Robert J. Huston, Chairma 

R. B. "Ralph" Marquez, Commissioner 

Kathleen Hartnett White, Commksioner 

Margaret Hoffman, Executive Director 

," Ern TEXAS COMMISSION ON ENVIRONMENTAL QUALITY Y) 

,- 

Botecting Texas by Reducing and Bwenting 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 

1445 Ross 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 establishment of a voidance process, require an 

application for pennit renewal to be submitted at least six months but no earlier than 18 months 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, Strategic Assessment Division 

Kerri Rowland, Senior Attorney, Environmental Law Division 

Clifton Wise, Rule Project Manager, Policy & Regulations Division 

Joyce Spencer, Texas Register Coordinator, Policy & Regulations Division 
Texas Commission on Environmental Quality 

Public Hearing 

April 24,2003 

30 TAC Chapter 1 16 

Offset Certification, New Source Review Permit 

Processes, and Extensions for Construction 

Rule Log Number 2003-003-1 16-AI 
INTRODUCTION 

The Texas Commission on Environmental Quality (commission) held a public hearing in Austin on April 24, 

2003, to consider revisions to 30 TAC Chapter 116, Control of Air Pollution by Permits for New Construction 

or Modification, and corresponding revisions to 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 Notification and Proposal 

0 Written and Oral Testimony 

o Evaluation of Testimony 

0 Staff Recommendations (including order and Texas Register publication) 

Additional copies of this hearing record are maintained in the Texas Commission on Environmental Quality 

central office at 12100 Park 35 Circle, Austin, Texas 78753. For further information, please contact 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 Environmental Quality 

(commission) wlll conduct a public hearing to receive comments concerning -revisions to 

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 116.1 72. 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 Protection Agency mgulations concerning SIPS. The proposed 

mvisions to Chapter 116 would require emisskm reductions be certified as offsets under 

Chapter 101, Subchapter H, retaining Chapter 116 as a futura internal offset certification 

method, ensure timely submlasbn of updated and additional lnformatlon used to process 

new source appllmtions induding the establishment of a voidance process, 

requlre an application for permlt renewal to be submitted at least six months but no 

eadier than 18 months prior to the perm# expiration date, and allow an additional 18 

months before voldina a Dennit to bepin consbudon of authorized ~roiects for delavs 

caused by third party-lii'atlon or other spec& reasons. A publlc heathQ on this . 

proposal will be held In Austln on April 24,2003 at 10:OO a.m. In Bullding F, Room 

3202~ at the mmmissbn's wnbal bfflce located at 12100 Park 35 Circle. The hearing 

wlll be structured for the receipt of oral or wrltten comments by interested persons. 

IndMduals may present oral stetemenb when called upon In order of ragistation. There 

will be no open dlscusslon durina the hearimr: howevsr, an asencv staff member wlll be 

available todiscuss the proposai30 minutesprior to the hearing and will answer 

questions before and after the hearing. Pemns with disabilities who have special 

communication or other accommodation needs who am planning to attend the hearing 

should contact the Office of Environmental Policy. Analysis, and Assessment at (51 2) 

2394800. Requests should be made as far in advance as possible. Comments may be 

submitted to Joyce Spencer, MC 205, Olfice of Environmental Policy, Analysis, and 

Assessment, Texas Commission on Environmental Qualii, P.O. Box 13087. Austin. 

Texas 7871 1-3087. or by fax to (512) 23W808. All comments should reference Rule 

Log Number 2003-003-1 16-Al, and must be received by 5:00 p.m., May 5,2003. For ' further infwmatlon, please contad Clifton We. Policy and Regulations Division at (512) 

238-2283. Issued In Austin, Texas, on March 19,2003. 

-Date: 3E2412003 

Source: Houston Chronicle Mark this 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 hearings to 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 Department of Health and Human Services 

Harris County Pollution Control Department 

North Central Texas Council of Governments 

Houston-Galveston Area 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 Department of Environmental Quality 

U. S. Environmental Protection Agency 
Individuals 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 answer questions 

before and after the hearing. 1 

sible. 

Stephanie Bergeron 

Director, Environmental Law 

Texas Commission on Environmen I Qualii 

Red: March 21,2003 f + t + 

hotice of Public Hearing on Roposed Revisions to 30 TAC 

Chapter 1 16 and the State Implementation Plan 

The Texas Commission on Environmental Quality (commission) will 

conduct a public hearing to receive comments concerning revisions to 

30 TAC Chapter 1 16, specifically the repeal of $ 1 16.170; 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 revisions to the state implementation plan (SIP), under the requirements of Texas Health and Safety Code, $382.01 7; Texas Government 

Code, Subchapter B, Chapter 2001; and 40 Code of Federal Regulations, $5 1.102 of the United States Environmental Protection Agency 

regulations concerning SIPS. 

The proposed revisions to Chapter 1 16 would require emission reductions be certified as offsets under Chapter 101, Subchapter H, 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 

a voidance process, require an application for permit renewal to be submitted at least six months but no earlier than 18 months prior to the permit expiration date, and allow an additional 18 months before voiding 

a permit to begin construction of authorized projects for delays caused 

by third party litigation or other specific reasons. 

Comments may be submitted to 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 received by 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 of Water Quality ~~~l~tions 

The following require the to publish notice in the newspaper. 

ts for public meetings, or requests 

submitted to the Office of the Chief 

Clerk, Mail Code 105 13087, Austin Texas 7871 1-3087, 

WITHTN 30 DAYS OF OF NEWSPAPER 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 treated effluent is 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 Sement NO. 1010 of 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 available to discuss 

the proposal 30 minutes prior to the hearing and will answer questions 

before and after the hearing. 

- 

EAST MONTGOMERY CO MUNICIPAL UTLITY DISPersons with disabilities who have special communication or other ac- arm-to-~arkdt Road 14-85 Tree Monkey Road in Montgomery 

cornmodation needs who are planning to attend the hearine 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 2971 
The Cellulose Products Man 

Technology standard as speci$ed in 40 Code of Federal Regulations 

Part 63, Subpart UUUU, is inhqmmted by reference as adopted June 

11,2002 (67 FR 40044). 1 

,{113.1050. Boat Man (40 CFR 63, Subpart wvy1. 

ity to adopt 

13.1260. Friction Materials A4 

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) proposes the repeal of 51 16.170; new §$116.120, 

116.170, 116.172; and amendments to $51 16.12, 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 Protection Agency as revisions 

to the state implementation plan (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 proposing that ap 

plicants that 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 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 informatin about the proposed facility. 

The commission currently requires that persons issued an NSR 

permit under Chapter 116 begin construction of the facility within 

18 months of permit issuance or the permit will be voided. The 

executive director may grant an additional one time l&month 

extension to this period. In the case of flexible permits, the time 

period to begin construction is specified in the permit with one 

- - - 

PROPOSED RULES April 4,2003 28 TexReg 2903 
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 litigation is 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 

by the executive directorto resdve 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 proposes that the executive director retain discretion to grant a further extension for reasons, not speo 

ified in the 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 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 (TCAA), 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 

and offset review. Because the same conditions that would motii 

vate a new NSR permit holder to seek extensions can also apply 

to holders of flexible permits, the commission proposes to apply 

the extension periods and conditions in proposed 51 16.120 to 

flexible permits as well. Flexible permits are used to authorize 

changes and modification to 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 in orderto achieve consistent protection of air quality. The 

commission is therefore proposing that emission offsets be certified in the same way as emission credits in 30 TAC Chapter 101, 

Subchapter H, Emissions Banking and Trading. The commission 

proposes to retain in Chapter 116 certification of future offsets 

internal to a facility. In many cases, these future internal offsets 

are credited forthe 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 externally to a facility which must occur before it can be credited. Those portions 

of §I 16.170 that concern the offset of emissions from rocket engine firing and cleaning would be transferred to 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 geographic area. Consequently, offsets are not permanent 

reductions but will reaooear in the future. In order to make meaningful emission contml plans for nonattainment and prevention of 

significant deterioration areas, the cornmission needs timely and 

accurate information on emission reductions that 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 considered for 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 least six months, but no earlier than 

18 months, before the permit will expire. By establishing a date 

for the earliest submission of a renewal application, the commission will also increase the possibility that renewal applications 

are received under the most current fee tables. 

SECTION BY SECTION DISCUSSION 

Subchapter A: Definitions 

The definition of "offset" in 51 16.1 2 would be 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 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 in the 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 application will be 

exempt from the fee requirements under 511 6.140, 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 §I 16.120. 

The new §116.120, Voiding of Permits, addresses the widing 

of permits and contains language relocated from §I 16.1 15. The 

relocated language would be amended to allow an additional extension of up to 18 months to begin construction of a project authorized with an NSR permit. This extension would be available 

in the case of a construction delay caused by litigation, notof the 

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 preparatory work and has demonstrated that emissions 

from the facility are in compliance with 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 TexReg 2904 April 4, 2003 Texas Register 
Sources, 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 government that own and operate equipment undifference. - - - der NSR ~ermit authorizations. Units of state and local aovernment that'do not own or operate equipment alfected by NQR per- he proposed amendment of 51 16.150, New Major Source or m& would not be affected by the proposed ~les. The commis- Major Modification in Ozone Nonaltainment Areas, 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 permit applications voided by the will cation of certain e=mptions to oxides for face additional public notice costs bewen $700 and $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 51 16.170, Applicability of Emission Reduo 

tions as Offsets, would establish the requirements for the use of 

emission reductions as offsets. Most existing reductions must be 

certified as an emission credii under Chapter 101, Subchapter 

H, Division I or 4. Some reductions that will be used internally 

may still be certified under Chapter 116. The proposed section 

would establish the conditions by which future reductions may be 

used as offsets. The permit for the facility must contain special 

conditions that specify the date the permit holder must submit 

to the executive director appropriate and sufficient data that the 

reduction has occurred. 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 agrees to obtain additional 

offsets if the executive director determines the reductions do not 

satisfy the original offset requirements. 

'The proposed new $1 16.172, 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 $1 16.170. 

'The language would be modified to state that information regarding mket engine offsets would be submitted to the executive director instead of the commission. 

Subchapter D: Permif Renewals 

The proposed amendment to 51 16.31 3, Renewal Application 

Fees, would correct the commission's address with the correct 

zip code. 

The proposed amendments to $1 16.315, Permit Renewal Submittal, would state that an application for permit renewal must 

be submitted at least six months but no earlier than 18 months 

prior to the permit expiration date. The commission intends to allow sufficient time for preparation and submission of renewals for 

permit holders whose permit expires within six months of the potential effective date 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 $1 16.71 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 Planning and Ap 

propriations, has determined that for the first fiveyear period the 

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 rules would 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 voidance and provide specific de 

tails 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 notice vary significantly depending on the location of 

the facility and its proximity to large metropolitan areas. Small 

townlcity newspapers generally charge much less for publication 

of a public natice. The commission estimates a large city newspaper would charge approximately $3,000 for the display notice 

and approximately $450 forthe 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 had applications voided and who reapply within 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. 

Persons who have been issued an NSR permit currently have 18 

months to begin construction ofthe 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 preparation for construction. 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. 

PUBLIC BENEFITS AND 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 

rules will be more consistent application of emission credits and 

offsets, and more timely NSR application submissions and re 

ceipt of application fees. 

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 

application fee rates. 

The proposed rules would require that emission reductions used 

as emission offsets becertified in the same manner that existsfor 

emission credits. Additionally, the proposed rules would require 

existing emission reductions to be certified and banked as 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 rules would 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 application would be required to 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 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 had applications voided and who reapply within 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 of the project starting with the minimum fee of $900 up to the statutory maximum of $75,000. 

Persons who have been issued an NSR permit currently have 18 

months to begin construction of the project. A one time 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 BUSINESS AND MICRO-BUSINESS ASSESSMENT 

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 implications for only those small and micrc+businesses with a 

voided NSR permit application that would be required to submit 

a new application and repeat the public notification process. 

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 by small or micro-businesses that would be affected by the proposed rules. Of the total number of applications 

processed, approximately 115 are voided by thecommission and 

sent back to the applicant for further processing. 

This rulemaking would require the commission to notify an 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 

notice vary 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 had applications voided and who reapply within 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 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-businesses affectedby the proposed 

rules. Small and micro-businesses are defined as having fewer 

than 100 or 20 employees, respectively. A small business which 

has to go through the 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 micmbusiness would have to pay an average of 

between $35 to $200 per employee to comply with the proposed 

rules. Small businesses that do not reapply for a voided permit 

within six months would be required to pay application fees. This 

cost would vary according to the size of the project, and would 

cause an incre'ase in the cost per employee. 

Small businesses would also be eligible to apply forthe 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 required to spend proportionately less to qualify for the second extension. 

LOCAL EMPLOYMENT IMPACT STATEMENT 

The commission has reviewed this 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 Register 
DRAFr REGULATORY IMPACT ANALYSIS DETERMI NATION 

'The commission reviewed the proposed rulemaking in light of 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 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 ofthe state or a sector of the state. The proposed rules would 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 

procedures for voiding permit applications, establish conditions 

under which 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 repeat the public notification process. Depending on location, this 

notitication can cost from $700 to $4,000. This expense would 

only be incurred following a la& of adion from the applicant after 

being notified of deficiencies in 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 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 proposed rules In Chap 

ter 116 are not subject to the regulatory analysis provisions of 

52001.0225(b), because the proposed rules do not meet any of 

the statute's four applicability requirements The commission invites public comment regarding the dm regulatory impact analysis determination. 

TAKINGS IMPACT ASSESSMENT 

The commission completed a takings impact assessment forthe 

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 in the ab 

sence of a governmental action. Therefore, the proposed rules 

do not constitute a taking under Texas 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 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 

proposed rules in accordance with 31 TAC 5505.22 found that 

the proposed rulemaking is consistent with the applicable CMP 

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

requires that the 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 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. No new 

emissions would be authorized if these proposals are adopted. 

Therefore, the rulemaking is consistent with the CMP. The cornmission invites public comment regarding the consistency of the 

proposed rules with the CMP. 

EFFECT ON SITES SUBJECTTO THE FEDERAL OPERATING 

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 

statements when 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 hearing and 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. 

SUBMllTAL OF 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, or faxed 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. 

SUBCHAPTER A. 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 2907 
purposes 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; 5382.01 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 authorizes the commission to develop a 

general, comprehensive plan for control of the state's air; and 

$382.01 6, 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 SIPS to 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. Nomttainment Review Definitions. 

Unless specifically defined in the Gletw Ak & 

01 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 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 (relating to Dehitions), the 

following words and terns, when used in 5 116.150 and $1 16.1 51 of 

this title (relating to Nonattaimnent Review), shall have the following 

meanings, unless the context clearly indicates otherwise. 

(1) - (6) (No change.) 

(7) Contemporaneous period-As follows. 

(A) For major sources with the potential to emit 250 

tons per year (my) [tpy] or more of anonattainment pollutant, the period 

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 decreases during the contemporaneous period is compared to the MAJOR MODIFICATION column of 

Table I (in tons per year [*I) for that specific nonattainrnent area. If 

the major modification level is exceeded, 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 amount allowable under applicable New Source Performance 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 SOURCE column of Table I of this section or more 

qualifying as a major stationary source in Table I of this section, if the 

change would constitute amajor stationary source by itself. A major 

stationary source that is major for xs [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 of this 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 some that causes a significant net 

emissions increase for any air contaminant for 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 of Table I of this section. At an existing major facility/stationary source, the increase must equal or exceed that specified 

in the MAJOR MODIFICATION column of Table I. 

Figure: 30 TAC 5 1 16.12(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 

contemporaneous emission increases, minus any sourcewide creditable 

contemporaneous emission decreases. 

(A) - (Dl (No change-) 

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

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 forareductiontoqualifvasanoffsef itmust 

be certified as an emission credit under Chapter 101,terH, Division 1 or4 ofthis title (relating to Emission Credit Banking or Trading; or 

DiscreteEmission CreditBankingandTrading), exceptasprovidedfor in 

1 16.170(b)ofthistitle(relatingt0ApplicabilityofEmissionReductions 

asoffsets). Thereductionmustnothavebeenreliedon in theissuanceofa 

previous nonattainment or prevention of significant deterioration permit 

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. 

of any air contaminant (including volatile organic compounds NOCs)) (15) Potential to emit-The maximum capacity of a facilfor which aNational Ambient Air Quality Standard(NAAQS) has been ity/stationary source to emit a pollutant under its physical and operaissued Any physical change that would occur at a stationary source not tional design. Any physical or enforceable operational limitation on the 

28 TexReg 2908 April 4, 2003 Texas Register 
capacity of the facilitylstationary source to emit a pollutant, including 

air pollution control equipment and restrictions on hours of omon 

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 definedin 40 Code of Federal Regulations $5 1.165(a)(l)(viii), 

do not count in detdning the potential to emit for [efJ a stationary 

source. 

(16) - (17) (No change.) 

(1 8) Stationary source-Any buildiig, structure, facility, or 

installation which emits or may emit any air pollutant subject to regu- , 

lation under the a 61eaR Air kt]. 

This agency hereby certifies thatthe proposal has been reviewed 

by legal counsel and found to be within the agency's legal authority toadopt. 

Filed with the Office of the Secretary of State on March 21,2003. 

TRD-200301060 

Stephanie Bergeron 

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 authorize the commission to adopt rules necessary 

to carry out its powers and duties under the TWC; and under 

TCAA, 9382.017, conceming Rules, which authoriis the commission to 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 purpose to 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 

commisshn 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 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 planning the construction or modification of 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 

382.051 8. 

$1 16.114. Application Review Schedule. 

(a) (No change.) 

(b) Voiding of deficient appli&tion. 

(1 (No change.) 

(2) If an applicant fails to make such good faith effort, the . executive director shall void the application and notify the applicant of 

the voidance andthedg deficiencies -on. If 

anew [the] application is submitted [mxk&ted] within six months of 

the voidance, it shall meet therequirrmentsof $1 16.1 1 1 ofthis title(relatinp:toGendApplication)butWill be exempt from the requirements 

of $1 16.140 of this title (relating to Applicability). 

(c) (No change.) 

$1 16.115. General and 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 following general conditions if the pmit or amendment is issued or amended on or after August 16, 1994, regardless of 

whether they are specifically stated within the pennit document 

& [@j] 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 latathan 

15 working days after occurrence of the event. 

(BJ [&j] Start-up notification. 

(i) The permit holder shall notify the appropriate air 

program regional office of the commission pior &the comm&cement 

of operations of the fmilities authorized by the permit. The notification must be made in such a manner as to allow g 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 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 of the 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 compliance with Chapter 101, Subchapter H, 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 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. 

[w] 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. 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 the permit. 

@ [m] Recordkeeping. The permit holder shall: 

0) maintain a copy of the permit 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 

having jurisdiction 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 re- quirements 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 certifjmg and registering a federally-enforceable emission limitation in accordance with 51 16.61 1 of 

this title (relating to Registration To Use a Standard Permit), retain all 

records demonstrating compliance for at least five years. 

(FJ [o] Maximum allowable emission rates. 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 air pollution emission 

capture and abatement equipment is maintained in good working order 

and operating properly during nonnal facility operations. The pennit 

holder shall provide notification for emissions events and maintenance 

in accordance with §§101.201, 101.211, and 101.221 ofthis title (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 conformity with the TCAA and the conditions precedent to 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 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 permit. 

A permit or permit amendment under this chapter is void if the permit 

holder does one of the following: 

fails to begin construction within 18 months, ora timeperiodspecifiedinthepermif ofdateofissuance. Attherequestofthepermit 

Wer, the executive director may grant an 18-month extension to begin 

construction. Permitsissuedto holders whohavereceivedextensions will 

be subiectto~erbestavai1ablecon~ol technolo~review andreevaluationofnettingoroffsetsasap~licable. Anadditionalextensionofupto 18 

monthtimay be wtedby theexecutive director if; 

(AJ the permit holder becomes involved in litigation not 

of the permit holder's initiation regard in^ the issuance of the permit, and 

demonstrates that emissions from the facility will comply with all rules 

and remlations ofthe commission and the intent ofthe TCAA, including 

protection ofthe public's health andphysical property; or 

@ the permit holder has spent 15% ofthe estimated capital cost of theproiect on preparation for construction, and demonstrates 

that emissions from the facility will comply with all rules and regulations 

ofthecommissionandtheintentoftheTCAkincludingprotectionofthe 

public's health andphysical property, 

(2J discontinues construction for more than 18 consecutive 

monthspriorto completio~ 

, (3J fils to complete construction within areasonable time. 

This agency hereby certifies that the proposal has been reviewed 

by legal counsel and found to be within the agency's legal author- 

'ky to adopt. 

Filed with the Office of the Secretary of 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 291 0 April 4,2003 Taus Register 
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 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, 

consistent with the protection of public health, general welfare, 

and physical property; 9382.011, concerning General Powers 

and Duties, which authorizes the commission to control the 

quali of 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 authorizes the commission to 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 Determination of Administrative Completion of Application, which authorizes the commission to determine when an 

application is administratively complete; s382.0518, concerning 

Preconstruction Permit, which requires persons planning the 

construction or modification of a fadlity to obtain a permit from 

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 of Fees. 

All permit fees will be remitted in the form of a check, certified check, 

elecbwic 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 7871 1-3088 (7-WMRVl. 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 

constraintsrequired ofTCEQ for applicationmcessing begin until a fee 

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 

refunded after a deficient application has been voided or after a permit 

or amendment has been issued by the agency. Fees will bereturnedunderthe following conditions. 

(AJ If no permit oramendment is issued by the agency or 

iftheappticantwithdrawstheappliwtiwpriortoissuanceofthepermitor 

amendment, one-halfofthe fee will berefunded. 

@J The fee difference will be refunded if a permit applicationis withdrawn because theproposed construction or modification is 

determined to meettherecpimnentsof: 

astandad permit issuedunder SubchapterFof this 

chapter (relatingto StandardPermitsb 

@ apermitbyruleunderchapter 106 ofthis title (relating to Permits by Rule); or 

theconditionsof 5 1 16.1 19ofthis title (relatingto 

DeMis Facilitiesor Sources). 

This agency hereby certifies that the proposal has been reviewed 

by legal counsel and found to be within the agency's legal authority to adopt. 

Filed with the ORice of the Secretary of State on March 21,2003. 

Stephanie Bergeron 

Director. Environmental Law Diion 

Texas Commission on Environmental Quality 

Earliest possibk date of adoption: May 4,2003 

For further 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 under TCAA, 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 

requirements for 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 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; 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 TexReg 291 1 
concerning 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 

95.1 05; and TCAA, 99382.002, 382.01 1, 382.p12, 382.01 6, 

382.051, 382.0513, 382.051 5, 382.0517, 382.0518, and 

382.061. 

$1 16.150. New Major Source or Major Mod$uation in Ozone Nonuttainment Areas. 

This agency hereby certifies that the proposal has been reviewed 

by legal counsel and found to be within the agency's legal authority to adopt. 

Filed with the Office of the Secretary of State on March 21,2003. 

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 section proposed for repeal 

will not bepublirhed. The section may be examined in the ofices of the 

Tern Commission 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 purposes of the TCAA. The repeal 

is also proposed under TCAA, 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; 3382.01 1, 

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 implements TWC, 95.103 and 95.105; and 

TCAA, @382.002, 382.01 1, and 382.012. 

61 16.170. Avpiicabilitv for Reduction Credits. 

'This agency hereby certifies that the proposal has been reviewed 

by legal counsel and found to be within the agency'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, $1 16.172 

STATUTORY AUTHORITY 

The new sections are proposed under TWC, 95.103, concerning 

Rules, and 95.105, concerning General Policy, which authorize 

the commission to adopt rules necessary to cany out its powers 

and duties under the TWC; and under TCAA, 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 TexReg 2912 April 4,2003 Texas Register 
protection of public health, general welfare, and physical prop 

erty; 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 authorizes 

the commission to develop a general, comprehensive plan for 

control of the state's air; 5382.016, concerning Monitoring Re 

quirements, Examination of Records, which authorizes the corn 

mission to prescribe reasonable requirements for the measuring and monitoring of emissions of air contaminants; 5382.051, 

concerning Permitbjng Authority of Commission Rules, which authorizes the commission to issue permits for the construction of 

a new facili or modification of an existing fadli 5382.0513. 

concerning Permit Conditions, which authorizes the commission 

to estabtish and 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 

determine when an application is administratively complete; and 

5382.0518, concerning Preconstrudion Permit, which requires 

persons planning the construction or modification of a facili to 

obtain a permit from the commission. The new sections are also 

proposed under 42 USC, 5741 O(a)(2)(A), which requires SIPS to 

indude enforceable emission limitations and other control measures or techniques, including economic 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, 382.01 6, 

382.051.382.0513,382.0515.382.0517, and 382.0518. 

pandim the testinn of rocket enaines or motors at an existing source permittedto test suchenaines asofNovember 15,1990. 

Q.J The source demonstrates to the satisfaction of the executive - 

dim%& that it has used all reasonable means to obtain and utilize 

offsets, as determined on an annual basis, for the emissions increases 

beyondallowable - - levels, that all available offsets are being used, and that -- 

sufficient offsetsarenot availableto the source. 

(3J The source has obtained a written finding from the 

Department of Defense, Department of Transportation, National Aeromutics and Space Administration. or other aupmpriate federal anency, 

that the testing of mcket motors or engines at the facility is required for a 

program essential to thenational securi% 

The source will comply with an alternative measure, 

imposed by the executive director, designed to offset any emissions 

increasesbeyondpmnittedlevelsnotdirectly offsetby the source. Inlieu 

of imposing any alternative offset measures, ttre 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 

adoptedin that areaduringthe previous three years. 

This agency hereby certifies that the proposal has been reviewed 

by legal counsel and found to be within the agency's legal authority to adopt 

Filed with the Office of the Secretary of State on March 21.2003. 

TRD-200301873 

Stephanie Bergeron 

Director. Environmental Law Division 

Taxas Commission on Environmental Quality 

J116.170. AppliabilityofEmission Reductions as offsets. Earliekt possible date of adoptton: May 4. 2003 

N~ reductionmaybe offsetm1e85 itha c&- For further information, please call: (512) 239-501 7 

fiedasan emission credit under Chapter 101, SubchapterH,Division 1 or 

4ofthisti~e(relatingtoEmissimCredit~gandT~g;orDiscrete 

Emission Credit Banking and Trading). except as provided for in subsection (c) ofthis section. . 

bJ ~eductionsnot yetchfiedandbgnked~sanemission mdit 

must be certified and banked with the executive director by September I, 

2004 in orderto be considered for useas anoffset. 

(cJ A future reduction may be uscdas an offset forapennit providedthat: 

(IJ 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 verifv that the reduction has occurred 

and the reduction is provided by start of operation; 

Q.J the reduction must be achievedprior to commencement 

ofthepermittedemissions for which theoffset isrequire6 

(3J 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 

(4J thepennit holderaanes toobtainadditionaloffe if the 

review bytheexecutivedirectorindicatestheredwtionsdonotsatisfy the 

original offsetrequirement-. 

$1 16.1 72. EmissionsOflsets from RocketEn~ineFiringand Cleaning. 

Emissions increases from rocket enine 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 

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 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 

quali 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 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 2913 
which authorizes the commission to establish and enforce ~er- 4 4 

mit conditions; 5382.0515, concerning Application for petkit, 

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 authorizes the commission to determine when an 

application is administratively complete; 5382.0518, concerning 

Preconstruction Permit. which reauires Dersons ~lannina the 

construction or modification of 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, 382.01 1. 382.012, 382.01 6. 

382.051, 382.0513, 382.051 5, 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 has been 

notified by the commission that the permit is scheduled for review. All 

pennit 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 7871 1-3088 [RFW308?]. Required 

fees must be received before the agency will consider an application to 

be complete. 

$1 16.31 5. Permit Rend Submittal. 

(a) An application for renewal must be submitted at least & 

months,- [than dep] prior to expiration of 

the pennit or the permit will expire. Thissubsectionwill beeffectiveon 

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 under the TWC; and under TCAA, 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 

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, 

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 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 determine when an 

appli&tion is administratively complete; 5382.051 8, concerning 

Preconstruction Permit, which reauires Dersons ~lannina the 

construction or modification of 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 subject for review 15 years 

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 certifies that the proposal has been reviewed 

by legal counsel and found to be within the agency's legal authority to adopt. 

Filed with the Office of the Secretary of State on March 21.2003. 

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. General and Special Conditions. 

(c) The following general conditions shall be applicable to ev- ery flexible permit. 

(1) [VeiBtffgef~A~geffitile~~~t 

~&~~is~veid

~re~~eS~kt

Fequw,&--~fft~~e~*-- 

sien efh date te eempkte -61 Thls section does not apply 

to physical or operational changes allowed without an amendment un- der 5 1 16.721 of this title (relsting to Amendments and Alterations). 

28 TexReg 2914 April 4,2003 Tpxas Register 
(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 1 of this title 

(relating to Emissions Event Reporting and Recordkeeping Requirements; and Scheduled Maintenance, Startup, and Shutdown Reporting 

and Recordkeeping Requirements). 

(1 0) (No change.) 

(4 (No change.) 

This agency hereby certifies that the proposal has been reviewed 

by legal counsel and found to be within the agency's legal authority to adopt. 

Filed with the Mice of the Secretary of State on March 21.2003. 

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 or for restoration of 

proposed rules outevaluate and assist 

projects in cooperPRA, §33.601(1 I), 

government, state 

v&s established by the CEPRA, support a study or project undertaken indemndentlv bv the 2 nd M~ce. orin coniunction with 

a qualified project parke; The EPRA, as amended by House 

Bill 2793, requires qualified proj ct partners to pay at least 15% 

of shared project costs that are i 1 entiied in a project cooperation 

agreement. I 

Proposed new 515.41(2) desc ibes the alternatives evaluation 

orocess. The Land Office and I aootential oroiect oartner for a 

project designated as a priority ente; ink a project cooperation aareement that will sm the alternatives-evaluation process will 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 will then &ope tively evaluate alternatkes. The 

alternatives evaluation ~rocess t ill include an evaluation of feasibility and mst effectiveness alternatives, as well as 

whether a qualified project 

a binding commitment to 

project. 

PROPOSED RULES April 4,2003 28 TexReg 2915 
Fip: 30 TAC 41 16.12(11)(A) 

TABLE I 

MAJOR SOURCE/MAJOR MODIFICATION EMISSION THRESHOLDS 

POLLUTANT MklOR SOURCE MAJOR MODIFICATIO# OFFSET RATIO 

tons/vear . . muurnurn 

OZONE (VOC, NOJ3 

I marginal 100 40 1.10 to 1 

II moderate 100 40 1.15 to 1 

III serious 50 25 1.20to1 

lV severe 25 25 1.30 to 1 

co 

I moderate 100 100 1.00 to l4 

II serious so 50 1.00 to l4 

so2 100 40 1.00 to l4 

PM,O 

I moderate 100 15 1.00 to l4 

II serious 70 15 1.00 to l4 

NO: 100 40 1.00 to l4 

Lead 100 0.6 1.00 to l4 

Texas nonattahmmt area designations are 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 appmprkte netting triggers for existing major sources of NO, and VOC are specified in 

$1 16.150 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 ozane formation and should be quantified individually to determine 

whether a source is subject to NNSR under 4 1 16.150 of this title. As specified in § 1 16.150 of this title, 

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 .OO 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 (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 WRITEN TESTIMONY 

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 Protection Agency 

William B. Keller, Sempra Energy Resources 

Jon Risher, Texas Chemical Council 
05/04/2003 13:43 FAX 5123222501 BAKER BOTTS 

BAKER BOTlS LLP 

May 5,2003 

BY FAX 

Ms. J'oyce Spencer 

Texas Commission on bvironrnenial Qualiv 

Office of Envitomd Policy, Analysis, and Assessment 

MC 205 

P.O. Box 13087 

Austin, Texas 787 1 1-3087 

1500 SAN JAUWO CENTEK AUSTIN 

90 MJAcMo NvD. BAKU 

AUmN, fMM OAW5 

787014039 HOUSKXJ 

a 12.322.2~~) LWSX)N 

FAX 512.322.2501 MOSCOW 

NEWYORK 

RIYADH 

WASHINGTON 

Jon Niannann 

5 1 2.322.2662 

FAX 51 2.3223389 

jon.niemann@ba~ottsottscom 

Re: Comments on Rule Log Number 2003-003-1 1 6-A1 

Dear Ms. Spencer: 

Baker Botts LL.P.. on behalf of the 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 thWb p~p~d. 

30 TAC 66 116.1 15 and 116.120 

Addirional MCT Review Should Not 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 

reevaluation of netting and offsets from proposed § 116.120(1) as applied to 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. The preamble to these proposed rules fails to discuss any basis for 

requiring an additional BACT review for 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 clprent rules. This nquirernent, if promulgated, 

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 stringent without 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 significant portion 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, and therefore 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 serniconductor fabrication facility 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 welleapitali7d corpomtions. Moreover, 15% of the capital cost of a permitted project may exceed 

that portion of costs that can reasonably be spent on prepmation 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 if the permit holder docs 

one of the folLowing: 

(I) fails to begin construction within 18 montbs, or a time 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 dircctor if+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 of the cammission and the intent of the TCAA, including protection of 

tbe public's health and physical property. p Pe 

& 

ncefvsd an additional extension will be sabieet to farther best available 

[no further changes to proposed 8 1 16.1201 

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 order to 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 reductions that 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 emission reductions 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 down by 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 

current permitting practices. 

The Texas Industry Project appreciates the opportunity to submit these comments 

for consideration in connection with the proposed revisions to Chapter 11 6. If you have any 

qucdons concerning thew comments, plcast call Jon Niermann at 322-2662- 

Sincerely, 

- 

Jon Niermann 

For the Texas Industry Project 
MAY -1-2003 14 : 37 FROM: BPSH-HSE-TC 4099424091 

BP Products North America Ina. 

2401 6" Avanua Sowh 

Pmt Offkc BOX 401 

Tsus City. TX 77680 

U6A 

Swhhbaard 400 945 1 Dl 1 

HSE fax 409 942 1W1 n May 5,2003 

CERTIFIED MAIL # 7002 241 0 0007 0428 4687 

Return Receipt Requested: 

Ms. Joyce Spencer 

Off ice of Environmental Policy, Analysis, and Assessment, MC 206 

Texas Commission on 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 'the TNRCC's proposal to amend Chapter 1 16 conceming New 

Source Review (NSR) permit applications. However, we offer the following suggestions 

for rule improvement and clarity. 

TCEQ should revise 1 16.1 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 continued flexibility in the 

timing allowed to respond to deficiencies. Rigid timelines could foster a system of 

unnecessary application voidance. Provided the applicant is making a "good faith 

effort" to provide -the requested infarma-tion, TCEQ should continue to provide 

extensions for responding to deficiencies. 

TCEQ is proposing in 1 16.120 to 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% (instead of 75%) is a more realistic 

capital expenditure especially for those projects that are being held for market or 

strategic reasons. Most projects will not be sanctioned for significant expenditures 

until the 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 the TCC 

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 

281 366 501 8. sRR 

Joel Robins 

HSE Manager, South Houston Integrated Site 
5- 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 7871 1-3087 

512 239 4808 (PAX) 

COMMENTS OF THE DOW CHEMICAL COMPANY ON THE TCEQ PROPOSED 

RULE CHANGE TO REG M FOR OFFSET CERTIFICATION, NEW SOURCE REVIEW 

PERMTT PROCESSES AND EXTENSIONS FOR CONSTRUCTION 

(Rule Log Number 2003-003-116-AI) 

Ms. Spencer: 

The Dow Chemical Company appreciates the opportunity to 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 Chemical Council, will ah be submitting comments. In general, we support 

their comments, but would like to emphasize some of their comments and to submit additional comments 

on this proposed regulation. 

If yon have any questions about these comments or need any clarification, please contact me at 

361-553-2920. 

Sincerely, A 

Rueell A. Wozniak 

Regulatory Affairs Sr. Specialist - Texas 

The Dow Chemical Company 
5- 2-03; 9:37AM;DOW CHEMICAL 

Comments on TCEQ's Proposed Changes to Regulation M for Offset Certification, New Source 

Review Permit Proc- and Extensions for Construction 

Voidlag of Deficient Application (116.114)(b)(2) - The requimment to provide two wrltten 

no-tione of the deadcacy ahodd be added to the regulation fn Rnie 11&114(b)(2). In addition, 

tbe TCEQ sbonld provide written notia tu the applicant if an applicathn is voided. 

TCBQ states in the preamble (28 TexReg 2904 - April 4,2003) that 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. 

Dow suggests that the fmt sentence in Section 116.1 14(b)(2) be revised as follows to capture the practice 

of providing two written notifications, and providing writtpn notice if an application is voided: 

"After two written notifications of the deficiency, if an applicant fails to make a good faith offoa to provide 

the required infomation, the htive director shall void the application and shall provide written 

notification to the applicant of the voidanco and the remaining deficiencies in the voided application". 

Voiding of DelBcient Applicalion (11&114)(b)(2) - Dow mgge!sts that TCEQ pmvide maximum 

WMUty for Notice of Deticimry Letters associated with repuests for dr dispersion modeling or 

detailed brrhnicnldm for Bast Available Control Technology. 

In general, XEQ providas an applicant 30 days to mspond to a first Notice of Deficiency Letter, and 15 

days fa a second Notice of Deficiency Letter. Dow suggests that TCBQ provide maximum flexibiity to 

applicants with mspect to Noh of Deficiency Letters associated with air dispusion modeling studies or 

requests for detailed technical information associated with the determination of BACT. For example, in 

some dispersion modeliig studies, there is a need to ovaluato dtiplo air eontaminants from the facilities 

seeking the permit, and also the existing facilities located at the same manufacturing site. These studies can 

bccoxne extremely complex at our larger facilities, and in some cases, a completed stody cannot be 

executed within the 30-day timeframe. Dow suggests that TCBQ consider, on a casaby-case basis, 

providing additional time either in the initial Notice of Dsficiency Letter (parhaps 60 days vs. 30 days) to 

complete these studies or in the form of providing an extension to the 30 day period when warranted. 

An additional alternative is to continue to provide for the option of Administratively voiding an application 

per cumnt practice when dealing with riming issues associated with just these two types of Notice of 

Deficiencies. 

Applicability of Emieeion Reductions as Offsets (116.170) - Dow suggests that TCEQ clarify that the 

requirement to certify an emission reduction as an emission credit applies b ohts that may be used 

by dtes other than where the reduction was made 

TCBQ states in the preamble (28 TexReg 2904) that the commission proposes'to retain in Chapter 116 

c-cation of future offsets internal to a facility. Dow's understanding of the proposed regulation is that 

emission reduction credits that am used as ofiets at another site must be certified prior to September 1, 

2004. Our understanding is also that emission reduction credits that py used in nettting calculations or as 

internal offsets at the facility where they wcrt generated are not subject to the certification requirement. 

Dow proposes the following clarification to the first sentence of Section 116.170(a): 

"No reduction may be used as an offset, at a site other thun where it war genemted, unless it has been 

certified as an mission credit under Chapter 101, Subchapter K, Division 1 or 4 of this title etc." 
5- 2-03: S:37AM;DOW CHEMICAL 

Page 2 

Clarifidon shodd be provided for &be permit renewal schedule (116315) 

TCEQ proposes that this subsection be effective on February 1,2004. Dow suggests that TCEQ clarify 

how permits that expire between May 1,2004 and August 1,2004 am to be handled. Our unclefitanding is 

that the requkemnt to apply for arcnewal6 months in advance- will take effect on February 1,2004. Our 

interpretation of the proposed rule is that the pamit renewal applications will be dm on Feimziry 1,2004 

for all permits that expire in the May 1,2004 to August 1,2004 period since these will change from the 90 

day to the six month requirement for renewal applications. 

Dow suggests adding the following to Section 116.3 15(a): 

"An application for renewal must be submitted by February 1,2004 for all permits that expire in the 

May 1,2004 through August 1,2004 timefiatnet'. An application for renawal must be submitted at least six 

months, but no earlier dun 18 months prior to expiration of the permit for a permit that expires on or after 

August 2,2004". 

TCEQ should revise Section 116.310 Notification of Permit Holder 

The current notification to the permit holder requires that the TCEQ notify the applicant no less than 180 

days prior to the expiration of the @t 

Although no chap were proposed to Section 116310, Dow suggests that TCEQrevise Section 116.310 

to require TCEQ to provide the notice no less than 270 days prior to the expiration of the pennit This 

change would be consistent with the current regulations (ie. 90 day period between agency notice and 

minimum application renewal dab) since the requirements to submit a renewal application are proposed to 

be revised to six months prior to expiration of the permit. 
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 Director approved 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 eliminate well more than 

100 tons per year of pollution from the midst of subsistence neighborhoods in Ciudad Juarez, 

Mexico. This project recehred a Texas Environmental Excellence Award from TCEQ, as well as 

an environmental stewardship award from the League of Women Voters. 

But the conversion of kilns to satisfy EPE's obligations under S.B.7 leaves the majority of kilns in 

Juarez unaffected.1 Having invested considerable resources in developing the program under 

' The S.B.7 NDr mnhl prugmrn dbta EPEL Newman Stah, Units 14, which are pm-1 Wl gabtlred bdlers. EPFs plan for cmplianoe 

dth the S.B.7 emlmion Ilmltstiona, refbted in the allowam elloeahs aaordsd b ttxmae three unlfs, alwye has mlM rnortly on burner 

cantrds and OW mns d mltrlon Ilmlbth, wlth any olbnrPneear tmalad by Jm klln mvsnlonr mhg to provide a merein of $ably In 

aompHaneem. &c?uw~mdu~~ersarewo~at~arwlim~,EPE~~tobe

within the ~UOWMOB ahtion mnbd b (he Newmon Sblbn, vvllhwt any addidond akwmm8 fmn UIm. ~~, EPE Is comnrlmd to 

convening mom ltllnr The ambucllon popram Ms at amid twenty to date, howarw, while Ciudrd Juaar ofRdsb evaluate the 

pogsibMy of relooatlng kllns and odw oplhm for asatlng seommies of soale. 
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 additional forms 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 i ncreased confidence i n b 0th the buyer a nd seller (or creator a nd u sar) 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 ration a 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 subject to 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 extensive tesCn~ prognm, Muding h cmstructlon d a model klln compound, and sunrep of kiln operating p~~ctimi in 

order to ddop mission factors. It also has large invsstmd in developing the erdsuw Isgal InfmrmePJn to authorb the mram, fosiedng 

the relationships on both sides of the border lo make the trading work, and fonnulaUng and obtaining TCEQ appm of tls pmposal. n 
MAY 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 requirs written 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 need for 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 offsets to 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 nonttainment areas. 

To address these and other possible sources of confusion, EPE recommends that TCEQ adopt 

a separate division in Subchapter H in which TCEQ defines the specific requirements and 

procedures for creating offsets for NNSR purposes. Appropriate principles from other divisions 

could be bornwed as needed, but customized to 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 in Juarez, 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 emissions from Juaret But no emissions inventory used for SIP purposes 

specifically identifies kiin emissions. Fortunately, this is not among the limitations on use of 

transborder emission reductions established in the Texas Clean Air Act, 5 382.01 72(b), 

2. EPE's concerns wlth the possible requirement to apply the emissions measurement protocol 

provisions of 5 101.302(d) to offset creation becomes especially pronounced if applied to kiln 
MRY 05 ' 03 11 : 24 FR ELECTRIC COMPANY 313 345 3610‘2 I 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 obligation to get that emission factor 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 incentividng the 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 Company 
PRY-02-2003 15: 19 C9D EPA MULTIEDI A 2146656762 P .02/07 

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY 

REGION 6 

1445 ROSS AVENUE, sum I noa 

DALLAS, TX 75202-2733 

May 2,2003 

Ms. Joycc Sper 

Ofhcc of Environmental Poky, 

Analysis and Aesessmant (MC 205) 

Tasu Canmnissian on Environmental Quality 

P.O. Box 13087 

TX 7871 1-3087 

\\b 

Proposed ReWm to 30 Texas Administrative Code (TAC) Chapter Mand the State 

Imp-n Ph (SIP). Rule Log Number 2003-003-1 1641 

Dear Ms. Spencer: 

Thank you for the opportunity to mview the proposed cbaages to 30 TAC Chapter 1 16 

and the SIP, In W acdon, you are proposing to repeal # 116.170; new 88 116.120,116.170, and 

116,172; and amendments to 88 116.12,116.114116.116,116.143,116.150,116.313, 116.315, 

and 116.715. You imW8t~d hat if adopted the new and amended Sections wlll be submitted to 

us as SIP revhbns. Based on our mview of these proposed changes, we provide rhe enclosed 

commenu. 

In several cases, we have suggested specific changes to your propossd rules which are 

necessary to meet applicable Federal requirements or which WU otherwise chi@ or strengthen 

the rule. If you have questions concerning 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. 

Inremet Address (URL) - hn~JImw.eua.sar/ear1t1lr6/ 

RecydedlRecyolable - Prlnmd wlth VageWle Oil Baed Inks on ReoyWed Papor (Minimum 30% Postamsurner) 
WD EPA MIL I IMtUIH 

Thank you for the opportunity to provide comments. We look forward to seeing the &Ll 

Tule when mbmhted. If you have any quatiom, pb call Mr. Stanley M. Spnrlen of my staff 

at (214) 665-7212. 

Sincerely yours, 

- 

Chief 

Air Permits Section 
ENCLOSURE 

COMMENTS ON =POSED REVTSIONS TO 30 TAC CHAPTER 116 - CONTROL OF 

AIR POILLUTION BY PERMITS FOR NEW CONSTRU~ON OR MODIKICATION 

1. 9 116.12(14) - Ddbdti~~~ of "ofkt ratio." 

You propose two changes as fohwu: add a requirement that reductions be certified as an 

mission reduction credit under Chapter 101, Subchaptcr H, Division 1 or 4, and to move from 

the demon the aimh that a reduction must mcet to be creditable as a OW. Thcsc cI.itcria 

that you propose to rmnovc arc mccamy to meet the the r-of Sadon 173(a)(l) and 

(c) ofthe Clean Air Act and 40 CFR 51.165(a)(3). Thcsc criteria enam the integrity and 

enforceability of the ofkts, and guard ag&m the use of reductions that the State has ralied upon 

in its atubmem demomation and wbhh 8118ure that the reductions are not otharwise requid 

under tb Act and regulations promulgated tbmunder. It is important that ofbets contiwe ro 

meet these req&amm. h These appear 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 and 40 

CFR 51.165(a)(3).' 

The proposed rule includes an mcption "as provided for in 5 116.170@) ... ." As 

proposed, Q 116.170(b) provides that a reduction "not yet certitied and banked as an &don 

rsducdon credit mw bc certified and banked by the executive director by Sepbmber 1,2004, in 

order to be considen=d for uaa an as offset." Under this proposal it is not clcar whether a 

reduction wbkh is not certified and banked may be used as an offsCt between the effective date 

of rbe revised rule 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 Sdon 173(a)(l) and (c) of the Clean Air 

Act and 40 CFR 51.165(a)(3). It is also nor consistent whh watements in your preamble in which 

you state as follows: 

The commission is proposing that emission reductions not yet ce@ied and 

banked as emission credits by the &bctive date of these rules be 

&&ed and bw by September I, 2004, in order to he considered as 

affsets. 

Emphasis added. See page 3 of preamble 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 currently under =view. We have not approved these provisions as &ions 

to the Texaa SP. Thas, any statement that the& N]cs appear to meet any rcqu-t for 

approval should not be considered a hnal determination. Ow find determination whether these 

provisions meet our quiremnts for 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 11 6 which rsliss on Chapter 101, Subchapter H, Divisions 1 and 4 may depend upon our 

tlDal decision mncnaming the spprovability of Chapter 101, Subchapter H, DMns 1 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 . . s,

ter 101 Su - 

Emphaah added. See page 4 of preamble to proposed rule and 28 TexReg 2904 (April 4,2003). 

These quotes indicate Texas' intmtion that after the effective date of theee proposed 

nJcs, only reducrions that are catifid and banked am digible for offsets. We concur that 

reductions generated &r the effective date of this rule must be mrtEied and banked and that 

reductions generated Wore the efhctive date of this rule must also be certified and baaked and 

must meet the guidelmcs of EPA'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) of the 

Qean Air Act and 40 CFR 5 1.165(a)(3) m order to qualify a offse~.~ by providing that after the 

effective dare of this proposed rule that any reduction be certified and banked under Chapter 101, 

Subchapter H, Divisions 1 or 4. Texas should clarrfy any uncmty which may occur because of 

the phrase "except as provided in 8 1 16.170(3)" which is proposed in $ 126.12(14). 

This Section would replace provisions in Section 116.1 15@)((A). Section 1 16.120 would 

provide &it a ped will expire if a source fails to begin construction within 18 months from 

date of issuance of a permit, unless the TCEQ grants extensions. The rule would allow TCEQ to 

gm~ two 18 month aendons. We have comments as follows: 

- A pp ACTl and lowest ac ' vablc 

Paragraph (1) requires the reevaluation of BACT as a condition for receiving an 

extension, Paragraph (1) should further provide for reevaluation of UER when that is the 

control masure required under the appkabk permitting program for the source. Th;ls is 

necessary to meet the req-s of 40 CFR 5 1.165.5 1.166, and 5 172(c)(5) and 173 of the 

Clean Air Act. 

B. Requirement to reevaluate BACT (or La, see comment 2.A above), netting 

and offsets. 

The introductory language requires reevaluation of BACT (or LAER, see comment 2.A 

above), netting and offsets. However, it is unclear whether these rtevaluations apply to both 

extensions or only to the bt extension. As written these reevaluations appear to apply only 

apply to the first extension. The rule should clearly require these remaluations for both 

extessions. This is necessary to meet the reqmts of 40 CFR 51.165,51.166, and 

S 172(c)(S) and 173 of the Clean Air Act. 
FPD EPR MLlLTI MEDIR 

-the of the TUA.. ~rotcction of the wblic's 

health and nhvsic~ert~. 

In Paragraph (I)(@ and (B), you propom as critcsia for a second extension that a source 

demonstrate that ~J&&IIS from the facility will comply with all rules and re&tions of the 

coen and the intest of the including ptdon of the 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 construction and modificadons, inchding 

the approval of extensions of a permit's expiration date. These criteria must apply to both 

extensians to saw the requirememts of 40 CFR 51.160(a) and (d). 

In Paragraph (l)(A) and (B), addhion of "current" before 'biles and regula&ns" would 

clarify the applicable quiremems for dations of BACI" and LAER, 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 criteria that futurc reductions must meet to quw m affects, as 

specified in paragraphs (c)(l)-(4). The fonowing changes to Paragraphs (2), (3), and (4) under 

Subsenlon (c) are necm to mwt the laquix8ments of Section 173(a)(l) and (c) of the Clean 

Air Act and 40 CFR 51.165(a)(3). The suggested changes are mdmIincd. 

Paragraph (2) should b~ =vised to provide: 

(2) tbe dud.09. iucludin@d- the Execut . . ive 

Dhxor mav rqph under - oaramuh (41, must be achicmd prior to 

commtncrm~nt of the permitted emhiom for which the offset is required. 

'4.0 CFR 51.160(a) require6 a determination rhe proposed mw source or modification 

witl not result ia. a violation of the 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 the nsponsibjlity of the owner or opartor to comply 

with applicable portions of the control strategy. 
6PD EPR HLILTIMEDI R 

Paragraph (3) show be mvised to provide: 

(3) rhe reduction meats all the requirements of Chapter 101, 

Subchapter H, Divjsion 1 or 4 of this title when submitted to the executive 

director for review per the req-ml of the hued per&. owner or 

pDMator must nrovide information to the Exaxtive Director wwcient to 

0 d 0 h n - 

Paragraph (4) should ba revised to provide: 

(4) the permit holder agrees to obtain additional ohts if the review by 

the executive director indtatcs the reductions do not satisfy the 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 underlined addition would serve to clardy the authorized usc of discrete 

emission reduction credirs: 

(0 Use of credits. Notwithstanding any other subsection of this section, discrere 

mission mduction credits 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 Environmental Policy, Analysis and Assessment 

Texas Commission on Environmental Quality 

MC 205 

P.O. Box 13087 

Austin, Texas 7871 1-3087 

~ihl B. iblhh P.E. 

Vlcs Pmldmt 

hbpmant 

101 Ash Street 

San Diego. CA m01-3m 

Tel: 619.6962932 

Fax: 619.6962911 

MKllerQsempra-res,com 

Re: Rule Log Number 2003-003-1 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. Sempra fully mpports this rulemaking and would simply suggest some language that will 

give the Executive Director more flexibility. 

The current rules provide that only one 1 8 months extension to the start of construction deadline may be 

sought. This current rule is not based on any state statutory or federal requirements. In fact, the current 

rule is in stark contrast to the federal rules which would allow the granting of more than one extension 

(see e.g., 40 CFR 52,21(r)(2)). 

1) Maximize Flexibility - Preferred Method 

Sempra suggests that the same lwel of flexibility should be made available to the Texas Commission on 

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) dictate a delay in construction and 2) that the permit was not obtained 

speculatively. Perhaps to most effective way to accomplish the assessment of those circumstances is to 

leave any additional extensions to the full discretion of the Executive Director without attempting to 

capture all potential scenarios in the details of the rule language. This approach would be consistent 

with the federal approach to allow several extensions, yet also speciEy and put the regulated community 

on notice that 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 speculative permitting. Since all aspects leading to the development of a 

project and any decision to delay construction could be considered, it would be very =cult to attempt 

to disguise a speculative project 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 Second Extension 

The current rule proposal suggests that spending at least 15 % of the capital cost of the project would 

demonstrate a strong commitment to the project such that a second extension could be granted. Sempra 

understands this language to mean that 15% of the entire cost of a project &om development to final 

construction would be considered. In the case of a $300 million project (such as a typical 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 

construction practices for capital intensive projects. See Attachment A, spreadsheet of typical 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 EPC release starts the execution phase 

of a project which includes construction. EPC costs would not be incurred by a permittee who is 

seeking a start of construction deadline extension. Simply stated, if those costs were being incurred, 

there would be no need to seek a construction extension. 

Consequently, and to better reflect the economic and project development realities of capital intensive 

projects, Sempra would suggest that the TCEQ focus on the level of development cost leading to, but 

not including, execution of the EPC and associated construction related activities. A speculative project 

would typically seek to minimize or delay development activities and the resulting costs while focusing 

primarily on environmental permit costs. In the case of a power plant project, overall development 

costs would generally approach $10 million when pursued diligently while it could be as low as $2-3 

million for a "speculative" project. As such, any speculative permit should be discemable krn the 

level of expenditure undertaken towards development costs. Sempra would suggest that, if apercentage 

of cost approach is preferred by TCEQ, a demonstration of expenditure 80% or higher of overall 

development costs (i.e. not including construction and EPC related costs) be required by the regulation. 

Alternatively, TCEQ could consider a stepped approach that recognizes that development costs 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 capture most development costs and not be too high a bar to reach. For 

that matter, for small projects, the level of expenditure relating to the preparation ofpermit applications 

and other development activities would likely meet a fifteen percent threshold. Candidly, problems 

only start to occur when projects reach a capital cost of $50 million or above where the meen percent 

factor becomes somewhat detached hm project 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, even inthe case of a $300 million power plant project, it would 

be unusual for preconstruction costs to rise much above $10 million. 

Several approaches may address this problem. Perhaps the cleanest approach would be to require a 

fifteen percent level of expenditure for projects under $50 million but cap the expenditure requirement 

to $7.5 million for all projects above $50 million in capital expenditure. This approach would still 
capture projects that are speculative, or otherwise not kund to merit an additional extension, since a 

second extension is discretionary and the Executive Director can chose not to grant a request. 

3) Other option if a list of factors is preferred. 

As stated above, Sempra believes that TCEQ could simply allow its Executive Director to grant 

additional extensions at ita discretion as long a project is found not to be speculative. Ifa list of &tors 

is prefd by the Commission, Sempra respecmy recommends the following language that might 

best capture all considerations: 

In considering extensions to the date to begin construction, the executive director may 

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 of the 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) the total costs incurred by the permittee, or the exiskme ofbinding contracts relating 

to the project, at the time an extension request is filed such that the executive director 

can properly ascertain that the permittee is making reasonable progress toward 

beginning construction; 

6) unique economic circumstances in a particular industry unrelated to the permittee's 

financial status; 

7) the overall public or environmental benefit of the project; 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 be just one of many factors. 

4) Level of CommittedfNon-Recoverable Capital 

Although the proposed language focuses on a percentage of expenditure without consideration of 

whether some of that expenditure may be recoverable, there has been some mention that a level of nonrecoverable commitment (or walkaway cost) could be considered. Sempra is opposed to this approach 

to the extent it demands that enough good money is thrown after bad without a clear correlation to 

speculative versus non-speculative projects. As stated above, a focus on development costs would seem 

the most effective approach to identify truly speculative projects. 

The notion of walkaway 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 

facility in construction has vastly different implicatiom since no further review of health effects, B& 

Available Control Technology or Lowest Achievable Emission Rate is contemplated. That is not the 
case where an extension is requested and the state has the opportunityto reevaluate the pollution control 

technology involved at the site. 

Clearly, the best indication of an entity's commitment to aproject is the level of effort undertakeinin the 

development of that project. Most development costs will indeed be 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 some recoverable value. If TCEQ were to 

require some percentage of the capital cost to be walkaway cost, large capital intensive projects would, 

once again, be in a difficult position unless those walkaway costs were capped or otherwise limit& 

Assuming for sake of argument that a walkaway cost would be around 10 percent of the capital cost of 

the project, a $300 million project would be required to have $30 millionin walkaway costs. Of those 

$30 million, approximately $10 million would be development costs and the balance would have to be 

met through losses in resale value of purchased equipment, See Attachment B. Although that 

requirement might be met in depressed industrial sectors, it fails to recognize that the vast majority of 

post-development costs may be associated with EPC contracts that are not triggered mtil construction is 

started 

Sempra respectfully suggest that if a walkaway approach is selected, the Commission should limit its 

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 capital intensive projects, walkaway costs incurred prior to the start of construction do 

not drastically continue to increase as a project's overall capital cost increases. Walkaway costs will be 

closely tied to the site-specific development costs that have been incurred. 

5) Litigation Extension 

Sempra believes that the litigation extension is a constructive step towards allowing a permittee to My 

benefit fiom its permit once removed hm the clout of litigation. Often projects require financing and 

litigation involving any of the permits required for the project delays the opportunity to move forward 

with the development and eventual construction of the facility or plant. In essence, the pending 

litigation is flagged by attorneys for a potential lender and no commitment of fimds will be made until 

that issue is fully resolved. This the case regarding any of the environmental pennits needed for the 

development and construction of a project. Understandably, the Air Quality permit, which is a 

preconstruction permit, is often one of the first permits sought by applicant. Yet when litigation occurs 

regarding any of the needed permits, the entire project is held back pending resolution of that dispute. 

Scrnpra believes that a permittee having to endure litigation, and the uncertainty of ultimate court 

decision on a challenge by Protestants or Hearing Requestors on a decision to issue a pennit, should be 

made whole on the timelines allowed by regulations for the start of construction of a project. 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 is pending, the pennittee is not in a 

position to make contractual commitments and move forward with the development of the project. 

Once litigation is finally resolved, the permittee must then quickly recover from this delay and restart 

the development process. At times the economic circumstances will have changed. 
Sempra believes that the two opportunities for extension provided in the proposed regulation (litigation 

delays and economic circumstances) should be clarified and not be mutually exclusive. Ifa permitteeis 

fig an extension request to be made whole on the deadline to start construction as a result of a third 

party lawsuit against the TCEQ, that same permittee should not be precluded &om later requesting on 

extension based on changed economic circumstances. To do otherwise would essentially penalize that 

permittee for having had to endure third party litigation over which it had no control. 

Sincerely, 

William B. Keller, P.E. 

Vice President 

Development 

(2) Attachments 

Cc: Albert0 Abreu 

Charlie Neal 

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 

Combustion Turbines (2) 

Steam Gen and Turbine (1 ) 

Project Engineering 

Land Clearing & Site Prep 

Constructio~~ Oversight 

Horizontal Construction 

Vertical Construction 

lnf rastructure 

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. Project Scope 

walkmy oats 

total project 

costs with 

prepurahased 

turbines 

(includes all EPC 

costs) 

12.1. Total Generation (MW) 

Walkaway costs 

compared to 

prow costs UP 

to EPC with 

prepurchased 

turbines 

(a,,,pical) 

500 to 600 

"Prudent and 

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 7870 1-1586 (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 5 121239-4808) 

RE: Rule Log Number 2003-003-11641 

Dear Ms. Spencer: 

Texas Chemical Council (TCC) offers these comments on proposed changes to Chapter 

1 16, concerning Permifs for New Construction or Modz~cation. 

TCC represents a major component of the 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 similar percentage of 

manufacturing shipments. 

Attached are detailed comments on the proposed rulemaking which reinforce our stated 

positions and concerns. Please do not hesitate to contact Barbara Pederson at (281) 842- 

41 98 or me at (5 12) 646-6404 with any questions regarding 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 1 6.120(1)@): Voiding of Permits 

Texas Chemical Council FCC) disagrees with the requirement to spend 15% of the 

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

an additional 18 month extension. 

TCC recommends that the term "spentyy be changed to "spent or codtted" to reflect 

that some charges would have to be paid even if the project were cancelled, per 

contractual arrangements with equipment vendors or construction contractors. Such 

forecasted non-recoverable costs should be included in any evaluation. 

TCC recommends changing the "15%" to "5% of the estimated capital cost". For a very 

large project, five percent could be a very large sum of money. In a scenario where 

economic conditions decline or business conditions change, a company may need to 

postpone further investment for 18 months. Five percent is still a large sum of money for 

a project which is not fully authorized by 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 1 16.3 15 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 

approximately 7 months from promulgation. This would only leave 1 month for a 

company to read and respond to the final rule to be in compliance with the 6 month 

requirement if the permit is scheduled to expire in February, 2004. Companies that had 

intended to submit permit renewal packages in November to meet the current 90 day 

requirement would be at a disadvantage to potentially pay expedited costs to prepare an 

application for submittal by August 1,2003. TCC recommends additional timing to 

accommodate those whose permits expire in 212004 - 414004 to allow them the 

appropriate time to preparelsubmit an application for renewal. TCC recommends an 

effective date of 4/1/2004 based 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 INTEROFFICE MEMORANDUM 

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 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. 

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 deadlimes by 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. 

Certification and banking of credits allows the commission to track ongoing reductions 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 a new source review permit. This change is needed to 
Commissioners 

Page 2 

August 1, 2003 

Docket No. 2003-0232-RUL 

accommodate permit holders who have had to delay construction because 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 

implement permitting processes to ensure that adequate and timely information is provided 

while allowing applicants flexibility to address problems that arise in the permitting and 

construction timeline. • 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 application fee 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 18 months 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 obsolete nonattainrnent 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 construction extension of up to 18 months will be provided for applicants under 

litigation or if the applicant has 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 affected persons who were not affected before? 

No. 

Those portions of the rules concerning permit applications and renewals are 

primarily administrative and are generally cost free to industry if the conditions 

of the amendments are observed. Permit applicants that have their applications 

voided would be required to repeat a technical review and pubIic notice, 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 101 certification methods are not materially different than 

methods now used, and Chapter 101 is 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 stakeholder meetings been held? 

The Air Permits Division conducted two stakeholder meetings concerning these 

amendments: January 7, 2003 and March 26, 2003. 

How many people attended? 

12-15 people attended on January 7,2003, and 12-15 people 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 source review program. No new full-time employees are 

needed. The Air Permits Division will change its internal procedures as 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 procedures that are the subject of this adoption are currently addressed in rules of the 

commission and require rule amendments to 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 commission believe this adoption will resolve 

any outstanding problems. 

Public comment: 

Sempra, Texas Chemical Council, and Texas Industrial Project all recommended that the 

commission lower the threshold for a second construction extension from the 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 Paso Electric is concerned that offset certification under Chapter 101 will affect its program of 

brick kiln emission reductions in Juarez. 

Signii5cant changes from proposal: 

The executive director recommends that the second construction cost threshold be lowered to 10% 

with a cap at $5 million. The executive director further recommends that a specification be 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 organic compounds. This would allow additional pollutants 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, Regulation Development 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 1 16.715 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, 

1 16.313, and the repealed $1 16.170 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 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 

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 116 begin 

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 extension periods 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-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 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 5 1 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 commission is 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 commission 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 

Page 3 
commission is also adopting rules so that pennit renewal applications be submitted at least six months, 

but no earlier than 18 months, 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 $ 1 16.1 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 $1 16.140, 

Applicability. However, the applicant must go through a new technical review and republish public 

notice. 

Page 4 
The amendment of $1 16.1 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 

$1 16.120. 

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 construction to 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 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 application prior to permit issuance, then onehalf of the fee will be refunded. If it is determined that a pedt applicant 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 classification under 

$1 16.119, 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 conditions that 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 agrees to obtain additional offsets if the executive director determines the reductions do 

not satisfy the original offset requirements. 

The new $1 16.172, Emissions Offsets from Rocket Engine Firing and Cleaning, contains the 

conditions under which emissions from rocket engine firing or cleaning may be offset by alternative or 

innovative means. These requirements have been transferred unchanged to the new section from 

existing $1 16.170 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 $116.313, Renewal Application Fees, corrects the zip code in the commission's 

address. 

The amendments to $1 16.315, Permit Renewal Submittal, state that an application for permit renewal 

must be submitted at least six months, but no earlier than 18 months prior to the permit expiration date. 

The commission intends to allow sufficient time for preparation and submission of 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 offsets be 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 applications voided 

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% qualification threshold 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 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 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 (3 1 TAC §501.12(1)), and the policy 

which requires that the commission protect 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 conditions under which the construction of a permitted project can be 

delayed, establish procedures for voiding pennit applications, establish conditions under which permit 

fees may be refunded, and specify a time period for the submission of 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 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 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 suggestions for 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 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 Ah 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; 

$382.011, 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 SIPS to 

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 CONSTRUCTION OR 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 

$ 1 16.150 and 5 1 16.151 of this title (relating to Nonattainment Review), 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, calculated using 

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 construction of 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 

construction of 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 emissions unit) 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 

nonattainrnent pollutant, 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 nonattainrnent review 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 Standards promulgated by the EPA under the FCAA, # 1 1 1, 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 demonstrates that 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 significant net 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 nonattainment area designations are 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 $1 16.150 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 curtailment plan 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 enforceable pennit 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 implementation plan. 

(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 emissions exceeds 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 nonattainment permit, 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 

shakedown period, 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 credit under 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 reduction must 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 facilitylstationary source 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 decreases proposed at the source between the date of 

application for the modification and the date the resultant modification begins emitting. Increases and 

decreases must 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 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 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 informing the 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 completed permit 

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 required by the 

executive director under 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 (relating to 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 demonstrates that 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 16.11 1 of this title (relating to General 

Application) but will be exempt from the requirements of $1 16.140 of this title (relating to 

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 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 $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 

$382.03 1 (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, special pennits, standard permits, and special 

exemptions may 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 of phased 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 having jurisdiction 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 16.61 1 of this title (relating to Registration To Use a Standard 

Permit), retain all records demonstrating compliance 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 $8 101.201, 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 precedent to 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, special permits, standard permits, and special 

exemptions shall comply with all special conditions contained in the permit document. 

(1) Special conditions may 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 Permits by 

Rule). 

(B) Such written approval may be required if the executive director 

specifically finds 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, $1 12(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 executive director may grant extensions to begin construction. Permits issued to holders 

who have received extensions will be subject to revision based 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 18 months may 

be granted if the permit holder demonstrates that emissions from the 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 litigation not of the permit holder's initiation 

regarding the issuance of the permit; or 

(2) the permit 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 if the 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, 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 

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; $ 382.05 15, 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 28 
Act; 8382.0517, concerning Determination of Administrative Completion of Application, which 

authorizes the 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 

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; $382.0513, 

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 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 construction or 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 $1 16.12 of this title (relating to Nonattainment 

Review Defmitions) specifies the various classifications of 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 100 tons 

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 

emission unit 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 $1 16.12 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 100 tons per year of an 

applicable nonattainment pollutant 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 nonattainment pollutant 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, comprehensive plan 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 commission 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, $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, 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 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 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 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 SIPS to 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 Credit Banking and 

Trading; or Discrete Emission Credit Banking and Trading), except as provided 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; 

5382.01 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; 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 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 

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 (base fee 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 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 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 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 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 Significant Deterioration 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) Construction progress. The start of construction, construction interruptions 

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 

having jurisdiction 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 commencement of 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 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). 

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 operations or 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 issuance or 

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 IMPLEMENTATION PLAN 

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 $1 16.170; new $8 1 16.120, 1 16.170, and 1 16.172; 

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 

implementation plan (SIP). The adoption would require emission reductions be certified as emission 

reduction credits under 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 

establishment of a voidance process, require an application for permit renewal to be submitted at least 

six months but no earlier than 18 months 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. Under Tex. Health & Safety Code Ann. $5 382.011, 382.012, and 

382.023 (Vernon 2001), the Commission has 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 Texas Register (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 

interested persons, 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 recommendations of 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.OR MODIFICATION 

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 $$I 16.12,116.114, 

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 

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 116 begin wnstruction 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 permits, the time period 

to begin construction is specllied in the permit with 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, particularly when third 

party litigation 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 aC 

lowing 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 lO%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 

flexiMe permits, the commission is adopting 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 meet the 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 

116 to 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 contrast to 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 needs timely and accurate information on 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 is also adoptingrules so that permit renewal applications be submitted at least six months, but no earlierthan 18 months. before the permit will expire. By establishing 

a date for the earliest submission of a renewal application, the 

commission will also increase the probabllity that renewal applications are received under the most cumnt fee tables. 

SECTION BY SECTION DISCUSSION 

Subchepter A: Definitions 

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 orderto 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 definitions. 

Subchapter 6: New Source Review Permifs 

The amendments to $116.114, Application Review Schedule, 

state that an application for a permit or permit 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 ap 

plicant shall submit an entirely new application with a new Form 

ADOP TED RULES September 5,2003 28 TexReg 7763 
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 newtechnical review and republish public 

notice. 

The amendment of $1 16.1 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 51 16.120. 

The new $116.120, Voiding of Permits, addresses the voiding of 

permits and contains language relocated from 51 16.1 15. 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 permlt 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 construction to 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 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 cornrnission will also review the application of lowest achievable emission rate. This is 

consistent with the commission's current practice of determining 

applicability of federal rules to projects where construction has 

been delayed. 

The amendments to 51 16.143, 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 comrnission 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 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 applicant 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 classification under §116.119, De 

Mipimis Facilities or Sources, would also enable the applicant to 

withdraw the permit application and receive a refund of the fee 

difference. 

The amendment to $1 16.150, New Major Source or Major Modification in Ozone 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- Port Arthur ozone nonattainment 

areas has expired. 

'The new $1 16.170, Applicability of Emission Reductions as Offsets, establishes requirementsforthe use of emission reductions 

as offsets. Reductions that 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 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 conditions that specify the date when the permit holder must 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 agrees to obtain addiional offsets if the executive director determines the reductions do not satisfy the original offset 

requirements. 

The new §I 16.1 72, Emissions Offsets from Rocket Engine Firing 

and Cleaning, contains the conditions under which emissions 

from rocket engine firing or cleaning may be offset by alternative 

or innovative means. These requirements have been transferred 

unchanged to the new section from existing 51 16.1 70 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 amendments to 51 16.31 5. Permit Renewal Submittal, state 

that an application for permit renewal must be submitted at least 

six months, but no earlier than 18 months prior to the permit expiration date. The comrnission intends to allow sufficient time 

for preparation and submission of renewals for permit holders 

whose permit expires within six months of 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 specified time period. 

Subchapter G: Flexible hrrnits 

The amendments to 61 16.715. General and Smial Conditions. 

remove language coicerning 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 IMPACT ANALYSIS 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 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 offsets be certified in a manner consistent with other TCEQ regulations, establish a deadline for the 

certification of existing reductions as emission offsets, establish 

pmcedures for voiding permit applications, estabiish conditions 

under which permit fees may be refunded, specify a time period 

28 TexReg 7764 September 5, 2003 Taas Registe 
for the submission of permit renewal applications, and specify 

which fee schedule will apply to permit renewals. These adopted 

rules will not require addii6nal emission controls or new capital 

expenses. Applicants who have their applications voided will be 

required to submit a new application and repeat the public ne 

tification process. Depending on location, this notification can 

cost from $700 to $4.000. This expense will only be incurred fob 

lowing 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 construo 

tion 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% qualification 

threshold of such a figurn is dearly a significant amount. However, the adopted rules do not compel a permit holder to seek an 

extension. While permit 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 cri 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 aaencv or re~reseniatii of the federal oovernment to 

imaem& a she ah federal program; or 4) adobt a rule solely 

under the general powers ofthe agency instead of under a specific state law. The adopted rules in Chapter 116 are not subject 

to the regulatory analysis provisions of 52001.0225(b). because 

the adopted rules do not meet any of the statute's four applicabili requirements. 

TAKINGS IMPACT ASSESSMENT 

The commission completed a takings impact assessme; for the 

adopted rules. Promulgation and enforcement of the rules will 

not burden private real property. The rules will not affect private 

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, 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 accordance with 31 TAC 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 (31 TAC §501.12(1)), and the policy which requires 

that the commission protect air quality in coastal areas (31 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 conditions 

under which the construction of a permitted project can be deIgred, establish procedures for voiding permit applications, establish conditions under which permit fees may be refunded, and 

specify a time period for the submission of permit renewal applications. No new emissions will be authorized. Therefore, the 

rulemaking is consistent with the CMP. 

EFFECTON SITES SUBJECTTO THE 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). Dow Chemical Company (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 commented that the notice of deficiency referenced in 51 16.1 14(b)(2) should be specified as a written notice. Dow and BP further recommended that the applicant be 

notified in writing if the application is voided. Dow and BP requested that the commission provide maximum flexibility in responding to reque-sts for application information that may require 

complex modeling studies and evaluate deficient applications on 

a case-by-case basis. 

The commission agrees with the commenters and has changed 

the rule language to indude a requirement for written notification 

of deficiencies. The commission currently notities permit applicants in writing if an application has been voided. The commission recognizes that certain requests for additional application 

information may require more time 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 respond to defiaency requests. 

Sempra stated that the current rule limiting start 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 population centers 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 7765 
a permit if construction is not completed within a reasonable 

time. The commission believes that the provisions it has estab 

lished in the rules allow a reasonable time for the beginning of 

construction and are consistent with 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 preliminary work, binding contracts on the 

permit holder, unique economic circumstances, and the public 

or environmental benefit of the project be considered as a sub 

stitute to potential scenarios in the rule language. Sempra stated 

that executive director discretion would provide a disincentive for 

and protection against permits that 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. In the 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 changed the rules in response to these 

comments. The commission agrees with another statement from 

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. development costs would.make upa higher 

percentage of the total cost of less expensive projects. The commission adopted a price threshold for the determination of a second extension as a deterrent against speculative permitting and 

wants this deterrent to apply equally to large as well as small 

projects. Because the development costs would be a lesser pm 

portion of large projects, the commission believes that companies with greater resources undertaking these projects would 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 meeting the 15% threshold as it requires good money to 

be thrown after bad to meet a figure without a clear correlation to 

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 commenter that project development or non-recoverable costs do not 

rise proportionately with the total cost of a project. Considering 

these Factors the commission has lowered the required expenditure to 10% of total project costs, which is consistent with federal 

guidance concerning substantial 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 money for a project not fully authorized by the wmmission and 

envisions a scenario where economic or business conditions decline that require postponement of further investment in a project 

for 18 months. TCC also recommended that the terms "spent or 

committed" be used when determining the expenditure figure so 

that it includes money that must be paid even 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 without the 5% expenditure. TIP stated that the proposed 15% figure 

may exceed the amount that could be reasonabiy expected to be 

spent on preparation for construction, making the rules useless. 

The commission has changed the rules to incorporate the TCC 

recommendation that the phrase "spent or committed" be used 

in determining a second extension threshold. The commission 

has not changed the rules in response to 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 sufficient disincentive to 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 requirement for 

additional health effects 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 penalize the 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 

review will be a documentation that the original conditions of the 

28 TexReg 7766 September 5, 2003 Texas Register 
area near the project have not changed significantly. If such a 

demonstration is not possible, then the commission reserves the 

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 believes that 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 extension should not be mutually exclusive. An extension of 

construction granted 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 control technology 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 mply with all rules and regulations, including pmtection of the public's health and property, 

should apply to both the 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 reviews as applicable as a condition for 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 response to this comment Afirst extension would be 

granted at or near the end of 18 months since permit issuance. 

The commission believes that no significant changes to the area 

surrounding the permitted site will occur over this period. 

TIP opposed an addiional best avakble control technology review for projects that have received a first IBmonth extension of 

the beginning of construction. 'I'IP stated that this would unnecessarily consume commisdon and industry resources and could 

lead to further project delays. TIP also stated that the reason for 

the additional best available control technology review was not 

stated in the proposal preamble and that adoption of this requirement would make the existing rules considerably 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 but slowly changing level of control that 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 expressed concern that the proposed requirement to 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 in the El Paso area where emission reductions from brick kilns achieved in Ciudad Juarez may be used 

in lieu of emission reductions achieved in the El Paso nonaltainment area. ELP listed the following specific concerns: 1) Would 

§101.301, Purpose, be applied to the creation of offsets, removing its voluntary application? 2) Under the general prwisions 

of §101.302, would offsets be restricted to 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 intend to create a bank for all nonattainment areas? ELP 

recommended the creation of aseparate division in Chapter 101. 

Subchapter H, where TCEQ defines the specific requirements 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 United States sources, and the 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 authorizing the 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 required to 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 requirement to offset 

new emissions in an area designated as 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 need to alter the statement 

of purpose under 51 01.301 as both emission credits and reductions used to offset must be voluntary reductions. The emission reduction credit program was established in 1993 to 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 in the state which contains nonattainment areas for crib 

ria pollutantsother than ozone, and there are currently no nonattainment permits that have been issued in El Paso County. The 

commission agrees with ELP's comments regarding the 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 Tdeg 7767 
§101.302 in Mure rulemaking. In addition, the commission intends to maintain a credii registry 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- reductions generated outside of the United States that 

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 meet this requirement, quantification 

methods must be based on TCEQ- and EPA-approved quantification protocols. Quantification methods that have not been prethe operation of equipment to be replaced until the replacement 

equipment is tested and integrated into the facility. 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 reduction to be used as an affsetata facility other than where 

it was generated must be cerbified under Chapter 101. The cornmission has not changed the rules in response to this comment. 

EPA commented that the commission should clarify that reduo 

tions to be used as offsets must be certified under Federal Clean 

Air Act requirements if those reductions are to be applied before 

the September 1,2004 deadline as ~ro~osed in 81 16.17Nbl. . . . , 

viOusl~ may be submitted 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 incorporated into which generate emission reductions that 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 method for Once the quantifi- tified by the date of September 1,20M if they are to be 

pratocol may be for future strategies used as offsets. The commission has not changed the rules in the same source type (i.e., engine, flare, brick kiln) and would not response to this comment. be subject to the approval process. The commission disagrees 

that this process will frustrate or hinder the generation of reduc- EPA recommended the following modifications to $1 16.170(~)(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 acknowledges the differences in the emissions (3) should cornin a requirement to 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 recognizes the obstacles which 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 in satisfvina the offset reauirement. 

To date, the commission has appr&d-the use of eniission re- The commission does not believe the additions are necessary for 

ductions from the modification of 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 effective date of February 1999). Future use Of these reductions for Of meeting 1,2004 proposed in $1 16.315(a) will not allow sufficient time 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 an anticipated rule promulgation of July 2003. This effective date than previously used in use for a state require- would only leave one month for companies to read and =pond rnent. The commission will continue to work with ELP and other to the amended rules in order to 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 mote the 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 recommended that $116.310 be revised to require 

September 1, 2004 deadline in $1 16.1 70(b) applies to existing the commission provide notification 270 days prior to permit exreductions and that reductions occumng 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 effective date 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 staff will modify its internal proceas during the new testing, and dures to provide more advance notification of pending expiration troubleshooting. of oerrnits. r 

The agrees with the l'IP suggestion and has EPA recommended an addition to 911 6.1 16 stating that 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 51 16.1 16; therefore, the comrnis- Dow commented that the proposed rules should be clarified that sion is prohibited by law from making any changes to this section the requirement to certify a reduction as an offset applies only to in the current rulemaking. those offsets that will be applted at another site. 

The commtssion is retaining language that allows future internal SUBCHAPTER A. DEFINITIONS 

offsetsto a facility to be certified under Chapter 116. This allows 30 TAC 8116.12 

28 TexReg 7768 September 5, 2003 Taas Register 
STATUTORY AUTHORITY Control Plan. which authoriies the commission to develo~ aaenThe 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 purpose to safeguard the state's air resources. 

consistent with the protection of public health, general weffire, 

and physical property; 982.01 1, 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 plan for 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 

measures or 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 exercise of the agency's 

legal authority. 

Filed with the Office of the 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 

For further information, please call: (51 2) 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 under Texas Water 

Code, 55.103, concerning Rules, and 55.105, concerning General Policy, which authorize the comrnission to adopt rules necessary to carry out its powers and duties under the Texas Water Code; and under Texas 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 Policy and 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 establish and enforce permit 

conditions; 5382.0515, concerning Applicafon 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 theTexas Clean Air Act; 5382.0517, 

concerning Determination of Administrative Completion of Application. which authorizes the commission to determine when an 

appli&tion is administratively complete; and 5382.0518, concernina Preconstruction Permit. which reauires persons Dbnning th;e consbuction or modification of a facility to obtain a permit 

from the commission. 

$11 6.114. 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 complete or that it is deficient within 90 days of receipt 

of the application for a new permif or amendment to a permit or special permit. 

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

state: 

(5) 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. 

(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 

completed permit 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 Pennit public notification as required 

by the executive director under 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 (relating to 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 539.41 9(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 539.419(d) of this title (relating to Notice of Application and Preliminary Decision), the executive director shall authorize 

ADOPTED RULES September 5,2003 28 TexReg 7769 
this notice and send capies to the appiicant and all other persons are 

required under 839.602 of this title (relating to Mailed Notice). 

(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. 

@) The pennit 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 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 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 16.1 11 of this title (relating to General Application) but will be 

exempt from the requirements of $1 16.140 of this title (relating to Applicability). 

(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 

@) 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 re- 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 submitting written 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 8382.03 I(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 permit application for an action under Subchapter C of this chapter: 

(B) 180 days of receipt of a completed pennit or permit 

renewal application; or 

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

$11 6.120. 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 formore than 18 consecutive 

months prior to completion; or 

(3) fails to complete construction within a reasonable time. 

@) The executive director may grant extensions to begin con- struction. Permits issued to holders who have received extensions will 

be subject to revision based on best available contml 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 18 months may be 

granted if the permit holder demonstrates that emissions from the 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 penit holder is a party to litigation not of the permit 

holder's initiation regadng the issuance of the permic or 

(2) the permit 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 if the 

permit holder meets the conditions of subsection (b)(2) of this section. 

This agency hereby certifies that the adoption has been reviewed 

by legal counsel and found to be a valid exercise of the agency's 

legal authority. 

Filed with the Office of the Secretary of 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 Register 
Policy and Purpose, which establiihes the commission's purpose to safeguard the state's air resources, consistent with the 

proteclion of public health, general welfare, and physical prop 

erty; 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 authorizes 

the commission to dewlop 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 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 

of Administrative Completion of Application, which authorizes the 

commission to determine when an application is administratively 

complete: 5382.051 8, concerning Preconstruction Permif 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 commission to adopt, charge, and collect fees for each 

application for a permit or renewal of a permit. 

This agency hereby certifies that the adoption has been reviewed 

by legal counsel and found to be a valid exercise of the agency's 

legal authority. 

Filed ~Ith te Office of the Secretary of State on August 25,2003. 

TRD-200305441 

Stephanie Bergeron 

Director. Environmental Law Division 

Texas Commission on Environmental Quali 

Effective date: September 14.2003 

Proposal publication date: April 4,2003 

For further information, please call: (512) 239-501 7 

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 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 

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 commission to 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 Requirements, Examination of Records, which authorizes the commission to prescribe reasonable requirements for the measuring and monitoring of emissions of air contaminants; 5382.051, 

conceming 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; p82.0513, 

concerning Permit Conditions, which atlfhoriis 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 specif~cations necessary for the commission to 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 Completion of Application, which authoriies the 

commission to determine when 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 permit from the commission. 

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 with the Office of the Secretary of State on August 25,2003. 

TRD-200305442 

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: (51 2) 239-501 7 

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 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 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 commission to 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 certifies that the adoption has been reviewed 

by legal counsel and found to be a valid exercise of the agency's 

legal authority. 

Filed with the Mfice of the Secretary of State on August 25,2003. 

ADOPTED RULES September 5,2003 28 TexReg 7771 
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) 239-501 7 

30 TAC §116.170,§116.172 

STATUTORY AUTHORIN 

The new sections are 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 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 

authorizes the commission to 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 Requirements, Examination of Records, which authorizes the commission to orescribe reasonable reauirements for the measuring gnd mo;litoring of emissions of dr contaminants; 5382.051, 

concernins Permitting Authority of Commission Rules, which authorizes the commi&~on to issue permits for the construction of 

a new facility or modification of an existing facility; 5382.0513, 

concerning Permit Conditions, which authoriies 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 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 authoriies the commission to determine when 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 permit from the commission. The new sections are also adopted under 42 United States 

Code, §7410(a)(2)(A), which requires SIPS to include enforceable emission limitations and other control measures or techniques, including economic incentives such as fees, marketable 

permits, and auction of emission rights. 

$116.1 70. Applicability of Emission Reductions as msetr. 

(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 Credit Banking and Trading; or Discrete Emission Credit Banking and Trading), except as provided 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: 

(I) 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; 

(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 pmit holder 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 that the adoption has been reviewed 

by legal counsel and found to be a valid exercise of the agency's 

legal authority. 

Filed with the Office of the Secretary of State on August 25,2003. 

-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 

SUBCHAPTER D. PERMIT RENEWALS 

30 TAC §116313,§116315 

STATUTORY AUTHORITY 

The amendments are 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 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 

authorizesthe commission to control the quaii 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; 5382.01 6, 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 Authoriiy 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 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; 5382.0517, concerning Determ~nation 

28 Tdeg 7772 September 5,2003 Texas Register 
of Administrative Completion of Application, which authorizes the 

commission to determine when an application is administratively 

complete; 5382.0518, concerning Preconstruction Permit, which 

requires persons planning the construction or modification ofa 

fadlity to obtain a permit from the commission; and 5382.061, 

concerning Applicatiin, Permit, and Inspection Fees, which re 

quires the cornrnission to adopt, charge, and collect fees for each 

application for a permit or renewal of a permit 

$1 16.315. Pennit Renewal Submitto2. 

(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 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 subject for review 15 years 

after the date of issuance; 

(2) on or after December 1, 1991, is subject for miew every ten years after the date of issuance; or 

(3) at non-federal sources on or after December 1, 1991, 

may, for cause, contain a provision requiring renewal between five and 

ten years. 

This agency hereby certifies that the adoption has been reviewed 

by legal counsel and found to be a valid exercise of the agency's 

legal authority. 

Filed with the Office ofthe Secretary of State on August 25,2003. 

TRD-200305445 

Stephanie Bergemn 

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 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 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 

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 

authorizes the commission to 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 Requirements, Examination of Records, which authorizes the commission to .pmhbe reasonable requirements for the measuring and monitoring of emissions of air contaminants; 5382.051, 

concerning Permitting Authority of Commission Rules, which authorizes the comrnission to 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 comrnission 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 authorizes the 

cornrnission to determine when an application is administratively 

complete; 5382.0518. 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 requiresthe commission to adopt, charge, and collect fees for each 

application for a permit or renewal of a permit. 

$116,715. 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, 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 Subchapter C of this chapter (relating to Hazardous Air Pollutants: 

Regulations Governing Constructed or Reconstructed Major Sources 

(XU, $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 

Pennits by Rule). 

(b) A pollutant specific emissioncap or multiple emission caps 

andlor individual emission limitations shall be established for each air 

contaminant for all facilities authorized by the flexible pemit. 

(c) The following general conditions shall be applicable to ev- ej flexible pennit. 

(1) Applicability. This section does not apply to physical or operational changes allowed without an amendment under 61 16.72 1 

of &is title (rela& to Amendments and Alterations). 

(2) Construction progress. The start of construction, con- struction intemptions 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 having jurisdiction shall be notified prior to the 

commencement of operations of the hcilities authorized by the permit in such a manner that a representative of the commission may be 

present. 

(B1 Phased construction. which may involve a series of 

facilities &&ing operations at different times; shall provide separate notification for the commencement of operations for each facility. 

ADOPTED RULES September 5,2003 28 Tdeg 7773 
(C) Prior to beginning operations of the facilities authorized by the permit, 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 

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 obtain the proper data forms and procedures. A11 skpling 

and testing procedures must be approved by the executive director and 

coordinata with the appropriate-regionaI office of the commission. 

The flexible pennit holder is also responsible for providing sampling 

facilities and conducting the sampling operations or contracting with 

an independent sampling consultant. 

(5) Equivalency of methods. It shall be the responsibility of 

the flexible pennit holder to demonstmte 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 pennit. 

(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 kilities 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 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 sources of emissions andthoseair 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 5 101.201 and 5 101.21 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, 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 issuance or amendment of the permit. Such conditions in a flexible permit may be more restrictive than the requirements 

of this title. 

This agency hereby certifies that the adoption has been reviewed 

by legal counsel and found to be a valid exercise of the agency's 

legal authority. 

Filed with the Office of the Secretary of 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 further information, 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 Practice Act (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 person is licensed through 

the Texas Board of Professional G The primary purpose of the amendments is to regulations for the public 

practice of geoscience. 

Adopted 5305.2, Definitions, amends he introductory paragraph 

by deleting the word "shall" and the hrase "unless the context t 

28 TexReg 7774 September 5, 2003 Texas Register