CONSTRUCTION PERMIT. PERMIT NO: 09LP0202F Final Approval

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1 COLORADO DEPARTMENT OF PUBLIC HEALTH AND ENVIRONMENT AIR POLLUTION CONTROL DIVISION TELEPHONE: (303) CONSTRUCTION PERMIT PERMIT NO: 09LP0202F Final Approval DATE ISSUED: September 3, 2013 Modification 1 ISSUED TO: THE SOURCE TO WHICH THIS PERMIT APPLIES IS DESCRIBED AND LOCATED AS FOLLOWS: Underground mining of coal and supporting surface facilities at King II Mine located at 6473 County Road 120 and supporting surface facilities at King I Mine located at 4424 County Road 120, Hesperus, La Plata County, Colorado. THE SPECIFIC EQUIPMENT OR ACTIVITY SUBJECT TO THIS PERMIT INCLUDES THE FOLLOWING: Underground Mine Ventilation, mining, coal handling, stockpiling, processing, hauling, reclamation and supporting rock dust silo storage and handling as described in Attachment A. THIS PERMIT IS GRANTED SUBJECT TO ALL RULES AND REGULATIONS OF THE COLORADO AIR QUALITY CONTROL COMMISSION AND THE COLORADO AIR POLLUTION PREVENTION AND CONTROL ACT C.R.S. ( et seq), TO THOSE GENERAL TERMS AND CONDITIONS INCLUDED IN THIS DOCUMENT AND THE FOLLOWING SPECIFIC TERMS AND CONDITIONS: EMISSION LIMITATIONS AND RECORDS 1. Emissions of air pollutants shall not exceed the following limitations (as calculated using the emission factors included in the Notes to Permit Holder section of this permit). Annual records of the actual emission rates shall be maintained by the applicant and made available to the Division for inspection upon request. (Reference: Regulation No. 3, Part B, Section II.A.4) AIRS ID: 067/1103 Page 1 of 11 Version

2 Annual Limits: AIRS Point Tons per Year PM PM 10 PM 2.5 Emission Type Fugitive Point Point Point Point Point Fugitive Point Fugitive TOTAL Note: Compliance with the fugitive emission limits shall be demonstrated by not exceeding the production limits in condition number 2 and by following the attached fugitive dust emissions control plan. See Attachment A for information on emission factors and methods used to calculate limits for Point Source emissions. PROCESS LIMITATIONS AND RECORDS 2. This source shall be limited to the following maximum consumption, processing and/or operational rates as listed below. Annual records of the actual process rate shall be maintained by the applicant and made available to the Division for inspection upon request. (Reference: Regulation 3, Part B, II.A.4) Process/Consumption Limits Process Parameter Mined coal production Crushing and screening of coal Finished product stockpiles Annual Limit 1,300,000 tons per year STATE AND FEDERAL REGULATORY REQUIREMENTS 3. Visible emissions shall not exceed twenty percent (20%) opacity during normal operation of the source. During periods of startup, process modification, or adjustment of control equipment visible emissions shall not exceed 30% opacity for more than six minutes in any sixty consecutive minutes. Opacity shall be determined using EPA Method 9. (Reference: Regulation No. 1, Section II.A.1. & 4.) 4. This source is subject to the New Source Performance Standards requirements of Regulation No. 6, Part A, Subpart Y, Standards of Performance for Coal Preparation Plants including, but not limited to, the following: AIRS ID: 067/1103 Page 2 of 11

3 a. The discharge into the atmosphere shall not exhibit 20 percent opacity or greater. This applies to emissions from coal processing and conveying equipment, coal storage systems, and coal transfer and loading systems. In addition, the following requirements of Regulation No. 6, Part A, Subpart A, General Provisions, apply. a. At all times, including periods of start-up, shutdown, and malfunction, the facility and control equipment shall, to the extent practicable, be maintained and operated in a manner consistent with good air pollution control practices for minimizing emissions. Determination of whether or not acceptable operating and maintenance procedures are being used will be based on information available to the Division, which may include, but is not limited to, monitoring results, opacity observations, review of operating and maintenance procedures, and inspection of the source. (Reference: Regulation 6, Part A. General Provisions from 40CFR60.11 b. No article, machine, equipment or process shall be used to conceal an emission which would otherwise constitute a violation of an applicable standard. Such concealment includes, but is not limited to, the use of gaseous diluents to achieve compliance with an opacity standard or with a standard which is based on the concentration of a pollutant in the gases discharged to the atmosphere. ( 60.12) c. Written notification of construction and Final startup dates shall be submitted to the Division as required under d. Records of startups, shutdowns, and malfunctions shall be maintained, as required under e. Written notification of continuous monitoring system demonstrations shall be submitted to the Division as required under f. Compliance with opacity standards shall be demonstrated according to OPERATING & MAINTENANCE REQUIREMENTS 5. This source is not required to follow a Division-approved operating and maintenance plan. The operating and maintenance plan provided by the manufacturer of the crusher (AIRS ID: 002) and the screen (AIRS ID: 010) shall be followed for these sources. COMPLIANCE TESTING AND SAMPLING Periodic Testing Requirements 6. No periodic testing is required for this facility. ADDITIONAL REQUIREMENTS 7. All previous versions of this permit are cancelled upon issuance of this permit. 8. Permit 11LP3252 is cancelled upon issuance of this permit. The screen (AIRS ID: 067/1103/010) described in that permit is incorporated into this permit. AIRS ID: 067/1103 Page 3 of 11

4 9. The AIRS ID number shall be marked on the subject equipment for ease of identification. (Reference: Regulation No. 3, Part B, III.E.) (State only enforceable) 10. A Revised Air Pollutant Emission Notice (APEN) shall be filed: (Reference: Regulation No. 3, Part A, Section II.C.) a. Annually whenever a significant increase in emissions occurs as follows: For any criteria pollutant: For sources emitting less than 100 tons per year, a change in actual emissions of five tons per year or more, above the level reported on the last APEN submitted; or For volatile organic compounds (VOC) and nitrogen oxide (NOx) sources in an ozone non-attainment area emitting less than 100 tons of VOC or nitrogen oxide per year, a change in actual emissions of one ton per year or more or five percent, whichever is greater, above the level reported on the last APEN submitted; or For sources emitting 100 tons per year or more of a criteria pollutant, a change in actual emissions of five percent or 50 tons per year or more, whichever is less, above the level reported on the last APEN submitted; or For sources emitting any amount of lead, a change in actual emissions, above the level reported on the last APEN submitted, of fifty (50) pounds of lead For any non-criteria reportable pollutant: If the emissions increase by 50% or five (5) tons per year, whichever is less, above the level reported on the last APEN submitted to the Division. b. Whenever there is a change in the owner or operator of any facility, process, or activity; or c. Whenever new control equipment is installed, or whenever a different type of control equipment replaces an existing type of control equipment; or d. Whenever a permit limitation must be modified; or e. No later than 30 days before the existing APEN expires. GENERAL TERMS AND CONDITIONS: 11. This permit and any attachments must be retained and made available for inspection upon request. The permit may be reissued to a new owner by the Division as provided in Regulation No. 3, Part B, Section II.B upon a request for transfer of ownership and the submittal of a revised APEN and the required fee. 12. This permit is issued in reliance upon the accuracy and completeness of information supplied by the applicant and is conditioned upon conduct of the activity, or construction, installation and operation of the source, in accordance with this information and with representations made by the applicant or applicant's agents. It is valid only for the equipment and operations or activity specifically identified on the permit. AIRS ID: 067/1103 Page 4 of 11

5 By: Charles N. Pray, P.E.-P.L.S. Permit Engineer By: R K Hancock III, P.E. Construction Permits Unit Supervisor Permit History: Final Approval November 24, 2010 Final Approval August 9, 2011 Final Approval This Modification 1 Issuance Final Approval issued to, based on an Enforcement Action. Facility wide permit for both King I & King II. Increase production from 800,000 tons per year to 1,300,000 tons per year. All King I activities eliminated except for the coal refuse pile and reclamation operations. Notes to Permit Holder (as of date of permit issuance): 1) The production or raw material processing limits and emission limits contained in this permit are based on the production/processing rates requested in the permit application. These limits may be revised upon request of the permittee providing there is no exceedence of any specific emission control regulation or any ambient air quality standard. A revised air pollutant emission notice (APEN) and application form must be submitted with a request for a permit revision. 2) This source is subject to the Common Provisions Regulation Part II, Subpart E, Affirmative Defense Provision for Excess Emissions During Malfunctions. The permittee shall notify the Division of any malfunction condition which causes a violation of any emission limit or limits stated in this permit as soon as possible, but no later than noon of the next working day, followed by written notice to the Division addressing all of the criteria set forth in Part II.E.1. of the Common Provisions Regulation. See: 3) The following equipment is currently exempt from construction permitting requirements and/or APEN reporting requirements based on information provided by the operator for the Division s analysis: AIRS ID Facility ID Description Notes N/A Pulverized limestone activities (Rock Dust) Rock Dust Bin, pneumatically conveyed, fully enclosed. APEN Exempt, Permit Exempt N/A Salt activities Emissions from delivery, storage, loading and unloading. APEN Exempt, Permit Exempt This operation is exempt from reporting requirements because the emissions are below the de minimis level This operation is exempt from reporting requirements because the emissions are below the de minimis level 4) In accordance with C.R.S , each Air Pollutant Emission Notice (APEN) associated with this permit is valid for a term of five years from the date it was received by the Division. A revised APEN shall be submitted no later than 30 days before the five-year term expires. Please AIRS ID: 067/1103 Page 5 of 11

6 refer to the most recent annual fee invoice to determine the APEN expiration date for each emissions point associated with this permit. For any questions regarding a specific expiration date call the Division at (303) ) This facility is classified as follows: Applicable Requirement Operating Permit PSD Status Minor Source for PM, PM10 and PM2.5 Minor Source for PM, PM10 and PM2.5 6) Full text of the Title 40, Protection of Environment Electronic Code of Federal Regulations can be found at the website listed below: Part 60: Standards of Performance for New Stationary Sources NSPS Subpart Y NSPS Part 60, Appendixes Appendix A Appendix I Note: For NSPS Subpart Y applicability purposes, all the affected facilities covered by this permit are considered as existing facilities, which were constructed or modified prior to April 28, ) The permit holder is required to pay fees for the processing time for this permit. An invoice for these fees will be issued after the permit is issued. The permit holder shall pay the invoice within 30 days of receipt of the invoice. Failure to pay the invoice will result in revocation of this permit (Reference: Regulation No. 3, Part A, Section VI.B.) 8) If this permit specifically states that final approval has been granted, then the remainder of this condition is not applicable. Otherwise, the issuance of this construction permit does not provide "final" authority for this activity or operation of this source. Final approval of the permit must be secured from the Division in writing in accordance with the provisions of (12)(a) C.R.S. and Regulation No. 3, Part B, Section III.G. Final approval cannot be granted until the operation or activity commences and has been verified by the Division as conforming in all respects with the conditions of the permit. Once self-certification of all points has been reviewed and approved by the Division, it will provide written documentation of such final approval. Details for obtaining final approval to operate are located in the Requirements to Self-Certify for Final Approval section of this permit. 9) Unless specifically stated otherwise, the general and specific conditions contained in this permit have been determined by the Division to be necessary to assure compliance with the provisions of Section (7)(a), C.R.S. 10) Each and every condition of this permit is a material part hereof and is not severable. Any challenge to or appeal of a condition hereof shall constitute a rejection of the entire permit and upon such occurrence, this permit shall be deemed denied ab initio. This permit may be revoked at any time prior to self-certification and final authorization by the Division on grounds set forth in the Colorado Air Pollution Prevention and Control Act and regulations of the AQCC including failure to meet any express term or condition of the permit. If the Division denies a permit, conditions imposed upon a permit are contested by the applicant, or the Division revokes a permit, the applicant or owner or operator of a source may request a hearing before the AQCC for AIRS ID: 067/1103 Page 6 of 11

7 review of the Division s action. 11) Section (2)(a), C.R.S. requires that all sources required to file an Air Pollutant Emission Notice (APEN) must pay an annual fee to cover the costs of inspections and administration. If a source or activity is to be discontinued, the owner must notify the Division in writing requesting a cancellation of the permit. Upon notification, annual fee billing will terminate. 12) Violation of the terms of a permit or of the provisions of the Colorado Air Pollution Prevention and Control Act or the regulations of the AQCC may result in administrative, civil or criminal enforcement actions under Sections (enforcement), -121 (injunctions), -122 (civil penalties), (criminal penalties), C.R.S. AIRS ID: 067/1103 Page 7 of 11

8 PARTICULATE EMISSIONS CONTROL PLAN FOR MINING AND PROCESSING ACTIVITIES THE FOLLOWING PARTICULATE EMISSIONS CONTROL MEASURES SHALL BE USED FOR COMPLIANCE PURPOSES ON THE ACTIVITIES COVERED BY THIS PERMIT, AS REQUIRED BY THE AIR QUALITY CONTROL COMMISSION REGULATION NO.1, SECTION III.D.1.b. THIS SOURCE IS SUBJECT TO THE FOLLOWING EMISSION GUIDELINES: a. Mining and Processing Activities - Visible emissions not to exceed 20%, no off-property transport of visible emissions. b. Haul Roads - No off-property transport of visible emissions shall apply to on-site haul roads, the nuisance guidelines shall apply to off-site haul roads. c. Haul Trucks - There shall be no off-property transport of visible emissions from haul trucks when operating on the property of the owner or operator. There shall be no off-vehicle transport of visible emissions from the material in the haul trucks when operating off of the property of the owner or operator. Control Measures 1. Adequate soil moisture must be maintained in topsoil to control emissions during removal. Watering shall be implemented if necessary. 2. Topsoil stockpiles shall be revegetated within one year. 3. Emissions from material handling (i.e. removal, loading, and hauling) shall be controlled by watering at all times unless natural moisture is sufficient to control emissions. 4. Unpaved haul roads shall be graveled, as per Final application, and watered as often as needed to control fugitive particulate emissions such that the above guidelines are met. Chemical Dust suppression shall be utilized if necessary. 5. Reclamation works and sequential extraction of material shall be initiated to keep the total disturbed areas at any one time to a minimum. 6. Material stockpiles shall be watered as necessary if inherent moisture is not sufficient to control fugitive particulate emissions. 7. Plant entryway and truck service roads shall be graveled or paved. Watering shall be implemented if emission guidelines above are not met. AIRS ID: 067/1103 Page 8 of 11

9 ATTACHMENT A DETAILS OF EQUIPMENT / ACTIVITIES COVERED UNDER THIS FACILITY-WIDE PERMIT AIRS ID DESCRIPTION MAKE, MODEL, S/N, DESIGN RATING, CAPACITY DIMENSIONS, CONSUMPTION, THROUGHPUT REMARKS SPECIFIC PROVISIONS 001 Surface Activities: King I & King II. Fugitive dust producing activities Topsoil Removal and Portal Development (King II only) Coal Extraction (King II only), Haul and Miscellaneous Road Maintenance, all stockpiles. Two (2) Intermediate Coal Stockpiles, One (1) Stoker Coal Stockpile, One (1) Lump Coal Stockpile, Two (2) Crushed Coal Stockpiles. In order to avoid lumping of coal, no control is assumed for stockpiles and front end loader transfers. 002 Crushing: King II One (1) Make: Gundlach, Model: 7055CC and Serial Number: 7055CC1243R crusher, Coal processed: 1,300,000 tons per year. Emission Control Measures for Mining Activities: Water/chemicals treatment of graveled road surfaces. Brushes / grasses, Revegetation. Restrict traffic to established roads. Subject to NSPS, Subpart Y. Compliance plan. Controlled by full enclosure.. Controlled emission factors from AP-42, Chapter Emission factor PM: lbs/ton Emission factor PM10: 5.40 e-04 lbs/ton Emission factor PM2.5: 1.00 e-04 lbs/ton 003 Two (2) Bins and loadout: King II Uncontrolled drop to trucks. Coal processed: 1,300,000 tons per year. Emission factors from AP-42, Chapter , Drop Equation Emission factor PM: 7.34e-04 lbs/ton Emission factor PM10: 3.47e-04 lbs/ton Emission factor PM2.5: 5.26e-05 lbs/ton AIRS ID: 067/1103 Page 9 of 11

10 AIRS ID 004 DESCRIPTION MAKE, MODEL, S/N, DESIGN RATING, CAPACITY DIMENSIONS, CONSUMPTION, THROUGHPUT Mine ventilation: King II only Operation based on annual use: 8760 Hours/year REMARKS SPECIFIC PROVISIONS Emission factor PM: 4.96 lbs/hour Emission factor PM10: 2.34 lbs/hour Emission factor PM2.5: 0.35 lbs/hour 005 Conveyor transfers: King II Subject to NSPS, Y Coal processed: 1,300,000 tons per year. Emission factors from AP-42, Chapter , Drop Equation. Control efficiencies from Texas Commission on Environmental Quality (TCEQ). Emission factor PM: 7.34e-04 lbs/ton. Emission factor PM10: 3.47e-04 lbs/ton. Emission factor PM2.5: 5.26e-05 lbs/ton. Conveyor transfer control efficiencies: BC-1 onto Stockpile 1 = 50% (stackout tube); Mined coal reclaim tunnel hoppers to BC-2 = 90%; BC-2 to Screen 1 = 85%; Screen 1 drop to Crusher = 85%; BC-3 to BC-6 = 90%; Screen to BC-5, BC-5 to Lump Coal Pile = 0%; Screen to BC-4, BC-4 to Stoker Coal Pile = 0%; Crushed Coal Reclaim to BC-6; 90%. Full enclosure Partial enclosure Partial enclosure Full enclosure except for crushed coal transfer Full enclosures 006 Screen: King I Point cancelled 007 Crusher and Screen: King I Point cancelled 008 Conveyor Transfers: King I Point cancelled 009 Coal Loadout: King I Point Cancelled AIRS ID: 067/1103 Page 10 of 11

11 AIRS ID DESCRIPTION MAKE, MODEL, S/N, DESIGN RATING, CAPACITY DIMENSIONS, CONSUMPTION, THROUGHPUT REMARKS SPECIFIC PROVISIONS 010 Screening: King II One (1) Cedar Rapid, Model: TSH Screen, Serial Number: TRXS7203PDUBC1056, Subject to NSPS, Y Compliance plan. Controlled by full enclosure. Coal processed: 1,300,000 tons per year. Controlled emission factors from AP-42, Chapter Emission factor PM: lbs/ton Emission factor PM10: 7.40e-04 lbs/ton Emission factor PM2.5: 5.00e-05 lbs/ton 011 Crushed Limestone activities: Compliance Plan Emissions from delivery, storage, loading and unloading. Crushed limestone handled: 24,000 tons per year AIRS ID: 067/1103 Page 11 of 11