Air Pollution

In 1989, the Environmental Protection Agency (EPA) made an initial determination that it was reasonable to expect that sulfur dioxide emissions from the Navajo Generating Station were impairing visibility in the Grand Canyon National Park, most notably during winter weather conditions. Although emission controls for visibility impairment were not required when the coal-fired power plant became fully operational in 1976, later amendments to the Clean Air Act required such controls if a source was found to be impairing visibility in national parks and wilderness areas. EPA initially proposed a rule requiring the Navajo Generating Station to cut its sulfur dioxide emissions by 70 percent. Under EPA's final rule, this reduction was increased to 90 percent. A project to install emission control equipment at the plant is under way and on schedule. This report (1) determines the effect on emissions reductions and the associated costs that resulted from the negotiated agreement used by EPA in making its decisions compared to its initial proposal, (2) identifies the visibility improvements that the agency estimated would result from the emissions controls and the means by which these improvements were determined, and (3) determines how contingent valuation was used to estimate the monetary value of visibility improvements.

GAO noted that: (1) the negotiated agreement is expected to result in greater emissions reductions at less cost than EPA had initially proposed; (2) the agency initially proposed limiting sulfur dioxide emissions at the Navajo Generating Station by approximately 70 percent at an annual cost estimated between $91.9 million and $128.3 million; (3) the negotiated agreement is expected to increase emissions reductions to approximately 90 percent at an estimated annual cost of approximately $89.6 million; (4) the lower costs resulted from several factors, according to the plant operators; (5) according to a project engineer for the Salt River Project, with its compliance determined on an annual basis, the plant can operate its emission control equipment most days at a rate greater than that needed to cut emissions by approximately 90 percent to make up for those days on which emissions are not controlled because the equipment is not operating; (6) also, delaying the initial installation of the emission control equipment by almost 3 years, from January 1995 to November 1997, allows the project to be completed in a more cost-effective manner; (7) EPA estimated that reducing the sulfur dioxide emissions at the Navajo Generating Station by approximately 90 percent would improve winter seasonal average visibility at the Grand Canyon approximately 7 percent--from about 124 miles to about 133 miles; (8) most of this improvement was estimated to result from improvements during certain winter weather conditions; (9) EPA initially estimated an approximately 14 percent improvement in the winter seasonal average visibility primarily on the basis of a National Park Service study of visibility in the vicinity of the Grand Canyon; (10) EPA revised this estimate to approximately 7 percent after considering the results of other analyses; (11) however, EPA noted that its revised estimated may be understated because it did not include visibility improvements: (a) below the rim of the Grand Canyon; (b) in seasons other than winter at the Grand Canyon; and (c) year round at other nearby national parks; (12) both EPA and the Navajo Generating Station's owners used contingent valuation to estimate the monetary value of visibility improvements; and (13) although relying on the same methodology, the studies were different and yielded widely different results.