APS 2015 Annual Report Download - page 27

Table of Contents
facilities may have contributed to groundwater contamination in this area. We are unable to predict the outcome of these matters;
however, we do not expect the outcome to have a material impact on our financial position, results of operations or cash flows.
Manufactured Gas Plant Sites. Certain properties which APS now owns or which were previously owned by it or its corporate
predecessors were at one time sites of, or sites associated with, manufactured gas plants. APS is taking action to voluntarily remediate
these sites. APS does not expect these matters to have a material adverse effect on its financial position, results of operations or cash
flows.
Navajo Nation Environmental Issues
Four Corners and the Navajo Plant are located on the Navajo Reservation and are held under easements granted by the federal
government, as well as leases from the Navajo Nation. See “Energy Sources and Resource Planning - Generation Facilities - Coal-
Fueled Generating Facilities” above for additional information regarding these plants.
In July 1995, the Navajo Nation enacted the Navajo Nation Air Pollution Prevention and Control Act, the Navajo Nation Safe
Drinking Water Act, and the Navajo Nation Pesticide Act (collectively, the “Navajo Acts”). The Navajo Acts purport to give the Navajo
Nation Environmental Protection Agency authority to promulgate regulations covering air quality, drinking water, and pesticide
activities, including those activities that occur at Four Corners and the Navajo Plant. On October 17, 1995, the Four Corners participants
and the Navajo Plant participants each filed a lawsuit in the District Court of the Navajo Nation, Window Rock District, challenging the
applicability of the Navajo Acts as to Four Corners and the Navajo Plant. The Court has stayed these proceedings pursuant to a request
by the parties, and the parties are seeking to negotiate a settlement.
In April 2000, the Navajo Nation Council approved operating permit regulations under the Navajo Nation Air Pollution
Prevention and Control Act. APS believes the Navajo Nation exceeded its authority when it adopted the operating permit regulations.
On July 12, 2000, the Four Corners participants and the Navajo Plant participants each filed a petition with the Navajo Supreme Court
for review of these regulations. Those proceedings have been stayed, pending the settlement negotiations mentioned above. APS cannot
currently predict the outcome of this matter.
On May 18, 2005, APS, SRP, as the operating agent for the Navajo Plant, and the Navajo Nation executed a Voluntary
Compliance Agreement to resolve their disputes regarding the Navajo Nation Air Pollution Prevention and Control Act. As a result of
this agreement, APS sought, and the courts granted, dismissal of the pending litigation in the Navajo Nation Supreme Court and the
Navajo Nation District Court, to the extent the claims relate to the Clean Air Act. The agreement does not address or resolve any dispute
relating to other Navajo Acts. APS cannot currently predict the outcome of this matter.
Water Supply
Assured supplies of water are important for APS’s generating plants. At the present time, APS has adequate water to meet its
needs. However, the Four Corners region, in which Four Corners is located, has been experiencing drought conditions that may affect
the water supply for the plants if adequate moisture is not received in the watershed that supplies the area. APS is continuing to work
with area stakeholders to implement agreements to minimize the effect, if any, on future operations of the plant. The effect of the
drought cannot be fully assessed at this time, and APS cannot predict the ultimate outcome, if any, of the drought or whether the
drought will adversely affect the amount of power available, or the price thereof, from Four Corners.
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