RobertJ. Huston, Chairma R. B. "Ralph" Marquez, Commissioner Kathleen HartnettWhite, Commksioner Margaret Hoffman, Executive Director 

## ," 

## Ern Y) 

# TEXAS COMMISSION ON 

# ENVIRONMENTAL QUALITY 

# ,- Botecting Texas by Reducing andBwenting Pollution 7 

### I--E h) 

### B< September 25, 2003 

# * zzzfz zt v 

# - ar 

## xr ca CT 

### Mr. Richard Greene 

# + Regional Administrator a r-- 

### cn ,.--t- 

# .; United States Environmental Protection Agency, Region 

### 6 1445Ross Avenue Dallas, Texas 75202-2733 Dear Mr. Greene: On August 20, 2003, the Texas Commission on Environmental Quality (Commission) adopted the repeal of 30 Texas Administrative Code (TAC) $1 16.170; new 

### 451 16.120, 116.170, and 116.172; amendments to $§116.12, 116.114, 116.115, 116.143, 116.150, 116.313, 116.315, and 116.715; and revisions to the 

### State Implementation Plan (SIP). The sections require emission reductions to be certified as emission reduction credits under 30 TAC Chapter 101, Subchapter H, except future internal offsets which will continue

### to be certified under Chapter 116. The Commission also approved provisions which ensure timely submission of updated and additional information used to process new source review applications including the establishmentof a voidance process, require 

### an application for pennit renewal to be 

### submitted at least six months but no earlier than 18months prior to the permit expiration date, prohibit processing of applications without the correct application fee, provide conditions for the return of application fees, and allow for executive director approval of additional time to begin construction of authorized projects if certain conditions are met. Enclosed are the proposed revisions to the SIP, 

### a public hearing certification, a complete record of the public hearing, and the accompanying order. I look forward to your expeditious approval of these 

### SIP revisions.

Robe



### . Huston Chairman RJHIjs

Enclosures

cc: The Honorable Rick Perry, Governor of Texas Ms. Wendy Wyman, Environmental and Natural Resources Policy Director, Office of the Governor Ms. Margaret Hoffman, Executive Director, Texas Commission on Environmental Quality

P.O. Box 13087 Austin, Texas 78711-3087 5121239-1000 Internet address: www.tceq.state.tx.us

### bcc: Mr. Randolph Wood, Deputy Director, Office of Environmental Policy, Analysis, and Assessment Mr. Jim Muse, Director, Policy and Regulations Division Ms. Heather Evans, StrategicAssessment Division Kerri Rowland, Senior Attorney, EnvironmentalLaw Division Clifton Wise, Rule Project Manager, Policy & 

### Regulations Division Joyce Spencer, Texas Register Coordinator, Policy & 

### Regulations DivisionTexas Commission on Environmental Quality Public Hearing April 24,2003 30TAC Chapter 116 Offset Certification, New Source Review Permit

Processes, and Extensions for Construction Rule Log Number 2003-003-1 16-AIINTRODUCTION

The Texas Commission on EnvironmentalQuality (commission) held a public hearing in Austin on April 24, 2003, to consider revisionsto 30 TAC Chapter 116, Control of Air Pollution by Permitsfor New Construction
or Modification, and corresponding revisionsto the state implementation plan.

Comments were accepted through April 28,2003. All testimony and comments have been reviewed and seriously considered. This hearing record contains a complete record of the public hearings and is divided into the following four sections:

0 Public Notificationand Proposal

0 Written and OralTestimony

o Evaluation of Testimony

0 Staff Recommendations (including order and Texas Register publication)

Additional copies of this hearing recordare maintained in the Texas Commission on EnvironmentalQuality central office at 12100 Park 35 Circle, Austin, Texas 78753. For further information, pleasecontact Clifton Wise at (512) 239-2263.

# PUBLIC NOTIFICATION AND PROPOSAL

### Exam~le 

### of News~aper Classified Ad Houston Chronicle, March 24, 

### 2003

NOTICE OF PUBLIC HEARING BY ME TEXAS COMMISSION ON ENVIRONMENTAL QUALI~? ON PROPOSED REVISIONS TO 30 TAC CHAPTER 116 AND THE STATE IMPLEMEMATION PLAN The Texas Commission on EnvironmentalQuality (commission) wlll conduct a public hearingto receive commentsconcerning -revisionsto 30 TAC Chapter 116, specfficallythe repeal of 116.170;amended 116.12, 116.114 116.116, 116.143, 116.150, 116.313,116.315,and 116.715;qpd new 116.120, 116.170, and 116.172. and corres~ondina reviaions to the stab imDlementatlon Dlan (SIP). under the requirements of T&S ~eak and Safety Cwe. 382.017;Texas ~overnmerit code, Subchapmr 8. Chapter 2001; and 40 Code of Federal Regulations,51.102 ofthe United States Environmental ProtectionAgency mgulationsconcerning SIPS.The proposed mvisionsto Chapter 116 would requireemisskm reductionsbe certified as offsets under Chapter 101, Subchapter H, retainingChapter 116 as a futura internaloffset certification method, ensure timely submlasbnof updated and additionallnformatlon usedto process new source appllmtions indudingthe establishmentof a voidance process, requlrean application for permlt renewalto be submitted at least six months but no eadier than 18 months priortothe perm#expiration date, and allow an additional 18 months beforevoldina a Dennitto bepin consbudon of authorized ~roiects for delavs causedby third party-lii'atlon or otherspec& reasons. A publlc heathQ on this 

### . proposalwill be held InAustln on April24,2003 at 10:OO a.m. In Bullding F, Room 3202~ at the mmmissbn's wnbalbfflce locatedat 12100 Park35 Circle. The hearing wlll be structuredfor the receipt of oral or wrltten comments by interested persons. IndMdualsmay present oral stetemenbwhen called upon In order of ragistation. There will be no opendlscusslon durina the hearimr: howevsr, an asencv staff memberwlll be available todiscuss the proposai30minutespriorto the hearing andwill answer questions before and after the hearing. Pemnswith disabilities who have special communicationor other accommodation needswho am planningto attend the hearing should contactthe Office of EnvironmentalPolicy. Analysis, and Assessmentat (512) 2394800. Requests should be made asfar in advance aspossible. Comments may be submitted to Joyce Spencer, MC205, Olficeof Environmental Policy,Analysis, and Assessment, Texas Commissionon EnvironmentalQualii, P.O. Box 13087. Austin. Texas 78711-3087. or by fax to (512)23W808. All comments should reference Rule Log Number2003-003-1 16-Al,and must be receivedby 5:00 p.m., May 5,2003. For ' further infwmatlon, pleasecontad CliftonWe. Policy and Regulations Division at (512) 238-2283. Issued InAustin, Texas, on March 19,2003. -Date:3E2412003 Source: Houston Chronicle Markthis ad

### Notification to the public of the proposed revisions was conducted by the following procedures:

1. Publication of notice of public hearings in the following newspapers on the date listed: Austin American Statesman; March 24, 2003 Fort Worth Star-Telegram; March 23,2003 Houston Chronicle; March 24, 2003

2. Publication of the proposed rules in the April 

### 4, 2003 issue of the Texas Register (28 TexReg 2903).

3. Publication of the Notice of Public Hearings in the April 4, 2003 issue of the Texas Register(28 TexReg 2971.

4. Correspondence forwarding the notice of public hearingsto the following officials and agencies: Speaker of the House Lieutenant Governor City of Victoria Planning Department Dallas Department of Environmental and Health Services Dallas Department of Aviation El Paso City-County Health and Environmental District El Paso Metropolitan Planning Organization Federal Highway Administration Fort Worth Environmental Management Department Galveston County Health District

### Houston Departmentof Health and Human Services Harris County Pollution Control Department North CentralTexas Council of Governments Houston-GalvestonArea Council South East Texas Regional Planning Commission Texas Department of Transportation Texas Transportation Institute Arkansas Department of Pollution Control and Ecology Louisiana Department of Environmental Quality New Mexico Environmental Department Oklahoma Departmentof Environmental Quality 

### U. S. Environmental ProtectionAgencyIndividuals may present oral or 'tten statements when called upon in order of registration. There wil be no open discussion during the hearing; however, an agency staff ember will be available to discuss the proposal 30 minutes prior to th hearing, and will answerquestions before and afterthe hearing. 

# 1

sible. Stephanie Bergeron Director,Environmental Law Texas Commission on Environmen I Qualii Red: March 21,2003 

# f + 

# t + hoticeof Public Hearing on Roposed Revisions to 30 TAC Chapter 116 and the State ImplementationPlan The Texas Commission on Environmental Quality (commission) will conduct a public hearing to receive comments concerning revisions to 30 TAC Chapter 116, specifically the repeal of $ 116.170; amended $$116.12,116.114-116.116,116.143,116.150,116.313,116.315,~d 116.715;andnew $$116.120, 116.170, and 116.172,andcomsponding revisionsto the state implementation plan (SIP), under the requirements ofTexasHealth and Safety Code, $382.017; Texas Government Code, SubchapterB, Chapter 2001; and 40 Code of Federal Regulations, $5 1.102 of the United States EnvironmentalProtection Agency regulations concerning SIPS. The proposed revisions to Chapter 116 would require emission reductions be certified as offsets under Chapter 101, SubchapterH, retaining Chapter 116 as a future internal offset certification method, ensure timely submission of umlated and additional information used to process new source review applications including the establishment of avoidance process, requirean application forpermitrenewal tobe submitted at least sixmonthsbutno earlier than 18months prior to thepermit expiration date, and allow an additional 18 months before voiding a permit to begin constructionof authorizedprojects for delays caused by third party litigation or other specific reasons. Commentsmay be submittedto Joyce Spencer,MC 205, Office of Environmental Policy, Analysis, and Assessment, Texas Commission on Environmental Quality,P.O. Box 13087,Austin, Texas 7871 1-3087, or by fkx to (512) 239-4808. All comments should reference Rule Log Number 2003-003-1 1dA1,and must be receivedby 5:00 p.m., May 5, 2003. For further information, please contact Clifton Wise, Policy and Regulations Division at (512) 239-2263. TRD-200301867 Stephanie Bergeron Director, Environmental Law Division Texas Commission on Environmental Quality Filed: March 21. 2003
Notice ofWater Quality ~~~l~tions The followingrequirethe topublish noticein thenewspaper. ts forpublic meetings, or requests submittedto the Officeof the Chief Clerk, Mail Code 105 13087, Austin Texas 78711-3087, WITHTN30DAYS OF OFNEWSPAPER PUBLICATION OF THIS NOTICE.

lied for a renewal of TPDES the discharge of treated doow not to exceed 1,200,000 ulphur Gully, approximately done mile east of C.E. King
CITY OF BLUE RIDGE has a lied for a renewal of TPDES Permit No. 10039-001, which autho ' s the discharge of treated domestic wastewater at a daily average fl not to exceed 140,000 gallons per day. The facility is located app ximately 0.5 mile southeast of the intersection of Farm-to-Market ad 545 and Farm-to-Market Road 1377 in Collin County, Texas.

# 1

ew permit, proposed (TPDES) Pennit No. omestic wastewater at s per day. The facility ighway 105, which is Montgomew County. A public hearing on this proposal will be held in Austin on April 24, Texas. The treatedeffluentis to drainage ditches-thence 2003 at 10:OO am. in Building F, Room 3202A at the commission's Milam Branch Fork; thence thence to Caney Creek central office located at 12100 Park 35 Circle. The hearine will be in SementNO. 1010of the structured for the receipt of oral or written comments by Lterested persons. Individuals may present oral statements when called upon in order of registration. There will be no open discussion during the hearing; however, an agency staff member will be availableto discuss the proposal 30minutesprior to the hearingand will answer questions before and after the hearing. - EAST MONTGOMERY CO MUNICIPAL UTLITY DISPersons with disabilitieswho have special communicationor other ac- 

### arm-to-~arkdt Road 14-85 Tree Monkey Road in Montgomery cornmodationneeds who areplanning to attend thehearine should con- County, Texas. tact the Office of Environ&tal poky, Analysis, and L&essment at 

# ESPEkNU wAE~ SER~ mc., which (5 12) 2394900. Requests should be made as far in advance as possi- a osmosis water for a renewal of ble. Permit No. 03807,



### IN ADDITION April 4,2003 28 

### TexReg 2971The Cellulose ProductsMan Technology standard as speci$ed in 40 Code ofFederal Regulations Part 63, SubpartUUUU, is inhqmmtedby reference as adoptedJune 11,2002 (67 FR 40044). 

# 1 ,{113.1050. BoatMan (40 CFR 63,Subpart wvy1.

ity to adopt

13.1260. FrictionMaterialsA4 Subpart QOOOU

TRD-200301676 Stephanie B-eron mwz



### CHAPTER 1 

### 16. 

### CONTROL OF AIR 

### POLLUTION 

### BY PERMITS FOR NEW 

### CONSTRUCTION OR MODIFICATION The Texas Commission on Environmental Quality (TCEQ or commission) proposesthe repeal of 5116.170; new §$116.120, 116.170, 116.172; and amendments to $5116.12, 116.1 14, 116.115, 116.143, 116.150, 116.313, 116.315, and 116.715. If adopted, the new and amended sections would be submitted to the United States Environmental ProtectionAgency as revisions to the state implementationplan (SIP). BACKGROLIND AND SUMMARY OF THE FACTUAL BASIS FOR THE PROPOSED RULES The commission is proposing rule amendments to ensure the timely submission of updated-and additional information used to process NSR applications. The commission is proposingthat ap plicantsthat do not supply requested and necessary information for the processing of a permit application will have their application voided. Applications resubmitted within six months would not be subjectto any further permitfees, but theapplicant would be requiredto go back through the public notice process in order to make possible a public reviewof updatedand current informatinabout the proposed facility. The commission currently requires that persons issued an NSR permit under Chapter 116 begin constructionof the facilitywithin 18 months of permit issuance or the permit will be voided. The executive director may grant an additional one time l&month extensionto this period. Inthe case of flexible permits, the time period to begin construction is specified in the permit with one

- - - 

### PROPOSED 

### RULES April 4,2003 28 

### TexReg290312-month extension available. In the large majority of cases. these cumulative time periods are sufficientto resolve issuesassociated with starting construction. In some cases, particularly when third party litigationis involved, a permit holder may not be able to start construction within the extended time periods. The commission is therefore proposing that an additional extension be available. The commission is specifically proposing that the first Ismonth extension may be granted at the permit holder's request. Another extension of up to 18 months may be granted bythe executive directorto resdve litigation that is not ofthe permit holder'sorigin. The commission also believesthat economic or other circumstancescan arisewhich would affectthe decision to start construction and proposes that the executive director retain discretionto grant a further extensionfor reasons, notspeo ified inthe rule, if the permit holder has demonstrated an intent to build the project by spending at least 15% of the estimated capital cost of the project. Any permit holder receiving a seo ond extension would be requiredto demonstratethat the project continues to meet all the rules and regulations of the commission and the intent of the Texas Clean Air Act (TCAA), including protection of the public's health and physical property. Any extension of the time to begin construction of a projectwill subject the permit holderto additional best available controltechnology and offset review. Because the same conditionsthat would motii vate a new NSR permit holder to seek extensions can also apply to holders of flexible permits, the commission proposesto apply the extension periods and conditions in proposed 5116.120 to flexible permits as well. Flexible permits are used to authorize changes and modificationto existing facilities. Emission reductions in the form of offsets are obtained prior to the issuance of an NSR permit to counter the effect of new emissions on air quality. In recent years, the commission has established programs that create emission caps in Houston and Dallas and use emission credits and allowances to maintain the caps. Emission offsets are also considered in these programs and must meet the same certification standards as emission credits inordertoachieve consistentprotection of air quality. The commission istherefore proposing that emission offsets becertified in the sameway as emission credits in 30 TAC Chapter 101, Subchapter H, EmissionsBankingandTrading. The commission proposes to retain in Chapter 116 certification of future offsets internalto a facility. In many cases, these future internal offsets are creditedforthe replacementof existing equipmentthat must be kept in operation until the new, lower emitting equipment is operational. This is in contrastto offsets used externally to a facility which must occur before it can be credited. Those portions of §I16.170 that concern the offset of emissionsfrom rocket engine firing and cleaning would be transferredto a new §I 16.172. Emission offsets are reductions- that are used to compensate for an emission increase, usually from new construction, in the same geographicarea. Consequently, offsets are not permanent reductions butwill reaooearinthe future. Inorder to make meaningfulemissioncontml plans for nonattainmentand prevention of significantdeteriorationareas, the cornmission needs timely and accurate information on emission reductionsthat will be used as offsets. The comrnission is proposing that emission reductions not yet certified and banked as emission credits by the effective date of these rules must be certified and banked by September 1, 2004. in order to be consideredfor offsets. The comrnission requires adequate time to process permit renewals and, for workload management, needs to ensure that those permits closest to expiration are received first. For these reasons, the commission is also proposing that permit renewal applications be submitted at leastsix months, but no earlierthan 18 months, before the permitwill expire. By establishing a date for the earliest submission of a renewal application, the commission will also increase the possibilitythat renewal applications are received underthe most current fee tables. SECTION BY SECTION DISCUSSION SubchapterA: Definitions The definition of "offset" in 5116.12 would be amended to state that an offset would have to be certified as an emission credit under Chapter 101, Subchapter H, inorderto qualify as a reduction. The commission is also proposing minor changes to abbreviations, rule citations, and acronyms to conform with Texas Register formatting in the definitions. Subchapter 

### B: New Source Review Permits The proposed amendments to §116.114, Application Review Schedule, would provide for the voiding of an application for a permit or permit amendment inthe event of deficient information supplied with the application. After two written notifications of the deficiency, if an applicant fails to make a good faith effort to provide the required information, the executive director will void the application and notify the applicant. To pursue the project, the applicant shall submit an entirely new application with a new Form PI-I. The new application will be subject to the state and federal rules and regulations in place at the time of submittal. If a new application is submitted within six months of the voidance of the original application, the applicationwill be exemptfrom the fee requirementsunder 5116.140, Applicability. However, the applicant must go through a new technical review and republish public notice. The commission proposes to amend §116.115, General and Special Conditions, to remove language relating to the widing of permits and extensions of time to begin construction and transfer this language to a new §I16.120. The new §116.120, Voiding of Permits, addresses the widing of permitsand contains language relocatedfrom §I16.1 15. The relocated languagewould be amended to allow an additional extension of up to 18 monthsto begin constructionof a project authorized with an NSR permit. This extension would be available inthe case of a construction delay caused by litigation, notofthe permit holder's origin. associated with the issuance of the permit. The executive director may also issue an extension if the permit holder has spent at least 15% of the estimated cost of construction on preparatorywork and has demonstratedthat emissions from the facilityare in compliancewith commission rules and the intent of the TCAA. The proposed amendments to §116.143, Payment of Fees, would state that the permit application fee must be received before an application will be processed or before the start of any time constraints required of the commission in application processing. 'This amendment is intended to ensure the commission receives fees needed to cover the expense in permit review and processing. The commission retains the conditions under which fees will or will not be returned to the applicant. If no permit or amendment is issued or if the applicant withdraws the application prior to permit issuance, then one-half of the fee will be refunded. If it is determined that a permit application will meet the requirements of a permit by rule, the applicant is entitled to a refund of the fee difference. The commission proposes to add a qualification for a standard permit or de minimis classification under §116.119, De Minimis Facilities or



### 28 TexReg2904 April 4, 2003 TexasRegisterSources, to those conditions under which the applicant may which are not anticipated to be significant, for certain units of withdraw the permit application and receive a refund of the fee state and local governmentthat own and operate equipment undifference. der NSR ~ermit authorizations. Units of state and local aovern- - - mentthat'do notown or operate equipment alfected by NQR per- he proposed amendment of 5116.150, New Major Source or m& would not be affected by the proposed ~les. The commis- Major Modificationin Ozone NonaltainmentAreas, would delete sion anticipates the costs for those affected units of government subsection (c) because the time period specified for the appli- that have NsR permitapplicationsvoided bythe will cation of certain e=mptions to oxides for face additional public notice costs bewen$700and $4,000 due sources in the Houstoffialveston and Beaumont-Port Arthur to implementation of the proposed rules. ozone nonattainment areas has expired. The proposed new 5116.170, Applicability of Emission Reduo tions as Offsets, would establishthe requirementsfor the use of emission reductions as offsets. Mostexistingreductionsmust be certified as an emission credii under Chapter 101, Subchapter H, Division I or 4. Some reductionsthat will be used internally may still be certified under Chapter 116. The proposed section would establishthe conditions bywhichfuture reductionsmay be used as offsets. The permitfor the facility must contain special conditions that specify the date the permit holder must submit to the executive director appropriateand sufficient data that the reduction has occurred. The reduction must be achieved prior to the commencementof the permitted emissions for which the offset is required. 'The reduction must meetthe requirements of Chapter 101, and the permit holder agrees to obtain additional offsets ifthe executive director determinesthe reductionsdo not satisfy the original offset requirements. 'The proposednew$116.172, Emissions Offsets from Rocket Engine Firing and Cleaning, would contain the conditions under which emissions from rocket engine firing or deaning may be offset by alternative or innovative means. These requirements would be transferred to the new section from existing $116.170. 'The languagewould be modifiedto state that informationregarding mketengine offsetswould be submittedtothe executive director instead of the commission. SubchapterD: Permif Renewals The proposed amendment to 5116.31 3, Renewal Application Fees, would correct the commission's address with the correct zip code. The proposed amendmentsto $116.315, Permit Renewal Submittal, would state that an application for permit renewal must be submitted at least six months but no earlier than 18 months priorto the permit expirationdate. The commission intendsto allowsufficienttimefor preparation and submission of renewals for permit holderswhose permitexpires within six months of the potential effectivedate of these proposed rules. Therefore, this provision would not become effective until February I, 2004. With executive director approval, applications may be submitted before or after these specified time periods. Subchapter G: Flexble BmRs The proposed amendments to $116.71 5, General and Special Conditions, would remove language concerning voiding of the permit. The commission proposes to apply the same extension of construction conditions, as stated in the proposed new $116.120, to flexible permits as would be applied to other NSR permits. FISCAL NOTE: COSTS TO STATE AND LOCAL GOVERNMENT John Davis, Technical Specialist with Strategic Planningand Ap propriations, has determined that for the first fiveyear periodthe proposed rules are in effect, there may be fiscal implications, Units of government most likely to be affected by the proposed rulemaking are municipally-owned electric generating units (power plants) and landfills along with a small number of university research facilities. The total number of sites with existing NSR permits is approximately 8,000, some of which are awned and operated by units of state and local government. The commission currently processes approximately 1,200 new NSR standard permits, 350 NSR permit amendments, and 100 NSR permit renewals annually, a small number of which are submitted by units of state and local government. Of the total number of applications processed, approximately 115 are voided each year by the commission and sent back to the ap plicant for further processing. These proposed rules would not require additional emission controls or new capital expenses, and would not change existing permit application fee rates. The proposed rules would require emission reductions to be used as emission offsets, which is an emission reduction that is used to compensate for emission increases from new construction, be certified in the same manner that exists for emission credits. Additionally, the proposed rules would require existing emission credb to be certified and banked as offsets by September 1. 2004, specify condbons under which permit fees may be refunded, specify a time period for the submission of permit renewal applications, and specify which fee schedule will apply to permit renewals. The proposed ruleswould also implement updated requirements for applicants that have NSR permit applicationsvoided by the commission. The proposed ruleswould require the commission to notify an applicant of the voidance and provide specific de tails concerning the application deficiencies. An applicant with a voided NSR permitapplication would be requiredto submita new application and repeat the public notificationprocess. The costs for public notice vary significantly depending on the location of the facility and its proximity to large metropolitan areas. Small townlcity newspapersgenerally charge much lessfor publication of a public natice. The commission estimates a large city newspaper would charge approximately $3,000 for the display notice and approximately$450forthe legal notice. A smaller city newspaper would charge approximately $210 for the display notice and $20 for the legal notice. The cost for alternative language publication, if needed, is estimated to be $150. The cost for signs at affected facilities would cost approximately $300. The total costs for public notice associated with an NSR permit application, renewal, or amendment would range from $700 to $4,000, assuming alternative language notice is also required. This proposal would waive application fees for applicants who have hadapplicationsvoided and who reapplywithin six months. If they do not reapply during that period, the commission would require the submission of the full application fee. The fee is -3% of the estimated capital cost ofthe project starting with the minimum fee of $900 and a statutory maximum of $75,000. Personswho have been issuedan NSR permitcurrently have 18 months to beginconstructionofthe project A one time I &month



### PROPOSED RULES April 

### 4,2003 28 

### TexReg

### 2905

- " -----extension is available to the holder on request. The commission is proposing that another extension of up to 18 months be made available for permit holders whose project has been delayed through litigation. The commission would also consider other circumstances for an extension if the permit holder meets certain conditions. Addionally, the permit holder would have to spend 15% of the cost of the project in preparationfor construction. The median range of cost for NSR projects is $8 to $9 million. Fifteen percentof these figures is $1.2 millionand $1.35 million, respectively. PUBLIC BENEFITSAND COSTS Mr. Davis has also determined that for each year of the first five years the proposed rules are in effect, the public benefit antio ipated from enforcement of and compliance with the proposed ruleswill be moreconsistent applicationof emission credits and offsets, and more timely NSR application submissions and re ceipt of applicationfees. The total number of sites with existing NSR permits is approximately 8,000, the majority of which are iarge industrial businesses. The commission currently processes approximately 1,200 new NSR permits, 350 NSR permit amendments, and 100 NSR permit renewals annually, the majority of which are submitted by industry. Of the total number of applications processed, approximately 115 are voided by the commission and sent back to the applicant for further processing. These proposed rules would not require additional emission controls or new capital expenses, and would not change existing permit applicationfee rates. The proposed ruleswould requirethat emission reductions used as emissionoffsets becertifiedinthe same mannerthat existsfor emission credits. Additionally, the proposed rules would require existing emission reductionsto be certified and bankedas offsets by September 1, 2004, specify conditions under which permit fees may be refunded, specify a time period for the submission of permit renewal applications, and specify which fee schedule will apply to permit renewals. The proposed ruleswould also implement updated requirements for applicants that have NSR permit applications voided by the commission. The proposed rules would require the commission to notify an applicant of the vbidance and provide specific de tails concerning the application deficiencies. An applicant with a voided NSR permit applicationwould be requiredto submit a new application and repeat the public notification process. The costs for public notice vary significantly depending on the location of the facility and its proximity to large metropolitanareas. The commission estimates the total cost for public notice will range from $700 to $4,000 per NSR application. This proposal would waive application fees for applicants who have hadapplications voided and who reapplywithin six months. If they do not reapply during that period, the commission would requirethe submission of the full applicationfee. The fee is .3% of the estimated capital cost of the project starting with the minimum fee of $900 up to the statutory maximum of $75,000. Personswho have been issuedan NSR permit currently have 18 monthsto begin construction of the project. A onetime 18-month extension is available to the holder on request. The commission is proposing that another extension of up to 18 months be made available for permit holders whose project has been delayed through litigation. The commission would also consider other circumstances for an extension if the permit holder has spent 15% of the cost of the project. The median range of cost for NSR projects is $8 to $9 million. Fifteen percent of these figures is $1.2 million and $1.35 million, respectively. SMALL BUSINESSAND MICRO-BUSINESSASSESSMENT There may be adverse fiscal implications, which are not anticipated to be significant, for small and micro-businesses due to implementation of the proposed rules, which are intended to make procedural changes to NSR permit application requirements. The commission anticipates there will be additional fiscal implicationsfor only those small and micrc+businesses with a voided NSR permit application that would be requiredto submit a new application and repeat the public notificationprocess. The total number of sites with existing NSR permits is approximately 8,000, a small number of which may be small or micmbusinesses. The commission currently processes approximately 1,200 new NSR permits, 350 NSR permit amendments, and 100 NSR permit renewals annually, a small number of which may be submitted bysmall or micro-businesses that would be affected bythe proposedrules. Of the total number of applications processed, approximately 115 arevoided bythecommissionand sent back to the applicantfor further processing. This rulemakingwould requirethe commissionto notifyan applicant ofthe voidance and provide specific details concerning the application deficiencies. An applicant with a voided NSR permit application would be required to submit a new application and repeat the public notification process. The costs for public noticevary significantly depending on the location of the facility and its proximity to large metropolitan areas. The commission estimates the total cost for public notice will range from $700 to $4,000 per NSR application. This proposal would waive application fees for applicants who have hadapplicationsvoidedand who reapply within six months. If they do not reapply during that period, the commission would requirethe submission of the full application fee. The fee is .3% of the estimated capital cost of the project starting with the minimum fee of $900 and the statutory maximum of $75,000. The following is an analysis of the potential additional costs per employee for small or micro-businessesaffectedbythe proposed rules. Small and micro-businesses are defined as havingfewer than 100 or 20 employees, respectively. A small business which hasto go throughthe public notification process due to a voided NSR permit application would pay an average of between approximately$700 to $4,000 per notice or $7.00 to $40 per employee, while a micmbusinesswould have to pay an average of between $35to $200 per employee to comply with the proposed rules. Small businesses that do not reapply for a voided permit within six monthswould be requiredto payapplicationfees. This cost would vary according to the size of the project, and would cause an incre'ase in the cost per employee. Small businesseswouldalso be eligibleto applyforthe additional extension of time to begin construction and would be subject to the same requirement to spend 15% of the cost of the project in preparation. Small businesses are typically under the median cost of an NSR project and would be requiredto spend proportionately less to qualify for the second extension. LOCAL EMPLOYMENT IMPACT STATEMENT The commission has reviewedthis proposed rulemaking and determined that a local employment impact statement is not required because the proposed rules do not adversely affect a I@ cal economy in a material way for the first five years that the proposed rules are in effect.

28 

### TexReg 2906 

### April 4,2003 Texas

### RegisterDRAFr REGULATORY IMPACTANALYSIS DETERMINATION 'The commission reviewed the proposedrulemaking inlightof the regulatory analysis requirements of Texas Government Code, 52001.0225, and determined that the rules do not meet the definkion of a "major environmental rule." Major environmental rule means a rule, the specific intent of which is to protect the environment or reducerisksto human healthfrom environmental exposure, and that mayadversely affect in a materialway the economy, a sector of the economy, productivity,competition,jobs, the environment, orthe public health and safetyofthe state or a sector of the state. The proposed rules would require that emission reductionsusedas emissionoffsets be certified in a mannerconsistent with otherTCEQ regulations, establisha deadlinefor the certificationof existing reductions as emission offsets, establish procedures for voiding permit applications, establish conditions underwhich perrnlt fees may be refunded, specify a time period for the submission of permlt renewal applications, and specify which fee schedule wlll apply to permlt renewals. These proposed rules would not require additional emission controls or new capital expenses. Applicants who have their applications voided would be required to submtt a new application and repeatthe public notificationprocess. Depending on location, this notitication can cost from $700 to $4,000. This expense would only be incurredfollowing a la& of adionfromthe applicant after being notified of deficienciesin its application. In addition, Texas Government Code. 52001.0225, only applies to a major environmental rule, the result of which is to: 1) exceed a standard set by federal law, unless the rule is specifically required by state law; 2) exceed an express requirement of state law, unless the rule is specifically required by federal law; 3) exceed a requirement of a delegation agreement or contract between the state and an agency or representative of the federal governmentto implement a state and federal program; or 4) adopt a rule solely under the general powers of the agency instead of undera specific state law. The proposed rules In Chap ter 116 are not subject to the regulatory analysis provisions of 52001.0225(b), becausethe proposedrules do not meet any of the statute's four applicability requirements The commission invites public comment regarding the dm regulatory impact analysis determination. TAKINGS IMPACTASSESSMENT The commission completed a takings impact assessmentforthe proposed rules. Promulgation and enforcement of the rules will not burden private real property. The proposed rules will not affect private property in a manner which restricts or limits an owner's right to the property that would otherwise exist inthe ab sence of a governmental action. Therefore, the proposed rules do not constitutea taking underTexas Government Code, Chap ter 2007. CONSISTENCY WITH THE COASTAL MANAGEMENT PROGRAM The commission reviewed the proposed rulemaking and found that the proposal is a rulemaking identified in Coastal Coordination Act Implementation Rules, 31 TAC 5505.1 1, and therefore, will requirethat applicable goals and policies of the Texas Coastal Management Program (CMP) be considered during the rulemaking process. The commission'spreliminary consistency determination for the proposed rules in accordance with 31 TAC 5505.22 found that the proposed rulemaking is consistentwith the applicable CMP goalto protectand preservethe qualityand values of coastal natural resource areas (31 TAC §501.12(1)), and the policy which requires thatthe commission protect air quality in coastal areas (31 TAC 5501.14(q)). The proposed rules would require emission reductions used as emission offsets be certified in a mannerconsistentwith other TCEQ regulations. establish a deadline for the certificationof existing reductionsas emission offsets, establish proceduresfor voiding permitapplications,establish conditions under which permitfees may be refunded, specify a time period for the submission of permit renewal applications, and specifywhich fee schedulewillapplyto permit renewals. No new emissions would be authorized if these proposals are adopted. Therefore, the rulemaking is consistent with the CMP.The cornmission invites public comment regardingthe consistency of the proposed rules with the CMP. EFFECTON SITES SUBJECTTOTHE FEDERALOPERATING PERMITS PROGRAM New source review is an applicable requirement under 30 TAC Chapter 122, Federal Operating Permits. These amendments affect the issuance, renewal, or extension of a new source review permit. Because they do not address permit content, the amendments do not require changes to Federal Operating Permits. ANNOUNCEMENT OF HEARING The commission will hold a public hearing on this proposal in Austin on April 24,2003 at 10:OO a.m. in Building F, Room 3202, at the commission's central office located at 12100 Park 35 Circle. The hearing is structured for the receipt of oral or written comments by interested persons. Individuals may present oral statementswhen called upon in order of registration. Open discussion wlll not be permitted during the hearing; however, cornmission staff members will be available to discuss the proposal 30 minutes before the hearingand will answer questions'before and after the hearing. Persons with disabilities who have special communication or other accommodation needs who are planning to attend the hearing should contact the Ofice of Environmental Policy, Analysis, and Assessment at (512) 2394900. Requests should be made as far in advance as possible. SUBMllTALOF COMMENTS Comments may be submitted to Joyce Spencer, Offrce of Environmental Policy, Analysis, and Assessment, Texas Cornmission on Environmental Quality, MC 205, PO. Box 13087, Austin, Texas 7871 1-3087, orfaxed to (512) 2394808. All cornments should reference Rule Log Number 2003-003-116-Al. Comments must be received by 5:00 p.m., May 5,2003. Copies of the proposed rules can be obtained from the commission's website at http:llwww.tceq.state.tw.usloprd. For further information, please contact Clifton Wise, Policy and Regulations Division, at (512) 239-2263. 

### SUBCHAPTERA. 

### DEFINITIONS 30 TAC $116.12 STATUTORY AUTHORITY The amendment is proposed under Texas Water Code (TWC), 55.103, concerning Rules, and 55.105, concerning General Policy, which authorize the commission to adopt rules necessary to carry out its powers and duties under the TWC; and under TCAA, 5382.017, concerning Rules, which authoriies the commission to adopt rules consistent with the policy and



### PROPOSED RULES April 4,2003 28 

### TexReg 2907purposes of the TCAA. The amendments are also proposed under TCAA, 5382.002, concerning Policy and Purpose, which establishes the commission's purpose to safeguard the state's air resources, consistent with the pmtection of public health, general welfare, and physical property; 5382.011, concerning General Powers and Duties,which authorizesthe commissionto controlthe quality of the state's air; 5382.012, concerning State Air Control Plan, which authorizes the commission to develop a general, comprehensive plan for control of the state's air; and $382.016, concerning Monitoring Requirements, Examination of Records, which authorizes the commission to prescribe reasonable requirements for the measuring and monitoring of emissions of air contaminants. The amendment is also proposed under 42 United States Code (USC), 57410(a)(2)(A), which requires SIPSto include enforceable emission limitations and other control measures or techniques, induding economic incentives such as fees, marketable permits, and auction of emission rights. The proposed amendment implements lWC, 55.103 and 55.105; and TCAA, ~~382.002,382.011,382.012, and 382.016. j116.12. NomttainmentReview Definitions. Unless specifically defined in the Gletw Ak & 

### 01 orinthe rules of the commission, the terms used by the commission have the meanings commonly ascribed to them in the field of air pollution control. The terms in this sectionare applicableto pennit review for major source construction and major source modification in nonattainment areas. In addition to the terms which are defined by the TCAA, and in 

### 5 101.1 of this title (relatingto Dehitions), the following words and terns, when used in 

### 5 116.150 and $116.151 of this title (relating to Nonattaimnent Review), shall have the following meanings, unless the context clearly indicatesotherwise. (1) 

## - (6) (No change.) (7) Contemporaneous period-As follows. (A) For major sources with the potential to emit 250 tonsperyear (my)[tpy] or more ofanonattainmentpollutant,theperiod between: 

### 0)

## - (ii) (No change.) (B) 

## - (C) (No change.) (8) De minimis threshold test (neteing)-A method of determining if a proposed emission increase will trigger nonattainment review. The summation of the proposed increase with all other creditable source emission increases and decreasesduringthe contemporaneousperiod is compared to the MAJOR MODIFICATIONcolumn of Table I (in tons per year [*I) for that specificnonattainrnent area. If the major modification level isexceeded, then nonattainment review is required. (9) Lowest achievable emission rate-For any emitting facility, that rate of emissions of a contaminant which does not exceed the amountallowableunder applicable New SourcePerformance Standards promulgated by the

# =[&&eel SWes

# -Preteerien Agency] under the itl Ak At], $111, and which reflects the following: (A) 

## - (B) (No change.) (10) Major facility/stationary source-Any facility/stationary source which emits, or has the potential to emit, the amount specified in the MAJOR SOURCEcolumn ofTable I ofthis section ormore qualifying as a major stationary sourcein Table I of this section, if the change would constitute amajor stationary source by itself. A major stationary sourcethat is major forxs [vdatik eq@e eeffte8~1Bs] or nitrogen oxides shall be considered major for ozone. The fugitive emissions of a stationary source shall not be included in determining for any of the purposes ofthis definition whether it is a major stationary source, unless the source belongs to one of the categories of stationary sources listed in 

## m] 40 Code of Federal Regulations[; W] $5 1.1 65(a)(l)(iv)(C). (1 1) Major modification--As follows. (A) Any physical' change in, or change in the method of operation of a facility/stationary somethat causes a significantnet emissions increase for anyaircontaminantfor which

### national Ambient Air Quality Standard (NAAQS) [ee WAQS] has been issued. At a facility/stationary source that is not major prior to the increase, the increase by itself must equal or exceed that specified in the MAJOR SOURCE column ofTableI of this section. At an existingmajor facility/stationary source, the increase must equal or exceed that specified in the MAJOR MODIFICATION column of Table I. Figure: 30

### TAC 5 116.12(1 l)(A) (B) (No change.) (12) (No change.) (13) Net emissions increase-The amount by which the sum of the following exceeds zero: the total increase in actual emissions from a particular physical change or change in the method of operation at a stationary source, plus any sourcewide creditable contemporaneousemission increases,minus any sourcewide creditable contemporaneous emission decreases. (A) 

## - (Dl (No change-) (E) At major sourceswith the potential to emit250 9 per year 

## [w] or more of a nonattainment pollutant:

(i) 

## - (ii, (No change.) (F) For all major sources of nitrogen oxides (NO,) 

# w,] in ozone nonattahment areas, increases and decreases of NO, are creditable only if they resulted fromauthorizations or applications received on or after November 15, 1992. (14) Offset rati+For the purpose of ~tisfylng the emissions offset reduction requirements of the FCAA, 

### 5 173(a)(l)(A), the emissionsoffsetratioistheratio oftotal actual reductions ofemissions to total allowableemissionsincreases of such pollutants. Theminimum offset ratios areincludedin TableI ofthis section under thedefinitionof major modification. In order forareductiontoqualifvasanoffsefitmust becertifiedasanemissioncreditunderChapter 101,terH, Division 1or4ofthistitle(relatingtoEmission CreditBankingorTrading;or DiscreteEmissionCreditBankingandTrading),exceptasprovidedfor in

116.170(b)ofthistitle(relatingt0ApplicabilityofEmissionReductions asoffsets).Thereductionmustnothavebeenreliedon intheissuanceofa previousnonattainmentorpreventionofsignificant deteriorationpermit mBat138~ 

# .p-f reettetieffek@a*&eirwttsereeteeftsdafhir is&TkeFe$tlecieRRlttstkaved**&%d keveb~er~iR*lgge8fa~efftis4ieRs iwel+ky.;Tke~Hlttsl~k~felie$ertW~ efrtrfrevietts-er-efw-~ 

### m1. ofany aircontaminant(including volatile organiccompoundsNOCs)) (15) Potential to emit-The maximum capacity of a facilforwhichaNationalAmbientAir Quality Standard(NAAQS) has been ity/stationary source to emit a pollutant under its physical and operaissued Any physical change that would occur ata stationary sourcenot tional design. Any physical or enforceableoperational limitation on the



### 28 TexReg2908 April 

### 4, 

### 2003 Texas

### Registercapacity of the facilitylstationary sourceto emit a pollutant, including air pollution control equipment and restrictions on hours of omon or on the type or amount ofmaterial combusted, stored, or processed, shall be treated as part of its design only if the limitationor the effect it would have on emissionsis federally enforceable. Secondaryemissions,asdefinedin40 CodeofFederal Regulations $5 1.165(a)(l)(viii), donot count in detdningthe potential to emit

### for [efJa stationary source. (16) 

## - (17) (No change.) (18) Stationary source-Any buildiig, structure,facility, or installation which emits or may emit any air pollutant subject to regu-
, lation under the 

# a 61eaRAir kt]. This agency hereby certifiesthatthe proposal has been reviewed by legalcounseland found to bewithin the agency's legalauthority toadopt. Filedwith the Officeof the Secretary of State on March21,2003. TRD-200301060 StephanieBergeron Director, Environmental Law Division Texas Commission on Environmental Quality Earliest possible date of adoption: May 4. 2003 For further information, please can: (512)239-5017


### SUBCHAPTER

### B. 

### NEW SOURCE EVEW 

### PERMITS DIVISION 1. 

### PERMIT APPLICATION 30 TAC ~~116.114,116.115,116.120 STATUTORY AUTHORITY The new and amended sections are proposed under TWC, 55.103, concerning Rules, and 95.105, mnwrning General Policy, which authorizethe commissionto adopt rules necessary to carry out its powers and duties under the TWC; and under TCAA, 9382.017, conceming Rules, which authoriisthe commissionto adopt rules consistent with the policy and purposes of the TCAA. The new and amended sections are also DKIDOS~~ under TC~, 9382.002, concerning Policy and ~ur~ok. 'which establishes the commission's purposeto safeguard the state's air resources. consistent with the Drotection of Dubtic health. general welfaie, and physical property; 9382.01 I, concerning General Powers .and Duties. which authorizes the commission to control the quality of the state's air; g82.012, concerning State Air Control Plan, which authorizes the commission to develop a general, comprehensive plan for control of the state's air; 9382.016, conceming Monitoring Requirements, Examination of Records, which authorizes the commission to c re scribe reasonable reauirements for the rneasurina and monitoring of emissions of air contaminants; 9382.051, concerning Permitting Authority of Commission Rules. which authoriies the commisshnto issue permitsfor the construction of a new facility or modification of an existing facility; 9382.0513, concerning Permit Conditions,which authorizesthe commissionto establish and enforce permit conditions; 9382.0515, concerning Application for Permit, which authorizes the commission to require a permit application with plans and specifications necessary for the commission to determine if the facility will comply with applicable state and Meral regulations and the intent of the TCAA; 9382.0517, conceming Determination of Administrative Completion of Application, which authorizes the commission to determine when an application is administratively complete; and 9382.0518. concerning Preconstruction Permit: which requires persons planningthe construction or modificationof a facility to obtain a permit from the commission. The proposed new and amended sections implement TWC, 95.103 and 95.105; and TCAA, 99382.002, 382.011, 382.012, 382.016, 382.051, 382.0513, 382.0515, 382.0517, and 382.0518. $1 16.114. ApplicationReview Schedule. (a) (No change.) (b) Voiding of deficient appli&tion. (1 (No change.) (2) If an applicant failsto make such good faith effort, the


### . executive director shall void the applicationandnotify the applicant

### of the voidanceandthedg deficiencies -on. If 

### anew [the] applicationis submitted [mxk&ted] within sixmonths of the voidance, it shall meettherequirrmentsof $1 16.1 1 1 ofthistitle(relatinp:toGendApplication)butWill be exempt fromthe requirements of $1 16.140 of this title (relating to Applicability). (c) (No change.) $1 16.115. Generaland Special Conditions. (a) (No change.) (b) General conditions. Holders of pennits, special pennits, standard permits, and special exemptions shall comply with the follovhg: (1) (No change.) (2) the followinggeneral conditionsif thepmitor amendment is issued or amended on or after August 16, 1994, regardless of whether they are specifically statedwithin the pennit document

& [@j]Report of construction progress. The permit holder shall report start of construction, constructioninterruptionsexceeding 45 days, and completion of construction. The report shall be given to the appropriateregionaloffice ofthe commissionnotlatathan 15 working days after occurrence ofthe event. (BJ [&j]Start-up notification. (i) The permit holder shall notify the appropriateair program regional office ofthe commissionpior&the comm&cement of operations of the fmilities authorized by the permit. The notification must be made in such a manner as to allow grepresentative ofthe commission to be present at the commencement ofoperations. (ii) The permit holder shall provide a separate notification for the commencement of operationsfor each unit of phased construction, which may involve a series of units commencing operations at different times.

- p~ 

### PROPOSED RULES April 4,2003 28 

### Tdeg 2909(iii) Prior to operation ofthe facilities authorized by the pennit, the pennit holder shall identify to the Office of Permitting, Remediation, and Registration the source or sources of allowances to be utilized for compliancewith Chapter 101, SubchapterH, Division 3 of this title (relating to Mass Emissions Cap and Trade Program). (CJ 

## [o] Sampling requirements. (7) If sampling is required, the permit holder shall contact the commission's Office ofCompliance and Enforcement prior to sampling to obtain the proper data forms and procedures. (ii) All sampling and testingprocedures must be approved by the executive director and coordinated with the regional representatives of the commission. (iii) The permit holder is also responsible for providing sampling facilities and conducting the sampling operations or contracting with an independentsampling consultant. 

# [w] Equivalency of methods. The permit holder must demonstrateorotherwise justify the equivalencyofemissioncontrol methods, sampling or other emission testing methods, and monitoring methods proposed as alternatives to methods indicated in the conditions of the permit. Altemative methods shall be applied for in writing and must be reviewed and approved by the executive director prior to their use in fulfilling any requirements of thepermit. @ 

## [m] Recordkeeping. The permit holder shall: 

### 0) maintain a copy of the permit along with records containing the information and data sufficient to.demonstrate compliancewith thepermit, including productionrecords and operating hours; (ii) keep all required records in a file at the facility site. If,however, the facilitysitenormally operatesunattended, records must be maintained at an office within Texas having day-to-day operational control ofthe facility site; (iii) make the records available atthe request of personnel from the commission or any local air pollution control agency havingjurisdiction over the site. Upon request, the commission shall make any suchrecordsof compliance available to thepublic in a timely manner; (iv) comply with any additional recordkeeping re- quirements specified in special conditionsattached to the permit; (v) retain informationin the file forat least two years following the date that the information or data is obtained, and (vi) for persons certifjmg and registering a federally-enforceable emission limitation in accordance with 51 16.611 of this title (relatingto Registration To Use a StandardPermit), retain all records demonstrating compliance for at least five years. (FJ 

## [o] Maximum allowableemissionrates. The total emissions of air contaminants from any of the sources of emissions must not exceed the values stated on the table attached to the permit entitled "Emission Sources--Maximum Allowable Emission Rates." (GJ [fW)]Maintenance of emission control. The permitted facilities shall not be operated unless all airpollution emission capture and abatement equipment is maintainedin good working order and operating properly during nonnal facility operations. The pennit holder shall provide notificationfor emissions eventsand maintenance in accordance with §§101.201, 101.211, and 101.221ofthistitle (relating to Emissions Event Reporting and Recordkeeping Requirements; Scheduled Maintenance, Startup [S&&up], and Shutdown Reporting and Recordkeeping Requirements;and Operational Requirements). (HJ 

### [@I Compliance with rules. (i) Acceptance of a permit by an applicant constitutes an acknowledgment and agreement that the pennit holder will comply with all rules, regulations, and orders of the commission issued in conformitywith the TCAA and the conditionsprecedent to the granting of the permit. (ii) If more than one state or federal rule or regulation orpermit condition are applicable, the most stringentlimit orcondition shall govern and be the standard by which compliance shall be demonstrated. (iii) Acceptance includes consent to the entrance of commission employeesand agents into the permitted premises at reasonabletimes to investigate conditions relating to theemission or concentrationof air contaminants, including compliance with thepermit.

A permit orpermit amendment under this chapter isvoid if the permit holder doesoneof thefollowing: failstobeginconstructionwithin 18months, oratimeperiodspecifiedinthepermif ofdateofissuance. Attherequestofthepermit Wer, the executivedirectormay grant an 18-monthextensiontobegin construction. Permitsissuedtoholderswhohavereceivedextensions will besubiectto~erbestavai1ablecon~ol technolo~reviewandreevaluationofnettingoroffsetsasap~licable. Anadditionalextensionofupto18 monthtimay bewtedby theexecutive directorif; (AJ thepermitholderbecomesinvolved in litigationnot ofthepermitholder's initiation regard in^the issuanceofthe permit, and demonstratesthat emissionsfromthefacilitywill complywith all rules andremlationsofthecommission andtheintentoftheTCAA,including protectionofthepublic's health andphysicalproperty;or @ thepermitholderhasspent 15%oftheestimatedcapital costoftheproiect onpreparationforconstruction,and demonstrates thatemissionsfromthefacilitywill comply withallrulesandregulations ofthecommissionandtheintentoftheTCAkincludingprotectionofthe public'shealthandphysicalproperty, (2J discontinues construction formore than 18consecutive monthspriortocompletio~

, (3J fils to completeconstruction withinareasonable time. This agency hereby certifiesthat the proposalhas been reviewed by legalcounselandfound to bewithin the agency's legalauthor- 'ky to adopt. Filedwith the Office ofthe Secretaryof State on March 21,2003. TRD-200301869 Stephanie Bergeron Director, Environmental Law Division Texas Commission on Environmental Quality Earliest possible date of adoption: May 4, 2003 For further information,please call: (512) 239-5017


### DIVISION 4. 

### PERMIT FEES 30 TAC 5116.143 STATUTORY AUTHORITY The amendment is proposed under TWC, 55.103, concerning Rules, and 55.105, concerning General Policy, which authorize the commission to adopt rules necessary to carry out its



### 28 

### Tdeg 2910 

### April 4,2003 

### Taus Registerpowers and duties under the TWC; and under TCAA, 9382.017, concerning Rules, which authorizes the commission to adopt rules consistent with the policy and purposes of the TCAA. The amendment is also proposed under TCAA, 9382.002, concerning Policy and Purpose, which establishes the commission's purpose to safeguard the state's air resources, consistentwith the protection of public health, general welfare, and physical property; 9382.011, concerning General Powers and Duties, which authorizes the commission to control the qualiof the state's air; 9382.012, concerning State Air Control Plan, which authorizes the commission to develop a general, comprehensive plan for control of the state's air; 9382.016, concerning Monitoring Requirements, Examination of Records, which authorizes the commission to prescribe reasonable requirements for the measuring and monitoring of emissions of air contaminants; 5382.051, concerning Permitting Authority of Commission Rules, which authorizes the commission to issue permits for the construction of a new facility or modification of an existing facility; 9382.0513, concerning Permit Conditions, which authorizes the commission to establish and enforce permit conditions; 9382.0515, concerning Application for Permit, which authorizesthe commissionto require a permit application with plans and specifications necessary for the commission tb determine if the facility will comply wtth applicable state and federal regulatipns and the intent of the TCAA; 982.0517, concerning Determinationof AdministrativeCompletion of Application, which authorizes the commission to determine when an application is administrativelycomplete; s382.0518, concerning Preconstruction Permit, which requires persons planning the construction or modification of a fadlity to obtain a permitfrom the commission; and $362.061, concerning Application, Permit, and Inspection Fees, which requires the commission to adopt, charge, and collect fees for each application for a permit or renewal of a permit. The proposed amendment implements TWC. 95.103 and 55.105; and TCAA. 5982.002, 382.01 1, 382.012, 382.016, 382.051, 382.0513, 382.0515, 382.0517, 382.0518, and 382.061. $1 16.143. Payment ofFees. All permit fees will be remittedin the form ofa check, certifiedcheck, elecbwic funds transfer, or money order made payable to the Texas Commission on Environmental Quality (TCEQ) or TCEQ and delivered with the application forpermit or amendmentto the TCEQ, P.O. Box 13088, MC 214, Austin, Texas 7871 1-3088 (7-WMRVl. 

### Fees mustbepaidatthetimeanapplication forapennitoramendment issubmitted. Applicationswill notbe consideredforreviewnorwill anytime constraintsrequired ofTCEQforapplicationmcessing beginuntilafee iSrecei~ed[ReettkeB*~b3~B6feTe~~~~ *exBRtiRBejeRef*-1. (1) (No chawe.) (2) Retumoffees. [Feesmwtbep&dettkeeifftetw@ eitiiefffi3Fer~tteRRiref~IsH~~tteRRir~ ~is~~*~~tteRRirif~~~*@ *~(e~eftke~eF~etle-ktdfeFtke EeewillkFehddq&h*feewillbM*a~y sttek~*~tw~&~%ef~~ frelttriRg(e~h~is&ewe&] Nofeeswillbe refundedafter adeficient applicationhas been voided or afterapermit or amendmenthas been issued by the agency. Feeswillbereturnedunderthefollowing conditions. (AJ Ifnopermitoramendmentisissuedbytheagencyor iftheappticantwithdrawstheappliwtiwpriortoissuanceofthepermitor amendment,one-halfofthefeewillberefunded. @J Thefeedifferencewill berefundedifapermitapplicationiswithdrawnbecausetheproposedconstruction ormodification is determinedtomeettherecpimnentsof: astandadpermitissuedunderSubchapterFofthis chapter(relatingtoStandardPermitsb @ apermitbyruleunderchapter106ofthistitle (relatingtoPermitsbyRule);or theconditionsof51 16.1 19ofthistitle(relatingto DeMis FacilitiesorSources). This agency herebycertifiesthatthe proposal has been reviewed by legalcounsel andfoundto bewithin the agency's legal authority to adopt. Filed with the ORice ofthe Secretary of State on March 21,2003. Stephanie Bergeron Director. Environmental Law Diion Texas Commission on EnvironmentalQuality Earliestpossibk date of adoption: May 4,2003 Forfurther information, please call: (512) 239-5017


### DMSION 

### 5. NONATTAINMENT REVIEW 30 

### TAC #116.150 STATUTORY AUTHORITY The amendment is proposed under TWC, 95.103, concerning Rules, and s5.105, concerning General Policy, which authorize the commission to adopt rules necessary to cany out its powers and duties under he TWC; and underTCAA, s382.017, concerning Rules, which authorizes the commission to adopt rules consistent with the policy and purposes of the TCAA. The amendment is also proposed under TCAA, s382.002, concerning Policy and Purpose, which establishes the commission's purpose to safeguard the state's air resources, consistent with the protection of public health, general wetfare, and physical property; 9382.01 1, concerning General Powers and Duties, which authorizes the commission to control the quality of the state's air; 982.012, concerning State Air Control Plan, which authorizes the commission to develop a general, comprehensive plan for control of the state's air; s382.016, concerning Monitoring Requirements, Examination of Records, which authorizes the commission to prescribe reasonable requirementsfor the measuring and monitoring of emissions of air contaminants; 9382.051, concerning Permitting Authority of Commission Rules, which authorizes the commission to issue permits for the construction of a new facility or modification of an existing facility; 9382.0513, concerning Permit Conditions, which authorizes the commission to establish and enforce permit conditions; s382.0515, concerning Application for Permit, which authorizesthe commission to requirea permit application with plans and specifications necessary for the commission to determine if the facility will comply with applicable state and federal regulations and the intent of the TCAA; 9382.0517, concerning Determination of Administrative Completion of Application, which authorizes the commission to determine when an application is administratively complete; and 9382.0518,

- -- 

### PROPOSED RULES April 

### 4,2003 28 

### TexReg291 1concerning Preconstnrction Permit, which requires persons planning the construction or modification of a facility to obtain a permit from the commission. The proposed amendment implements TWC, 55.103 and 95.105; and TCAA, 99382.002, 382.011, 382.p12, 382.016, 382.051, 382.0513, 382.0515, 382.0517, 382.0518, and 382.061. $1 16.150. New Major SourceorMajorMod$uation in OzoneNonuttainmentAreas.

This agency hereby certifies that the proposal has been reviewed by legalcounsel andfound to bewithin the agency's legalauthority to adopt. Filedwith the Office ofthe Secretary of Stateon March21,2003. TRD-200301871 Stephanie Bergeron Director, Environmental Law Division Texas Commission on Environmental Quality Earliest possible date of adoption: May 4, 2003 For further information, please call: (512) 239-5017


### DMSION 

### 7. EMISSION REDUCTIONS: OFFSETS 30 TAC $116.170 (Editor's note: The text of the following sectionproposedfor repeal willnot bepublirhed. Thesectionmay be examinedintheofices ofthe TernCommission on Envitvnmentul Quality or in the Tom Register ofice, Room 245, James Earl Rudder Building, 1019 Brazos Street, Austin.) STATUTORY AUTHORITY The repeal is proposed under TWC, 55.103, concerning Rules, and 55.105, concerning General Policy, which authorize the commission to adopt rules necessary to carry out its powers and duties under the TWC; and under TCAA, 5382.017,concerning Rules, which authorizes the commission to adopt rules consistent with the policy and purposesof the TCAA. The repeal is also proposed underTCAA, 3382.002,concerning Policy and Purpose, which establishes the commission's purpose to safeguard the state's air resources, consistent with the protection of public heallh, general welfare, and physical property; 3382.011, concerning General Powers and Duties, which authorizes the commission to control the quality of the state's air; and 5382.012, concerning State Air Control Plan, which authoriies the commission to develop a general, comprehensive plan for control of the state's air. The proposed repeal implementsTWC, 95.103and 95.105; and TCAA, @382.002, 382.011, and 382.012. 6116.170. Avpiicabilitvfor Reduction Credits. 'This agency hereby certifiesthat the proposalhas been reviewed by legal counselandfoundto bewithin theagency's legal authority to adopt. Filed with the Office of the Secretary of State on March 21.2003. TRD-200301872 Stephanie Bergeron Director. Environmental Law Division Texas Commission on Environmental Quality Earliest possible date of adoption: May 4.2003 For further infonnation, please call: (512) 239-5017

30 TAC $116.170, $116.172 STATUTORY AUTHORITY The new sections are proposed underTWC, 95.103, concerning Rules, and 95.105,concerning General Policy, which authorize the commission to adopt rules necessaryto cany out its powers and duties under the TWC; and under TCAA, 9382.017, concerning Rules, which authorizes the commission to adopt rules consistent with the policy and purposes of the TCAA. The new sections are also proposed under TCAA, 9382.002, concerning Policy and Purpose, which establishes the commission's purpose to safeguard the state's air resources, consistent with the



### 28 

### TexReg2912 April 4,2003 TexasRegisterprotection of public health, general welfare, and physical prop erty; 5382.01 1, concerning General Powers and Duties, which authorizes the commissionto control the quality of the state's air; 5382.012, concerning State Air Control Plan, which authorizes the commission to develop a general, comprehensive plan for control of the state's air; 5382.016, concerning Monitoring Re quirements, Examinationof Records,which authorizes the corn mission to prescribe reasonable requirements for the measuring and monitoring of emissions of air contaminants; 5382.051, concerning PermitbjngAuthority of Commission Rules, which authorizes the commissionto issue permitsfor the constructionof a new facili or modification of an existing fadli 5382.0513. concerning Permit Conditions, which authorizesthe commission to estabtishand enforce permit conditions; 5382.0515, concern ing Application for Permit, which authorizes the commission to require a permit application with plans and specifications necessary for the commission to determine if the facility will comply with applicable state and federal regulations and the intent of the TCAA; 5382.0517, concerning Determination of Administrative Completion of Application, which authoii the commission to determinewhen an application isadministratively complete; and 5382.0518, concerning Preconstrudion Permit, which requires persons planningthe constructionor modification of a facilito obtain a permitfromthe commission. The newsectionsare also proposedunder42 USC, 5741O(a)(2)(A), which requiresSIPS to indude enforceable emission limitationsand other control measures ortechniques, includingeconomic incentives such as fees, marketable permits, and auction of emission rights. The proposed new sections implement TWC, $5.103 and 55.1 05; and TCAA, 55382.002, 382.01 1, 382.012, 382.016, 382.051.382.0513,382.0515.382.0517, and 382.0518. pandim thetestinn ofrocketenainesor motorsatan existing sourcepermittedtotest suchenainesasofNovember 15,1990. Q.J The sourcedemonstratesto the satisfactionofthe executive dim%& that it

### has used all reasonablemeans to obtain and utilize

- offsets, as determined on an annual basis, for the emissions increases beyondallowablelevels, thatall availableoffsetsarebeingused,andthat

- - -- sufficient offsetsarenotavailabletothe source. (3J The source has obtained a written finding from the Department ofDefense,DepartmentofTransportation,National Aeromutics and SpaceAdministration. or other aupmpriatefederal anency, that thetesting ofmcketmotorsorenginesatthe facilityis requiredfora program essentialtothenationalsecuri% The source will comply with an alternative measure, imposed by the executive director, designed to offset any emissions increasesbeyondpmnittedlevelsnotdirectly offsetbythesource.Inlieu ofimposing any alternativeoffsetmeasures, ttre executive directormay impose an emissions feetobepaid, which shallbe an amountno greater than 1.5 times the average cost of stationary source control measures adoptedinthatareaduringthe previousthreeyears. This agency herebycertifiesthatthe proposal has been reviewed by legalcounsel and foundto bewithinthe agency's legal authority to adopt Filedwiththe Officeofthe Secretary of State on March21.2003. TRD-200301873 StephanieBergeron Director. Environmental Law Division Taxas Commission on Environmental Quality J116.170. AppliabilityofEmission Reductions asoffsets. Earliekt possible date of adoptton: May 4. 2003 N~reductionmaybe offsetm1e85 itha c&- For further information,please call: (512) 239-5017 fiedasanemission creditunderChapter 101,SubchapterH,Division 1 or 4ofthisti~e(relatingtoEmissimCredit~gandT~g;orDiscrete EmissionCreditBankingandTrading). exceptasprovidedforinsubsection(c)ofthissection.

. bJ ~eductionsnot yetchfiedandbgnked~sanemission mdit must be certified andbanked with theexecutivedirectorby SeptemberI, 2004inorderto beconsideredforuseasanoffset. (cJ A futurereduction maybe uscdas an offsetforapennitprovidedthat:(IJ the permit contains special conditionsthat specify the date by which the permit holder must submitto the executive director appropriateand sufficientdatato verifv that the reductionhas occurred and the reductionisprovidedbystartofoperation; Q.J the reduction must be achievedpriorto commencement ofthepermittedemissions forwhichtheoffsetisrequire6 (3J the reduction meets all of the requirements of Chapter 101, Subchapter H, Division 1or 4 of this title when submitted to the executive director for review per the requirementsofthe issued permit; and 

### - (4J thepennitholderaanestoobtainadditionaloffe ifthe reviewbytheexecutivedirectorindicatestheredwtionsdonotsatisfy the originaloffsetrequirement-. $116.1 72. EmissionsOflsets fromRocketEn~ineFiringand Cleaning. Emissionsincreases from rocket enineand motor firing, and cleaning related to such firing, at an existingor modified major source, shall be allowed to be offset by alternative or innovative means, provided the followingconditionsaremet. 

### SUBCHAPTER

### D. PERMIT RENEWALS 30 

### TAC ~116313,~116315 STATUTORY AUTHORITY The amendments are proposed under TWC, 55.103, concerning Rules, and 55.105, concerning General Policy, which authorize the commission to adopt rules necessary to cany out its powers and duties under the TWC; and under TCAA, 5382.017, concerning Rules, which authoriies the commission to adopt rules consistent with the policy and purposes of the TCAA. The amendments are also proposed under TCAA, 5382.002, concerning Policy and Purpose, which establishes the commission's purposeto safeguardthe state'sair resources, consistent with the protection of public health, general welfare, and physical property; '5382.01 1, concerning General Powers and Duties, which authorizes the commission to control the qualiof the state's air; 5382.012, concerning StateAir Control Plan, which authorizes the commission to develop a general, comprehensive plan for control of the state's air; 5382.016, concerning Monitoring Requirements, Examination of Records, which authorizes the commission to prescribe reasonable requirements for the measuring and monitoring of emissions of air contaminants; 5382.051, concerning Permitting Authority of Commission Rules, which authorizes the commission to issue permits for the construction of a new facility or modification of an existing facility; 5382.0513, concerning Permit Conditions,



### PROPOSED RULES April 4,2003 28 

### TexReg 2913which authorizes the commission to establish and enforce ~er- 4 4 mit conditions; 5382.0515, concerning Application for petkit, which authorizesthe commissionto require a permit application with plans and specifications necessary for the commission to determine if the facility will comply with applicable state and federal regulations and the intent of the TCAA; 5382.0517, concerning Determination of Administrative Completion of Application. which authorizes the commission to determinewhen an application is administratively complete; 5382.0518, concerning Preconstruction Permit. which reauires Dersons ~lannina the construction or modificationof a faulity 

## td obtain a permitfrom the commission; and 5382.061, concerning Application, Permit, and Inspection Fees, which requires the commission to adopt, charge, and collect fees for each application for a permit or renewal of a permit The proposed amendments implement TWC, 55.103 and 55.105; and TCAA, 55382.002, 382.011. 382.012, 382.016. 382.051, 382.0513, 382.0515, 382.0517, 382.0518, and 382.061. $1 16.313. Renewal Application Fees.
(b) Fees are due and payable at the time the renewal application is filed. No fee will be accepted before the permit holder hasbeen notifiedby the commission that the permit is scheduled forreview. All pennit review fees shall be remitted by check, certified check, electronic fundstransfer, or money order payable to the TexasCommission on Environmental Quality (TCEQ) and mailed to the TCEQ, P.O.Box 13088,MC 214, Austin, Texas 7871 1-3088 [RFW308?]. Required feesmust be received before the agency will consideran application to be complete. $1 16.31 5. Permit Rend Submittal. (a) An application forrenewal must be submitted at least & months,- [than dep] prior to expiration of the pennit or the permit will expire. Thissubsectionwillbeeffectiveon February 1.2004 exeetkw &e&e~ ma=j &en14 &e tiwe pekl FerSttefffi#iRgm-1. 

### SUBCHAPTER 

### G. FLEXIBLE PERMITS 30 TAC §116.715 STATUTORY AUTHORITY The amendment is proposed under TWC, 55.103, concerning Rules, and 55.105, concerning General Policy, which authorize the commission to adopt rules necessary to carry out its powers and duties undertheTWC; and underTCAA, 5382.017. concerning Rules, which authorizes the commission to adopt rules consistent with the policy and purposes of the TCAA. The amendment is also proposed under TCAA, 5382.002, concerning Policy and Purpose, which establishes the commission's purpose to safeguard the state's air resources, consistent with the protection of public health, generai welfare, and physical property; 5382.011, concerning General Powers and Duties, which authorizes the commission to control the quality of the state's air; 5382.012, concerning State Air Control Plan, which authorii the commission to develop a general, comprehensive plan for control of the state's air; 5382.016, concerning Monitoring Requirements, Examination of Records, which authorizes the commission to prescribe reasonable requirementsfor the measuring and monitoring of emissions of air contaminants; 5382.051, concerning Permitting Authority of Commission Rules, which authorizes the commission to issue permits for the construction of a new facility or modification of an existing facility; 5382.0513, concerning Permit Conditions, which authorizes the commission to establish and enforce permit conditions; 5382.0515, concerning Application for Permit, which authorizesthe commissionto require a permit application with plans and specifications necessary for the commission to determine if the facility will comply with applicable state and federal regulations and the intent of the TCAA; 5382.0517, concerning Determinationof AdministrativeCompletionof Application. which authorizes the commission to determine when an appli&tion is administratively complete; 5382.051 8, concerning Preconstruction Permit, which reauires Dersons ~lannina the construction or modificationof a facility to obtain a ~ermiffrom @ withex~utivedi~c~r~ea~plica~ the commission; and 5382.061, conce;ning ~~~licat'ion, Permit, mittedbeforeorafterthetimeperiodspecifiedinsubsection~ofthissec- and Inspection Fees, which requires the commission to adopt, 

### tion. @J

,

### [@I Any permit issue& (1) before December 1, 1991,is subjectforreview 15years after the date of issuance; (2) on or after December 1, 1991, is subject for review every ten years after the date of issuance. (3) at non-federal sources on or after December I, 1991, may, for cause, contain a provision requiring renewal between five and ten years. This agency hereby certifiesthat the proposal has been reviewed by legalcounsel andfound to bewithin the agency's legalauthority to adopt. Filedwith the Office of the Secretary of State on March21.2003. TRD-200301874 Stephanie Bergeron Director, Environmental Law Division Texas Commission on Environmental Quality Earliest possible date of adoption: May 4.2003 For further information,please call: (512)239-5017 charge,. and collect fees for each application for a permit or renewal of a permit. The proposed amendment implements TWC, 55.103 and 55.105; and TCAA, 55382.002, 382.01 1, 382.012, 382.016, 382.051, 382.0513, 382.0515, 382.0517, 382.0518, and 382.061. 51 16.71 5. Generaland Special Conditions.
(c) The following general conditions shall be applicableto ev- ery flexible permit. (1) [VeiBtffgef~A~geffitile~~~t ~&~~is~veidIF~~ ~re~~eS~kt&e~~7~ Fequw,&--~fft~~e~*-- sien efh date te eempkte

### -61 Thls section does not apply to physical oroperationalchanges allowed without an amendmentun- der 5 116.721 ofthis title (relstingto Amendments and Alterations).



### 28 

### TexReg 2914 April 4,2003 

### TpxasRegister(9) Maintenance of emission control. The facilities cov- ered by the flexible permit shall not be operated unless all air pollution emission capture and abatement equipment is maintained in good working order and operating properly during normal facility operations. Notification for emissions events and scheduled maintenance shall be made in accordance with 

### 5 101.201 and 5101.2 1 1of this title (relating to Emissions Event Reporting and Recordkeeping Requirements; and Scheduled Maintenance, Startup, and Shutdown Reporting and RecordkeepingRequirements). (10) (No change.) (4 (No change.) This agency herebycertifiesthatthe proposal has been reviewed by legalcounsel and found to be within the agency's legalauthority to adopt. Filedwith the Miceof the Secretaryof State on March21.2003. TRD-200301875 Stephanie Bergeron Director, Environmental Law Division Texas Commission on Environmental Quality Earliest possible date of adoption: May 4,2003 For further information, please call: (512)239-5017 

### TITLE 31. 

### CONSERVATION 

### PART 1. 

## GENEq LAND 

## OFFICE CHAPTER 15. 

### COAST AREA PLANNING SUBCHAPTER B. CO STAL EROSION PLANNING 

### AND RESP 

# E'

NSE The Texas General Land s orfor restorationof proposed rules outevaluateand assist projects in cooperPRA, §33.601(1 I), government, state

v&s established bythe CEPRA, support a study or project undertaken indemndentlvbvthe

# 2 nd M~ce. or inconiunction with a qualified project parke; The EPRA, as amended by House Bill2793, requires qualified proj ct partners to pay at least 15% of shared projectcoststhat are i 

# 1
entiied ina project cooperation agreement. 

## I

Proposed new 515.41(2) desc ibes the alternatives evaluation orocess. The Land Office and

# I a ootential oroiect oartner for a project designated as a priority ente; ink a project cooperation aareement that will sm the alternatives-evaluation processwill be conducted operatively. By entering into a project cooperation agreement the potential project partner becomes a aualified project ~artn 

# r-

r. 'The Land Office and aualified project willthen &ope tively evaluate alternatkes. The alternatives evaluation ~rocess 

# t ill include an evaluation of feasibility and msteffectiveness alternatives, as well as whether a qualified project a binding commitment to project.



### PROPOSEDRULES April 

### 4,2003 28 TexReg2915

### Fip: 

### 30 TAC 

### 41 16.12(11)(A) TABLE 

### I MAJOR SOURCE/MAJOR MODIFICATIONEMISSIONTHRESHOLDS POLLUTANT 

### MklOR SOURCE MAJOR MODIFICATIO# OFFSET

### RATIO 

### tons/vear 

## . . muurnurn OZONE (VOC,

### NOJ3 

### Imarginal 

### 100 40 1.10 to 

### 1 

### IImoderate 100 

### 40 1.15 to 

### 1 

### III serious 

### 50 25 1.20to1 

### lV severe 

### 25 25 1.30 to 

### 1 

## co Imoderate 

### 100 100 1.00 to 

### l4 

### II serious 

## so 50 1.00to 

### l4 so2 

### 100 40 1.00 to 

### l4 PM,O 

### Imoderate 

### 100 15 1.00 to 

### l4 

### II serious 

### 70 15 1.00to 

### l4 NO: 

### 100 

### 40 1.00to 

### l4 

### Lead 100 0.6 1.00 to 

### l4 Texas 

### nonattahmmt 

### area designations are 

### specifiedin 

### 40 Codeof Federal Regulations 

### $81.344. 

### Themajor 

### modification 

### thresholdis applicable onlyto existingmajor 

### sources and shall be 

### evaluated 

### afternetting, 

### unlessthe 

### applicant chooses to apply

### nonattainmentnew source

### review (NNSR) directlyto 

### the project. 

### The appmprkte

### netting triggersfor

### existingmajor 

### sources of

### NO, and 

### VOC are 

### specified in 

### $1 16.150 of 

### thistitle (relating to

### New Major 

### SourceorMajor 

### Modificationin Ozone

### Nonattainment Areas) and for other

### pollutants are equal tothe major 

### modificationlevel

### listed in Table 

### I. 

# 'VOC and 

### NO, 

### areprecursorsto ozane formation and shouldbe 

### quantified individuallyto 

### determine whether 

### a 

### source

### is subject to

### NNSR under 

## 4116.150 of this title. As 

### specified in §

### 116.150 of this title, for ElPaso County, 

### the 

### NNSR rules apply to sources of

### VOC, but not to 

### sourcesof

### NO,.

The offset ratio

### is 

### specifiedto

### be greater 

### than 1 

### .OO to 

### 1. 

### VOC =

### volatile organic 

### compounds 

### NO, =

### oxides ofnitrogen 

### CO =carbon 

### monoxide 

### SO, =

### sulfur dioxide PM,, =

### particulate matter 

### ofless than tenmicrons in 

### diameter

Applies to 

### the 

### NAAQS for nitrogen 

### dioxide 

### (NO&.



### TABLES

### AND GRAPHICS Apn7 

### 4,2003 28 

### Tdeg 2965

.-...-1-1------_--_---1_-----_-----.------------.---.-_---^-..-._.-------_I

# WRITTEN 

# AND 

# ORAL TESTIMONY

### Reference Number W-I W-2 W-3 W-4 

### W-5 W-6 w-7 INDEX OF WRITENTESTIMONY

Submitted bv Jon Niennann, Baker Botts LLP Joel Robins, BP Products North America Inc. Russell A. Wozniak, Dow Chemical Company Luis Ito, El Paso Electric Company David Neleigh, U. 

### S. Environmental ProtectionAgency William B. Keller, Sempra Energy Resources Jon Risher,Texas Chemical Council05/04/2003 13:43 

### FAX 5123222501 BAKER BOTTS


# BAKER BOTlS LLP



### May 5,2003 

## BY FAX 

### Ms. J'oyce Spencer 

### Texas Commission on bvironrnenial 

### Qualiv Office

### ofEnvitomd

### Policy, Analysis, 

### and

### Assessment MC 205 

## P.O. Box 13087 Austin, Texas 

### 787

### 11-3087 1500 SANJAUWO CENTEK AUSTIN 90 MJAcMoNvD. BAKU AUmN, fMM OAW5 787014039 HOUSKXJ a12.322.2~~) LWSX)N FAX 512.322.2501 MOSCOW NEWYORK RIYADH WASHINGTON

Jon Niannann 5 12.322.2662 FAX 51 2.3223389 jon.niemann@ba~ottsottscom



## Re: Comments 

## on

## Rule Log Number 2003-003-1 

### 16-A1 

### Dear

## Ms. Spencer: 

### Baker 

### Botts LL.P.. 

### onbehalf 

### ofthe 

## Texas Industry Project (''TIP").' 

### submits these 

### comments on the Texas 

### Commission on Environmental Quality's 

### (tho 

### YCommission's'') proposed

### rule* 

### to revise 30 

## TAC Chaptor 116. 

### As set 

### forth at 28 

### Tex. Rcg. 

### 2903 (April 4, 

### 2003)' 

### the proposed 

### des 

### would allow 

### an additional exhsicm 

### to the period 

### during 

### which 

### pmons issucd 

## NSR parmiis 

### must commence coastruction and 

### wdd

## establish the requhmemts 

## whereby emission 

### reductions may 

### be 

## used as offsets. 

## TIP appreciates 

### the opportunity to 

### CO-t On thWbp~p~d. 30 

### TAC 66 116.1 15 

### and 116.120 Addirional

### MCT Review 

### ShouldNot Be 

### Regadredfor First 

### 18-Month

### Extension 

## TIP agrees 

### with the 

### Commission that the 

### one-time, 18-month 

### extension currently available for holders of 

## NSR permits 

### to commence 

### construction is 

### in some mas 

### insufhcient. TIP 

### supports the 

### Commission's proposal to 

### amend 

# 4 116.115 and add 

### the new 

### 116.120 to 

### allow 

### au additional extansion of up 

### to 18-months where 

## third party 

### litigation 

### has prevented the start 

### of construction or where the 

### permit hnlder has 

### demonstrated 

### an intent to 

### build the 

### project. However, TIP urges

### the 

### Commission to rcmove the 

### requirement

### for addiuonal

## BACT review and 

### reevaluationofnetting 

### and 

### offsets

### from proposed § 

### 116.120(1) 

### as appliedto 

### the 

### initial 

### atension. Additional 

## BACT review 

### is 

### not 

### warrd

### for an initial 18-month 

### extension. It would unndy 

### consume sigdicant Commission and industry 

### resources for analysis recently 

### completed as part 

### of the 

### application process. 

### Moreover, additional 

## BACT rcvicw can 

### further 

### delay 

### construction of permitted facilities, 

### aggravating thc 

### very 

### circumstances this

-- -- I 

### ne 

### Texas Industry Project 

### is 

### composed of 

### approximately fifty 

### companies 

### in 

## the chemical, refining, 

### oil 

### and gas, 

### electronic, forest 

### products, terminal, 

### electric utility 

### and 

### transportation 

### industries with 

### opmtions in 

### Texas.06/04/2003 13:43 FAX 512JZZZ501 

# -

BAKER 

## BCrrrS u~ 

## Ms. Joyce 

### Spencer May 5,2003



### rulemaking seebs to alleviate. Thepreamble to these

### proposed 

### rules failsto 

### discuss any basis 

### for 

### requiring an 

### additional BACT 

### reviewfor 

### the 

### initial 18-month 

### extension-much lass appropriately identify 

### the change 

### to current 

### rules 

### in the 

### prcamble so that the 

### regulated community is 

### made 

### fully aware 

### of the 

### impact 

### of new 

# 5 116.120 

### on clprentrules. 

## This nquirernent, 

### ifpromulgated, would 

### be considerably more stringent 

## than the Commission's 

### current 

### rules, 

## which simply 

### provide that 

### the "executive 

### director may 

### grant 

### a one-time 18-month extension to 

### the dale to 

### begin 

### construction." 

## TIP opposes making 

### the 

### cutlent 

### rule more 

### stringentwithout 

### an opportunity to hear and 

### comment on the 

### Commission's rationale 

### for 

### such a change. 

### Five Percenr 

### of Estimated 

### Capital Cosrs

### Amply 

### Demonstrates Intenr 

### ro

### Build TIP supports 

### the 

### proposal to allow 

### additional extensions 

### to permit 

### holdcrs involved in 

### third party 

### litigation regarding the issuance 

### of 

### the permit 

### TIP 

### also supports 

### additional extensions 

## whcre pnmit 

## holdGIs kve 

### damonstratad an 

### intent to build 

### the project by 

### spending 

### a significantportion 

### of the 

### total estimated capital 

### cost 

### on preparation for construction. 

## Howcvcr, 

## TIP bclievcs 

## that cxpmditures 

### of 

### 15% of the estimated 

### capital 

### cost 

### far exceed the 

## amount necessary to demonstrate 

### dekdned intent on the 

### part of permit 

### holders 

### to build 

### the project,

### andtherefore supparts 

### a lower threshold. While unusual, 

## tht capital 

### cost of some projects 

### to 

### build NSR-permitted facilities can 

### run into 

### the hundreds 

### of millions or 

### evcn billions of 

### dollars. For example, 

### a 

### new serni

### conductor fabricationfacility with 

### all tools installed can 

### cost 

### as 

## much as two billion dollars. 

### If the Commission requires 15% 

### of the entire 

### ‘@reject" 

## (not just 

### the building that will house the tools), it is mdating 

### expenditures of $300 

### million just to get 

## an exttnsion-a cost 

### that 

# far exceeds 

### the 

### amount necessary to demonstrate 

### an 

## intent 

## to build, even 

### by 

### the most well

### eapitali7d 

### corpomtions. Moreover, 15% 

### of the capital cost 

### of 

### a permitted 

### project 

### may exceed that 

### portion of costs 

### that can 

### reasonably be 

### spent onprepmation for 

### comtmction. 

### In 

### these cases, 

### permit holders 

### would be 

### &nied any 

### benefit of the 

### proposed rule. 

### Using the 

### median m~ge 

### of costs 

### to set the 

### limit 

### of 15% 

### is 

### &r for those projects 

### signifimtly 

### higher than the 

### median-- 

## which are 

## more likcly 

### than 

### olhers to 

### need a 

### delay, given 

### the vmy 

### significant expenditures required 

### TIP 

### believes that 

### an expenditure 

### of 5% 

### of the 

### estimated capital 

### cost of a 

### project 

### more than adequately 

### demonstrates an intent to 

### build, and urges 

### the 

### Commission to adopt 

### this figure, 

### rather 

## than 15%, in 

### issuing its final

### rule. Five 

### percent 

### of the estimated capital 

### cost 

### of a 

### project 

### is a significant 

### expenditure 

### for projects 

### of any size. Yet it is small 

### enough to be 

### more 

### readily expended in 

### preconstruction costs, 

### thereby 

### enabling 

## most permit holders 

### to 

## use the proposed extension provisions. However, the executive 

### director 

### should also be 

### given the discretion to 

### make exceptions 

### where appropriate, 

### such 

### as where 

### very large 

### capital costs are projected.05/04/2003 13:43. 

### FAX 5123222501 

### BAKER BO'ITS



## BAKER

# Born UP 

### Ms. Joyce Spencer 

### May 5,2003



### In accordanoe with 

### these comments, 

## TIP proposes 

### the following changcs 

### to 

## the Commission's proposed 

# 4 1 16.120.



### A permit or 

### permit amendment 

### under this 

### chapter

### is void 

### ifthe permit

### holder docs 

### one of

### the folLowing: (I) 

## fails to

### begin construction

## within 18 

## montbs, or atime period specified 

## in the permit, 

## of date 

### of issuance. 

### At 

### the rcqu~st 

### of 

## the permit 

### holder, the 

### executive director 

### may grant 

## an 18-month 

### extension to 

### begin 

### oonstruction.
qqkbh 

## An additional 

### txtmsion 

### of up to 18 

### months may be grauted 

### by 

## tht cxccutivc dircctorif+i (A) 

### the permit 

### holder becomes involvad 

## in litigation 

### not of the 

### permit 

### holdar's initiation 

### mgarding 

## the issuance of 

### the ptrmit-



## (B)the 

### permit 

### holder 

### bas spcnt 

### of the 

### estimated capital 

### cost of the 

### project on preparation 

### for conetructioqd 

## or otherwise 

### demonstrates to tbe 

### satisfaction of 

### the executive 

### di&r 

## an intent to 

### build



## An addit' 

### emit 

### holder demonstratas 

### that 

### uuissions 

## from the 

## facility will comply 

### with all 

## rules and regulations 

### ofthe 

### cammissionand 

### the 

### intent 

## ofthe 

## TCAA,includingprotection

### of tbe 

### public's health 

### and physical 

### property. 

# p Pe ncefvsd 

### an additional 

### extension will be 

### sabieet to 

### farther best 

### available 

## & [no

## further changesto 

### proposed 

## 8 116.1201 30 

## TAC 66 

### 116.170 

## TIP supports the 

### Commission's efforts 

### to 

### harmonize its 

### emissions credit 

### and allowance

### programs with its rules 

### pertaining 

### to 

### emission offsets and 

### to 

### improve thc 

### information it 

## has on reductions 

## that will be used 

### as 

### offsets. Accordingly, TIP 

### largely 

### supports proposed $05/04/4003 13 : 43 FAX 5123224601



## EAKERBC~~~SUP Ms. Joyce 

### Spencer 

### May 

## 5,2003

116.170,

## which establishes standards 

### for 

### using offts. However, 

### clarifications are 

### needed to 

### ensure that 

## tht regulated commtmity

## has needed flexibility. 

### Section 

### 216.170(b) states 

### that reductions not yet 

### certified 

### and banked as 

### an emissions credit 

### must be 

### cded and 

### banked 

### with 

### the executive director by 

### September 

### 1,2004 in 

### orderto 

### be considered for 

### use 

### as 

## an offset. Presumably

### this applies to reductions in existence prior 

### to 

### September 

### 1, 

### 2004,but 

## the rule does not 

## make that clear. 

## The Commission 

### needs to 

### clarify that 

### reductionsthat occur after September 

### 1,2004

### may 

### be certified

### and

### banked. Subsection 1 

### 16.170(~)(2) 

### would require 

## firftrrt reductions to 

### be 

### achieved prior to 

### commencement of 

### the permitted 

### emissions for 

### which the 

### offset 

### is requirad 

### In the preamble to the 

### proposed rule, 

### the 

### Commission rrcopkzes 

## th& existing equipment oh 

### must 

### be kept 

### in operation until 

### new, lower 

### emitting equipment 

### is opcratiod. 

## However, the proposed 

### rule appears 

### to prohibit 

### any 

### such period 

### of overlap. 

## For example, 

## when boilers 

## arc replaced with 

### cogeneration 

### Mties, 

### emission reductions that 

### form 

### the basis of the 

### internal offsets cannot be achieved 

### until the 

### cogeneration 

### uuit is fully 

### operational and 

### the 

### boilcr 

### can be 

### removed fium 

### service. 

## The boiler 

## is needed for staud-by 

### purposes until 

## all tasting 

### and troubleshooting 

### of the 

### cogeneration unit 

### is complete. 

### Because 

### boiler emissionreductions cannot 

### be 

## fully ndked

### until after 

### commencement of dssions from 

### replacement wgeneration 

## units, proposed 

## 8 116.170(~)(2)

### seems 

### to preclude the use 

### of 

## tht eliminated boiler 

### emissions as 

### internal 

### offsets. The Commission 

### fbquently addresses 

## such issues 

### now expressly 

## by pennit condition requiring that 

### boilers be shut 

### downby a 

### date 

### certain. TIP 

### therefore asks the 

### Cormnission to 

### clarify 

### that 

### it 

### will continue to 

### permit en 

### overlap of operation to 

### allow for 

### intend offbets 

### consistent with currentpermitting practices.



## The Texas 

## Industry Project 

### appreciates the 

### opportunity 

### to submit these comments 

### for consideration 

### in connection 

### with the 

### proposed revisions to 

### Chapter 

## 116. If you have 

### any qucdons 

### concerningthew 

### comments, plcast call 

### Jon Niermann

### at 322-2662-

Sincerely,

-

### Jon 

### Niermann 

## For the Texas IndustryProjectMAY-1-2003 14: 37 FROM: BPSH-HSE-TC 4099424091

BP Products North America Ina. 2401 6"Avanua Sowh Pmt Offkc BOX401 Tsus City.TX 77680 U6A Swhhbaard 400 945 1Dl 1 HSE fax 409 942 1W1 

# n May 5,2003 

### CERTIFIED 

### MAIL# 7002

### 241 0 

### 0007 0428 4687 

### Return Receipt 

### Requested: 

### Ms. Joyce Spencer 

## Office of Environmental Policy, 

### Analysis, and Assessment, 

### MC 206 Texas Commissionon Environmental Quality 

## P. 0, Box 1 

### 3087 Austin, Texas 7871 1-3087 

### (FAX 51

### 2/239-48081 

### RE: Rule Loa Number 2003-003-1 1 

### 6AI 

### Dear Ms. Spencer: 

### BP, on behalf of its operating companies 

### in Texas, appreciates the opportunity to 

### comment on the proposed revisions to Chapter 11 

### 6 conceming permits for new construction or modification. BP 

### is proud to be 

### a 

### part of 

### the 

### Texas economy. We employ more than 8,000 people in 

### Texas and offshore in the Gulf of 

### Mexico. Texas has one of .the largest concentrations of 

### the company's people and assets in 

### the world. Our 

### Texas operations include exploration and 

### production of crude oil 

### and 

### natural gas 

### on- and 

### off-shore, natural gas 

### processing, natural gas 

### marketing

### and trading, refining, chemicals manufacturing, and gas-fired power generation. In general, 

### BP supports 

## 'theTNRCC's proposalto amend Chapter 116 

### conceming New Source Review (NSR) permit 

### applications. However, 

### we offer the following suggestions for rule improvementand clarity. 

## TCEQ should revise 116.1 14(b)(2) 

### conceming "Application Review 

### Schedule" to clarify that applicants will 

### receive 

## written notice prior to voiding any 

### permit: "If an applicant fails to 

### make such good faith effort, the 

### executive director 

### shall void 

### the application and provide written notice to 

### w#y 

### the applicant of 

### the 

### voidance and 

### the remaining deficiencies 

### in the 

### voided application."

### As has been agency practice in the 

### past, we encourage 

### continuedflexibility in the timing allowed to respond to deficiencies. 

### Rigid timelines could foster 

### a system of unnecessary applicationvoidance. Providedthe applicant is making a 

### "good faith 

### effort" to provide-therequested infarma-tion,

### TCEQ should continue to provide extensions for responding to deficiencies. 

### TCEQ is proposing in 

### 116.120to grant a 

## second 18 month construction 

### extension 

### if approved 

### by the Executive Director for: (1)

### third party litigation (2)other cases 

### where the 

### permit holder 

### has 

### spent 15% 

### of 

### the estimated capital cost of 

### the project on 

### preparation. 

### BP supports the 

### potential availability of a second 

### extension, but we encourage the 

### agency to reduce 

### the necessary pre-spend. 5% 

## (insteadof 75%) is a 

### more realistic capital expenditure especiallyfor those projects that are being held for market 

## or strategic 

### reasons. Most projects

### will not be 

### sanctioned for significant expenditures untilthe market and the need 

### for the project are 

### clear. Revise 116.1 

### 20(1)(B) as 

### follows: "the permit holder has 

### spent or 

### committed 445% 

### &of the estimated capital cost of the 

### project 

# .... .I 

### BP~S 

### a 

### member af 

### the Texas Chemical Council 

### TTCC], and 

### we endorse 

### theTCC comments. 

### We 

### urge TNRCC to give the 

### TCC comments serious consideration. 

### If you 

### have any questions about our comments, please 

### contact 

## Susan Moore, 

### P.E. at 

### 281 366 

### 5018. 

# sRR

Joel 

### Robins 

### HSE Manager, 

## South Houston IntegratedSite5- 2-03; Q:37AM;DOW CHEMICAL

May 2,2003 Union Carblde Corporation A Subsidiary of The Dow Chemical Company P.O. Box 186 Port Lavaca. Texas 77979-01 86 U.S.A.



### Ms. Joyce Spencer Texas Commission on 

### Environmental Quality 

### Office of 

### Knvironmental Policy, Analysis, and Assessment (MC-205) 

### P.O.Box 13087 Austin, Texas 78711-3087 512 2394808 (PAX) 

### COMMENTS OF 

### THEDOW CHEMICAL COMPANY ON 

### THE

### TCEQ PROPOSED 

### RULE CHANGE TO 

### REG M FOR OFFSET CERTIFICATION, 

### NEW SOURCE 

### REVIEW PERMTTPROCESSES

### AND EXTENSIONS

### FOR CONSTRUCTION 

### (Rule Log 

### Number 

### 2003-003-116-AI) Ms. Spencer: The Dow Chemical Company appreciates the opportunityto comment on the TCEQ's proposed changes to Regulation

### VL Our comments ate included as an attachment

### to this letter. We 

### understand that industry groups, 

### such as the Texas ChemicalCouncil,will 

### ah be 

### submittingcomments. In general, 

### we support their comments, but would like to emphasize 

### someof their comments and 

### to submitadditionalcomments 

### onthis proposed regulation. 

### If yon have any questions about these comments or need any clarification,please contactme at 361-553-2920. Sincerely, A



### Rueell A. Wozniak Regulatory

### Affairs Sr. Specialist

# -Texas 

### TheDow Chemical Company5- 2-03; 9:37AM;DOW CHEMICAL



### Comments

### on TCEQ's Proposed 

### Changesto 

### Regulation M 

### for 

### Offset Certification, 

### New 

### Source Review Permit

### Proc- 

### andExtensionsfor Construction Voidlag ofDeficientApplication (116.114)(b)(2) 

# - The 

### requimmentto 

### provide two wrltten no-tione 

### ofthe deadcacyahoddbe added 

### to the 

### regulation

### fnRnie 11&114(b)(2). 

### In addition, tbe 

### TCEQsbonldprovide written

### notia tu the applicant

### if 

### anapplicathnis 

### voided. 

### TCBQ states in the preamble (28 TexReg 2904

# -April 4,2003) that 

### after two written notifications of the deficiency, if 

### an applicantfails to

### make a good faith effortto providethe

### requiredinformation, the executive director will void the applicationand notifythe applicant. Dow suggests that the 

### fmt sentence

### in Section 116.1 14(b)(2) 

### be 

### revised as followsto capture the practice of

### providingtwo 

### written notifications, andproviding writtpnnotice if an applicationis voided: "After two writtennotifications of the deficiency, 

### if an applicant 

### fails to makea good 

### faithoffoa

### to provide the

### required infomation, the htive 

### director

### shall void 

### the application 

### and shallprovide written notification to the applicantof the voidanco and the remaining deficiencies in the voided application". 

### Voiding 

### ofDelBcient

### Applicalion(11&114)(b)(2) 

# -Dow mgge!ststhat 

### TCEQpmvide

### maximum WMUty

### forNotice ofDeticimry 

### Letters associatedwith repuests

### for drdispersion 

### modelingor detailed brrhnicnldm for

### Bast Available Control Technology. 

### In general, 

### XEQprovidas 

### an applicant30 daysto mspond to a 

### firstNotice ofDeficiency

### Letter, and 

### 15 

### days fa 

### a secondNotice ofDeficiency

### Letter. Dow suggests that 

### TCBQ provide

### maximum flexibiityto applicants with mspect to Noh of Deficiency

### Letters 

### associated with 

### air dispusion

### modeling studies or 

### requests for detailed

### technicalinformationassociated with 

### the determination ofBACT. For example, in some dispersionmodeliig studies,there is a need to ovaluato dtiplo

### air eontaminants 

### fromthe facilities seekingthepermit, and also 

### theexisting facilitieslocated at 

### thesamemanufacturingsite. 

### These studiescan bccoxneextremely complex at our largerfacilities, and in some cases, a completedstody cannotbe executed within the 30-day timeframe. Dow suggeststhat 

### TCBQ consider, on a casaby-casebasis, providing additionaltime

### eitherin the initial Notice ofDsficiency Letter (parhaps 

### 60days vs. 30 days) 

### to complete these studiesor

### in the form of providing

### an extension to the 30 dayperiod when warranted. 

### An additional alternativeis to continuetoprovide for the option ofAdministratively voiding an application per cumntpractice when dealing with riming issues associated with just these two 

### types ofNotice of Deficiencies. 

### ApplicabilityofEmieeion Reductionsas Offsets(116.170) 

# -Dow suggeststhat 

### TCEQ clarifythat the 

### requirementto 

### certify 

### an emissionreduction 

### as an emission creditapplies b

### ohts that

### may be

### used by dtes 

### other than

### where the 

### reductionwas made TCBQ states in the preamble (28 TexReg 2904) that the commissionproposes'to retain in Chapter 116 c-cation of

### futureoffsetsinternal to a facility. Dow's understanding ofthe proposedregulation is that emission reduction creditsthat 

### am used 

### as ofiets atanother sitemust be certified

### priorto September 1, 2004. Ourunderstandingis also that emissionreduction creditsthat py 

### used in nettting calculations or as internal offsets at the facility where they wcrt generated 

### arenot subjectto the certificationrequirement. Dow proposes the following clarification to the firstsentence of Section 116.170(a): "Noreduction may be used asan offset, at a site otherthun where it wargenemted, unless ithas been certifiedas 

### an mission credit under Chapter 101, Subchapter

### K, Division 1or4 of this title etc."5- 2-03: S:37AM;DOW CHEMICAL

Page 2


### Clarifidon 

### shodd be providedfor &be 

### permit 

### renewal schedule (116315) 

### TCEQproposes that 

### this subsection be effectiveon 

### February 1,2004. Dow suggeststhat TCEQ clarify how permitsthat expirebetweenMay 1,2004 and August 1,2004

### am to be

### handled. Our

### unclefitanding 

### is that the requkemnt to apply for arcnewal6 months in advance-

### will takeeffecton February 1,2004. 

### Our interpretation of the proposed ruleis that thepamit renewal applications will be dmon 

### Feimziry 1,2004 for 

### all permits that expire

### in the May 1,2004 toAugust 1,2004period 

### since these will changefromthe 90 day to the six month requirement for renewal applications. Dow suggests adding the following 

### to Section 116.3 15(a): 

### "An applicationforrenewal must be submittedby 

### February 1,2004 for 

### all permits that expirein 

### the 

### May 1,2004through August 1,2004timefiatnet'. 

### An application 

### forrenawalmust be 

### submitted 

### at least six months, butno

### earlier

### dun 18months

### priorto expiration ofthepermit for apermit that expires onor 

### after 

### August 2,2004". 

### TCEQshould

### revise Section 116.310 

### Notification

### ofPermit

### Holder 

### The currentnotification to the permit holder

### requires that the 

### TCEQ notify 

### the applicantno 

### less than 180 daysprior to the expirationof the@t Although no chap wereproposed to Section 116310,Dow suggeststhat TCEQrevise Section 116.310 

### torequire 

### TCEQto provide the notice no 

### less than 270 

### days prior to the expirationof the pennit 

### This change would be consistentwith the currentregulations(ie. 90 day period between agency noticeand 

### minimum applicationrenewal dab) since the 

### requirementsto submitarenewal 

### application areproposed to berevised to six months 

### prior to expiration of thepermit.MFlY 05 '03 

### 11 :

### 23 FR ELECTRIC COMPRNY 915 543 5802 

### TO 915122394808 P .02/05

LUIS llo Direebo~EnvimenY, Health & Safety 

### May 5,2003 

## VIA FACSiMl

## LE NO. 

## (512) 239&08 ' 

## AND REGULAR 

### MAIL EO.Box 982 El 

### Paso,Texas 79960-0982 (915)543-5711



## Ms. 

## Joyce Spencer Office of 

### Envlranmental Policy, Analysis and Assessment 

### Texas Commission on Environmental

### Quality, M.C. 

### 205 P.O. Box 

### 13087 Austtn, 

## TX 7871 I -3087 Dear 

### Ms. 

### Spencer: 

## RULE LOG NO. 2003-0031164 

### El Paso 

### Electric Company CEPE") 

### appreciates this opportunity 

## to comment 

## on the abovereferenced proposal of changes 

### to the rules 

## of 

## the Texas Cornmimion on Envimnrnerrtal Qualtty ("TCEQ"). Specifically, 

## the following 

### comments add- 

### the pmpoaad 

### changes 

### to 

## the rules governing 

## the certification of offsets used 

### to 

## satisfy requirements 

### of 

## the Tms nonattainment new source review ("NNSR") pmgram. 

### As the Staff 

### of the TCEQ Emission 

### Banking and Trading ("EBT") program 

### is fully 

### aware, EPE 

### has pioneered

## the creation and use of emissions currency

## from the conversion of prirnitlve brick 

### kilns 

## in Border areas of 

### Mexico. Last 

### November, 

## the TCEQ Executive Directorapproved EPE's 

### proposal to 

### create allowances under the Senate 

### Bill 

### 7 

### (1999 

## Legislature) program 

### for NOx controls 

### at grandfathered utility 

### boilers, 

### codified 

## in 30 T.A.C. Ch. 101, 

### Subch. H, 

### DivisCon 2. 

## EPE may convert up to 

### 40 kllns 

## to a less-polluting deslgn, which would eliminatewell 

## more than 100 

### tons per year of 

### pollution 

### from the midst of 

### subsistence 

## neighborhoods in 

## Ciudad Juarez, Mexico. 

### This 

### project recehred a 

### Texas 

### Environmental ExcellenceAward from TCEQ, 

### as well 

### as an environmental stewardship award 

### from 

## the Leagueof

### Women Voters. But the 

### conversion 

### of kilns 

## to satisfy EPE's obligations under 

### S.B.7 leaves the majorityof kilns in Juarez 

### unaffected.1 Having invested 

## considerable resources in developing the program 

### under



### 'The S.B.7 NDr mnhlprugmrn dbtaEPEL NewmanStah, Units 14,which are pm-1Wlgabtlred bdlers. EPFs plan for cmplianoe dththe S.B.7 emlmion Ilmltstiona, refbtedinthe allowamelloeahsaaordsd bttxmae three unlfs,alwye has mlMrnortlyon burner cantrdsand OW mnsd mltrlon Ilmlbth, wlth any olbnrPneear tmaladby Jm klln mvsnlonr mhg to providea mereinof $ably 

### In aompHaneem. 

### &c?uw~mdu~~ersarewo~at~arwlim~,EPE~~tobe~b~ra$ within the ~UOWMOB ahtionmnbd b (he

### Newmon Sblbn, vvllhwt

### any addidondakwmm8fmn UIm. 

### ~~, EPE Is comnrlmd to convening mom ltllnr The ambucllon popram Ms at amidtwentyto date, howarw,while Ciudrd JuaarofRdsb evaluatethe pogsibMyof relooatlng kllnsand 

### odwoplhm forasatlngseommiesofsoale.PRY 05 

### '03 11 : 23 FR 

### ELECTRIC COMPRNY 915 543 5682 IU Y~~.~~JY~MUM r. USUD 

### Page 

### 2 

### Ms. Joyce 

### Spencer 

### May 5,2003 s.B.7,~ EPE 

### of course is 

### very interested 

### In maxlmizlng

## the 

## return on that inttial investment 

## by the creation of additionalforms 

## of emissions currency, especially offsets. It 

## also is interested, as 

### a 

### leading corporate citizen of the 

### El Paso area, in seeing all Juarez 

### kilns converted to 

### the lesspolluting design, 

### if possible. In.principle, EPE believes that the proposed 

### offset certification requirement will, incidentally, 

## advance its goal of further commercializing Juarez kiln conversions. With certification may 

## come increased confidence 

### in b0th the buyer a 

### nd seller (or creator a 

### nd 

### usar) of a ny offsets created by 

### kiln conversions. 

## EPE is concerned, though, that the 

### proposal is not sufficiently surgical in Its selection of existing provisions of 

### Chapter 101, 

### Subchapter H

### that wlll apply to the 

### creation and 

## use of NNSR 

## ofFsets. The proposed regulatory approach is 

### to 

### Include in the deflnttion of 

### 'offset rationa requirement that an offset be certified as 

### an emission credit under Divisions 

### 1 or 

### 4 

### of Subchapter H. 

### But these divisions evolved to 

### create differing programs 

### for dtfferent 

### purposes, and 

### so they 

### include provisions that unduly mstiict 

### or should not 

### apply to 

## the creation and use 

## of offsets 

### far NNSR 

### purposes. The following 

### are cited as non-exclusive examples of the confusion that may result from the 

### proposed approach: I, 

### Does TCEQ intend 

## to apply 

## 5 101.301 

## to the creation 

### of offsets? If 

### so, 

## that statement of 

### purpose Is inaccurate, because offsets are 

### not a 

### "voluntary" requirement. 

### 2. 

### Does

### TCEQ 

### intend

### to apply all 

## of the General Provisions of 

# 5 101.3021 

### If so,


### a. Section 101.302(a) allows only 

### VOC and 

### NOx reductions 

### es emission credits. Texas, 

### however, also 

### has carbon monoxlde, sulfur dioxide and particulate matter nonattainrnent areas, and thus the potential need 

## to allow for 

## the creation 

## of offsets for those 

## pollutants, as well. b, 

### Note that subsection 

### (d) 

### was drafted primarily in contemplation of 

## using Division 1 as 

### a means of 

### creating an ERG 

### banklng program 

## for use in 

### trading 

### among existing sources 

### in the Houston-Galveston area (and 

### to 

### a lesser extent other ozone nonattainrnent areas). 

## The assumption was 

## that the emission measurement approaches would be 

### specified by 

### rule for virtually all of the sources subjectto 

### the VOC and 

### NOx limits of 

### Chapters 115 

### and 117. All other sources, however, must undergo an elaborate procedure 

### for approval (under § 

### 101.302(d)(l)(C)). This might have been appropriate in 

### the 

### case 

## of using 

### ERCs to trade 

### for compliance with existing source 

### NOx and VOC 

## limb (because few, if 

### any, 

## sources would need to 

### undergo the case-by-case approval); however, 

## because-by definitiowthe sources from which 

### offsets will be created are NOT already subject 

### to stringent existing 

### source 

### limitation ruies that have defined 

### measurement protocols, 

### virtually all sources from which offsets 

### would be 

### created 

### in the 

### future 

### would need to 

# ' EPE epowored en extensivetesCn~ prognm, Muding h cmstructlon da model klln compound, and sunrep of kiln operating p~~ctimi in order

### to ddop missionfactors. Italso has large invsstmdin developingthe erdsuw Isgal InfmrmePJn

### toauthorb the mram,fosiedng the relationshipson both sides ofthe border 

### lo make the tradingwork, and fonnulaUngandobtainingTCEQ appm of tls pmposal. nMAY 

### 05 

### '03 

### 11 : 

### 24 FR ELECTRIC COPIPFINY 

### 915 543 

### 5802 

### TO 915122394808 P. 

### 04/05 

### Page 3 

## Ms, Joyw Spencer 

## May 5,2003 undergo this process. 

### That is 

## a level 

### of 

## unintended difficulty that will 

## frustrate offset creation.
c. 

### Subsection 

## (f), like 

### (a), would Incorrectly restrict offsets to ozone nonattainment 

## areas. In addition, that subsection appears to requirswritten approval from both

## TCEQ and 

### EPA to 

### use credits 

## from outside

## the nonattainrnent area, even though TCEQ 

## has a fully 

## appraved NNSR 

### program. EPE recognfzes the needfor consubtion with 

### EPA (and 

### T CEQ 

### may 

## lean heavily on 

### EPA'e opinlon), but the 

### need for 

### formal dual appmvais 

## is unnecessarily and inappropriately burdensome. 

### d. Subsection (i) also unduly restricts offsetsto VOC 

### or 

### NOx. 3. Does TCEQ 

### intend 

## to create a bank for all nonattainment areas 

## (i.e.,all areas in 

### which offsets 

### could be 

### created or needed), as 

### contemplated 

### in 

# 5 101.3093 It 

### wlll need 

### to 

### do so. Also, note that 

## g 1 01.309(a)(3) and § 

### 101.31 1 

### (concemlng 

### pmgrarn 

## audlts) are currently limited

### to ozone nonttainmentareas. 

### To address 

### these and 

### other possible 

### sources of confusion, EPE 

### recommendsthat TCEQ adopt 

## a separate division 

## in Subchapter 

## H in which 

## TCEQ defines 

### the 

## specific requirements and proceduresfor creating offsets for 

### NNSR 

### purposes. Appropriate principles

### from other divisions could be bornwed 

### as needed, 

## but customizedto the 

### needs of offang 

### for 

### NNSR purposes. In addition to 

## the above general concerns, 

### EPE also 

## is spectfically concerned 

### about the unique effects of applying 

### Division I(or 

### 4) criteria 

### to the creation of 

## offsets from kiln conversions 

### in Juaw The conditions expected 

### for offset 

### creation for a typical 

### source in 

## the UnM

### States would prove imposs[ble If applied to 

### an open-topped rudimentary kiln inJuarez, 

## Mexico. Fortunately, based on TCEQ's consideration of 

### the issue in 

## the context of 

### creating S.B.7 

### allowances, we believe 

### it is well equipped 

### to understand 

## the need for 

## flexibility. Equally fortunate, 

### the Texas Legblature has granted TCEQ the flexlblltty to 

### accept redudons 

### from Mexlco 

### to 

### satisfy othetwise-applicable regulatory requirements 

### in Texas. In at 

### least the 

### following respects, 

## the Division 1 rules 

### could 

### unduly and perhaps fatally burden 

## EPE's kiln conversion sponsorship program: 1. 

### In 

## 5 101.302(c)(I)(D), the obligation to 

### establish 

## that the facility's annual emissions have reported or represented in the emissions inventory 

### used in 

## the SIP could be 

## problematic, depending on 

### how that requirement 

## is interpreted.3 The SIP for El Paso 

### generally considers 

### emission 

## from Juarez, but only to 

### the extent of documenting that 

## El Paso would be 

### attainment but for 

### emissionsfrom 

### Juaret But 

### no emissions inventory used 

### for 

### SIP purposes specifically 

### identifies kiin emissions. Fortunately, this is 

### not among 

### the limitations on use of 

### transborderemission 

### reductions established inthe Texas Clean Air Act, 

# 5 382.0172(b), 2. 

### EPE's 

### concerns wlth the possible requirementto 

### apply the emissions measurement protocol provisions of 

# 5 101.302(d) to 

### offset creation becomes especially pronounced if applied 

### to kilnMRY 05 

### ' 03 11 : 24 

### FR ELECTRIC COMPANY 313 345 3610‘2I u ~3 -~LWYYBUU r

# . uwu~ 

### Page 4 Ms. 

### Joyce Spencer May 

### 5,2003 conversions. 

### EPE already has 

### undergone 

### a substantial testing 

### program and 

### survey 

### of kiln 

### usage 

### practices to e6tablish 

### a conservative emission facbrs on 

### a tons per year per kiln 

### basis. Any 

### obligationto get

### that 

### emissionfactor re-reviewed puts 

### that investment

### at risk. 3. 

### The recordkeeplng 

## requirements 

## af subsection (g) 

### are 

### ordinary 

### and expected 

### obligations for 

### a fully 

### staffed stationary 

### source 

### in the 

### W.S., 

## but far beyond expectations 

### for 

## a ladrillero 

## in 

## Juarez, EPE has proposed 

### and TCEQ 

## has approved 

## an implementation and 

### enforcement pratocol 

### that 

## works as applied 

### to 

### numerous and diverse ktlns 

### in 

### Juarez, -and

### that protocol should 

## suffice

## for offset purposes, 4. 

### The 

### amount of 

### credits to 

### be 

### generated

### from kiln conversions 

### is 

### based solely 

### on the 

### number of 

### kllns converted; 

### therefore, 

## 5 101.303(b) 

### should not apply. 

## 5. 

## The application requirements 

## of § 101.303(~)(3) 

### are unnecessarily 

## detailed 

## in 

## the case 

## of the system almdy 

### established

## for kiln 

### conversions. 6. 

### The 

## enforcement mechanisms listed in 

# 5 101.303(~)(4) 

### are too 

### limiting 

## as applied 

## to kiln conversions. 

### EPE 

### cannot overstate 

### Its 

### appreciation to 

### TCEQ 

### for it6 

### flexibility 

### and inventiveness in partnering 

### with 

### EPE to 

### take some 

## first, Important steps 

### toward incentividngthe conversion 

### of brick kilns 

### in 

## Juarez. The 

## rule changes 

### proposed by 

### TCEQ, 

### modffied as suggested above, 

### will allow the kiln 

### conversion pmgram to 

### break 

### into a 

### much 

### more 

## canfident stride. Thank 

## you 

## in advance for your careful consideration'of 

## these comments. 

### Please 

### let 

### us 

## know of any questions, 

## or of any 

## interest 

## in 

## further discussions of 

### the issues 

### presented 

## here. Very Truly Yours,

Directar-Environmental, Health 

### and Safety


## cc. 

## Cory Chism, TCEQJAustin Eric 

### Groten, Bracewell, Patterson, 

## L.L.P. Mark Rodriquez, El Paso Electric 

## CompanyPRY-02-2003 15: 19 C9D EPA MULTIEDI A 2146656762 P.02/07


### UNITED STATES 

### ENVIRONMENTAL PROTECTIONAGENCY REGION 6 1445ROSS AVENUE, 

## sum I 

## noa DALLAS, TX 75202-2733



### May 2,2003 

## Ms. Joycc Sper Ofhcc 

### of

## EnvironmentalPoky,

Analysis andAesessmant 

## (MC 205) 

## Tasu Canmnissian

## onEnvironmental 

## Quality P.O. Box 13087 

## TX 7871

### 1-3087 

## \\b Proposed

## ReWmto 30 

## TexasAdministrative 

## Code 

## (TAC) ChapterMand

### the State 

### Imp-n 

## Ph (SIP). 

## Rule 

## Log Number 2003-003-1 1641 

### Dear

## Ms. Spencer: Thank

## you for 

### the 

## opportunityto mview 

### the

### proposed 

## cbaages to 

### 30 

## TAC Chapter 116 

## and the 

## SIP, InW acdon, 

### you 

## are

## proposingto 

## repeal 

## # 116.170; new 

## 88 116.120,116.170, 

## and 116,172; 

### and 

## amendmentsto 

## 88 116.12,116.114116.116,116.143,116.150,116.313, 

### 116.315, 

### and 116.715. 

### You imW8t~d hat

## if adoptedthe

### new and amended 

## Sectionswlll

## be submitted 

### to 

### us 

### as 

## SIP revhbns. 

### Based 

## on ourmview of

## theseproposed changes, we 

### provide rhe 

## enclosed commenu. 

## Inseveralcases, 

### we 

## have suggested 

## specific

## changesto your 

## propossd 

## rules 

## which are 

## necessary to meet 

### applicableFederal 

## requirements

## orwhich WU 

## otherwise 

## chi@ or strengthen the rule. 

### If

## you have 

## questionsconcerning these comments,

## we rcque~t 

### that 

## you dismss;your 

### questions 

### and 

### concerns

## with us More

## your final adoption

### and submtnal

## ro 

## us for 

## a SIP 

## revision.

InremetAddress (URL)

# - hn~JImw.eua.sar/ear1t1lr6/ RecydedlRecyolable

# - Prlnmd wlth VageWle Oil Baed Inks on ReoyWed Papor (Minimum 30% Postamsurner)WDEPA MILI IMtUIH



### Thank you 

### for the opportunity to 

### provide 

### comments. 

## We look 

## forward to 

### seeing the &Ll 

### Tule when 

## mbmhted. 

## Ifyou 

### have 

## any quatiom,pb 

## call Mr. 

## Stanley

## M.Spnrlen of

## my staff at 

### (214) 665-7212. 

### Sincerelyyours,



# - Chief Air

### Permits 

## Section

### ENCLOSURE 

### COMMENTS 

## ON =POSED REVTSIONS 

## TO 30 TAC 

## CHAPTER 116

# - CONTROL 

## OF

AIR

### POILLUTION

## BYPERMITS

### FOR

## NEW CONSTRU~ON 

## OR MODIKICATION 

## 1. 

## 9 116.12(14) 

# -Ddbdti~~~ 

## of 

## "ofkt ratio." 

## Youproposetwo changes 

### as fohwu: add 

### a

## requirementthat 

### reductions

## be certifiedas 

## an missionreduction

## credit

## underChapter 101, 

### Subchaptcr

## H,Division 1 

## or4, 

## andto 

## movefrom the 

## demon the aimh

## that areduction

## must mcet 

## to 

## be creditable as a 

### OW. 

## ThcsccI.itcria that 

## you propose to rmnovc

## arc

## mccamyto 

## meet the 

### the 

## r- 

## ofSadon 173(a)(l)

## and (c) ofthe Clean

### Air Act 

## and 40 CFR 

### 51.165(a)(3). 

## Thcsccriteria enamthe 

### integrity 

## and enforceability of

### the ofkts, 

### and 

### guard 

## ag&m

## the 

## use of reductionsthat the 

## Statehas ralied

### upon in 

## its atubmem 

### demomation 

## and 

## wbhh 8118ure 

### that 

### the 

### reductions 

## arenot otharwise

### requid under 

### tbAct 

### and regulations

## promulgated

## tbmunder. It 

## is important 

### that 

## ofbetscontiwero 

## meet these req&amm. 

## h 

## Theseappear

## in Chapter 

### 101, 

### Subchapter).I,

### Won 

## 1 or 

## 4, 

## and appear to 

### meet 

### the mquhments 

### of 

## Section 173(a)(l) 

## and 

## (c) of

## rhe Clean

## Atr Act 

## and40 

### CFR51.165(a)(3).' 

### The 

## proposed rule includes 

### an mcption "as 

### providedfor in 

## 5 116.170@)


# ...." 

### As 

### proposed, 

## Q 116.170(b) provides 

## that 

## a reduction 

## "not

## yet certitied 

## and banked 

## as 

## an &don rsducdoncredit

## mw 

## bc certified and 

## banked by 

### the executive 

### director 

### by Sepbmber 1,2004, 

### in 

### order

## to be 

### considen=dfor 

## uaa anas offset." 

## Under this proposal it 

### is 

## not clcar whether a 

## reductionwbkh is 

### not 

### certified and 

## banked may 

## be used as 

## an offsCt 

### between the 

## effective date 

### of rbe 

## revisedrule and September 1,2004. 

### Any

## use 

## of a reduction

## which

## L not cerdibd 

### and bed 

## as an offset

### is 

### not consistem

### with

### the 

### criteria

## m Sdon173(a)(l) 

## and (c) 

## ofthe 

### CleanAir Act 

## and 40 CFR 

### 51.165(a)(3). It 

## is also 

## nor consistentwhh watements 

### in your 

## preamblein which you state 

## as follows: 

## The 

## commissionis 

## proposing that 

### emissionreductions 

## not yet 

### ce@ied and 

## banked 

## as emission creditsby 

## the &bctive 

### date 

## of these 

### rules 

## be &&ed and 

## bw by 

### September 

## I, 2004, 

### in 

### orderto 

### he 

### considered 

### as 

## affsets. Emphasis added. See

### page 3 

### ofpreamble

### to proposed mle and 28 TexReg

### 2904 (A@ 4,2003).



### 'Chapter 

### 101. Subchapter

## H, 

## Divisions 1 

## and 4, 

## have 

## been submitted 

### to 

## us for approval

## as SIP revisions

## and 

## am currentlyunder =view. 

## We have not 

### approved these

### provisions 

## as &ions 

### to 

## the Texaa 

## SP. Thas, any

## statement that the& N]cs 

## appearto 

## meet any

## rcqu-t for approval

### should not

### be 

### considered a hnal

### determination. 

## Owfind 

### determination

## whether these provisions meet our

## quiremntsfor 

## SIP approval will be 

### made when we 

### complete our 

### review of both 

### Chapters. Also please note 

### thar 

### any final 

### action 

### to appmvc 

### or disapprove any

### provision of 

### Chapter 116which 

## rsliss on Chapter 101, Subchapter

## H, Divisions 1 and 4

### may depend

### upon our 

## tlDal decision

## mncnamingthe 

### spprovability

### of Chapter 

## 101,SubchapterH, 

### DMns1 

### and 4.FPD EPA MLILTIMEDIA



## The drhithn 

### of 

## "o~t" in 

## 8 116.12 would 

## be @ed to state 

### that 

## an offset Imagg t 

### e 

## uc 

# . 

# . ter 101 

## Su 

# s,Q.

- 

## Emphaah added. Seepage4 

## ofpreambleto 

## proposed rule

## and 28 

### TexReg 2904 

## (April 

## 4,2003). 

## These quotes indicate Texas' 

### intmtion that 

## after the 

## effective date 

### of 

## theeeproposed nJcs, only 

### reducrions that 

### are 

## catifid

## and banked am 

### digible

### for offsets. 

### We concur that 

## reductions

## generated 

## &r the 

## effective date ofthis rule

## must 

## be mrtEied

### and

## banked and that 

## reductions generated Wore 

## the efhctive date 

### ofthis 

## rule

## must also 

## be certified and baaked and must meet 

### the guidelmcs 

### ofEPA'e guidance. 

## See Improving

## Air Quality

## with Economic 

## Incenrive 

## Programs, Chapm 7.0, Page 

### 1 14 

### (EPA452IR-01-001, January

### 2001). The

## rule should clearly 

### provide that 

### reductions

## meet Section 173(a)(l) 

## and 

## (c) ofthe 

## Qean Air Act 

## and 

## 40 CFR 

## 51.165(a)(3) 

### m

### order to 

### qualify 

## a offse~.~ 

## by providing 

## that 

## afterthe effectivedare 

## ofthis proposed rule 

### that 

## anyreduction

### be certified 

### and

## banked under Chapter 101, Subchapter

## H,Divisions 1 or 4. 

## Texas should clarrfy

## any

## uncmty whichmay

## occur because of the 

## phrase "except as 

### provided 

## in 

## 8 1 16.170(3)" 

### which is

## proposed in $ 

### 126.12(14).



## This Sectionwould 

## replace

## provisions

## in Section 116.115@)((A). 

## Section 116.120 

## would provide &it 

### a

## ped will

### expire 

### if 

## asource fails 

### to 

### begin 

## constructionwithin 18 

### months from date 

## ofissuance 

### of a 

### permit,unless 

### the 

## TCEQ grants

## extensions. The rulewould 

## allow TCEQ to 

### gm~ 

## two 18 

## month

## aendons. 

## We have 

## commentsas follows:

A 

## pp 

# - ACTl 

## and lowest ac ' 

## vablc Paragraph (1) requires the 

### reevaluation

### of

## BACT as a 

## condition 

## forreceiving 

## an extension, Paragraph (1) 

### should 

## furtherprovideforreevaluationof

### UERwhen 

### that 

## is the 

### control 

## masure required 

## under

## the appkabkpermitting 

## programfor the source. Th;ls 

## is necessaryto 

### meet the 

## req-s of40 

### CFR 51.165.5 

### 1.166, and 

## 5 172(c)(5) 

### and 173 

## of the Clean

### Air Act. 

## B. Requirement to 

### reevaluateBACT (or

## La, see 

### comment 

### 2.A above), netting 

### and offsets. Theintroductorylanguage 

### requires

### reevaluation

### ofBACT 

### (or LAER, 

## see comment 2.A 

### above),netting and 

## offsets. However, it is

## unclearwhether these 

### rtevaluations

## applyto 

### both 

## extensions 

## or only 

## to the bt 

## extension. As 

## written these 

## reevaluations appearto 

### apply only apply to 

### the first

## extension. 

## The rule

### should clearly require

### these 

### remaluations 

### for both 

## extessions. This is necessaryto

### meet the 

### reqmts 

## of 

## 40 CFR 

### 51.165,51.166, and 

## S 172(c)(S) 

### and 173 

### of the Clean

### Air Act.FPD EPR MLlLTIMEDIR



## -the of

## the TUA.. 

### ~rotcction of

## thewblic's health 

## and nhvsic~ert~.


## InParagraph 

## (I)(@and (B), you 

### propom as 

### critcsia

### for a 

## second 

## extensionthat 

## asource 

## demonstrate

## that ~J&&IIS 

## fromthe facility

### will

## comply with 

## all rules

## and re&tions 

## of

## the coen and the 

## intest ofthe including

### ptdon ofthe

### public's health

### and 

### physical 

## property. As 

## proposed, thae dcmo118tra&m

### apply 

## only TO 

## the second

## e~(.tension. Omission

## of these criteria

### for the &st 

### exrension 

### is not consistmt

### with 40 

### CFR 51.160(a) and 

### (d)', 

## which gemrally

## apply to all 

## decisions 

## relating to 

## new som constructionandmodificadons,inchding 

### the 

## approval of

## extensionsof a

### permit's 

## expirationdate. 

### These 

### criteria

## must 

## applyto 

## both 

## extensians to 

### saw 

## the 

## requirememtsof40 

## CFR 51.160(a) and (d). 

## InParagraph (l)(A) 

## and 

## (B),addhion

## of 

## "current" before 'biles 

## and 

## regula&ns" would clarify the 

### applicablequiremems

### fordations of

## BACI"andLAER, netting and 

### offset 

## ds-ns.

Tbis 

### Section

### requira 

## offsets 

## ro be cmlfbd

## as an emhdon credit under 

### Chapter 

## 101, Subchaptti

## H,Division 

## 1 or

### 4, "except 

## as provided 

## for in 

### subsection(c) 

### of

## this 

## section" 

## Subsection

## (c) sets

## forth 

## criteriathat 

## futurcreductions

## must meet to 

### quw 

## m affects, as 

### specified 

## inparagraphs 

## (c)(l)-(4). 

## The fonowing 

## changesto 

### Paragraphs (2), 

## (3), 

## and (4) 

## under Subsenlon(c) 

## are

## necm to mwt the laquix8ments

## of 

## Section 173(a)(l) 

## and (c) 

### ofthe Clean 

### Air Act 

### and 

## 40

## CFR 51.165(a)(3). 

## The suggested 

## changes are mdmIincd.



### Paragraph (2) 

### shouldb~ =vised 

### to 

### provide: (2) tbe 

### dud.09.

## iucludin@d- the 

### Execut 

# . . ive 

### Dhxor

## mav 

## rqph under - 

## oaramuh (41, 

### must

### be achicmd

### priorto commtncrm~nt 

## ofthe 

### permitted 

## emhiomfor which the offset is

## required.

'4.0 CFR 

## 51.160(a) require6 a 

### determination 

## rhe proposed

## mwsource 

## or modification witl

### not

### result 

## ia. aviolationofthe 

### control strategy

## and interEerence with am 

### or mahtenance of a

### national ambiem 

### air quality 

### standard. 40 

## CPR 5

### 1.1 60(d) 

### pmvidcs that 

### cons?ntction 

### of modification

### will 

### not affect 

### thensponsibjlity

### ofthe 

### owner 

### or opartor 

### to 

### comply 

### with 

## applicableportions ofthe 

### control strategy.6PD 

### EPR HLILTIMEDIR



### Paragraph (3) 

### show 

### be mvised to

### provide: (3) 

## rhe reductionmeats 

## all the requirements of Chapter 101, Subchapter

## H, Divjsion 

## 1 

## or 4 

### ofthis title 

### when submitted to 

## the 

## executive director

## for

## reviewper the 

## req-ml 

## ofthe huedper&. 

## owner or pDMator 

### must 

### nrovide information to the 

### Exaxtive 

### Directorwwcient to 

### d 0 

### h 

# 0 n 

## -
Paragraph (4) 

## shouldba 

### revisedto 

## provide: (4) the

## permit 

## holder

## agrees to 

## obtainadditional

## ohts 

## ifthe 

## reviewby the 

### executive director

### indtatcs

### the reductions do not 

### satisfythe 

### original 

### offsct require men^, 

### Such 

### wonal reductions

## musi corngl~ with 

## oara~~~ must

### be achieved

### ~rior to conlgg~ 

### f 

### recnnred. ~rovided 

### in 

## uuam~h (2).

4. 

## 8 116.116. 

### Changes toBadHtiea 

### The

## fonowing underlinedaddition 

### would serveto 

### clardythe authorized

## usc of discrete 

## emissionreductioncredirs: 

# (0Use of credits. 

## Notwithstanding any 

### other 

## subsection of 

## this section, 

### discrere 

### mission

## mductioncredits

## may

## be used to 

## exceed perm&allowabla 

## a%described 

## in 9 101.376@)(1),

### mbiect 10 

### the 

### hifations 

## of 

## 5 101.3761~~~

# &Sern-pra 

# Energym Resources



### May 5,2003

Joyce Spencer, Office of

### EnvironmentalPolicy, 

### Analysis andAssessment Texas Commission on 

### Environmental Quality MC 205 P.O. Box 13087 

### Austin, Texas 78711-3087 ~ihl B. iblhh P.E. Vlcs Pmldmt hbpmant 101 Ash Street San Diego. CAm01-3m Tel: 619.6962932 Fax: 619.6962911 MKllerQsempra-res,com



### Re: Rule Log Number2003-003-1 16-A1 Dear

## Ms. Spencer, Sempra 

### Energy Resources, Inc. 

### ("Sempra") submits the following 

### comments in response to the proposed changes 

### in 30 TAC Chapter 116, and 

### in particular 

### the extension to stolrt 

### of construction provisions. Semprafullympports 

## thisrulemakingandwould simplysuggest 

### somelanguagethat will give the Executive Directormore flexibility. Thecurrentrulesprovidethat only one 1 8months extension

### tothe start

### ofconstructiondeadline

### maybe sought. 

### Thiscurrentruleisnotbased on

### any state statutoryorfederal

### requirements. 

### In fact, 

### thecurrent rule 

### is in starkcontrastto the federalrules whichwould allowthe 

### grantingof

### morethan one extension (see e.g., 

### 40 CFR 52,21(r)(2)). 1)

### Maximize Flexibility

# - Preferred Method Semprasuggests thatthe samelwelofflexibilityshouldbemade available

### totheTexas 

### Commissionon Environmental Quality 

### ("TCEQ") Executive 

### Director when circumstances justify 

### that 1) prudent business practices 

### (usually based on significant chges 

### in the economic climate 

### unrelated to the permittee's financial

### condition) dictatea delayin constructionand 2)that thepermitwas notobtained speculatively. Perhapsto

### most effectiveway to accomplishthe assessmentof thosecircumstancesis

### to leave any additional extensions to 

### the full 

### discretionofthe Executive Director without attempting to capture all

### potential scenarios in the details ofthe 

### rule language. This approach wouldbe consistent 

### withthefederalapproach

### to allow 

### several extensions, yet also speciEyandput

### theregulatedcommunity on noticethat any second extension is strictly discretionary. 

## In addition, leaving a 

### second extension to the full 

### discretion of the Executive Director would itself provide a disincentive for speculativepermitting. Since all aspects leading 

### to the development of a 

### project and

### anydecisionto 

### delay constructioncould be considered,it wouldbe very =cult to attempt to disguise a 

### speculativeproject in 

### order to get an 

### extension. Clearly, any permittee that makes the decision to delay construction should be prepared and expected to make a strong 

### showing that the pennit was 

### not sought speculatively.

Sempra Enerqy Resources is not the same company as the utility, SDGCE or SoCalGas, and Sempra Energy Resources ....,-A,..-.

. ... .. .. . - .... ~ .~

~ 

### . . 

## .... .. -... .L 

## ,........,. . . -

. --- ..

### 2) 

### Specify Percentage of Expenditure Condition for SecondExtension The currentrule proposal suggeststhat spending at least 15 % 

### ofthe capital cost of theproject would demonstratea strongcommitment tothe project suchthat a secondextension

### couldbe granted. Sempra understands

### this language to mean that 15% ofthe entire cost of aproject &omdevelopment to 

## final construction would be considered. 

### In the case of a $300 million 

### project (such 

### as atypical 500 

### MW 

### combined cycle gas 

### power plant) that would lead 

### to 

### a $45 

### million expenditure

### prior to 

### the start of construction. That level of expenditure does not reflect typical development, execution and constructionpractices for capital intensiveprojects. SeeAttachment A, 

### spreadsheetoftypical power project development and construction costs. The development stage of 

### a power plant project typically involves conceptual engineering, 

### infrastructure study, permitting and acquisition costs prior 

### to releasing the full 

### EngineeringProcurement/Construction (''EPC") contract. The

## EPCrelease startsthe executionphase of a project which includes construction. EPC costs would not be incurred by a permittee 

## who is seekinga start of construction deadline extension. Simply 

### stated, ifthose costs were

### being incurred, there would be no need to seek a 

### construction extension. Consequently, and

### to betterreflect the 

### economic and

### project development realities ofcapitalintensive projects, Sempra would suggestthat the TCEQ

### focus on the 

### level of developmentcost

### leadingto, but not including, executionofthe EPC and associated constructionrelated 

### activities. A speculative

### project wouldtypically seektominimize ordelaydevelopmentactivities and

### theresulting costs

## while focusing primarily on environmentalpermit costs. 

### In the case of 

## a power plant project, overall development costs would 

### generally approach $10million when pursued diligentlywhile it couldbe 

### as low 

### as $2-3 

### million for a "speculative" project. 

### As such, any speculativepermit should be discemable 

## krnthe levelof expenditure

### undertakentowards developmentcosts. Semprawould suggestthat, 

### if

### apercentage of cost approach is preferred by TCEQ, a demonstration 

### of 

### expenditure 80% or higher of overall developmentcosts (i.e. not includingconstructionand

## EPC related costs) 

### berequiredby

### theregulation. Alternatively, TCEQ could consider a steppedapproach

## thatrecognizes

### that developmentcosts will 

### not linearly increase as 

### the total capital cost of a project increases. As 

### stated in 

### the preamble to the proposed 

### rule, the

## median range of cost for 

### NSR projects is $8 

### to $9 

### million which leads 

### to 

### fifteen percent of these figures being around $1.3 million. Sempxa believes that 

### $1.3 million for those "median" cases would clearly capturemost developmentcosts andnotbe too high 

### abar to reach. For that matter, for small

### projects, thelevel ofexpenditure relatingto thepreparationofpermitapplications and 

### other development activities would likely meet a 

### fifteenpercent threshold. Candidly, problems only start

### to occurwhenprojects reach a capital costof 

### $50million or above where the meen 

### percent factor becomes somewhat detached hmproject development and 

### construction realities. Yet, ironically, it 

### is those capital intensive projects with EPC 

### contracts that may most realistically need additional

### extensions. As 

### stated above, eveninthecaseof a $300millionpowerplantproject, itwould be 

### unusual 

### forpreconstructioncosts to rise 

### much above $10

### million. Several 

### approachesmay 

### address this problem. Perhaps the 

### cleanest 

### approach would be to require a 

### fifteen percent levelofexpenditureforprojects under $50millionbut capthe expenditurerequirement 

### to $7.5 million for all projects above $50 

### million in capital expenditure. 

### This approach would still

### captureprojectsthat 

### are speculative, or otherwisenot kund

### to 

### merit 

### an additional extension, since a second extension 

### is 

### discretionary

## and the Executive Director can chose not 

### to grant 

### arequest. 

### 3) Other option 

### if a 

### list of 

### factorsispreferred. 

### As stated above, 

### Sempra believes that 

### TCEQ could simply allow its Executive Director to grant additionalextensionsat 

### ita discretion

### aslong a project 

### is foundnottobe speculative. Ifa

### list of&tors isprefd by the Commission, Semprarespecmyrecommends the following languagethat might best capture

### all considerations: 

### In consideringextensionsto the dateto begin construction,the executivedirectormay consider, among other factors, the following: 1) 

### delays resulting 

### from litigation such 

## that useful life of the p&t was affected or timelines in the pdt were rendered impractical, 2) 

### the amount of pre- 

### work 

### &uired for the project prior 

### to beginning co~tion; 3)the 

### total cost of the project, or the nature 

### ofthe project, which renders construction timelines impractical; 4) 

### delays in obtaining other pennits for 

### a 

### hility such that the 

### entire project cannot reasonably proceed 

## with construction; 

### 5) 

### thetotal costs

### incurredbythepermittee, orthe exiskme ofbindingcontracts relating to the

### project, at the time 

### an extensionrequest is 

### filed 

### suchthat the executive director 

### can properly ascertain that the permittee 

### is 

### making reasonable 

### progress toward beginning construction; 6) 

### unique economiccircumstances in aparticularindustryunrelated to the permittee's financial status; 

### 7) the 

### overall public or 

### environmentalbenefit oftheproject; or 8) 

### other equitable factors. 

## This approach 

### has the merit of establishing some guideline and legitimacy to 

### the process without focusing solely on the 

### level of expenditure which could bejust one of

### manyfactors. 

### 4) Level of 

### CommittedfNon-Recoverable Capital Although the proposed language focuses on 

### a percentage of expenditure without consideration of whether 

### someofthat expenditure mayberecoverable,there

### hasbeen somementionthat a level of nonrecoverablecommitment(or walkaway cost) couldbe considered. Semprais 

### opposed

### to this approach to the extent it demands that enough good money is 

### thrownafter bad 

### without a clear correlation to speculative versus non-speculativeprojects. 

### As stated

### above, afocusondevelopment costs

### would seem the most effective approachto identifytruly speculativeprojects. 

## The notion ofwalkaway costs appears possibly related to 

### EPA consideration of "commcnc&t of construction" where EPA allows the considemtion of substantial losses to declare a facility in 

### construction even where no construction equipment or personnel 

### is present at the site. Declaring a facilityin 

### construction

### has vastly differentimplicatiom sinceno 

### furtherreview ofhealth effects,

## B& AvailableControl Technology or Lowest Achievable EmissionRate is contemplated. That is not the

### casewhere an

### extensionisrequestedandthe state

## hastheopportunitytoreevaluate thepollutioncontrol technology 

### involved 

### atthe site. Clearly,thebest indicationof

## anentity's commitmentto aprojectisthelevel of effortundertakeinin

### the development of that project. Most development costs will indeedbe lost and that effort

## will not be 

### transferable to another project. On 

### the other 

### hand, once 

### the level of 

## financial commitment 

### starts contemplating purchases of equipment, that equipment

### has somerecoverablevalue. If

### TCEQwereto require somepercentage ofthe capitalcostto be

### walkaway cost, largecapitalintensiveprojectswould, once again, be 

## in a difficult position unless those walkaway costs were capped or otherwise limit& Assumingfor 

### sake of argumentthat awalkaway costwould be around 10 percent ofthe 

### capital costof theproject, a $300 millionprojectwould be requiredto have $30millioninwalkaway costs. Ofthose $30

### million, approximately$10 

### millionwouldbe developmentcosts andthebalancewouldhavetobe met through losses in resale value of purchased equipment, See Attachment 

### B. Although that requirementmightbe met 

### in depressedindustrial sectors, it failsto recognizethat

### the vastmajorityof post-development costs

### maybe associatedwith

### EPC contractsthat are

### nottriggeredmtil 

### constructionis started Sempra respectfully suggest that if 

### a walkaway approachis selected, the Commission shouldlimitits 

### approach to ten percent for projects 

### with capital costs up 

### to $50 

### million and cap those costs to 

### $5 

### million for all 

### projects above $50 

### million 

### in 

### capital expendihrre. 

### Tbis 

### approach reflects that, for 

### equipment

### and capitalintensive projects, walkaway costsincurredprior 

### to the

## start ofconstructiondo 

### notdrasticallycontinue to increase

### as 

### aproject's overall capital cost increases. Walkaway

### costswillbe closely tied to the site-specificdevelopment costs 

### that have 

### been incurred. 

### 5) Litigation Extension Semprabelievesthatthelitigationextensionis a

### constructivestep towards allowinga

### permitteeto My benefit 

### fiom itspermit once removed

### hm the cloutof

### litigation. 

## Oftenprojectsrequirefinancingand litigationinvolvingany ofthepermits requiredfortheproject delaysthe opportunityto move forward with the 

### development and eventual construction of the 

### facility or plant. 

### In essence, the pending litigationis flaggedby attorneysfor a

### potential lender and

### no commitmentoffimds willbe

### madeuntil that issue is fully resolved. This the caseregarding 

### any ofthe environmentalpennits needed for the development 

### and construction of a project. Understandably, the Air 

### Quality permit, which is a 

### preconstructionpermit, isoften oneof the first

### permits soughtby 

### applicant. Yet

### whenlitigationoccurs regardingany oftheneededpermits, the entireproject is held

### backpending resolution ofthat dispute. Scrnpra 

### believes that a permittee having to endure litigation, and 

### the uncertainty of ultimate court 

### decision on a challengeby Protestants

### orHearing Requestorson a

### decisionto issue a

### pennit, shouldbe made

### whole onthetimelines allowedby regulationsforthe startofconstructionof

### aproject. It should be noted that these actions by Protestants or Hearing Requestors are challenges to TCEQ actions 

# - lawsuits against the state, not the permittee. While this litigation ispending, the pennitteeis not in 

### a 

### position to make contractual commitments and 

### move forward with 

### the development of the project. Once litigationis finallyresolved, thepermitteemust then 

### quicklyrecover from this delay andrestart the developmentprocess. At times the economic circumstanceswill have changed.

## Semprabelieves

### thatthetwo opportunitiesfor extension providedin

### theproposedregulation(litigation delays 

### and economiccircumstances)shouldbeclarified andnotbe

## mutually exclusive. 

## Ifapermitteeis fig 

### an extension requestto be

### made whole on the deadline

### to start construction

### as aresult ofa

### third party 

### lawsuit against 

### the TCEQ, that 

### samepermittee shouldnot be precluded 

### &om 

### laterrequestingon extension

### based on 

### changedeconomiccircumstances. To do otherwisewould 

### essentiallypenalizethat 

### permittee 

### for having had 

### to endurethird party 

### litigation overwhich it had no control. Sincerely,



### William

## B. Keller, 

## P.E. Vice President 

### Development

(2)

### Attachments 

### Cc: Albert0 

### Abreu CharlieNeal 

## Bill Nelson Octavio Simoes Cecil Sterling Alexandre Bourgeois, Jackson & 

### Walker

### Spreadsheet 

### of Tvpical Power 

### Proiect Development

### and 

### Construction Costs
Project Scope 

### Total Generation 

### (MW) Number of Combustion Turbines (each) Number of 

### HRSG (each) Total Land Area 

### (acres) Location I 

### 40 SE Texas

Total Project Costs Part

## A 

# -- Pre Engineering-Procurement-Construction 

### (EPC) Contract Land

# -- Initial Cost $1 00,000 Easements and 

## ROW $1,500,000 Pre-Engineering $3,000,000 Legal Fees $1,000,000 Permits (fees plus tech) $800,000 Emissions Reduction Credits $3,000,000 Part 

### 6

# -- Post 

### EPC Contract CombustionTurbines 

### (2) Steam Gen 

### and Turbine (1) 

### Project Engineering 

### Land Clearing & 

### Site Prep Constructio~~ Oversight Horizontal Construction Vertical Construction lnfrastructure Startup and Testing TOTAL 

### PROJECT COSTS $297,100,000

Attachment A

~ ~ ~ ~ -

. , ..

### Spreadsheet of 

### Possible 

### Power Prolect Walkawav Costs
Anticipated 

### CMia 

### for 

### me Trub .Spscuiative" 

### Project 1. Description 

### of Methodology

2. ProjectScope 

### walkmy oats total project costswith 

### prepurahased turbines (includes all EPC costs)

12.1. Total Generation 

### (MW) Walkaway 

### costs compared to 

### prowcosts UP to EPC with prepurchased turbines (a,,,pical)

500 to 600 "Prudentand Development 

# mmeS up to EPC Phase 

### w,mout prepurchased turbines (typical)

2.2. Number of Combustion

### Attachment

### B

- ..... 

### _ .- ~._

. . . __- .,

# TEXAS CHEMICAL COUNCIL

1402 

### Nueces Street 

### Austin, Texas 78701-1586 (5 12) 477-4465 

### Fax (512) 477-5387


### May 1,2003

Ms. Joyce Spencer Office of Environmental Policy, Analysis, and Assessment, MC 205 Texas Commission on Environmental Quality P.O. Box 13087 Austin, Texas 7871 1-3087 

### (FAX 5121239-4808) 

### RE: Rule Log Number 

### 2003-003-11641

Dear Ms. Spencer: Texas Chemical Council (TCC) offers these comments on proposed changes to 

### Chapter 116, concerning

### Permifs for New ConstructionorModz~cation. TCC represents a major component ofthe manufacturing sector in Texas. The chemical industry results in the employment of more than 450,000 Texans, with 

### a total 

### annual payroll of more than 

### $15 billion. The chemical industry has invested more 

### than $40 billion in Texas production facilities. The Texas chemical industry generates one-quarter of the state's manufacturing value added and accounts for a similarpercentage of manufacturing shipments. Attached are detailed comments on the proposed rulemaking which reinforce our stated positions and concerns. Please do not hesitate to contactBarbara Pederson at (281) 842- 4198 or me at (5 

### 12) 646-6404 with 

### any questionsregarding these comments. Sincerely,

Vice President

Attachment

PRINTED 

### ON RECYCLED PAPER 

# @

### Comments on Rule Log Number 2003-003-116-A1 Submitted by Texas Chemical Council
Chapter 1 1 6.1 14(b)(2): Application Review Schedule TCC would like to clarify that the "notice" indicated 

### in this section would be formal Mitten notice. Chapter 

### 1 16.120(1)@):Voiding of Permits Texas Chemical Council FCC) disagrees with the requirementto 

### spend 15%of 

### the estimated capital cost of the project on preparation for construction in order to be granted an additional 

### 18month extension. TCC recommendsthat the term "spentyy be changedto "spent or codtted"to reflect that some charges would have to be paid even ifthe project were cancelled, per contractual arrangementswith 

### equipmentvendors or construction contractors. Such forecasted non-recoverable costs should be included in any evaluation. TCC recommends changing the "15%" to "5% of the estimatedcapital cost". For a very large project, fivepercent could 

### be a very large sum of money. In a scenario where economic conditions decline or business conditionschange, a company may need to postpone further investment for 18months. Fivepercent is still a large sum of money for 

### aproject which is not fully authorizedby the agency and may be particularly susceptible to changing business conditions or economic shifts. Therefore, based on these two changes, TCC recommends the following wording for paragraph 

### (B): "the permit holder has spent or committed 

### 5% of the estimated capital cost of the project..

# .." Chapter 116.315 Permit Renewal Submittal The proposed rule states that applications for renewal are due at least 

### 6 months prior to expiration. The stated effective date is 2/1/2004. TCC is concerned that several companies may be caught in an unfair situation as a result of the effective date being approximately7 months from promulgation. This would only leave 1month for 

### a company to read and respond to the 

### final rule to be in compliance with the 6 month requirement ifthe permit is scheduled to expire in February, 2004. Companies that had intended to submitpermit renewal packages in November to meet the current 90 day requirement would be at a disadvantageto potentially pay expedited costs to prepare an application for submittal by August 1,2003. TCC recommends additional timing to accommodatethose whose permits expire in 212004 -

### 414004 to allow them the appropriatetime to preparelsubmit an 

### application for renewal. TCC recommends an 

### effective date of 4/1/2004based on rule promulgation in early July, 2003.

### INDEX OF ORAL TES'TIMONY

Reference Number Submitted by

No oral testimony was received pertaining to the proposal.

# EVALUATION 

# OF TESTIMONY

# Texas Commission on Environmental 

# Ouality INTEROFFICEMEMORANDUM



### To: Commissioners 

### Date: August 

### 1, 2003


### Thru: LaDonna Castaihela, Chief Clerk Margaret Hoffman, Executive Director 

### fl From: Randolph Wood, Deputy Director 

# (9 Office of Environmental Policy, Andysis, and Assessment Subject: 

### Commission Approval for Rulemaking Adoption 

### Docket No.: 2003-0232-RUL 

### Rule Log 

### No. 2003-003-116-AI, Offset Certifications, New Source Review Permit Processes, 

### and Short 

### Title: and Extensions for Construction


### Reasons for 

### the rule 

### package: Under what authority 

### are we adopting 

### these changes? The changes 

### are proposed under Texas Water Code, 85.103, concerning Rules, and 

### 95.105, 

### concerning General Policy, which authorize the commission to adopt rules necessary to carry 

### out itspowers and dutiesunder the TexasWaterCode; and 

### under Texas Clean 

### Air Act, 5382.017, concerning Rules, which authorizes the commission to adopt rules consistent with the policy 

### and purposes of the Texas Clean 

### Air Act. If this rule is required by federal rule or state statute, 

### which ones? These rules 

### are not requmd by federal rule or state 

### statute. 

### Are there any legal deadlimesby 

### which 

### this rule must be proposed, adopted, or effective? No. What issue(s) or problem(s) 

### are we trying to 

### solve? These rules provide public notice that Air Permits Division is discontinuing the practice of 'administrative voidance" of deficient permit applications. This practice is not supported by commission rules. The adoption contains other items concerning permit applications that are principally administrative, such as no acceptance of applications without a correct fee, refund of application fees if a facility qualifies for a lower level of authorization, and the 

### establishment of a permit renewal window of no earlier than 

### 18 

### months, but no later than 

### six months before expiration. This window is required to regulate the flow of renewal applications and to discourage applications sent in early to avoid changes in 

### rules or permitting fees. These rules will also require that emission reductions be certified and banked 

### as emission credits under Chapter 101, Subchapter H if they are to be used as 

### emission offsets. Certificationand banking ofcredits allows the commissionto track ongoingreductions and new construction in 

### order to meet 

### air quality goals and federal requirements. The adoption will also amend permitting rules to allow for a second extension of time to begin construction following issuance of anew source review permit. This change is needed to

### Commissioners Page 2 August 1, 2003 Docket No. 2003-0232-RUL accommodatepermit holders who have had to delay constructionbecause of litigation or economic conditions.
• 

### Why is it important that we do this 

### rule package? This rule package allows the program to achieve consistent certification standards and implementpermitting processesto ensurethat adequate and timely information is provided while allowing applicants flexibility to address problems that arise in the 

### permitting and constructiontimeline.
• 

### How does it improve the environment? Consistent and effective certification standards and permitting processes help ensure protection of 

### air quality.

• 

### What the rules will 

### do:

• 

### The rulemaking 

### will end the practice of "administrative voidance." Applications would be voided after second written notice and will 

### require new technical review and public notice. No additional applicationfee will be required if re-application 

### is made within 

### six months.
• 

### No permit applications will be processed without submission of the correct fee.
• 

### The window of application for permit renewals will be no earlier than 18months and no later than 

### six months before expiration. 

### This requirement will become effective on February 1,2004.
• 

### The rulemaking will provide for the refund of fees if the applicant is qualified for 

### a lower level of authorization.
• 

### These rules remove obsoletenonattainrnent language (compliance dates have passed).
• 

### Offsets must be certified under Chapter 101, Subchapter 

### H. Future offsets to be used 

### internal to 

### a facility will 

### be allowed so that equipment may be replaced.
• 

### A second constructionextensionof up to 18months

### will be provided for applicants under litigation or if the applicanthas 

### spent, or committed to 

### spend, 10%of the capital cost of the project to a 

### maximum of $5 million. A health effects review will be required for the second extension. Best available control technology reviews are required for any extension.


### Impact on the: Regulated 

### community:
• 

### Who is affected? Applicants for and holders of new source review permits. Does it create a group of affectedpersons who were not affected before? No. Those portions of the rules concerning permit applications and renewals are primarily administrativeand are generally cost 

### free to industry if the conditions of the amendments are observed. Permit applicants that have their applications voided wouldbe requiredtorepeat a technical review andpubIicnotice,but would pay no additional application fees if re-application is made within six months.

### Commissioners Page 3 August 1, 2003 Docket No. 2003-0232-RUL The requirement to certify 

### reductions under Chapter 101 is not a significant expense as the Chapter 101certificationmethods are not materially different than methods now used, and Chapter 101is already widely used by participants in 

### the emission credit program. The rules would require that a substantial sum of money be spent in 

### order to qualify a permit holder for a second construction extension. Some large projects 

### may cost into the hundreds of millions of ddlars. However, the rules do not compel permit holders to 

### seek this 

### extension and 

### do not add any expense to the cost of project development. The opportunity to receive a second extension is viewed favorably by industry. Public: Who will be afkted? 

### These rules will

### not affect the general public. How? NIA. Does it create a group of affected persons who were not affected before? No. Stakeholder meetiugs: 

### Have any stakeholdermeetings been held? The Air 

### Permits Division conducted two stakeholder meetings concerningthese amendments: January 7, 

### 2003 and March 26, 2003. How 

### many people attended? 12-15 people attended on 

### January 7,2003, and 

### 12-15people attended on March 26, 2003. What were the general sentiments? The proposal was well received as it was seen as a benefit to 

### industry. There were no comments from the general public at the meetings. Were any changes made in response to 

### stakeholder concerns? The comments from industry at the meetings were repeated in 

### written comments submitted during the public comment period, and the staff 

### has made some recommended changes based on the comments. Those recommendations are stated in 

### the Response to Comments section of the preamble. Agency programs: This adoption affects the new sourcereview program. No new full-time employees are needed. The Air 

### Permits Divisionwill change its internalproceduresas

### needed, but only small adjustments will be required. The Air Permits Division does not believe new guidance will be needed. The 

### implications are: 

### What policy issues are affected?

### Commissioners Page 4 

### July 3, 2003 

### Docket No. 2003-0232-RUL 

### The proceduresthat 

### are the subject of this adoption

### are currently addressed 

### in rules of the 

### commission and require rule amendmentsto change them. 

### What 

### are the consequences if 

### this rulemaking is not approved to go forward? Rulemaking is needed to correct deficient permit processing procedures. Permit holders who have been forced to delay construction of projects will have permits voided without further construction extensions. Are there alternatives? Since the proposal is not required by federal rule or state statute, no action is 

### an alternative. Potentially controversial matters: The number of construction extensions may become a matter of continuing concern for industry. Some industries would prefer that the number of extensions be indefinite. Because of netting, offsets, and 

### the need to obtain allowances, projects which go a prolonged period without construction will tie up a limited amount of "permit space." Requests for second construction extensions are rare, 

### and the executive director and commissionbelieve this adoption will resolve any outstanding problems. Public 

### comment: Sempra, Texas Chemical Council, and 

### Texas Industrial Project all 

### recommended that the commissionlower the threshold for a secondconstructionextension fromthe proposed 15%



### . They 

### argue that development cost of a project does not necessarily rise with the 

### total cost of a project and meeting the 15% 

### threshold may not be realistic. The United States Environmental Protection Agency wanted a review of lowest achievable emission rates added to construction extension requirements. El PasoElectric is concerned that offset certification under Chapter 101

### will affect its program of brick kiln emission reductions 

### in 

### Juarez. Signii5cant 

### changes from proposal: Theexecutive directorrecommendsthat the second constructioncost thresholdbe lowered to 10% 

### with a cap at $5 million. The executive director further recommends that a 

### specificationbe added to the rules requiring a 

### lowest achievable emission rate review. This review is consistent with current practice. This adoption will not affect El Paso Electric's current brick 

### kiln program, as the emissions realized under that program are not considered offsets used 

### for meeting nonattainment emission reduction requirements. The executive director recommends that the commission consider future rulemaking to allow the creation of emission offsets for nonattainment pollutants other than nitrogen oxides and 

### volatile organiccompounds. Thiswould allow additionalpollutants to be used as offsets provided reductions could be verified and quantified under Federal Clean Air Act requirements. Agency contacts:

### Commissioners Page 5 July 3,2003 Docket No. 2003-0232-RUL Clifton Wise, Rule Project Manager, Policy & 

### Regulations Division, 239-2263 Beecher Cameron, Program Lead, 

### Air Permits Division, 239-1495 Garrett Arthur, Staff Attorney, Environmental 

### Law Division, 239-5757 Joyce Spencer, Texas Register Coordinator, Policy & 

### Regulations Division, 239-5017 Kathy Vail, RegulationDevelopment Team Leader, Policy & 

### Regulations Division, 239-6637 Attachments

cc: 5 copies to 

### the Chief Clerk for distribution Carolyn Brittin Sonia Ralls David Schanbacher Brian Christian Dan Eden Derek Seal Randolph Wood Jim Muse 

### Office of General 

### Counsel Clifton Wise Joyce Spencer

cc (without attachments): 

### Beecher Cameron, Program Lead Garrett Arthur, Staff Attorney Kathy Vail, Regulation Development Team Leader Javier Gm, 

### Program Liaison Kem Rowland, OLS 

### Liaison

### EVALUATION 

### OF TESTIMONY

The Texas Commission on Environmental Quality (TCEQ or commission) adopts the repeal of §116.170; new §§116.120, 116.170, and 116.172; and amendments to §§116.12, 116.114, 116.115, 116.143, 116.150, 116.313, 116.315, and 116.715. Sections 116.114, 116.120, 116.170, 116.315, and 116.715 are adopted 

### with changes to 

### the proposed text 

### as published in the April 4, 2003 issue of the 

### Texas Register (28 TexReg 2903). Sections 116.12, 116.115, 116.143, 116.150, 116.172, 116.313, and the repealed $116.170 are adopted 

### without changes and 

### will not be republished. The

new and amended sections will be 

### submitted to 

### the United States Environmental Protection Agency (EPA) 

### as revisions 

### to the state implementation plan (SIP).

BACKGROUND AND SUMMARY OF THE FACTUAL BASIS 

### FOR THE ADOPTED 

### RULES The commission is adopting rule amendments to ensure the timely submissionof updated and additional information used to process new 

### source review applications. The commission is also adopting rules so that applicants who do not supply requested and necessary information for the processing of a permit applicationwill have their application voided. Applications resubmitted within six months would not be 

### subject to any further permit fees, but the applicant would be required to go back through the public notice process in order to 

### make possible a public review of updated and 

### current information about the proposed facility.

The commission requires that persons issued a new source review permit under Chapter 116begin construction of the facility within 18 months of permit issuance or the permit will be voided. The 

### executive director may grant an additional 18-month extension to this period. In 

### the case of flexible

Page 1

### permits, the time period to begin construction is specified in the permit with one 12-month extension available. 

### In the large majority of cases, these cumulative time periods are sufficient to resolve issues associated with starting construction. In some cases, particularly when third party litigatiop is involved, a permit holder may not be able to start construction within the extended time periods. The commission is therefore adopting rules so that an additional extension will be available. The commission is specifically adopting rules so that the first 18-month extension may be granted at the permit holder's request. Another extension of up to 18 months will be granted by the executive director to resolve litigation that is not of the permit holder's origin. The commission also believes that economic or other circumstances can arise which would affect the decision to start construction and adopts amendments allowing the executive director to retain discretion to grant a further extension for
reasons not specified in the rules; if the permit holder has demonstrated an intent to build the project by spending at least 10%of the estimated total cost of the project up to a 

### maximum of 

### $5 million. Any permit holder receiving a second extension would be required to demonstrate that the project continues
to meet all the rules and regulations of the commission and the intent of the Texas Clean Air Act, including protection of the public's health and physical property. Any extension of the time to begin construction of a project will subject the permit holder to additional best available control technology, lowest achievable emission rate, and offset review. Because the same conditions that would motivate a

new 

### NSR (new source review) permit holder to seek extensions can also apply to holders of flexible permits, the commission is adopting rules to 

### apply the extensionperiods and conditions in $1 16.120 to flexible permits 

### as well. Flexible permits are used to authorize changes and modifications to existing facilities.

Page 2

### Emission reductions in the form of offsets 

### are obtained prior to the issuance of a new source review permit to counter the effect of-newemissions on 

### air quality. 

### In recent years, the commissionhas established programs that create emission caps in Houston and Dallas and 

### use emission credits and allowances to 

### maintain the caps. Emission offsets are also considered 

### in these programs and must meet the same certification standards as emission credits 

### in order to achieve consistent protection of air quality. The commission is therefore adopting rules 

### so that emission offsets will be certified in the

same way as emission credits in 30 TAC Chapter 101, Subchapter H, Emissions Banking and Trading. The commission is adopting rules in Chapter 116 to 

### retain certification of 

### future offsets internal to 

### a facility. In many cases, these future 

### internal offsets are credited for the replacement of existing equipment that must be 

### kept in operation until the new, lower emitting equipment is operational. This is in contrast to 

### offsets used between facilities which requires that a reduction occur before it can be credited. Those portions of 51 16.170 that concern the offset of emissions from rocket engine fuing and cleaning are transferred to a new 

## 51 16.172.

Offsets are not permanent reductions but will reappear in the future. 

### In order to 

### make meaningful emission control plans for nonattainrnent and prevention of significant deterioration areas, the commission needs timely and accurate information on emission reductions that will be used as offsets. The commissionis adopting rules so that emission reductions not yet certified and banked as emission credits by the effective date of these rules must be certified and banked by September 1, 

### 2004, in order to be considered for offsets.

The commissionrequires adequate 

### time to process permit renewals and, for workload management, needs to ensure that those permits closest to expiration are received first. For these reasons, the

Page 3

### commission is also adopting rules so that pennit renewal applications be 

### submitted at least six months, but no earlier than 

### 18months, before the pennit will expire. By establishing a date for the earliest submission of a renewal application, the commission will also increase the probability that renewal applications 

### are received under the most current fee tables.

SECTION 

### BY SECTION DISCUSSION 

### Subchapter A: 

### DeJinitions The definition of "Offset ratio" in $1 16.12, Nonattainment Review Definitions, is amended to state that

an offset would have to be certified as 

### an emission credit under Chapter 101, Subchapter H, in order to qualify as a reduction. The commission is also making minor changes to abbreviations, rule citations, and acronyms to conform with 

### Texas Register formatting 

### in the defmittions.



### Subchapter B: 

### New Source Review Pennits The amendments to $ 

### 116.1 14, Application Review Schedule, state that 

### an application for a permit or pennit amendment will be voided in the event deficient information supplied with 

### the application is not corrected. If 

### an applicant fails to 

### make a good faith effort to provide the required information after
two written notifications of the deficiency, the executive director will void the application and notify the applicant. To pursue the project, the applicant shall submit an entirely new application with a new Form PI-1. The new application will be subject to 

### the state and federal rules and regulations in place
at the time of submittal. If a new application is submitted within six months of the voidance of the original application, the application will be exempt from the fee requirements under $116.140, Applicability. However, the applicant must go through a new technical review and republish public notice.

Page 

### 4

### The amendment of $116.1 15, General and Special Conditions, removes language relating to the voiding of permits and extensions of time to 

### begin construction and transfers this language to 

### a new $116.120.

The new $116.120, Voiding of Permits, addresses the voiding of permits and contains language relocated from $ 

### 116.115. The relocated language allows additional time to begin construction of a project authorized with a new source review permit. This extension would be available in the case of a construction delay caused by litigation, not of the permit holder's origin, associated with the issuance of the permit. The executive director could also issue an extension if the permit holder has spent, or 

### has committed to spend, 10%of the estimated cost of constructionto 

### a 

### maximum of $5 million and has demonstratedthat emissions from the facility would be 

### in compliance with commission rules and the intent of the Texas Clean Air Act. The commission proposed that a permit holder would have to spend 15 % 

### of the cost of the project, but 

### has reduced that figure based on public comments stating that costs incurred preparatory to a project do not rise proportionately with 

### the cost of the project. The commission has also added language to the rules stating that, in addition to best available control technology review, the commission will also review the application of lowest achievable emission rate. This is consistent with the commission's current practice of detemining applicability of federal rules to projects where construction has been delayed.

The amendments to $116.143, Payment of Fees, state that the permit application fee must be received before an application will be processed or before the start of any time constraints required of the commission in application processing. This amendment is intended to ensure that the commission receives fees needed to cover the expense of permit review and processing. The commission retains

Page 5

### the conditions under which fees will or will not be returned to 

### the applicant. If no permit or amendment is issued or if the applicant withdraws the applicationprior to permit issuance, then onehalf of the fee will be refunded. If it is determined that a pedtapplicant will meet the requirements of a permit by rule, the applicant is entitled to a refund of the fee difference. The commission amended the rule to state that a qualification for a standard permit or de minimis classificationunder $116.119, De Minimis Facilities or Sources, would also enable the applicant to withdraw the permit application and receive a refund of the fee difference.

The amendment to 

### $116.150, New Major Source or Major Modification 

### in Ozone Nonattainrnent Areas, deletes subsection (c) because the time period specified for the application of certain exemptions
to nitrogen oxides reductions for sources 

### in the Houston-Galveston and Beaumont-Port Arthur ozone nonattainrnent areas has expired.

The new $ 

### 116.170, Applicability of Emission Reductions as Offsets, establishes requirements for the

use of emission reductions as offsets. Reductions that will be used as emission credits must be certified and banked under the requirements of Chapter 101, Subchapter H, Division 1 

### or 

### 4. The commission will require that any existing reductions must be certified under Chapter 101 by September 1, 2004 

### in order to be eligible for use as an offset. The commission changed the rule from proposal and specified that the September 1, 2004 

### date applies to existing reductions. Reductions occurring after that date
may also be certified under Chapter 101.

Future reductions that will 

### be used internally to a facility may still be certified under Chapter 116. The permit for the facility must contain special conditionsthat specify the date when the permit holder must

Page 6

### submit to the executive director appropriate and sufficient data verifying 

### that the reduction has occurred, and the reduction must be achieved prior to the commencement of the 

### permitted emissions for which the offset is required. The reduction must meet the requirements of Chapter 101,and the permit holder agreesto obtain additional offsets if the executive director determines the reductions do
not satisfy the original offset requirements.

The new $116.172, Emissions Offsets from Rocket Engine Firing and 

### Cleaning, contains the conditionsunder which emissions from rocket engine firing or cleaning may be 

### offset by alternative or innovative means. These requirementshave been transferred unchanged to the new section from existing $116.170 except to state that information regarding rocket engine offsets would be submitted
to the executive director instead of the commission.

SubchapterD: Permit Renewals The amendment to $116.313, Renewal ApplicationFees, corrects the zip code in the commission's address.

The amendments to $116.315, Permit Renewal Submittal, state that 

### an application for permit renewal
must be submitted at least six months, but no earlier than 

### 18months prior to the permit expiration date. The commission intends to allow sufficient time for preparation and submissionof renewals for permit holders whose permit expires within 

### six months of the 

### potential effective date of these adopted rules. The commission proposed February 1, 2004 as the effective date of this new requirement, but extended the date 

### to May 1, 

### 2004 as a 

### result of public comment to allow additional time for permit holders to

Page 7

### become aware of the new requirement. With executive director approval, applications may be submitted before or after this specified time period.



### Subchapter 

### G: Flsrible Permits The amendments to $116.715, General and Special Conditions, remove language concerning voiding of the permit. The commission will apply the same extension of construction conditions, 

### as stated in the

new $116.120, to flexible permits as would be applied to other new source review permits.



### FINAL REGULATORY IMPACT ANALYSIS DETERMINATION The commission reviewed the adopted rulemaking in light of the regulatory analysis requirements of Texas Government Code, $2001.0225, and determined that the rules do not meet the definition of a "major environmental rule." Major environmental rule means a rule, the specific intent of which is to protect the environment or reduce risks to human health from environmental exposure, and that may adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, or the public health and safety of the state or a sector of the state. The adopted rules require that emission reductions used as emission offsetsbe certified in a manner consistent with other TCEQ regulations, establish 

### a deadline for the certification of existing reductions as emission offsets, establish procedures for voiding permit applications, establish conditions under which permit fees may be refunded, specify a time period for the submission of permit renewal applications, and specify which fee schedule will apply to permit renewals. These adopted rules will not require additional emission controls or new capital expenses. Applicants who have their applicationsvoided will be required to submit a new application and repeat the public notification process. Depending on

Page 8

### location, this notification can cost from 

### $700 to $4,000. This expense will only be incurred following

a lack of action from the applicant after being notified of deficiencies 

### in its application.

Permit holders who'wish to extend the start of project construction beyond 36 months may be required to spend a large amount of money to 

### qualify for this extension. Large projects can cost 

### into the hundreds of millions of dollars and the 10%qualificationthreshold of such a figure is clearly a significant amount. However, the adopted rules do not compel a pennit holder to 

### seek an extension. While pennit holders seeking an extension under this cost threshold are assumed to do so under economic reasons that 

### make construction impractical or unprofitable, the commission sees this 

### as a risk of doing business over which it has no control and the opportunity for extension reduces that risk.

Texas Government Code, 52001.0225, applies to 

### a major environmental rule, the result of which is to: 

### 1) exceed a standard set by federal law, unless the rule is specifically required by state law; 2) exceed



### an express requirement of state law, unless the rule is specificallyrequired by federal law; 3) exceed a requirement of a delegation agreement or contract between the state and 

### an agency or representative of the federal government to implement a state and federal program; or 4) adopt a rule solely under the general powers of the agency instead of under a specific state law. The adopted rules 

### in Chapter 116

are not subject to the regulatory analysis provisions of $2001.0225@),because the adopted rules do not
meet any of the statute's four applicability requirements.

TAKINGS IMPACT ASSESSMENT The commission completed a takings impact assessment for the adopted rules. Promulgation and enforcement of the rules will not burden private real property. The rules will not affect private

Page 9

### property in 

### a manner which restricts or limits an owner's right to the property that would otherwise exist in the absence of a governmental action. Therefore, the adopted rules do not constitute a taking under Texas Government Code, Chapter 2007.

CONSISTENCY WITH THE COASTAL MANAGEMENT PROGRAM The commission reviewed the proposed rulemaking and found that the adoption is a rulemaking identified in Coastal Coordination Act Implementation Rules, 3

### 1 TAC 5505.1 1, and therefore, will require that applicable goals and policies of the Texas Coastal Management Program (CMP) be 

### considered during the rulemaking process.

The commission's preliminary consistency determination for the adopted rules 

### in accordance with 3 1 TAC $505.22 found that the rulemaking is consistent with the applicable CMP goal 

### to protect and
preserve the quality and values of coastal natural resource areas (31TAC §501.12(1)), and the policy which requires that the commissionprotect 

### air quality in coastal areas (3 

### 1 TAC §501.14(q)). The adopted rules require that emission reductions used as emission offsets be certified in 

### a manner consistent with other TCEQ regulations, establish 

### a deadline for the certification of existing reductions

as emission offsets, establish conditionsunder which the constructionof a permitted project can be delayed, establish procedures for voiding pennit applications, establish conditionsunder which permit fees may be refunded, and specify a time period for the submissionof permit renewal applications. No

new emissions will be authorized. Therefore, the rulemaking is consistent with the CMP.

EFFECT ON SITES SUBJECT TO THE FEDERAL OPERATING PERMITS PROGRAM

Page 10

### New source review is an applicable requirement under 30 TAC Chapter 122, Federal Operating Permits. These amendments affect the issuance, renewal, or extension of a new source review permit.
Because they do not addresspermit content, the amendments do not require changes to federal operating permits.

PUBLIC COMMENT A public hearing on these rules was held on April 

### 24, 2003 in Austin, and the public comment period closed on May 5,2003. The agency received written comments from Texas Chemical Council (TCC), El Paso Electric (ELP), Baker Botts, L.L.P. on behalf of the Texas Industry Project (TIP), Sempra Energy Resources (Sempra), Dow Chemical Company (Dow), EPA, and BP Products North America, Inc. (BP). All commenters disagreed with or had suggestionsfor changes to portions of the proposed rules.

STATUTORY AUTHORITY The amendment is adopted under Texas Water Code, $5.103, concerning Rules, and $5.105, concerning General Policy, which authorize the commission to adopt rules necessary to carry out its
powers and duties under the Texas Water Code; and under Texas Clean Air Act, $382.017, concerning Rules, which authorizesthe commission to adopt rules consistent with the policy 

### and purposes of the Texas Clean Air Act. The amendment is also adopted under Texas Clean Ah Act, $382.002, concerning Policy and Purpose, which establishes the commission's purpose to safeguard the state's air
resources, consistentwith the protection of public health, general welfare, and physical property; $382.011, concerning General Powers and Duties, which authorizes the commission to control the quality of the state's air; $382.012, concerning State Air Control Plan, which authorizes the

Page 11

### commission to develop a general, comprehensive plan for control of the state's air; and 8382.016, concerning Monitoring Requirements, Examination of Records, which authorizes the commission to prescribe reasonable requirements for the measuring and monitoring of emissions of air contaminants. The amendment is also adopted under 42 United States Code, §7410(a)(2)(A),which requires SIPSto include enforceable emission limitations and other control measures or techniques, including economic incentives such 

### as fees, marketable permits, and auction of emission rights.

Page 12

# STAFF 

# RECOMMENDATIONS

### CHAPTER 116: CONTROL OF 

### AIR POLLUTION

### BY PERMITS FOR 

### NEW CONSTRUCTIONOR MODIFICATION SUBCHAPTER

### A: DEFINITIONS 5116.12

5116.12. Nonattainment Review Defmitions.

Unless specifically defined in the TCAA or in the rules of the commission, the terms used by the commission have the meanings commonly ascribed to them in the field of 

### air pollution control. The terms in this section are applicable to permit review for major source consauction and major

source modification in nonattainment areas. In addition to the terms which are defined by the TCAA, and in $101.1 of this title (relating to Defmitions), the following words and terms, when 

### used in $ 

### 116.150 and 

## 5 116.151 of this title (relating to NonattainmentReview), shall have the following meanings, unless the context clearly indicates otherwise.

(1) 

### Actual emissions 

## - Actual emissions as of a particular date shall equal the average rate, in tons per year, at which the unit actually emitted the pollutant during a two-year period which precedes the particular date and which is representative of normal source operation. The executive director shall allow the use of a different time period upon a determination that it is more representative of normal source operation. Actual emissions shall be calculated using the unit's actual operating hours, production rates, and types of materials processed, stored, or combusted during the selected time period. The executive director may presume that the source-specific allowable emissions for the unit are equivalent to the actual emissions, e.g., when the allowable limit is reflective of actual emissions. For any emissions unit which has not begun normal operations on the particular date, actual Page 1

### emissions shall equal the potential to emit the unit on that date.

(2) 

### Allowable emissions 

## - The emissions rate of a stationary source, calculatedusing the maximum rated capacity of the source (unless the source is subject to federally enforceable limits which restrict the operating rate, or hours of operation, or both), and the most stringent of the following:

(A) 

### the applicable standards set forth in Title 40 Code of Federal Regulations, Part 60 

### or 

### 61 ;



### (B) the applicable state implementation plan emissions limitation including those with a future compliance date; 

### or

(C) 

### the emissions rate specified as a federally enforceable permit condition including those with a future compliance date.

(3) 

### Begin actual construction 

## - In general, initiation of physical on-site construction activities on an emissions unit which are of a permanent nature. Such activities include, but are not limited to, installation of building supports and foundations, laying of underground pipework, and construction of permanent storage structures. With respect to a change in method of operation, this term refers to those on-site activities other than preparatory activities which mark the initiation of the change.

Page 2

### (4) 

### Building, structure, 

### facility, or instahtion 

## - All of the pollutantemitting activities which belong to the same industrial grouping, are located in one or more contiguous or adjacent properties, and are under the control of the 

### same person (or persons under common control). Pollutantemitting activities shall be considered as part of the same industrial grouping if they belong to the 

### same 'major group" (i.e., which have the 

### same twodigit code) as described in the Standard Industrial Classification Manual, 1972, as amended by the 1977 supplement.



### (5) Commence 

## - As applied to 

### constructionof a major stationary source or major modification, 

### means that the owner or operator has all necessary preconstruction approvals or permits and either has:

(A) begun, or caused to begin, a continuous program of actual on-site constructionof the source, to 

### be completed within a reasonable time; or



### (B) entered into binding agreements or contractual obligations, which cannot be canceled or modified without substantial loss to 

### the owner or operator, to 

### undertake a program of actual construction of the source to be completed within a reasonable time.

(6) 

### Construction

## - Any physical change or change 

### in the method of operation (including fabrication, erection, installation, demolition, or modification of an emissionsunit) which would result in a change 

### in actual emissions.

(7) 

### Contemporaneous period 

## - As follows.

Page 3

### (A) For major sources with the potential to emit 250 tons per year (tpy) 

### or

more of a nonattainment pollutant, the period between:

(i) November 15, 1992; and

(ii) the date that the increase from the particular change occurs.

(B) For major sources with the potential to emit less than 250 tpy 

### of a nonattainrnentpollutant, the period between:

commences; and (i) the date five years before construction on the particular change

(ii) the date that the increase from the particular change occurs.

(C) 

### Notwithstanding subparagraphs (A) 

### and (B) of this defintion, for major

sources of nitrogen oxides as a precursor to ozone in ozone nonattainment areas, the contemporaneous period shall begin no earlier than 

### November 15, 1992.

(8) 

### De minimis 

### threshold test 

### (netting) 

## - A method of determining if a proposed emission increase will trigger nonattainment review. The summation of the proposed increase with all

Page 4

### other creditable source emission increases and decreases during the contemporaneous period is compared to the MAJOR MODIFICATION column of Table I 

### (in tons per year) for that specific nonattainment area. If the major modification level is exceeded, then nonattainrnentreview is required.

(9) 

### Lowest achievable emission rate 

## - For any emitting facility, that rate of emissions of a con taminant which does not exceed the amount allowable under applicable New Source Performance Standardspromulgated by the EPA under the FCAA, 

### # 1 11, and 

### which reflects the following:

(A) the most stringent emission limitation which is contained in the rules and regulations of any approved state implementation plan for a specific class or category of facility, unless the owner or operator of the proposed facility demonstratesthat such limitations are not achievable; or



### (B) the most stringent emission limitation which is achieved 

### in practice by a specific class or category of facilities, whichever is more stringent.

(10) Major facilitylstationary source - 

### Any facility/stationary source which emits, or has the potential to emit, the amount specified in the MAJOR SOURCE column of Table I 

### of this section or more of any 

### air contaminant (including volatile organic compounds (VOCs)) for which a National Ambient Air Quality Standard (NAAQS) has been issued. Any physical change that would
occur at a stationary source not qualifying as 

### a major stationary source in Table I 

### of this section, if the change would constitute a major stationary source by itself. A 

### major stationary source that is major for

Page 5

### VOCs or nitrogen oxides shall be considered major for ozone. The fugitive emissions of a stationary source shall not be included in determining for any of the purposes of this definition whether it is a major stationary source, unless the source belongs to one of the categories of stationary sources listed in 40 

### Code of Federal Regulations $5 1.165(a)(l)(iv)(C).

(1 1) 

### Major modification 

## - As follows.

(A) Any physical change in, or change 

### in the method of operation of 

### a facilitylstationary source that causes a significantnet emissions increase for any air contaminant for which a National Ambient Air Quality Standard (NAAQS) 

### has been issued. At a facilitylstationary

source that is not major prior to the increase, the increase by itself must equal or exceed that specified in the MAJOR SOURCE column of Table 

### I of this section. At 

### an existing major facilitylstationary source, the increase must equal or exceed that specified 

### in the MAJOR MODIFICATION column of Table I.

Page 6

### TABLE I
MAJOR SOURCEIMAJOR MODIFICATION EMISSION THRESHOLDS POLLUTANT MAJOR SOURCE MAJOR OFFSET RATIO

designation1 tonslyear 

### MODIFICATION^ minimum

I marginal 100 I1 moderate 100 111 serious 50 

### IV severe 25 

# co I moderate 100 

### II serious 50 

### SO2 100 PM10 I moderate 100 I1 serious 70 

### NO,' 100 

### Lead 100

Texas nonattainmentarea designationsare specified in 40 

### Code of Federal Regulations $81.344.

The major modification threshold is applicable only to existing major sources and shall be evaluated after netting, unless the applicant chooses to apply nonattainment new source review (NNSR) directly
to the project. The appropriate netting triggers for existing major sources of NO, and VOC are
Page 7

### specified in $116.150 

### of this title (relating to New Major Source or Major Modification in 

### Ozone Nonattainment Areas) and for other pollutants are equal to the major modification level listed in 

### Table 

### I.

VOC and NO, are precursors to ozone formation and should be quantified individually to determine whether a source is subject to NNSR under $116.150 

### of this title. As specified in $116.150

### of this titie, for El Paso County, the NNSR rules apply to sources of VOC, but not to 

### sources of NO,.

The offset ratio is specified to be greater than 1.00 

### to 1.



### VOC = 

### volatile organic compounds

NO, = 

### oxides of nitrogen

CO = 

### carbon monoxide

SO, = 

### sulfur dioxide

PM,, = 

### particulate matter of less than 

### ten microns in diameter

Applies to the NAAQS for nitrogen dioxide (NOJ.

(B) 

### A physical change or change in 

### the method of operation shall not include:

Page 8

### (i) routine maintenance, repair, and replacement;

(ii) use of an alternative fuel or raw material by reason of an order under the Energy Supply and Environmental Coordination Act of 1974, $2(a) and (5) 

### (or any superseding legislation) or by 

### reason of a natural gas curtailmentplan under the Federal 'Power Act;

(iii) use of an alternative fuel by reason of an order or rule of the FCAA, $125;

(iv) use of an alternative 

### fuel at a steam generating unit to the extent that the fuel is generated from municipal solid waste;

(v) use of an alternative fuel or raw material by a stationary source which the source was capable of accommodating before December 21, 1976 (unless such change would be prohibited under any federally enforceablepennit condition established after December 21, 1976) or the source is approved to use under any permit issued under regulations approved under this chapter;

(vi) an increase in the hours of operation or in the production rate (unless the change 

### is prohibited under any federally enforceable permit condition which was established after December 21, 1976); or

(vii) any change in ownership at a stationary source.

Page 9

### (12) 

### Necessary preconstruction approvals or permits 

## -- Those permits or approvals required under federal 

### air quality control laws and regulations and those air quality control laws and regulations which are part of the applicable state implementationplan.

(13) 

### Net emissions increase 

## - The amount by which the sum of the following exceeds

zero: the total increase 

### in actual emissions from a particular physical change or change in the method of operation at a stationary source, plus any sourcewide creditable contemporaneous emission increases, minus any sourcewide creditable contemporaneous emission decreases.

(A) An increase or decrease in actual emissions is creditable only if both of the following conditions are met:

(i) it occurs during the contemporaneous period; and

(ii) the executive director has 

### not relied on it in issuing a nonattainment permit for the source (under regulations approved during which the permit is in effect) when the increase in actual emissions from the particular change occurs.



### (B) An increase 

### in actual emissions is creditable only to the extent that the new level of actual emissionsexceeds the old level.

(C) 

### A decrease in actual emissions is creditable only to the extent that all of the following conditions are met:

Page 10

### (i) the old level of actual emissions or the old level of allowable emissions, whichever is lower, exceeds the new level of actual emissions;

(ii) it is federally enforceable at and after the time that actual construction on the 

### particular change begins;

(iii) the reviewing authority has not relied on it in issuing a Prevention of Significant Deterioration or a nonattainmentpermit, or the state has not relied on it in demonstrating attainment or reasonable further progress; and

(iv) it 

### has approximately the same qualitative significance for public health and welfare as that attributed to the increase from the particular change.



### (D) An increase that results from a physical change at a source occurs when the emissions unit on which construction occurred becomes operational and begins to emit a particular pollutant. Any replacement unit that requires shakedown becomes operational only after a reasonable shakedownperiod, not to exceed 180 

### days.



### (E) At major sources with the potential to emit 250 

### tons per year or more of a nonattainment pollutant:

(i) increases and decreases of such pollutant resulting from authorizations or applications received before November 15, 1992, 

### are creditable to the 

### extent that the

Page 11

### increases or decreases occur within the period five years prior to the date construction on a particular change commences and meet all other creditability criteria; and

(ii) increases and decreases of such pollutant resulting from authorizations or applications received on or after November 15, 1992, are creditable indefinitely to the extent that all other creditability criteria are met.

(F) For all major sources of nitrogen oxides (NO,) 

### in ozone nonattainment
areas, increases and decreases of NO, are creditable only if they resulted from authorizations or applications received on or after November 15, 1992.

(14) Offset 

### ratio - 

### For the purpose of satisfying the emissions offset reduction requirements of the FCAA, $173(a)(l)(A), the emissions offset ratio is the ratio of total actual reductions of emissions to total allowable emissions increases of such pollutants. The minimum offset ratios are included in Table I 

### of this 

### section under the definition of major modification. In order for a reduction to qualify 

### as an offset, it must be certified as 

### an emission creditunder Chapter 101, Subchapter 

### H, Division 1 or 4 of this title (relating to Emission Credit Banking or Trading; or Discrete Emission Credit Banking and Trading), except 

### as provided for in $1 16.170(b) of this title (relating to Applicability of Emission Reductions as Offsets). The reductionmust not have been relied on in the issuance of a previous nonattainment or prevention of significant deterioration permit.

(15) Potential to emit 

### - 

### The maximum capacity of a facilitylstationary source to emit

a pollutant under its physical and operational design. Any physical or enforceable operational

Page 12

### limitation on the capacity of the facilitylstationarysource to emit a pollutant, including air pollution control equipment and restrictions on hours of operation or on the type or amount of material combusted, stored, or processed, shall 

### be treated as part of its design only if the limitation or the effect it would have on emissions is federally enforceable. Secondary emissions, 

### as defined in 40 

### Code of Federal Regulations §51.165(a)(l)(viii), do not count in determining the potential to emit for a stationary source.

(16) 

### Project net 

## -- The sum of the following: the total proposed increase in emissions resulting from a physical change or change in the method of operation at a stationary source, minus any sourcewide creditable 

### actual emission decreasesproposed at the source between the date of application for the modification and the date 

### the resultant modification begins emitting. Increases and decreasesmust meet the creditability criteria listed under paragraph (13) of this section.

(17) 

### Secondary emissions 

## - Emissions which would occur as a result of the construction or operation of a major stationary source or major modification, but do not come from the

source or modification itself. Secondary emissions must be specific, well-defined, quantifiable, and impact the same general area 

### as the stationary source or modification which causes the secondary emissions. Sekondary emissions include emissions from any off-site support facility which would not be constructed or increase its emissions, except as a result of the construction or operation of the major stationary source or major modification. Secondary emissions do not include any emissions which

come directly from a mobile source such as emissions from the tail pipe of a motor vehicle, from a train, or from a vessel.

Page 13(18) 

### Stationary 

### source - Any 

### building, structure, facility, or installation which emits

or 

### may emit 

### any air pollutant subject to 

### regulation under the FCAA.



### Page 14

### SUBCHAPTER 

### B: 

### NEW SOURCE 

### REVIEW PERMITS DMSION 1: 

### PERMIT APPLICATION 

### 00116.114,116.115,116.120

STATUTORY AUTHORITY The new and amended sections are adopted under Texas Water Code, $5.103, concerning Rules, and $5.105, concerning General Policy, which authorize the commission to adopt rules necessary to 

### carry out its powers and duties under the Texas Water Code; and 

### under Texas Clean

### Air Act, $382.017, concerning Rules, which authorizes the commission to 

### adopt rules consistent with the policy and
purposes of the Texas Clean 

### Air Act. The new and amended sections are also adopted under Texas Clean 

### Air Act, E382.002, concerning Policy and Purpose, which establishes the commission's purpose
to safeguard the state's air resources, consistent with the protection of public health, general welfare, and physical property; 5382.01 1, concerning General Powers and Duties, which authorizes the commission to control the quality of the state's air; 5382.012, concerning State

### Air Control Plan, which authorizesthe commission to develop a general, comprehensive plan for control of the state's air; $382.016, concerning Monitoring Requirements, Examination of Records, which authorizes the commission to prescribe reasonable requirements for the measuring and monitoring of emissions of air contaminants; $382.051, concerning Permitting Authority of Commission Rules, which authorizesthe commission to 

### issue permits for the construction of a new facility or modification of an existing facility; $382.0513, concerning Permit Conditions, which authorizes the commission to 

### establish and enforce permit conditions; $382.0515, concerning Application for Permit, which authorizes the commission to require a permit application with plans and specifications necessary for the commission

to 

### determine if the facility will comply with applicable state and federal regulations and the intent of the

Page 15

### Texas Clean Air Act; $382.0517, concerning Determination of Administrative Completion of Application, which authorizes the commission to determine when an application is administratively complete; and $382.0518, concerning Preconstruction Permit, which requires persons planning the construction or modification of a facility to obtain a permit from the commission.

9116.114. 

### Application 

### Review Schedule.

(a) Review schedule. The executive director shall review permit applications in accordance with the following.

(1) Notice of completion or deficiency. The executive director shall mail written notification informingthe applicant that the application is complete or that it is deficient within 90 days of receipt of the application for a new permit, or amendment to a permit or special permit.

(A) If the application is deficient, the notification must state:

(i) the additional information required; and

(ii) the intent of the executive director to void the application if information for a complete application is not submitted.

(B) Additional information 

### may be requested within 60 days of receipt of the information provided in response to the deficiency notification.

Page 16

### (2) Preliminary decision to approve or disapprove the application. The executive director shall conduct a technical review and 

### send 

### written notice to the applicant of the preliminary decision to approve or not approve the application within 180 days from receipt of a completedpermit application or 150 days from receipt of a completed permit amendment. If the applicant has provided Notice of Receipt of Application and Intent to Obtain Permit public notification 

### as requiredby the executive directorunder Chapter 39 of this title (relating to Public Notice), one of the following shall apply:

(A) if comments are received on the proposed facility and replied to 

### by the executive director in accordance with 539.420 of this title (relatingto Transmittal of the Executive Director's Response to Comments and Decision) and 555.156 of this title (relating to 

### Public Comment Processing); and



### (B) if no requests for public hearing or public meeting on the proposed facility have been received or the application is otherwise exempt under 539.419(e) of this title (relating to Notice of Application and Preliminary Decision), the executive director shall send a copy of the Preliminary Decision to 

### the applicant; or

(C) if Notice of Application and Preliminary Decision is required under §39.419(d) of this title (relating to Notice of Application and Preliminary Decision), the executive director shall authorize this notice and send copies to the applicant and all 

### other persons are required under $39.602 of this title (relating to 

### Mailed Notice).

Page 17

### (3) Refund of permit fee.



### (A) If the time limits provided 

### in this section to process an application are exceeded, the applicant may appeal in writing to 

### the executive director for a refund of the permit fee.



### (B) The permit fee shall be reimbursed if it is determined by the executive director that the specified period was exceeded without good cause, as provided 

### in Texas Civil Statutes, Article 6252-13b. 1, $3.

(b) 

### Voiding of deficient application.

(1) An applicant shall make a good faith effort to submit, 

### in a timely manner, adequate information which demonstratesthat the requirements for obtaining a permit or permit amendment are
met in response to any deficiency notification issued by the executive director under the provisions of this section, or Chapter 39 of this title (relating to Public Notice).



### (2) If an applicant fails to make such good faith effort after two written notices of deficiency, the executive director shall void the application and notify the applicant of the voidance and the remaining deficiencies in the voided application. If a new application is submitted within six months of the voidance, it shall meet the requirements of $1 16.111of this title (relatingto General Application) but will be exempt from the requirements of $116.140 of this title (relatingto Applicability).

Page 18

### (c) Notification of executive director's decision.

(1) Notification to applicant. The executive director or the chief clerk shall send to the applicant the decision to approve or not approve the application if:

(A) 

### no timely requests for reconsideration, contested case hearing, or public meeting on the proposed facility have been received; or



### (B) if hearing requests have been received and withdrawn before the executive director's Preliminary Decision; or

(C) the application 

### is for any amendment, modification, or renewal application that would not result 

### in an increase 

### in allowable emissions and would not result 

### in the emission of an air contaminant not previously emitted; and



### (D) the applicant has satisfied all public notification requirements of Chapter 39 of this title.



### (2) Notification to commenters. Except for initial issuance of voluntary emission reduction permits and electric generating facility permits, persons submitting written commentsunder Chapter 39 of this title shall be sent the executive director's final action and given an explanation of the opportunity to file a motion under $50.139 of this title (relating to Motion to Overturn Executive Director's Decision) at the same time that the applicant is notified. If the number of interested persons

Page 19

### who have requested notification makes it impracticable for the commission to notify those persons by mail, the commission shall notify those persons by publication using the method prescribed by $382.031 (a) of the Texas Health and Safety Code.

(3) Time limits. The executive director shall send notification of final 

### action within:

(A) 

### one year after receipt of a complete prevention of significant deterioration

or nonattainment permit application, or a complete pennit application for an action under Subchapter C 

### of this chapter;



### (B) 180 days of receipt of a completed permit or permit renewal application;

(C) 150 days of receipt of a permit amendment or special pennit amendment application.

§116.115. 

### General 

### and Special 

### Conditions.

(a) General and special conditions. Permits, specialpennits, standard permits, and special exemptionsmay contain general and special conditions.

(b) 

### General conditions. Holders of permits, special permits, standard permits, and special exemptions shall comply with the following:

Page 20

### (1) the general conditions contained in the pennit document if issued or amended prior
to August 16, 1994; or

(2) the following general conditions if the permit or amendment is issued or amended

on or after August 16, 1994, regardless of whether they are specifically stated within the permit document.

(A) Report of construction progress. The permit holder shall report start of construction, construction interruptions exceeding 45 days, and completion of construction. The report shall be given to the appropriate regional office of the commission not later 

### than 15 working days after

occurrence of the event.

(B) Start-up 

### notification.

(i) The permit holder shall notify the appropriate 

### air program regional office of the commission prior to the commencement of operations of the facilities authorized by the permit. The notification must be made 

### in such a manner as 

### to allow 

### a representative of the commission
to be 

### present at the commencement of operations.

(ii) The permit holder shall provide 

### a separate notification for the
commencement of operations for each unit ofphased construction, which may involve a series of units commencing operations at different times.

Page 21

### (iii) Prior to operation of the facilities authorized by the pennit, the permit holder shall identify to the Office of Permitting, Remediation, and Registration the source or

sources of allowances to be utilized for compliance with Chapter 101, 

### Subchapter 

### H, Division 3 

### of this 

### title (relating to Mass Emissions Cap and Trade Program).

(C) Sampling requirements.

(i) If sampling is required, the permit holder shall contact the commission's Office of Compliance and Enforcement prior to sampling to obtain the proper data forms and procedures. (ii) All sampling and testing procedures must 

### be approved by the executive director and coordinated with the regional representatives of the commission.

(iii) The permit holder is also responsible for providing sampling facilities and conducting the sampling operations or contracting with an independent sampling consultant.

(D) Equivalency of methods. The permit holder must demonstrate or otherwise justify the equivalency of emission control methods, sampling or other emission testing methods, and monitoring methods proposed 

### as alternatives to methods indicated in the conditions of the permit. Alternative methods shall 

### be applied for in writing and must be reviewed and approved by the 

### executive director prior to their use in fulfilling any requirements of the permit.

Page 22

### (E) Recordkeeping. The pennit holder shall:

(i) 

### maintain a copy of the pennit along with records containing the information and data sufficient to demonstrate compliance with the permit, including production records 

### and operating hours;

(ii) keep all required records in a 

### file at the facility site. If, however, the facility site normally operates unattended, records must be maintained at an office 

### within Texas having day-to-day operational control of the facility site;

(iii) 

### make the records available at the request of personnel from the commission or 

### any local air pollution control agency havingjurisdiction over the site. Upon request, the commission shall 

### make any such records of compliance available 

### to the public in a timely manner;

(iv) comply with any additional recordkeeping requirements specified in special conditions attached to the permit;



### (v) retain information in the file for at least two years following the date that the information or data is obtained; and



### (vi) for persons certifying and registering a federally-enforceable emission limitation in accordance with $1 16.611 of this title (relating to Registration To Use a Standard Permit), retain all records demonstratingcompliance for at least five years.

Page 

### 23

### (F) Maximum allowable emission rates. The total 

### emissions of air

con taminants from any of the sources of emissions must not exceed the values stated on the table attached to the pennit entitled "Emission Sources--Maximum Allowable Emission Rates. 

### "

(G) 

### Maintenance of emission control. The permitted facilities shall not be operated unless all air pollution emission capture and abatement equipment is maintained in 

### good working order and operating properly during normal facility operations. The permit holder shall provide notification for emissions events and maintenance in accordance with 

### $8101.201, 101-21 1, 

### and 101.221 

### of this title (relating to 

### Emissions Event Reporting and Recordkeeping Requirements; Scheduled Maintenance, Startup, and Shutdown Reporting and Recordkeeping Requirements; and Operational Requirements).



### (H) Compliance with rules.

(i) Acceptance of a pennit by 

### an applicant constitutes an acknowledgment and agreement that the pennit holder will comply with all rules, regulations, and orders of the commission issued in conformity with the TCAA and the conditions precedentto the granting of the permit. (ii) If more than 

### one state or federal rule or regulation or permit condition are applicable, the most stringent limit or condition shall govern and be the standard by which compliance shall be demonstrated.

(iii) Acceptance includes consent to the entrance of commission

Page 24

### employees and agents into the permitted premises at reasonable times to investigate conditions relating
to 

### the emission or concentration of 

### air contaminants, including compliance with the pennit.

(c) Special conditions. The holders of permits, specialpermits, standardpermits, and special exemptions shall comply with all special conditions contained in the permit document.

(1) Special conditionsmay be attached to a permit that are more restrictive than the requirements of Title 

### 30 of the Texas Administrative Code.

(2) Special condition for written approval.

(A) The executive director may require as a special condition that the permit holder obtain written approval before constructing a source under:

(i) a standard permit under Subchapter 

### F of this 

### chapter (relating 

### to Standard Permits); or



### (ii) 

### an exemption under Chapter 106 of this title (relating to Permitsby Rule).



### (B) Such written approval may be required if the executive director specificallyfinds that an increase of a particular pollutant could either:

Page 25

### (i) result 

### in a significant impact on the air environment; or

(ii) cause the facility to become subject to review under:

(I) 

### Subchapter C of this chapter (relating 

### to Hazardous Air Pollutants: Regulations Governing Constructed or Reconstructed Major Sources (FCAA, $112(g), 40 CFR Part 63)); or



### (LI) the provisions 

### in $1 16.150 and $1 16.151 of this title (relating to Nonattainment Review) and $81 16.160 - 

### 116.163 of this title (relating to Prevention of Significant Deterioration Review).



### $116.120. Voiding of Permits.

(a) A permit or permit amendment under this chapter is void if the permit holder does one of the following:

(1) fails to begin construction within 18 months of issuance, except as noted in subsection (b) 

### of this section;

(2) discontinues construction for more than 18 consecutive months prior to completion; or

Page 26

### (3) fails to complete constsuction 

### within a reasonable time.

(b) 

### The executivedirectormay grant extensionsto begin construction. Permits issued to holders who have received extensions will be subject to revisionbased on best available control technology, lowest achievable emission rate, and netting or offsets 

### as applicable. A first 

### extension of 18 months 

### may be granted solely at the request of the permit holder. One additional extension of up to 18months may be 

### granted if the permit holder demonstratesthat emissions fromthe facility will comply with all rules and regulations of the commission and the intent of the TCAA, 

### including protection of the public's health and physical property;' and

(1) the permit holder is a party to litigationnot of the permit holder's initiation regarding the issuance of the permit; or

(2) thepermit holder has spent, or committed to spend, at least 10% of the estimated total cost of the project up to a maximum 

### of $5 million.

(c) A 

### permit holder granted 

### an extension under subsection (b)(l) 

### of this section may receive one subsequent extension ifthe permit holder meets the conditions of subsection (b)(2) of this section.

Page 27

### SUBCJWPTER 

### B: 

### NEW SOURCE 

### REVIEW PERMITS DMSION 4: PERMIT 

### FEES 9116.143

STATUTORY AUTHORITY The amendment is adopted under Texas Water Code, $5.103, concerning Rules, and $5.105, concerning General Policy, which authorize the commission to adopt rules necessary to carry out its
powers and duties under the Texas Water Code; and under Texas Clean Air Act, $382.017, concerning Rules, which authorizes the commission to adopt rules consistent with the policy and purposes of the Texas Clean Air Act. The amendment is also adopted under Texas Clean Air Act, $382.002, concerning Policy and Purpose, which establishes the commission's purpose to safeguard the state's air resources, consistentwith the protection of public health, general welfare, and physical property; $382.01 1, concerning General Powers and Duties, which authorizes the commission to control the quality of the state's air; $382.012, concerning State Air Control Plan, which authorizes the commission to develop a general, comprehensive plan for control of the state's air; $382.016, concerning Monitoring Requirements, Examination of Records, which authorizes the commission to prescribe reasonable requirements for the measuring and monitoring of emissions of air contaminants; $382.051, concerning Permitting Authority of Commission Rules, which authorizesthe commission to issue pennits for the construction of a new facility or modification of an existing facility; $382.0513, concerning Permit Conditions, which authorizes the commission to establish and enforce permit conditions; $

### 382.05 15, concerning Application for Permit, which authorizes the commission to require



### a permit application with plans and 

### specificationsnecessary for the commission to determine if the facility will comply with applicable state and federal regulations and the intent of the Texas Clean Air

Page 28

### Act; 8382.0517, concerning Determination of Administrative Completion of Application, which authorizesthe commission to determine when an application is administratively complete; 8382.05 18, concerning Preconstruction Permit, which requires persons planning the construction or modification of a facility to obtain a permit from the commission; and 8382.061, concerning Application, Pemit, and Inspection Fees, which requires the commission 

### to adopt, charge, and collect fees for each application for a permit or renewal of a permit.



### 5116.143. Payment 

### of Fees.

All permit fees will be remitted in the form of a check, certified check, electronic funds transfer, or money order made payable to the Texas Commission on Environmental Quality (TCEQ) or TCEQ and delivered with the application for permit or amendment to the TCEQ, P.O. Box 13088, MC 214, Austin, Texas 787 11-3088. Fees must be paid at the time 

### an application for a pennit or amendment is submitted. Applications will not be considered for review nor will any 

### time constraints required of TCEQ for application processing begin until a fee is received.

(1) Single fee. The executive director shall charge only one fee for multiple pennits issued for one project if it is determined that the following conditions are met:

(A) all the component or separate processes being permitted are integral or related to the overall project;

(B) the project is under continuous construction of the component parts;

Page 

### 29

### (C) 

### the permitted facilities 

### are to be located on the same or contiguous property; and

@) 

### applications for all permits for the project must be submitted at the same time.

(2) 

### Return of fees. No fees will be refunded after a deficient application has 

### been voided or after a permit or amendment has been issued by the agency. Fees will be returned under the following conditions.



### (A) If no permit or amendment is issued by the agency or if the applicant withdraws the application prior to issuance of the permit or amendment, one-half of the fee will be refunded.



### (B) The fee difference will be 

### refunded if a permit application is withdrawn because the proposed construction or modification is determined to 

### meet the requirements of:

(i) 

### a standard permit issued under Subchapter

### F of this chapter (relating 

### to Standard Permits);

(ii) a permit by rule under Chapter 106 of this title (relating to Permits by Rule); or

(iii) the conditions of 5116.119 of this title (relating to De Minirnis Facilities or Sources).

Page 30

### Page 31

### SUBCHAPTER B: 

### NEW SOURCE 

### REVIEW PERMITS DIVISION 5: NONATTAINMENT 

### REVIEW 5116.150



### STATUTORY AUTHORITY The amendment is adopted under Texas Water Code, $5.103, concerning Rules, and $5.105, concerning General Policy, which authorize the commission to adopt rules necessary to carry out its
powers and duties under the Texas Water Code; and under Texas Clean Air Act, $382.017, concerning Rules, which authorizes the commission to adopt rules consistent with 

### the policy and purposes of the Texas Clean Air Act. The amendment is also adopted under Texas Clean Air Act, $382.002, concerning Policy and Purpose, which establishes the commission's purpose to safeguard the state's air
resources, consistent with the protection of public health, general welfare, and physical property; $382.01 1, concerning General Powers and Duties, which authorizes the commission to 

### control the quality of the state's air; $382.012, concerning State 

### Air Control Plan, which authorizes the commissionto develop a general, comprehensiveplan for control of the state's air; 5382.016, concerning Monitoring Requirements, Examinationof Records, which authorizes the commission to prescribe reasonable requirements for the measuring and monitoring of emissions of air contaminants; $382.051, concerning Permitting Authority of Commission Rules, which authorizes the commissionto issue permits for the construction of a new facility or modification of an existing facility; $382.0513, concerning Permit Conditions, which authorizesthe commission to establish and enforce permit conditions; 5382.0515, concerning Application for Permit, which authorizes the commission to require

a permit application with plans and specifications necessary for the commission to determine if the facility will comply with applicable state and federal regulations and the intent of the Texas Clean Air

Page 32

### Act; 8382.0517, concerning Determination of Administrative Completion of Application, which authorizes the commission to 

### determine when 

### an application is administratively complete; and 8382.0518, concerning Preconstruction Permit, which requires persons planning the construction or modification of a facility to obtain a permit from the commission.



### 5116.150. New Major Source or Major Modifcation

### in Ozone Nonattainment

### Areas.

(a) This section applies to administratively complete applications submitted on or after November 15, 1992 for new constructionor modification of facilities located in any area designated 

### as nonattainrnent for ozone in accordance with 

### the FCAA, $107. The owner or operator of a proposed

new or modified facility which will be a new major stationary source of volatile organic compound (VOC) emissions or nitrogen oxides (NO,) emissions, or the owner or operator of 

### an existing major stationary source of VOC or NO, emissions that will undergo a major modification with respect to VOC or NO,, shall meet the requirements of paragraphs (1) 

## - (4) 

### of this subsection, except as provided 

### in subsections (b) 

### and (c) of this section. Table 

### I of $116.12 of this title (relating to Nonattainment Review Defmitions) specifies the various classificationsof nonattainment along with the associated emission levels which designate a major stationary source or major modification for those classifications. Except 

### as noted in subsection (b) 

### of this section regarding NO,, the de minimis threshold test (netting) shall be 

### required for all modifications to 

### existing major sources of VOC or NO,, unless at least one of the following conditions are met: the proposed emissions increases associated with a project, without regard to decreases, is less 

### than five tons per year of the individual nonattainment pollutant or, the project emissions increases coupled with project actual emissions decreases for the 

### same pollutant, summed 

### as the project net, 

### are less than 

### or equal to zero tons per

Page 33

### year. 

### In applying the de minimis threshold test, if the net emissions increases, aggregated over the contemporaneous period, are greater 

### than the major modification levels stated 

### in Table 

### I, then the following requirements apply.

(1) The proposed facility shall comply with the lowest achievable emission rate (LAER) as defined in $1 16.12 of this title for the nonattainment pollutants for which the facility is a

new major source or major modification except as provided in paragraph (3)(B) of this subsection and except for existing major stationary sources that have a potential to emit (PTE) of less than 

### 100tons
per year of the applicable nonattainment pollutant. For these sources, Best Available Control Technology (BACT) can be substituted for LAER. LAER shall otherwise be applied to each new emissionunit and to each existing emission unit at which the net emissions increase will occur 

### as a result of a physical change or change in method of operation of the unit.

(2) All major stationary sources owned or operated by the applicant (or by any person controlling, controlled by, 

### or under common control with the applicant) in the state shall be in compliance or on a schedule for compliance with all applicable state and federal emission'limitations and standards.

(3) At the time the new or modified facility or facilities commence operation, the emissions increases from the new or modified facility or facilities shall be offset. The proposed facility shall use the offset ratio for the appropriate nonattainment classification 

### as defined in $ 

### 116.12 of this title and shown in Table 

### I of $116.12 of this title. Internal offsets which 

### are generated at the source and which otherwise meet all creditability criteria can be applied as follows.

Page 34

### (A) Major stationary sources with a PTE of less than 

### 100tons per year of 

### an applicable nonattainmentpollutant are not required 

### to undergo Nonattainment New Source Review under this section, if the project increases are offset with 

### internal offsets at a ratio of at least 1.3 to 1.

(B) Major stationary sources with 

### a 

### PTE of greater than or equal to 

### 100 tons
per year of an applicable nonattainmentpollutant 

### can substitute BACT for 

### LAER, if the project increases 

### are offset with 

### internal offsets at a ratio of at 

### least 1.3 to 1. 

### Internal offsets used 

### in this

manner can also be applied to satisfy the offset requirement.



### (4) 

### In accordance with the FCAA, the pennit application shall contain 

### an analysis of alternative sites, sizes, production processes, and control techniques for the proposed source. The analysis shall demonstrate that the 

### benefits of the proposed location and source configuration significantly outweigh the environmental and social costs of that location.

(b) For sources located in the El Paso ozone nonattainment area (El Paso County), the requirements of this section do not apply to NO, emissions.

Page 35

### SUBCHAPTER 

### B: 

### NEW SOURCE REVIEW 

### PERMITS DMSION 7: 

### EMlSSION REDUCTIONS: OFFSETS 5116.170

STATUTORY AUTHORITY The repeal is adopted under Texas Water Code, $5.103, concerning Rules, and $5.105, concerning General Policy, which authorize the commission to adopt rules necessary to carry out its powers and duties under the Texas Water Code; and under Texas Clean Air Act, $382.017, concerning Rules, which authorizes the commission to adopt rules consistent with the policy and purposes of the Texas Clean Air Act. The repeal is also adopted under Texas Clean Air 

### Act, 5382.002, concerning Policy and Purpose, which establishes the commission's purpose to safeguard the state's air resources, consistent with the protection of public health, general welfare, and physical property; 5382.01 1, concerning General Powers and Duties, which authorizes the commission to control the quality of the state's air; and $382.012, concerning State Air Control Plan, which authorizes the commission to develop a general, comprehensiveplan for control of the state's air.

5116.170. Applicability 

### for Reduction Credits.

Page 36

### SUBCHAPTER

### B: 

### NEW SOURCE 

### REVIEW PERMITS DMSION 7: EMISSION REDUCTIONS: OFFSETS 8116.170, 8116.172

STATUTORY AUTHORITY The new sections are adopted under Texas Water Code, $5.103, concerning Rules, and $5.105, concerning General Policy, which authorize the commission to adopt rules necessary to cany out its
powers and duties under the Texas Water Code; and under Texas Clean Air Act, $382.017, concerning Rules, which authorizes the commissionto adopt rules consistent with the policy and purposes of the Texas Clean Air Act. The new sections are also adopted under Texas Clean Air Act, $382.002, concerning Policy and Purpose, which establishes the commission's purpose to safeguard the state's air
resources, consistent with the protection of public health, general welfare, and physical property; $382.01 1, concerning General Powers and Duties, which authorizes the commission to control the quality of the state's air; $382.0 12, concerning State Air 

### Control Plan, which authorizes the 

### commission to 

### develop a general, comprehensiveplan for control of the state's 

### air; $382.016, concerning Monitoring Requirements, Examination of Records, which authorizes the commission to prescribe reasonable requirements for the measuring and monitoring of emissions of air contaminants; $382.051, concerning Permitting Authority of Commission Rules, which authorizes the commission to issue permits for the construction of a new facility or modification of an existing facility; $382.05 13, concerning Permit Conditions, which authorizes the commission to establish and enforce permit conditions; $382.0515, concerning Application for Permit, which authorizes the commissionto require

a permit 

### application with plans and specificationsnecessary for the commission to 

### determine if the facility will comply with applicable state and federal regulations and the intent of the Texas Clean Air

Page 37

### Act; $382.0517, concerning Determination of Administrative Completion of Application, which authorizes the commission to determine when an application is administratively complete; and $382.0518, concerning Preconstruction Permit, which requires persons planning the construction or modification of a facility to obtain a permit from the commission. The new sections are also adopted under 42 

### United States Code, §7410(a)(2)(A),which requires SIPSto include enforceable emission limitations and other control measures or techniques, including economic incentives such as fees, marketable permits, and auction of emission rights.



### fi116.170. Applicability of 

### Emission Reductions as 

### Offsets.

(a) No reduction may be used as an offset unless it has been certified as an emission credit under Chapter 101, Subchapter

### H, Division 1 or 4 of this title (relating to Emission CreditBanking and Trading; or Discrete Emission Credit Banking and Trading), except 

### asprovided for in subsection (c) of this section.

(b) 

### Existing reductions not yet certified and banked as an emission credit must be certified and banked with the executive director by September 1, 

### 2004 in order to 

### be considered for use as 

### an offset.

(c) A future reduction may be used as 

### an offset for a permit provided that:

(1) the permit contains special conditions that specify the date 

### by which the permit holder must submit to the executive director appropriate and sufficient data to verify that the reduction has occurred and the reduction is provided by start of operation;

Page 38

### (2) the reduction must be achieved prior to 

### commencement of the permitted emissions for which the offset is required;

(3) the reduction meets all of the requirements of Chapter 101, Subchapter 

### H, Division 

### 1 or 4 of this title when submitted to 

### the executive director for review per the requirements of the issued permit; and

(4) the permit holder agrees to obtain additional offsets if the review by the executive director indicates the reductions do not satisfy the original offset requirements.



### 3116.172. Emissions Offsets from 

### Rocket Engine 

### Firing and Cleaning.

Emissions increases from rocket engine and motor firing, and cleaning related to such firing, at



### an existing or modified major source, shall be allowed to be offset by alternative or innovative means, provided the following conditions are met.

(1) Any modification proposed is solely for the purpose of expanding the testing of rocket engines or motors at an existing source permitted to test such engines as of November 15, 1990.

(2) The source demonstrates to the satisfaction of the executive director that it has used all reasonable means to obtain and utilize offsets, as determined on 

### an annual basis, for the

, 

### emissions increases beyond allowable levels, that all available offsets are being used, and that sufficient offsets are not available to the source.

Page 39

### (3) 

### The source 

### has obtained a written finding from the Department of Defense, Department of Transportation, National Aeronautics and Space Administration, or other appropriate federal agency, that the testing of rocket motors or engines at the facility is required for a program essential to the national security.

(4) 

### The source will comply with an alternative measure, imposed by the executive director, designed to offset any emissions increases beyond permitted levels not directly offset by 

### the

source. 

### In lieu of imposing any alternative offset measures, the executive director may impose an emissions fee to be paid, which shall be an amount no greater than 

### 1.5 times the average cost of stationary source control measures adopted in that area during the previous three years.

Page 40

### SUBCHAPTER

### D: 

### PERMIT RENEWALS 0116.313, 8116.315

STATUTORY AUTHORITY The amendments are adopted under Texas Water Code, $5.103, concerning Rules, and 55.105, concerning General Policy, which authorize the commission to adopt rules necessary to carry out its
powers and duties under the Texas Water Code; 

### and under Texas Clean Air Act, 5382.017, concerning Rules, which authorizes the commission to adopt rules consistent with the policy and purposes of the Texas Clean Air Act. The amendments are also adopted under Texas Clean Air Act, 5382.002, concerning Policy and Purpose, which establishes the commission's purpose to safeguard the state's air
resources, consistent with the protection of public health, general welfare, and physical property; 5382.011, concerning General Powers and Duties, which authorizes the commission to control the quality of the state's air; $382.012, concerning State Air Control Plan, which authorizes the commission to develop a general, comprehensive plan for control of the state's air; 5382.016, concerning Monitoring Requirements, Examination of Records, which authorizes the commission to prescribe reasonable requirements for the measuring and monitoring of emissions of 

### air contaminants; $382.051, concerning Permitting Authority of Commission Rules, which authorizes the commission to issue permits for the construction of a new facility or modification of an existing facility; 5382.0513, concerning Pennit Conditions, which authorizes the commission to establish and enforce permit conditions; 5382.0515, concerning Application for Permit, which authorizes the commission to require

a permit applicationwith plans and specificationsnecessary for the commission to determine if the facility will comply with applicable state and federal regulations and the intent of the Texas Clean Air Act; 5382.0517, concerning Determination of Administrative Completion of Application, which

Page 41

### authorizes the commission to determine when an application is administratively complete; $382.0518, concerning Preconstruction Permit, which requires persons planning the construction or modification of a facility to obtain a permit from the commission; and 5382.061, concerning Application, Permit, and Inspection Fees, which requires the commission to adopt, charge, and collect fees for each application for a permit or renewal of a permit.



### $116.313. 

### Renewal Application 

### Fees.

(a) The fee for renewal is based on the total 

### annual allowable emissions from the permitted facility to be 

### renewed, according to the following table.



### RENEWAL FEE TABLE*
X = 

### TOTAL ALLOWABLE BASE 

### FEE $300 $300

Minimum fee: $300 Maximum fee: $10,000 

### INCREMENTAL FEE



## -- $35/ton $25/ton $8/ton



### --



## * To calculate the fee, multiply the number of tons in excess of the lower limit of the appropriate
Page 42

### category by the incremental fee, then add this amount to 

### the base fee. For example, if total emissions of all air contaminants 

### are 50 tons per year, the total fee would be $1,615 

### (basefee of $965, plus incremental fee of $25 x 26 

### tons or $650).

(b) 

### Fees are due and payable at the time the renewal application is filed. No fee will be 

### accepted before the permit holder has been notified by the commission that the permit is scheduled for review. All permit review fees shall be remitted by check, certified check, electronic funds transfer,

or money order payable to the Texas Commission on Environmental Quality (TCEQ) 

### and mailed to the TCEQ, P.O. Box 13088, MC 214, Austin, Texas 78711-3088. Required fees must be received before the agency will consider an application to be complete.



### 8116.315. 

### Permit 

### Renewal Submittal.

(a) An application for renewal must be submitted at least 

### six months, but no earlier than 

### 18 months, prior to expiration of the permit or the permit will expire. This subsection will be effective on May 1, 2004.

(b) 

### With executive director approval, the applicationmay be submitted before or after the time period specified in subsection (a) of this section.

(c) Any permit issued:

(1) before December 1, 1991, is subject for review 15 years after the date of issuance;

Page 43

### (2) 

### on or after December 1, 

### 1991, is subject for review every ten years after the date of issuance; or

(3) 

### at non-federal sources on or afeer December 1, 

### 1991, may, for cause, contain a provision requiring renewal between five and ten years.

Page 44

### SUBCHAPTER 

### G: FLEXIBLE 

### PERMITS 

### 5116.715

STATUTORY AUTHORITY The amendment is adopted under Texas Water Code, $5.103, concerning Rules, and $5.105, concerning General Policy, which authorize the commission to adopt rules necessary to carry out its
powers and duties under the Texas Water Code; and unde; Texas Clean Air Act, $382.017, concerning Rules, which authorizes the commission to adopt rules consistent with the policy and purposes of the Texas Clean 

### Air Act. The amendment is also adopted under Texas Clean 

### Air Act, $382.002, concerning Policy and 

### Purpose, which establishes the commission's purpose to safeguard the state's air
resources, consistent with the protection of public health, general welfare, and physical property; $382.01 1, concerning General Powers and Duties, which authorizesthe commission to control the quality of the state's air; $382.012, concerning State 

### Air Control Plan, which authorizes the 

### commission to develop a general, comprehensive plan for control of the state's air; $382.016, concerning Monitoring Requirements, Examination of Records, which authorizes the commission to prescribe reasonable requirements for the measuring and monitoring of emissions of 

### air contaminants; $382.051, concerning Permitting Authority of Commission Rules, which authorizes the commission to issue pennits for the construction of a new facility or modification of an existing facility; $382.0513, concerning Permit Conditions, which authorizes the commission to establish and enforce permit conditions; $382.0515, concerning Application for Permit, which authorizes the commission to require

a permit application with plans and specifications necessary for the commission to determine if the facility will comply with applicable state and federal regulations and the intent of the Texas Clean Air Act; $382.0517, concerning Determination of Administrative Completion of Application, which

Page 45

### authorizes the commission to determine when an application is administratively complete; $382.0518, concerning Preconstruction Permit, which requires persons planning the construction or modification of a facility to obtain a permit from the commission; and $382.061, concerning Application, Permit, and Inspection Fees, which requires the commission to adopt, charge, and collect fees for each application for a permit or renewal of a permit.



### 9116.715. General and Special 

### Conditions.

(a) Flexible permits may contain general and special conditions. The holders of flexible permits shall comply with any and all such conditions. Upon a specific finding by the executive director that an increase of a particular air contaminant could result in a significant impact on the air environment, or could cause the facility, group of facilities, or account to 

### become subject to review under $116.150 and $116.151 and $$116.160 

### - 116.163 of this title (relating 

### to Nonattainment Review

or Prevention of SignificantDeterioration Review) or Subchapter C of this chapter (relating to Hazardous Air Pollutants: Regulations Governing Constructed or Reconstructed Major Sources (FCAA, $1 12(g), 40 CFR Part 

### 63)), the permit may include a special condition which requires the permittee to obtain written approval from the executive director before constructing a facility under a standard permit or a permit by rule under Chapter 106 of this title (relating to Permits by Rule).

(b) A pollutant specific emission cap or multiple emission caps andlor individual emission limitations shall be 

### established for each air contaminant for all facilities authorized by the flexible permit.

Page 46

### (c) The following general conditions shall be applicable to every flexible permit.

(1) Applicability. This section does not apply to physical or operational changes allowed without an amendment under 0116.721 of this title (relating to Amendments and 

### Alterations).

(2) Constructionprogress. The start of construction, constructioninterruptions exceeding 45 days, and completion of construction shall be 

### reported 

### to the appropriate regional office of the commission not later than 

### 15 working days after occurrence of the event.

(3) Start-up notification.

(A) 

### The appropriate regional office of the commission and any local program havingjurisdiction shall be notified prior to the commencement of operations of the facilities authorized by the permit in such a manner that a representative of the commission may be present.

I 

### . (B) 

### Phased construction, which may involve a series of facilities commencing operations at different times, shall provide separate notification for the commencementof operations for each facility.

(C) Prior to beginning operations of the facilities authorized by the permit, the permit holder shall identify 

### to the Office of Permitting, Remediation, and Registrationthe source or

sources of allowances to be 

### utilized for compliance with Chapter 101, Subchapter H, Division 3 of this title (relating to Mass Emissions Cap and Trade Program).

Page 47(4) 

### Sampling requirements. If sampling of stacks or process vents is required, the flexible permit holder shall contact the commission's 

### Office of Compliance and Enforcement prior 

### to sampling to obtain the proper data 

### forms and procedures. All sampling 

### and testing procedures must be approved by the executive director and coordinated with the appropriate regional office of the commission. The flexible permit holder is also responsible for providing sampling facilities and conducting the sampling operationsor contracting with an independent sampling consultant.



### (5) Equivalency of methods. It shall be the responsibility of the flexible permit holder
to demonstrate or otherwise justify the equivalency of emission control methods, sampling or other emission testing methods, and monitoring methods proposed as alternatives to methods indicated in the conditions of the flexible permit. Alternative methods shall be 

### applied for in writing and must be reviewed and approved by the executive director prior to their use in fulfilling any requirements of the permit.



### (6) Recordkeeping. A copy of the flexible permit along with information and data 

### sufficient to demonstrate continuous compliance with the emission caps and individual emission limitations contained in the flexible permit shall be maintained in a file at the plant site and made available at the request of personnel from the commission or any air pollution control program having jurisdiction. For facilities that normally operate unattended, this information shall be maintained at the
nearest staffed location within Texas specified by the permit holder in the permit application. This information may include, but is not limited to, emission cap and individual emission limitation calculations based on a 12-month rolling basis and production records and operating hours. Additional recordkeeping requirements may be specified in special conditions attached to the flexible permit.

Page 48

### Information in the file shall be retained for at least two years following the date that the information or data is obtained.

(7) 

### Maximum allowable emission rates. A flexible permit covers only those sources of emissions 

### and those 

### air contaminants listed in the table entitled "Emission Sources, Emissions Caps and Individual Emission Limitations" attached to the flexible permit. Flexible permitted sources are limited to the emission limits and other conditions specified in the 

### table attached to the flexible permit.



### (8) Emission cap readjustment. If a schedule to install additional controls is included 

### in the flexible permit and a facility subject 

### to such a schedule is taken out of service, the emission cap contained in the flexible permit will be readjusted for the period the 

### unit is out of service to a level as if

no schedule had 

### been established. Unless a special provision specifies the method of readjustment of the emission cap, a permit alteration shall be obtained.

(9) Maintenance of emission control. The facilities covered by the flexible permit shall not be 

### operated unless all air pollution emission capture and abatement equipment is maintained in good working order and operating properly during normal facility operations. Notification for emissions events and scheduled maintenance shall be 

### made in accordance with $10 

### 1.20 1 and $10 1.21 1 of this title (relating to Emissions Event Reporting and Recordkeeping Requirements; and Scheduled Maintenance, Startup, and Shutdown Reporting and Recordkeeping Requirements).

(10) Compliance with rules. Acceptance of a flexible permit by a permit applicant constitutes an acknowledgment and agreement that the holder will comply with all Rules, Regulations,

Page 49

### and Orders of the commission issued in 

### conformity with 

### the TCAA 

### and the conditions precedent to the granting of the pennit. If more than one state or federal rule or regulation or flexible permit condition

are applicable, then the most stringent limit or condition shall govern and be the standard by which compliance shall be demonstrated. Acceptance includes consent to the entrance of commission employees and agents into the permitted premises at reasonable times to investigate conditions relating
to the emission or concentration of air contaminants, including compliance with the flexible permit.

(d) There 

### may be additional special conditions attached to a flexible permit upon issuanceor amendment of the permit. Such conditions in 

### a flexible permit may be more restrictive than 

### the requirements of this title.

Page 50

### ORDER ADOPTING 

### NEW, 

### AMENDED,

### AND REPEALED 

### RULES AND 

### REVISIONS TO THE 

### STATE IMPLEMENTATIONPLAN

Docket No. 2003-0232-RUL On August 20, 2003, the Texas Commission on Environmental Quality (Commission), during a public meeting, considered adoption of the repeal of $116.170; new 

### $8 116.120, 116.170, and 

### 116.172; and amendments to 

### $$116.12, 116.114, 116.115, 116.143, 116.150, 116.313, 116.315, and 116.715. The Commission adopts these new, amended, and repealed rules 

### in Chapter 116, concerning Control of Air Pollution by Permits for New Construction or Modification; and corresponding revisions to the state implementationplan (SIP). The adoption would require emissionreductions be certified as emission reduction creditsunder 30 TAC Chapter 101, Subchapter H, except future 

### internal offsets which would continue 

### to be certified under Chapter 116. The adoption would also ensure timely submission of updated and additional information used to process new source review applications including the establishmentof a voidance process, require an applicationfor permit renewal to 

### be 

### submitted at least six months but no earlier than 18months prior to 

### the permit expiration date, prohibit processing of applications without the correct application fee, provide conditions for the return of application fees, and allow for executive director approval of additional time to begin constructionof authorized projects if certain conditions are met. Under Tex. Health & 

### Safety Code Ann. 

## $5 382.011, 382.012, and 382.023 (Vernon 2001), the Commissionhas the authority to 

### control the quality of the state's air and to issue orders consistent with the policies and purposes of the Texas Clean 

### Air Act, Chapter 382 of the Tex. Health & 

### Safety Code. The proposed rules were published for comment in the April 4, 2003 issue of the 

### TexasRegister (28 TexReg 2903). Pursuant to 

### Tex. Health & 

### Safety Code Ann. 

### 5 382.017 (Vernon 2001), Tex. Gov't Code Chapter 2001 (Vernon 2000 & 

### Vernon Supp. 2002) and 40 Code of Federal Regulations $ 

### 5 1.102 and after proper notice, the Commission conducted a public hearing to 

### consider the new, amended, and repealed rules and revisions to 

### the SIP. Proper notice included prominent advertisement in the areas affected at least 30 days prior to the date of the hearing. A public hearing was held in Austin on April 24, 2003. The Commission circulated hearing notices of its intended action to the public, including interestedpersons, the Regional Administrator of the EPA, and all applicable local air pollution control agencies. The public was invited to submit data, views, and recommendations on the proposed new, amended, and repealed rules and SIP revisions, either orally or in writing, at the hearing or during the comment period. Prior to the scheduled hearing, copies of the proposed new, amended, and repealed rules and SIP revisions were available for public inspection at the Commission's central office and regional offices. Data, views, and recommendationsof interested persons regarding the proposed new, amended, and repealed rules and SIP revisions were submitted to 

### the Commission during the comment period, and

### were considered by the Commission 

### as reflected in the analysis of testimony incorporated by reference to 

### this Order. The Commission finds that the analysis of testimony includes the names of all interested groups or associations offering comment on the proposed new, amended, and repealed rules and the SIP revisions and their position concerning the same. IT IS THEREFORE ORDERED 

### BY THE COMMISSION that the new, amended, and repealed rules and revisions to the SIP incorporated by reference to this Order are hereby adopted. The Commission further authorizes staff to make any non-substantive revisions to the rules necessary to comply with 

### Texas Register requirements. The adopted rules and 

### the preamble to the adopted rules and the revisions to the SIP are incorporated by reference in this Order as if set forth at length verbatim 

### in this Order. 

### IT IS FURTHER ORDERED 

### BY THE COMMISSION that on behalf of the Commission, the Chairman should transmit a copy of this Order, together with the adopted rules and revisions to the SIP, to the Regional Administrator of EPA as a proposed revision to the Texas SIP pursuant to the Federal Clean Air Act, 

### 5 1

### 10, codified at 42 U.S. Code AM. 

### $5 7410 

## - 7671q, as amended. This Order constitutes the Order of the Commission required by the Administrative Procedure Act, Tex. Gov't Code, 

### 8 2001.033. If any portion of this Order is for any reason held to be invalid by a court of competent jurisdiction, the invalidity of any portion shall not affect the validity of the remaining portions.

Dateissued: 

# AUG 262003 ENV
iton, Chairman

### CHAPTER 116. 

### CONTROL OF AIR POLLUTION 

### BY PERMITS FOR 

### NEW CONSTRUCTION.ORMODIFICATION The Texas Commission on Environmental Quality (TCEQ or commission) adopts the repeal of $116.170; new $$116.120, 116.170, and 116.172; and amendments to $$I16.12,116.114, 116.115, 116.143, 116.150, 116.313, 116.315, and 116.715. Sections 116.114, 116.120, 116.170, 116.315, and 116.715 are adopted with chenges to the proposed text as published in the April 4, 2003, issue of the Texes Register (28 TexReg 2903). Sections116.12,116.115,116.143,116.150, 116.172, 116.313, and the repealed $1 16.170 are adopted widhout chenges and wlll not be republished. The new and amended sections will be submitted to the United States Environmental Protection Agency (EM) as revisions to the state implementation plan (SIP). BACKGROUND AND SUMMARY OF THE FACTUAL BASIS FOR THE ADOPTED RULES The commission is adopting rule amendments to ensure the timely submission of updated and additional information used to process new source review applications. 'The commission is also adopting rules so that applicants who do not supply requested and necessary information for the processing of a permit application will have their application voided. Applications resubmitted within six months would not brr subject to any further permit fees, but the applicant would be required to go backthroughthe public notice process in order to make possible a public review of updated and current information about the proposed facility. The commission requires that persons issued a new source review permit under Chapter 116 begin wnstruction of the facility within 18 months of permit issuance or the permit will bevoided. The executivedirector may grant an additional 18-month extensionto this period. Inthe case of flexible permits, the time period to beginconstruction isspecllied in the permitwith one 12-month extension available. In the large majority of cases, these cumulative time periods are suffiiient to resolve issues associated with starting construction. In some cases, particularlywhen third party litigation is involved. a permit holdermay not be ableto start construction within the extended time periods. The commission is therefore adopting rules so that an additional extension will be available. The commission is specifically adopting rules so that the first 18-month extension may be granted at the permit holder's request. Another extension of up to 18 months will be granted by the executive director to resolve litigation that is not of the permit holder's origin. The commission also believes that economic or other circumstances can arise which would affect the decision to start construction and adopts amendments aC lowing the executive director to retain discretion to grant a further extension for reasonsnot specified in the rules, if the permit holder has demonstrated an intent to buildthe project by spending at least lO%of the estimated total cost of the project up to a maximum of $5 million. Any permit holder receivinga second extension would be required to demonstratethatthe projectcontinues to meet all the rules and regulations of the commission and the intent of the Texas Clean Air Act, including protection of the public's health and physical property. Any extension of the time to begin construction of a project will subject the permit holder to additional best available control technology, lowest achievable emission rate, and offset review. Because the same conditions that would motivate a new NSR (new source review) permit holder to seek extensions can also apply to holders of flexiMe permits, the commission isadopting rules to apply the extension periods and conditions in $116.120 to flexible permits as well. Flexible permits are used to authorize changes and modifications to existing facilities. Emission reductions in the form of offsets are obtained prior to the issuance of a new source review permit to counter the effect of new emissions on air quality. In recent years, the commission has established programs that create emission caps in Houston and' Dallas and use emission credits and allowances to maintain the caps. Emission offsets are also considered in these programs and must meetthe same certification standards as emission credi in order to achieve consistent protection of air quality. The commission is therefore adopting rules so that emission offsets will be certified in the same way as emission credits in 30 TAC Chapter 101, Subchapter H, Emissions Banking and Trading. The commission is adopting rules in Chapter 116to retain certification of future offsets internal to a facility. In many cases, these future internal offsets arexredited for the replacement of existing equipment that must be kept in operation until the new, lower emitting equipment is operational. This is in contrastto offsets used between facilities which requires that a reduction occur before it can be credibd. Those portions of $116.170 that concern the offset of emissions from rocket engine firing and cleaning are transferred to a new $1 16.172. Offsets are not permanent reductions but will reappear in the future. In order to make meaningful emission control plans for nonattainment and prevention of significant deterioration areas, the commission needstimely and accurate informationon emission reductions that wlll be used as ats. The commission is adopting rules so that emlssion reductions not yet certified and banked as emission credlts by the effective date of these rules must be cerbif~ed and banked by September I, 2004, in order to be considered for offsets. The commission requires adequate time to process permit renewals and, for workload management, needs to ensure that those permits dosest to expiration are received first. For these reasons, the commission isalso adoptingrulessothat permit renewal applications be submitted at least six months, but no earlierthan 18 months. beforethe permitwill expire. By establishing a date for the earliest submission of a renewal application, the commission will also increasethe probabllitythat renewal applications are received under the most cumntfee tables. SECTION BY SECTION DISCUSSION SubchepterA: Definitions The definitionof "Offset ratio" in $1 16.12, Nonattainment Review Definitions, isamended to state that an offset would have to be certifiedas anemission credit under Chapter 101, Subchapter H, inorderto qualifyas a reduction. The commission is also making minor changes to abbreviations, rule citations, and acronyms to conform with Texas Registerformatting in the definitions. Subchapter 6: New Source Review Permifs The amendments to $116.114, Application Review Schedule, statethat an applicationfor a permit or permit amendmentwill be voided in the event deficient informationsuppliedwith the application is not corrected. If an applicant fails to make a good faith effort to provide the required information after two written notifications of the deficiency, the executive director will void the application and notify the applicant. To pursue the project, the ap plicant shall submit an entirely new applicationwith a new Form



### ADOP

### TED RULES 

### September 5,2003 28 

### TexReg 7763PI-1. The new applicationwill be subjectto the state and federal rules and regulations in place at the time of submittal. If a new application is submittedwithin six months of the voidance of the original application, the application will be exempt from the fee requirements under $116.140. Applicability. However, the applicant mustgo througha newtechnical review and republishpublic notice. The amendment of $1 16.115, General and Special Conditions, removes language relating to the voiding of permits and extensions of time to begin construction and transfers this language to a new 51 16.120. The new $116.120, Voiding of Permits, addresses the voiding of permits and contains language relocated from 51 16.115. The relocated language allows additional time to begin construction of a project authorized with a new source review permit. This extension would be available in the case of a constructiondelay caused by litigation, not of the permlt holder's origin, associated with the issuanceof the permit. The executivedirector could also issuean extension ifthe permit holder hasspent, or has committedto spend, 10% of the estimated cost of constructionto a maximum of $5 million and has demonstrated that emissions from the facility would be in compliance with commission rules and the intent of the Texas Clean Air Act The comrnission proposed that a permit holderwould have to spend 15% of the cost of the project, but has reduced that figure based on public comments stating that costs incurred preparatory to a project do not rise proportionatelywith the cost ofthe project The commission has also added languageto the rules stating that, in addition to best available controltechnology review, the cornrnission will also review the application of lowest achievable emission rate. This is consistent with the commission'scurrent practiceof determining applicability of federal rules to projects where construction has been delayed. The amendments to 5116.143, Payment of Fees, state that the permitapplication fee must be received before an applicationwill be processed or beforethe start of any time constraints required of the comrnission inapplication processing. This amendment is intendedto ensure that the commission receives fees neededto cover the expense of permit review and processing. The commission retains the conditionsunderwhich fees will or will not be returnedto the applicant. If no permit or amendment is issuedor iftheapplicant withdrawsthe application priorto permit issuance, then one-half of the fee will be refunded. If it isdeterminedthat a permitapplicant will meetthe requirements of a permit by rule, the applicant is entitled to a refund of the fee difference. The commission amended the rule to state that a qualification for a standard permit or de minimis classificationunder §116.119, De Mipimis Facilities or Sources, would also enable the applicantto withdraw the permit application and receive a refund of the fee difference. The amendmentto $1 16.150, New Major Source or Major Modification inOzone Nonattainment Areas, deletes subsection (c) because the time period specified for the application of certain exemptions to nitrogen oxides reductions for sources in the Houston-Galveston and Beaumont- PortArthur ozone nonattainment areas has expired. 'The new $1 16.170,Applicability of Emission Reductionsas Offsets, establishes requirementsforthe useof emission reductions as offsets. Reductionsthat will be used as emission credits must be certified and banked underthe requirements of Chapter 101, Subchapter H. Division 1 or 4. The commission will require that any existing reductions must be certified under Chapter 101 by September 1, 2004 in order to be eligiblefor use as an offset. The commission changed the rule from proposal and specified that the September 1, 2004 date appliesto existing reductions. Reductions occurring after that date may also be certified under Chapter 101. Future reductions that will be used internallyto a facility may still be certified under Chapter 116. The permit for the facility must contain special conditions that specify the date when the permit holder must submit to the executive director appropriateand sufficient data verifying that the reduction has occurred, and the reduction must be achieved prior to the commencement of the permitted emissions for which the offset is required. The reduction must meet the requirementsof Chapter 101, and the permit holder agrees to obtain addiional offsets if the executive director determines the reductions do not satisfy the original offset requirements. The new§I16.172, Emissions Offsets from Rocket Engine Firing and Cleaning, contains the conditions under which emissions from rocket enginefiring or cleaning may be offset by alternative or innovativemeans. These requirements have been transferred unchangedto the new section from existing 5116.170 except to state that information regarding rocket engine offsets would be submitted to the executive director instead of the commission, Subchapter D: Permit Renewals The amendment to 5116.313, Renewal Application Fees, corrects the zip code in the commission's address. The amendmentsto 5116.315. Permit Renewal Submittal, state that anapplicationfor permit renewal must be submitted at least six months, but no earlier than 18 months priorto the permit expiration date. The comrnission intends to allow sufficient time for preparation and submission of renewals for permit holders whose permitexpires within six monthsof the potential effective date of these adopted rules. The cornrnission proposed February 1, 2004 as the effective date of this new requirement, but extended the date to May 1,2004 as a result of public comment to allow additional time for permit holders to become aware of the new requirement. With executive director approval, applications may be submitted before or after this specifiedtime period. Subchapter G: Flexible hrrnits The amendmentsto 6116.715. General and Smial Conditions. remove languagecoicerning voiding of the pehit. The commisi sion will a~~lv the same.extension of construction conditions. as stated in thenew 5116.120, to flexible permits as would be applied to other new source review permits. FINAL REGULATORY IMPACTANALYSIS DETERMINATION The commission reviewed the adopted rulernaking in light of the regulatory analysis requirements of Texas Government Code, 52001.0225, and determined that the rules do not meet the definition of a "major environmental rule." Major environmental rule means a rule, the specific intent of which is to protectthe environment or reduce risks to human health from environmentalexposure, andthat mayadverselyaffect in a materialway the economy, a sector of the economy, productivity, competition,jobs, the environment, or the public health and safety of the state or a sector of the state. 'The adopted rules require that emission reductions used as emission offsets be certified in a mannerconsistent with other TCEQ regulations, establish a deadline for the certification of existing reductions as emission offsets, establish pmcedures for voiding permit applications, estabiish conditions underwhich permit fees may be refunded, specify a time period



### 28 TexReg 7764 

### September 

### 5, 2003 TaasRegistefor the submission of permit renewal applications, and specify which fee schedule willapplyto permit renewals. These adopted ruleswill not require addii6nal emission controls or new capital expenses. Applicants who have their applicationsvoidedwill be requiredto submit a new application and repeat the public ne tification process. Depending on location, this notification can cost from $700to $4.000. This expense will only be incurredfob lowing a lack of action from the applicant after being notified of deficiencies in its application. Permit holderswho wish to extend the start of project construo tion beyond 36 monthsmay be requiredto spend a large amount of money to qualify for this extension. Large projects can cost intothe hundreds of millionsof dollars and the 10% qualification threshold of such a figurn is dearly a significant amount. However, the adopted rulesdo not compel a permit holderto seek an extension. While permit holders seekingan extensionunderthis cost threshold are assumed to do so under economic reasons that make construction impractical or unprofitable, the commission sees this as a risk of doing business over which it has no control andthe opportunityfor extension reducesthat risk. Texas Government Code, 52001.0225, applies to a major environmental rule, the result

### cri which is to: 1) exceed a standard set byfederal law, unless the rule is specifically required bystate law; 2) exceed an express requirement of state law, unless the rule is specifically required by federal law; 3) exceed a requirement of a delegation agreement or contract between the state and an aaencv or re~reseniatii of the federal oovernment to imaem& a sheah federal program; or 4) adobt a rule solely underthe general powersofthe agency instead of under a specific state law. The adopted rules in Chapter 116are not subject to the regulatory analysis provisions of 52001.0225(b). because the adopted rules do not meet any of the statute'sfour applicabilirequirements. TAKINGS IMPACT ASSESSMENT The commission completed a takings impactassessme; for the adopted rules. Promulgation and enforcement of the rules will not burden private real property. The ruleswill not affect private property in a manner which restricts or limits an owner's rightto the propertythat would otherwise exist in the absence of a governmental action. Therefore, the adopted rules do not constitute a taking underTexas Government Code, Chapter2007. CONSISTENCY WITH THE COASTAL MANAGEMENT PROGRAM The commission reviewed the proposed rulemaking and found that the adoption is a rulemaking identified in Coastal Coordination Act Implementation Rules, 31 TAC 5505.1 1, and therefore, will require that applicable goals and policies of the Texas Coastal Management Program (CMP) be considered during the rulemaking process. The commission's preliminary consistency determination for the adopted rules in accordancewith 31TAC 5505.22 found that the rulemaking is consistent with the applicable CMP goal to pre tect and preserve the quality and values of coastal natural resource areas (31TAC §501.12(1)), and the policywhich requires that the commission protect air quality in coastal areas (31 TAC §501.14(q)). The adopted rules requirethatemission reductions used as emission offsets be certified ina mannerconsistentwith other TCEQ regulations, establish a deadline for the certification of existing reductions as emission offsets, establish conditions under which the construction of a permitted project can be deIgred, establish procedures for voiding permit applications, establish conditions under which permitfees may be refunded, and specify a time periodfor the submissionof permit renewal applications. No new emissions will be authorized. Therefore, the rulemaking is consistent with the CMP. EFFECTONSITES SUBJECTTOTHE FEDERAL OPERATING PERMIT$ PROGRAM New source review is an applicable requirement under 30 TAC Chapter 122. Federal Operating Permits. These amendments affect the issuance, renewal, or extension of a new source review permit. Because they do not address permit content, the amendments do not require changes to federal operating permits. PUBLIC COMMENT A public hearing on these rules was held on April 24. 2003 in Austin. and the public comment period closed on May 5,2003. The agency received written comments from Texas Chemical Council (TCC), El Peso Electric (ELP), Baker Botts, L.L.P. on behalf of the Texas Industry Project (TIP), Sempra Energy Re sources (Sempra). DowChemicalCompany (Dow), EPA. and BP Products North America, Inc. (BP). All commenters disagreed with or had suggestions for changes to portions of the proposed rules. RESPONSE TO COMMENTS TCC, BP, and Dow commentedthat the notice of deficiency referenced in 5116.1 14(b)(2) should be specified as a written notice. Dow and BP further recommendedthat the applicant be notified in writing if the application is voided. Dow and BP requested that the commission provide maximum flexibility in respondingto reque-stsfor application informationthat may require complex modelingstudies and evaluatedeficientapplications on a case-by-case basis. The commission agrees with the commenters and has changed the rule languageto indude a requirementforwritten notification of deficiencies. The commission currently notities permit applicants in writing if an application has beenvoided. The commission recognizes that certain requests for additional application information may require moretime to produce than others. Requests for information and the time to respond to them will be evaluated and handled on a case-bycase basis. For this reason, the commission is not including in the rule language any specific time to respondto defiaency requests. Sempra stated that the current rule limitingstart of construction extensions is in conflict with federal rules (40 Code of Federal Regulations 52.21(r)(2)) which allow the granting of more than one extension. The commission has not changed the rules in response to this comment. Under the commission's adopted rules, a permit holder can have up to 4-112 years from permit issuance to the beginning of construction. In the nonattainment areas of the state there is the need to obtain offsets or allowances before a project can be authorized which limits the number of permits that may be issued. Permkted projects are also generally located near populationcenters where the population may grow and population concentrations may shift or expand. For these reasons, the commission does not wish to have an indefinite authorization for a project that has not been built. The federal rule cited by the commenter is silent on the number and length of extensions available, but does allow for the invalidation of



### ADOP 

### 'TED

### RULES September 

### 5, 2003 28 TexReg 7765a permit if construction is not completed within a reasonable time. The commission believes that the provisionsit has estab lished in the rules allow a reasonable time for the beginning of construction and are consistentwith the federal rule. Sempra recommended that the commission examine alternative approaches to the granting of a second construction extension. Sempra prefers a method whereby the second extension is left entirely to the discretion of the executive director. Sempra recommended that a list of factors, including delays from litigation, amount and cost of preliminarywork, binding contracts on the permit holder, unique economic circumstances, and the public or environmental benefit of the project be considered as a sub stituteto potentialscenarios inthe rule language. Sempra stated that executive director discretionwould provide a disincentive for and protection against permitsthat are sought speculatively. The commission has not changed the rules in response to this comment. The adopted rules are structured such that the executive director may grant extensions if the permit holder meets certain conditions involving litigation or minimum expenditures. The commission has chosen these methods because decisions of the executive director may be appealed, and it wishes to limit the scope of possible appeals by placing a minimum requirement within the rules. As another alternative, Sempra suggested that the commission concentrate on the initial ~roiect develo~ment costs instead of the estimated cost for completion of the project. These development costs include engineering, infrastructure study, acquisitions, and permitting and generally approach $10 million in a typical power plant project. Inthe case of a speculative project, Sempra stated that the cost would be held to a minimum, typically $3 to $4 million. Sempra suggested that a percentage (80%) of these development costs be used as the threshold for determining eligibility for a second extension rather than a percentage of the total project cost. The commission has not changedthe rules in responsetothese comments. The commissionagreeswith another statementfrom Sempra that development costs tend to become detached from the total cost of a project as the cost of th6'proiect increases (see next commentj. developmentcostswould.make upahigher percentageof the total cost of less expensive projects. The commissionadopted a price thresholdfor the determination of a second extension as a deterrent against speculative permittingand wants this deterrent to apply equally to large as well as small projects. Becausethe development costswould be a lesser pm portion of large projects, the commission believes that companies with greater resources undertaking these projectswould be deterred less by a threshold based on development costs. Sempra stated that development costs for lower cost projects would be close to 15% of the total project cost, but in the case of projects that have a total cost of $50 million or more, the development costs do not increase proportionately and become detached from the 15% figure. Sempra recommended an alternative approach where the 15% figure is used for projects under $50 million, but capping the expenditure amount at $7.5 million for projects over $50 million. Sempra opposed the concept of using non-recoverable or "walkaway" costs as the determining figure in meetingthe 15% threshold as it requires good money to bethrown after badto meet a figure without a clear correlationto speculative versus non-speculative projects. Sempra stated that since preconstruction costs tend to become detached from the 15%figure, the balance of the money would come from losses on resale of capital equipment. This requirement might be met in depressed industrial areas, but does not recognize that the majority of post-development costs are not triggered until construction has begun. If development costs only are considered, Sempra recommended a 10% threshold for projects under $50 million total costs and a $5 million cap for projects at or above that amount The commission has changed the rules in response to these comments. The wmmission believes that the expenditure required to qualify for a second extension should be based on a percentage of the total project cost as this provides the most equal disincentive to small and large companies against speculative permitting. The commission also agrees with the commenterthat projectdevelopment or non-recoverable costs do not rise proportionately with the total cost of a project. Considering these Factors the commission has loweredthe required expenditure to 10%of total project costs, which is consistent with federal guidance concerningsubstantial loss, and has capped the maximum required expenditure at $5 million. In order to qualify for a second extension of the time to begin construction, TCC and BP recommended that the commission reduce the required expenditure from 15%to 5% of the cost of the project. TCC stated that this figure would still be a large sum of moneyfor a project notfully authorized bythewmmission and envisionsa scenariowhere economic or businessconditions declinethat requirepostponement of further investment in a project for 18months. TCC also recommendedthat theterms "spent or committed" be usedwhen determiningthe expenditurefigure so that itincludes money that mustbepaideven if the project is canceled. TIP recornmended a 5% figure as sufficient demonstration of intent to build and suggested rule language allowing the executive director discretion in determining intent to build withoutthe 5% expenditure. TIP statedthat the proposed 15%figure may exceed the amount that couldbe reasonabiy expectedto be spent on preparation for construction, makingthe rules useless. The commission has changed the rules to incorporate the TCC recommendationthat the phrase "spent or committed" be used in determining a second extension threshold. The commission has not changed the rules in responseto the other comments. The commission agrees that a 15% figure for determining a second extension would become detached from total costs for more expensive projects and could become an unreasonable figure. However, the commission believes that a 5% threshold does not provide a sufficientdisincentiveto speculative projects, especially for large resource companies. The commission has changed the rules to use a 10%threshold and $5 million cap. TIP suggested that the commission remove the requirementfor additional healtheffects review for permit holders seeking a second extension because of involvement in litigation. The commission has not changed the rules in response to this comment. The commission recognizes that litigation initiated against the permit holder may be beyond the permit holder's control and does not want to penalizethe holder as a result. Regardless of the reason for construction delay, the commission is obligated to ensure that the project continues to meet all the rules and regulations of the commission, including the protection of the public's health and property. By the end of a second construction extension, 4-112 years may have passed between permit issuance and the beginning of construction. It is reasonable to expect that there may have been changes in population near the proposed project. The commission anticipates that, in the majority of cases, the nature of the additional health effects reviewwill be a documentation that the originalconditions of the



### 28 

### TexReg 7766 

### September 5, 2003 

### Texas Registerarea near the project have not changed significantly. If such a demonstration isnot possible, then the commission reservesthe right to require addiional heath effect evaluation including dispersion modeling. Sempra supported the concept of litigation providing a circumstance for an extension of construction. Because lenders may withhold loan approvals while litigation is active causing delay of the project, Sempra believesthat the permit holder should be made whole again once the litigation is resolved, and the two conditions proposed by the commission for a second construction extensionshould not be mutuallyexclusive. An extension of constructiongranted for purposes of litigation resolution should not preclude the applicant from requesting an additional extension based on changing economic conditions. Otherwise, the permit holder is penalized for third party litigation over which it had no conlrol. 'The commission agrees with Sempra's argument and has changed the rules accordingly. EPA commented that the rules should clearly state that best available controltechnology review should apply to both the first and second axtension of construction. Additionally, the rules should contain a requirement to reevaluate lowest achievable emission rate. EPA also commented that the requirement to demonstrate that a fecility will mplywith all rules and regulations, including pmtection of the public's health and property, should apply to boththe first and second extension of construction. The commission agrees with the commenter in part, and has changed the rules to require both best available control technology and lowest achievable emission rate reviewsas applicable as a conditionfor any extension. The commission does not agree with the comment that the rules require a health effects review as a condition for a first extension and has not changed the rules in responseto this comment Afirstextensionwould be granted at or near the end of 18 months since permit issuance. The commission believes that no significantchangesto the area surrounding the permitted site will occur over this period. TIP opposed an addiional best avakble control technology review for projectsthat have receiveda first IBmonthextension of the beginning of construction. 'I'IP stated that this would unnecessarily consumecommisdonand industry resourcesandcould lead to further projectdelays. TIP also stated thatthe reasonfor the additional best available control technology review was not stated inthe proposal preamble andthat adoptionof this requirement would makethe existing rulesconsiderably more stringent. Best available control technology review is a current permitting practice, and the commission has not changed the rules in response to this comment. Best available control technology is a constantly butslowlychanging level of controlthat is accepted by both regulators and industry as the current and reasonable level of control. Current best available control technology also pre vides the best protection of public health and ambient air quality standards. Wiout an extension, permit holders can wait a full 18 months between permitting and construction. It is conceivable that best available control technology could change in that period and during any subsequent extension. The commission will not apply a best available control technology change retroactively once an extension has been granted at a previous best available control technology level unless the permit holder requests another extension. ELP expressedconcern that the proposed requirementto certify that reductions be used as offsets under Chapter 101, Subchapter H. Divisions 1 or 4, will jeopardize the ELP-initiated program of emission substitutions inthe El Paso area where emission reductionsfrom brick kilns achieved in Ciudad Juarez may be used in lieu of emission reductionsachieved in the El Paso nonaltainment area. ELP listed the following specific concerns: 1) Would §101.301, Purpose, be appliedto the creation of offsets, removing its voluntary application? 2) Under the general prwisions of §101.302, would offsets be restrictedto volatile organic cornpounds and nitrogen aides and would the Juarez sources be subject to TCEQ measurement protocols? 3) Would offsets be restricted to designated ozone nonattainment areas? 4) Does TCEQ intendto create a bank for all nonattainment areas? ELP recommendedthe creationof aseparate division in Chapter 101. Subchapter H, where TCEQ definesthe specificrequirements for creating offsets under nonattainment new source review. ELP believes that the Chepter 101 requirement could fatally burden the kiln conversion program because the kilns are not currently subject to an emission inventory or measurement program, the kilns are not subject to the ordinary recordkeeping requirements of UnitedStates sources, andthe kiln conversion program is currently based on the number of kilns converted and not the emission reduction protocols in §101.303. The commission has not changed the rules in response to this comment. The commission supports the ELP-sponsored program of brick kiln modification in Ciudad Juarez, and this adoption will not affect the existing requirements for using reductions generated in Mexico in lieu of achieving reductions in El Paso. Senate Bill 1561 (77th Legislature. 2001) directed the commission to adopt rule language authorizingthe use of reductions generated outside of the United States to satisfy otherwise applicable emission reductions in Texas. Any reductions achieved outside of the United States are requiredto be surplus to all applicable laws and if used in lieu of an emission reduction credit or discrete emission reduction credit must meet the applicable requirements of those programs. In addressing ELP's spedfic concerns, the requirementto offset new emissions in an area designatedas nonattainment for a criteria pollutant is not voluntary; however, in accordance with the Federal Clean Air Act the reductions used to satisfy the offset requirement must be voluntary and "otherwise not relied upon." Based on this reasoning, there is no needto alter the statement of purpose under 

### 5101.301 as both emission credits and reductions used to offset must be voluntary reductions. The emission reduction credit programwas established in 1993to provide a means for marketing reductions in criteria pollutants for use in satisfying the offset requirements in all nonattainment areas. The commission acknowledges that the requirement to offset emission increases is not specific to ozone precursor pollutants, however, the perceived need, by the commission and interested parties, at that time was for a market-based system for reductions in ozone precursor pollutants, nitrogen oxides, and volatile organic compounds. This perception has been supported wer time by the lack of interest and need in establishing a market for other criteria pollutants. To dab, El Paso County is the only county inthe state which contains nonattainment areasfor crib ria pollutantsother than ozone, and there are currently no nonattainment permitsthat have been issued in El Paso County. The commission agrees with ELP'scomments regardingthe need to include other criteria pollutants in the ernission reduction credit program in order to meet potential offset needs and will revise



### ADOPTED RULES September 5,2003 28 

### Tdeg7767§101.302 in Mure rulemaking. In addition, the commission intends to maintain a crediiregistry for all nonattainment areas in which banked credit could be created or needed and will appropriately revise 5101.309 and §101.311 in future rulemaking. Emission- reductionsgeneratedoutside of the United Statesthat are used in lieu of an emission reduction credit or discrete emission reduction credit shall meet the applicable requirements of those programs. One such requirement for an emission reduo tion credit or discrete emission reduction credii is that the reduction be quantifiable. To meetthis requirement, quantification methods must be based on TCEQ- and EPA-approved quantification protocols. Quantification methodsthat have not been prethe operation of equipment to be replaced until the replacement equipment istested and integrated into thefacility. The emission credit and banking system allows the commission to keep track of emission reductions that may reappear as emissions if they are used as offsets. Therefore, the commission will require that any reductionto be usedas anaffsetata facilityotherthan where itwas generated must be cerbified under Chapter 101. The cornmission has not changed the rules in responseto this comment. EPA commentedthat the commission should clarify that reduo tionsto be used as offsets must be certified under Federal Clean Air Act requirements if those reductionsare to be applied before the September 1,2004 deadline as ~ro~osed in 8116.17Nbl.

. . 

### . , viOusl~ may 

### besubmitted to the The &mmission currently requires that redu&s be mified EPA for located outside the United States under Clean Air Act requiremen&, which are incorporatedinto which generate emission reductionsthat are used in Texas are Chapter Subchapter H, if they are to be used as offsets. subject to this requirement and would need to submit a chosen Existing that have not yet been banked must be cer- quantification methodfor Once the quantifi- tified by the date of September 1,20M if theyare to be pratocol may be for future strategies used as offsets. The commission has not changed the rules in the same sourcetype (i.e., engine, flare, brick kiln) andwould not response to this comment. be subject to the approval process. The commission disagrees that this processwill frustrate or hinder the generation of reduc- EPA recommended the following modificationsto $116.170(~)(2) tions that may be used as offsets. 

## - (4): paragraph (2) should contain a reference to any additional reductions required by the executive director; paragraph The commission acknowledgesthe differences in the emissions (3)should cornin a requirementto provide info,.ation to the ex- inventory, emissions measurement, and recordkeeping require- ecutive director that emission reductions meet the requirements in Mexico and the States' Addi- of Chapter 101, Subchapter H; and paragraph (4) should con- tionally, the commission recognizesthe obstacleswhich sources tain language requiring that any additional reductions meet the in Texas must overcome in proving that reductions achieved in ,quirements of (2) and (3). Mexico are creditable for use insatisfvinathe offset reauirement. To date, the commission has appr&d-the use of eniission re- Thecommission does not believethe additionsare necessary for ductions from the modificationof brick kilns in Ciudad Juarez to the clear application of the rule and has not changed $116.170 be used in lieu of allowances within a state- reauired cao and in resoonse to this comment. tmde program enacted under Senate (7Bih 'qisiature. TCC

# and Dew are concerned that the effectivedateof February 1999). Future use Of these reductions for Of meeting 1,2004 proposed in$116.315(a) will not allow sufficienttime for a federal requirement, such as offsets, will be subject to the aP notification and application for companies that must proval of the EPA as well as the TCEQ. Thus. the requirements 

# ,, their permits in February. TCC is basing this comment on by which these are -Iuated may be ananticipated rule promulgationof July 2003. This effective date than previouslyused in use for a state require- would only leave one monthfor companiesto read and =pond rnent. The commissionwill continueto work with ELP and other to the amended rulesin orderto submit renewals six months prior interested parties in addressing these and other issues to pro- to February 2004 TCC recommended an effective date of April motethe use of reductions from Ciudad Juarez and other border 2004. re&mmended that permits expiring May areas of Mexico. 1,2004 and August 1, 2004 be submitted by February 1,2004. TIP commented that the commission should clarify that the Dwv further recommendedthat $116.310 be revised to require September 1, 2004 deadline in $116.1 70(b) applies to existing the commission provide notification270 days prior to permit exreductionsand that reductionsoccumng after that date may ako piration. be certified and banked. TIP also requested clarification that The 

# ,,,the request for an extension of the the commission will continue to allow, consistent with current effectivedate of the rules to May 2004 and has changed the permitting practice, a period Of werla~ between the installati0n rules accordingly.Section 116.310 was not proposed for amendOf new equipment for internal Offsets and the Of the ment and, under rulemaking procedures, cannot be changed at so that the equipment remains available this adoption. The commission staffwillmodify its internalproceas during the new testing, and duresto provide more advance notificationof pendingexpiration troubleshooting. of oerrnits. r The agrees with the l'IP suggestion and has EPA recommendedan additionto 9116.1 16 statingthat discrete changed the rules in response to this comment. TIP is also emission credits used to exceed permit allowables under 'Orrect about the current practice Of a period §101.376(b)(I), Discrete Emission Credit Use, are subject to for new equipment that is replacing old. The commission will the limitations of 9101.376(c). continue this practice. No changes were proposed to 5116.1 16; therefore,the comrnis- Dow commented that the proposed rules should be clarifiedthat sion is prohibited by law from making any changes to this section the requirementto certify a reductionas an offset applies only to in the current rulemaking. those offsets that will be applted at another site. The commtssion is retaining languagethat allows future internal 

### SUBCHAPTERA. 

### DEFINITIONS offsetsto a facility to be certified under Chapter 116. This allows 30 TAC 8116.12



### 28 TexReg 7768 September 5, 2003 

### TaasRegisterSTATUTORY AUTHORITY Control Plan. whichauthoriies the commissionto develo~ a aenThe amendment is adopted under Texas Water Code, 55.103, concerning Rules, and 55.105, concerning General Policy, which authorize the commission to atlopt rules necessary to cany out its powers and duties under the Texas Water Code; and under Texas Clean Air Act, 5382.017, concerning Rules, which authoriies the commission to adopt rules consistent with the policy and purposes of the Texas Clean Air Act. The amendment is also adopted under Texas Clean Air Act, s382.002, concerning Policy and Purpose, which establishes the commission's purposeto safeguardthe state's air resources. consistent with the protection of public health, general weffire, and physical property; 982.011, concerning General Powers and Duties, which authorizes the commission to control the quality of the state's air; w.012,concerning State Air Control Plan, which authorizes the commission to develop a general, comprehensive planfor control of the state's air; and s382.016, concerning Monitoring Requirements, Examination of Records, which authorizes the commission to prescribe reasonable requirements for the measuring and monitoring of emissions of air contaminants. The amendment is also adopted under 42 United States Code, §7410(a)(2)(A), which requires SIPS to include enforceable emission limitations and other control measuresor techniques, including economic incentives such as fees, marketable permits, and auction of emission rights. This agency hereby certifiesthatthe adoption has been reviewed by legal counsel and found to be a valid exerciseof the agency's legal authority. Filedwith the Office ofthe Secretary of State on August 25,2003. TRD-200305439 Stephanie Bergeron Director. Environmental Law Diin Texas Commission on Environmental Quality Effective date: September 14,2003 Proposal publication date: April 4,2003 Forfurther information, please call: (512) 239-5017


### SUBCHAPTER B. 

### NEW SOURCE 

### REVIEW PEWTS DMSION 1. 

### PERMIT APPLICATION 30 

### TAC @116.114, 116.115, 116.120 STATUTORY AUTHORITY The new and amended sections are adopted underTexas Water Code, 55.103, concerning Rules, and 55.105,concerning General Policy, which authorizethe comrnission to adopt rules necessary to carry out its powers and duties under the Texas Water Code; and underTexas Clean Air Act, 5382.017, conmrning Rules, which authorizes the commission to adopt rules consistent with the policy and purposes of the Texas Clean Air Act. The new and amended sections are also adopted under Texas Clean Air Act, 982.002, concerning Policyand Purpose, which estab lishes the cornmission's purpose to safeguard the state's air resources, consistent with the protection of public health, general welfare, and physical property; S382.011, concerning General Powers and Duties, which authorizes the comrnission to control the quality of the state's air; 5382.012,concerning State Air eral. comorehensive olan for control of the state's air: 6382.016, concerning ~onitorii~ Requirements, Examination o<~ecords, which authorizes the commission to prescribe reasonable reauirements for the measurina and monitorina of emissions of air contaminants; $382.051, &cerning perfking Authority of Commission Rules. which.authorizes the commission to issue permits for the coktruction of a new facility or modification of an existing facility; 5382.051 3, concerning Permit Conditions, which authorizes the commission to establishand enforce permit conditions; 5382.0515,concerningApplicafon for Permit, which authorizes the commission to require a permit application with plans and specifications necessaryfor the commissionto determine if the facility will comply with applicable state and federal regulationsand the intent of theTexas Clean Air Act; 5382.0517, concerning Determinationof Administrative Completion ofApplication. which authorizes the commission to determine when an appli&tion is administratively complete; and 5382.0518,concernina Preconstruction Permit. which reauires persons Dbnningth;e consbuctionor modificationof afacility to obtain a permit from the commission. $116.114. Application Review Schedule. (a) Review schedule. The executive htor shall review permit applications in accordance with the following. (1) Notice of completion or deficiency. The executive dimtor shall mail written notification informing the applicant that the application is completeor that it is deficient within 90 days of receipt of the applicationfor a new permif or amendmentto a permit or special permit. (A) Ifthe application is deficient, the notification must state: (5) the additional informationrequired; and (ii) the intent of the executive director to void the application if informationfor a completeapplicationis not submitted. (B) Additional information may be requestedwithin 60 daysofreceiptofthe informationprovided inresponsetothe deficiency notification. (2) Preliminary decision to approve or disapprove the application. The executive director shall conduct a technical review and send written notice to the applicant of the preliminary decision to approve or not approvethe application within 180days from receiptof a completed permit application or 150days fromreceipt of a completed permit amendment. If the applicant has provided Notice ofReceipt of Application and Intent to Obtain Pennitpublic notification as required by the executive directorunder Chapter 39 of this title (relating to Public Notice), one of the following shall apply: (A) if comments are received on the proposed facility and replied to by the executive directorin accordancewith 539.420 of this title (relating to Transmittal of the Executive Director's Response to Comments and Decision) and 555.156 ofthistitle (relating to Public Comment Processing); and (B) if no requests for public hearing or public meeting on the proposed facility have been received or the application is otherwise exempt under 539.419(e) of this title (relating to Notice ofApplication and Preliminary Decision), the executive director shall send a copy of the Preliminary Decision to the applicant; or (C) if Notice of Application and Preliminary Decision is required under 539.419(d)ofthis title (relating to Notice of Application and PreliminaryDecision), the executivedirector shall authorize



### ADOPTED RULES September 5,2003 28 

### TexReg 7769this notice and send capies to the appiicant and all other persons are required under 839.602 of this title (relatingto Mailed Notice). (3) Refund of permit fee. (A) If the time limits provided in this sectionto process an application are exceeded, the applicantmay appeal in writing to the executive director for a refund of the permit fee. @) The pennit fee shall be reimbursed if it is determined by the executivedirector thatthe specified period was exceeded without good cause, asprovided in Texas Civil Statutes, Article 6252- 13b.1, $3. (b) Voiding of deficient application. (1) An applicant shall make a good faith effort to submit, in a timely manner, adequate information which demonsbates that the requirements for obtaining a permit or permit amendment are met in response to any deficiency notification issued by the executive director under theprovisionsofthis section, or Chapter 39 of this title (relating to Public Notice). (2) If an applicant fails to make such good faith effort after two written notices of deficiency, the executive director shall void the application and notify the applicantof the voidance and the remaining deficiencies in the voided application. If a new application is submitted within six months of the voidance, it shall meet the requirements of $ 116.1 11 of this title (relating to General Application) but will be exempt fromthe requirements of $116.140 ofthis title (relating to Applicability). (c) Notification of executivedirector's decision. (1) Notification to applicant. The executive director or the chief clerk shall send to the applicant the decision to approve or not approve the application if: (A) no timely requests for reconsideration, contested case hearing, or public meeting on the proposed facility have been received; or @) if hearing requests have been received and withdrawn before the executive director's Preliminary Decision; or (C) the application isfor any amendment, modification, orrenewal applicationthat would not result in an increasein allowable emissions and would not result in the emission of an air contaminant not previously emitted; and (D) theapplicanthas satisfied all public notificationre- quirements of Chapter 39 of this title. (2) Notification to commenters. Except for initial issuance of voluntary emission reduction permits and electric generating facility permits, persons submittingwritten comments under Chapter 39 of this title shall be sent the executive director's final action and given an explanation of the opportunity to file a motion under 550.139 of this title (relating to Motion to Overturn Executive Director's Decision) at the same time that the applicant is notified. If the number of interested persons who have requested notification makes it impracticable for the commission to notify those persons by mail, the commission shall notify those persons by publication using the method prescribed by 8382.03I(a) of the Texas Health and Safety Code. (3) Time limits. The executive director shall send notification of final action within: (A) one year after receipt of a complete prevention of significant deteriorationornonattainmentpermit application,ora complete permit application for an action under Subchapter C ofthis chapter: (B) 180days of receipt of a completedpennit orpermit renewal application; or (C) 150 days of receipt of a permit amendment or special permit amendment application. $116.120. Voiding ofPermits. (a) A permit or permit amendment under this chapter is void if the permit holder does one of the following: (1) fails to begin construction within 18 months of issuance, except asnoted in subsection (b)of this section; (2) discontinues constructionformore than 18consecutive months prior to completion; or (3) fails to complete constructionwithin areasonable time. @) The executive director may grant extensionsto begin con- struction. Permits issued to holders who have received extensions will be subject to revision based on best availablecontml technology, lowest achievable emission rate, and netting or offsets as applicable. A first extension of 18months may be granted solelyatthe request ofthe permit holder. One additional extension of up to 18 months may be granted if the permit holder demonstrates that emissions from the facilitywill comply with all rules and regulationsof the commission and the intent of the TCAA, includingprotection of thepublic's health and physical property; and (1) thepenitholder isa party to litigationnotofthepermit holder's initiation regadng the issuance of thepermic or (2) the permit holder has spent, or committed to spend, at least 10%ofthe estimatedtotal cost of the project up to a maximum of $5 million. (c) A permit holder granted an extension under subsection (b)(l) of this section may receive one subsequent extension if the permit holder meets the conditions of subsection(b)(2) ofthis section. This agency herebycertifiesthatthe adoptionhas been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Filedwith the Office ofthe Secretaryof State on August 25,2003. TRD-200305440 Stephanie Bergeron Director. Environmental Law Division Texas Commission on Environmental Quality Effective date: September 14, 2003 Proposal publication date: April 4, 2003 For further information, please call: (512)239-5017


### DIVISION 4. 

### PERMIT FEES 30 TAC 8116.143 STATUTORY AUTHORITY The amendment is adopted under Texas Water Code, 55.103, concerning Rules, and 55.105, concerning General Policy, which authorize the commission to adopt rules necessary to carry out its powers and duties under the Texas Water Code; and under Texas Clean Air Act, 5382.017, concerning Rules, which authorizes the commission to adopt rules consistent with the policy and purposes of the Texas Clean Air Act. The amendment is also adopted under Texas Clean Air Act, 5382.002, concerning



### 28 TexReg 

### 7770 September 

### 5, 2003 Texas RegisterPolicy and Purpose, which establiihes the commission's purpose to safeguard the state's air resources, consistentwith the proteclion of public health, general welfare, and physical prop erty; 5382.011, concerning General Powers and Duties, which authorizesthe commissionto controlthe quality ofthe state's air; 5382.012, concerning State Air Control Plan, which authorizes the commission to dewlop a general, comprehensive plan for control of the state's air; 5382.016, concerning Monitoring Requirements, Examinationof Records, which authorizesthe commission to prescribe reasonable requirements for the measuring and monitoring of emissions of air contaminants; 5382.051, concerning Permitting Authority ofCommission Rules, which authorizes the commission to issue permits for the construction of a new facility or modification of an existing faality; 5382.0513, concerning Permit Conditions, which authorizes the commission to establish and enforce permit conditions; 5382.0515,concerning Application for Permit, which authorizes the commission to require a permit application with plans and specifications neo essary for the commission to determine if the facility will comply with applicable state and federal regulations and the intent of the Texas Clean Air Act; 5382.0517,concerning Detemination ofAdministrativeCompletionofApplication, which authorizesthe commissionto determinewhen an applicationisadministratively complete: 5382.0518, concerningPreconstructionPermif which requires persons planning the consbuction or modffication of a faality to obtain a permit from the commission; and 5382.061, concerning Application, Permit, and Inspection Fees, which requires the commissionto adopt, charge, and collectfees for each application for a permit or renewal of a permit. This agency hereby certifies thatthe adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Filed~Ith te Officeofthe Secretaryof State onAugust 25,2003. TRD-200305441 Stephanie Bergeron Director. Environmental Law Division Texas Commission on EnvironmentalQuali Effective date: September 14.2003 Proposal publication date: April 4,2003 Forfurther information, please call: (512) 239-5017


### DMSION 5. 

### NONATTWNT 

### REVIEW 30 TAC §116.150 STATUTORY AUTHORITY The amendment is adopted under Texas Water Code, 55.103, concerning Rules, and 55.105, concerning General Policy, which authorize the commissionto adopt rules necessary to carry out its powers and duties under the Texas Water Code; and under Texas Clean Air Act, 5382.017,concerning Rules, which authorizes the commission to adopt rules consistent with the policy and purposes of the Texas Clean Air Act. The amendment is also adopted under Texas Clean Air Act, 5382.002, concerning Policy and Purpose, which establishes the commission's purpose to safeguard the state's air resources, consistent with the protection of public health, general welfare, and physical prop erty; 5382.011, concerning General Powers and Duties, which authorizes the commissionto control the quality ofthe state's air; 5382.012,concerning State Air Control Plan, which authorizes the commission to develop a general, comprehensive plan for control of the state's air; 5382.016, concerning Monitoring Requirements, Examinationof Records, which authorizes the commission to prescribe reasonable requirements for the measuring and monitoring of emissions of air contaminants; 5382.051, conceming PermittingAuthority of Commission Rules, which authorizes the commissionto issue permits for the construction of a new facility or modification of an existing facility; p82.0513, concerning Permit Conditions,which atlfhoriisthe commission to establish and enforce permit conditions; 5382.0515,concerning Application for Permit, which authorizes the commission to require a permit application with plans and specif~cationsnecessary for the commissionto determine if the facility will comply wfth applicable state and federal regulations and the intent of the Texas Clean Air Act; 5382.0517, conceming Determination of Administrative Completionof Application, which authoriiesthe commissionto determinewhen an application is administratively complete; and 5382.0518, concerning Preconstruction Permit, which requires persons planning the construction or modification of a facility to obtain a permitfrom the commission. This agency hereby certifiesthattheadoptionhas been reviewed by legal counseland found to be a valid exercise of the agency's legal authority. Filedwiththe Office ofthe Secretaryof State onAugust 25,2003. TRD-200305442 Stephanie Bergeron Director, EnvironmentalLaw Division Texas Commission on Environmental Quality Effective date: September 14,2003 Proposal publication date: April 4, 2003 For further information, please call: (512) 239-5017


### DMSION 7. EMISSION REDUCTIONS: OFFSETS 30 

### TAC 5116.170 STATUTORY AUTHORITY The repeal is adopted under Texas Water Code, 55.103,concerning Rules, and 55.105,concerning General Policy, which authorize the commissionto adopt rules necessaryto carry out its powers and duties underthe Texas Water Code; and under Texas Clean Air Act, 5382.017,concerning Rules, which authorizes the commission to adopt rules consistent with the policy and purposes of the Texas Clean Air Act. The repeal is also adopted under Texas Clean Air Act, 5382.002,concerning Policy and Purpose, which establishes the commission's purpose to safeguard the state's air resources, consistent with the protection of public heaith, general welfare, and physical property; 5382.01 1,concerning General Powers and Duties, which authorizes the commissionto control the quality of the state's air; and 5382.012,concerning State Air Control Plan, which authorizes the commission to develop a general, comprehensive plan for control of the state's air. This agency hereby certifiesthatthe adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Filedwiththe Mfice of the Secretaryof Stateon August 25,2003.



### ADOPTED 

### RULES September 5,2003 28 

### TexReg 7771Stephanie Bergeron Director, Environmental Law Division Texas Commission on Environmental Quality Effective date: September 14,2003 Proposal publication date: April 4, 2003 Forfurther information, please call: (512) 239-501 7

30 TAC §116.170,§116.172 STATUTORY AUTHORIN The newsections are adopted underTexas Water Code. 55.103, concerning Rules, and 55.105, concerningGeneral Policy, which authorize the commissionto adopt rules necessary to carry out .its powers and duties under the Texas Water Code; and under Texas Clean Air Act, 5382.017, concerning Rules, which authorizes the cornmission to adopt rules consistent with the policy and purposes of the Texas Clean Air Act. The new sections are also adopted under Texas Clean Air Act. 5382.002, concerning Policy and Purpose, which establishes the commission's purpose to safeguard the state's air resources, consistent with the protection of public health, general welfare, and physical property; 5382.011, concerning General Powers and Duties, which authorizesthe commissionto controlthe qualityof the state's air; 5382.012, concerning State Air Control Plan, which authorizes the commission to develop a general, comprehensive plan for control of the state's air; 5382.016, concerning Monitoring Requirements, Examinationof Records, which authorizesthe commission to orescribe reasonable reauirements for the measuringgnd mo;litoring of emissions of drcontaminants; 5382.051, concernins PermittingAuthority of Commission Rules, which authorizes the commi&~onto issue permitsfor the construction of a new facility or modification of an existing facility; 5382.0513, concerning Permit Conditions, which authoriiesthe commission to establish and enforce permit conditions; 5382.0515, concerning Application for Permit, which authorizes the commissionto require a permit application with plans and specifications necessary for the commission to determine if the facility will comply with applicable state and federal regulations and the intent of the Texas Clean Air Act; 5382.0517, concerning Determination of Administrative Completion of Application, which authoriiesthe commissionto determinewhen anapplication is administratively complete; and 5382.0518, concerning Preconstruction Permit, which requires persons planning the construction or modification of a facilityto obtain a permit from the commission. The new sections are alsoadopted under42 UnitedStates Code, §7410(a)(2)(A), which requires SIPS to include enforceable emission limitations and other control measures or techniques, includingeconomic incentives such as fees, marketable permits, and auctionof emission rights. $116.170. Applicability ofEmission Reductions as msetr. (a) No reduction may be used as an offset unless it has been certifiedas an emission credit under Chapter 101,Subchapter H, Division 1 or 4 of this title (relating to Emission Credit Banking and Trading; or Discrete Emission Credit Banking and Trading), except asprovided for in subsection (c) ofthis section. (b) Existing reductionsnot yet certified and banked as an emission credit must be certified and banked with the executive directorby September 1,2004 in order to be considered for use as an offset. (c) A future reduction may be used as an offset for a permit provided that: (I) the permit contains special conditions that specify the date by which the permit holder must submit to the executive director appropriateand sufficientdata to verify that the reduction has occurred and the reduction isprovided by start of operation; (2) the reduction must be achieved prior to commencement of the permitted emissions for which the offset is required; (3) the reduction meets all of the requirements of Chapter 101, SubchapterH, Division 1 or 4 of this title when submitted to the executive directorfor reviewper the requirementsofthe issuedpermit; and (4) the pmitholder agrees to obtain additional offsets if the review by the executive director indicates the reductions do not satisfy the original offset requirements. This agency hereby certifies thattheadoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Filedwith the Officeof the Secretaryof Stateon August 25,2003. -StephanieBergeron Director, Environmental Law Division Texas Commission on Environmental Quality Effective date: September 14.2003 Proposal publication date: April 4,2003 For further information, please call: (512) 239-5017


### SUBCHAPTER D. 

### PERMIT RENEWALS 30 TAC §116313,§116315 STATUTORY AUTHORITY The amendments are adopted underTexas Water Code, 55.103, concerning Rules, and 55.105, concerning General Policy, which authorize the commission to adopt rules necessary to carry out its powers and duties under the Texas Water Code; and under Texas Clean Air Act, 5382.017, concerning Rules, which authorizes the commission to adopt rules consistent with the policy and purposes of the Texas Clean Air Act. The amendments are also adopted under Texas Clean Air Act, 5382.002, concerning Policy and Purpose, which establishes the commission's purpose to safeguard the state's air resources, consistent with the protection of public health, general welfare, and physical property; $382.011, concerning General Powers and Duties, which authorizesthecommission to controlthe quaiiof the state's air; 5382.012, concerning State Air Control Plan, which authorizes the commission to develop a general, comprehensive plan for control of the state's air; 5382.01 6, concerning Monitoring Requirements, Examinationof Records, which authorizes the commission to prescribe reasonable requirements for the measuring and monitoring of emissions of air contaminants; 5382.051, concerning PermittingAuthoriiyof Commission Rules, which authorizes the commission to issue permits for the construction of a new facility or modification of an existing facility; 5382.0513, concerning Permit Conditions, which authorizesthe commission to establishand enforce permit conditions; 5382.0515, concerning Application for Permit, which authorizes the commission to require a permit application with plans and specifications necessary for the commissionto determine if the facility will comply with applicable state and federal regulations and the intent of the Texas Clean Air Act; 5382.0517, concerning Determ~nation



### 28 

### Tdeg7772 

### September 5,2003 

### TexasRegisterofAdministrative CompletionofApplication, which authorizesthe commissionto determinewhen an applicationisadministratively complete; 5382.0518, concerning PreconstructionPermit, which requires persons planning the construction or modificationofa fadlity to obtain a permit from the commission; and 5382.061, concerningApplicatiin, Permit, and Inspection Fees, which re quiresthe cornrnission to adopt, charge, and collectfees for each application for a permit or renewal of a permit $116.315. Pennit Renewal Submitto2. (a) An application for renewal must be submitted at least six months, but no earlierthan 18months, prior to expirationofthepermit or the permit will expire. This subsectionwill be effective on May 1, 2004. (b) With executive director approval, the application may be submitted before or after the time period specified in subsection (a) of this section. (c) Any permit issued: (1) before December 1, 1991,is subjectforreview 15years after the date of issuance; (2) on or after December 1, 1991, is subject formiewevery ten years after the date of issuance; or (3) at non-federal sources on or after December 1, 1991, may, for cause, contain aprovision requiring renewalbetween five and ten years. This agency herebycertifiesthatthe adoption has been reviewed by legal counseland foundto be a valid exercise ofthe agency's legal authority. Filedwiththe Officeofthe Secretary of State onAugust 25,2003. TRD-200305445 Stephanie Bergemn Director. Environmental Law Division Texas Commission on EnvironmentalQuality Effective date: September 14,2003 Proposal publication date: April 4, 2003 For further information,please call: (512)239-5017


### SUBCHAPTER G. 

### FLEXIBLE PERMITS 30 TAC §116.715 STATUTORY AUTHORITY The amendment is adopted under Texas Water Code. 55.103, concerning Rules, and 55.105, concerning General Policy, which authorize the commissionto adopt rules necessary to carry out its powers and duties under the Texas Water Code; and under Texas Clean Air Act, 5382.017, concerning Rules, which authorizes the commission to adopt rules consistent with the policy and purposes of the Texas Clean Air Act. The amendment is also adopted under Texas Clean Air Act, 5382.002, concerning Policy and Purpose, which establishes the commission's purpose to safeguard the state's air resources, consistent with the protection of public health, general welfare, and physical prop erty; 5382.01 1, concerning General Powers and Duties, which authorizesthe commission to controlthe qualityof the state's air; 5382.012, concerning State Air Control Plan, which authorizes the commission to develop a general, comprehensive plan for control of the state's air; 5382.016, concerning Monitoring Requirements, Examinationof Records, which authorizes the commission to .pmhbe reasonable requirements for the measuring and monitoringof emissions of air contaminants; 5382.051, concerning Permitting Authority of Commission Rules, which authorizes the comrnissionto issue ~ermits for the construction of a new facility or modification of an existing facility; 5382.0513, concerning Permit Conditions. which authorizes the commission to establisi; and enforce conditions; 5382.0515, concerning Application for Permit, which authorizes the comrnission to require a permt application with plans and specifications necessary for the comrnissionto determine ifthe facility will comply with applicable state and federal regulations and the intent of the Texas Clean Air Act; 5382.0517, concerning Determination ofAdministrative CompletionofApplication,which authorizesthe cornrnission to determine when an applicationisadministratively complete; 5382.0518. concerning PreconstructionPermit,which requires persons planning the construction or modificationof a facility to obtain a permit from the commission; and 5382.061, concerning Application, Permit, and Inspection Fees, which requiresthe commissionto adopt, charge, and collectfees for each application for a permit or renewal of a permit. $116,715. General andSpecial Conditions. (a) Flexible permits may contain general and special conditions. The holders of flexible permits shall comply with any and all such conditions. Upon a specific findingby the executive directorthat an increase of a particular air contaminant could result in a significant impact on the air environment,or could cause the facility, group of facilities, a account to become subject to review under 61 16.150 and§116.151 and§§116.160- 116.163ofthistitle(relatingtoNonattaimnent Review or Prwention of Significant Deterioration Review) or SubchapterC of this chapter (relating to Hazardous Air Pollutants: Regulations Governing Constructedor Reconstructed Major Sources (XU, $1 12(g),40 CFR Part 63)), the permit may include a special condition whichrequires the permittee to obtain written approval from the executive director before constructing a facility under a standard permit or a permit by rule under Chapter 106 of this title (relating to Pennits by Rule). (b) Apollutant specificemissioncap ormultiple emission caps andlor individual emission limitations shallbe establishedfor each air contaminantfor all facilitiesauthorizedby the flexiblepemit. (c) The followinggeneral conditions shall be applicableto ev- ej flexiblepennit. (1) Applicability. This section does not apply to physical or operational changes allowedwithout an amendmentunder 6116.721 of &is title (rela& to Amendments and Alterations). (2) Construction progress. The start of construction, con- structionintemptionsexceeding45 days, and completion of construction shall be reported to the appropriateregional office ofthe commission not later than 15 working days after occurrence of the event. (3) Start-up notification. (A) The appropriateregional office of the commission and any local program having jurisdiction shall be notifiedprior to the commencement of operations of the hcilities authorized by the permit in such a manner that a representative of the commissionmay be present. (B1 Phased construction. which may involve a series of facilities&&ing operationsat different times; shall provide separate notification for the commencement of operations for each facility.



### ADOPTED RULES September 5,2003 28 

### Tdeg7773(C) Priorto beginning operations ofthe facilities authorized by the permit, the permit holder shall identify to the Office of Permitting, Remediation, and Registration the sourceor sources of allowances to be utilized for compliance with Chapter 101, Subchapter H, Division 3 of this title (relating to Mass Emissions Cap and Trade fiogram). (4) Sampling requirements. If sampling of stacks or process vents is required, the flexible permit holder shall contact the commission's Office of Compliance and Enforcement mior to sampling to obtainthe proper data formsandprocedures. A11 skpling and testingprocedures mustbe approved by the executivedirector and coordinata with the appropriate-regionaI office of the commission. The flexible pennit holder is also responsible for providing sampling facilities and conductingthe sampling operations or contracting with an independent sampling consultant. (5) Equivalencyof methods. It shallbetheresponsibilityof the flexiblepennit holderto demonstmteorotherwise justify the equivalency of emissioncontrolmethods, sampling orotheremission testing methods, and monitoringmethods proposed asalternatives to methods indicated in the conditions ofthe flexible permit Alternative methods shallbe applied for in writing and must be reviewed and approved by the executive director prior to their use in fulfilling any requirements of the pennit. (6) Recordkeeping. A copy of the flexible permit along with informationand data sufficientto demonstrate continuous compliance with the emission caps and individual emission limitations contained in the flexiblepermit shall bemaintained ina file at the plant site and made availableat the request ofpersonnel fromthe commission or any airpollution controlprogramhavingjurisdiction. For kilitiesthat normally operate unattended, this information shall be maintained at the nearest staffed location within Texas specifiedby thepermit holder in thepermit application. This informationmay include, but is not limited to, emission cap and individual emission limitation calculations based on a 12-monthrollingbasis and production records and operating hours. Additional recordkeeping requirementsmay be specified in special conditions attached to the flexible pennit. Information in the file shall be retained for at least two years following the date that the information or data is obtained. (7) Maximum allowable emission rates. A flexible permit covers only those sourcesofemissionsandthoseair contaminants listed in the table entitled "Emission Sources, Emissions Caps andIndividual Emission Limitations" attached to the flexible permit. Flexible permitted sources are limited to the emission limits and other conditions specified in the table attached to the flexible permit. (8) Emission cap readjustment. If a schedule to install additional controls is included in the flexible permit and a facility subject to such a scheduleis taken out of service, the emission cap contained in the flexible permit will be readjusted for the period the unit is out of service to a level as if no schedule had been established. Unless a special provision specifiesthe method of readjustment of the emission cap, a permit alteration shall be obtained. (9) Maintenance of emission control. The facilities covered by the flexible permit shall not be operated unless all air pollution emission capture and abatement equipment is maintained in good working order and operating properly during normal facility operations. Notification for emissions events and scheduled maintenance shall be made in accordancewith 5 101.201 and 

### 5 101.21 1of this title (relating to Emissions Event Reporting and Recordkeeping Requirements; and ScheduledMaintenance, Startup, and Shutdown Reporting and Recordkeeping Requirements). (10) Compliance with rules. Acceptance of a flexible permit by a permit applicant constitutes an acknowledgment and agreement that the holder will comply with all Rules, Regulations, and Orders of the commission issued in conformity with the TCAA and the conditions precedent to the granting of the pennit. If more than one state or federal rule or regulation or flexible permit condition are applicable, then the most stringent limit or condition shall govern and be the standard by which compliance shall be demonstrated. Acceptance includes consent to the entrance of commissionemployees and agents into the permitted premises at reasonable times to investigate conditions relating to the emission or concentration of air contaminants, including compliance with the flexiblepermit. (d) There may be additional special conditions attached to a flexible permitupon issuanceor amendmentofthe permit. Suchconditions in a flexiblepermit may be morerestrictivethan therequirements of this title. This agency hereby certifiesthat the adoption has been reviewed by legalcounsel and found to be a valid exercise of the agency's legal authority. Filedwiththe Office ofthe Secretaryof State on August 25,2003. TRD-200305446 Stephanie Bergeron Director, Environmental Law Division Texas Commission on Environmental Quality Effective date: September 14,2003 Proposal publication dale: April 4,2003 For furtherinformation,please call: (512) 239-5017


### CHAPTER 305. 

### CONSO#IDATED PERMITS

BACKGROUND AND SLIMMAR OF THE FACTUAL BASIS FOR THE ADOPTED RULES Senate Bill (SB) 405, 77th Legi ature, established the Texas Board of Professional Geoscienti ts and the regulation of professional geoscientists. The Texa Geoscience PracticeAct (the Act) requires that a person may t take responsible charge of a aeoscientific report or a aeosc

# !

ntific portion of a report required by state agency rule unless personis licensedthrough the Texas Board of ProfessionalG The primary purpose of the amendments is to regulationsfor the public

practice of geoscience. Adopted 5305.2, Definitions, amends he introductory paragraph by deleting the word "shall"and the hrase "unlessthe context 

# t

28 TexReg 7774 

### September 5, 2003 

### Texas 

### Register