United States
Environmental Protection
Agency

Summary of the Proposed Permit

On August 11, 2011, the United States Environmental Protection Agency (EPA) Region IX provided
notice of, and requested public comment on, action relating to the Prevention of Significant Deterioration
(PSD) permit application for the Palmdale Hybrid Power Project (Project). The proposed permit would
grant conditional approval, in accordance with the Prevention of Significant Deterioration (PSD)
regulations (40 CFR 52.21), to the City of Palmdale to construct and operate a 570 megawatt (MW,
nominal) electric generating facility. The City of Palmdale is located at 38300 Sierra Highway, Suite A,
Palmdale, CA 93550. The public comment period for this proposed permit, which is ongoing, will close
on September 14, 2011.

The proposed Project consists of two General Electric (GE) Frame 7FA natural gas-fired combustion
turbine-generators (CTGs) rated at 154 megawatt (MW) each, two heat recovery steam generators
(HRSGs), one steam turbine generator (STG) rated at 267 MW, and 251 acres of parabolic solar-thermal
collectors with associated heat-transfer equipment with the capacity to provide up to 50 MW of
supplemental energy. The Project will have an electrical output of 570 MW (nominal) or 563 MW (net).
The Project will be located on a parcel of land owned by the city of Palmdale, currently zoned for
industrial use, in Los Angeles County. The approximately 333-acre parcel is west of the northwest corner
of Air Force Plant 42, and east of the intersection of Sierra Highway and East Avenue M. The City of
Palmdale is located within the Antelope Valley Air Quality Management District (District).

This document is intended to provide a brief, informal summary of information to assist members of the
public attending public participation events scheduled for September 14, 2011 for EPA's proposed PSD
permit for the Project. For official permit documents developed in accordance with 40 CFR Part 124 and
more details about the permit requirements, refer to EPA's public notice, the proposed permit, and the
Fact Sheet/Ambient Air Quality Impact Report (AAQIR) for this proposed permit action, which are
linked to the EPA Region 9 permit website: http://www.epa.gov/region09/air/permit/r9-permits-
issued.html#pubcomment.

What Laws and Regulations Apply to EPA's Proposed PSD Permit?

We have prepared this proposed permit based on our Prevention of Significant Deterioration regulations
issued under the Clean Air Act at 40 Code of Federal Regulations (CFR) 52.21. We believe that the
proposed project will comply with PSD requirements including the installation and operation of Best
Available Control Technology (BAC1), and will not cause or contribute to a violation of the National
Ambient Air Quality Standards (NAAQS) for the pollutants regulated under the permit. We have made
this determination based on the information supplied by the applicant, our review of the analyses
contained in the permit application, and other relevant information contained in the administrative record
for this proposed action. EPA has provided the proposed permit and fact sheet/AAQIR to the public for
review, and will make a final decision on the Project's PSD permit application after considering all public
comments on our proposal submitted during the public comment period.

Environmental requirements from other federal, state, or local laws are not included in this proposed
permit unless they are also part of the Clean Air Act Prevention of Significant Deterioration program. The
project is required to comply with all other environmental requirements. To this end, the City of Palmdale

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also has submitted applications for state and local construction approvals, respectively referred to as an
Application for Certification (AFC) submitted to the California Energy Commission (CEC)1 and an
application for a Determination of Compliance (DOC) submitted to the Antelope Valley Air Quality
Management District (District). The emissions of other air pollutants from the proposed Project,
including the pollutants for which the area is not meeting the NAAQS (and precursors that lead to the
formation of such pollutants), are regulated by the District, which implements the Nonattainment New
Source Review (NA-NSR) permitting program for this area. The District is designated as a severe non-
attainment area for ozone. The non-attainment pollutants subject to NA-NSR permitting by the District
include nitrogen oxides (NOj and volatile organic compounds (VOC) as ozone precursors. On May 13,
2010, the District issued a Final Determination of Compliance for the Project, which includes the
District's NA-NSR permit requirements. For power plants over 50 MW, the CEC must issue a license to
authorize construction. The CEC issued its Final Commission Decision approving the Project's
Application for Certification on August 10, 2011 (08-AFC-09). The District and CEC approval processes
are separate from EPA's PSD permitting process.

The applicant must also apply for and obtain an Acid Rain permit and a Title V operating permit. The
applicant will apply for the Title V operating permit, which will incorporate the acid rain permit after the
facility is constructed, as these permits are not required prior to construction. The District has jurisdiction
to issue the Acid Rain permit and the operating permit for the facility.

What Does EPA's Proposed PSD Permit Regulate?

The PSD program (40 CFR 52.21) applies to "major" new sources of attainment pollutants. The
estimated emissions for this project show that the facility will be a major source for nitrogen dioxides
(N02), carbon monoxide (CO), total particulate matter (PM), particulate matter under 10 micrometers
(PM10), particulate matter under 2.5 ([im) in diameter (PM25), and greenhouse gases (GHG). Once a source
is considered major for a PSD pollutant, PSD also applies to any other pollutant regulated under the PSD
program that is emitted in a significant amount. The emissions of oxides of sulfur (SOx) will be less than
the major source threshold and less than the significant emission rate. Therefore, PSD does not apply for
SOx. In addition, because the area in which the Project is located is designated non-attainment for ozone,
the PSD program does not apply to ozone and the PSD permit does not address ozone.

In accordance with 40 CFR 52.21 (j), a new major stationary source is required to apply best available
control technology (BACT) for each PSD pollutant that it has the potential to emit (PTE) in significant
amounts. With respect to the Project, N02, CO, PM, PM10 PM25 and GHG are emitted in significant
amounts, and therefore the proposed permit requires the Project to apply BACT to all equipment that
emits these pollutants.

How Would EPA's Proposed PSD Permit Affect Air Quality?

The PSD regulations require an examination of the impacts of the proposed project on ambient air quality
for the pollutants regulated under the PSD permit. EPA has reviewed the computer modeling analysis that
predicts the effect of the proposed project on ambient air quality. Based on the modeling results, and the
technical information that we have reviewed to date, the project's impacts on air quality and visibility are
consistent with limits allowed under the Clean Air Act. The proposed emission limits will protect the
NAAQS for N02, CO, PM10, and PM25. There are no NAAQS for PM or GHG.

The PSD regulations require that EPA evaluate other potential impacts on 1) soils and vegetation; 2)
visibility impairment; and 3) growth. Based on our review of the analyses provided by the applicant and
the maximum potential concentrations of the visibility-related criteria pollutants — N02, PM10, and PM, 5 —

1 City of Palmdale Hybrid Power Plant Project Licensing Case (08-AFC-09),
http://www.energy.ca.gov/sitingcases/palmdale/index.html.

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we do not expect any adverse impacts on visibility, nor do we expect this project to result in any adverse
impacts on plants and soils or significant growth.

What Other Actions is EPA Taking in Connection with Its Decision making Process?

EPA has been engaged in consultation with the U.S. Fish and Wildlife Service under section 7 of the
federal Endangered Species Act (ESA) to ensure that its proposed PSD permit decision for the Project is
not likely to jeopardize the continued existence of any federally-listed endangered or threatened species or
result in the destruction or adverse modification of critical habitat for such species. EPA will proceed with
issuance of its final PSD permit decision after making a determination that its decision will be consistent
with ESA requirements.

In addition, in accordance with Executive Order 12898, "Federal Actions to Address Environmental
Justice in Minority Populations and Low-Income Populations," EPA determined that it would be
appropriate to prepare an analysis to consider environmental justice issues in connection with the issuance
of this federal PSD permit. In our Environmental Justice Analysis, we conclude that the Project will not
cause or contribute to air quality levels in excess of health standards for the pollutants regulated under the
permit, including CO, N02, PM10 or PM2 5 and that therefore it will not result in disproportionately high
and adverse human health or environmental effects with respect to these air pollutants on minority or low-
income populations residing near the proposed Project or the community as a whole. The Environmental
Justice Analysis is available to the public as part of the administrative record supporting EPA's proposed
PSD permit for the Project.

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