placed into an energy system that has its own

subtle impacts on what the overall limits

would be I think the way that the Board

should land on that is deference to the permit

issuers technical judgment in this case on a

case-by-case basis that this apparent

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difference of 25 pounds per megawatt hour was

not significant And we made that decision

without any written guidance from OAPPS or

OGC but it was based on our permit issuer

technical judgment And all is not as it

seems if you were to look at for instance

that net efficiency which illustrates that

that 27 percent difference which the

petitioners now complain about is only a 01

percent difference

JUDGE HILL At what point does it

become too big I mean you talk in your

brief or the response comments document talks

about well unless its poorly designed or

non-representative of the capabilities of the

technology is that the standard we should

adopt

JUDGE MCCABE Were wondering

where that came from actually

MR TOMASOVIC Well that phrase

you might find a phrase in the GHG guidance on

performance benchmarking Im not saying its

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straight transferrable to that to the way

that we used it in the brief but it does

reference performance capabilities of

technology as a starting point And we were

looking at the GHG guidance that does say in

the case of a gas-fired plant if its

considering single cycle for example you

should consider as an option combined cycle

Combined cycle isnt broken down into the

world of turbines that are available on the

market Go larger if you can if that shows

its more efficient

Instead it was more us taking

this application as it came in a conventional

combined cyc plant using modern F class

turbines with the heat recovery steam

generator and the duct burners Its a

standard type of permit It is similar to

LCRA permit that we issued It was the first

permit issued which incidentally in that

case the application came to us with the

request to permit multiple options and they

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decided before public comment that the GE 7FA

turbine was the one that they would go with

JUDGE HILL So can you cite to

any permit where EPA basically allowed the

size or model of the main emission unit to be

selected after the permit is issued as

happened here Are the -shy

MR TOMASOVIC As far as a

regionally- issued permit I sir No The

Washington State permit that is referenced in

our brief is a delegated state Sierra Club

submitted adverse comments on it and that wasl

one case where they for similar reasoning to

us decided that they would defer to the

applicants request to have multiple options

and not make them pick one of two acceptable

turbine models

JUDGE HILL Okay

JUDGE MCCABE Just going back to

your point about the F class turbines 11m

wondering if what you l re saying to us is that

it is sufficient for the permitting authority

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to look at that class of turbines and say

step one combined cycle technology is the

best available control technology here and

then when we get all the way down to step five

to set the emission limit that anything within

class F is good enough is that what youre

saying

MR TOMASOVIC No your Honor

The proj ect did come to us wi th F class

turbines You may see that in the response to

comments one of the things that Sierra Club

had said is choose larger turbines make a

bigger power plant and we quickly said that

we didnt believe that was appropriate in our

case because they had selected theyre

looking at a power plant of a certain size

using three different types of F class

turbines

But all of those were open to

commenters adverse commenters that may say

well these three turbine models of these

three turbine models this one doesnt show

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anything that shows modern day efficienc s

But at the same time its likely not a good

permit practice to say with absoluteness that

this turbine that was designed in the last

five years is not acceptable for BACT purposes

or for project purposes in other cases

because if you rest solely on that one piece

of information then the net heat rate

expresses as the pounds per megawatt hour on

a gross basis youre not necessarily

capturing all that is relevant to efficiency

JUDGE HI What if La Paloma had

said were going to build a plant thats 637

megawatts no more no less and theres only

one turbine on the market that will allow us

to do it even though there are several other

F class turbines that are much more efficient

Would the region have any authority to look

behind that

MR TOMASOVIC I think general

permit issuers do have authority to say have

you considered this or that thats so

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available In that case your Honor I think

youre presenting a case where the source is

defined binarily

JUDGE HILL Exactly

MR TOMASOVIC However it

doesn t necessarily mean that the selection of

that turbine model is unjustified If you are

to look at going back to the NSR workshop

manual I believe we cited we said in our

brief in one of our footnotes that customer

selection factors can be based on a number of

things including reliability and efficiency

experience with the equipment And all of

those are things that you can find in the NSR

in the NSR workshop manual as an example of

how you step into the BACT analysis for a

turbine Its really something that we come

in with we have a contractual commitment to

use these turbines can you see what limits

would apply to it at the front end

JUDGE HILL Let me ask if Judge

Stein or Judge McCabe has anymore questions on

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the turbine issue because then I want to move

to solar real fast

JUDGE STEIN I do

JUDGE HILL Okay

JUDGE STEIN Did I hear you say

that another facility in Region 6 that was

recently permitted is using the same turbine

as will be used by La Paloma

MR TOMASOVIC Yes your Honor

JUDGE STEIN And does the record

reflect what that BACT limit is for that

facility and how it compares to the BACT limit

here

MR TOMASOVIC s your Honor

So the name of the facility is the LCRA

Ferguson Plant And I believe that was

referenced in the statement of basis as well

as discussions sections of the response to

comments all cases looking at other

facilities that are out there including LCRA

we deemed the limits to be appropriate when

theyre placed in the appropriate context

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The Sierra Club presents Palmdale which isnt

reflective of the same design that were using

that we permitted here They referenced the

Pioneer Valley and we had to contextualize

the limits that were assigned to the Pioneer

Valley permit because that particular facility

wasnt using duct burners

JUDGE STEIN Okay So if Im

correct the BACT emissions limit for the

Lower Colorado River was 918 pounds of C02 per

megawatt hour And the limit that were

looking at here is 934 is that correct Im

not purporting to say that I have a correct

understanding Im just trying to clarify

MR TOMASOVIC Is this in the

response to comments or statement of basis

your Honor

JUDGE STEIN Oh its in my

little cheat sheet that somebody gave me

JUDGE MCCABE Its extracted

MR TOMASOVIC I may be mistaken

but I believe the limits assigned for LCRA

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were in fact on a net basis so they

wouldnt be directly comparable But we might

well have had some discussion that tried to

reconcile them

JUDGE MCCABE Yes the

comparability of all of these numbers is

somewhat perplexing to us so well address

that at the end because were thinking that we

might need some supplemental briefing to try

to get us on an agreed-on comparison table

here so that we at least understand and that

others who read the decision can understand

the import of what were deciding Do you

want to turn to solar

JUDGE HILL Yes So Mr Alonsos

argument is in essence that including any

solar into this proj ect would have been

redefining the source Do you agree wi th

that or do you think the agency has any

authority to consider some solar at an

electric plant even if it hasnt been

proposed by the applicant

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MR TOMASOVI C Your Honor I

believe that the Boards precedent on

redefinition of the source allows that a

permit issuer in their discretion may

require consideration of options that may

constitute a redefinition of the source

However if that is in conflict with the

fundamental business purpose of the applicant

then it is against our policy to do that

JUDGE HILL Do you think that the

agency has some -- okay So you believe the

agency has the authority to require

consideration Do you think the agency has

the obligation to do so if it wasnt proposed

if somebody raises it in comments as happened

here

MR TOMASOVIC I believe that the

agencys responsibilities in responding to the

comments in many ways are calibrated off of

the specificity of the comments that come to

us In this case the comments that we

received on solar are not in the same shape as

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they carne to the board in the petition in that

theyve attached the exhibits for two permits

that werent part of their comments that were

submitted to us and they specifically focused

on Palmdale and Victorville as two facilities

that we should have had a further discussion

about in our response to comments

But in terms of how the comments

carne to us which actually raised the issue of

solar in a lot of different ways where at

times it wasnt even clear whether they were

referencing photovoltaic versus stearn

auxiliary contributions to efficiency I

believe that the regions responses were

appropriate

JUDGE HILL Mr Alonso

essentially argued that our decision in

Palmdale said that it is appropriate to

classify addition of extra solar as

essentially redefining the source and he also

cites to Sierra Pacific Do you agree with

that characterization of those decisions

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MR TOMASOVIC Our decision is

based on the facts of our administrative

record and not a broad reliance on those

decisions stating that As was argued in our

br f we think the administrative record

shows that the considerationof solar options

at least as we understood it coming from the

commenters would redefine the source

The administrative record does

show l fact that the property limits are no

more than 80 acres and from that l it can be

discerned that there iS I based on the

footprint of the plant l not a lot of

additional acres which might approximate the

20 acres that the permittee was able to

substantiate with the affidavit that they gave

with their petition

JUDGE HILL So does the region

believe itl s not feasible to install any solar

capacity at the site

MR TOMASOVIC WeIll depending on

how that comment might be construel l your

l

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Honor rooftop solar is an option that

presumably is not what the commenters were

trying to talk about although its not always

clear In the case of the Palmdale decision

it does illustrate that as a rough measure to

contribute 10 percent of that plants total

capacity

JUDGE MCCABE Does someone have a

cell phone going Where is that music coming

from

(Whereupon the foregoing matter

went off the record at 450 pm

and went back on the record at

4 52 p m )

JUDGE MCCABE Okay Lets

proceed We dont have to cut Mr Ritchie

off Lovely music anyway

MR TOMASOVIC I was saying your

Honor as a background matter the Region 6

was aware of the factual setting that was

recited by the Board in the Palmdale case

which was the fact that to generate just 10

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percent of the capacity for that Palmdale

plant it required 250 acres And in fact

and I believe some lang-uage in the opinion

came close to this you need acreage to be

able to have power in a significant amount

You may well need more than 20 acres just to

get steam that could be used in the process

but you know thats a different technical

issue in any event

If we were to just sort of roughly

say 250 acres 10 percent of the plants power

reduced down to 20 or 25 acres youre talking

about something that doesnt substantially

influence the overall plant -shy

JUDGE HILL But thats not in the

analysis the region did in the record

correct

MR TOMASOVIC No your Honor

JUDGE HILL Okay

JUDGE MCCABE Is it the regions

position that as a matter of exercising its

discretion it would never consider solar it

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would always consider adding a supplemental

solar or whatever we call it here to be

redesign and therefore against at least the

regions policy if not the agencys to even

consider

MR TOMASOVI C No your Honor I

dont think anything in the regions response

was intended to cut off comments on solar

technology as a general matter for any other

permitting case

JUDGE MCCABE You just think the

comments here were insufficient to get you

where you needed to go in order to give it

serious consideration here i is that what

youre saying

MR TOMASOVIC Yes your Honor

I mean we had a bit of a technical discussion

in there that it is the case that for any

process that uses fuel to generate heat you

can get that from something else which might

be geothermal or solar And you could get

into the myriad permutations that go on

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in terms of whatever a commenter might

bring but it isl

JUDGE MCCABE Comment clearly

focused on solar in this case l so you dont

need to go there

MR TOMASOVIC However I there are

other parts of the comment which seem to

suggest that the l that l in their view l this

project was defined to be within a range of

capacity that could be energy generated by any

means I which we disagree with because this is

a combined cycle plant thats meant to use

natural gas as its fuel and take advantage of

the rastructural advantages specific to

that location including the waterl

availability of the pipelines and the local

need this particular kind of power to be

delivered for grid stability reasons

JUDGE MCCABE I hate to put you

on the sPOtl Mr Tomasovic l but do you think

you could reduce to one or two sentences the

reason the region did not consider solar here

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or considered it to be redesign that the

region would not entertain

MR TOMASOVIC In the way that

the comments came your Honor we believe that

that solar auxiliary preheat was not well

defined because it was it was actually raised

as a substitute for duct burners when duct

burners have a different purpose than solar

auxiliary preheat And Im already past my

two sentences but

JUDGE MCCABE Thats okay

Youre close enough Thank you Those are

all the questions we have for you at this

time Mr Tomasovic Thank you And Mr

Bender you have been very patient and I bet

youre watching your watch National Airport

flight at 700 You probably need to leave

here by what would folks who are

Washingtonians say given that it is Wednesday

rush hour before a storm

JUDGE HILL If you take a cab

Id say 545 at the latest

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JUDGE MCCABE Okay So 5 30 i

will that work for you Mr Bender

MR BENDER I think so your

Honor

JUDGE MCCABE Okay I would hate

to give you short shrift after you were so

gracious as to choose the last position or to

suggest that your judgment perhaps might need

to be revisited the next time youre offered

that choice

MR BENDER I wouldnt want to

miss this even if I had already gone

JUDGE MCCABE Okay

MR BENDER Is this better

Thank you your Honors I think to address

one thing that kind of permeates the briefs

from respondents and some of the discussion

here today theres kind of two pieces or two

sides of the same coin maybe Were talking

about size or capacity Were talking about

megawatts right And when were talking

about ERCOT or any other regional system

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operator the dispatch is to meet a load

Were talking about dispatching to meet a load

in megawatts

And the size of the units are

different here Its actually kind of a

combination of things turbines plus heat

recovery stearn generator turbine that adds

up to certain numbers Its 637 for the GE

combination for example Thats megawatts as

their peak You know if you throttle full

thats what youre going to get

The Siemens turbines can generate

637 Its not that you have a turbine you

turn it on and you get 637 megawatts or you

turn it off and you get zero and its a

binary on or off situation

In fact the other argument or the

other piece of this argument in the briefs was

that turbines as they get larger get more

efficient And if you want a large turbine at

a reduced rate less than full youre

decreasing its efficiency and thats simply

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not true And thats not true based on the

evidence in this record because that last

increment of power comes from duct burning

which is less efficient than the turbines and

stearn generator

And so as you throttle down or as

you de-rate or decrease your generation all

saying the same thing youre actually until

you hi t the point where the duct burners corne

off youre actually improving the efficiency

and decreasing the emission And we can see

that among other places in one of the tables

that counsel for Region 6 pointed to in the

response to comments where in addition to net

and gross theres also without duct burner

fire on page 11 of response to comments

which is Petition Exhibit 3 you can see that

the GE the smallest of the turbines piece is

75275 without duct burner firing The

biggest turbine the Siemens 5 is 77717

Less efficient right And you only get the

increased efficiency from the larger turbines

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as a system because theyre able to generate

more of their power before turning the duct

burners on

JUDGE MCCABE Well does this

mean youre happy to hear that theyve

selected the GE turbine

MR BENDER If they have a permit

limit that reflects what they could do If

the question is phrased differentlYI right

If the draft permit had come out and said our

project purpose is to build a plant thats

capable of generating 637 megawat ts you know II

this would be a different case The comments

would have been different l and we mayor may

not be here

But then wed saYI the comments

would come in among other things l something

to the effect of the Siemens I you know l 5 or

the Siemens 4 can generate 637 megawatts In

facti when it does so it does it at a reduced

emission

So were dealing with emission

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rates The final permit emission limits are

set based on operating full out But full out

is a different number of megawatts for each

right

JUDGE MCCABE Thank you for that

clarification Do you agree that the F class

turbines are among the most efficient turbines

available for combined cycle combustion

technology

MR BENDER I believe theyre

among I dont know that they are the most

efficient

JUDGE MCCABE Do you know of a

class thats more efficient

MR BENDER I dont The

question though is the emission limits too

which is the end of everything So were

talking about turbines and different turbines

but were really talking about different

turbines put in front of the same 271 megawatt

steam generator in this case

JUDGE MCCABE Well to you and to

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EPA of course the emission limit is the

ultimate most important thing here But of

course to the company the most important

thing is which turbine do they get to use and

is it the one that will fit whatever their

business purpose is

Your petition Im a little

confused about something Your pet it ion says

that youre not suggesting that the company

should be required to pick any particular

turbine but just that they should meet the

lowest GHG limit that any of the turbines

could meet But arent you in effect by

doing that forcing their choice of turbine

MR BENDER No Its not

requiring a turbine Whether youre forcing

it or not raises some other internal issues

I think at the company which is you know

their risk appetite for that headroom margin

thats built in how much theyre actually

going to operate because this is a 12-month

rolling average and assumes operating at 100

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percent including those duct burners wide

open which is one of the least efficient ways

to operate

JUDGE MCCABE So your preference

would be that they have to build a bigger

turbine and operate it at a lower load

MR BENDER Our preference is

they have to meet the emission limit that

JUDGE MCCABE But in concept

MR BENDER To build a bigger

turbine and operate it with less duct burning

and using more of the waste heat from the

turbine the way that the three options are

set up in this record is the most efficient

And

JUDGE HILL But that wasnt your

comment was it Your comment was simply to

pick the limit that reflects the lowest

emission rate Your comment wasnt

essentially to recalculate the rate based on

the lack of duct burning

MR BENDER Thats correct

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Sorry Im trying to answer a question a

direct question Im not representing that

thats what the comments were

JUDGE HILL Okay Fair enough

Im sorry to interrupt Keep going

MR BENDER I should speci fy this

is based on our understanding from the record

Because the Siemens turbines are capable of

basically more heat because theyre bigger but

theyre going into the same size heat recovery

steam generators as would the turbines

More of the total heat going in is coming from

waste heat from the turbines with the Siemens

compared to the GE so theres less need for

duct burning Thats what

JUDGE MCCABE What is your goal

Mr Bender Are you looking for the

lowest total amount of GHG emissions that can

possibly come out of this facility or are you

looking for something else

MR BENDER We I re looking for the

lowest BACT rate but were also looking for

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JUDGE MCCABE But the BACT rate

is based on efficiency yes

MR BENDER Its based on

efficiency here yes

JUDGE MCCABE Do you have any

objection to that

MR BENDER Im sorry

JUDGE MCCABE Do you have any

obj ection to EPAs basing the BACT rate on the

energy efficiency of the turbines

MR BENDER Not in this petition

JUDGE MCCABE Okay Well it is

this petition were talking about

MR BENDER Right Its

JUDGE STEIN But given that they

have indicated that depending on the timing

that theyre going to go with the GE turbine

what is your position as to what the emissions

limit should be for that turbine

MR BENDER The emission limit

for any of these turbines based on this

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record and the draft permit that we were able

to comment on should be -- Ill put it this

way If F class category of turbines

followed by heat recovery steam generator is

the control option and thats what we were

able to comment on And if thats the control

option that theyre going to treat as the same

control option through steps one through four

then in step five the emission rate should be

based on the lowest emission rate achievable

by that class And based on the record here

thats represented by the Siemens F4 at least

that line in the permit right

So depending on how your question

was intended your Honor if they came in and

said draft permitr project purpose 637

megawatts on peak 100-percent capacity you

know r we would look at what combination of

turbine heat recovery steam generator gives

you the lowest emission rate at that But

want to be clear thats not this case thats

not this record

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JUDGE STEIN Well Im a little

confused I mean Im with you to a point

but what I thought I heard the region say is

that when they chose the BACT limit that they

chose that they couldnt necessarily translate

between these different turbines in quite the

same way that you were doing the translation

And I mean if for example youre saying

that they need to meet emissions rate X what

if they cant meet that with this equipment

Does that mean that they cant install the

equipment

MR BENDER If La Paloma cannot

meet 909 pounds per megawatt hour gross with

the GE equipment is the hypothetical

JUDGE STEIN Yes

MR BENDER Yes then they cant

install that equipment

JUDGE MCCABE So you are forcing

their choice of turbine in effect

MR BENDER Only as a secondary

effect But just like if you cannot meet a

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BACT limit for 802 on a coal fire power plant

wi th a dry scrubber are you forcing the

selection of a more efficient wet scrubber as

a secondary effect Thats true

JUDGE MCCABE Do you think thats

a fair analogy Were talking here about the

main emitting unit and the main unit that

produces the capacity of product that the

facility wants to produce The choice between

a wet and dry scrubber doesnt affect that

MR BENDER Well according to

the region its a category and its not

affecting the category If the category as

a region says is combined cycle turbine with

heat recovery stearn generator then youre not

changing anything You may be foreclosing

business choices that are made later but I

would suggest thats true with every BACT

limit There are choices that a permittee may

want to make but cannot make because they have

to comply with their BACT limit

JUDGE HILL 80 Mr Tomasovic says

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that pointed out that the Siemens

going to get it wrong the Siemens 4 turbine

has the lowest emission limit hourly but that

the GE turbine has the lowest annual tons per

year primarily because its operating at a

lower capacity Is your argument that the

limit that the region should have set have

been the lowest of each of those or is your

argument that they should use the limits that

they got for the most efficient turbine which

was the Siemens 4

MR BENDER I believe that the

BACT limit is the primary driver BACT limit

is the pounds per megawatt hour and thats

the limit that we think that the La Paloma

facility whatever equipment it ultimately

chooses should meet That will result in

different tons on an annual basis but tons on

an annual basis is I would submitt not a

limiting limit It assumes 100 percent

operation You know t itts basicallYt itts

JUDGE HILL Wellt but heres my

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point If Mr Alonso had gotten up and said

its most likely were going to pick the

Siemens 5 or Im sorry the Siemens 4 then

theres going to be more total emissions of

GHGs a lower rate but more total emissions

So by your argument should the region have

had to pick the lowest limit for each of the

three parameters on which they set the limit

And if not why not

MR BENDER We didnt address the

total tons because we dont feel that its

going to limit If they decide that they want

to generate 630 megawatts thats the number

that multiplied by the emission rate is

going to generate the tons

JUDGE HILL But if they had

picked the Siemens 4 or the Siemens 5 they

could be operating at 735

MR BENDER They could be

operating at 735 but there are other things

that go into it obviously your Honor as Im

sure youre aware of when theyre dispatched

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how theyre dispatched And the focus here is

the per megawatt hours because thats the one

that the Sierra Club sees as actually limiting

emissions here because the annual caps are set

such a high rate that theyre not going to

be approached Even the lowest is not going

to be approached

JUDGE MCCABE Let me bring you

back to this table thats I dont know if

you have it Its page 11 of the response to

comments These numbers are all starting to

sound fungible so lets try to anchor

ourselves again Im looking at the middle

column here that says output-based emission

limit which is net without duct burning And

the GE turbine that limit is 894 and for

the Siemens 4 turbine is 909 Theyre picking

the GE turbine What limit do you want

MR BENDER Well first of all

question the accuracy of these numbers because

some of them are the same as the gross with

duct burning

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JUDGE MCCABE Theyre saying

what

MR BENDER The Siemens F4 number

in that column is the same as the permit limit

for that turbine which is expressed as gross

wi th duct burning So looking at these right

now I suspect that theyre not correct Some

of them may not be correct

JUDGE MCCABE Can we assume for

the moment that these numbers are correct

MR BENDER Yes

JUDGE MCCABE And if that turns

it into a hypothetical question so be it

Im trying to understand where youre going

there conceptually Im looking at a lower

number 894 you know its C02 equivalence of

per megawatt hour without duct burning net

wi thout duct burning Its 894 for the

turbine they want Its 909 for the one that

you were saying was the most efficient

turbine Which limit do you want for the GE

turbine Do you want the 894 or do you want

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the 909

MR BENDER It depends on this

your Honor It depends on whether were going

to set this as the ultimate rate or if were

going to s another limit as the ultimate

rate because this is a part this is without

duct burning right But the permit allows

duct burning So if we say we want 8947

without duct burning and then well leave the

duct-burning caused emissions kind

unmeasured and unregulated as a different

JUDGE MCCABE Okay Go to

next column with duct burning Youve got

9452-shy

MR BENDER Yes

JUDGE MCCABE for the GE

turbine And just a hair under that youve

got 9444 for the Siemens 4 Are you telling

us thats what you want Board to do to

tell the region that that kind of difference

is significant and that they should force this

company when it installs the GE turbine to

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meet the 944 limit for the Siemens 4 Is that

what youre asking us to do

MR BENDER Your Honor if that

if the limits were set based on this as final

enforceable limits based on that Im not

sure that we would be here on this issue

JUDGE HILL So how much of a

margin is too big Because the regions

initial submission is that even with the

limits that they actually set the difference

is 26 percent and thats just not that big

JUDGE MCCABE And looking at

these latest numbers they actually said the

range for all three turbines there was on

that net with duct burning column that the

total range was 01 percent So seeing how

close those numbers are between 945 and 944

thats obviously a lot less than 01 percent

Is that a significant difference that the

agency should be concerned about

MR BENDER The limits were

talking about are the ones in the final

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permit which are gross And they are -shy

JUDGE MCCABE Okay Would you

like to point us to a different table to look

at

MR BENDER Sure Ill point you

to the permit which is Exhibit 1 to our

petition and the permit limits themselves

Because the permits measured we commented

that the region should be looking at net

among other things And the region said no

It made that choice It made this permit the

way it did and so were addressing it the way

it came out What we and EPA and the state

can enforce are the limits and the limits are

what drive what we can count on as enforceable

emission reductions

JUDGE MCCABE Wait a minute You

wanted the limits to be based on net

MR BENDER We commented that you

should look at the net emission rates and the

region said no were going to base this on

gross

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JUDGE HILL Okay But my

question is how do you respond to the argument

the region made in its brief and that Mr

Tomasovic stated here which is okay so the

permits got gross and the difference in these

gross numbers is 26 percent and thats in the

noise

MR BENDER Its not And the

reason why I know that its too big to be

insignificant is that the region thought that

margins even around that for different

pieces because the margin is an aggregate

was significant enough to start bumping the

limit up And when they got to step five

they said thats a big enough difference

between these turbines that we cant expect

the one to meet the limit for another So I

know because its significant enough in step

five that it should be significant enough in

step one to not count them all as you know

the same

JUDGE HILL So your argument so

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if their error was at step one then what

youre really saying is that the GE turbine is

a different technology than the Siemens

turbines

MR BENDER It is a different

let me put it this way Control option in

step one should be the same as control option

in step five As counsel for La Paloma put

it its a sequence right It starts at one

it goes to five and the definition of the

control option stays the same And if and

were saying well grant the argument that

they should be treated as one option in step

one well if thats the case they should be

treated as the same option in step five and

the limit based on what that option as a

whole can achieve But if youre going to

start parsing them the appropriate time to

parse between turbines or in this case

turbine plus heat recovery generator

combination -shy

JUDGE HILL Understood

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MR BENDER is step one so

that we can look at their relative

efficiencies their relative costs what they

do emit at different levels at production

Its got to be one or the other It makes

hash out of the five-step process to look at

one definition of control option in step one

right And then look at a different

definition of control option and start

applying limits in step five Thats the

argument It has to be consistent all the way

through

I think we would get to the same

option or the same result whether we looked at

them in step one as separate or if we applied

the maximum control efficiency for that class

as a whole in step five But you run into

problems when you separate them and thats

what weve done here

JUDGE MCCABE Okay Mr Bender

could we back up again to the question that

was raised by your saying that you preferred

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and said in your comments that you preferred

limits based on gross capacity I was trying

to use the table on page 11 of the response to

comments to try to understand exactly what you

want If theyre picking the GE turbine you

said the limits these are net limits and

gross is a better measure Have you found a

place where I can look at gross limits

MR BENDER For what gross

emissions are relative to

JUDGE MCCABE Is re any place

in the record that we can look to see how

these net limits would be stated as numbers

for these turbines if it were based on gross

Is that in the record any place

MR RICHIE Your Honor if I may

this is Travis Richie Page 16 of the

statement of basis which was included I

believe as Exhibit AA of La Palomas

response I believe has that same table listed

with pounds of C02 per megawatt hour on a

gross basis with duct firing

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JUDGE MCCABE Thank you Mr

Richie So glad you stayed on the phone I

have this Do the other judges have it

Okay Its the same thing Well how are

these different They look like theyre the

same ones that we were looking at on page II

Whats the difference between the gross and

the net rates

MR BENDER Thats what I was

suggesting earlier that Im not sure that

theyre correct

JUDGE MCCABE Youre not sure

which is correct

MR BENDER I dont know

JUDGE MCCABE You dont know

MR BENDER But I dont think the

net and the gross can be the same number and

thats what I was maybe failing to highlight

before

JUDGE MCCABE But whatever the

gross is you would prefer it You just dont

know what it is or youre not sure which of

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these numbers it is is that what youre

saying

MR BENDER Your Honor there has

to be other details in the hypothetical to

know the answer It depends on if were

measuring If were measuring just whats

coming out of the turbines or if were

measuring whats coming out of the stack

because theres another pollution-causing

device in the middle and thats the duct

burner So if were saying whats the net

without duct burning and were measuring it

but were still allowing duct burning its a

different question

JUDGE MCCABE Yes I understand

This gets very complicated which is why

judges usually defer to the technical

expertise of the EPA people that are charged

with this Now in this case lets try to

bring it back to sort of principles that the

Board can focus on more appropriately I was

hoping through this argument that people

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would be able to give us the numbers that we

should be looking at to consider this argument

that I understand the region to be making that

whatever the variation among these turbines is

so close the variation in the heat rates and

accordingly the GHG limits is so close that

it is something that is essentially

equivalent to use one phraseology another

negligible difference marginal difference

Do you agree that these are so close that they

are marginally different or essentially

equivalent

MR BENDER Two answers your

Honor They are not What the permit

includes is the gross with duct burning and

that number again I would say those are

different enough that the region thought

necessary to differentiate between them And

if thats true then its not negligible and

its not inconsequential

JUDGE HILL So let me ask you a

question So if the region had said theyre

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close enough I so weI re going to set the

highest one and if they happen to pick al

turbine that we could limit more closely I

were comfortable with that

In other words I based on that

argument I okay so if the region had instead

concluded they are negligible GE looked good

enough and so were going to set the limits

based on GE And if they pick Siemens I they

get a bennie out of it would you have a basis

for challenging

MR BENDER Yes I for the same

reason Because the record says that 9092 is

achievable And then we have -shy

JUDGE HILL Well but they would

conclude that 909 is not achievable for GE

MR BENDER I think it depends on

what the record is to support that conclusion

And thats not this case and its not this

record

JUDGE HILL So the regions

mistake was setting three different limits

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MR BENDER The regions mistake

was setting three different limits for what it

says is the same control If it had

identified them as three different control

options in step one and you have a continuity

through the rest of the steps and it set three

different limits it would be a different

problem which is BACT is all limit and you

would rank them and set them based on the top

rank control option in step five But again

it depends on what happened in the prior four

steps to be able to say whether that would

have been a mistake or not and thats not

this record and its not the basis that we had

to appeal

JUDGE MCCABE Coming back to the

factual question of the variation in these

emission limits that the region has permitted

for the three turbines Mr Tomasovic

described them it may not be fair to call

this a range but he mentioned numbers that

to my mind ranged from 01 percent up to 27

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percent Is a 01 percent difference

significant enough that the agency should have

to distinguish between them in setting and

distinguish between these turbine models and

force the companys choice Point one If we

just had point one I realize theres a

range but just look at point one for a

moment Is that significant

MR BENDER I think its

contextual And I would say although you

asked that as a factual question I would

point to the Prairie State decision your

Honor

JUDGE MCCABE The what Prairie

State

MR BENDER Because its cited by

both respondents to say when theres a

negligible difference you dont have to

consider them as separate control options

And I think that Prairie State actually stands

for the opposite On page 37 in the footnote

I think its footnote 36 it rejects that

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argument that just equivalency alone is

sufficient to ignore a difference between two

different control options There has to be a

demonstrated equivalency or a negligible

difference and especially if that difference

is based on emission factors or something else

that is inherently also perhaps not specific

So if its based on an emission

factor that has a margin of error that helps

dictate what amount of difference between two

emission rates may be negligible and even if

they are exactly the same thats not enough

to ignore them You have to -shy

JUDGE MCCABE If theyre exactly

the same

MR BENDER To ignore one of the

control options because of the requirement

that you also look at what their collateral

impacts are because two different controls

options may have the same emission limit but

they may have different collateral impacts -shy

JUDGE MCCABE Thats absolutely

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true of a control option but were talking

about two different turbines here If the

turbines had the same limit would we be here

If they had the same GHG limit

MR BENDER If they had the same

GHG limit and it was -shy

JUDGE MCCABE Because thats just

the way they say that was the manufacturers

the vendors number and EPA permitted it at

that number and there was no comparable that

showed a bet ter performance why on earth

would we require them to distinguish between

those What practical difference would that

make

MR BENDER In this record and to

my knowledge there is no other distinction

between them other than emission rates But

if youre saying hypothetically the emission

rates are all the same -shy

JUDGE MCCABE No Im simply

following up on what you thought Prairie State

stood for that even if things are the same

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you cant ignore the di f f erence I just think

were doing apples and oranges here because

in Prairie State if I recall correctly and

maybe Judge Stein can help us out with this

I think they were comparing you know much

larger differences

Here Im concerned that were

getting down in the margins We are getting

dangerously close to micromanaging here on

what this GHG emission limit should be So is

o 1 percent micromanaging Is that a

difference that we dont need to worry about

Is 05 percent -- 27 percent obviously is too

much for you You think thats over the level

of significance Were wondering where is

that level of significance in difference And

Im not talking about the exact numbers Im

talking conceptually here Thats why I used

percentages to iron it out

If the range of differences

between these two turbines and their GHG

emission rates ranges somehow and depending

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on how you calculate it from 01 percent to

27 percent why should we worry about this

Why should the region be required to

distinguish

MR BENDER Your Honor the

equivalency of emission rates is an issue or

a concept thats tied together wi th the

topdown BACT analysis process and that was in

Prair State Thats the point of that

footnote that I cited to If you did this

again this is not what was done so in the

hypothetical if they had ranked them as

separate control options and they had assigned

emission rates and there was somewhere

between I think it was 01 in your

hypothetical difference and there was no other

collateral impacts differences between them

would that be enough to say -- and it was not

and it was based on you know some emission

calculations that themselves have some

variable in them I think in that

hypotheti this would not be the issue for

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appeal It wouldnt be because you know

were assuming were assuming away all of the

problems with this particular decision which

is theyre not treated as separate theyre

not distinguished in the first few steps we

dont know if theres collateral impact

differences and theres no record made to

support those findings at each of the rest of

the steps

JUDGE MCCABE So is the critical

piece of your argument that they didnt

differentiate between the turbines at step

one Is that really what Sierra Clubs

concerned about

MR BENDER If theyre going to

differentiate between them in step five they

need to differentiate between them in step I

guess it would be one through four because

then wed have an opportunity to look at

whether or not there are differences in

emissions at that point and under what

scenario and everything else that goes into a

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five-step BACT process And that was just

shunted all to the side and we only looked at

the difference between them when we got to

step five after the opportunity to address all

those other issues had passed

JUDGE MCCABE Okay Lets turn

quickly because Im watching your flight time

here to solar Is it your position that

solar is feasible on this site Supplemental

solar as youve described it And if so

please explain how

MR BENDER Your Honor the

comment was step one you need to cast as big

a net as possible to identify potentially

feasible available and applicable and we

say yes its available its applicable Is

it feasible Well we dont know the acreage

They say 20 We dont - - because we never got

to this

JUDGE MCCABE Theres a site plan

in the record isnt there

MR BENDER There are some maps

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in the record We dont know

JUDGE MCCABE Have you looked at

them

MR BENDER Ive looked at some

of the maps in the record yes

JUDGE MCCABE Have you looked at

the site plan

MR BENDER Im not sure -shy

JUDGE MCCABE The site plans

shows where things are situated on the si

where the turbines will go and the other

equipment what the footprint of the si te is

how much space is open or not

MR BENDER Im envisioning a

color map with I think that information

JUDGE MCCABE Mine is not in

color but I saw one like that Have you

looked at that and considering that is it

feasible And Judge Stein please add your

question

JUDGE STEIN If these maps show

or you can deduce from whats in the record

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that what is at play here is approximately 20

acres do you still contend that solar is

ible at this site

MR BENDER I would say to the

extent its scalable its feasible Whether

its cost effective and whether it achieves

emission reductions I dont think I dont

know and I dont think any of us know and

thats the point Thats why you go through

the five steps because you gather that

information at the later steps It was -shy

JUDGE STEIN So Im sorry

Finish I didnt mean to interrupt

MR BENDER It was excluded from

step one as not as redefining the source

And I think it would be inappropriate to

assume fact findings from what we have the

limited amount of information we have in the

record to say it would necessarily be rej ected

in the following steps unlike in Palmdale

where the issue of incremental increase was

looked at and the record was clear that there

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was zero space And the difference between

zero space for no addition and where to draw

the line when theres some space but it mayor

may not be enough to make it feasible cost

effective and everything else is something

that needs to be done by a fact finder with

the public input

JUDGE STEIN But how much effort

and work must a permit applicant go through

when theyre primarily building a particular

kind of plant and theres fairly limited

space I mean do they need to go do a I

scale investigation and develop models

space if what youre dealing with is a very

small area I mean thats a question Im

struggling with because you know this is not

lmdale and I dont buy the characterization

what Mr Alonso said about what Palmdale

stood for in terms of redefining the source

But I am troubled by what may be in the

record perhaps not as fulsome as someone

would like but there may be sufficient

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information in the record to establish that

theres only a very limited amount of space

there And if thats the case are you still

insisting that people do a full-scale analysis

of solar under those circumstances

MR BENDER I think that when

you get into the later steps two three

four the scale of the analysis is probably

relative to you know some reasonableness

right But in step one the whole point is

you cast the net and then you start doing that

analysis And it would be inappropriate to

start making assumptions because we dont

agree with all the assumptions in La Paloma

about hurricanes about other things and wed

like the ability to develop the record in

response depending on what is said about

feasibility

But feasibility wasnt discussed

until the response to comments And then it

was discussed as not not that it was not

technically feasible but it was redefining the

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source And based on in our mind in one of

the main reasons that we brought this appeal

is based on a very problematic definition of

redefining the source

JUDGE HILL Mr Bender the region

argues that Sierra Clubs comments on this

didnt ly raise this issue to any level of

specificity that youre now raising it in your

brief or here How do you respond to that

MR BENDER When they say that

they point to one of the multiple comments

looking at solar hybrid And they say it was

mentioned as an al ternative to duct burning

in addition to other things that could be

looked as alternative to duct burning

Earlier in the comments is the Palmdale

permit and the C02 BACT emission limit saying

its conservatively lower they get that and

they get a chunk of it from solar you need to

look at solar because its available its

applicable it meets the step one criteria

lets look at it And that I s what was

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ected

Elsewhere we said instead of

duct burning did you consider these other

things And yes theyre talking about the

same concept but theyre talking about two

different areas So its inappropriate to

look at only one comment and say well that

one comment about solar didnt raise this

other issue when the other comment did

JUDGE MCCABE Are you suggesting

that permitting authorities whenever theyre

faced with a PSD application by someone who

wants to build a power plant have to analyze

solar in all cases if theyre not proposing it

to begin with

MR BENDER Solar hybrid in a

combined cycle plant when it I S raised by the

public-shy

JUDGE MCCABE Okay And that -shy

MR BENDER Then the region has

an obligation to look at it

JUDGE MCCABE Expand on that

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please What do you mean by look at it

MR BENDER Include it in step

one or deem it redefining the source based on

a correct interpretation of redefining the

source And here it was an incorrect

interpretation of redefining the source It

should have made it into step one when raised

by the public And to go to your question

Judge Stein how much detail they need to do

to develop whether to reject it in later

steps I would agree theres some

reasonableness to it But I dont agree that

even assuming that 20 acres is all that there

is that we can say based on this record

that its reasonable that thats not enough to

generate solar

JUDGE STEIN But if you have a

circumstance where the BACT analysis has been

done the regions looked at it theres been

back and forth between the permit applicant

and the permittee I mean and the region

they proposed the permit for comment and a

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comment comes in about solar youre

suggesting that they have to go redo the BACT

analysis or cant they simply respond to the

comment by saying on this particular site on

these facts we dont think solar is feasible

for X Y and Z reason

MR BENDER Thats different than

the answer here

JUDGE STEIN Why is it different

than here I mean I understand what the

region did in its analysis of redefining the

source you know didnt do exactly what Im

describing here but Im concerned about

taking us to a place where in responding to

a publ ic comment where there may be an answer

that you have to go back to square one on the

BACT analysis because I dont think you do

I think you need to respond to the comment

I think you need to respond fairly to the

comment But wed never I mean how in the

world would we ever get a permit out if every

time theres a public comment that relates to

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the BACT analysis youve got to go back and

redo the BACT analysis Yes t may be

cases where you need to supplement it but I

dont think we go back to square one

MR BENDER Well two responses

your Honor Here we had raising solar in the

context of another facility a similar

facility that has solar hybrid and has a

permi t wi th lower limi ts Thats the context

So to the extent were talking about you

know how much or how real does this have to

be to generate a more substantive response

thats the context

In Knauf Fiberglass I believe Kshy

N-A-U-F however thats pronounced

JUDGE MCCABE Knauf

MR BENDER Knauf Fiberglass

The first the 1999 decision a comment was

raised another production process for

fiberglass The response was thats

proprietary to a competi tor We dont have to

look at it because well reject it later

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anyways so you know why look at it And

the Board reversed and said you cant preshy

judge Thats the point of the process You

cant pre-judge the process Go back look at

it and make a record so we know and the

public knows that you really did look at it

and you really did document your analysis and

we know you did your procedural job

Thats what should be done here

and it follows that precedent And I would

suggest if its distinguishable this is even

a clearer case than Knauf because its not

proprietary that we know of You can go out

and buy it So to the extent theres a line

this is even further on the petitioners side

of the line

JUDGE MCCABE Mr Bender Im

worried about your plane If you would like

to take a minute to just wrap up please do

And then we will let you go on your way Its

getting late

MR BENDER Sure Thank you

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your Honors I and thank you for the opportuni ty

to address these issues From Sierra Clubs

perspective this is an important permit tol

get right on these issues raised And there

are other issues that were commented on l

potent lyother issues that could have been

raised You know I dont want to suggest

that Sierra Club loves this permit even if

its corrected but this issue of what you

have to consider and how you consider

efficiency and how you consider supplemental I

in this case solari that helps improve the

efficiencyof a plant is critically important r

especially as we start into greenhouse gas PSD

permits and getting the definition of what is

the control option were looking at correct

and making sure that thats consistent all the

way through the process and that were

correctly addressing efficiency Its going

to be critical especiallyuntil we develop an

end of the pipe technology that facilities

s installing

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142

The other is this now perennial

redefinition of the source issue I

understand the Boards prior precedents and

in some cases unfortunately theyre being

applied incorrectly And this is one of those

cases And when that happens its important

to correct it make it clear and give guidance

to not only Region 6 but other permitting

authorities what redefining the source means

and whatit doesnt mean And here it doesnt

mean that if a control option is not within

the two-sentence description of the

application of the project purpose that it

cant be considered because that opens a door

to all kinds of problems not just greenhouse

gasses but every - - I mean and SCR al so

wasnt in that two-sentence description

Thank you your Honor

JUDGE MCCABE Thank you very much

Well thank you all for your presentations and

for your valiant efforts to answer our very

often detailed questions

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I would make one observation that

theres such factual confusion l at least in

the argument around the issue of how do we

compare apples to apples with the emission

numbers that we really should be looking at

for these turbines that there is a

possibility and I regret to say this because

I know its a PSD case and we are in a big

hurry but theres a possibility that we will

ask you to do a supplemental briefing on that

or ask you all perhaps to confer to get on one

sheet if its possible to give us some basisl

comparison so that we have the facts

straight in our opinion It is a lot to ask

judges like us We have some technical

training l but we are not engineers I and it is

really quite difficult for us to understand

which numbers we should be comparing to which

here

We will however make a valiant

effort to go back and to see if we can figure

that out And weill only ask you to do a

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supplemental briefing if we think its very

necessary If we do do that we will get to

you quickly on that because we do intend to

move quickly on making this decision These

are not easy issues They are important

issues and we take your point Mr Bender

that as we are entering the world of GHG BACT

permitting we do need to be careful about

what precedent were setting But we also are

very very cognizant of the need for speed

here because we dont want to hold up the

building of something that should proceed

unnecessarily

So with that well take this

matter under submission with the caveat that

you may get a request for a supplemental

briefing And we will wish you all

travels home those of you who are traveling

far especially And good luck catching that

plane Mr Bender

(Whereupon the foregoing matter

was concluded at 547 pm)

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assert 567 5022 5412 5514 10922 113321 114519 137314 assign 63 19 69 10 581578198911158 1165 1171 baseload 15 1922

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Neal R Gross and Co Inc 202-234-4433

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C E R T I F I CAT E

This is to certify that the foregoing transcript

In the matter of La Paloma Energy Center

Before US EPA

Date 02-12-14

Place Washington DC

was duly recorded and accurately transcribed under

my direction further that said transcript is a

true and accurate record of the proceedings

Court Reporter

NEAL R GROSS COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE NW

(202) 234-4433 WASHINGTON DC 20005-3701 wwwneairgrosscom

Page 7: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us

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representative of a company with you

MR ALONSO Yes Im sorry This

is Sandra Snyder with Bracewell also

representing La Paloma and we do not have any

travel restrictions tonight

JUDGE MCCABE Thank you And

from the EPA side

MR TOMASOVIC My flight departs

at 8 pm

JUDGE MCCABE All right Then I

think we should have plenty of time Weve

scheduled an hour and a half for this We

will try our best to get you out on timel so

you can run for the airports Snow is not

supposed to begin until later this evening

We are doing this slightly

differently than our normal procedure because

this is a status conference as well as an

expedited oral argument As usual well go

ahead and allocate one half an hour

approximately to each party But the order

the parties will be slightly different than

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usual

We will start in this case with

the permitee with La Paloma Energy Center

who I will refer to briefly as La Paloma I

suspect the other judges will be doing that

too for the record Because we have some

status questions for you which I assume will

not surprise you given our scheduling order

Those answers to those questions may inform

the rest of the discussion that we have here

today so we thought it best to begin with La

Paloma

Normally of course our practice

would be to begin with the petitioner the

Sierra Club So in this case Mr Bender Im

going to give you your choice as to whether

you would like to go second or third Some

people like to have the first word some

people like to have the last word

You also have the option if you

choose to go second after La Paloma to

reserve five minutes of your time for rebuttal

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after EPA What would you like to do

MR BENDER I I 11 combine both and

do it all together

JUDGE MCCABE Okay Thats the

way weIll proceed then WeIll begin first

with La Paloma

mentioned l if we didnt we should have in ourI

order to you l were not expecting you or

asking you to make any formal presentations

today I as you would in the normal oral

argument

In the interest of timel please

presume that weve read your briefs l that

were famil with the records And in the

interest of saving time and getting you out of

here weld like to focus right away on the

judges questions If you have anything that

you would like to say very briefly first l

thoughl please 1 us know that and feel free

Mr onso

MR ALONSO Thank you Judges

And we just want to first start off by

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recognizing and thanking you for expediting

this appeal I believe the briefs were

submitted on December 27th and the Board

reached out to us just a couple of weeks later

to schedule this argument So were really

appreciative of that We are prepared to

answer your questions presented in your order

as well as any other issue thats before the

Court

As to your first issue you asked

us to report on the status of the projects

First 1 me address the construction time

line We currently have all government

approvals that are required for pre-

construction as well as agreements that we

need wi th governments We have tax agreements

that were completed We have a water supply

agreement with the local water works We have

land agreements in place We have our TCEQ

Air Permit that was finali in February of

2013

The two main components that we

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are missing right now is number one

financing Financing is contingent on

receiving a final PSD permit Once we receive

a final agency action on the permit we expect

to close that financing in short order right

ter that

As far as construction we have in

EPC the engineering procurement and

construction contract completed That was

executed in September of 2013 So shortly

er this closing we can start construction

shortly right after that That was wi th

Bechtel Power Corporation and again they are

standing by ready to start construction

JUDGE MCCABE Most importantly

Mr Alonso could you address whether youve

selected your turbine yet

MR ALONSO Yes we are prepared

to talk about that We have preliminarily

identified the preferred turbine that we would

like to install at this site It is the GE

7FA turbine However we are currently

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various escalation clauses of our existing

contracts including for the turbine in the

sense that we have planned to be done with

this process on January 1st Not just the

contract for the turbine but for other

components of the site every day that goes on

the cl is paying escalation fees on that

contract

JUDGE MCCABE So do you have a

turb contract or not

MR ALONSO We do have a spot for

manufacturing of the turbine

JUDGE MCCABE So is that like

reserving a place in case you decide to put in

your order

MR ALONSO Correct And that

deadline is April 1st On April 1st we have

what happened ter January is that we

negotiated our escalation clauses through

April 1st Come April 1st I think that the

weIll come April 1st I we would have to

renegotiate that contract And most likely I

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we can maybe even consider selecting one of

the other turbines that are in this permit

So if we dont have a final permit

in the next you know -- and Im not putting

any pressure on you guys but as of April

1st I think that the well I know the

developer would like the flexibility to

install anyone of these three turbines

JUDGE MCCABE Im not sure Im

completely following you What happens -shy

lets try it this way What happens if you

get your permit tomorrow

MR ALONSO If we get our permit

tomorrow we would close our financing a

couple of weeks later and we could start and

then we would put in a notice for the

procurement finalizing the GE 7FA turbine

contract

JUDGE MCCABE And how soon could

that happen or would that happen

MR ALONSO That would happen

upon closing and we would -shy

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JUDGE MCCABE So are we talking

about a week two weeks a month

MR ALONSO Yes My

understanding the information that I have is

that closing can happen in its a matter of

weeks a couple of weeks after we receive a

final permit

JUDGE MCCABE Okay So when you

say youve preliminary picked this GE 7FA

turbine -- can we just refer to that as the GE

turbine

MR ALONSO Sure

JUDGE MCCABE Its the only one

right thats a GE Okay Well call this

the GE turbine Youve preliminary selected

that If you get your permit tomorrow is

there any reason that youll change that

choice

MR ALONSO Most likely not If

we get our permit tomorrow if we get it

before April 1st we are probably we are most

likely yes going to select we are going to

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select the turbine

JUDGE MCCABE Okay If you get

your permit before April 1st you will select

the GE turbine is that correct

MR ALONSO That is yes

JUDGE MCCABE And my

understanding of this turbine is that its the

smallest of the three and according to heat

rates the least efficient the one to which

the region has assigned the highest GHG

ssion limit is that correct

MR ALONSO That is correct

JUDGE MCCABE Okay That will

very much inform the rest of our discussion

Thank you Mr Alonso Do you know yet

another question on your preparation here do

you know yet where the facility will be placed

in the ERCOT dispatch order and whether it

will be operated as a baseload or load cycling

facility

MR ALONSO Our plan is to

operate this as a baseload uni t However we

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will respond to the ERCOT orders as they come

I mean in Texas our business plan is to

operate this as a baseload unit

JUDGE MCCABE Does ERCOT give you

any preview of that

MR ALONSO Excuse me

JUDGE MCCABE Does ERCOT give you

any advanced notice as to whether youre going

to be likely operated as a baseload or not

MR ALONSO Our intention is to

operate it as a baseload Im not qui sure

about we can follow up with you on that as

far as ERCOT notices Im not prepared to

talk about the ERCOT notices But to the

extent that ERCOT manages dispatching we will

comply with their orders

JUDGE MCCABE Okay And you

expect at this point based on current

condi ons which I understand can change if

other plants come online or other things

happen you expect based on current

conditions that youll be dispatched high

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enough in the order that this will be a

baseload plant and therefore it will be

operated at 100-percent capacity

MR ALONSO Pretty close to it

JUDGE MCCABE On a regular basis

MR ALONSO On a regular basis

we would like to have you know utilize this

as much as possible Keep in mind though

while we do have the you know as an EPA

administrative record yes larger turbines

may be more efficient But at the end of the

day they also have higher mass emissions

And so when you look at it from an

environmental perspective to the ent that

an environmental impact plays into that the

environment really feels the impact of the

mass limit more than anything else I believe

JUDGE MCCABE Understood Okay

Can you tell us a little bit about what was

the chief factor that drove the companys

selection of the turbine how important was

the capacity or size for example

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MR ALONSO I dont know the ins

and outs why they selected that turbine

I believe its just commercial terms It was

the better commercial term -shy

JUDGE MCCABE Would you like to

consult with your client at all to see if you

can clarify that answer

MR ALONSO Sure Shes here

JUDGE MCCABE This may help you

Some of the questions that were also

interested in are how important was the

capacity or size the uni t in terms of your

decision to s the GE turbine and how do

the relative heat rates or the GHG emission

rates affect decision Did they affect

that decision if its made

MR ALONSO The way that this

project was developed is that we went out for

competitive bids of at least three turbines

And based on the necessary heat rate the

forecast of demand that was the basis of the

select ion It was not based on you know any

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other factors except for trying to meet the

purpose of the proj ect which is to supply the

load and the heat rates and the financial

arrangements that resulted from that bid

process

JUDGE HILL Was that forecast of

demand strictly internal or was it something

dictated by either EReOT or some other

external entity

MR ALONSO La Paloma is a

merchant power plant Wei re not regulated so

its not that wei to extent that your

question is to whether or not we had any

regulatory oversight -shy

JUDGE HILL Or just external

information or some sort of external driver

I guess

MR ALONSO me consul t wi th

- sorrYI I just wasnt prepared

JUDGE HILL No thats okay

MR ALONSO So specific

questions Okay

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JUDGE MCCABE But we appreciate

your corning

MR ALONSO But Im glad that

Kathleen the proj ect developer Kathleen

Smi th is here wi th us today When you develop

these projects yes they went out they had

third party evaluations of load demand and

what would fit for this market absolutely

JUDGE HILL Okay

MR ALONSO I mean its -shy

JUDGE HILL Let me ask one other

follow-up You said at the very outset Mr

Alonso that you had preliminarily identified

the GE turbine and the record before us is

that certainly at the time of the application

that decision hadnt been made Im not

asking for a specific date but roughly when

was that determination made relative

because Im curious how it relates to this

proceeding

MR ALONSO So again we made

the selection based on closing in January but

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the selection of the turbine was made in

August expecting to be you know

manufactured and installed in January So to

answer your question it was August of 2013

JUDGE HILL Did you communicate

that to the region at that time

MR ALONSO No because again

because of the timing of this permit it is a

preliminary determination At that time in

August if we were 100-percent certain that we

would get a permi t in January sure we

probably would have you know told the region

and maybe the final permit may have looked

differently But we couldnt put our eggs

all our eggs in that one basket at that time

JUDGE MCCABE What was your

understanding Mr Alonso of what the region

planned to do once you made your turbine

section Will they revise your permit or

leave in those three original limits

MR ALONSO We have a special

condition in the permit that requires that La

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Paloma submit an amended permit application to

remove the other two turbines that are not

selected from the permit So it would be a

deletion of the two other turbines that are

not selected

JUDGE STEIN Why if youve made

the decision to proceed with this particular

turbine if you receive your permit within the

time frame that is necessary for you would

you be revisiting that question if you dont

get the permit until May

MR ALONSO If we -shy

JUDGE STEIN Just hypothetically

if you get the permit a month after why is it

that suddenly thats an open question again

Im having difficulty understanding that

MR ALONSO Correct Our current

negotiations on the escalation clauses of the

contracts we have currently negotiated terms

through April 1st At that point youre

right we would have an option to negotiate

further or more likely than not we could we

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might go through another bid process to

determine whether or not maybe another turbine

might be more beneficial from an economic

perspective to install

JUDGE STEIN Thank you

JUDGE MCCABE Just to make sure

the record is clear on this though at this

point youre telling us that if the company

gets its final PSD permit from EPA before

April 1st it will be the GE turbine

MR ALONSO That is my

understanding

JUDGE MCCABE Okay Would you

like to qualify that statement

MR ALONSO Right The problem

is that again we cannot make a final

decision on the turbine until after we get the

permit because youre only going to reserve

your place line for a certain amount of

time at the manufacturing plant

JUDGE MCCABE But if you get your

permit tomorrow or anytime before April 1st

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or perhaps you need a week advanced notice

then you would be choosing the GE turbine We

can rely on that

MR ALONSO Yes

JUDGE MCCABE Is that correct

MR ALONSO More likely than not

we will be selecting that turbine

JUDGE MCCABE When you say more

likely than not or preliminary then Im not

sure what youre telling me Mr Alonso

Which is it Will you have that GE turbine be

your selection

JUDGE HILL What else might

prevent you from going ahead with the GE

turbine if there were a decision before April

1st is another way to ask the question

MR ALONSO To maintain

flexibility I mean thats one of the

purpose were here I mean if we get a call

tomorrow from Siemens saying that theyre

going to give us the turbine at five cents

maybe wed go with the Siemens

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JUDGE MCCABE So price matters

MR ALONSO Absolutely

JUDGE HILL Price really I I meant

but

MR ALONSO The likelihood of

that is minimal

IJUDGE HILL But let s explore

that for a second because it sort of takes us

to the other direction So if you so ifl

Siemens were tOI you know I mean I and I can

certainly relate to this 11m trying to do

some home maintenance But so they come in

with a bid youre not expecting l and you saYI

You know what That I s the one we should go

with thats going to be one of the larger

turbines So what will happen in terms of

your demand forecast or I I meanl how will you

operate that plan

MR ALONSO It may not fit the

business plan at the time I meanl we would

like to maintain the flexibility of selecting

the turbine as much as we can in this final

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permit Everything is in place that if we

were to get a final permit tomorrow that the

GE turbine would be used However we still

want I dont want to tell you that its 100shy

percent guaranteed We would like to maintain

that flexibility

JUDGE MCCABE But you understand

s your very desire to maintain that

flexibility that leads us all to be here

today right As I understand it the main

issue that the petitioners have with the limit

that was chosen in this case is the fact that

you are reserving flexibility to make this

choice after you get your permit

MR ALONSO But the limit is the

limit doesnt satisfy region as appropriate

and valid under BACT What the permitee is

arguing here today is that somehow we start

off with a class of control devices The

region has identified combustion combined

cycle turbines as a control class That is

your step one BACT is an evolution all the

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way through step five Once you get to step

five the purpose and the intent of step five

is to impose an emission limit looking at

those control devices and its not just

combined cycle We have a whole list of

technologies that were identified by the

region that apply to each of these turbines

At that point you look at the

ssion unit and you develop a unit-specific

emission rate that reflects the technology as

its supplied to that particular emission

unit

JUDGE MCCABE Dont you also look

at comparable units located at other

facilities when the permitting authority makes

that decision

MR ALONSO Absolutely You look

at technologies at other through the

clearinghouse and other technical information

That is your step two analysis absolutely

JUDGE MCCABE Then why wouldnt

you look at other turbines that are available

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MR ALONSO Im sorry

JUDGE MCCABE Then why wouldnt

you look at these other turbines that are

available

MR ALONSO You look at the other

turbines as - - well f are you saying the other

turbines that are mentioned

JUDGE MCCABE The Siemens

turbines

MR ALONSO The Siemens turbines

and the GE turbines have the exact same

technology installed Again at the end

and Siemens does not make the identical

products Theres going to be some

variability amongst those products and I

would argue that the actual impact of these

units or these emission rates arent that

off from each other But in step five the

region looked at the turbines and looked at

as this board has approved in the past and in

particular in Prairie State the ability to

take into consideration operational

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variability compliance headroom and other

factors made to ensure that the BACT limit at

the end of the day is workable and something

that can be achievable from a compliance

perspective

JUDGE MCCABE Mr Alonso wed

like to go on to that subject of the relative

heat rates and therefore the GHG emission

rates of these three turbines But before we

leave the subj ect that we are on of the

criteria that the company used perhaps past

tense or might in the future if something

unexpected happens use in the future to

select the turbine I heard you say two

primary things And I know were several

beats back on the questioning now But I

heard you say the forecast of demand how much

power you can 1 -- Im sure where ERCOT

will dispatch you is part of that equation -shy

and the heat rates Are those the two most

important factors to the company in selecting

the turbine Price obviously has something

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to do with this too

MR ALONSO Yes I mean and the

result of the bidding process and how that

and the third-party analysis of the energy

demand and everything else Absolutely

JUDGE HILL So are you really

saying to a large extent price is the

primary driver

MR ALONSO No not necessarily

I mean its what fits for this particular

you know looking at the forecast -shy

JUDGE HILL But its the balance

of price to demand to efficiency

MR ALONSO Sure Im sure

There is a cost component to this but its

not a cost component as specified in step four

of the BACT analysis

JUDGE HILL No Im not doing

BACT right now Im talking about just the

decision of which one to install

MR ALONSO Sure Its a

business decision and the product developer

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would like to maintain that flexibility At

the time the permit was submitted we

concurrently went and did basically a dual

process of trying to get a PSD permi t and try

to come to terms with all these agreements

whether the turbine or your tax agreement

your water use agreement And thats why our

initial application had three turb s in it

To say that we had to do I that

work up-front and then wait another two years

to get a PSD permit it would really delay the

proj ect and lose a window opportunity

currently right now at ERCOT where there are

some energy constraints in Texas This is a

very good time to build a gas-fired power

plant in Texas

JUDGE STEIN I want to follow up

Are you -shy

JUDGE HILL Yes yes

JUDGE STEIN I wanted to follow

up on your decision of the ous steps of

the BACT process I understand your wanting

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to have flexibility to the last possible

moment At the same time ordinarily in the

step two analysis you would be looking at

whether technologies are available and

applicable And if somebody was going to

drive the company to say you should build a

size thats too small or too large its my

understanding that there would be an

opportunity at that point for commenters to

explain why a different size unit might be

appropriate and you in turn would have an

opportunity to say well that doesnt work

for us

But by keeping the flexibility

until the end of the process my question is

whether you have deprived either citizens

groups or other comn1enters of the opportunity

to meaningfully comment at an earlier phase of

the process And therefore by keeping your

flexibility to the last moment you are

perhaps you should assume the risk for having

done that

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I mean in pio Pico we briefly

talked about the sizing issues Weve

acknowledged I understand your points on you

get to pick the size But if you pick it so

late in the process that nobody else can

meaningfullycomment notwithstandingthe size

you want to pick if you pick it a little

bigger its much more efficient how can that

happen if you wait until the end the

process to choose to say what technology you

the company want to go with

MR ALONSO First of 1 you

know recognizing BACT and step two Im not

aware of any precedent in PSD permitting or

from this board that somehow size and

itself is a control device Step two and to

a certain extent I step one is to identify

control devices you know technology that

would be applied to a given emission unit or

a given source And I believe that its been

pretty well established that the permittee has

a lot of flexibility in deciding the design

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factors in how the plant is designed I

would you know ask the Board to consider

that size is not a control device its more

a design criteria that is used by permittees

when they go to design a source

IJUDGE STEIN Yes I m not

thinking of size as a control technology I

see the control technology as combined cycle

turbines But when you look at combined cycle

turbines youve looked at three different

models They have different efficiencies We

can get later people can tell us whether

theyre comparable or theyre not But if the

company is headed towards a particular

efficiency and the agency or other commenters

think they should be headed elsewhere that

this particular technology combined cycle

turbines can get you a more efficient

process where in the process are they

supposed to raise that

MR ALONSO They could raise that

in how the technologies are defined and

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developed in step two

JUDGE MCCABE You may be hurting

Mr Richies ears doing that so

MR ALONSO Sorry sorry Region

6 identified roughly four different energy

efficiency and processes or practices that

apply to the class of this technology which

is a combined cycle class The public has

full opportunity and they had in this permit

to comment on exactly that whether its

installation whether its installing an

efficient heat exchanger design economizer

exhaust steam These are the control devices

that apply to the class of technology which is

whats known as combined cycle

That list today is what we have

today That list was different ten years ago

and its going to be different ten years from

now because BACT evolves That is where the

public has its say

To set a one-level you know all-

combined cycle must be 90 the 9092 pound

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I Iper C02 megawatt hour that s not BACT BACT

is set on a case-by-case emission unit-

specific basis What Sierra Club is basically

asking this board to consider is taking that

one limitl the 90921 and apply it to two

other totally different combined cycle

turbines I and I dont see that as what is

intended by BACT

JUDGE MCCABE That brings us to

an interesting question Can the GE turbine l

which you are most likely to select l to quote

you l achieve the GHG emissions rate that the

region established the Siemens turbine

MR ALONSO First of all weI

think that to require the GE turbine to meet

that limit would be asking the permittee to

over comply with an adequately-developedBACT

limit We dont think -shy

JUDGE MCCABE 11m asking you for

a factual answer l Mr Alonso

MR ALONSO From a factual

question l I mean l 1 1 m not

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JUDGE MCCABE Would you like to

consult with your client

MR ALONSO Yes okay We are

not prepared at this time to say 100 percent

whether or not we can meet that limit What

we would have to do is possibly de-rate We

might have shy

JUDGE MCCABE Possibly what

MR ALONSO De-rate the unit

JUDGE MCCABE De

MR ALONSO The unit may be not

at its maximum capacity

JUDGE MCCABE What would that do

Explain that

JUDGE HILL You mean run it

greater than capacity

JUDGE MCCABE Yes he means if

they de-rate it that they would operate it at

less than its 1 capacity What would that

do to your heat rate

MR ALONSO Probably not much

But they would have to do something

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operational to unit to basically comply

with that limit Plus we would not have the

compliance headroom that was developed for

degradation factors We might be able to meet

it day one but who knows in ten years And

just operation flexibility It would be

really difficult to commit to that limit

JUDGE MCCABE Let me see if Im

understanding you correctly I hear you say

that de-rating it would be one option to meet

that GHG emissions limit because its a total

limit even though your efficiency rate would

clearly go down if you de-rated it I hear

you saying that option number two would

essentially be to take it out of your

compliance margin which the petitioner has

characterized as generous I believe in its

comments on this permit Are those the only

two ways that the company could meet the heat

or the GHG emission limit that the region set

for the Siemens turbines in using the GE

turbine

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MR ALONSO I mean we can follow

up wi th the Board on this but to the extent

of whether or not theres other engineering

solutions or modifications to that turbine

that could be done tOI you know l basically

change the design of this unitl I meanl I

think that I s why we went through the BACT

process l though I meanl the end-of -day

emission limit is based on vendor information

that we obtain from GEl and the region took

that and applied the control technologies to

those numbers I and thats how we establish

BACT limits at the end of the day is you take

those control technologies and you impose them

onto the uni t that s supposed to be buil t I youI

work in compliance headroom l and it wasl you

know I and this board is generally deferred to

EPA techni staff on issues about compliance

headroom and whats -shy

JUDGE MCCABE I dont even think

thats an issue on this appeal l so you dont

need to go there

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MR ALONSO Well no no no To

the extent that you said that the Sierra Club

thinks that compliance headrooms are generous

JUDGE MCCABE That was just a

comment They didnt raise it on appeal

MR ALONSO Okay

JUDGE MCCABE But let me ask you

this Mr Alonso Im hearing essentially

that the only two ways that you could that

the company could meet the limit on the GE

turbine would be to either de-rate it in

which case youre not getting the power that

you want out it or to take it out of your

compliance margin which is effectively

somewhat lowering your limit really

But Im puzzled about one thing

Didnt the company in its original permit

application propose to use the average of

propose to set the permit limit at the average

the GHG emission rates or heat rates of the

three uni ts the three turbines And if

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thats the case isnt that an admission that

you can actually meet the more-demanding

emission limit on the less efficient unit

MR ALONSO Let me just say when

we initially submitted this permit

application we used the LCRA permit that

Region 6 had processed and finalized in a

period of six months

JUDGE HILL Im sorry What is

LCRA

MR ALONSO The Lower River

Colorado Authority They permitted a gas

plant in Region 6 It was not appealed to

this board So we modeled it after that

application

JUDGE MCCABE You modeled your

application after theirs

MR ALONSO To a certain extent

because it worked at Region 6 as far as this

averaging It turns out that once between

draft and final LCRA was able to select the

turbine and they selected a turbine The

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timing worked for them given their

development path

JUDGE MCCABE Im sorry You

said they selected theirs between the draft

and final permits

MR ALONSO They did And ir

final permit came out with one turbine But

thats a different project dif

development path

JUDGE HILL Well but I think the

question is youre saying that if you were to

apply the Siemens emission limit to the GE

turbine that that would over comply But if

the permit limit were set at the average of

the three and you would as you apparently are

almost likely to do select the GE turbine

then youre going to meet a lower limit than

the limit that would have been set on the GE

turbine alone So would you have been arguing

that that was over-compliance as well

MR ALONSO I mean the record

speaks for itself I mean obviously if we

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submit a permit application agreeing to a

certain limit we would have to you know

probably shave our compliance headroom But

it doesnt it doesnt I mean the issue

before the Board though I believe is whether

or not Region 6 acted properly in its BACT

analysis of these three turbines of these

particular emission units Whether or not a

unit can over comply or whether a permittee

can take a voluntarily limit to reduce its

emissions I believe thats outside of the

BACT process

JUDGE STEIN But I think what is

inside the BACT process is whether or not the

emissions limit that the region has selected

is in fact BACT And thats what Im

struggling with This case comes to us in a

somewhat unusual setting in that I dont

recall in my many years on the Board ever

seeing a situation and its possible that we

did in which three different emissions limits

were picked for the same unit

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Now Im not saying its not

happening Im simply saying that I dont

have any experience with that And what Im

more famil with is a control technology

being p whether its I you know a

scrubber or something else and within thatl

technology I the company being called upon

through the BACT process to meet an emissions

limit that reflects the best emissions limit

that that technology can achieve

And if the technology is combined

cycle then clearly there are certain sizes

of combined cycle that may be able to achieve

a better emissions than the unit that youre

picking And I dont have a problem with

somebody saying to me well we can I t do that

because of A B and C But my problem is

whether BACT automatically gets picked by

size rather than what the class of technology

is capable of performing

MR ALONSO Again I think two

points as to previous practices I meanl we

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have identified seven GHG permits or Im

sorry PSD permits that have throughout the

country and different permitting authorities

further research identified five more where

you have two or three emission units and all

units have dif rates They range from

California Arizona Florida Oregon North

Carolina So it is an established

practice out there in the permitting

JUDGE STEIN Were those

federally-issued permits or state-issued

permits if you know

MR ALONSO They were well you

know they were all state-issued permits but

some of those were in delegated states such

as Washington the s of Florida so they

are federal permits I agree that I dont

believe that this issue has come before the

Board but keep in mind BACT is a progression

And I think in step one the technology is

combined cycle And you take that technology

and you run it through the five steps But at

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the end of the day in step five if you take

the design of the emission unit thats being

proposed to be installed and you take those

technologies you know the use of rehea t

cycles the exhaust steam condensers the

generator design and all these things apply

to each of the three turbines

And at the end of the day in step

five whats the purpose of step five The

purpose of step five is to take that

progression and look at the emission unit

being proposed and develop an enforceable BACT

limit BACT is a limit based on technology

thats being identified through the step one

through four

JUDGE HILL Thats basically the

three separate applications argument am I

correct

MR ALONSO At the end of the

day we could have possibly submitted three

different applications and you would have had

to - - to do otherwise you would be basically

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setting sort of like an NSPS where you say all

combined cycles need to meet this one limit

across the board No matter where you are l

who you are l which manufacturer you use l what

color your turbine iS you need to meet thisI

limit Thats not what BACT is

JUDGE MCCABE Well the problem

with that analysis of course Mr Alonso isl

that if we take it to the full ent of what

youre suggesting you get to pick the

emission limit according to which turbine you

pick And I dont believe thats what the

permitting authority is supposed to do But

we dont need to debate this issue further

Wed like to turn before we leave

you and go to EPA 1 to the solar issue And my

question to you is is it possible -- again

here were talking facts not legal conclusion

to install some solar-generating capacity

at this proposed facility And what

information in the record can you cite us to

support your answer l whatever that answer is

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MR ALONSO On the solar pre-heat

issuel first of alII solar pre-heat is not a

control device to be identified in step one

Your factual question l can it be inst led at

this ilitYI in a meaningful waYI no We

only have 20 acres left over after we build

this proj ect

JUDGE HILL Is that in the

record

JUDGE MCCABE Is that in the

record

MR ALONSO NO I it is not Its

not in the record because againl what is in

the record is that Region 6 determined that

installing based on this boards precedent l

installing solar pre-heat or using solar as

some type of alternative fuel for this plant

would be re-designing the source

JUDGE MCCABE Well go back to

your explanation about the 20 acres Explain

to us

IMR ALONSO Okay First theres

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the 20 acres There s not enough space I landI

to make solar pre-heat a feasible or economic

technology Palmdale had 250 - something acres I

you know l a vast amount of land

Second l this plant is pretty close

to the Texas coast vulnerable to hurricanesI

Who knows if regulators of local communities

would even let us build such a large solar

field in this areal given the threat of

hurricanes

JUDGE MCCABE Is there anything

in the record for us to look at on that

IMR ALONSO No I again in the

record solar pre-heat is defined aS I would bel

redefining the source And this board has

already ruled on this issue In Palmdale thel

petitioner sought to have Palmdale install

even more solar energy than it already had

proposed and this board said that that wouldl

be redefining the source

JUDGE MCCABE I don I t bel ieve

lthat s what we said Mr Alonso I believe we

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said that redefining the source was clear if

you were talking about making it a 100-percent

solar facility

MR ALONSO Correct

JUDGE MCCABE That is quite

different from what youre talking about here

MR ALONSO Well I point the

Board then to Sierra Pacific In that case

there was a dual fuel plant biomass as well

as natural gas and the petitioner sought to

have the permitting authority to force

installation of solar and this board there

said it was redefining the source

JUDGE MCCABE And what did they

base that on

MR ALONSO Im sorry

JUDGE MCCABE I dont believe

that the Board made such a broad statement

that any time you introduce solar that it

would be redefining the source Do you recall

in Sierra Pacific what the reason was that the

Board concluded that

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MR ALONSO I do not

JUDGE MCCABE Okay Well I

wont make you do that homework right now We

actually know that Go ahead back to if you

would to the factual question because thats

the one were most interested for todays

purposes about whether its actually possible

and what there is in the record that t Is us

yes or no on that

MR ALONSO Okay Well first Il

mentioned that theres not enough land l the

hurricane situation The second issue is

Paloma is not in the renewable business They

doni t have the resources to go out and do

solar studies They would need to retra or

redo their business model in order to look at

alternative energy or renewable energy

JUDGE MCCABE Do they build their

own turbines

MR ALONSO They build gas

turbines yes

JUDGE MCCABE They build them or

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they buy them

MR ALONSO They dont do wind

they dont do solar

JUDGE MCCABE Do they use

subcontractors

MR ALONSO I mean this is

something that they would have to develop as

a business unit and will take time to go out

and get experts hire them on staff or go get

third-party folks Its just not part of

their business plan

JUDGE MCCABE Mr Alonso what do

you think the company responded the first time

the first company was asked to put on an SCR

MR ALONSO They probably said it

was unfeasible

JUDGE MCCABE They probably did

They probably also said they werent in the

business There has to be a first time

doesnt-shy

MR ALONSO No I think that as

far as being in the business I mean theyre

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in the business of burning coal And they

know that they have to put on pollution

control -shy

JUDGE HILL And I think Sierra

Clubs argument would be that La Paloma is in

the business of generating energy as

efficiently as possible in South Texas I

mean put aside the hurricane issue for a

moment but if there were enough land you

know the stated business purpose in the

application is to produce between 637 and 735

megawatts of energy I mean thats the

stated business purpose not to produce it

per se exclusively with natural gas That

may be their preference but Im not sure

thats what the record shows

MR ALONSO I mean the purpose

of citing this plant is to use the reclaimed

water from the municipality as cooling water

Theres also a natural gas pipeline close by

to this facility That is -- and the intent

is to maximize the use of that gas pipeline

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You know shy

JUDGE HILL And that is in the

record

MR ALONSO That is in our brief

JUDGE HILL Okay

MR ALONSO But again I dont

believe that solar pre-heat would even survive

step one I mean youre king about a

redesign the source by forcing folks to

consider renewable energies at a fossil fuel

plant where thats not the intention of the

design And this board has allowed and has

recognized the ability for permit to

define the parameters of their design what

they want to build and I dont think we you

know well you guys can do what you want but

to force folks that want to build fossil fuel

natural gas plants to build wind turbines I

dont know that sounds like -shy

JUDGE MCCABE Do you know if

theres any situation where any permitting

authority has done that in the United States

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yet

MR ALONSO I have not seen a

BACT analysis resul ting in or you know to do

as an alternative particularly in step one

to consider the feasibility of a renewable

project I dont have any knowledge of that

occurring at other permitting authorities

JUDGE STEIN But what about a

hybrid pI I mean I dont think whats

being suggested here is that you convert the

principal purpose of the gas turbines I

think the question thats being asked is

whether any component of it could be solar

and I think what the Board is struggling with

is in a si tuation in which solar is not

already part of the plant design is it proper

or improper to raise questions about that If

so what is the regions obligation

I mean I dont see this as sort

of a black and white issue I see it as

youre lling us theres 20 acres Maybe

thats the record maybe its not That

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may be relevant to how you answer that

question in this case as opposed to some

other case

MR ALONSO It really goes to

whether or not solar or renewable energy

should be considered a control device in step

one And I would assert no its a different

fuel source Youre redesigning when people

go to build solar plants or hybrid plants

even hybrid plants you go in and thats what

you want to build and you have a business plan

and an engineering design for a hybrid plant

and thats what you want to get permitted

But if youre out building a gas-

fired power plant and solar is not a

component I mean nowhere in the record is

there anything about La Paloma interested in

building a solar plant We want to build a

natural gas fire plant and thats the source

that should be permitted not some alternative

design And a hybrid plant would be forcing

basically brand new engineering you have to

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study you know solar rays and the impact

whether or not its efficient in this area

It would just be a totally different design or

engineering effort to design a hybrid plant

versus the plant that were trying to permit

here

JUDGE MCCABE Okay Thank you

Mr Alonso We take your point and you may

be seated And we will hear next from EPA

and Judge Hill will take the lead on questions

for EPA but be resting assured that we will

all have questions for you

JUDGE Let me start by

asking how you pronounce your name so I dont

mess it up

MR TOMASOVIC I will generally

say Tomasovic but

JUDGE HI Tomasovic

MR TOMASOVIC - - Tomasovic is

fine if you want to go old country

JUDGE HILL What do you prefer

MR TOMASOVIC Tomasovic

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JUDGE HILL Tomasovic okay So

this is purely a hypothetical question but

in your experience or in the experience

generally of the region when does a permit

applicant decide what their you know what

their turbine is going to be or what their

size is going to be or the precise design

factors of the source Does it typically

happen before they submit the permit

application after both

MR TOMASOVIC I think it could

be a variety of things your Honor Looking

through historical permitting actions we did

find that there are a couple of cases that

happened before the Board that had permit

structured such as this that had permitted

multiple turbine options You wouldnt be

able to see it from the face of the decisions

and it wouldnt be something that you could

discern from the challenges that were raised

but the Three Mountain Power decision in 2001

is one such example and there was a case

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where a petition was dismissed for being a

minor source permit But clearly on the

face of that decision which was Carlton Inc

North Shore Plant in 2001 it described a

minor NSR permit with multiple turbine

options

JUDGE MCCABE Could you repeat

the name of that one please

MR TOMASOVIC Carlton Inc

JUDGE MCCABE Carlton Inc

MR TOMASOVI C North Shore

Plant

JUDGE HILL Do you have a cite on

that or you said it was dismissed as -shy

MR TOMASOVIC It was 2001 and

it was a published decision your Honor

JUDGE HILL Okay Now my

understanding of Three Mountain Power is that

they allowed for different equipment but they

only specified a single emission limit

MR TOMASOVIC It does show that

in the RBLC sir but we tracked down the

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permit and actually what happens is

different permit issuers will input different

data into the RBLC We gave you approximately

ten RBLC numbers and in almost all those

cases you are going to see different BACT

limits depending on what types of BACT limit

is being assigned

And under the Three Mountain Power

permit that was issued there were multiple

types of limits other than the concentration

limits So the hourly limits the pounds per

hour limits the annual ton per year limits

just as in our permit show that with each

turbine option different limits apply

JUDGE HI And what was the

control technology in those cases or can you

generalize on that I mean one of the things

that makes this a challenging case I think

in part is because the control technology is

I I mean you know is also essentially the

plant design because what youre trying to do

is simply maximize the effici use

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inherently Are those others cases are any

of those similar or are they all about add-on

technologies

MR TOMASOVIC I bel ieve these

days the conventional thing is that for add-on

control technology wi th turbines is SCR For

other limits such as PM and carbon monoxide

youre assigning limits inherent to good

combustion practices inherent to the equipment

that is selected And thats reflected in the

TCEQ permit that was issued for La Paloma in

this case which like ours followed an

application that asked for the flexibility to

consider multiple options And as a

practical matter when the permit writer is

assigning those limits they have to look at

the specs inherent to the turbine in assigning

both the worst case emissions but also those

emissions that reflect whats good operation

on an hourly basis

JUDGE HILL Does the TCEQ permit

have this condition that says that once the

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turb selection decision is made then the

permit is going to be amended to basically

take out reference to the other two turbines

MR TOMASOVI C It does and I

believe that may be a practice that varies by

permit issuer I didnt notice that when I

looked at the Three Mountain Power permi t I

also have on hand a listed RBLC number for a

orida permit in 2000 I didnt notice

provision there

For what we have as a special

condition theres no time set requirement on

when they would need to come in and modify it

Its more of a back-end cost-keeping

requirement where they indicate what their

selection would be and the permit issuer

would simplify the permit so its more

readable enforcement purposes

JUDGE HILL And thats the reason

to do it Because if you take Mr Alonsos

argument kind of to its logical conclusion

then they get to select the turbine and

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therefore they get the limit that applies to

that turb But youre saying that that

condition was put in there just to make the

permit cleaner to read in essence

MR TOMASOVIC Its not the case

as the petitioners have argued that they get

to choose their emissions rate Thats not

what they to choose They get to choose

their capacity they get to choose the

equipment and the various designs of equipment

that we couldnt differentiate for efficiency

purposes in assigning limits for a final

permit

So even as those limits look

numerically different in the permit we have

a technical decision on the part of the permit

issuer that says these are comparable and they

dont implicate a weakening of the BACT

requirement that we decided to assign the

limits this way

LL I want to come back

to the comparable because I think that thats

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an important issue But getting back to this

full issue of basically the selection

decision Sierra Clubs essential argument is

that since the control technology here is

maximum efficiency within a range and given

that La Paloma defined the business purpose as

build a plant thats between the capacity of

the smallest capacity turbine and the largest

capacity turbine that they should have to use

the most efficient control technology which

in this case would be the most efficient

turbine Do you agree Could the agency have

told La Paloma look you can pick whatever

turbine you want but youve got to run it as

if it were the most efficient because thats

BACT Does the agency have that authority

MR TOMASOVIC Speaking for

Region 6 with this permit there are multiplel

ways that I think permit issuers could have

decided to come out in the final permit We

decided l based on the design heat rates the

best data we had for the operational factor

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that would apply to this equipment plus a

consistent safety margin for all three

options that there are these three limits

that come out

And if we chose to express those

limits in their different format for instance

the net heat rate the picture would actually

be qui different So it is a distorted a

bit of a distorted picture to say that GHG

BACT on a gross output basis is the ultimate

measurement of what is efficient

JUDGE HILL Why would it look

different Please explain that further What

would happen if you use net

MR TOMASOVIC So what appears

from the of the permit is that the

largest difference in efficiency is 27

percent In our response to comments on page

II we actually provided the numbers to show

what that dif would look like on a net

basis which is I believe the format that

the limits were expressed in the Palmdale

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decision l as well as even earlier permits

issued by Region 6

And permit issuers do have

discretion at this timel in the absence of

guidance to consider the comments that comeI

in and decide which type of limit is going to

be most meaningful for putting BACT in place

But -shy

JUDGE LL So I cant do math in

my head but Im looking at those numbers So

youve got for the GE turbine the net heat

rate would be 7527 and for the Siemens it

would be 7771 Isnt that about two and a

half percent I or is it less than that

MR TOMASOVIC WeIll I think what

you want to look to is if you can see a 9452I

number -shy

JUDGE HILL Okay That I S the

emission limit

MR TOMASOVIC -- and the 9444

number

JUDGE HILL And then a 965

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number

MR TOMASOVI C I f you were to ask

what the percent difference is there you

would have one-tenth of one percent of a

difference which expressed as gross shows

up as 27 percent And this is one of the

challenges with such a narrowly-written

petition It didnt challenge the reasonable

compliance margins that we assigned to each

option and it doesnt bring up issues like

the start-up emission limits which in factiI

give a different rank order if you could usel

that terminology for each of the turbine

options

JUDGE HILL All right So are

you saying that if you I mean I based on thisI

chart on page 111 that I I mean I the response

comments references the 26 earl on butl

its also got this chart And youre saying

that that chart shows that its really tiny

MR TOMASOVIC Yes your Honor

If we chose to place a final permit final

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limits in the permit on a net basis using the

same calculation methodology it would be one-

tenth of one percent

JUDGE HILL How do you decide

whether you set the limit on a gross basis or

a net basis Because I know Ive seen both

MR TOMASOVIC In this case we

evaluated the adverse comments on the issue

we looked at what was going on for instance

with the proposed NSPS which expresses those

limits at least in a proposal form on a gross

output basis We saw that in general a lot

of the performance data that is out there is

available on a gross output basis so we

decided that for permitting purposes

permitting administration purposes and for

the benefit of other permitting actions it

seemed that gross output made sense for this

permit

JUDGE HILL Okay But you had

the discretion to pick net

MR TOMASOVI C Well we dont

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close off ourselves from choosing net base

1 imi ts in future permits if for instance the

NSPS were to on the basis of comments decide

that net basis really is a preferred way to

go But we have a reasonable basis for this

permit to say so And in saying that were

not purporting to say anything that would be

determinative of how state permitting

authorities or even other regions might choose

to assign the limits for a permit that

guarantees efficiency and control of GHGs

JUDGE MCCABE I just want to get

some clarity on again the facts I love

facts If the numbers here that were going

to be looking at when we decide whether we

agree with the regions position that these

limits are really not different that theyre

comparable or whatever language you use to

describe them how would we describe that Is

it 01 percent are you telling us now Is it

27 percent Is it a range from 01 percent

to 27 percent The world looks closely at

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the facts of what we were looking at when we

draw the conclusion l so the facts matter and

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MR TOMASOVIC Yes l your Honor

So 111 try and go over the notes I have on

the comparability of the limits in maybe an

orderly shy

give me a

feel free

that the

JUDGE MCCABE I was hoping youd

sound bite in the end but please

to go through the notes

MR TOMASOVIC The first thing is

permit actually assigns three

different kinds of emission limits the ton

per year the start-up limits which are on a

pound-per-hour basis and this gross output

when its sendingelectricityto the grid how

efficient is in relation to the output

So if you look at those three

different limits and were to assign a rank

order under kind of turbine model I you I re

actually going to get three different orders l

permutations I suggest thatthere dif

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the net limits was another possibility for us

You would get a fourth order if you were to

assign -- and actually nothing would have

permitted us from assigning both kinds of

limits and that limit and a gross limit but

that would have been duplicative So we

decided these are the limits for the permit

So looking just at that the basis

for the challenge which is the gross limits

you have a smallest difference of one-half of

one percent Thats the difference between

909 to 912 The largest apparent difference

is 27 percent which is the difference from

909 to 9345 And this difference is not a

difference in efficiency In the commenters

letter they do throw around the term

efficiency but sometimes thats using the

context of what is power plant efficiency

which gives you a different comparison If

youre talking about engine efficiency or

power plant efficiency the 27 percent

difference is actually 12 percent

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JUDGE HILL Why is that I was

with you until that sentence

MR TOMASOVIC So

JUDGE MCCABE I think we need a

chalkboard

MR TOMASOVIC That calculation

and I think maybe the footnotes in the comment

letter explain it as 3412 divided by the heat

rate And another issue is that the

commenters use actually lower heat value for

their descriptions of the heat rate whereas

our permit is using the high heat rate

information to get the limits

But that 12 percent difference in

efficiency that kind of efficiency power

plant efficiency were talking about is what

you may read in -shy

JUDGE HILL Can you define power

plant efficiency for that purpose for me

MR TOMASOVIC Yes sir The

definition of power plant efficiency would be

what is the heat rate value of the kilowatt

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hour divided by the heat rate for the power

plant or the turbine

JUDGE HILL Okay

MR TOMASOVIC And in our case

our limits arent just the heat rate for the

turbines as though they were in simple cycle

mode but the heat rate for those turbines in

conjunction with the heat recovery steam

generator with duct burner firing So theres

a number of things going on

And we had explained that as

turbines get larger they get more efficient

And thats actually true for several reasons

but in this case its not actually because

the GE turbine is demonstrated to be

inefficient Thats not the case Its

actually the influence of the duct burners

which wasnt something that the petitioners

raised in their appeal Because each scenario

has the same size duct burners they have a

disproportionate impact in the overall heat

rate We assigned limits that included

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everything l and thats why I when Mr Alonso

was talking about de-rating that may be a

situation where is easy to figure out that

youre just cutting into the compliance margin

if we had decided to set them all the same

limit but also might be a case where they

really put limits on their use of duct

burners which cuts into the operational

flexibility that they want to have as base

load plant that has peaking type capabilities

JUDGE HILL In other words you

cant sort of size the duct burner to the size

of the turbine or

MR TOMASOVIC No your Honor

In this case the HRSG with the duct burners

is assigned to be the same for all three

scenarios

JUDGE HILL Okay all right So

is 27 percent the largest when you talk

about tons per year startup gross output and

net heat rate is 27 the largest difference

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MR TOMASOVIC Well sir if you

were to count the annual ton per year

differences each capacity scenario is

actually about 10 percent larger than the

next If you look at the annual ton per year

limits I think the differences might be 6 or

7 percent but youre just building up your

plant with the bigger greenhouse gas impact

overall and -shy

JUDGE HILL Well the reason I

ask that question is because in your brief

you talk about that you dont need to look at

alternative control technologies that are

essentially equivalent In response to

comments it talks about these turbines are

quote highly comparable and there are

marginal differences between them So theres

a lot of words thrown around that all seem to

imply small or not significant but which one

do we use I mean the argument seems to be

essentially -- see Im coming up with a new

phrase -- essentially equivalent How do we

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judge that Well first of all is there a

single term that is most relevant from a

legal standpoint And then my second question

will be and how do we judge that

MR TOMASOVIC Well the two

explanations that we gave in the record I

think are pertinent and that is that the

differences are mere fractions of the

compl iance margin The compl iance margins we

assign to each turbine is reflective of the

uncertainties in terms of variable load

performance deviations from the iso

conditions degradation over time So if -shy

JUDGE HILL Well but how does

that cut I mean if you accept a compliance

margin at 30 percent then yes everything is

probably going to get swamped by that But if

you set the compliance margin at 2 percent

you might not

JUDGE MCCABE Or 126

MR TOMASOVIC And we set the

compliance margin at 12 percent and I think

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what that illustrates is that the difference

between the 2 percent which is approximately

a quarter of that total compliance margin

shows these are all these are all comparable

They are all going to be expected to be

performing in range of each other but we

decided that there are subtle differences that

allowed for the assignment of that reasonable

safety factor They are different sizes and

different engines but theres no fact-based

reason for us to decide to set them all at the

same limit or average them or round them up to

the nearest 50 pounds per megawatt hour

although other permit issuers may well choose

to do that in order to simplify things

JUDGE HILL If we want to give

guidance to future permit writers how would

you propose we say youve got three turbines

with different heat rates but they are

essentially equivalent How much discretion

do you think the agency has to figure out to

declare two different GHG limits to be

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essentially equivalent

MR TOMASOVI C Well I would

start your Honor with the fact that these

are all F class turbines and at the comment

period there wasnt any articulated difference

between the turbines in terms of the

technology they have You may find that in

other cases where heres a turbine that uses

dry cooling and heres a turbine that uses wet

cooling and thats a technological difference

that would allow us to elaborate on it

explain perhaps why one option is necessary

and the other isnt

But in this case where you have F

class turbines that are all modern at least

in the last several years type efficiencies

placed into an energy system that has its own

subtle impacts on what the overall limits

would be I think the way that the Board

should land on that is deference to the permit

issuers technical judgment in this case on a

case-by-case basis that this apparent

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difference of 25 pounds per megawatt hour was

not significant And we made that decision

without any written guidance from OAPPS or

OGC but it was based on our permit issuer

technical judgment And all is not as it

seems if you were to look at for instance

that net efficiency which illustrates that

that 27 percent difference which the

petitioners now complain about is only a 01

percent difference

JUDGE HILL At what point does it

become too big I mean you talk in your

brief or the response comments document talks

about well unless its poorly designed or

non-representative of the capabilities of the

technology is that the standard we should

adopt

JUDGE MCCABE Were wondering

where that came from actually

MR TOMASOVIC Well that phrase

you might find a phrase in the GHG guidance on

performance benchmarking Im not saying its

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straight transferrable to that to the way

that we used it in the brief but it does

reference performance capabilities of

technology as a starting point And we were

looking at the GHG guidance that does say in

the case of a gas-fired plant if its

considering single cycle for example you

should consider as an option combined cycle

Combined cycle isnt broken down into the

world of turbines that are available on the

market Go larger if you can if that shows

its more efficient

Instead it was more us taking

this application as it came in a conventional

combined cyc plant using modern F class

turbines with the heat recovery steam

generator and the duct burners Its a

standard type of permit It is similar to

LCRA permit that we issued It was the first

permit issued which incidentally in that

case the application came to us with the

request to permit multiple options and they

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decided before public comment that the GE 7FA

turbine was the one that they would go with

JUDGE HILL So can you cite to

any permit where EPA basically allowed the

size or model of the main emission unit to be

selected after the permit is issued as

happened here Are the -shy

MR TOMASOVIC As far as a

regionally- issued permit I sir No The

Washington State permit that is referenced in

our brief is a delegated state Sierra Club

submitted adverse comments on it and that wasl

one case where they for similar reasoning to

us decided that they would defer to the

applicants request to have multiple options

and not make them pick one of two acceptable

turbine models

JUDGE HILL Okay

JUDGE MCCABE Just going back to

your point about the F class turbines 11m

wondering if what you l re saying to us is that

it is sufficient for the permitting authority

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to look at that class of turbines and say

step one combined cycle technology is the

best available control technology here and

then when we get all the way down to step five

to set the emission limit that anything within

class F is good enough is that what youre

saying

MR TOMASOVIC No your Honor

The proj ect did come to us wi th F class

turbines You may see that in the response to

comments one of the things that Sierra Club

had said is choose larger turbines make a

bigger power plant and we quickly said that

we didnt believe that was appropriate in our

case because they had selected theyre

looking at a power plant of a certain size

using three different types of F class

turbines

But all of those were open to

commenters adverse commenters that may say

well these three turbine models of these

three turbine models this one doesnt show

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anything that shows modern day efficienc s

But at the same time its likely not a good

permit practice to say with absoluteness that

this turbine that was designed in the last

five years is not acceptable for BACT purposes

or for project purposes in other cases

because if you rest solely on that one piece

of information then the net heat rate

expresses as the pounds per megawatt hour on

a gross basis youre not necessarily

capturing all that is relevant to efficiency

JUDGE HI What if La Paloma had

said were going to build a plant thats 637

megawatts no more no less and theres only

one turbine on the market that will allow us

to do it even though there are several other

F class turbines that are much more efficient

Would the region have any authority to look

behind that

MR TOMASOVIC I think general

permit issuers do have authority to say have

you considered this or that thats so

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available In that case your Honor I think

youre presenting a case where the source is

defined binarily

JUDGE HILL Exactly

MR TOMASOVIC However it

doesn t necessarily mean that the selection of

that turbine model is unjustified If you are

to look at going back to the NSR workshop

manual I believe we cited we said in our

brief in one of our footnotes that customer

selection factors can be based on a number of

things including reliability and efficiency

experience with the equipment And all of

those are things that you can find in the NSR

in the NSR workshop manual as an example of

how you step into the BACT analysis for a

turbine Its really something that we come

in with we have a contractual commitment to

use these turbines can you see what limits

would apply to it at the front end

JUDGE HILL Let me ask if Judge

Stein or Judge McCabe has anymore questions on

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the turbine issue because then I want to move

to solar real fast

JUDGE STEIN I do

JUDGE HILL Okay

JUDGE STEIN Did I hear you say

that another facility in Region 6 that was

recently permitted is using the same turbine

as will be used by La Paloma

MR TOMASOVIC Yes your Honor

JUDGE STEIN And does the record

reflect what that BACT limit is for that

facility and how it compares to the BACT limit

here

MR TOMASOVIC s your Honor

So the name of the facility is the LCRA

Ferguson Plant And I believe that was

referenced in the statement of basis as well

as discussions sections of the response to

comments all cases looking at other

facilities that are out there including LCRA

we deemed the limits to be appropriate when

theyre placed in the appropriate context

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The Sierra Club presents Palmdale which isnt

reflective of the same design that were using

that we permitted here They referenced the

Pioneer Valley and we had to contextualize

the limits that were assigned to the Pioneer

Valley permit because that particular facility

wasnt using duct burners

JUDGE STEIN Okay So if Im

correct the BACT emissions limit for the

Lower Colorado River was 918 pounds of C02 per

megawatt hour And the limit that were

looking at here is 934 is that correct Im

not purporting to say that I have a correct

understanding Im just trying to clarify

MR TOMASOVIC Is this in the

response to comments or statement of basis

your Honor

JUDGE STEIN Oh its in my

little cheat sheet that somebody gave me

JUDGE MCCABE Its extracted

MR TOMASOVIC I may be mistaken

but I believe the limits assigned for LCRA

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were in fact on a net basis so they

wouldnt be directly comparable But we might

well have had some discussion that tried to

reconcile them

JUDGE MCCABE Yes the

comparability of all of these numbers is

somewhat perplexing to us so well address

that at the end because were thinking that we

might need some supplemental briefing to try

to get us on an agreed-on comparison table

here so that we at least understand and that

others who read the decision can understand

the import of what were deciding Do you

want to turn to solar

JUDGE HILL Yes So Mr Alonsos

argument is in essence that including any

solar into this proj ect would have been

redefining the source Do you agree wi th

that or do you think the agency has any

authority to consider some solar at an

electric plant even if it hasnt been

proposed by the applicant

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88

MR TOMASOVI C Your Honor I

believe that the Boards precedent on

redefinition of the source allows that a

permit issuer in their discretion may

require consideration of options that may

constitute a redefinition of the source

However if that is in conflict with the

fundamental business purpose of the applicant

then it is against our policy to do that

JUDGE HILL Do you think that the

agency has some -- okay So you believe the

agency has the authority to require

consideration Do you think the agency has

the obligation to do so if it wasnt proposed

if somebody raises it in comments as happened

here

MR TOMASOVIC I believe that the

agencys responsibilities in responding to the

comments in many ways are calibrated off of

the specificity of the comments that come to

us In this case the comments that we

received on solar are not in the same shape as

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they carne to the board in the petition in that

theyve attached the exhibits for two permits

that werent part of their comments that were

submitted to us and they specifically focused

on Palmdale and Victorville as two facilities

that we should have had a further discussion

about in our response to comments

But in terms of how the comments

carne to us which actually raised the issue of

solar in a lot of different ways where at

times it wasnt even clear whether they were

referencing photovoltaic versus stearn

auxiliary contributions to efficiency I

believe that the regions responses were

appropriate

JUDGE HILL Mr Alonso

essentially argued that our decision in

Palmdale said that it is appropriate to

classify addition of extra solar as

essentially redefining the source and he also

cites to Sierra Pacific Do you agree with

that characterization of those decisions

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MR TOMASOVIC Our decision is

based on the facts of our administrative

record and not a broad reliance on those

decisions stating that As was argued in our

br f we think the administrative record

shows that the considerationof solar options

at least as we understood it coming from the

commenters would redefine the source

The administrative record does

show l fact that the property limits are no

more than 80 acres and from that l it can be

discerned that there iS I based on the

footprint of the plant l not a lot of

additional acres which might approximate the

20 acres that the permittee was able to

substantiate with the affidavit that they gave

with their petition

JUDGE HILL So does the region

believe itl s not feasible to install any solar

capacity at the site

MR TOMASOVIC WeIll depending on

how that comment might be construel l your

l

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Honor rooftop solar is an option that

presumably is not what the commenters were

trying to talk about although its not always

clear In the case of the Palmdale decision

it does illustrate that as a rough measure to

contribute 10 percent of that plants total

capacity

JUDGE MCCABE Does someone have a

cell phone going Where is that music coming

from

(Whereupon the foregoing matter

went off the record at 450 pm

and went back on the record at

4 52 p m )

JUDGE MCCABE Okay Lets

proceed We dont have to cut Mr Ritchie

off Lovely music anyway

MR TOMASOVIC I was saying your

Honor as a background matter the Region 6

was aware of the factual setting that was

recited by the Board in the Palmdale case

which was the fact that to generate just 10

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percent of the capacity for that Palmdale

plant it required 250 acres And in fact

and I believe some lang-uage in the opinion

came close to this you need acreage to be

able to have power in a significant amount

You may well need more than 20 acres just to

get steam that could be used in the process

but you know thats a different technical

issue in any event

If we were to just sort of roughly

say 250 acres 10 percent of the plants power

reduced down to 20 or 25 acres youre talking

about something that doesnt substantially

influence the overall plant -shy

JUDGE HILL But thats not in the

analysis the region did in the record

correct

MR TOMASOVIC No your Honor

JUDGE HILL Okay

JUDGE MCCABE Is it the regions

position that as a matter of exercising its

discretion it would never consider solar it

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would always consider adding a supplemental

solar or whatever we call it here to be

redesign and therefore against at least the

regions policy if not the agencys to even

consider

MR TOMASOVI C No your Honor I

dont think anything in the regions response

was intended to cut off comments on solar

technology as a general matter for any other

permitting case

JUDGE MCCABE You just think the

comments here were insufficient to get you

where you needed to go in order to give it

serious consideration here i is that what

youre saying

MR TOMASOVIC Yes your Honor

I mean we had a bit of a technical discussion

in there that it is the case that for any

process that uses fuel to generate heat you

can get that from something else which might

be geothermal or solar And you could get

into the myriad permutations that go on

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in terms of whatever a commenter might

bring but it isl

JUDGE MCCABE Comment clearly

focused on solar in this case l so you dont

need to go there

MR TOMASOVIC However I there are

other parts of the comment which seem to

suggest that the l that l in their view l this

project was defined to be within a range of

capacity that could be energy generated by any

means I which we disagree with because this is

a combined cycle plant thats meant to use

natural gas as its fuel and take advantage of

the rastructural advantages specific to

that location including the waterl

availability of the pipelines and the local

need this particular kind of power to be

delivered for grid stability reasons

JUDGE MCCABE I hate to put you

on the sPOtl Mr Tomasovic l but do you think

you could reduce to one or two sentences the

reason the region did not consider solar here

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or considered it to be redesign that the

region would not entertain

MR TOMASOVIC In the way that

the comments came your Honor we believe that

that solar auxiliary preheat was not well

defined because it was it was actually raised

as a substitute for duct burners when duct

burners have a different purpose than solar

auxiliary preheat And Im already past my

two sentences but

JUDGE MCCABE Thats okay

Youre close enough Thank you Those are

all the questions we have for you at this

time Mr Tomasovic Thank you And Mr

Bender you have been very patient and I bet

youre watching your watch National Airport

flight at 700 You probably need to leave

here by what would folks who are

Washingtonians say given that it is Wednesday

rush hour before a storm

JUDGE HILL If you take a cab

Id say 545 at the latest

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JUDGE MCCABE Okay So 5 30 i

will that work for you Mr Bender

MR BENDER I think so your

Honor

JUDGE MCCABE Okay I would hate

to give you short shrift after you were so

gracious as to choose the last position or to

suggest that your judgment perhaps might need

to be revisited the next time youre offered

that choice

MR BENDER I wouldnt want to

miss this even if I had already gone

JUDGE MCCABE Okay

MR BENDER Is this better

Thank you your Honors I think to address

one thing that kind of permeates the briefs

from respondents and some of the discussion

here today theres kind of two pieces or two

sides of the same coin maybe Were talking

about size or capacity Were talking about

megawatts right And when were talking

about ERCOT or any other regional system

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operator the dispatch is to meet a load

Were talking about dispatching to meet a load

in megawatts

And the size of the units are

different here Its actually kind of a

combination of things turbines plus heat

recovery stearn generator turbine that adds

up to certain numbers Its 637 for the GE

combination for example Thats megawatts as

their peak You know if you throttle full

thats what youre going to get

The Siemens turbines can generate

637 Its not that you have a turbine you

turn it on and you get 637 megawatts or you

turn it off and you get zero and its a

binary on or off situation

In fact the other argument or the

other piece of this argument in the briefs was

that turbines as they get larger get more

efficient And if you want a large turbine at

a reduced rate less than full youre

decreasing its efficiency and thats simply

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not true And thats not true based on the

evidence in this record because that last

increment of power comes from duct burning

which is less efficient than the turbines and

stearn generator

And so as you throttle down or as

you de-rate or decrease your generation all

saying the same thing youre actually until

you hi t the point where the duct burners corne

off youre actually improving the efficiency

and decreasing the emission And we can see

that among other places in one of the tables

that counsel for Region 6 pointed to in the

response to comments where in addition to net

and gross theres also without duct burner

fire on page 11 of response to comments

which is Petition Exhibit 3 you can see that

the GE the smallest of the turbines piece is

75275 without duct burner firing The

biggest turbine the Siemens 5 is 77717

Less efficient right And you only get the

increased efficiency from the larger turbines

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as a system because theyre able to generate

more of their power before turning the duct

burners on

JUDGE MCCABE Well does this

mean youre happy to hear that theyve

selected the GE turbine

MR BENDER If they have a permit

limit that reflects what they could do If

the question is phrased differentlYI right

If the draft permit had come out and said our

project purpose is to build a plant thats

capable of generating 637 megawat ts you know II

this would be a different case The comments

would have been different l and we mayor may

not be here

But then wed saYI the comments

would come in among other things l something

to the effect of the Siemens I you know l 5 or

the Siemens 4 can generate 637 megawatts In

facti when it does so it does it at a reduced

emission

So were dealing with emission

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rates The final permit emission limits are

set based on operating full out But full out

is a different number of megawatts for each

right

JUDGE MCCABE Thank you for that

clarification Do you agree that the F class

turbines are among the most efficient turbines

available for combined cycle combustion

technology

MR BENDER I believe theyre

among I dont know that they are the most

efficient

JUDGE MCCABE Do you know of a

class thats more efficient

MR BENDER I dont The

question though is the emission limits too

which is the end of everything So were

talking about turbines and different turbines

but were really talking about different

turbines put in front of the same 271 megawatt

steam generator in this case

JUDGE MCCABE Well to you and to

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EPA of course the emission limit is the

ultimate most important thing here But of

course to the company the most important

thing is which turbine do they get to use and

is it the one that will fit whatever their

business purpose is

Your petition Im a little

confused about something Your pet it ion says

that youre not suggesting that the company

should be required to pick any particular

turbine but just that they should meet the

lowest GHG limit that any of the turbines

could meet But arent you in effect by

doing that forcing their choice of turbine

MR BENDER No Its not

requiring a turbine Whether youre forcing

it or not raises some other internal issues

I think at the company which is you know

their risk appetite for that headroom margin

thats built in how much theyre actually

going to operate because this is a 12-month

rolling average and assumes operating at 100

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percent including those duct burners wide

open which is one of the least efficient ways

to operate

JUDGE MCCABE So your preference

would be that they have to build a bigger

turbine and operate it at a lower load

MR BENDER Our preference is

they have to meet the emission limit that

JUDGE MCCABE But in concept

MR BENDER To build a bigger

turbine and operate it with less duct burning

and using more of the waste heat from the

turbine the way that the three options are

set up in this record is the most efficient

And

JUDGE HILL But that wasnt your

comment was it Your comment was simply to

pick the limit that reflects the lowest

emission rate Your comment wasnt

essentially to recalculate the rate based on

the lack of duct burning

MR BENDER Thats correct

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Sorry Im trying to answer a question a

direct question Im not representing that

thats what the comments were

JUDGE HILL Okay Fair enough

Im sorry to interrupt Keep going

MR BENDER I should speci fy this

is based on our understanding from the record

Because the Siemens turbines are capable of

basically more heat because theyre bigger but

theyre going into the same size heat recovery

steam generators as would the turbines

More of the total heat going in is coming from

waste heat from the turbines with the Siemens

compared to the GE so theres less need for

duct burning Thats what

JUDGE MCCABE What is your goal

Mr Bender Are you looking for the

lowest total amount of GHG emissions that can

possibly come out of this facility or are you

looking for something else

MR BENDER We I re looking for the

lowest BACT rate but were also looking for

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JUDGE MCCABE But the BACT rate

is based on efficiency yes

MR BENDER Its based on

efficiency here yes

JUDGE MCCABE Do you have any

objection to that

MR BENDER Im sorry

JUDGE MCCABE Do you have any

obj ection to EPAs basing the BACT rate on the

energy efficiency of the turbines

MR BENDER Not in this petition

JUDGE MCCABE Okay Well it is

this petition were talking about

MR BENDER Right Its

JUDGE STEIN But given that they

have indicated that depending on the timing

that theyre going to go with the GE turbine

what is your position as to what the emissions

limit should be for that turbine

MR BENDER The emission limit

for any of these turbines based on this

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record and the draft permit that we were able

to comment on should be -- Ill put it this

way If F class category of turbines

followed by heat recovery steam generator is

the control option and thats what we were

able to comment on And if thats the control

option that theyre going to treat as the same

control option through steps one through four

then in step five the emission rate should be

based on the lowest emission rate achievable

by that class And based on the record here

thats represented by the Siemens F4 at least

that line in the permit right

So depending on how your question

was intended your Honor if they came in and

said draft permitr project purpose 637

megawatts on peak 100-percent capacity you

know r we would look at what combination of

turbine heat recovery steam generator gives

you the lowest emission rate at that But

want to be clear thats not this case thats

not this record

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JUDGE STEIN Well Im a little

confused I mean Im with you to a point

but what I thought I heard the region say is

that when they chose the BACT limit that they

chose that they couldnt necessarily translate

between these different turbines in quite the

same way that you were doing the translation

And I mean if for example youre saying

that they need to meet emissions rate X what

if they cant meet that with this equipment

Does that mean that they cant install the

equipment

MR BENDER If La Paloma cannot

meet 909 pounds per megawatt hour gross with

the GE equipment is the hypothetical

JUDGE STEIN Yes

MR BENDER Yes then they cant

install that equipment

JUDGE MCCABE So you are forcing

their choice of turbine in effect

MR BENDER Only as a secondary

effect But just like if you cannot meet a

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BACT limit for 802 on a coal fire power plant

wi th a dry scrubber are you forcing the

selection of a more efficient wet scrubber as

a secondary effect Thats true

JUDGE MCCABE Do you think thats

a fair analogy Were talking here about the

main emitting unit and the main unit that

produces the capacity of product that the

facility wants to produce The choice between

a wet and dry scrubber doesnt affect that

MR BENDER Well according to

the region its a category and its not

affecting the category If the category as

a region says is combined cycle turbine with

heat recovery stearn generator then youre not

changing anything You may be foreclosing

business choices that are made later but I

would suggest thats true with every BACT

limit There are choices that a permittee may

want to make but cannot make because they have

to comply with their BACT limit

JUDGE HILL 80 Mr Tomasovic says

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that pointed out that the Siemens

going to get it wrong the Siemens 4 turbine

has the lowest emission limit hourly but that

the GE turbine has the lowest annual tons per

year primarily because its operating at a

lower capacity Is your argument that the

limit that the region should have set have

been the lowest of each of those or is your

argument that they should use the limits that

they got for the most efficient turbine which

was the Siemens 4

MR BENDER I believe that the

BACT limit is the primary driver BACT limit

is the pounds per megawatt hour and thats

the limit that we think that the La Paloma

facility whatever equipment it ultimately

chooses should meet That will result in

different tons on an annual basis but tons on

an annual basis is I would submitt not a

limiting limit It assumes 100 percent

operation You know t itts basicallYt itts

JUDGE HILL Wellt but heres my

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point If Mr Alonso had gotten up and said

its most likely were going to pick the

Siemens 5 or Im sorry the Siemens 4 then

theres going to be more total emissions of

GHGs a lower rate but more total emissions

So by your argument should the region have

had to pick the lowest limit for each of the

three parameters on which they set the limit

And if not why not

MR BENDER We didnt address the

total tons because we dont feel that its

going to limit If they decide that they want

to generate 630 megawatts thats the number

that multiplied by the emission rate is

going to generate the tons

JUDGE HILL But if they had

picked the Siemens 4 or the Siemens 5 they

could be operating at 735

MR BENDER They could be

operating at 735 but there are other things

that go into it obviously your Honor as Im

sure youre aware of when theyre dispatched

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how theyre dispatched And the focus here is

the per megawatt hours because thats the one

that the Sierra Club sees as actually limiting

emissions here because the annual caps are set

such a high rate that theyre not going to

be approached Even the lowest is not going

to be approached

JUDGE MCCABE Let me bring you

back to this table thats I dont know if

you have it Its page 11 of the response to

comments These numbers are all starting to

sound fungible so lets try to anchor

ourselves again Im looking at the middle

column here that says output-based emission

limit which is net without duct burning And

the GE turbine that limit is 894 and for

the Siemens 4 turbine is 909 Theyre picking

the GE turbine What limit do you want

MR BENDER Well first of all

question the accuracy of these numbers because

some of them are the same as the gross with

duct burning

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JUDGE MCCABE Theyre saying

what

MR BENDER The Siemens F4 number

in that column is the same as the permit limit

for that turbine which is expressed as gross

wi th duct burning So looking at these right

now I suspect that theyre not correct Some

of them may not be correct

JUDGE MCCABE Can we assume for

the moment that these numbers are correct

MR BENDER Yes

JUDGE MCCABE And if that turns

it into a hypothetical question so be it

Im trying to understand where youre going

there conceptually Im looking at a lower

number 894 you know its C02 equivalence of

per megawatt hour without duct burning net

wi thout duct burning Its 894 for the

turbine they want Its 909 for the one that

you were saying was the most efficient

turbine Which limit do you want for the GE

turbine Do you want the 894 or do you want

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the 909

MR BENDER It depends on this

your Honor It depends on whether were going

to set this as the ultimate rate or if were

going to s another limit as the ultimate

rate because this is a part this is without

duct burning right But the permit allows

duct burning So if we say we want 8947

without duct burning and then well leave the

duct-burning caused emissions kind

unmeasured and unregulated as a different

JUDGE MCCABE Okay Go to

next column with duct burning Youve got

9452-shy

MR BENDER Yes

JUDGE MCCABE for the GE

turbine And just a hair under that youve

got 9444 for the Siemens 4 Are you telling

us thats what you want Board to do to

tell the region that that kind of difference

is significant and that they should force this

company when it installs the GE turbine to

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meet the 944 limit for the Siemens 4 Is that

what youre asking us to do

MR BENDER Your Honor if that

if the limits were set based on this as final

enforceable limits based on that Im not

sure that we would be here on this issue

JUDGE HILL So how much of a

margin is too big Because the regions

initial submission is that even with the

limits that they actually set the difference

is 26 percent and thats just not that big

JUDGE MCCABE And looking at

these latest numbers they actually said the

range for all three turbines there was on

that net with duct burning column that the

total range was 01 percent So seeing how

close those numbers are between 945 and 944

thats obviously a lot less than 01 percent

Is that a significant difference that the

agency should be concerned about

MR BENDER The limits were

talking about are the ones in the final

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permit which are gross And they are -shy

JUDGE MCCABE Okay Would you

like to point us to a different table to look

at

MR BENDER Sure Ill point you

to the permit which is Exhibit 1 to our

petition and the permit limits themselves

Because the permits measured we commented

that the region should be looking at net

among other things And the region said no

It made that choice It made this permit the

way it did and so were addressing it the way

it came out What we and EPA and the state

can enforce are the limits and the limits are

what drive what we can count on as enforceable

emission reductions

JUDGE MCCABE Wait a minute You

wanted the limits to be based on net

MR BENDER We commented that you

should look at the net emission rates and the

region said no were going to base this on

gross

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JUDGE HILL Okay But my

question is how do you respond to the argument

the region made in its brief and that Mr

Tomasovic stated here which is okay so the

permits got gross and the difference in these

gross numbers is 26 percent and thats in the

noise

MR BENDER Its not And the

reason why I know that its too big to be

insignificant is that the region thought that

margins even around that for different

pieces because the margin is an aggregate

was significant enough to start bumping the

limit up And when they got to step five

they said thats a big enough difference

between these turbines that we cant expect

the one to meet the limit for another So I

know because its significant enough in step

five that it should be significant enough in

step one to not count them all as you know

the same

JUDGE HILL So your argument so

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if their error was at step one then what

youre really saying is that the GE turbine is

a different technology than the Siemens

turbines

MR BENDER It is a different

let me put it this way Control option in

step one should be the same as control option

in step five As counsel for La Paloma put

it its a sequence right It starts at one

it goes to five and the definition of the

control option stays the same And if and

were saying well grant the argument that

they should be treated as one option in step

one well if thats the case they should be

treated as the same option in step five and

the limit based on what that option as a

whole can achieve But if youre going to

start parsing them the appropriate time to

parse between turbines or in this case

turbine plus heat recovery generator

combination -shy

JUDGE HILL Understood

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MR BENDER is step one so

that we can look at their relative

efficiencies their relative costs what they

do emit at different levels at production

Its got to be one or the other It makes

hash out of the five-step process to look at

one definition of control option in step one

right And then look at a different

definition of control option and start

applying limits in step five Thats the

argument It has to be consistent all the way

through

I think we would get to the same

option or the same result whether we looked at

them in step one as separate or if we applied

the maximum control efficiency for that class

as a whole in step five But you run into

problems when you separate them and thats

what weve done here

JUDGE MCCABE Okay Mr Bender

could we back up again to the question that

was raised by your saying that you preferred

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and said in your comments that you preferred

limits based on gross capacity I was trying

to use the table on page 11 of the response to

comments to try to understand exactly what you

want If theyre picking the GE turbine you

said the limits these are net limits and

gross is a better measure Have you found a

place where I can look at gross limits

MR BENDER For what gross

emissions are relative to

JUDGE MCCABE Is re any place

in the record that we can look to see how

these net limits would be stated as numbers

for these turbines if it were based on gross

Is that in the record any place

MR RICHIE Your Honor if I may

this is Travis Richie Page 16 of the

statement of basis which was included I

believe as Exhibit AA of La Palomas

response I believe has that same table listed

with pounds of C02 per megawatt hour on a

gross basis with duct firing

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JUDGE MCCABE Thank you Mr

Richie So glad you stayed on the phone I

have this Do the other judges have it

Okay Its the same thing Well how are

these different They look like theyre the

same ones that we were looking at on page II

Whats the difference between the gross and

the net rates

MR BENDER Thats what I was

suggesting earlier that Im not sure that

theyre correct

JUDGE MCCABE Youre not sure

which is correct

MR BENDER I dont know

JUDGE MCCABE You dont know

MR BENDER But I dont think the

net and the gross can be the same number and

thats what I was maybe failing to highlight

before

JUDGE MCCABE But whatever the

gross is you would prefer it You just dont

know what it is or youre not sure which of

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these numbers it is is that what youre

saying

MR BENDER Your Honor there has

to be other details in the hypothetical to

know the answer It depends on if were

measuring If were measuring just whats

coming out of the turbines or if were

measuring whats coming out of the stack

because theres another pollution-causing

device in the middle and thats the duct

burner So if were saying whats the net

without duct burning and were measuring it

but were still allowing duct burning its a

different question

JUDGE MCCABE Yes I understand

This gets very complicated which is why

judges usually defer to the technical

expertise of the EPA people that are charged

with this Now in this case lets try to

bring it back to sort of principles that the

Board can focus on more appropriately I was

hoping through this argument that people

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would be able to give us the numbers that we

should be looking at to consider this argument

that I understand the region to be making that

whatever the variation among these turbines is

so close the variation in the heat rates and

accordingly the GHG limits is so close that

it is something that is essentially

equivalent to use one phraseology another

negligible difference marginal difference

Do you agree that these are so close that they

are marginally different or essentially

equivalent

MR BENDER Two answers your

Honor They are not What the permit

includes is the gross with duct burning and

that number again I would say those are

different enough that the region thought

necessary to differentiate between them And

if thats true then its not negligible and

its not inconsequential

JUDGE HILL So let me ask you a

question So if the region had said theyre

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close enough I so weI re going to set the

highest one and if they happen to pick al

turbine that we could limit more closely I

were comfortable with that

In other words I based on that

argument I okay so if the region had instead

concluded they are negligible GE looked good

enough and so were going to set the limits

based on GE And if they pick Siemens I they

get a bennie out of it would you have a basis

for challenging

MR BENDER Yes I for the same

reason Because the record says that 9092 is

achievable And then we have -shy

JUDGE HILL Well but they would

conclude that 909 is not achievable for GE

MR BENDER I think it depends on

what the record is to support that conclusion

And thats not this case and its not this

record

JUDGE HILL So the regions

mistake was setting three different limits

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MR BENDER The regions mistake

was setting three different limits for what it

says is the same control If it had

identified them as three different control

options in step one and you have a continuity

through the rest of the steps and it set three

different limits it would be a different

problem which is BACT is all limit and you

would rank them and set them based on the top

rank control option in step five But again

it depends on what happened in the prior four

steps to be able to say whether that would

have been a mistake or not and thats not

this record and its not the basis that we had

to appeal

JUDGE MCCABE Coming back to the

factual question of the variation in these

emission limits that the region has permitted

for the three turbines Mr Tomasovic

described them it may not be fair to call

this a range but he mentioned numbers that

to my mind ranged from 01 percent up to 27

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percent Is a 01 percent difference

significant enough that the agency should have

to distinguish between them in setting and

distinguish between these turbine models and

force the companys choice Point one If we

just had point one I realize theres a

range but just look at point one for a

moment Is that significant

MR BENDER I think its

contextual And I would say although you

asked that as a factual question I would

point to the Prairie State decision your

Honor

JUDGE MCCABE The what Prairie

State

MR BENDER Because its cited by

both respondents to say when theres a

negligible difference you dont have to

consider them as separate control options

And I think that Prairie State actually stands

for the opposite On page 37 in the footnote

I think its footnote 36 it rejects that

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argument that just equivalency alone is

sufficient to ignore a difference between two

different control options There has to be a

demonstrated equivalency or a negligible

difference and especially if that difference

is based on emission factors or something else

that is inherently also perhaps not specific

So if its based on an emission

factor that has a margin of error that helps

dictate what amount of difference between two

emission rates may be negligible and even if

they are exactly the same thats not enough

to ignore them You have to -shy

JUDGE MCCABE If theyre exactly

the same

MR BENDER To ignore one of the

control options because of the requirement

that you also look at what their collateral

impacts are because two different controls

options may have the same emission limit but

they may have different collateral impacts -shy

JUDGE MCCABE Thats absolutely

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true of a control option but were talking

about two different turbines here If the

turbines had the same limit would we be here

If they had the same GHG limit

MR BENDER If they had the same

GHG limit and it was -shy

JUDGE MCCABE Because thats just

the way they say that was the manufacturers

the vendors number and EPA permitted it at

that number and there was no comparable that

showed a bet ter performance why on earth

would we require them to distinguish between

those What practical difference would that

make

MR BENDER In this record and to

my knowledge there is no other distinction

between them other than emission rates But

if youre saying hypothetically the emission

rates are all the same -shy

JUDGE MCCABE No Im simply

following up on what you thought Prairie State

stood for that even if things are the same

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you cant ignore the di f f erence I just think

were doing apples and oranges here because

in Prairie State if I recall correctly and

maybe Judge Stein can help us out with this

I think they were comparing you know much

larger differences

Here Im concerned that were

getting down in the margins We are getting

dangerously close to micromanaging here on

what this GHG emission limit should be So is

o 1 percent micromanaging Is that a

difference that we dont need to worry about

Is 05 percent -- 27 percent obviously is too

much for you You think thats over the level

of significance Were wondering where is

that level of significance in difference And

Im not talking about the exact numbers Im

talking conceptually here Thats why I used

percentages to iron it out

If the range of differences

between these two turbines and their GHG

emission rates ranges somehow and depending

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on how you calculate it from 01 percent to

27 percent why should we worry about this

Why should the region be required to

distinguish

MR BENDER Your Honor the

equivalency of emission rates is an issue or

a concept thats tied together wi th the

topdown BACT analysis process and that was in

Prair State Thats the point of that

footnote that I cited to If you did this

again this is not what was done so in the

hypothetical if they had ranked them as

separate control options and they had assigned

emission rates and there was somewhere

between I think it was 01 in your

hypothetical difference and there was no other

collateral impacts differences between them

would that be enough to say -- and it was not

and it was based on you know some emission

calculations that themselves have some

variable in them I think in that

hypotheti this would not be the issue for

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appeal It wouldnt be because you know

were assuming were assuming away all of the

problems with this particular decision which

is theyre not treated as separate theyre

not distinguished in the first few steps we

dont know if theres collateral impact

differences and theres no record made to

support those findings at each of the rest of

the steps

JUDGE MCCABE So is the critical

piece of your argument that they didnt

differentiate between the turbines at step

one Is that really what Sierra Clubs

concerned about

MR BENDER If theyre going to

differentiate between them in step five they

need to differentiate between them in step I

guess it would be one through four because

then wed have an opportunity to look at

whether or not there are differences in

emissions at that point and under what

scenario and everything else that goes into a

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five-step BACT process And that was just

shunted all to the side and we only looked at

the difference between them when we got to

step five after the opportunity to address all

those other issues had passed

JUDGE MCCABE Okay Lets turn

quickly because Im watching your flight time

here to solar Is it your position that

solar is feasible on this site Supplemental

solar as youve described it And if so

please explain how

MR BENDER Your Honor the

comment was step one you need to cast as big

a net as possible to identify potentially

feasible available and applicable and we

say yes its available its applicable Is

it feasible Well we dont know the acreage

They say 20 We dont - - because we never got

to this

JUDGE MCCABE Theres a site plan

in the record isnt there

MR BENDER There are some maps

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in the record We dont know

JUDGE MCCABE Have you looked at

them

MR BENDER Ive looked at some

of the maps in the record yes

JUDGE MCCABE Have you looked at

the site plan

MR BENDER Im not sure -shy

JUDGE MCCABE The site plans

shows where things are situated on the si

where the turbines will go and the other

equipment what the footprint of the si te is

how much space is open or not

MR BENDER Im envisioning a

color map with I think that information

JUDGE MCCABE Mine is not in

color but I saw one like that Have you

looked at that and considering that is it

feasible And Judge Stein please add your

question

JUDGE STEIN If these maps show

or you can deduce from whats in the record

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that what is at play here is approximately 20

acres do you still contend that solar is

ible at this site

MR BENDER I would say to the

extent its scalable its feasible Whether

its cost effective and whether it achieves

emission reductions I dont think I dont

know and I dont think any of us know and

thats the point Thats why you go through

the five steps because you gather that

information at the later steps It was -shy

JUDGE STEIN So Im sorry

Finish I didnt mean to interrupt

MR BENDER It was excluded from

step one as not as redefining the source

And I think it would be inappropriate to

assume fact findings from what we have the

limited amount of information we have in the

record to say it would necessarily be rej ected

in the following steps unlike in Palmdale

where the issue of incremental increase was

looked at and the record was clear that there

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was zero space And the difference between

zero space for no addition and where to draw

the line when theres some space but it mayor

may not be enough to make it feasible cost

effective and everything else is something

that needs to be done by a fact finder with

the public input

JUDGE STEIN But how much effort

and work must a permit applicant go through

when theyre primarily building a particular

kind of plant and theres fairly limited

space I mean do they need to go do a I

scale investigation and develop models

space if what youre dealing with is a very

small area I mean thats a question Im

struggling with because you know this is not

lmdale and I dont buy the characterization

what Mr Alonso said about what Palmdale

stood for in terms of redefining the source

But I am troubled by what may be in the

record perhaps not as fulsome as someone

would like but there may be sufficient

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information in the record to establish that

theres only a very limited amount of space

there And if thats the case are you still

insisting that people do a full-scale analysis

of solar under those circumstances

MR BENDER I think that when

you get into the later steps two three

four the scale of the analysis is probably

relative to you know some reasonableness

right But in step one the whole point is

you cast the net and then you start doing that

analysis And it would be inappropriate to

start making assumptions because we dont

agree with all the assumptions in La Paloma

about hurricanes about other things and wed

like the ability to develop the record in

response depending on what is said about

feasibility

But feasibility wasnt discussed

until the response to comments And then it

was discussed as not not that it was not

technically feasible but it was redefining the

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source And based on in our mind in one of

the main reasons that we brought this appeal

is based on a very problematic definition of

redefining the source

JUDGE HILL Mr Bender the region

argues that Sierra Clubs comments on this

didnt ly raise this issue to any level of

specificity that youre now raising it in your

brief or here How do you respond to that

MR BENDER When they say that

they point to one of the multiple comments

looking at solar hybrid And they say it was

mentioned as an al ternative to duct burning

in addition to other things that could be

looked as alternative to duct burning

Earlier in the comments is the Palmdale

permit and the C02 BACT emission limit saying

its conservatively lower they get that and

they get a chunk of it from solar you need to

look at solar because its available its

applicable it meets the step one criteria

lets look at it And that I s what was

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ected

Elsewhere we said instead of

duct burning did you consider these other

things And yes theyre talking about the

same concept but theyre talking about two

different areas So its inappropriate to

look at only one comment and say well that

one comment about solar didnt raise this

other issue when the other comment did

JUDGE MCCABE Are you suggesting

that permitting authorities whenever theyre

faced with a PSD application by someone who

wants to build a power plant have to analyze

solar in all cases if theyre not proposing it

to begin with

MR BENDER Solar hybrid in a

combined cycle plant when it I S raised by the

public-shy

JUDGE MCCABE Okay And that -shy

MR BENDER Then the region has

an obligation to look at it

JUDGE MCCABE Expand on that

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please What do you mean by look at it

MR BENDER Include it in step

one or deem it redefining the source based on

a correct interpretation of redefining the

source And here it was an incorrect

interpretation of redefining the source It

should have made it into step one when raised

by the public And to go to your question

Judge Stein how much detail they need to do

to develop whether to reject it in later

steps I would agree theres some

reasonableness to it But I dont agree that

even assuming that 20 acres is all that there

is that we can say based on this record

that its reasonable that thats not enough to

generate solar

JUDGE STEIN But if you have a

circumstance where the BACT analysis has been

done the regions looked at it theres been

back and forth between the permit applicant

and the permittee I mean and the region

they proposed the permit for comment and a

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comment comes in about solar youre

suggesting that they have to go redo the BACT

analysis or cant they simply respond to the

comment by saying on this particular site on

these facts we dont think solar is feasible

for X Y and Z reason

MR BENDER Thats different than

the answer here

JUDGE STEIN Why is it different

than here I mean I understand what the

region did in its analysis of redefining the

source you know didnt do exactly what Im

describing here but Im concerned about

taking us to a place where in responding to

a publ ic comment where there may be an answer

that you have to go back to square one on the

BACT analysis because I dont think you do

I think you need to respond to the comment

I think you need to respond fairly to the

comment But wed never I mean how in the

world would we ever get a permit out if every

time theres a public comment that relates to

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the BACT analysis youve got to go back and

redo the BACT analysis Yes t may be

cases where you need to supplement it but I

dont think we go back to square one

MR BENDER Well two responses

your Honor Here we had raising solar in the

context of another facility a similar

facility that has solar hybrid and has a

permi t wi th lower limi ts Thats the context

So to the extent were talking about you

know how much or how real does this have to

be to generate a more substantive response

thats the context

In Knauf Fiberglass I believe Kshy

N-A-U-F however thats pronounced

JUDGE MCCABE Knauf

MR BENDER Knauf Fiberglass

The first the 1999 decision a comment was

raised another production process for

fiberglass The response was thats

proprietary to a competi tor We dont have to

look at it because well reject it later

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anyways so you know why look at it And

the Board reversed and said you cant preshy

judge Thats the point of the process You

cant pre-judge the process Go back look at

it and make a record so we know and the

public knows that you really did look at it

and you really did document your analysis and

we know you did your procedural job

Thats what should be done here

and it follows that precedent And I would

suggest if its distinguishable this is even

a clearer case than Knauf because its not

proprietary that we know of You can go out

and buy it So to the extent theres a line

this is even further on the petitioners side

of the line

JUDGE MCCABE Mr Bender Im

worried about your plane If you would like

to take a minute to just wrap up please do

And then we will let you go on your way Its

getting late

MR BENDER Sure Thank you

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your Honors I and thank you for the opportuni ty

to address these issues From Sierra Clubs

perspective this is an important permit tol

get right on these issues raised And there

are other issues that were commented on l

potent lyother issues that could have been

raised You know I dont want to suggest

that Sierra Club loves this permit even if

its corrected but this issue of what you

have to consider and how you consider

efficiency and how you consider supplemental I

in this case solari that helps improve the

efficiencyof a plant is critically important r

especially as we start into greenhouse gas PSD

permits and getting the definition of what is

the control option were looking at correct

and making sure that thats consistent all the

way through the process and that were

correctly addressing efficiency Its going

to be critical especiallyuntil we develop an

end of the pipe technology that facilities

s installing

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142

The other is this now perennial

redefinition of the source issue I

understand the Boards prior precedents and

in some cases unfortunately theyre being

applied incorrectly And this is one of those

cases And when that happens its important

to correct it make it clear and give guidance

to not only Region 6 but other permitting

authorities what redefining the source means

and whatit doesnt mean And here it doesnt

mean that if a control option is not within

the two-sentence description of the

application of the project purpose that it

cant be considered because that opens a door

to all kinds of problems not just greenhouse

gasses but every - - I mean and SCR al so

wasnt in that two-sentence description

Thank you your Honor

JUDGE MCCABE Thank you very much

Well thank you all for your presentations and

for your valiant efforts to answer our very

often detailed questions

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I would make one observation that

theres such factual confusion l at least in

the argument around the issue of how do we

compare apples to apples with the emission

numbers that we really should be looking at

for these turbines that there is a

possibility and I regret to say this because

I know its a PSD case and we are in a big

hurry but theres a possibility that we will

ask you to do a supplemental briefing on that

or ask you all perhaps to confer to get on one

sheet if its possible to give us some basisl

comparison so that we have the facts

straight in our opinion It is a lot to ask

judges like us We have some technical

training l but we are not engineers I and it is

really quite difficult for us to understand

which numbers we should be comparing to which

here

We will however make a valiant

effort to go back and to see if we can figure

that out And weill only ask you to do a

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supplemental briefing if we think its very

necessary If we do do that we will get to

you quickly on that because we do intend to

move quickly on making this decision These

are not easy issues They are important

issues and we take your point Mr Bender

that as we are entering the world of GHG BACT

permitting we do need to be careful about

what precedent were setting But we also are

very very cognizant of the need for speed

here because we dont want to hold up the

building of something that should proceed

unnecessarily

So with that well take this

matter under submission with the caveat that

you may get a request for a supplemental

briefing And we will wish you all

travels home those of you who are traveling

far especially And good luck catching that

plane Mr Bender

(Whereupon the foregoing matter

was concluded at 547 pm)

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164

C E R T I F I CAT E

This is to certify that the foregoing transcript

In the matter of La Paloma Energy Center

Before US EPA

Date 02-12-14

Place Washington DC

was duly recorded and accurately transcribed under

my direction further that said transcript is a

true and accurate record of the proceedings

Court Reporter

NEAL R GROSS COURT REPORTERS AND TRANSCRIBERS

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(202) 234-4433 WASHINGTON DC 20005-3701 wwwneairgrosscom

Page 8: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us

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usual

We will start in this case with

the permitee with La Paloma Energy Center

who I will refer to briefly as La Paloma I

suspect the other judges will be doing that

too for the record Because we have some

status questions for you which I assume will

not surprise you given our scheduling order

Those answers to those questions may inform

the rest of the discussion that we have here

today so we thought it best to begin with La

Paloma

Normally of course our practice

would be to begin with the petitioner the

Sierra Club So in this case Mr Bender Im

going to give you your choice as to whether

you would like to go second or third Some

people like to have the first word some

people like to have the last word

You also have the option if you

choose to go second after La Paloma to

reserve five minutes of your time for rebuttal

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after EPA What would you like to do

MR BENDER I I 11 combine both and

do it all together

JUDGE MCCABE Okay Thats the

way weIll proceed then WeIll begin first

with La Paloma

mentioned l if we didnt we should have in ourI

order to you l were not expecting you or

asking you to make any formal presentations

today I as you would in the normal oral

argument

In the interest of timel please

presume that weve read your briefs l that

were famil with the records And in the

interest of saving time and getting you out of

here weld like to focus right away on the

judges questions If you have anything that

you would like to say very briefly first l

thoughl please 1 us know that and feel free

Mr onso

MR ALONSO Thank you Judges

And we just want to first start off by

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recognizing and thanking you for expediting

this appeal I believe the briefs were

submitted on December 27th and the Board

reached out to us just a couple of weeks later

to schedule this argument So were really

appreciative of that We are prepared to

answer your questions presented in your order

as well as any other issue thats before the

Court

As to your first issue you asked

us to report on the status of the projects

First 1 me address the construction time

line We currently have all government

approvals that are required for pre-

construction as well as agreements that we

need wi th governments We have tax agreements

that were completed We have a water supply

agreement with the local water works We have

land agreements in place We have our TCEQ

Air Permit that was finali in February of

2013

The two main components that we

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are missing right now is number one

financing Financing is contingent on

receiving a final PSD permit Once we receive

a final agency action on the permit we expect

to close that financing in short order right

ter that

As far as construction we have in

EPC the engineering procurement and

construction contract completed That was

executed in September of 2013 So shortly

er this closing we can start construction

shortly right after that That was wi th

Bechtel Power Corporation and again they are

standing by ready to start construction

JUDGE MCCABE Most importantly

Mr Alonso could you address whether youve

selected your turbine yet

MR ALONSO Yes we are prepared

to talk about that We have preliminarily

identified the preferred turbine that we would

like to install at this site It is the GE

7FA turbine However we are currently

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various escalation clauses of our existing

contracts including for the turbine in the

sense that we have planned to be done with

this process on January 1st Not just the

contract for the turbine but for other

components of the site every day that goes on

the cl is paying escalation fees on that

contract

JUDGE MCCABE So do you have a

turb contract or not

MR ALONSO We do have a spot for

manufacturing of the turbine

JUDGE MCCABE So is that like

reserving a place in case you decide to put in

your order

MR ALONSO Correct And that

deadline is April 1st On April 1st we have

what happened ter January is that we

negotiated our escalation clauses through

April 1st Come April 1st I think that the

weIll come April 1st I we would have to

renegotiate that contract And most likely I

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we can maybe even consider selecting one of

the other turbines that are in this permit

So if we dont have a final permit

in the next you know -- and Im not putting

any pressure on you guys but as of April

1st I think that the well I know the

developer would like the flexibility to

install anyone of these three turbines

JUDGE MCCABE Im not sure Im

completely following you What happens -shy

lets try it this way What happens if you

get your permit tomorrow

MR ALONSO If we get our permit

tomorrow we would close our financing a

couple of weeks later and we could start and

then we would put in a notice for the

procurement finalizing the GE 7FA turbine

contract

JUDGE MCCABE And how soon could

that happen or would that happen

MR ALONSO That would happen

upon closing and we would -shy

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JUDGE MCCABE So are we talking

about a week two weeks a month

MR ALONSO Yes My

understanding the information that I have is

that closing can happen in its a matter of

weeks a couple of weeks after we receive a

final permit

JUDGE MCCABE Okay So when you

say youve preliminary picked this GE 7FA

turbine -- can we just refer to that as the GE

turbine

MR ALONSO Sure

JUDGE MCCABE Its the only one

right thats a GE Okay Well call this

the GE turbine Youve preliminary selected

that If you get your permit tomorrow is

there any reason that youll change that

choice

MR ALONSO Most likely not If

we get our permit tomorrow if we get it

before April 1st we are probably we are most

likely yes going to select we are going to

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select the turbine

JUDGE MCCABE Okay If you get

your permit before April 1st you will select

the GE turbine is that correct

MR ALONSO That is yes

JUDGE MCCABE And my

understanding of this turbine is that its the

smallest of the three and according to heat

rates the least efficient the one to which

the region has assigned the highest GHG

ssion limit is that correct

MR ALONSO That is correct

JUDGE MCCABE Okay That will

very much inform the rest of our discussion

Thank you Mr Alonso Do you know yet

another question on your preparation here do

you know yet where the facility will be placed

in the ERCOT dispatch order and whether it

will be operated as a baseload or load cycling

facility

MR ALONSO Our plan is to

operate this as a baseload uni t However we

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will respond to the ERCOT orders as they come

I mean in Texas our business plan is to

operate this as a baseload unit

JUDGE MCCABE Does ERCOT give you

any preview of that

MR ALONSO Excuse me

JUDGE MCCABE Does ERCOT give you

any advanced notice as to whether youre going

to be likely operated as a baseload or not

MR ALONSO Our intention is to

operate it as a baseload Im not qui sure

about we can follow up with you on that as

far as ERCOT notices Im not prepared to

talk about the ERCOT notices But to the

extent that ERCOT manages dispatching we will

comply with their orders

JUDGE MCCABE Okay And you

expect at this point based on current

condi ons which I understand can change if

other plants come online or other things

happen you expect based on current

conditions that youll be dispatched high

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enough in the order that this will be a

baseload plant and therefore it will be

operated at 100-percent capacity

MR ALONSO Pretty close to it

JUDGE MCCABE On a regular basis

MR ALONSO On a regular basis

we would like to have you know utilize this

as much as possible Keep in mind though

while we do have the you know as an EPA

administrative record yes larger turbines

may be more efficient But at the end of the

day they also have higher mass emissions

And so when you look at it from an

environmental perspective to the ent that

an environmental impact plays into that the

environment really feels the impact of the

mass limit more than anything else I believe

JUDGE MCCABE Understood Okay

Can you tell us a little bit about what was

the chief factor that drove the companys

selection of the turbine how important was

the capacity or size for example

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MR ALONSO I dont know the ins

and outs why they selected that turbine

I believe its just commercial terms It was

the better commercial term -shy

JUDGE MCCABE Would you like to

consult with your client at all to see if you

can clarify that answer

MR ALONSO Sure Shes here

JUDGE MCCABE This may help you

Some of the questions that were also

interested in are how important was the

capacity or size the uni t in terms of your

decision to s the GE turbine and how do

the relative heat rates or the GHG emission

rates affect decision Did they affect

that decision if its made

MR ALONSO The way that this

project was developed is that we went out for

competitive bids of at least three turbines

And based on the necessary heat rate the

forecast of demand that was the basis of the

select ion It was not based on you know any

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other factors except for trying to meet the

purpose of the proj ect which is to supply the

load and the heat rates and the financial

arrangements that resulted from that bid

process

JUDGE HILL Was that forecast of

demand strictly internal or was it something

dictated by either EReOT or some other

external entity

MR ALONSO La Paloma is a

merchant power plant Wei re not regulated so

its not that wei to extent that your

question is to whether or not we had any

regulatory oversight -shy

JUDGE HILL Or just external

information or some sort of external driver

I guess

MR ALONSO me consul t wi th

- sorrYI I just wasnt prepared

JUDGE HILL No thats okay

MR ALONSO So specific

questions Okay

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JUDGE MCCABE But we appreciate

your corning

MR ALONSO But Im glad that

Kathleen the proj ect developer Kathleen

Smi th is here wi th us today When you develop

these projects yes they went out they had

third party evaluations of load demand and

what would fit for this market absolutely

JUDGE HILL Okay

MR ALONSO I mean its -shy

JUDGE HILL Let me ask one other

follow-up You said at the very outset Mr

Alonso that you had preliminarily identified

the GE turbine and the record before us is

that certainly at the time of the application

that decision hadnt been made Im not

asking for a specific date but roughly when

was that determination made relative

because Im curious how it relates to this

proceeding

MR ALONSO So again we made

the selection based on closing in January but

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the selection of the turbine was made in

August expecting to be you know

manufactured and installed in January So to

answer your question it was August of 2013

JUDGE HILL Did you communicate

that to the region at that time

MR ALONSO No because again

because of the timing of this permit it is a

preliminary determination At that time in

August if we were 100-percent certain that we

would get a permi t in January sure we

probably would have you know told the region

and maybe the final permit may have looked

differently But we couldnt put our eggs

all our eggs in that one basket at that time

JUDGE MCCABE What was your

understanding Mr Alonso of what the region

planned to do once you made your turbine

section Will they revise your permit or

leave in those three original limits

MR ALONSO We have a special

condition in the permit that requires that La

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Paloma submit an amended permit application to

remove the other two turbines that are not

selected from the permit So it would be a

deletion of the two other turbines that are

not selected

JUDGE STEIN Why if youve made

the decision to proceed with this particular

turbine if you receive your permit within the

time frame that is necessary for you would

you be revisiting that question if you dont

get the permit until May

MR ALONSO If we -shy

JUDGE STEIN Just hypothetically

if you get the permit a month after why is it

that suddenly thats an open question again

Im having difficulty understanding that

MR ALONSO Correct Our current

negotiations on the escalation clauses of the

contracts we have currently negotiated terms

through April 1st At that point youre

right we would have an option to negotiate

further or more likely than not we could we

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might go through another bid process to

determine whether or not maybe another turbine

might be more beneficial from an economic

perspective to install

JUDGE STEIN Thank you

JUDGE MCCABE Just to make sure

the record is clear on this though at this

point youre telling us that if the company

gets its final PSD permit from EPA before

April 1st it will be the GE turbine

MR ALONSO That is my

understanding

JUDGE MCCABE Okay Would you

like to qualify that statement

MR ALONSO Right The problem

is that again we cannot make a final

decision on the turbine until after we get the

permit because youre only going to reserve

your place line for a certain amount of

time at the manufacturing plant

JUDGE MCCABE But if you get your

permit tomorrow or anytime before April 1st

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or perhaps you need a week advanced notice

then you would be choosing the GE turbine We

can rely on that

MR ALONSO Yes

JUDGE MCCABE Is that correct

MR ALONSO More likely than not

we will be selecting that turbine

JUDGE MCCABE When you say more

likely than not or preliminary then Im not

sure what youre telling me Mr Alonso

Which is it Will you have that GE turbine be

your selection

JUDGE HILL What else might

prevent you from going ahead with the GE

turbine if there were a decision before April

1st is another way to ask the question

MR ALONSO To maintain

flexibility I mean thats one of the

purpose were here I mean if we get a call

tomorrow from Siemens saying that theyre

going to give us the turbine at five cents

maybe wed go with the Siemens

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JUDGE MCCABE So price matters

MR ALONSO Absolutely

JUDGE HILL Price really I I meant

but

MR ALONSO The likelihood of

that is minimal

IJUDGE HILL But let s explore

that for a second because it sort of takes us

to the other direction So if you so ifl

Siemens were tOI you know I mean I and I can

certainly relate to this 11m trying to do

some home maintenance But so they come in

with a bid youre not expecting l and you saYI

You know what That I s the one we should go

with thats going to be one of the larger

turbines So what will happen in terms of

your demand forecast or I I meanl how will you

operate that plan

MR ALONSO It may not fit the

business plan at the time I meanl we would

like to maintain the flexibility of selecting

the turbine as much as we can in this final

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permit Everything is in place that if we

were to get a final permit tomorrow that the

GE turbine would be used However we still

want I dont want to tell you that its 100shy

percent guaranteed We would like to maintain

that flexibility

JUDGE MCCABE But you understand

s your very desire to maintain that

flexibility that leads us all to be here

today right As I understand it the main

issue that the petitioners have with the limit

that was chosen in this case is the fact that

you are reserving flexibility to make this

choice after you get your permit

MR ALONSO But the limit is the

limit doesnt satisfy region as appropriate

and valid under BACT What the permitee is

arguing here today is that somehow we start

off with a class of control devices The

region has identified combustion combined

cycle turbines as a control class That is

your step one BACT is an evolution all the

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way through step five Once you get to step

five the purpose and the intent of step five

is to impose an emission limit looking at

those control devices and its not just

combined cycle We have a whole list of

technologies that were identified by the

region that apply to each of these turbines

At that point you look at the

ssion unit and you develop a unit-specific

emission rate that reflects the technology as

its supplied to that particular emission

unit

JUDGE MCCABE Dont you also look

at comparable units located at other

facilities when the permitting authority makes

that decision

MR ALONSO Absolutely You look

at technologies at other through the

clearinghouse and other technical information

That is your step two analysis absolutely

JUDGE MCCABE Then why wouldnt

you look at other turbines that are available

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MR ALONSO Im sorry

JUDGE MCCABE Then why wouldnt

you look at these other turbines that are

available

MR ALONSO You look at the other

turbines as - - well f are you saying the other

turbines that are mentioned

JUDGE MCCABE The Siemens

turbines

MR ALONSO The Siemens turbines

and the GE turbines have the exact same

technology installed Again at the end

and Siemens does not make the identical

products Theres going to be some

variability amongst those products and I

would argue that the actual impact of these

units or these emission rates arent that

off from each other But in step five the

region looked at the turbines and looked at

as this board has approved in the past and in

particular in Prairie State the ability to

take into consideration operational

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variability compliance headroom and other

factors made to ensure that the BACT limit at

the end of the day is workable and something

that can be achievable from a compliance

perspective

JUDGE MCCABE Mr Alonso wed

like to go on to that subject of the relative

heat rates and therefore the GHG emission

rates of these three turbines But before we

leave the subj ect that we are on of the

criteria that the company used perhaps past

tense or might in the future if something

unexpected happens use in the future to

select the turbine I heard you say two

primary things And I know were several

beats back on the questioning now But I

heard you say the forecast of demand how much

power you can 1 -- Im sure where ERCOT

will dispatch you is part of that equation -shy

and the heat rates Are those the two most

important factors to the company in selecting

the turbine Price obviously has something

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to do with this too

MR ALONSO Yes I mean and the

result of the bidding process and how that

and the third-party analysis of the energy

demand and everything else Absolutely

JUDGE HILL So are you really

saying to a large extent price is the

primary driver

MR ALONSO No not necessarily

I mean its what fits for this particular

you know looking at the forecast -shy

JUDGE HILL But its the balance

of price to demand to efficiency

MR ALONSO Sure Im sure

There is a cost component to this but its

not a cost component as specified in step four

of the BACT analysis

JUDGE HILL No Im not doing

BACT right now Im talking about just the

decision of which one to install

MR ALONSO Sure Its a

business decision and the product developer

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would like to maintain that flexibility At

the time the permit was submitted we

concurrently went and did basically a dual

process of trying to get a PSD permi t and try

to come to terms with all these agreements

whether the turbine or your tax agreement

your water use agreement And thats why our

initial application had three turb s in it

To say that we had to do I that

work up-front and then wait another two years

to get a PSD permit it would really delay the

proj ect and lose a window opportunity

currently right now at ERCOT where there are

some energy constraints in Texas This is a

very good time to build a gas-fired power

plant in Texas

JUDGE STEIN I want to follow up

Are you -shy

JUDGE HILL Yes yes

JUDGE STEIN I wanted to follow

up on your decision of the ous steps of

the BACT process I understand your wanting

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to have flexibility to the last possible

moment At the same time ordinarily in the

step two analysis you would be looking at

whether technologies are available and

applicable And if somebody was going to

drive the company to say you should build a

size thats too small or too large its my

understanding that there would be an

opportunity at that point for commenters to

explain why a different size unit might be

appropriate and you in turn would have an

opportunity to say well that doesnt work

for us

But by keeping the flexibility

until the end of the process my question is

whether you have deprived either citizens

groups or other comn1enters of the opportunity

to meaningfully comment at an earlier phase of

the process And therefore by keeping your

flexibility to the last moment you are

perhaps you should assume the risk for having

done that

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I mean in pio Pico we briefly

talked about the sizing issues Weve

acknowledged I understand your points on you

get to pick the size But if you pick it so

late in the process that nobody else can

meaningfullycomment notwithstandingthe size

you want to pick if you pick it a little

bigger its much more efficient how can that

happen if you wait until the end the

process to choose to say what technology you

the company want to go with

MR ALONSO First of 1 you

know recognizing BACT and step two Im not

aware of any precedent in PSD permitting or

from this board that somehow size and

itself is a control device Step two and to

a certain extent I step one is to identify

control devices you know technology that

would be applied to a given emission unit or

a given source And I believe that its been

pretty well established that the permittee has

a lot of flexibility in deciding the design

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factors in how the plant is designed I

would you know ask the Board to consider

that size is not a control device its more

a design criteria that is used by permittees

when they go to design a source

IJUDGE STEIN Yes I m not

thinking of size as a control technology I

see the control technology as combined cycle

turbines But when you look at combined cycle

turbines youve looked at three different

models They have different efficiencies We

can get later people can tell us whether

theyre comparable or theyre not But if the

company is headed towards a particular

efficiency and the agency or other commenters

think they should be headed elsewhere that

this particular technology combined cycle

turbines can get you a more efficient

process where in the process are they

supposed to raise that

MR ALONSO They could raise that

in how the technologies are defined and

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developed in step two

JUDGE MCCABE You may be hurting

Mr Richies ears doing that so

MR ALONSO Sorry sorry Region

6 identified roughly four different energy

efficiency and processes or practices that

apply to the class of this technology which

is a combined cycle class The public has

full opportunity and they had in this permit

to comment on exactly that whether its

installation whether its installing an

efficient heat exchanger design economizer

exhaust steam These are the control devices

that apply to the class of technology which is

whats known as combined cycle

That list today is what we have

today That list was different ten years ago

and its going to be different ten years from

now because BACT evolves That is where the

public has its say

To set a one-level you know all-

combined cycle must be 90 the 9092 pound

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I Iper C02 megawatt hour that s not BACT BACT

is set on a case-by-case emission unit-

specific basis What Sierra Club is basically

asking this board to consider is taking that

one limitl the 90921 and apply it to two

other totally different combined cycle

turbines I and I dont see that as what is

intended by BACT

JUDGE MCCABE That brings us to

an interesting question Can the GE turbine l

which you are most likely to select l to quote

you l achieve the GHG emissions rate that the

region established the Siemens turbine

MR ALONSO First of all weI

think that to require the GE turbine to meet

that limit would be asking the permittee to

over comply with an adequately-developedBACT

limit We dont think -shy

JUDGE MCCABE 11m asking you for

a factual answer l Mr Alonso

MR ALONSO From a factual

question l I mean l 1 1 m not

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JUDGE MCCABE Would you like to

consult with your client

MR ALONSO Yes okay We are

not prepared at this time to say 100 percent

whether or not we can meet that limit What

we would have to do is possibly de-rate We

might have shy

JUDGE MCCABE Possibly what

MR ALONSO De-rate the unit

JUDGE MCCABE De

MR ALONSO The unit may be not

at its maximum capacity

JUDGE MCCABE What would that do

Explain that

JUDGE HILL You mean run it

greater than capacity

JUDGE MCCABE Yes he means if

they de-rate it that they would operate it at

less than its 1 capacity What would that

do to your heat rate

MR ALONSO Probably not much

But they would have to do something

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operational to unit to basically comply

with that limit Plus we would not have the

compliance headroom that was developed for

degradation factors We might be able to meet

it day one but who knows in ten years And

just operation flexibility It would be

really difficult to commit to that limit

JUDGE MCCABE Let me see if Im

understanding you correctly I hear you say

that de-rating it would be one option to meet

that GHG emissions limit because its a total

limit even though your efficiency rate would

clearly go down if you de-rated it I hear

you saying that option number two would

essentially be to take it out of your

compliance margin which the petitioner has

characterized as generous I believe in its

comments on this permit Are those the only

two ways that the company could meet the heat

or the GHG emission limit that the region set

for the Siemens turbines in using the GE

turbine

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MR ALONSO I mean we can follow

up wi th the Board on this but to the extent

of whether or not theres other engineering

solutions or modifications to that turbine

that could be done tOI you know l basically

change the design of this unitl I meanl I

think that I s why we went through the BACT

process l though I meanl the end-of -day

emission limit is based on vendor information

that we obtain from GEl and the region took

that and applied the control technologies to

those numbers I and thats how we establish

BACT limits at the end of the day is you take

those control technologies and you impose them

onto the uni t that s supposed to be buil t I youI

work in compliance headroom l and it wasl you

know I and this board is generally deferred to

EPA techni staff on issues about compliance

headroom and whats -shy

JUDGE MCCABE I dont even think

thats an issue on this appeal l so you dont

need to go there

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MR ALONSO Well no no no To

the extent that you said that the Sierra Club

thinks that compliance headrooms are generous

JUDGE MCCABE That was just a

comment They didnt raise it on appeal

MR ALONSO Okay

JUDGE MCCABE But let me ask you

this Mr Alonso Im hearing essentially

that the only two ways that you could that

the company could meet the limit on the GE

turbine would be to either de-rate it in

which case youre not getting the power that

you want out it or to take it out of your

compliance margin which is effectively

somewhat lowering your limit really

But Im puzzled about one thing

Didnt the company in its original permit

application propose to use the average of

propose to set the permit limit at the average

the GHG emission rates or heat rates of the

three uni ts the three turbines And if

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thats the case isnt that an admission that

you can actually meet the more-demanding

emission limit on the less efficient unit

MR ALONSO Let me just say when

we initially submitted this permit

application we used the LCRA permit that

Region 6 had processed and finalized in a

period of six months

JUDGE HILL Im sorry What is

LCRA

MR ALONSO The Lower River

Colorado Authority They permitted a gas

plant in Region 6 It was not appealed to

this board So we modeled it after that

application

JUDGE MCCABE You modeled your

application after theirs

MR ALONSO To a certain extent

because it worked at Region 6 as far as this

averaging It turns out that once between

draft and final LCRA was able to select the

turbine and they selected a turbine The

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timing worked for them given their

development path

JUDGE MCCABE Im sorry You

said they selected theirs between the draft

and final permits

MR ALONSO They did And ir

final permit came out with one turbine But

thats a different project dif

development path

JUDGE HILL Well but I think the

question is youre saying that if you were to

apply the Siemens emission limit to the GE

turbine that that would over comply But if

the permit limit were set at the average of

the three and you would as you apparently are

almost likely to do select the GE turbine

then youre going to meet a lower limit than

the limit that would have been set on the GE

turbine alone So would you have been arguing

that that was over-compliance as well

MR ALONSO I mean the record

speaks for itself I mean obviously if we

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submit a permit application agreeing to a

certain limit we would have to you know

probably shave our compliance headroom But

it doesnt it doesnt I mean the issue

before the Board though I believe is whether

or not Region 6 acted properly in its BACT

analysis of these three turbines of these

particular emission units Whether or not a

unit can over comply or whether a permittee

can take a voluntarily limit to reduce its

emissions I believe thats outside of the

BACT process

JUDGE STEIN But I think what is

inside the BACT process is whether or not the

emissions limit that the region has selected

is in fact BACT And thats what Im

struggling with This case comes to us in a

somewhat unusual setting in that I dont

recall in my many years on the Board ever

seeing a situation and its possible that we

did in which three different emissions limits

were picked for the same unit

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Now Im not saying its not

happening Im simply saying that I dont

have any experience with that And what Im

more famil with is a control technology

being p whether its I you know a

scrubber or something else and within thatl

technology I the company being called upon

through the BACT process to meet an emissions

limit that reflects the best emissions limit

that that technology can achieve

And if the technology is combined

cycle then clearly there are certain sizes

of combined cycle that may be able to achieve

a better emissions than the unit that youre

picking And I dont have a problem with

somebody saying to me well we can I t do that

because of A B and C But my problem is

whether BACT automatically gets picked by

size rather than what the class of technology

is capable of performing

MR ALONSO Again I think two

points as to previous practices I meanl we

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have identified seven GHG permits or Im

sorry PSD permits that have throughout the

country and different permitting authorities

further research identified five more where

you have two or three emission units and all

units have dif rates They range from

California Arizona Florida Oregon North

Carolina So it is an established

practice out there in the permitting

JUDGE STEIN Were those

federally-issued permits or state-issued

permits if you know

MR ALONSO They were well you

know they were all state-issued permits but

some of those were in delegated states such

as Washington the s of Florida so they

are federal permits I agree that I dont

believe that this issue has come before the

Board but keep in mind BACT is a progression

And I think in step one the technology is

combined cycle And you take that technology

and you run it through the five steps But at

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the end of the day in step five if you take

the design of the emission unit thats being

proposed to be installed and you take those

technologies you know the use of rehea t

cycles the exhaust steam condensers the

generator design and all these things apply

to each of the three turbines

And at the end of the day in step

five whats the purpose of step five The

purpose of step five is to take that

progression and look at the emission unit

being proposed and develop an enforceable BACT

limit BACT is a limit based on technology

thats being identified through the step one

through four

JUDGE HILL Thats basically the

three separate applications argument am I

correct

MR ALONSO At the end of the

day we could have possibly submitted three

different applications and you would have had

to - - to do otherwise you would be basically

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setting sort of like an NSPS where you say all

combined cycles need to meet this one limit

across the board No matter where you are l

who you are l which manufacturer you use l what

color your turbine iS you need to meet thisI

limit Thats not what BACT is

JUDGE MCCABE Well the problem

with that analysis of course Mr Alonso isl

that if we take it to the full ent of what

youre suggesting you get to pick the

emission limit according to which turbine you

pick And I dont believe thats what the

permitting authority is supposed to do But

we dont need to debate this issue further

Wed like to turn before we leave

you and go to EPA 1 to the solar issue And my

question to you is is it possible -- again

here were talking facts not legal conclusion

to install some solar-generating capacity

at this proposed facility And what

information in the record can you cite us to

support your answer l whatever that answer is

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MR ALONSO On the solar pre-heat

issuel first of alII solar pre-heat is not a

control device to be identified in step one

Your factual question l can it be inst led at

this ilitYI in a meaningful waYI no We

only have 20 acres left over after we build

this proj ect

JUDGE HILL Is that in the

record

JUDGE MCCABE Is that in the

record

MR ALONSO NO I it is not Its

not in the record because againl what is in

the record is that Region 6 determined that

installing based on this boards precedent l

installing solar pre-heat or using solar as

some type of alternative fuel for this plant

would be re-designing the source

JUDGE MCCABE Well go back to

your explanation about the 20 acres Explain

to us

IMR ALONSO Okay First theres

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the 20 acres There s not enough space I landI

to make solar pre-heat a feasible or economic

technology Palmdale had 250 - something acres I

you know l a vast amount of land

Second l this plant is pretty close

to the Texas coast vulnerable to hurricanesI

Who knows if regulators of local communities

would even let us build such a large solar

field in this areal given the threat of

hurricanes

JUDGE MCCABE Is there anything

in the record for us to look at on that

IMR ALONSO No I again in the

record solar pre-heat is defined aS I would bel

redefining the source And this board has

already ruled on this issue In Palmdale thel

petitioner sought to have Palmdale install

even more solar energy than it already had

proposed and this board said that that wouldl

be redefining the source

JUDGE MCCABE I don I t bel ieve

lthat s what we said Mr Alonso I believe we

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said that redefining the source was clear if

you were talking about making it a 100-percent

solar facility

MR ALONSO Correct

JUDGE MCCABE That is quite

different from what youre talking about here

MR ALONSO Well I point the

Board then to Sierra Pacific In that case

there was a dual fuel plant biomass as well

as natural gas and the petitioner sought to

have the permitting authority to force

installation of solar and this board there

said it was redefining the source

JUDGE MCCABE And what did they

base that on

MR ALONSO Im sorry

JUDGE MCCABE I dont believe

that the Board made such a broad statement

that any time you introduce solar that it

would be redefining the source Do you recall

in Sierra Pacific what the reason was that the

Board concluded that

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MR ALONSO I do not

JUDGE MCCABE Okay Well I

wont make you do that homework right now We

actually know that Go ahead back to if you

would to the factual question because thats

the one were most interested for todays

purposes about whether its actually possible

and what there is in the record that t Is us

yes or no on that

MR ALONSO Okay Well first Il

mentioned that theres not enough land l the

hurricane situation The second issue is

Paloma is not in the renewable business They

doni t have the resources to go out and do

solar studies They would need to retra or

redo their business model in order to look at

alternative energy or renewable energy

JUDGE MCCABE Do they build their

own turbines

MR ALONSO They build gas

turbines yes

JUDGE MCCABE They build them or

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they buy them

MR ALONSO They dont do wind

they dont do solar

JUDGE MCCABE Do they use

subcontractors

MR ALONSO I mean this is

something that they would have to develop as

a business unit and will take time to go out

and get experts hire them on staff or go get

third-party folks Its just not part of

their business plan

JUDGE MCCABE Mr Alonso what do

you think the company responded the first time

the first company was asked to put on an SCR

MR ALONSO They probably said it

was unfeasible

JUDGE MCCABE They probably did

They probably also said they werent in the

business There has to be a first time

doesnt-shy

MR ALONSO No I think that as

far as being in the business I mean theyre

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in the business of burning coal And they

know that they have to put on pollution

control -shy

JUDGE HILL And I think Sierra

Clubs argument would be that La Paloma is in

the business of generating energy as

efficiently as possible in South Texas I

mean put aside the hurricane issue for a

moment but if there were enough land you

know the stated business purpose in the

application is to produce between 637 and 735

megawatts of energy I mean thats the

stated business purpose not to produce it

per se exclusively with natural gas That

may be their preference but Im not sure

thats what the record shows

MR ALONSO I mean the purpose

of citing this plant is to use the reclaimed

water from the municipality as cooling water

Theres also a natural gas pipeline close by

to this facility That is -- and the intent

is to maximize the use of that gas pipeline

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You know shy

JUDGE HILL And that is in the

record

MR ALONSO That is in our brief

JUDGE HILL Okay

MR ALONSO But again I dont

believe that solar pre-heat would even survive

step one I mean youre king about a

redesign the source by forcing folks to

consider renewable energies at a fossil fuel

plant where thats not the intention of the

design And this board has allowed and has

recognized the ability for permit to

define the parameters of their design what

they want to build and I dont think we you

know well you guys can do what you want but

to force folks that want to build fossil fuel

natural gas plants to build wind turbines I

dont know that sounds like -shy

JUDGE MCCABE Do you know if

theres any situation where any permitting

authority has done that in the United States

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yet

MR ALONSO I have not seen a

BACT analysis resul ting in or you know to do

as an alternative particularly in step one

to consider the feasibility of a renewable

project I dont have any knowledge of that

occurring at other permitting authorities

JUDGE STEIN But what about a

hybrid pI I mean I dont think whats

being suggested here is that you convert the

principal purpose of the gas turbines I

think the question thats being asked is

whether any component of it could be solar

and I think what the Board is struggling with

is in a si tuation in which solar is not

already part of the plant design is it proper

or improper to raise questions about that If

so what is the regions obligation

I mean I dont see this as sort

of a black and white issue I see it as

youre lling us theres 20 acres Maybe

thats the record maybe its not That

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may be relevant to how you answer that

question in this case as opposed to some

other case

MR ALONSO It really goes to

whether or not solar or renewable energy

should be considered a control device in step

one And I would assert no its a different

fuel source Youre redesigning when people

go to build solar plants or hybrid plants

even hybrid plants you go in and thats what

you want to build and you have a business plan

and an engineering design for a hybrid plant

and thats what you want to get permitted

But if youre out building a gas-

fired power plant and solar is not a

component I mean nowhere in the record is

there anything about La Paloma interested in

building a solar plant We want to build a

natural gas fire plant and thats the source

that should be permitted not some alternative

design And a hybrid plant would be forcing

basically brand new engineering you have to

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study you know solar rays and the impact

whether or not its efficient in this area

It would just be a totally different design or

engineering effort to design a hybrid plant

versus the plant that were trying to permit

here

JUDGE MCCABE Okay Thank you

Mr Alonso We take your point and you may

be seated And we will hear next from EPA

and Judge Hill will take the lead on questions

for EPA but be resting assured that we will

all have questions for you

JUDGE Let me start by

asking how you pronounce your name so I dont

mess it up

MR TOMASOVIC I will generally

say Tomasovic but

JUDGE HI Tomasovic

MR TOMASOVIC - - Tomasovic is

fine if you want to go old country

JUDGE HILL What do you prefer

MR TOMASOVIC Tomasovic

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JUDGE HILL Tomasovic okay So

this is purely a hypothetical question but

in your experience or in the experience

generally of the region when does a permit

applicant decide what their you know what

their turbine is going to be or what their

size is going to be or the precise design

factors of the source Does it typically

happen before they submit the permit

application after both

MR TOMASOVIC I think it could

be a variety of things your Honor Looking

through historical permitting actions we did

find that there are a couple of cases that

happened before the Board that had permit

structured such as this that had permitted

multiple turbine options You wouldnt be

able to see it from the face of the decisions

and it wouldnt be something that you could

discern from the challenges that were raised

but the Three Mountain Power decision in 2001

is one such example and there was a case

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where a petition was dismissed for being a

minor source permit But clearly on the

face of that decision which was Carlton Inc

North Shore Plant in 2001 it described a

minor NSR permit with multiple turbine

options

JUDGE MCCABE Could you repeat

the name of that one please

MR TOMASOVIC Carlton Inc

JUDGE MCCABE Carlton Inc

MR TOMASOVI C North Shore

Plant

JUDGE HILL Do you have a cite on

that or you said it was dismissed as -shy

MR TOMASOVIC It was 2001 and

it was a published decision your Honor

JUDGE HILL Okay Now my

understanding of Three Mountain Power is that

they allowed for different equipment but they

only specified a single emission limit

MR TOMASOVIC It does show that

in the RBLC sir but we tracked down the

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permit and actually what happens is

different permit issuers will input different

data into the RBLC We gave you approximately

ten RBLC numbers and in almost all those

cases you are going to see different BACT

limits depending on what types of BACT limit

is being assigned

And under the Three Mountain Power

permit that was issued there were multiple

types of limits other than the concentration

limits So the hourly limits the pounds per

hour limits the annual ton per year limits

just as in our permit show that with each

turbine option different limits apply

JUDGE HI And what was the

control technology in those cases or can you

generalize on that I mean one of the things

that makes this a challenging case I think

in part is because the control technology is

I I mean you know is also essentially the

plant design because what youre trying to do

is simply maximize the effici use

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inherently Are those others cases are any

of those similar or are they all about add-on

technologies

MR TOMASOVIC I bel ieve these

days the conventional thing is that for add-on

control technology wi th turbines is SCR For

other limits such as PM and carbon monoxide

youre assigning limits inherent to good

combustion practices inherent to the equipment

that is selected And thats reflected in the

TCEQ permit that was issued for La Paloma in

this case which like ours followed an

application that asked for the flexibility to

consider multiple options And as a

practical matter when the permit writer is

assigning those limits they have to look at

the specs inherent to the turbine in assigning

both the worst case emissions but also those

emissions that reflect whats good operation

on an hourly basis

JUDGE HILL Does the TCEQ permit

have this condition that says that once the

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turb selection decision is made then the

permit is going to be amended to basically

take out reference to the other two turbines

MR TOMASOVI C It does and I

believe that may be a practice that varies by

permit issuer I didnt notice that when I

looked at the Three Mountain Power permi t I

also have on hand a listed RBLC number for a

orida permit in 2000 I didnt notice

provision there

For what we have as a special

condition theres no time set requirement on

when they would need to come in and modify it

Its more of a back-end cost-keeping

requirement where they indicate what their

selection would be and the permit issuer

would simplify the permit so its more

readable enforcement purposes

JUDGE HILL And thats the reason

to do it Because if you take Mr Alonsos

argument kind of to its logical conclusion

then they get to select the turbine and

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therefore they get the limit that applies to

that turb But youre saying that that

condition was put in there just to make the

permit cleaner to read in essence

MR TOMASOVIC Its not the case

as the petitioners have argued that they get

to choose their emissions rate Thats not

what they to choose They get to choose

their capacity they get to choose the

equipment and the various designs of equipment

that we couldnt differentiate for efficiency

purposes in assigning limits for a final

permit

So even as those limits look

numerically different in the permit we have

a technical decision on the part of the permit

issuer that says these are comparable and they

dont implicate a weakening of the BACT

requirement that we decided to assign the

limits this way

LL I want to come back

to the comparable because I think that thats

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an important issue But getting back to this

full issue of basically the selection

decision Sierra Clubs essential argument is

that since the control technology here is

maximum efficiency within a range and given

that La Paloma defined the business purpose as

build a plant thats between the capacity of

the smallest capacity turbine and the largest

capacity turbine that they should have to use

the most efficient control technology which

in this case would be the most efficient

turbine Do you agree Could the agency have

told La Paloma look you can pick whatever

turbine you want but youve got to run it as

if it were the most efficient because thats

BACT Does the agency have that authority

MR TOMASOVIC Speaking for

Region 6 with this permit there are multiplel

ways that I think permit issuers could have

decided to come out in the final permit We

decided l based on the design heat rates the

best data we had for the operational factor

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that would apply to this equipment plus a

consistent safety margin for all three

options that there are these three limits

that come out

And if we chose to express those

limits in their different format for instance

the net heat rate the picture would actually

be qui different So it is a distorted a

bit of a distorted picture to say that GHG

BACT on a gross output basis is the ultimate

measurement of what is efficient

JUDGE HILL Why would it look

different Please explain that further What

would happen if you use net

MR TOMASOVIC So what appears

from the of the permit is that the

largest difference in efficiency is 27

percent In our response to comments on page

II we actually provided the numbers to show

what that dif would look like on a net

basis which is I believe the format that

the limits were expressed in the Palmdale

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decision l as well as even earlier permits

issued by Region 6

And permit issuers do have

discretion at this timel in the absence of

guidance to consider the comments that comeI

in and decide which type of limit is going to

be most meaningful for putting BACT in place

But -shy

JUDGE LL So I cant do math in

my head but Im looking at those numbers So

youve got for the GE turbine the net heat

rate would be 7527 and for the Siemens it

would be 7771 Isnt that about two and a

half percent I or is it less than that

MR TOMASOVIC WeIll I think what

you want to look to is if you can see a 9452I

number -shy

JUDGE HILL Okay That I S the

emission limit

MR TOMASOVIC -- and the 9444

number

JUDGE HILL And then a 965

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number

MR TOMASOVI C I f you were to ask

what the percent difference is there you

would have one-tenth of one percent of a

difference which expressed as gross shows

up as 27 percent And this is one of the

challenges with such a narrowly-written

petition It didnt challenge the reasonable

compliance margins that we assigned to each

option and it doesnt bring up issues like

the start-up emission limits which in factiI

give a different rank order if you could usel

that terminology for each of the turbine

options

JUDGE HILL All right So are

you saying that if you I mean I based on thisI

chart on page 111 that I I mean I the response

comments references the 26 earl on butl

its also got this chart And youre saying

that that chart shows that its really tiny

MR TOMASOVIC Yes your Honor

If we chose to place a final permit final

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limits in the permit on a net basis using the

same calculation methodology it would be one-

tenth of one percent

JUDGE HILL How do you decide

whether you set the limit on a gross basis or

a net basis Because I know Ive seen both

MR TOMASOVIC In this case we

evaluated the adverse comments on the issue

we looked at what was going on for instance

with the proposed NSPS which expresses those

limits at least in a proposal form on a gross

output basis We saw that in general a lot

of the performance data that is out there is

available on a gross output basis so we

decided that for permitting purposes

permitting administration purposes and for

the benefit of other permitting actions it

seemed that gross output made sense for this

permit

JUDGE HILL Okay But you had

the discretion to pick net

MR TOMASOVI C Well we dont

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close off ourselves from choosing net base

1 imi ts in future permits if for instance the

NSPS were to on the basis of comments decide

that net basis really is a preferred way to

go But we have a reasonable basis for this

permit to say so And in saying that were

not purporting to say anything that would be

determinative of how state permitting

authorities or even other regions might choose

to assign the limits for a permit that

guarantees efficiency and control of GHGs

JUDGE MCCABE I just want to get

some clarity on again the facts I love

facts If the numbers here that were going

to be looking at when we decide whether we

agree with the regions position that these

limits are really not different that theyre

comparable or whatever language you use to

describe them how would we describe that Is

it 01 percent are you telling us now Is it

27 percent Is it a range from 01 percent

to 27 percent The world looks closely at

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the facts of what we were looking at when we

draw the conclusion l so the facts matter and

311 m a Ii Ie unclear about them right now

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MR TOMASOVIC Yes l your Honor

So 111 try and go over the notes I have on

the comparability of the limits in maybe an

orderly shy

give me a

feel free

that the

JUDGE MCCABE I was hoping youd

sound bite in the end but please

to go through the notes

MR TOMASOVIC The first thing is

permit actually assigns three

different kinds of emission limits the ton

per year the start-up limits which are on a

pound-per-hour basis and this gross output

when its sendingelectricityto the grid how

efficient is in relation to the output

So if you look at those three

different limits and were to assign a rank

order under kind of turbine model I you I re

actually going to get three different orders l

permutations I suggest thatthere dif

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the net limits was another possibility for us

You would get a fourth order if you were to

assign -- and actually nothing would have

permitted us from assigning both kinds of

limits and that limit and a gross limit but

that would have been duplicative So we

decided these are the limits for the permit

So looking just at that the basis

for the challenge which is the gross limits

you have a smallest difference of one-half of

one percent Thats the difference between

909 to 912 The largest apparent difference

is 27 percent which is the difference from

909 to 9345 And this difference is not a

difference in efficiency In the commenters

letter they do throw around the term

efficiency but sometimes thats using the

context of what is power plant efficiency

which gives you a different comparison If

youre talking about engine efficiency or

power plant efficiency the 27 percent

difference is actually 12 percent

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JUDGE HILL Why is that I was

with you until that sentence

MR TOMASOVIC So

JUDGE MCCABE I think we need a

chalkboard

MR TOMASOVIC That calculation

and I think maybe the footnotes in the comment

letter explain it as 3412 divided by the heat

rate And another issue is that the

commenters use actually lower heat value for

their descriptions of the heat rate whereas

our permit is using the high heat rate

information to get the limits

But that 12 percent difference in

efficiency that kind of efficiency power

plant efficiency were talking about is what

you may read in -shy

JUDGE HILL Can you define power

plant efficiency for that purpose for me

MR TOMASOVIC Yes sir The

definition of power plant efficiency would be

what is the heat rate value of the kilowatt

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hour divided by the heat rate for the power

plant or the turbine

JUDGE HILL Okay

MR TOMASOVIC And in our case

our limits arent just the heat rate for the

turbines as though they were in simple cycle

mode but the heat rate for those turbines in

conjunction with the heat recovery steam

generator with duct burner firing So theres

a number of things going on

And we had explained that as

turbines get larger they get more efficient

And thats actually true for several reasons

but in this case its not actually because

the GE turbine is demonstrated to be

inefficient Thats not the case Its

actually the influence of the duct burners

which wasnt something that the petitioners

raised in their appeal Because each scenario

has the same size duct burners they have a

disproportionate impact in the overall heat

rate We assigned limits that included

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everything l and thats why I when Mr Alonso

was talking about de-rating that may be a

situation where is easy to figure out that

youre just cutting into the compliance margin

if we had decided to set them all the same

limit but also might be a case where they

really put limits on their use of duct

burners which cuts into the operational

flexibility that they want to have as base

load plant that has peaking type capabilities

JUDGE HILL In other words you

cant sort of size the duct burner to the size

of the turbine or

MR TOMASOVIC No your Honor

In this case the HRSG with the duct burners

is assigned to be the same for all three

scenarios

JUDGE HILL Okay all right So

is 27 percent the largest when you talk

about tons per year startup gross output and

net heat rate is 27 the largest difference

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MR TOMASOVIC Well sir if you

were to count the annual ton per year

differences each capacity scenario is

actually about 10 percent larger than the

next If you look at the annual ton per year

limits I think the differences might be 6 or

7 percent but youre just building up your

plant with the bigger greenhouse gas impact

overall and -shy

JUDGE HILL Well the reason I

ask that question is because in your brief

you talk about that you dont need to look at

alternative control technologies that are

essentially equivalent In response to

comments it talks about these turbines are

quote highly comparable and there are

marginal differences between them So theres

a lot of words thrown around that all seem to

imply small or not significant but which one

do we use I mean the argument seems to be

essentially -- see Im coming up with a new

phrase -- essentially equivalent How do we

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judge that Well first of all is there a

single term that is most relevant from a

legal standpoint And then my second question

will be and how do we judge that

MR TOMASOVIC Well the two

explanations that we gave in the record I

think are pertinent and that is that the

differences are mere fractions of the

compl iance margin The compl iance margins we

assign to each turbine is reflective of the

uncertainties in terms of variable load

performance deviations from the iso

conditions degradation over time So if -shy

JUDGE HILL Well but how does

that cut I mean if you accept a compliance

margin at 30 percent then yes everything is

probably going to get swamped by that But if

you set the compliance margin at 2 percent

you might not

JUDGE MCCABE Or 126

MR TOMASOVIC And we set the

compliance margin at 12 percent and I think

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what that illustrates is that the difference

between the 2 percent which is approximately

a quarter of that total compliance margin

shows these are all these are all comparable

They are all going to be expected to be

performing in range of each other but we

decided that there are subtle differences that

allowed for the assignment of that reasonable

safety factor They are different sizes and

different engines but theres no fact-based

reason for us to decide to set them all at the

same limit or average them or round them up to

the nearest 50 pounds per megawatt hour

although other permit issuers may well choose

to do that in order to simplify things

JUDGE HILL If we want to give

guidance to future permit writers how would

you propose we say youve got three turbines

with different heat rates but they are

essentially equivalent How much discretion

do you think the agency has to figure out to

declare two different GHG limits to be

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essentially equivalent

MR TOMASOVI C Well I would

start your Honor with the fact that these

are all F class turbines and at the comment

period there wasnt any articulated difference

between the turbines in terms of the

technology they have You may find that in

other cases where heres a turbine that uses

dry cooling and heres a turbine that uses wet

cooling and thats a technological difference

that would allow us to elaborate on it

explain perhaps why one option is necessary

and the other isnt

But in this case where you have F

class turbines that are all modern at least

in the last several years type efficiencies

placed into an energy system that has its own

subtle impacts on what the overall limits

would be I think the way that the Board

should land on that is deference to the permit

issuers technical judgment in this case on a

case-by-case basis that this apparent

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difference of 25 pounds per megawatt hour was

not significant And we made that decision

without any written guidance from OAPPS or

OGC but it was based on our permit issuer

technical judgment And all is not as it

seems if you were to look at for instance

that net efficiency which illustrates that

that 27 percent difference which the

petitioners now complain about is only a 01

percent difference

JUDGE HILL At what point does it

become too big I mean you talk in your

brief or the response comments document talks

about well unless its poorly designed or

non-representative of the capabilities of the

technology is that the standard we should

adopt

JUDGE MCCABE Were wondering

where that came from actually

MR TOMASOVIC Well that phrase

you might find a phrase in the GHG guidance on

performance benchmarking Im not saying its

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straight transferrable to that to the way

that we used it in the brief but it does

reference performance capabilities of

technology as a starting point And we were

looking at the GHG guidance that does say in

the case of a gas-fired plant if its

considering single cycle for example you

should consider as an option combined cycle

Combined cycle isnt broken down into the

world of turbines that are available on the

market Go larger if you can if that shows

its more efficient

Instead it was more us taking

this application as it came in a conventional

combined cyc plant using modern F class

turbines with the heat recovery steam

generator and the duct burners Its a

standard type of permit It is similar to

LCRA permit that we issued It was the first

permit issued which incidentally in that

case the application came to us with the

request to permit multiple options and they

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decided before public comment that the GE 7FA

turbine was the one that they would go with

JUDGE HILL So can you cite to

any permit where EPA basically allowed the

size or model of the main emission unit to be

selected after the permit is issued as

happened here Are the -shy

MR TOMASOVIC As far as a

regionally- issued permit I sir No The

Washington State permit that is referenced in

our brief is a delegated state Sierra Club

submitted adverse comments on it and that wasl

one case where they for similar reasoning to

us decided that they would defer to the

applicants request to have multiple options

and not make them pick one of two acceptable

turbine models

JUDGE HILL Okay

JUDGE MCCABE Just going back to

your point about the F class turbines 11m

wondering if what you l re saying to us is that

it is sufficient for the permitting authority

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to look at that class of turbines and say

step one combined cycle technology is the

best available control technology here and

then when we get all the way down to step five

to set the emission limit that anything within

class F is good enough is that what youre

saying

MR TOMASOVIC No your Honor

The proj ect did come to us wi th F class

turbines You may see that in the response to

comments one of the things that Sierra Club

had said is choose larger turbines make a

bigger power plant and we quickly said that

we didnt believe that was appropriate in our

case because they had selected theyre

looking at a power plant of a certain size

using three different types of F class

turbines

But all of those were open to

commenters adverse commenters that may say

well these three turbine models of these

three turbine models this one doesnt show

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anything that shows modern day efficienc s

But at the same time its likely not a good

permit practice to say with absoluteness that

this turbine that was designed in the last

five years is not acceptable for BACT purposes

or for project purposes in other cases

because if you rest solely on that one piece

of information then the net heat rate

expresses as the pounds per megawatt hour on

a gross basis youre not necessarily

capturing all that is relevant to efficiency

JUDGE HI What if La Paloma had

said were going to build a plant thats 637

megawatts no more no less and theres only

one turbine on the market that will allow us

to do it even though there are several other

F class turbines that are much more efficient

Would the region have any authority to look

behind that

MR TOMASOVIC I think general

permit issuers do have authority to say have

you considered this or that thats so

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available In that case your Honor I think

youre presenting a case where the source is

defined binarily

JUDGE HILL Exactly

MR TOMASOVIC However it

doesn t necessarily mean that the selection of

that turbine model is unjustified If you are

to look at going back to the NSR workshop

manual I believe we cited we said in our

brief in one of our footnotes that customer

selection factors can be based on a number of

things including reliability and efficiency

experience with the equipment And all of

those are things that you can find in the NSR

in the NSR workshop manual as an example of

how you step into the BACT analysis for a

turbine Its really something that we come

in with we have a contractual commitment to

use these turbines can you see what limits

would apply to it at the front end

JUDGE HILL Let me ask if Judge

Stein or Judge McCabe has anymore questions on

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the turbine issue because then I want to move

to solar real fast

JUDGE STEIN I do

JUDGE HILL Okay

JUDGE STEIN Did I hear you say

that another facility in Region 6 that was

recently permitted is using the same turbine

as will be used by La Paloma

MR TOMASOVIC Yes your Honor

JUDGE STEIN And does the record

reflect what that BACT limit is for that

facility and how it compares to the BACT limit

here

MR TOMASOVIC s your Honor

So the name of the facility is the LCRA

Ferguson Plant And I believe that was

referenced in the statement of basis as well

as discussions sections of the response to

comments all cases looking at other

facilities that are out there including LCRA

we deemed the limits to be appropriate when

theyre placed in the appropriate context

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The Sierra Club presents Palmdale which isnt

reflective of the same design that were using

that we permitted here They referenced the

Pioneer Valley and we had to contextualize

the limits that were assigned to the Pioneer

Valley permit because that particular facility

wasnt using duct burners

JUDGE STEIN Okay So if Im

correct the BACT emissions limit for the

Lower Colorado River was 918 pounds of C02 per

megawatt hour And the limit that were

looking at here is 934 is that correct Im

not purporting to say that I have a correct

understanding Im just trying to clarify

MR TOMASOVIC Is this in the

response to comments or statement of basis

your Honor

JUDGE STEIN Oh its in my

little cheat sheet that somebody gave me

JUDGE MCCABE Its extracted

MR TOMASOVIC I may be mistaken

but I believe the limits assigned for LCRA

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were in fact on a net basis so they

wouldnt be directly comparable But we might

well have had some discussion that tried to

reconcile them

JUDGE MCCABE Yes the

comparability of all of these numbers is

somewhat perplexing to us so well address

that at the end because were thinking that we

might need some supplemental briefing to try

to get us on an agreed-on comparison table

here so that we at least understand and that

others who read the decision can understand

the import of what were deciding Do you

want to turn to solar

JUDGE HILL Yes So Mr Alonsos

argument is in essence that including any

solar into this proj ect would have been

redefining the source Do you agree wi th

that or do you think the agency has any

authority to consider some solar at an

electric plant even if it hasnt been

proposed by the applicant

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MR TOMASOVI C Your Honor I

believe that the Boards precedent on

redefinition of the source allows that a

permit issuer in their discretion may

require consideration of options that may

constitute a redefinition of the source

However if that is in conflict with the

fundamental business purpose of the applicant

then it is against our policy to do that

JUDGE HILL Do you think that the

agency has some -- okay So you believe the

agency has the authority to require

consideration Do you think the agency has

the obligation to do so if it wasnt proposed

if somebody raises it in comments as happened

here

MR TOMASOVIC I believe that the

agencys responsibilities in responding to the

comments in many ways are calibrated off of

the specificity of the comments that come to

us In this case the comments that we

received on solar are not in the same shape as

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they carne to the board in the petition in that

theyve attached the exhibits for two permits

that werent part of their comments that were

submitted to us and they specifically focused

on Palmdale and Victorville as two facilities

that we should have had a further discussion

about in our response to comments

But in terms of how the comments

carne to us which actually raised the issue of

solar in a lot of different ways where at

times it wasnt even clear whether they were

referencing photovoltaic versus stearn

auxiliary contributions to efficiency I

believe that the regions responses were

appropriate

JUDGE HILL Mr Alonso

essentially argued that our decision in

Palmdale said that it is appropriate to

classify addition of extra solar as

essentially redefining the source and he also

cites to Sierra Pacific Do you agree with

that characterization of those decisions

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MR TOMASOVIC Our decision is

based on the facts of our administrative

record and not a broad reliance on those

decisions stating that As was argued in our

br f we think the administrative record

shows that the considerationof solar options

at least as we understood it coming from the

commenters would redefine the source

The administrative record does

show l fact that the property limits are no

more than 80 acres and from that l it can be

discerned that there iS I based on the

footprint of the plant l not a lot of

additional acres which might approximate the

20 acres that the permittee was able to

substantiate with the affidavit that they gave

with their petition

JUDGE HILL So does the region

believe itl s not feasible to install any solar

capacity at the site

MR TOMASOVIC WeIll depending on

how that comment might be construel l your

l

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Honor rooftop solar is an option that

presumably is not what the commenters were

trying to talk about although its not always

clear In the case of the Palmdale decision

it does illustrate that as a rough measure to

contribute 10 percent of that plants total

capacity

JUDGE MCCABE Does someone have a

cell phone going Where is that music coming

from

(Whereupon the foregoing matter

went off the record at 450 pm

and went back on the record at

4 52 p m )

JUDGE MCCABE Okay Lets

proceed We dont have to cut Mr Ritchie

off Lovely music anyway

MR TOMASOVIC I was saying your

Honor as a background matter the Region 6

was aware of the factual setting that was

recited by the Board in the Palmdale case

which was the fact that to generate just 10

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percent of the capacity for that Palmdale

plant it required 250 acres And in fact

and I believe some lang-uage in the opinion

came close to this you need acreage to be

able to have power in a significant amount

You may well need more than 20 acres just to

get steam that could be used in the process

but you know thats a different technical

issue in any event

If we were to just sort of roughly

say 250 acres 10 percent of the plants power

reduced down to 20 or 25 acres youre talking

about something that doesnt substantially

influence the overall plant -shy

JUDGE HILL But thats not in the

analysis the region did in the record

correct

MR TOMASOVIC No your Honor

JUDGE HILL Okay

JUDGE MCCABE Is it the regions

position that as a matter of exercising its

discretion it would never consider solar it

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would always consider adding a supplemental

solar or whatever we call it here to be

redesign and therefore against at least the

regions policy if not the agencys to even

consider

MR TOMASOVI C No your Honor I

dont think anything in the regions response

was intended to cut off comments on solar

technology as a general matter for any other

permitting case

JUDGE MCCABE You just think the

comments here were insufficient to get you

where you needed to go in order to give it

serious consideration here i is that what

youre saying

MR TOMASOVIC Yes your Honor

I mean we had a bit of a technical discussion

in there that it is the case that for any

process that uses fuel to generate heat you

can get that from something else which might

be geothermal or solar And you could get

into the myriad permutations that go on

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in terms of whatever a commenter might

bring but it isl

JUDGE MCCABE Comment clearly

focused on solar in this case l so you dont

need to go there

MR TOMASOVIC However I there are

other parts of the comment which seem to

suggest that the l that l in their view l this

project was defined to be within a range of

capacity that could be energy generated by any

means I which we disagree with because this is

a combined cycle plant thats meant to use

natural gas as its fuel and take advantage of

the rastructural advantages specific to

that location including the waterl

availability of the pipelines and the local

need this particular kind of power to be

delivered for grid stability reasons

JUDGE MCCABE I hate to put you

on the sPOtl Mr Tomasovic l but do you think

you could reduce to one or two sentences the

reason the region did not consider solar here

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or considered it to be redesign that the

region would not entertain

MR TOMASOVIC In the way that

the comments came your Honor we believe that

that solar auxiliary preheat was not well

defined because it was it was actually raised

as a substitute for duct burners when duct

burners have a different purpose than solar

auxiliary preheat And Im already past my

two sentences but

JUDGE MCCABE Thats okay

Youre close enough Thank you Those are

all the questions we have for you at this

time Mr Tomasovic Thank you And Mr

Bender you have been very patient and I bet

youre watching your watch National Airport

flight at 700 You probably need to leave

here by what would folks who are

Washingtonians say given that it is Wednesday

rush hour before a storm

JUDGE HILL If you take a cab

Id say 545 at the latest

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JUDGE MCCABE Okay So 5 30 i

will that work for you Mr Bender

MR BENDER I think so your

Honor

JUDGE MCCABE Okay I would hate

to give you short shrift after you were so

gracious as to choose the last position or to

suggest that your judgment perhaps might need

to be revisited the next time youre offered

that choice

MR BENDER I wouldnt want to

miss this even if I had already gone

JUDGE MCCABE Okay

MR BENDER Is this better

Thank you your Honors I think to address

one thing that kind of permeates the briefs

from respondents and some of the discussion

here today theres kind of two pieces or two

sides of the same coin maybe Were talking

about size or capacity Were talking about

megawatts right And when were talking

about ERCOT or any other regional system

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operator the dispatch is to meet a load

Were talking about dispatching to meet a load

in megawatts

And the size of the units are

different here Its actually kind of a

combination of things turbines plus heat

recovery stearn generator turbine that adds

up to certain numbers Its 637 for the GE

combination for example Thats megawatts as

their peak You know if you throttle full

thats what youre going to get

The Siemens turbines can generate

637 Its not that you have a turbine you

turn it on and you get 637 megawatts or you

turn it off and you get zero and its a

binary on or off situation

In fact the other argument or the

other piece of this argument in the briefs was

that turbines as they get larger get more

efficient And if you want a large turbine at

a reduced rate less than full youre

decreasing its efficiency and thats simply

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not true And thats not true based on the

evidence in this record because that last

increment of power comes from duct burning

which is less efficient than the turbines and

stearn generator

And so as you throttle down or as

you de-rate or decrease your generation all

saying the same thing youre actually until

you hi t the point where the duct burners corne

off youre actually improving the efficiency

and decreasing the emission And we can see

that among other places in one of the tables

that counsel for Region 6 pointed to in the

response to comments where in addition to net

and gross theres also without duct burner

fire on page 11 of response to comments

which is Petition Exhibit 3 you can see that

the GE the smallest of the turbines piece is

75275 without duct burner firing The

biggest turbine the Siemens 5 is 77717

Less efficient right And you only get the

increased efficiency from the larger turbines

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as a system because theyre able to generate

more of their power before turning the duct

burners on

JUDGE MCCABE Well does this

mean youre happy to hear that theyve

selected the GE turbine

MR BENDER If they have a permit

limit that reflects what they could do If

the question is phrased differentlYI right

If the draft permit had come out and said our

project purpose is to build a plant thats

capable of generating 637 megawat ts you know II

this would be a different case The comments

would have been different l and we mayor may

not be here

But then wed saYI the comments

would come in among other things l something

to the effect of the Siemens I you know l 5 or

the Siemens 4 can generate 637 megawatts In

facti when it does so it does it at a reduced

emission

So were dealing with emission

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rates The final permit emission limits are

set based on operating full out But full out

is a different number of megawatts for each

right

JUDGE MCCABE Thank you for that

clarification Do you agree that the F class

turbines are among the most efficient turbines

available for combined cycle combustion

technology

MR BENDER I believe theyre

among I dont know that they are the most

efficient

JUDGE MCCABE Do you know of a

class thats more efficient

MR BENDER I dont The

question though is the emission limits too

which is the end of everything So were

talking about turbines and different turbines

but were really talking about different

turbines put in front of the same 271 megawatt

steam generator in this case

JUDGE MCCABE Well to you and to

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EPA of course the emission limit is the

ultimate most important thing here But of

course to the company the most important

thing is which turbine do they get to use and

is it the one that will fit whatever their

business purpose is

Your petition Im a little

confused about something Your pet it ion says

that youre not suggesting that the company

should be required to pick any particular

turbine but just that they should meet the

lowest GHG limit that any of the turbines

could meet But arent you in effect by

doing that forcing their choice of turbine

MR BENDER No Its not

requiring a turbine Whether youre forcing

it or not raises some other internal issues

I think at the company which is you know

their risk appetite for that headroom margin

thats built in how much theyre actually

going to operate because this is a 12-month

rolling average and assumes operating at 100

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percent including those duct burners wide

open which is one of the least efficient ways

to operate

JUDGE MCCABE So your preference

would be that they have to build a bigger

turbine and operate it at a lower load

MR BENDER Our preference is

they have to meet the emission limit that

JUDGE MCCABE But in concept

MR BENDER To build a bigger

turbine and operate it with less duct burning

and using more of the waste heat from the

turbine the way that the three options are

set up in this record is the most efficient

And

JUDGE HILL But that wasnt your

comment was it Your comment was simply to

pick the limit that reflects the lowest

emission rate Your comment wasnt

essentially to recalculate the rate based on

the lack of duct burning

MR BENDER Thats correct

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Sorry Im trying to answer a question a

direct question Im not representing that

thats what the comments were

JUDGE HILL Okay Fair enough

Im sorry to interrupt Keep going

MR BENDER I should speci fy this

is based on our understanding from the record

Because the Siemens turbines are capable of

basically more heat because theyre bigger but

theyre going into the same size heat recovery

steam generators as would the turbines

More of the total heat going in is coming from

waste heat from the turbines with the Siemens

compared to the GE so theres less need for

duct burning Thats what

JUDGE MCCABE What is your goal

Mr Bender Are you looking for the

lowest total amount of GHG emissions that can

possibly come out of this facility or are you

looking for something else

MR BENDER We I re looking for the

lowest BACT rate but were also looking for

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JUDGE MCCABE But the BACT rate

is based on efficiency yes

MR BENDER Its based on

efficiency here yes

JUDGE MCCABE Do you have any

objection to that

MR BENDER Im sorry

JUDGE MCCABE Do you have any

obj ection to EPAs basing the BACT rate on the

energy efficiency of the turbines

MR BENDER Not in this petition

JUDGE MCCABE Okay Well it is

this petition were talking about

MR BENDER Right Its

JUDGE STEIN But given that they

have indicated that depending on the timing

that theyre going to go with the GE turbine

what is your position as to what the emissions

limit should be for that turbine

MR BENDER The emission limit

for any of these turbines based on this

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record and the draft permit that we were able

to comment on should be -- Ill put it this

way If F class category of turbines

followed by heat recovery steam generator is

the control option and thats what we were

able to comment on And if thats the control

option that theyre going to treat as the same

control option through steps one through four

then in step five the emission rate should be

based on the lowest emission rate achievable

by that class And based on the record here

thats represented by the Siemens F4 at least

that line in the permit right

So depending on how your question

was intended your Honor if they came in and

said draft permitr project purpose 637

megawatts on peak 100-percent capacity you

know r we would look at what combination of

turbine heat recovery steam generator gives

you the lowest emission rate at that But

want to be clear thats not this case thats

not this record

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JUDGE STEIN Well Im a little

confused I mean Im with you to a point

but what I thought I heard the region say is

that when they chose the BACT limit that they

chose that they couldnt necessarily translate

between these different turbines in quite the

same way that you were doing the translation

And I mean if for example youre saying

that they need to meet emissions rate X what

if they cant meet that with this equipment

Does that mean that they cant install the

equipment

MR BENDER If La Paloma cannot

meet 909 pounds per megawatt hour gross with

the GE equipment is the hypothetical

JUDGE STEIN Yes

MR BENDER Yes then they cant

install that equipment

JUDGE MCCABE So you are forcing

their choice of turbine in effect

MR BENDER Only as a secondary

effect But just like if you cannot meet a

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BACT limit for 802 on a coal fire power plant

wi th a dry scrubber are you forcing the

selection of a more efficient wet scrubber as

a secondary effect Thats true

JUDGE MCCABE Do you think thats

a fair analogy Were talking here about the

main emitting unit and the main unit that

produces the capacity of product that the

facility wants to produce The choice between

a wet and dry scrubber doesnt affect that

MR BENDER Well according to

the region its a category and its not

affecting the category If the category as

a region says is combined cycle turbine with

heat recovery stearn generator then youre not

changing anything You may be foreclosing

business choices that are made later but I

would suggest thats true with every BACT

limit There are choices that a permittee may

want to make but cannot make because they have

to comply with their BACT limit

JUDGE HILL 80 Mr Tomasovic says

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108

that pointed out that the Siemens

going to get it wrong the Siemens 4 turbine

has the lowest emission limit hourly but that

the GE turbine has the lowest annual tons per

year primarily because its operating at a

lower capacity Is your argument that the

limit that the region should have set have

been the lowest of each of those or is your

argument that they should use the limits that

they got for the most efficient turbine which

was the Siemens 4

MR BENDER I believe that the

BACT limit is the primary driver BACT limit

is the pounds per megawatt hour and thats

the limit that we think that the La Paloma

facility whatever equipment it ultimately

chooses should meet That will result in

different tons on an annual basis but tons on

an annual basis is I would submitt not a

limiting limit It assumes 100 percent

operation You know t itts basicallYt itts

JUDGE HILL Wellt but heres my

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point If Mr Alonso had gotten up and said

its most likely were going to pick the

Siemens 5 or Im sorry the Siemens 4 then

theres going to be more total emissions of

GHGs a lower rate but more total emissions

So by your argument should the region have

had to pick the lowest limit for each of the

three parameters on which they set the limit

And if not why not

MR BENDER We didnt address the

total tons because we dont feel that its

going to limit If they decide that they want

to generate 630 megawatts thats the number

that multiplied by the emission rate is

going to generate the tons

JUDGE HILL But if they had

picked the Siemens 4 or the Siemens 5 they

could be operating at 735

MR BENDER They could be

operating at 735 but there are other things

that go into it obviously your Honor as Im

sure youre aware of when theyre dispatched

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how theyre dispatched And the focus here is

the per megawatt hours because thats the one

that the Sierra Club sees as actually limiting

emissions here because the annual caps are set

such a high rate that theyre not going to

be approached Even the lowest is not going

to be approached

JUDGE MCCABE Let me bring you

back to this table thats I dont know if

you have it Its page 11 of the response to

comments These numbers are all starting to

sound fungible so lets try to anchor

ourselves again Im looking at the middle

column here that says output-based emission

limit which is net without duct burning And

the GE turbine that limit is 894 and for

the Siemens 4 turbine is 909 Theyre picking

the GE turbine What limit do you want

MR BENDER Well first of all

question the accuracy of these numbers because

some of them are the same as the gross with

duct burning

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JUDGE MCCABE Theyre saying

what

MR BENDER The Siemens F4 number

in that column is the same as the permit limit

for that turbine which is expressed as gross

wi th duct burning So looking at these right

now I suspect that theyre not correct Some

of them may not be correct

JUDGE MCCABE Can we assume for

the moment that these numbers are correct

MR BENDER Yes

JUDGE MCCABE And if that turns

it into a hypothetical question so be it

Im trying to understand where youre going

there conceptually Im looking at a lower

number 894 you know its C02 equivalence of

per megawatt hour without duct burning net

wi thout duct burning Its 894 for the

turbine they want Its 909 for the one that

you were saying was the most efficient

turbine Which limit do you want for the GE

turbine Do you want the 894 or do you want

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the 909

MR BENDER It depends on this

your Honor It depends on whether were going

to set this as the ultimate rate or if were

going to s another limit as the ultimate

rate because this is a part this is without

duct burning right But the permit allows

duct burning So if we say we want 8947

without duct burning and then well leave the

duct-burning caused emissions kind

unmeasured and unregulated as a different

JUDGE MCCABE Okay Go to

next column with duct burning Youve got

9452-shy

MR BENDER Yes

JUDGE MCCABE for the GE

turbine And just a hair under that youve

got 9444 for the Siemens 4 Are you telling

us thats what you want Board to do to

tell the region that that kind of difference

is significant and that they should force this

company when it installs the GE turbine to

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meet the 944 limit for the Siemens 4 Is that

what youre asking us to do

MR BENDER Your Honor if that

if the limits were set based on this as final

enforceable limits based on that Im not

sure that we would be here on this issue

JUDGE HILL So how much of a

margin is too big Because the regions

initial submission is that even with the

limits that they actually set the difference

is 26 percent and thats just not that big

JUDGE MCCABE And looking at

these latest numbers they actually said the

range for all three turbines there was on

that net with duct burning column that the

total range was 01 percent So seeing how

close those numbers are between 945 and 944

thats obviously a lot less than 01 percent

Is that a significant difference that the

agency should be concerned about

MR BENDER The limits were

talking about are the ones in the final

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permit which are gross And they are -shy

JUDGE MCCABE Okay Would you

like to point us to a different table to look

at

MR BENDER Sure Ill point you

to the permit which is Exhibit 1 to our

petition and the permit limits themselves

Because the permits measured we commented

that the region should be looking at net

among other things And the region said no

It made that choice It made this permit the

way it did and so were addressing it the way

it came out What we and EPA and the state

can enforce are the limits and the limits are

what drive what we can count on as enforceable

emission reductions

JUDGE MCCABE Wait a minute You

wanted the limits to be based on net

MR BENDER We commented that you

should look at the net emission rates and the

region said no were going to base this on

gross

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JUDGE HILL Okay But my

question is how do you respond to the argument

the region made in its brief and that Mr

Tomasovic stated here which is okay so the

permits got gross and the difference in these

gross numbers is 26 percent and thats in the

noise

MR BENDER Its not And the

reason why I know that its too big to be

insignificant is that the region thought that

margins even around that for different

pieces because the margin is an aggregate

was significant enough to start bumping the

limit up And when they got to step five

they said thats a big enough difference

between these turbines that we cant expect

the one to meet the limit for another So I

know because its significant enough in step

five that it should be significant enough in

step one to not count them all as you know

the same

JUDGE HILL So your argument so

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if their error was at step one then what

youre really saying is that the GE turbine is

a different technology than the Siemens

turbines

MR BENDER It is a different

let me put it this way Control option in

step one should be the same as control option

in step five As counsel for La Paloma put

it its a sequence right It starts at one

it goes to five and the definition of the

control option stays the same And if and

were saying well grant the argument that

they should be treated as one option in step

one well if thats the case they should be

treated as the same option in step five and

the limit based on what that option as a

whole can achieve But if youre going to

start parsing them the appropriate time to

parse between turbines or in this case

turbine plus heat recovery generator

combination -shy

JUDGE HILL Understood

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MR BENDER is step one so

that we can look at their relative

efficiencies their relative costs what they

do emit at different levels at production

Its got to be one or the other It makes

hash out of the five-step process to look at

one definition of control option in step one

right And then look at a different

definition of control option and start

applying limits in step five Thats the

argument It has to be consistent all the way

through

I think we would get to the same

option or the same result whether we looked at

them in step one as separate or if we applied

the maximum control efficiency for that class

as a whole in step five But you run into

problems when you separate them and thats

what weve done here

JUDGE MCCABE Okay Mr Bender

could we back up again to the question that

was raised by your saying that you preferred

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and said in your comments that you preferred

limits based on gross capacity I was trying

to use the table on page 11 of the response to

comments to try to understand exactly what you

want If theyre picking the GE turbine you

said the limits these are net limits and

gross is a better measure Have you found a

place where I can look at gross limits

MR BENDER For what gross

emissions are relative to

JUDGE MCCABE Is re any place

in the record that we can look to see how

these net limits would be stated as numbers

for these turbines if it were based on gross

Is that in the record any place

MR RICHIE Your Honor if I may

this is Travis Richie Page 16 of the

statement of basis which was included I

believe as Exhibit AA of La Palomas

response I believe has that same table listed

with pounds of C02 per megawatt hour on a

gross basis with duct firing

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JUDGE MCCABE Thank you Mr

Richie So glad you stayed on the phone I

have this Do the other judges have it

Okay Its the same thing Well how are

these different They look like theyre the

same ones that we were looking at on page II

Whats the difference between the gross and

the net rates

MR BENDER Thats what I was

suggesting earlier that Im not sure that

theyre correct

JUDGE MCCABE Youre not sure

which is correct

MR BENDER I dont know

JUDGE MCCABE You dont know

MR BENDER But I dont think the

net and the gross can be the same number and

thats what I was maybe failing to highlight

before

JUDGE MCCABE But whatever the

gross is you would prefer it You just dont

know what it is or youre not sure which of

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these numbers it is is that what youre

saying

MR BENDER Your Honor there has

to be other details in the hypothetical to

know the answer It depends on if were

measuring If were measuring just whats

coming out of the turbines or if were

measuring whats coming out of the stack

because theres another pollution-causing

device in the middle and thats the duct

burner So if were saying whats the net

without duct burning and were measuring it

but were still allowing duct burning its a

different question

JUDGE MCCABE Yes I understand

This gets very complicated which is why

judges usually defer to the technical

expertise of the EPA people that are charged

with this Now in this case lets try to

bring it back to sort of principles that the

Board can focus on more appropriately I was

hoping through this argument that people

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would be able to give us the numbers that we

should be looking at to consider this argument

that I understand the region to be making that

whatever the variation among these turbines is

so close the variation in the heat rates and

accordingly the GHG limits is so close that

it is something that is essentially

equivalent to use one phraseology another

negligible difference marginal difference

Do you agree that these are so close that they

are marginally different or essentially

equivalent

MR BENDER Two answers your

Honor They are not What the permit

includes is the gross with duct burning and

that number again I would say those are

different enough that the region thought

necessary to differentiate between them And

if thats true then its not negligible and

its not inconsequential

JUDGE HILL So let me ask you a

question So if the region had said theyre

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close enough I so weI re going to set the

highest one and if they happen to pick al

turbine that we could limit more closely I

were comfortable with that

In other words I based on that

argument I okay so if the region had instead

concluded they are negligible GE looked good

enough and so were going to set the limits

based on GE And if they pick Siemens I they

get a bennie out of it would you have a basis

for challenging

MR BENDER Yes I for the same

reason Because the record says that 9092 is

achievable And then we have -shy

JUDGE HILL Well but they would

conclude that 909 is not achievable for GE

MR BENDER I think it depends on

what the record is to support that conclusion

And thats not this case and its not this

record

JUDGE HILL So the regions

mistake was setting three different limits

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MR BENDER The regions mistake

was setting three different limits for what it

says is the same control If it had

identified them as three different control

options in step one and you have a continuity

through the rest of the steps and it set three

different limits it would be a different

problem which is BACT is all limit and you

would rank them and set them based on the top

rank control option in step five But again

it depends on what happened in the prior four

steps to be able to say whether that would

have been a mistake or not and thats not

this record and its not the basis that we had

to appeal

JUDGE MCCABE Coming back to the

factual question of the variation in these

emission limits that the region has permitted

for the three turbines Mr Tomasovic

described them it may not be fair to call

this a range but he mentioned numbers that

to my mind ranged from 01 percent up to 27

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percent Is a 01 percent difference

significant enough that the agency should have

to distinguish between them in setting and

distinguish between these turbine models and

force the companys choice Point one If we

just had point one I realize theres a

range but just look at point one for a

moment Is that significant

MR BENDER I think its

contextual And I would say although you

asked that as a factual question I would

point to the Prairie State decision your

Honor

JUDGE MCCABE The what Prairie

State

MR BENDER Because its cited by

both respondents to say when theres a

negligible difference you dont have to

consider them as separate control options

And I think that Prairie State actually stands

for the opposite On page 37 in the footnote

I think its footnote 36 it rejects that

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argument that just equivalency alone is

sufficient to ignore a difference between two

different control options There has to be a

demonstrated equivalency or a negligible

difference and especially if that difference

is based on emission factors or something else

that is inherently also perhaps not specific

So if its based on an emission

factor that has a margin of error that helps

dictate what amount of difference between two

emission rates may be negligible and even if

they are exactly the same thats not enough

to ignore them You have to -shy

JUDGE MCCABE If theyre exactly

the same

MR BENDER To ignore one of the

control options because of the requirement

that you also look at what their collateral

impacts are because two different controls

options may have the same emission limit but

they may have different collateral impacts -shy

JUDGE MCCABE Thats absolutely

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true of a control option but were talking

about two different turbines here If the

turbines had the same limit would we be here

If they had the same GHG limit

MR BENDER If they had the same

GHG limit and it was -shy

JUDGE MCCABE Because thats just

the way they say that was the manufacturers

the vendors number and EPA permitted it at

that number and there was no comparable that

showed a bet ter performance why on earth

would we require them to distinguish between

those What practical difference would that

make

MR BENDER In this record and to

my knowledge there is no other distinction

between them other than emission rates But

if youre saying hypothetically the emission

rates are all the same -shy

JUDGE MCCABE No Im simply

following up on what you thought Prairie State

stood for that even if things are the same

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you cant ignore the di f f erence I just think

were doing apples and oranges here because

in Prairie State if I recall correctly and

maybe Judge Stein can help us out with this

I think they were comparing you know much

larger differences

Here Im concerned that were

getting down in the margins We are getting

dangerously close to micromanaging here on

what this GHG emission limit should be So is

o 1 percent micromanaging Is that a

difference that we dont need to worry about

Is 05 percent -- 27 percent obviously is too

much for you You think thats over the level

of significance Were wondering where is

that level of significance in difference And

Im not talking about the exact numbers Im

talking conceptually here Thats why I used

percentages to iron it out

If the range of differences

between these two turbines and their GHG

emission rates ranges somehow and depending

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on how you calculate it from 01 percent to

27 percent why should we worry about this

Why should the region be required to

distinguish

MR BENDER Your Honor the

equivalency of emission rates is an issue or

a concept thats tied together wi th the

topdown BACT analysis process and that was in

Prair State Thats the point of that

footnote that I cited to If you did this

again this is not what was done so in the

hypothetical if they had ranked them as

separate control options and they had assigned

emission rates and there was somewhere

between I think it was 01 in your

hypothetical difference and there was no other

collateral impacts differences between them

would that be enough to say -- and it was not

and it was based on you know some emission

calculations that themselves have some

variable in them I think in that

hypotheti this would not be the issue for

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appeal It wouldnt be because you know

were assuming were assuming away all of the

problems with this particular decision which

is theyre not treated as separate theyre

not distinguished in the first few steps we

dont know if theres collateral impact

differences and theres no record made to

support those findings at each of the rest of

the steps

JUDGE MCCABE So is the critical

piece of your argument that they didnt

differentiate between the turbines at step

one Is that really what Sierra Clubs

concerned about

MR BENDER If theyre going to

differentiate between them in step five they

need to differentiate between them in step I

guess it would be one through four because

then wed have an opportunity to look at

whether or not there are differences in

emissions at that point and under what

scenario and everything else that goes into a

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five-step BACT process And that was just

shunted all to the side and we only looked at

the difference between them when we got to

step five after the opportunity to address all

those other issues had passed

JUDGE MCCABE Okay Lets turn

quickly because Im watching your flight time

here to solar Is it your position that

solar is feasible on this site Supplemental

solar as youve described it And if so

please explain how

MR BENDER Your Honor the

comment was step one you need to cast as big

a net as possible to identify potentially

feasible available and applicable and we

say yes its available its applicable Is

it feasible Well we dont know the acreage

They say 20 We dont - - because we never got

to this

JUDGE MCCABE Theres a site plan

in the record isnt there

MR BENDER There are some maps

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in the record We dont know

JUDGE MCCABE Have you looked at

them

MR BENDER Ive looked at some

of the maps in the record yes

JUDGE MCCABE Have you looked at

the site plan

MR BENDER Im not sure -shy

JUDGE MCCABE The site plans

shows where things are situated on the si

where the turbines will go and the other

equipment what the footprint of the si te is

how much space is open or not

MR BENDER Im envisioning a

color map with I think that information

JUDGE MCCABE Mine is not in

color but I saw one like that Have you

looked at that and considering that is it

feasible And Judge Stein please add your

question

JUDGE STEIN If these maps show

or you can deduce from whats in the record

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that what is at play here is approximately 20

acres do you still contend that solar is

ible at this site

MR BENDER I would say to the

extent its scalable its feasible Whether

its cost effective and whether it achieves

emission reductions I dont think I dont

know and I dont think any of us know and

thats the point Thats why you go through

the five steps because you gather that

information at the later steps It was -shy

JUDGE STEIN So Im sorry

Finish I didnt mean to interrupt

MR BENDER It was excluded from

step one as not as redefining the source

And I think it would be inappropriate to

assume fact findings from what we have the

limited amount of information we have in the

record to say it would necessarily be rej ected

in the following steps unlike in Palmdale

where the issue of incremental increase was

looked at and the record was clear that there

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was zero space And the difference between

zero space for no addition and where to draw

the line when theres some space but it mayor

may not be enough to make it feasible cost

effective and everything else is something

that needs to be done by a fact finder with

the public input

JUDGE STEIN But how much effort

and work must a permit applicant go through

when theyre primarily building a particular

kind of plant and theres fairly limited

space I mean do they need to go do a I

scale investigation and develop models

space if what youre dealing with is a very

small area I mean thats a question Im

struggling with because you know this is not

lmdale and I dont buy the characterization

what Mr Alonso said about what Palmdale

stood for in terms of redefining the source

But I am troubled by what may be in the

record perhaps not as fulsome as someone

would like but there may be sufficient

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information in the record to establish that

theres only a very limited amount of space

there And if thats the case are you still

insisting that people do a full-scale analysis

of solar under those circumstances

MR BENDER I think that when

you get into the later steps two three

four the scale of the analysis is probably

relative to you know some reasonableness

right But in step one the whole point is

you cast the net and then you start doing that

analysis And it would be inappropriate to

start making assumptions because we dont

agree with all the assumptions in La Paloma

about hurricanes about other things and wed

like the ability to develop the record in

response depending on what is said about

feasibility

But feasibility wasnt discussed

until the response to comments And then it

was discussed as not not that it was not

technically feasible but it was redefining the

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source And based on in our mind in one of

the main reasons that we brought this appeal

is based on a very problematic definition of

redefining the source

JUDGE HILL Mr Bender the region

argues that Sierra Clubs comments on this

didnt ly raise this issue to any level of

specificity that youre now raising it in your

brief or here How do you respond to that

MR BENDER When they say that

they point to one of the multiple comments

looking at solar hybrid And they say it was

mentioned as an al ternative to duct burning

in addition to other things that could be

looked as alternative to duct burning

Earlier in the comments is the Palmdale

permit and the C02 BACT emission limit saying

its conservatively lower they get that and

they get a chunk of it from solar you need to

look at solar because its available its

applicable it meets the step one criteria

lets look at it And that I s what was

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ected

Elsewhere we said instead of

duct burning did you consider these other

things And yes theyre talking about the

same concept but theyre talking about two

different areas So its inappropriate to

look at only one comment and say well that

one comment about solar didnt raise this

other issue when the other comment did

JUDGE MCCABE Are you suggesting

that permitting authorities whenever theyre

faced with a PSD application by someone who

wants to build a power plant have to analyze

solar in all cases if theyre not proposing it

to begin with

MR BENDER Solar hybrid in a

combined cycle plant when it I S raised by the

public-shy

JUDGE MCCABE Okay And that -shy

MR BENDER Then the region has

an obligation to look at it

JUDGE MCCABE Expand on that

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please What do you mean by look at it

MR BENDER Include it in step

one or deem it redefining the source based on

a correct interpretation of redefining the

source And here it was an incorrect

interpretation of redefining the source It

should have made it into step one when raised

by the public And to go to your question

Judge Stein how much detail they need to do

to develop whether to reject it in later

steps I would agree theres some

reasonableness to it But I dont agree that

even assuming that 20 acres is all that there

is that we can say based on this record

that its reasonable that thats not enough to

generate solar

JUDGE STEIN But if you have a

circumstance where the BACT analysis has been

done the regions looked at it theres been

back and forth between the permit applicant

and the permittee I mean and the region

they proposed the permit for comment and a

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comment comes in about solar youre

suggesting that they have to go redo the BACT

analysis or cant they simply respond to the

comment by saying on this particular site on

these facts we dont think solar is feasible

for X Y and Z reason

MR BENDER Thats different than

the answer here

JUDGE STEIN Why is it different

than here I mean I understand what the

region did in its analysis of redefining the

source you know didnt do exactly what Im

describing here but Im concerned about

taking us to a place where in responding to

a publ ic comment where there may be an answer

that you have to go back to square one on the

BACT analysis because I dont think you do

I think you need to respond to the comment

I think you need to respond fairly to the

comment But wed never I mean how in the

world would we ever get a permit out if every

time theres a public comment that relates to

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the BACT analysis youve got to go back and

redo the BACT analysis Yes t may be

cases where you need to supplement it but I

dont think we go back to square one

MR BENDER Well two responses

your Honor Here we had raising solar in the

context of another facility a similar

facility that has solar hybrid and has a

permi t wi th lower limi ts Thats the context

So to the extent were talking about you

know how much or how real does this have to

be to generate a more substantive response

thats the context

In Knauf Fiberglass I believe Kshy

N-A-U-F however thats pronounced

JUDGE MCCABE Knauf

MR BENDER Knauf Fiberglass

The first the 1999 decision a comment was

raised another production process for

fiberglass The response was thats

proprietary to a competi tor We dont have to

look at it because well reject it later

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anyways so you know why look at it And

the Board reversed and said you cant preshy

judge Thats the point of the process You

cant pre-judge the process Go back look at

it and make a record so we know and the

public knows that you really did look at it

and you really did document your analysis and

we know you did your procedural job

Thats what should be done here

and it follows that precedent And I would

suggest if its distinguishable this is even

a clearer case than Knauf because its not

proprietary that we know of You can go out

and buy it So to the extent theres a line

this is even further on the petitioners side

of the line

JUDGE MCCABE Mr Bender Im

worried about your plane If you would like

to take a minute to just wrap up please do

And then we will let you go on your way Its

getting late

MR BENDER Sure Thank you

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your Honors I and thank you for the opportuni ty

to address these issues From Sierra Clubs

perspective this is an important permit tol

get right on these issues raised And there

are other issues that were commented on l

potent lyother issues that could have been

raised You know I dont want to suggest

that Sierra Club loves this permit even if

its corrected but this issue of what you

have to consider and how you consider

efficiency and how you consider supplemental I

in this case solari that helps improve the

efficiencyof a plant is critically important r

especially as we start into greenhouse gas PSD

permits and getting the definition of what is

the control option were looking at correct

and making sure that thats consistent all the

way through the process and that were

correctly addressing efficiency Its going

to be critical especiallyuntil we develop an

end of the pipe technology that facilities

s installing

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142

The other is this now perennial

redefinition of the source issue I

understand the Boards prior precedents and

in some cases unfortunately theyre being

applied incorrectly And this is one of those

cases And when that happens its important

to correct it make it clear and give guidance

to not only Region 6 but other permitting

authorities what redefining the source means

and whatit doesnt mean And here it doesnt

mean that if a control option is not within

the two-sentence description of the

application of the project purpose that it

cant be considered because that opens a door

to all kinds of problems not just greenhouse

gasses but every - - I mean and SCR al so

wasnt in that two-sentence description

Thank you your Honor

JUDGE MCCABE Thank you very much

Well thank you all for your presentations and

for your valiant efforts to answer our very

often detailed questions

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I would make one observation that

theres such factual confusion l at least in

the argument around the issue of how do we

compare apples to apples with the emission

numbers that we really should be looking at

for these turbines that there is a

possibility and I regret to say this because

I know its a PSD case and we are in a big

hurry but theres a possibility that we will

ask you to do a supplemental briefing on that

or ask you all perhaps to confer to get on one

sheet if its possible to give us some basisl

comparison so that we have the facts

straight in our opinion It is a lot to ask

judges like us We have some technical

training l but we are not engineers I and it is

really quite difficult for us to understand

which numbers we should be comparing to which

here

We will however make a valiant

effort to go back and to see if we can figure

that out And weill only ask you to do a

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supplemental briefing if we think its very

necessary If we do do that we will get to

you quickly on that because we do intend to

move quickly on making this decision These

are not easy issues They are important

issues and we take your point Mr Bender

that as we are entering the world of GHG BACT

permitting we do need to be careful about

what precedent were setting But we also are

very very cognizant of the need for speed

here because we dont want to hold up the

building of something that should proceed

unnecessarily

So with that well take this

matter under submission with the caveat that

you may get a request for a supplemental

briefing And we will wish you all

travels home those of you who are traveling

far especially And good luck catching that

plane Mr Bender

(Whereupon the foregoing matter

was concluded at 547 pm)

NEAL R GROSS COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE NW (202) 234-4433 WASHINGTON DC 20005-3701 wwwnealrgrosscom

- ------

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202-234-4433

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Neal R Gross and Co Inc 202-234-4433

164

C E R T I F I CAT E

This is to certify that the foregoing transcript

In the matter of La Paloma Energy Center

Before US EPA

Date 02-12-14

Place Washington DC

was duly recorded and accurately transcribed under

my direction further that said transcript is a

true and accurate record of the proceedings

Court Reporter

NEAL R GROSS COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE NW

(202) 234-4433 WASHINGTON DC 20005-3701 wwwneairgrosscom

Page 9: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 10: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 11: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 12: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 13: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 14: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 15: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 16: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 17: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 18: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 19: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 20: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 21: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 22: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 23: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 24: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 25: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 26: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 27: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 28: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 29: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 30: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 31: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 32: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 33: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 34: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 35: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 36: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 37: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 38: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 39: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 40: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 41: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 42: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 43: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 44: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 45: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 46: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 47: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 48: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 49: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 50: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 51: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 52: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 53: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 54: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 55: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 56: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 57: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 58: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 59: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 60: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 61: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 62: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 63: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 64: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 65: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 66: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 67: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 68: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 69: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 70: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 71: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 72: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 73: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 74: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 75: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 76: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 77: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 78: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 79: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 80: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 81: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 82: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 83: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 84: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 85: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 86: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 87: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 88: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 89: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 90: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 91: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 92: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 93: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 94: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 95: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 96: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 97: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 98: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 99: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 100: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 101: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 102: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 103: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 104: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 105: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 106: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 107: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 108: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 109: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 110: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 111: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 112: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 113: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 114: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 115: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 116: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 117: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 118: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 119: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 120: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 121: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 122: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 123: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 124: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 125: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 126: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 127: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 128: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 129: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 130: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 131: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 132: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 133: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 134: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 135: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 136: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 137: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 138: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 139: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 140: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 141: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 142: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 143: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 144: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 145: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 146: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 147: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 148: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 149: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 150: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 151: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 152: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 153: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 154: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 155: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 156: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 157: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 158: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 159: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 160: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 161: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 162: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 163: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us
Page 164: BEFORE THE ENVIRONMENTAL APPEALS BOARD WASHINGTON, … By... · 2017. 3. 28. · this appeal. I believe the briefs were submitted on December 27th, and the Board reached out to us