March 21, 2017

John Filippelli, Director
USEPA Region 2
Clean Air and Sustainability Division
290 Broadway
New York, NY 10007-1866

Subject: Energy Answers Arecibo, LLC
Request for Prevention of Significant Deterioration Air Permit Limited Extension

Dear Director Filippelli:
Energy Answers Arecibo, LLC (EAA) has been working diligently to commence construction of the
Arecibo Resource Recovery Facility (Arecibo RRF, or the Project) by the April 10, 2017 extended
Prevention of Significant Deterioration (PSD) permit Effective Date deadline; however, as discussed
below, EAA has experienced significant procedural and financial impediments that continue to restrict
our practical ability to commence construction of the Project, as this is defined under PSD regulations.
Although we continue to work towards beginning construction as soon as possible, and in advance of
the permitted deadline, we are requesting a limited extension of the current deadline for commencing
construction. We are making this request as a practical matter, considering the uncertain timing of the
completion of the necessary procedural steps for securing federal funding, which are steps that are
beyond EAA’s control, yet directly influence the timeline by which EAA will be able to embark on a
program of continuous construction of the project.
At this time, we are prohibited from commencing a program of continuous construction due to the
onsite construction restrictions associated with the National Environmental Policy Act (NEPA)
Environmental Impact Statement (EIS) review, which is currently being conducted by the USDA Rural
Utilities Service (RUS). This process commenced on November 28, 2014 (28 months ago), with the
publication in the Federal Register of a Notice of Intent to prepare a Draft EIS, and has advanced slowly,
but steadily since that time, with the Final EIS being issued for public review and comment on February
22, 2017. Due to the Limitations on Actions During the NEPA process stipulated in 7 CFR Section
1794.15, which states that “until RUS concludes its environmental review process, the applicant shall
take no action concerning the proposed action which would have an adverse environmental impact or
limit the choice of reasonable alternatives being considered in the environmental review process”, the
work that can be conducted on the project site prior to the issuance of the RUS Record of Decision
(ROD) and without putting the Project at the risk of becoming ineligible to participate in the RUS loan
program, is consequently very limited.
The declining economic climate in Puerto Rico, due to the well documented ongoing economic crisis and
below-investment-grade credit ratings of Puerto Rico’s debt and that of the Puerto Rico Electric Power
Authority (PREPA), has limited the sources of funding available to projects of the size and complexity of
Energy Answers Arecibo, LLC
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Letter - Director Filippelli
USEPA Region 2
March 21, 2017
the Arecibo RRF, and made it necessary for EAA to pursue a federal loan through RUS. The RUS loan
program remains one of the few, if not only, potential sources of debt available to this Project under the
current economic conditions. These circumstances have presented a significant and extraordinary
financial impediment to proceeding with project financing and construction as originally expected. EAA
is now in a position wherein commencing on site construction prior to the issuance of a ROD would put
the RUS loan at risk, and consequently, put the entire project at risk. As of the date of this letter, the
ROD has yet to be issued.
Additionally, the NEPA onsite construction restriction is preventing the Project from commencing and
completing the tasks needed to activate one of the previously approved and currently effective local
environmental permits. Specifically, the Project must complete limited demolition activities on the
Project site and on the adjacent property in order to receive its previously approved Conditional Letter
of Map Revision (CLOMR) from FEMA. The issuance of the FEMA CLOMR, is a prerequisite condition to
the Puerto Rico Planning Board Siting Consultation. With the issuance of the FEMA CLOMR, all Project
federal and local permits necessary to commence construction will be approved, issued, effective and
active.
The negotiation of the Project's Engineering Procurement and Construction (EPC) contract, which
provides a program of continuous construction through the completion of the Project, is in an advanced
stage, and execution of a final agreement is expected within the next few weeks. Although most of the
terms and conditions of the EPC contract were negotiated years ago, the fact that this is a fixed price
contract with a guaranteed in-service date, means that the EPC contractor assumes substantial risk with
regards to the accuracy of both the price and schedule set in the contract. Consequently, to ensure that
all critical contract cost and schedule elements are accurate and current, the EPC contractor seeks to
complete the contract as near to the start of construction as possible, thus tying the execution of the
EPC contract to the ability to commence construction.
It is important to note that prior to the onset of the economic and fiscal crisis facing Puerto Rico and the
associated extraordinary financing impediments, EAA was prohibited from commencing construction,
and was required to seek an extension due to the legal challenges filed against the Project’s PSD permit.
The legal challenges were not resolved until June 2016, only after the successful defense of the PSD
Permit at the DC Circuit Court of Appeals concluded and the request for an en banc reconsideration was
denied.
With respect to the proposed emissions control equipment technologies, pollution prevention
measures, and good engineering practices, which together constitute the Best Available Control
Technology (BACT) for the Project, this combined control system remains the most effective BACT
controls for the Project. In advance of this request, our project team reviewed the EPA
RACT/BACT/LAER Clearinghouse (RBLC) database and other industry sources, for the issuance of PSD
permits after the Arecibo RRF Permit was issued. This exercise confirmed that there is no evidence of
advancements in air pollution control technologies or regulatory standards that would indicate that
BACT for large scale Municipal Waste Combustion (MWC) units would be any different from what is
specified in the Arecibo RRF PSD Permit. In fact, the RBLC database continues to indicate that the
Arecibo RRF is the most recent PSD project and BACT determination for the large MWC source category.
In addition, it was confirmed with the Energy Recovery Council that there have been no new or modified
large MWCs or waste-to-energy facilities permitted since the Arecibo RRF PSD permit was issued, which

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Letter - Director Filippelli
USEPA Region 2
March 21, 2017
further supports the fact that the BACT controls specified in the Arecibo RRF PSD permit continue to be
current and effective for minimizing emissions of regulated air pollutants from large MWCs.
Also, it is important to note that the RUS NEPA EIS review, which incorporates the PSD permit as part of
the document, has undergone a rigorous review process, which has included a Scoping meeting held on
January 28, 2015, a Draft EIS (DEIS) public hearing held on August 20, 2015, which was accompanied by
an extended public comment period of 97 days, which was further extended by 11 days to
accommodate a request by Regional Administrator Enck. In addition to these public participation
opportunities, the RUS FEIS underwent a 30-day public comment period that ended on March 6, 2017,
within approximately two weeks of the submittal of this letter. During the DEIS review, there were no
comments on the BACT controls or PSD permit conditions that brought into question whether they
represent the most current and effective emission control methods or technologies.
It is the Project’s intention to commence limited test pile/foundation work prior to the April 10, 2017
permit Expiration Date and execute the EPC Contract as quickly as possible, also likely before the April
10, 2017 Expiration Date. Upon the issuance of a favorable RUS ROD, the Project will commence the
essential demolition work necessary to activate the Project’s local construction permits. In summary, the
Project intends to follow the milestone target schedule detailed below:
Project Milestones
EPC Contract Executed
Commencement of Phase I work (FEMA Onsite work and test piles)
RUS ROD Issued
FEMA CLOMR Issued
RUS Loan Commitment Letter Issued
Commencement of Phase II work (Fill & Foundation Work)
EPA Notification of Construction Start

Target Date
March 31, 2017
April 7, 2017
April 14, 2017
June 16, 2017
July 14, 2017
July 21, 2017
July 28, 2017

Delayed Date

April 28, 2017
July 7, 2017
August 4, 2017
August 18, 2017
September 1, 2017

Finally, although it is outside of the scope of the specific governing regulations, it is our hope that your
evaluation of our request takes into consideration the fact that:
• 20 of Puerto Rico's 28 landfills are not, and cannot, meet Sub-Title D regulations,
• The average age of Puerto Rico Electric Power Authority’s generating facilities is over 45 years, with
many of these facilities needing renovations and/or fuel conversions to effectively meet EPA
emission standards,
• Puerto Rico’s recycling rate has remained below 15% for approximately 20 years and less than 5% of
the energy generated in Puerto Rico is renewable energy, and finally,
• Puerto Rico is going through a historic economic crisis.
And know that the proposed Arecibo RRF will:
•
•
•

Provide fully compliant solid waste management capacity for over 20% of the MSW generated in
Puerto Rico,
Add greatly needed renewable energy generation capacity to PREPA,
Provide a major net reduction in GHG generation and will recover over 200 tons per day of
recyclable metals that would otherwise be lost to landfills, and

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Letter - Director Filippelli
USEPA Region 2
March 21, 2017
•

Be the largest single economic development project in Puerto Rico’s Fiscal Plan, providing thousands
of construction jobs and hundreds of permanent jobs.

As our record shows, we have been working diligently since the issuance of the PSD permit and have
spent over $20 million obtaining all of the necessary contracts and approvals necessary to commence
construction. We were hopeful that we would have been able to commence construction prior to the
April 10, 2017 deadline, but the need for the federal loan program due to the economic climate in
Puerto Rico and the slow pace of the NEPA EIS review, have made meeting that date less certain at this
time. EAA continues to work toward reaching the commencement of construction as soon as practical.
Notwithstanding the uncertainty related to the timing of the RUS ROD and the conclusion of the NEPA
process, we expect that construction will commence within no more than five (5) months from the April
10, 2017 deadline. Therefore, we respectfully request a five (5) month extension to the Effective Date
deadline for the commencement of construction of the Project.
Should you have any questions or require additional information, please contact me directly at your
earliest convenience.
Sincerely,

Mark J. Green
Vice President
Energy Answers Arecibo, LLC