ENVIRONMENTAL PROTECTION AGENCY 40 CFRPart 52 [EPA-R06-0AR-2005-TX-0031; FRL- ---'
Approval and Promulgation ofAir Quality Implementation Plans; Texas; Revisions to Rules and Regulations for Control ofAirPollution; Permitting of Grandfathered and Electing Electric Generating Facilities

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposedrule.

SUMMARY: The EPA is proposing to partially approve andpartially disapprove revisions of the Texas State ImplementationPlan (SIP) submittedby the Texas Commission on Environmental Quality (TCEQ, or Commission) on January 

### 3, 2000, and July 

### 31, 2002, as supplemented on August 5, 2009. These revisions are to regulations ofthe TCEQ whichrelate to application andpermitting procedures for grandfathered electric generating facilities (EGFs). The revisions address a mandate by the Texas Legislature under Senate Bill 7 to achieve nitrogen oxide (NOx), sulfur dioxide (S02) and particulate matter (PM) emissionreductions from grandfathered EGFs. These emissions reductions will contribute to achieving attainment and help ensure attainment and continuedmaintenance ofthe National Ambient Air Quality Standards (NAAQS) for ozone, sulfur dioxide, and particulate matter in the State ofTexas. As a result ofthese mandated emissions reductions, in accordance with section 

### 110(1) ofthe Federal2 CleanAirAct, as amended (the Act, or CAA), partial approval ofthese revisions will not interfere with attainmentofthe NAAQS, reasonable further progress, or any other applicable requirement ofthe Act. EPA is proposing thatthe revisions, butfor a severable provision, meet section 110, part C, and partD ofthe Federal CleanAirAct (the Act or CAA) and EPA's regulations. Therefore, EPA is proposing to approve the revisions but for a severable portion that allows collateral emissions increases ofcarbon monoxide (CO) created by the imposition of technology controls to be permittedunderthe State's Standard Permit (SP) for Pollution Control Projects (PCP). EPA is proposing 

### to disapprove this severable portion concerning the issuance ofa PCP SP for the CO collateral emissions increases. EPA is taking comments on this proposal and plans to follow with a fmal action.

DATES: Written comments mustbe received on or before !Insertdate 30 days from date of publication in the Federal Register].

ADDRESSES: Submityour comments, identifiedby DocketNo. R06-0AR-2005-TX-0031, by
one ofthe following methods: Federal eRulemaking Portal: http://www.regulations.goY. Follow the on-line instructions for submitting comments. U.S. EPA Region 6 "ContactUs" website: http://epa.goYlregion6/r6comment.htm. Please clickon "6PD (Multimedia)" and select "Air" before submitting comments. E-mail: Mr. RickBarrett at: barrett.richard@epa.goY. Please also send a copy by email to the person listed inthe FORFURTHERINFORMATION CONTACT sectionbelow.3 Fax: Mr. Rick Barrett, Air Pennits Section (6PD-R), at fax number 214-665-7263. Mail: 

### Mr. Rick Barrett, AirPennits Section (6PD-R), Environmental Protection Agency, 1445 Ross Avenue, Suite 1200, Dallas, Texas 75202-2733. Hand or Courier Delivery: 

### Mr. Rick Barrett, Air Pennits Section (6PD-R), Environmental Protection Agency, 1445 Ross Avenue, Suite 1200, Dallas, Texas 75202-2733. Such deliveries are accepted only betweenthe hours of8:00am and 4:00pm weekdays except for legal holidays. Special arrangements should be made for deliveries ofboxed infonnation. Instructions: Directyour comments to DocketNo. EPA-R06-0AR-2005-TX-003I. EPA's policy is that all comments received will be included in the public docket without change and may be made available online at www.regulations.gov, including any personal infonnation provided, unless the comment includes information claimedto be Confidential Business Information (CBI) orother infonnation the disclosure ofwhich is restrictedby statute. Do not submit infonnation through www.regulations.gov ore-mail that you consider to 

### be CBI or otherwise protected from disclosure. The www.regulations.gov website is an "anonymous access" system, which means EPA will not knowyour identity or contact infonnation unless you provide 

### it in the body ofyour comment. Ifyou send an e-mail comment directly to EPA without going through www.regulations.gov, your e-mail address will be automatically captured and included as part ofthe commentthat is placed in the public docket and made available on the Internet. Ifyou submit an electronic comment, EPA recommends that you include yourname and other contact infonnation inthe body ofyourcomment and with any disk or CD-ROM you submit. IfEPA cannot read your comment due to technical difficulties and cannot contact you for clarification, EPA may not be able to consideryour comment. Electronic files should avoid4 the use ofspecial characters, any fonn ofencryption, and be free ofany defects orviruses. Docket: All documents inthe docket are listed in the www.regulations.goy index. Although listed in the index, some infonnation is not publicly available, e.g., CHI or other infonnation whose disclosure is restricted by statute. Certain othermaterial, such as copyrighted material, will be publicly available only in hard copy. Publicly available docket materials are available eitherelectronically in www.regulations.goy orin hard copy at the AirPennits Section (6PD-R), Environmental Protection Agency, 1445 Ross Avenue, Suite 700, Dallas, Texas 75202-2733. The file will be made available by appointment for public inspection in the Region 6 FOIA Review Room between the hours of8:30 am and 4:30 pm weekdays except for legal holidays. Contactthe person listed in the FORFURTHERINFORMATION CpNTACT paragraph below orMr. Bill Deese at 214-665-7253 to make an appointment. Ifpossible, please make the appointment at leasttwo working days in advance ofyour visit. There will be a 15 centperpage fee for making photocopies ofdocuments. Onthe day ofthe visit, please checkin at the EPA Region 6 reception area at 1445 Ross Avenue, Suite 700, Dallas, Texas. The State submittal is also available for public inspection at the State Air Agency listed below during official business hours by appointment: Texas Commission on Environmental Quality, Office ofAir Quality, 12124 Park 35 Circle, Austin, Texas 78753.

FORFURTHERINFORMATION CONTACT: Mr. Rick Barrett, AirPennits Section (6PD-R), Environmental Protection Agency, Region 6,1445 Ross Avenue, Suite 700, Dallas, Texas 75202-2733, telephone 214-665-7227; fax number 214-665-7263; e-mail address: barrett. richard@epa.goy.5

SUPPLEMENTARY INFORMATION: Throughoutthis document "we," "our," and "us" refers to EPA.

OUTLINE: I. Texas Senate Bill 7 II. WhatAction is EPA proposing?

A. January 3, 2000 submittal B. July 31, 2002 submittal III. Why are we proposing to partially approve and partially disapprove this SIP submittal?

A. January 3, 2000 submittal B. July 31, 2002 submittal C. CAA 110(1) Analysis IV. ProposedAction V. Statutory and Executive Order Reviews



### I. Texas Senate Bill 7
Texas Senate Bill 7 (SB 7), formed underthe 76th Texas State Legislature, 1999, amended the Texas Utilities Code (TUC), Title 2, Public Utility Regulatory Act, Subtitle B, Electric Utilities, and created a new Texas Utilities Code Chapter 39, "Restructuring ofElectric Utility Industry." SB 7 requires the TCEQ to establish aregulatory program implementing the6 statute's mandatory emissions reductions for "grandfathered facilities" underthe Texas Utilities Code section 39.264. A "grandfathered facility" is one thatexisted atthe time the Legislature amended the Texas CleanAirAct (TCAA) in 1971.

These facilities were notrequired to comply with (Le., grandfathered from) the then new requirement to obtain permits for construction ormodifications offacilities thatemit air contaminants. Texas beganpermitting new and modified sources in 1971, and sources built before Texas' permitting rules became effective were not required to obtain permits for air emissions as long as they were notmodified as defined underTexas' New Source Review SIP program.

Section 39.264 ofthe TUC now requires EGFs thatexisted on January 1, 1999, to obtain
apermit from the Commission even though these sources were notpreviously required to obtain
a permitunderthe TCAA, section 382.0518(g).

Section 39.264 ofthe

# ruc specifically requires owners oroperators ofgrandfathered EGFs to apply for a permitto emit nitrogen oxides (NOx) and, for coal-fired grandfathered EGFs, sulfurdioxide (S02) and particulate matter (PM) through opacity limitations. These applications were due on orbefore September 1, 2000. A grandfathered EGF that does not obtain a permitmay not operate afterMay 1, 2003, unless the Commission finds good cause for
an extension. Section 39.264 ofthe

# ruc requires that for the 12-monthperiod beginning May 1, 2003, and for each 12-monthperiod following, annual emissions ofNOxfrom grandfathered7 EGFs not exceed 50% ofthe NOx emissions reported to the Commission for 1997. Furthermore, it requires that emissions ofS02from coal-fired grandfatheredEGFs notexceed 75% ofthe S02 emissions reported to the Commission in 1997. In addition, TUC section 39.264(e) requires electric generating facility permits (EGFPs) for coal-fired, grandfathered EGFs to contain appropriate opacity limitations providedby the commission's rules in 30 Texas Administrative Code (TAC) Ch.lll.lll, "Requirements for Specified Sources." As described in more detail below, the emission limitations may be satisfied by using control technology orby participating in the banking and trading ofallowances underTexas' Emission Banking and Trading of Allowances (EBTA) program.
Overall, SB 7 mandates specific pollution reduction in an area, while allowing individual
sources flexibility in how they meet emissions reductions. As participants in the program, EGFs must obtain apermit allocating them a certainlevel ofemissions which they cannotexceed. In each defined region, the total level ofemissions are restricted, orcapped, to a level consistent withthe SB 7 statutory goals. The individual EGF, to meet its allocated emissions level, can either choose to install pollution controls, shut down operations, orpurchase allowances from another source that already reduced emission levels below its permitted amount.

To achieve SB 7's mandate, the TCEQ made revisions to 30 TAC Ch.l16, "Control of Air Pollutionby Permits for New Construction or Modification," by establishing an allowance and permitting program for regulating grandfathered EGFs under Subchapter 

### 1. TCEQ concurrently adopted Chapter 101, Subchapter H, "Emissions Banking and Trading," that8 establishes a regional cap and trade system to distribute emission allowances for use by EGFs. The new Division 2, Chapter 101, SubchapterH, concerning EBTA, sets outthe allowance systemto be used to assist grandfathered and electing EGFs in meeting the emission reduction requirements ofTUC, section 39.264. Together, the two rules define categories of EGFs that are eligible to use the trading system. As discussed above, the first category consists ofgrandfathered facilities. The second category ofEGFs consist ofcurrently permitted EGFs that are not subjectto the permitting requirements mandatedby SB 7, yet electto participate in the allowance trading system. These are referred to as "electing" EGFs and participationin the permitting program will allow electing EGFs to obtain allowances underthe EBTA.

The purpose ofthe proposed rulemaking by EPA is to partially approve and partially disapprove the TCEQ's permit and emission control requirements for grandfathered and electing EGFs and related permit application, monitoring, reporting and public notice procedures. Specifically, the permit applicationrequirements, methods for monitoring and reporting emissions andpublic notice procedures for grandfathered and electing EGFs are the subject of this proposal action. Please note that EPA's action on 30 TAC Chapter 101, SubchapterH, Division 2, concerning Emissions Banking and Trading ofAllowances, is being proposed in a separate notice and is evaluated in a separate TSD. (RME Docket R06-0AR-2005-TX-0012).

The revisions to TCEQ's 30 TAC, Chapter 116, concerning the permitting ofgrandfatheredEGFs, will achieve the Legislature's SB 7 emissions reductions goals. Compliance with these revisions will cause decreased airemissions ofNOx, S02, and PM, due9 to the shutdown ofthe source, participation in the EBTA, or installation ofpollution controls on grandfathered sources thathad previously been exempt from having to use pollution controls. Because the revisions will cause additional emissionreductions from these sources, they will better serve to protectthe public health and welfare. The revisions will also continue to contribute to improvement ofair quality and attainmentor maintenance ofthe federal air quality standards. Overall, these provisions serve to improve the existing SIP.
Lastly, these provisions meetthe requirement in 40 CFR S1.160(a) thateach planinclude legally enforceable procedures to determine whetherthe construction or modification ofa facility, building, structure, orinstallation, or combination ofthese will resultin (I) a violation of applicable portions ofthe control strategy; or (2) interference with attainmentor maintenance of
a national standard in the State in which the proposed source (ormodification) is located orin a neighboring State.

II. What Action Is EPA Proposing?

We are proposing to partially approve and partially disapprove the revision to Title 30, Chapter 116, ofthe TAC submittedby the State ofTexas on January 3, 2000. We are also proposing to fully approve the revision to Title 30, Chapter 116, ofthe TAC submittedby the State ofTexas onJuly 31,2002. The January 3, 2000 submittal concerns Subchapter A: "Definitions," section 116.18; and Subchapter I: "Electric Generating Facility Permits," sections 116.910-914,116.916,116.920-922,116.930, and 116.931. We are proposing to fully approve10 aU ofthis 2000 submittal but for the severable reference in 30 TAC 116.911(a)(2) that, if approved, would allow the use ofaTexas PCP SP for the permitting ofthe CO collateral emissions increases. We are proposing to disapprove this reference in submitted 30 TAC 116.911 (a)(2) allowing the use ofa PCP SP for the collateral CO emissions. The July 31, 2002 submittal concerns Subchapter A: "Definitions," sections 116.10 and 116.18; and Subchapter 1: "Electric Generating Facility Permits," sections 116.910, 116.911, 116.913, 116.917, 116.918, 116.921, 116.926, 116.928, and 116.930. The TCEQ adopted these revisions on December 16, 1999, and May 22, 2002, respectively. Please note that in the July 31, 2002 submittal concerning Subchapter A: "Definitions," section 116.10 is severable and previously acted on as approvab1e in a separate ru1emaking (See explanation below). EPA intends to take final action on 

### the submitted SB 7 SIP by December 31,2010, as provided in the Consent Decree entered onJanuary 21, 2010 in BCCA Appeal Group v. EPA, Case No. 3:08,cv-01491-N (N.D. Tex).



### A. January 3, 2000 Submittal In the January 3, 2000 submittal, TCEQ submitted new rules to Chapter 116, including Subchapter A: "Definitions," delineating certain definitions ofwords and terms used in Subchapter I; and Subchapter I: "Electric Generating Facility Permits," implementing the applicability requirements for grandfathered and electing electric generating facilities.11 Representative sections ofSubchapter I include: 116.911, Electric Generating Facility PennitApplication; 116.913, General and Special Conditions; 116.914, Emissions Monitoring and Reporting Requirements; and 116.921, Notice and Comment Hearings for Initial Issuance.

In 116.911, owners or operators ofgrandfathered or electing EGFs shall submit an application to TCEQ to authorize nitrogen oxides (NOx) emissions and, ifapplicable, sulfur dioxide (S02) and particulate matter (PM) emissions before September II, 2000. The sectionrequires the application to specify various requirements under 116.911(a)(I)- (4), (b)(l)-(2), (c)-(d). Section 116.911 contains one subsection, 116.911(a)(2), "Control method," whichreferences section 116.617, Standard Pennits for Pollution Control Projects (PCPs). Under I 16.91 I(a)(2), ifan EGF pennit applicantproposes the use of
new control methods l in its initial application, then compliance with particular subsections in 116.617 is required and TCEQ may require air dispersion modeling or ambientmonitoring. The Texas PCP SP is notpart ofthe Texas NSR SIP. Moreover, EPA has proposedto disapprove it on September23,2009. See 74 FR48467. Final action was signed on August 31, 20I0, underthe BCCA consentdecree. Furthennore, the D.C. Circuit Court ofAppeals issued a court decision, New Yorkv. EPA, No. 02- 1387 (June 24, 2005) that addressed the use ofPCPs and disapproved theiruse for Major NSRrequirements. In that decision, the courtvacated the provisions ofthe 2002NSR Refonn rule that specifically related to CleanUnits and Pollution Control Projects.

1 TCEQ does notinterpret "new control methods" to include the use ofcombustion techniques. Consequently, no PCP SP is required. Also, ifa grandfathered facility chooses to impose add-on controls, this does notfall underthe PCP SP requirementeither. As a result, a PCP SP is required only for collateral emissions ofCO.12

In response to the court's decision, EPA filed a Petition for Rehearing or Rehearing En Banc and Request for Clarification on August 8, 2005. In that Petition, EPA requested clarificationthatthe court's ruling on PCP's applies only prospectively. On December 9, 2005, the D.C. Circuitordered that "EPA's request for clarification as to any retroactive effectofthe ruling on Pollution Control Projects be denied." The court also stated that because there was no specific retroactive application ofthis provision before the court, itwas premature to rule on this request. Based on TCEQ's Technical Supplement, EPAbelieves thatany collateral emissions increases due to controls installedto limitNOx, S02 or PMunder the submitted 30 TAC 91 I(a)(2) are above the significance level for Prevention ofSignificant Deterioration (PSD) review for CO collateral emissions increases only, and thatthese collateral CO increases are located at only two PCP SP permitted plants. Therefore, in only two instances were there collateral CO emissions increases that obtained aTexas PCP SP ratherthan aMajorNSR SIP permit. They obtainedtheir PCP SP before the court decision was issued. Furthermore, basedupon the Technical Supplement, EPA believes that all ofthe resultant collateral CO increases across the State ofTexas (including those from the two plants) do not interfere with attainment or maintenance ofthe NAAQS for CO, et aI, nor cause or contribute to increase in PSD increments, much less a violation ofany NAAQS. Nevertheless, based
on the above courtdecision and the PCP SP notbeing part ofthe Texas NSR SIP, the submitted subsection 116.91 I(a)(2) is not approvable, and therefore we are proposing to disapprove this submitted subsection for collateral increases ofCO emissions. Note that the entire State ofTexas is currently in attainment for CO.13

Section 116.913 contains general conditions applicable to every EGF permit, and allows the TCEQ to include special conditions in individual permits. Under 116.913, an EGF permit authorizes nitrogen oxides 

### (NOx) emissions from aU grandfathered or electing electric generating facilities (EGF); and sulfur dioxide (S02) emissions and particulate matter emissions, through opacity limitations, for coal-fired grandfathered or electing EGFs. The grandfathered or electing EGF must comply with Chapter 101, Subchapter H, Division 2 ofthis title, relating to EBTA, including the requirementto maintain allowances in a compliance account. Facilities subject to the EBTA shall quantify and report emissions using the monitoring and reporting requirements ofsection 116.914. As noted previously, EPA's action on Chapter 101, Subchapter H, Division 2, is being proposed in a separate action (RME DocketR06-0AR-2005-TX-00l2).

Section 116.914, specifies the monitoring and reporting requirements for EGFPs. The rule authorizes the use ofContinuous Emission Monitoring (CEM) underthe Acid Rain Program, which contains monitoring requirements for S02 for affected units. Since the acid rain program already requires extensive monitoring, this section authorizes the
use ofthat monitoring for EGF's that are subjectto the acid rain program for compliance with Subchapter 1. EGFs not subject to the Acid Rain Program would have three choices in monitoring: the EGF may choose to meeteitherthe Part 75 monitoring requirements,
orthe requirements ofTitle 40 CFRPart 60; or, the EGF may provide an alternative monitoring plan that would be incorporated into the permitconditions. This alternate monitoring plan must meet state and federal requirements for approval. Monitoring and14 reporting requirements provisions related to the EBTA rule are set forth in sectionI01.336(a), per 30 TAC Chapter 116.914.

Section 116.921 contains the hearing requirements forthe initial issuance of EGFPs. Ifahearing is requested by aperson who may be affectedby emissions from the grandfathered or electing EGF, and that request is reasonable, the commission will hold a hearing. The sectionrequires thatnotice ofhearing on a draft EGFP be published in the public notice section ofone issue ofa newspaper ofgeneral circulation in the municipality or the nearestmunicipality where the EGF is located. The notice mustbe published at least 30 days priorto a hearing.

The State ofTexas submitted the SIP revision to EPA after adequate notice and public hearing onJanuary 3, 2000. The Technical Supplement was submitted on August 5,2009. See our Technical Support Document, AttachmentC, for more details.



### B. July 31, 2002 Submittal In the July 31, 2002 submittal, Texas submitted new and amended rules to Chapter 116, which include Subchapter A: "Definitions," delineating certain definitions ofwords and terms used in Subchapter I; SubchapterH: "Permits for Grandfathered Facilities, "Division I, "General Applicability;" Division 2, "Small Business Stationary Source Permits," "Pipeline Facilities Permits," and "Existing Facility Permits;" Division 3, "Existing Facility Flexible Permits;" and SubchapterI: "Electric Generating Facility Permits." In addition, Texas submitted TAC Chapter 39, "PublicNotice," which includes15 Subchapter H: "Applicability and General Provisions," and Subchapter K: "Public Notice ofAir Quality Applications."

EPA is acting only on Subchapter A: "Definitions," and Subchapter I: "Electric Generating Facility Permits" ofChapter 116 from the July 31, 2002 submittal. The above-referencedprovisions containedin the Subchapter H ofCh. 116 and the Subchapter K ofChapter 39 are severable and not part oftoday's proposal action. Other revisions to Ch.116 establish requirements and procedures in Subchapter H for the permitting ofgrandfathered facilities in accordance with 5.02-5.04 ofHouse Bi1l (HB) 2912, 77th Legislature, 2001, and Section 78 ofHB 2914, 77th Legislature, 2001, which establishes an incentive program for the reduction ofemissions ofnitrogen oxides from certain grandfathered reciprocating internal combustion engines associated with pipelines. These severable submittals will be acted on in separate rulemakings.

The submitted amendments to SubchapterA, Section 116.10, "General Definitions," revise the definition of"grandfathered facility" to be consistent with TCAA, section 382.0518(g). The revised definition clarifies that a grandfathered facility is one that is not a new facility, was constructedpriorto August 30, 1971 (or no construction contract was executed on or before August 30, 1971 that specified a beginning construction date on or before February 29,1972) and has notbeen modified since August 30, 1971. This definition is severable and previously acted on as approvable in a separate rulemaking (See 75 FR 19468, April 14, 2010). Therefore, itnow is partof the Texas NSR SIP already.16

The submitted amendments to SubchapterA, Section 116.18, "Electric Generating Facility Permits Definitions," add a definition for "natural gas-fired electric generating facility" for consistency only with the EGF permitrequirements ofHB 2912. HB 2912 provides that a natural gas fued EGF includes a facility that was designed to bumboth natural gas and fuel oil. The amendments also include a definition for "normal annual operating schedule," to establishthe normal annual operating schedule at an EGF site.
The submitted amendments to Subchapter I, Electric Generating Facility Permits, implement the portions ofTCAA, section 382.0518, which create a new EGF permit. Representative sections ofSubchapter Iinclude: 116.911, Electric Generating Facility PermitApplication; 116.913, General and Special Conditions; 116.917, Electric Generating Facility PermitApplication for Certain Grandfathered Coal-Fired Electric Generating Facilities and Certain Grandfathered Facilities Located at Electric Generating Facility Sites; and 116.918, Additional General and Special Conditions for Grandfathered Coal-Fired Electric Generating Facilities and Certain Grandfathered Facilities Located at Electric Generating Facility Sites.
Under amended sectionl16.911, Electric Generating Facility PermitApplication,
a new EGF permitwill allow the owners or operators ofEGFs who have already applied for apermit required by SB 7 to apply for apermit for: 1) generators that do not generate electric energy for compensation and are not used more than 10% ofthe annual operating schedule; and 2) auxiliary fossil-fuel-fired combustion facilities that do not generate electric energy and do not emit more than 100tpy ofany air contaminant. The adopted17 changes will also allow coal-fired EGFs which were required to apply for a pennit under SB 7 to apply for an EGF pennit for criteria pollutants otherthanNOx, S02, and PM as it relates to opacity.

Section 116.913, General and Special Conditions, is amended to update the conditions ofany pennit issuedunder Subchapter I, including the pollutants or allowances that may be authorized for each pennit, and the requirements ofthe SB 7 allowance trading program for the additional equipment which may be pennitted under Subchapter 1. The commission will issue a pennitto these facilities.

Section 116.917, Electric Generating Facility PennitApplication for Certain Grandfathered Coal-Fired Electric Generating Facilities and Certain Grandfathered Facilities Located at Electric Generating Facility Sites outlines the application requirements for grandfathered coal-fired EGFs which choose to pennittheir additional criteriapollutants, and the auxiliary generators and the additional combustion equipment which can now be permitted under Subchapter 1. To be consistentwith the currentreview process for pennits and applicable federal requirements, 116.917 requires the owneror operatorofa grandfathered facility applying for an EGF pennitto demonstrate thatthe facility meets applicable federal New Source Perfonnance Standards (NSPS) and National Emission Standard for Hazardous AirPollutants (NESHAP). Ifapplicable, facilities would be required to comply with PSD and nonattainment review as specified in Chapter 116, Subchapter B, New Source Review Pennits.18 Section 116.918, Additional General and Special Conditions for Grandfathered Coal-Fired Electric Generating Facilities and Certain Grandfathered Facilities Located at Electric Generating Facility Sites identifies some ofthe general and special conditions which may be included in any permit issued underthe adopted section 116.917. The holders ofa permit shall comply with all such conditions. General conditions include: Sampling requirements, equivalency ofmethods, recordkeeping, maximum allowable emissionrates, maintenance ofemission control, and compliance withrules. The holders ofpermits shall also comply with all special conditions contained in the permitdocument.

The State ofTexas submittedthe SIP revision to EPA after adequate notice and public hearing on July 31, 2002. See our Technical Support Document, AttachmentB, for more details.



### III. Why are we proposing to partially approve and partially disapprove the January 3, 2000 submittal and approve the July 31, 2002 SIP submittal?

A. January 3, 2000 submittal Regarding the January 3, 2000 submittal, it is the intent ofSB 7 that for the 12- month periodbeginning May I, 2003, and for each 12-monthperiod following, annual emissions ofNOx from grandfathered EGFs not exceed 50% ofthe NOx emissions reported to the Commissionfor 1997. Furthermore, it is the intentofthe legislationthat emissions ofS02 from coal-fired EGFs not exceed 75% ofthe S02 emissions reported to the Commission in 1997, and to contain appropriate opacity limitations by way of19 permitting the emissions ofparticulate matter. These provisions will cause additional emissionreductions and ensure betterprotection ofpublic health and welfare, and improve the existing SIP. These provisions, with the exception of 116.91 I(a)(2) discussed above, meetthe requirementin 40 CFR S1.160(a) that each plan include legally enforceable procedures to determine whetherthe construction or modification ofa facility, building, structure, or installation, orcombination ofthese will result in (I) a violation ofapplicable portions ofthe control strategy; or (2) interference with attainmentormaintenance ofa national standard in the State in which the proposed
source (ormodification) is located or in a neighboring State. The revision also meets 40 CFR 51.160(e) by identifying a type offacility that will be subjectto review under40 CFR SI.160(a). In this case, TCEQ specifically identified grandfathered and electing electric generating facilities. See our Technical Support Document, AttachmentA, for more details.



### B. July 31, 2002 submittal Regarding the July 31, 2002 submittal, this rulemaking allows the owners or operators ofpreviously grandfathered and electing EGFs who have already applied for a permitrequired by SB 7 to also obtain a permit for all air contaminants, certain generators and auxiliary fossil fuel fired combustion facilities The adopted changes will also allow coal fired EGFs which were required to apply for a permit under SB 7 to apply for an EGF permitfor criteriapollutants other thanNO" S02, and PM as itrelates to opacity. The permits issued for these facilities are expectedto result inreduced emissions ofair contaminants and improved compliance with state and federal air pollution control requirements. Further, these permits should achieve betterprotection ofpublic health20
and welfare, and improve the existing SIP. These provisions meet the requirement in 40 CFR 51.160(a) that each plan include legally enforceable procedures to determine whetherthe construction ormodification ofa facility, building, structure, or installation,
orcombination ofthese will result in (1) a violation ofapplicable portions ofthe control strategy; or (2) interference with attainment or maintenance ofa national standard in the state in whichthe proposed source (ormodification) is located or in a neighboring state. The revision also meets 40 CFR 51.160(e) by identifying a type offacility that will 

### be subjectto review under 40 CFR 51.160(a). In this case, Texas specifically identified grandfathered and electing electric generating facilities. See ourTechnical SupportDocument, AttachmentB, for more details.
C. CAA 110(1) Analysis Eachrevision to an implementationplan submitted by a State underthis Act shall be adopted by such State after reasonable notice and public hearing. The Administrator shall not approve a revision ofa plan ifthe revision would interfere with any applicable requirementconcerning attainment and reasonable further progress (as defined in section 171), or any other applicable requirement ofthis Act. EPA is proposing to approve these revisions because they improve the SIP in accordance with Section 110 ofthe Act. The reductions achieved through the SB7 program are throughoutthe State ofTexas and include reducing precursors to ozone (NOx), S02 emissions, and PM emissions. The NOx emissions reductions in certainregions ofthe State were assumed in Texas' ozone attainment demonstration plans and will provide benefits inreducing ozone concentrations in nonattainrnent areas and nearnonattainment areas, as well as attainment
areas. There are no S02 nonattainment areas in Texas. The only PM-l0 nonattainrnent21

areain Texas is the EI Paso geographic area. Any reductions in PMI0 emissions due to these revisions should contribute to attainment ofthe PMIO NAAQS in that area. Further, EPA believes that any collateral emissions increases in carbon dioxide (CO) due to controls installedto limitNOx do not interfere with attainment ormaintenance ofthe NAAQS for CO, nor cause or contribute to increase in any PSD increments. Texas is also currently in attainment for CO. Further, the permitting ofgrandfathered sources will benefitthe public due to reductions ofair contaminants emitted from affected EGFs, and presentthe opportunity for public participation and comment in the permitting procedures for formerly grandfatheredEGFs and otherparticipating EGFs. The programestablishes requirements, procedures, deadlines and responsibilities for EGF permit applications for facilities formerly exempt from permit requirements.
IV.Proposed Action

EPA is proposing to partially approve and partially disapprove revisions to the Texas SIP that include 30 TAC Chapter 116, Subchapter A: "Definitions," section 116.18; and Subchapter I: "Electric Generating Facility Permits," sections 116.910-914, 116.916, 116.920-922, 116.930, and 116.931, which Texas submitted onJanuary 3, 2000. EPA is proposing to approve all ofthe January 3, 2000, SIP revision submittal as partofthe Texas NSR SIP butfor 30 TAC 116.911(a)(2). EPA is proposing to disapprove the submitted severable 30 TAC 116.911(a)(2) for collateral emissions increases ofCO that are allowed to be permitted underthe Texas PCP SP. Further, EPA is proposing to approve revisions to the Texas SIP that include 30 TAC Chapter 116, SubchapterA: "Definitions," section 116.18; and SubchapterI:22
"Electric Generating Facility Permits," sections 116.910, 116.911, 116.913, 116.917, 116.918, 116.921, 116.926, 116.928, and 116.930, which Texas submitted onJuly 31, 2002. We are proposing to take no action on Chapter 116, Subchapter H: "Permits for Grandfathered Facilities," which Texas submitted onJuly 31, 2002. The State understands that EPA will take future action on SubchapterH because it is independent from Subchapters A and I, and action is not necessary at this time. The January 3, 2000 and July 31, 2002 submittals address the applicability and permitting requirements for grandfathered and electing electric generating facilities. The revisions will contribute to improvement in overall air quality in Texas. There will be no increase in ozone, S02, and PM concentration levels because ofapproving the revisions. We have evaluatedthe State's submittal, determined that itmeets the applicable requirements ofthe CAA and EPA air quality regulations, and is consistent with EPA policy.

V. Statutory and Executive OrderReviews

A. Executive Order 12866, Regulatory Planning and Review This action is not a "significantregulatory action" underthe terms ofExecutive Order 12866 (58 FR 51735, October4, 1993) and is therefore not subjectto review under the Executive Order. B. Paperwork Reduction Act This action does not impose an information collectionburdenunder the provisions ofthe Paperwork Reduction Act, 44 U.S.C. 3501 et seq. because this proposed23 SIP disapproval under section 110 and subchapter I, part D ofthe CleanAirActwill not in-and-ofitselfcreate any new information collectionburdens but simply disapproves certain State requirements for inclusion into the SIP. Burden is defined at 5 CFR 1320.3(b). C. Regulatory Flexibility Act The Regulatory Flexibility Act (RFA) generally requires an agency to conduct a regulatory flexibility analysis ofany rule subject to notice and cornment rulemaking requirements unless the agency certifies thatthe rule will not have a significant economic impact on a substantial number ofsmall entities. Small entities include small businesses, small not-for-profitenterprises, and small governmentaljurisdictions. For purposes of assessing the impacts oftoday's rule on small entities, small entity is defined as: (1) A small business as defined by the Small Business Administration's (SBA) regulations at 13 CFR 121.201; (2) a small governmentaljurisdictionthat is a government ofa city, county, town, school district or special district with a population ofless than 50,000; and (3) a small organizationthat is any not-for-profit enterprise which is independently owned and operated and is not dominant in its field. After considering the economic impacts oftoday's proposed rule on small entities, I certify thatthis action will not have a significant impact on a substantial number ofsmall entities. This rule does not impose any requirements or create impacts
on small entities. This proposed SIP disapproval under section 110 and subchapter I, part D ofthe Clean AirAct will not in-and-ofitselfcreate any new requirements but simply disapproves certain State requirements for inclusion into the SIP. Accordingly, it affords
no opportunity for EPA to fashion for small entities less burdensome compliance or24 reporting requirements ortimetables or exemptions from all orpartofthe rule. The fact thatthe Clean AirActprescribes that various consequences (e.g., higher offset requirements) mayor will flow from this disapproval does notmean that EPA eithercan
or must conduct aregulatory flexibility analysis for this action. Therefore, this action will nothave a significant economic impact on a substantial number ofsmall entities. We continue to be interested in the potential impacts ofthis proposed rule on small entities and welcome comments on issues related to such impacts. D. Unfunded Mandates Reform Act This action contains no Federal mandates underthe provisions ofTitle II ofthe Unfunded Mandates Reform Act of 1995 (UMRA), 2 U.S.C. 1531-1538 "for State, local,
ortribal governments orthe private sector." EPA has determined thatthe proposed disapproval action does not include a Federal mandate thatmay result in estimated costs of$100 million or more to either State, local, ortribal governments in the aggregate, orto the private sector. This action proposes to disapprove pre-existing requirements under State or local law, and imposes no new requirements. Accordingly, no additional costs to State, local, ortribal governments, orto the private sector, result from this action. E. Executive Order 13132, Federalism Executive Order 13132, entitled "Federalism" (64 FR 43255, August 10,1999), requires EPA to develop an accountable process to ensure''meaningful and timely input by State and local officials in the development ofregulatory policies that have federalism implications." "Policies that have federalism implications" is defined in the Executive Orderto include regulations that have' 'substantial direct effects on the States, on the25 relationship betweenthe national government and the States, oron the distribution of power and responsibilities among the various levels ofgovernment." This action does not have federalism implications. Itwill nothave substantial direct effects on the States, on the relationship betweenthe national government and the States, or on the distribution ofpower and responsibilities among the various levels of government, as specified in Executive Order 13132, because it merely disapproves certain State requirements for inclusion into the SIP and does not alterthe relationship or the distribution ofpower andresponsibilities established in the Clean AirAct. Thus, Executive Order 13132 does not apply to this action. F. Executive Order 13175, Coordination With Indian Tribal Governments This action does not have tribal implications, as specified in Executive Order 13175 (59 FR 22951, November 9, 2000), because the SIP EPA is proposing to disapprove would not apply in Indian country located in the State, and EPA notes that it will not impose substantial direct costs on tribal governments orpreempttribal law. Thus, Executive Order 13175 does not apply to this action. G. Executive Order 13045, Protection ofChildren From Environmental Health Risks and Safety Risks EPA interprets Executive Order 13045 (62 FR 19885, April 23, 1997) as applying only to those regulatory actions thatconcern health or safety risks, suchthatthe analysis required under section 5-501 ofthe Executive Order has the potential to influence the regulation. This action is not subjectto Executive Order 13045 because it because it is not an economically significantregulatory action based on health or safety risks subjectto Executive Order 13045 (62 FR 19885, April 23, 1997). This proposed SIP26 disapproval under section 110 and subchapter I, partD ofthe Clean AirActwill not inand-ofitselfcreate any new regulations but simply disapproves certain State requirements for inclusion into the SIP. H. Executive Order 13211, Actions That Significantly Affect Energy Supply, Distribution, or 

### Vse This proposed rule is not subjectto Executive Order 13211 (66 FR 28355, May 22, 2001) because itis not a significantregulatory action underExecutive Order 12866. 1. National Technology Transfer and AdvancementAct Section l2(d) ofthe National Technology Transfer and AdvancementAct of 1995 ("NTTAA"), Public LawNo. 104-113, section l2(d) (15 V.S.C. 272 note) directs EPA to use voluntary consensus standards in its regulatory activities unless to do so would be inconsistentwith applicable law or otherwise impractical. Voluntary consensus standards are technical standards (e.g., materials specifications, testmethods, sampling procedures, and business practices) that are developed or adopted by voluntary consensus standards bodies. NTTAA directs EPA to provide Congress, through OMB, explanations when the Agencydecides notto use available and applicable voluntary consensus standards. The EPA believes thatthis action is not subjectto requirements ofSection l2(d) ofNTTAA because application ofthose requirements would be inconsistentwith the Clean Air Act. J. Executive Order 12898: Federal Actions To Address Environmental Justice in Minority Populations and Low-Income Populations27
Executive Order 12898 (59 FR 7629 (Feb. 16, 1994» establishes federal executive policy on environmentaljustice. Its main provision directs federal agencies, to the greatest extentpracticable and permitted by law, to make environmentaljustice part oftheirmission by identifying and addressing, as appropriate, disproportionately high and adverse human health or environmental effects oftheirprograms, policies, and activities on minority populations and low-income populations in the United States. EPA lacks the discretionary authority to address environmentaljustice in this proposed action. 

### In reviewing SIP submissions, EPA's role is to approve or disapprove state choices, based on the criteria ofthe Clean Air Act. Accordingly, this action merely proposes to disapprove certain State requirements for inclusion into the SIP under section 110 and subchapter 1, part D ofthe Clean Air Act and will not in-and-ofitselfcreate any
new requirements. Accordingly, itdoes notprovide EPA with the discretionary authority to address, as appropriate, disproportionate human health or environmental effects, using practicable and legally permissible methods, underExecutive Order 12898.List ofSubjects in 40 CFR Part 52 Environmental protection, Air pollution control, Carbon monoxide, Intergovernmental relations, Nitrogen oxides, Nonattainment, Ozone, Particulate matter, Reporting and recordkeeping requirements, Sulfur dioxide.
Authority: 42 U.S.C. 7401 

### etseq.

Dated: Lawrence E. Starfield, Acting Regional Administrator, Region 6.