UNITED STATES ENVIRONMENTAL PROTECTION AGENCY

REGION 2

In the Matter of:

Puerto Rico Electric Power Authority

Palo Seco Steam Power Plant
Toa Baja, Puerto Rico, NOTICE OF VIOLATION AND
OPPORTUNITY TO CONFER
Respondent, CAA-02-2021-1302

In a proceeding under
Section 113(a) of the Clean Air Act

The Director of the Caribbean Environmental Protection Division (“Director”) for the United

States Environmental Protection Agency (“EPA”) Region 2 Office issues this Notice of Violation

and Opportunity to Confer (“NOVOC”) pursuant to Sections 111, 112(d), 113(a)(1), and (a)(3) of

the Clean Air Act (“CAA” or the “Act”), 42 U.S.C. §§ 7411, 7412(d); 7413(a)(1), (3). EPA finds

that Respondent, Puerto Rico Electric Power Authority (“PREPA” or “Respondent”) has violated

the Act at its Palo Seco Steam Power Plant as follows:

STATUTORY AND REGULATORY BACKGROUND

Prevention of Significant Deterioration

1. When the Act was passed in 1970, Congress exempted existing facilities from many of its

requirements. However, Congress made it clear that this exemption would not last forever. As the

United States Court of Appeals for the D.C. Circuit explained in Alabama Power v. Costle, 636

F.2d. 323, 400 (D.C. Cir. 1979), “[the] statutory scheme intends to ‘grandfather’ existing

industries; but . . . this is not to constitute a perpetual immunity from all standards under the

P[revention of] S[ignificant] D[eterioration] program.” Rather, the Act requires grandfathered
facilities to install modern pollution control devices whenever they propose modifications that may

increase their emissions.

2. On June 19, 1978, EPA promulgated regulations pursuant to Part C of Title I of the Act,

“Prevention of Significant Deterioration of Air Quality” (“PSD”). See 43 Fed. Reg. 26403 (June

19, 1978).

3. The PSD provisions of Part C of Title I of the Act establish specific requirements

applicable to the construction and modification of sources located in areas designated as either

attainment or unclassifiable for purposes of meeting the National Ambient Air Quality Standards

(“NAAQS”). See 42 U.S.C. §§ 7470-7492. These statutory provisions and their implementing

regulations at 40 C.F.R. § 52.21, collectively known as the PSD program, provide that if a major

stationary source located in an attainment area is planning to make a major modification, then that

source must obtain a PSD permit before beginning actual construction. See 40 C.F.R. § 52.21(i).

To obtain this permit, the source must, among other things, undergo a technology review and apply

Best Available Control Technology (“BACT”); perform a source impact analysis; perform an air

quality analysis and modeling; submit appropriate information; and conduct additional impact

analyses as required.

4. 40 C.F.R. § 52.21(a)(1) provides that the PSD regulations apply to any State Implementation

Plan (“SIP”) which has been disapproved with respect to prevention of significant deterioration of air

quality in any portion of any state that is in attainment with the applicable NAAQS.

5. Pursuant to Sections 110 and 161 of the Act, EPA (1) disapproved Puerto Rico’s

prevention of significant deterioration of air quality rules, and (2) incorporated by reference, and

made part of the applicable Puerto Rico SIP, the provisions at 40 C.F.R. §§ 52.21(a)(2) through

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(w). See 40 C.F.R. §§ 52.2720 through 52.2732; 62 Fed. Reg. 3211, 3213 (January 22, 1997); 68

Fed. Reg. 74491 (Dec. 24, 2003); 42 U.S.C. §§ 7410, 7471.

6. 40 C.F.R. § 81.355 establishes the attainment status designations for Puerto Rico, including

the 2010 Sulfur Dioxide NAAQS non-attainment designation for the San Juan, Puerto Rico area,

which includes the Toa Baja Municipality (specifically, the Palo Seco and Sabana Seca Wards).

This area was designated non-attainment for sulfur dioxide (SO2) on April 9, 2018. See 83 Fed.

Reg. 1098, 1171 (Jan. 9, 2018).

Non-attainment New Source Review (“NSR”)

7. Part D of Title I of the Act, 42 U.S.C. §§ 7501-7515, “Plan Requirements for Non-attainment

Areas,” sets forth New Source Review (“NSR”) provisions for areas classified as non-attainment with

the NAAQS. These provisions are referred to herein as the “Non-attainment NSR” program. The Non-

attainment NSR program is intended to reduce emissions of air pollutants in areas that have not attained

NAAQS so that the areas can make progress towards meeting the NAAQS. Prior to the effective date of

the 1990 Clean Air Act Amendments, P. Law 101-549, effective November 15, 1990, the Non-

attainment NSR provisions were set forth at 42 U.S.C. §§ 7501-7508.

8. Under Section 172(c)(5) of the Non-attainment NSR provisions of the Act, 42 U.S.C. §

7502(c)(5), each state is required to adopt Non-attainment NSR SIP rules that include provisions to

require permits that conform to the requirements of Section 173 of the Act, 42 U.S.C. § 7503, for the

construction and operation of modified major stationary sources within non-attainment areas. Section

173 of the Act, in turn, sets forth a series of minimum requirements for the issuance of permits for major

modifications to major stationary sources within non-attainment areas. 42 U.S.C. § 7503.

9. Section 173(a) of the Act, 42 U.S.C. § 7503(a), provides that construction and operating permits

may be issued, if, inter alia, “(a) sufficient offsetting emission reductions have been obtained to reduce

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existing emissions to the point where reasonable further progress towards meeting the national ambient

air quality standards is maintained; and (b) the pollution controls to be employed will reduce emissions

to the lowest achievable emission rate.”

10. Under 40 C.F.R. Part 51 Appendix S, “Emission Offset Interpretative Ruling,” no person may

undertake a major modification of an existing major stationary source in a non-attainment area without

first obtaining a Non-attainment NSR permit.

11. Under Appendix S, a “major stationary source” of particulate matter 10 (PM10), nitrogen oxides

(NOx), volatile organic compounds (VOCs), carbon monoxide (CO), carbon dioxide-equivalent (CO2e),

and SO2 is one that emits or has the potential to emit 100 tons per year or more, and a “significant” net

emissions increase of these pollutants is one that results in increased emissions of 40 tons per year or

more of these pollutants.

New Source Performance Standards and National Emission Standards for Hazardous Air
Pollutants

12. Section 111 of the Act authorizes EPA to develop technology-based standards that apply to

specific categories of stationary sources. These standards are referred to as the New Source

Performance Standards (“NSPS”), which are promulgated under 40 C.F.R. part 60. The Act provides

that after the effective date of any emission limit or other standard promulgated pursuant to Section 111,

it shall be unlawful for any owner or operator of a new source to operate that source in violation of the

emission limit or standard. See 42 U.S.C. §§ 7411(e); 7411(h)(5). A “new source” is one that is

constructed or modified after the regulations are issued. See id. § 7411(a)(2).

13. 40 C.F.R. part 60 subpart KKKK regulates stationary combustion turbines constructed after

February 2005 with a heat input at peak load of equal to or greater than 10 million British Thermal Units

(“MMBtu”) per hour, imposing emission limits on nitrogen oxides NOx and SO2.

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14. Subpart KKKK, at 40 C.F.R. § 60.4333(a), requires a regulated entity to operate and maintain its

stationary combustion turbines, air pollution control equipment, and monitoring equipment in a manner

consistent with good air pollution control practices for minimizing emissions at all times including

startup, shutdown, and malfunction.

15. 40 C.F.R. § 60.4335(a) requires regulated entities that choose to use water injection systems to

regulate NOx emissions to install, calibrate, and maintain a continuous monitoring system to monitor

and record fuel consumption and the ratio of water or steam to fuel used. Alternatively, 40 C.F.R. §

60.4335(b) provides several alternative options for an entity to use continuous emission monitoring.

16. 40 C.F.R. § 60.4340 explains how an entity that is not using water injection may demonstrate

continuous compliance for NOx. It requires an entity to perform annual performance tests to

demonstrate continuous compliance, or alternatively, install, calibrate, maintain, and operate a

continuous monitoring system.

17. 40 C.F.R. part 60 subpart TTTT imposes emission standards and compliance schedules for the

control of greenhouse gas emissions (“GHGs”) for electric generating units constructed after January

2014 with a base load rating of greater than 250 MMBtu per hour of fossil fuel, and which are capable

of selling greater than 25 MW of electricity.

18. Subpart TTTT, at 40 C.F.R. § 60.5525(a), mandates that an entity must be in compliance with

the emission standards that apply to its affected electric generating unit (“EGU”) at all times.

19. 40 C.F.R. § 60.5525(b) explains that a regulated entity must operate and maintain each affected

EGU in a manner consistent with safety and good air pollution control practice at all times.

20. Section 112(d) of the Act requires EPA to promulgate regulations establishing national emission

standards for hazardous air pollutants (“NESHAPs”) for certain categories of major sources. NESHAPs

promulgated under the CAA as amended in 1990 are set forth in 40 C.F.R. part 63. Part 63 NESHAPs

CAA-02-2021-1302 5
are sometimes known as maximum achievable control technology (“MACT”) standards, because

Section 112(d) of the CAA, as amended in 1990, directs EPA to promulgate emissions standards based

on the MACT. See 42 U.S.C. § 7412(d)(2).

21. 40 C.F.R. part 63 subpart YYYY establishes NESHAPs and operating limitations for stationary

combustion turbines located at major sources of emissions of hazardous air pollutants. Sources must

demonstrate initial and continuous compliance with the emission and operating limitations.

22. 40 C.F.R. § 63.6110 explains when a regulated entity must conduct initial performance tests or

other initial compliance demonstrations, and 40 C.F.R. § 63.7 provides performance testing

requirements.

23. 40 C.F.R. § 63.6135 explains how a regulated entity must conduct monitoring and collect data to

demonstrate continuous compliance.

24. 40 C.F.R. § 63.6140 explains the ways in which a regulated entity may demonstrate continuous

compliance with the emission and operating limitations. Table 2 of subpart YYYY provides the relevant

operating limitations. Table 5 of subpart YYYY explains that in order to operate a stationary

combustion turbine without the use of an oxidation catalyst, a regulated entity must have obtained

approval for specific operating limitations through a petition to the EPA Administrator.

Puerto Rico Regulations for the Control of Atmospheric Pollution

25. Puerto Rico Regulations for the Control of Atmospheric Pollution (“RCAP”) Rule 201 (Location

Approval), no person shall cause, or permit the location or construction of a new major stationary

source, or major modification or significant source, without first obtaining a location approval from the

Puerto Rico Department of Natural and Environmental Resources (“DNER”).

26. RCAP Rule 202 (Air Quality Impact Analysis) describes the circumstances and requirements for

an air quality impact analysis, which include a demonstration that allowable emissions increase from a

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proposed new source or modification, in conjunction with all other applicable emission increases or

reductions, will not significantly cause or contribute to air pollution in violation of any NAAQS, and

that a net ambient air quality benefit is demonstrated.

FINDINGS OF FACT

27. Respondent, a public corporation and government instrumentality organized pursuant to the laws

of the Commonwealth of Puerto Rico, owns and operates a power generation plant (the “Plant”) located

at State Road PR-165, Km. 30.8, Toa Baja, Puerto Rico.

28. PREPA is a “person” as defined by Section 302(e) of the CAA, 42 U.S.C. § 7602(e), and the

Puerto Rico RCAP Rule 102.

29. PREPA is the “owner” and “operator” of the Plant within the meaning of Puerto Rico RCAP

Rule 102.

30. The Plant is an existing major source under the PSD program for NOx, CO, SO2, PM, PM10,

PM2.5, VOCs, GHGs, and H2SO4.

31. The Plant is located within the San Juan, Puerto Rico SO2 non-attainment area that was

designated on April 9, 2018.

32. On June 18, 2019, PREPA sent a letter to EPA via email (the “June 18 Letter”), proposing to

install three new gas turbines of approximately 23 MW capacity each to provide emergency backup

generation and maintain reliable service to the island in preparation for the upcoming 2019 hurricane

season. PREPA requested EPA’s assistance to determine an “appropriate vehicle” to install the units so

that they could be ready for use by the beginning of September 2019. PREPA’s proposal included the

following details about the three new gas turbines:

a. The three gas turbines would be MOBILEPAC®-branded gas turbine packages with

FT8®-branded engines, with a capacity of approximately 23 MW each;

CAA-02-2021-1302 7
 b. The MOBILEPAC® gas turbine package (“MobilePacs”) would offer 22.5 MW (Fuel

Oil) or 23.8 MW (Natural Gas) of movable power;

c. the MobilePacs would be dual-fuel ready, with the capability to use diesel (low-sulfur

No. 2 fuel oil) or natural gas as fuel;

d. installation was expected to begin in June 2019, and completed by late August 2019, with

normal operation of the MobilePacs expected by early September 2019;

e. the MobilePacs would have emissions controls in the form of water injection to control

NOx;

f. while PREPA intended to use the MobilePacs to serve as emergency power during the

2019 hurricane season, it planned to keep the MobilePacs in place at Palo Seco for emergency use and

peaking operations, with the objective of having these units replace three existing 21 MW GE Frame

5000 gas turbines in the current Palo Seco power block (Units PS-GT 2-2, 3-1, and 3-2). PREPA

reasoned that because they were more efficient, the MobilePacs would be dispatched first, prior to the

existing gas turbines in the power block.

33. On June 20, 2019, EPA Region 2’s Regional Administrator, Peter D. Lopez, met with PREPA’s

representatives concerning the proposal contained in the June 18 Letter. In a subsequent telephone call

with EPA staff on June 24, 2019, PREPA agreed to supply EPA with the hourly emission rates of the

MobilePacs, as well as the load levels, to determine whether it would be possible for PREPA to meet

PSD non-applicability conditions for the three proposed units.

34. On October 11, 2019, PREPA sought a 90-day emergency variance from DNER to install the

MobilePacs without a DNER construction permit, in order to bolster PREPA’s power grid.

CAA-02-2021-1302 8
35. DNER granted PREPA the 90-day emergency variance on October 24, 2019. The variance

allowed PREPA to begin installing the MobilePacs and operate them without a construction permit for a

period of 90 days, which expired on January 22, 2020.

36. On January 14, 2020, PREPA submitted a construction permit application to DNER for the

MobilePacs, which DNER has not granted.

37. The permit application asserts, and EPA finds, that the MobilePacs are subject to 40 C.F.R. part

60 subpart KKKK, 40 C.F.R. part 60 subpart TTTT, and 40 C.F.R. part 63 subpart YYYY.

38. On January 14, 2020, PREPA also submitted a written no-action assurance (“NAA”) request to

EPA (“NAA Request”) to waive several CAA requirements related to the Plant’s MobilePac units,

including PSD, NSPS, and NESHAPs requirements.

39. Although EPA granted PREPA an NAA on January 31, 2020, it did not include relief from any

violations related to the installation or operation of the MobilePacs.

40. PREPA never installed the water-injection system to control pollution from the MobilePacs, and

used only No. 2 diesel fuel oil to operate them.

41. The installation of the MobilePacs constitutes a “physical change” in the method of operation of

the Plant, as that phrase is used pursuant to 40 C.F.R. §§ 52.21(b)(2)(i) and (iii).

42. When the MobilePac units were installed, the Plant was an existing major stationary source

under 40 C.F.R. § 52.21(b)(1)(i) and 40 C.F.R. part 51, Appendix S, § II(A)(4)(i)(a) because it is a

fossil-fuel fired steam electric plant of more than 250 MMBtu per hour heat input, with a potential to

emit PM10, NOx, VOC, CO, CO2e, and SO2 in excess of 100 tpy.

43. The Plant is also a “major source” of hazardous air pollutant (“HAP”) emissions, because it

emits or has the potential to emit at least 10 tpy in the aggregate of any HAP, or at least 25 tpy of any

combination of HAP. See 40 C.F.R. § 63.2.

CAA-02-2021-1302 9
44. The physical changes PREPA made through the installation and operation of the MobilePacs

constitute a “major modification” pursuant to 40 C.F.R. § 52.21(b)(2)(i) and 40 C.F.R. part 51,

Appendix S, § II(A)(5)(i)(a).

45. The installation and operation of the MobilePacs resulted in a significant net emissions increase

from the Plant, as defined in 40 C.F.R. § 52.21, of NOx, PM, PM10, PM2.5, H2SO4, and CO2e, and SO2

pursuant to 40 C.F.R. part 51, Appendix S, §§ II(A)(5)(i)(a) and (10)(i).

46. PREPA operated at least one of the MobilePacs from November 7, 2019 until August 13, 2020,

when it disconnected all three MobilePacs.

VIOLATIONS

47. PREPA emitted NOx, PM, PM10, PM2.5, H2SO4, and CO2e in exceedance of PSD applicability

thresholds in violation of 40 C.F.R. 52.21(b)(23)(i).

48. PREPA emitted SO2 in exceedance of non-attainment area NSR applicability thresholds in

violation of 40 C.F.R. part 51, Appendix S, § II(A)(10)(i).

49. PREPA is in violation of PSD requirements, Section 165 of the Act, 42 U.S.C. § 7475, and 40

C.F.R. § 52.21, for, among other things, failing to: (1) apply for and obtain a PSD permit to construct

and operate the MobilePac units, (2) conduct a BACT analysis, (3) install appropriate emission control

equipment in accordance with a BACT analysis, (4) conduct a source impact analysis or an ambient air

quality analysis, (5) submit source information, and (6) meet source obligations.

50. PREPA violated non-attainment area NSR requirements, Sections 171 through 193 of the Act, 42

U.S.C. §§ 7501 through 7515, and 40 C.F.R. part 51, Appendix S, Emission Offset Interpretive Ruling,

and RCAP Rules 201 and 202, which were approved into the SIP at the time the violations began to

occur, by failing to: (1) apply for and obtain a non-attainment area NSR permit to construct and operate

the MobilePac units in a non-attainment area for SO2, (2) implement the lowest achievable emissions

CAA-02-2021-1302 10
rate (“LAER”), (3) obtain federally enforceable emission offsets for SO2, (4) submit an analysis

demonstrating that the benefits of the MobilePac units significantly outweigh their environmental and

social costs, and (5) conduct an air quality impact analysis.

51. PREPA violated the NSPS, 40 C.F.R. part 60 subpart KKKK, because of, inter alia, its failure

to: (1) employ good air pollution control practices, including failing to install the water injection system

or employ a CEMS, in contravention of 40 C.F.R. §§ 60.4333(a) and 60.4335; and (2) demonstrate

continuous compliance for NOx emissions in contravention of 40 C.F.R. § 60.4340.

52. PREPA violated the NSPS, 40 C.F.R. part 60 subpart TTTT, by, inter alia, failing to: (1) be in

compliance with the emission standards at all times, in contravention of 40 C.F.R. § 60.5525(a)(2); and

(2) operate the MobilePacs “in a manner consistent with safety and good air pollution control practice,”

in contravention of 40 C.F.R. § 60.5525(b).

53. PREPA violated the NESHAPs, 40 C.F.R. part 63 subpart YYYY, by failing to, inter alia: (1)

conduct a performance test or demonstrate initial compliance in contravention of 40 C.F.R. §§ 63.6110

and 63.7; (2) monitor and collect data to demonstrate continuous compliance in contravention of 40

C.F.R. § 63.6135; and (3) demonstrate continuous compliance with the emission and operating

limitations in contravention of 40 C.F.R. § 63.6140, Tables 2 and 5.

54. These violations were ongoing through August 13, 2020, when PREPA disconnected the

MobilePacs.

ENFORCEMENT AUTHORITY

Section 113(a)(1) of the CAA authorizes EPA to take any of the following actions in response to

a respondent’s violation(s) of a SIP, after the expiration of 30 days following the issuance of a notice of

violation:

● Issue an order requiring compliance with the requirements or prohibitions of the SIP;

CAA-02-2021-1302 11
 ● Issue an administrative penalty order in accordance with CAA Section 113(d); or

● bring a civil action in accordance with CAA Section 113(b) for civil penalties and/or

injunctive relief.

The amount of civil penalties that may be recovered for violations of the CAA and its

implementing regulations is $25,000 per day per violation, but has been adjusted to $101,439 per day for

each violation that occurs after November 2, 2015, and where penalties are assessed on or after January

13, 2020. See 40 C.F.R. § 19.4.

Furthermore, for any person who knowingly violates any requirement or prohibition of an

applicable SIP for more than thirty days after the date of the issuance of an NOVOC, Section 113(c) of

the Act provides for criminal penalties or imprisonment, or both. In addition, under Section 306 of the

Act, the regulations promulgated thereunder (2 C.F.R. § 1532.1100), and Executive Order 11738, no

federal agency may enter into any contract with any person who is convicted of any offense under

Section 113(c) of the Act for the procurement of goods, materials, and services to perform such contract

at any facility at which the violation which gave rise to such conviction occurred if such facility is

owned, leased, or supervised by such person.

PENALTY ASSESSMENT CRITERIA

Section 113(e)(1) of the Act provides that if a penalty is assessed pursuant to Section 113 of the

Act, EPA or the court, as appropriate, shall, in determining the amount of the penalty to be assessed,

take into consideration the size of the business, the economic impact of the penalty on the business, the

violator’s full compliance history and good faith efforts to comply, the duration of the violation as

established by any credible evidence (including evidence other than the applicable test method),

payment by the violator of penalties previously assessed for the same violation, the economic benefit of

noncompliance, the seriousness of the violation, and other factors as justice may require.

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 Section 113(e)(2) of the Act allows EPA or the court, as appropriate, to assess a penalty for each

day of violation. In accordance with Section 113(e)(2) of the Act, EPA will consider a violation to

continue from the date the violation began until the date Respondent establishes that it has achieved

continuous compliance. If Respondent proves that there was an intermittent day of compliance or that

the violation was not continuous in nature, EPA will reduce the penalty accordingly.

OPPORTUNITY FOR A CONFERENCE

Respondent may request a video conference with EPA concerning the violations alleged in this

NOVOC. This conference will enable Respondent to present evidence regarding the findings of

violation, the nature of the violation, and any efforts it may have taken, or it proposes to take, to achieve

compliance. Respondent’s request for a conference must be confirmed in writing within ten days of

receipt of this NOVOC. The request for a conference, or other inquiries concerning this NOVOC,

should be made by email to Amanda Prentice, Assistant Regional Counsel, at

prentice.amanda@epa.gov.

Notwithstanding this NOVOC and the opportunity for conference, Respondent must comply with

all applicable requirements of the CAA.

CARMEN Digitally signed by
CARMEN GUERRERO PEREZ
GUERRERO Date: 2021.01.22 07:04:13

January 22, 2021

Date: ____________________
PEREZ -04'00'
___________________________________

Carmen R. Guerrero
Director
Caribbean Environmental Protection Division
U.S. Environmental Protection Agency - Region 2

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To: Eng. Efran Paredes Maisonet, Acting Executive Director

Puerto Rico Electric and Power Authority

Efran.Paredes@prepa.com

cc: Eng. Luis Sierra, Air Quality Area Manager

Puerto Rico Department of Natural and Environmental Resources

luissierra@jca.pr.gov

Luisette Rios, PREPA Environmental Protection and Quality Assurance Division,

Luisette.Ríos@prepa.com

Maria Mercado, PREPA Environmental Protection and Quality Assurance Division,

Maria.Mercado@prepa.com

Jose Santos, PREPA Environmental Protection and Quality Assurance Division,

Jose.Santos@prepa.com

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bcc: N. Rodriguez, CEPD-MPCB
R. Buettner, ECAD-ACB
H. Patel, ECAD-ACB
L. Villatora, ORC-AIR
A. Prentice, ORC-AIR
CEPD MPCB Air File
ORC Air Chron File

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