ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R06-0AR-2005-TX-0031; FRL- ---'

Approval and Promulgation of Air Quality Implementation Plans;

Texas; Revisions to Rules and Regulations for Control of Air Pollution; Permitting of

Grandfathered and Electing Electric Generating Facilities

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

SUMMARY: The EPA is proposing to partially approve and partially disapprove revisions of

the Texas State Implementation Plan (SIP) submitted by 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 which relate to

application and permitting 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) emission reductions from

grandfathered EGFs. These emissions reductions will contribute to achieving attainment and

help ensure attainment and continued maintenance ofthe National Ambient Air Quality

Standards (NAAQS) for ozone, sulfur dioxide, and particulate matter in the State of Texas. As a

result ofthese mandated emissions reductions, in accordance with section 110(1) ofthe Federal
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Clean Air Act, as amended (the Act, or CAA), partial approval ofthese revisions will not

interfere with attainment ofthe NAAQS, reasonable further progress, or any other applicable

requirement ofthe Act. EPA is proposing that the revisions, but for a severable provision, meet

section 110, part C, and part D ofthe Federal Clean Air Act (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 of carbon monoxide (CO) created by the imposition of

technology controls to be permitted under the State's Standard Permit (SP) for Pollution Control

Projects (PCP). EPA is proposing to disapprove this severable portion concerning the issuance

of a 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 must be received on or before !Insert date 30 days from date of

publication in the Federal Register].

ADDRESSES: Submit your comments, identified by Docket No. 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 "Contact Us" website: http://epa.goYlregion6/r6comment.htm.

Please click on "6PD (Multimedia)" and select "Air" before submitting comments.

E-mail: Mr. Rick Barrett at: barrett.richard@epa.goY. Please also send a copy by email

to the person listed in the FOR FURTHER INFORMATION CONTACT section below.
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Fax: Mr. Rick Barrett, Air Pennits Section (6PD-R), at fax number 214-665-7263.

Mail: Mr. Rick Barrett, Air Pennits 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 between the hours of 8:00am and 4:00pm weekdays except for

legal holidays. Special arrangements should be made for deliveries of boxed infonnation.

Instructions: Direct your comments to Docket No. 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 claimed to be Confidential Business

Information (CBI) or other infonnation the disclosure ofwhich is restricted by statute. Do not

submit infonnation through www.regulations.gov or e-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 know your identity or contact infonnation unless you

provide it in the body of your comment. If you 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 comment that is placed in the public docket and made available on the

Internet. If you submit an electronic comment, EPA recommends that you include your name

and other contact infonnation in the body of your comment 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 consider your comment. Electronic files should avoid
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the use ofspecial characters, any fonn of encryption, and be free of any defects or viruses.

Docket: All documents in the 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 other material, such as copyrighted material,

will be publicly available only in hard copy. Publicly available docket materials are available

either electronically in www.regulations.goy or in hard copy at the Air Pennits 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 of 8:30 am and 4:30 pm weekdays except for legal holidays.

Contact the person listed in the FOR FURTHER INFORMATION CpNTACT paragraph

below or Mr. Bill Deese at 214-665-7253 to make an appointment. If possible, please make the

appointment at least two working days in advance of your visit. There will be a 15 cent per page

fee for making photocopies of documents. On the day ofthe visit, please check in 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 of Air Quality, 12124 Park 35 Circle, Austin, Texas 78753.

FOR FURTHER INFORMATION CONTACT: Mr. Rick Barrett, Air Pennits 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.
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SUPPLEMENTARY INFORMATION: Throughout this document "we," "our," and "us"

refers to EPA.

OUTLINE:

I. Texas Senate Bill 7

II. What Action 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. Proposed Action

V. Statutory and Executive Order Reviews

I. Texas Senate Bill 7

Texas Senate Bill 7 (SB 7), formed under the 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 a regulatory program implementing the
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statute's mandatory emissions reductions for "grandfathered facilities" under the Texas Utilities

Code section 39.264. A "grandfathered facility" is one that existed at the time the Legislature

amended the Texas Clean Air Act (TCAA) in 1971.

These facilities were not required to comply with (Le., grandfathered from) the then new

requirement to obtain permits for construction or modifications offacilities that emit air

contaminants. Texas began permitting 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 not modified as defined under Texas' New Source Review SIP

program.

Section 39.264 ofthe TUC now requires EGFs that existed on January 1, 1999, to obtain

a permit from the Commission even though these sources were not previously required to obtain

a permit under the TCAA, section 382.0518(g).

Section 39.264 ofthe ruc specifically requires owners or operators of grandfathered

EGFs to apply for a permit to emit nitrogen oxides (NOx) and, for coal-fired grandfathered

EGFs, sulfur dioxide (S02) and particulate matter (PM) through opacity limitations. These

applications were due on or before September 1, 2000. A grandfathered EGF that does not

obtain a permit may not operate after May 1, 2003, unless the Commission finds good cause for

an extension. Section 39.264 ofthe ruc requires that for the 12-month period beginning May 1,

2003, and for each 12-month period following, annual emissions ofNOxfrom grandfathered
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EGFs not exceed 50% ofthe NOx emissions reported to the Commission for 1997. Furthermore,

it requires that emissions ofS02from coal-fired grandfathered EGFs not exceed 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 provided by 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 or by participating

in the banking and trading of allowances under Texas' 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 a permit allocating them a certain level of emissions which they cannot exceed. In

each defined region, the total level of emissions are restricted, or capped, to a level consistent

with the SB 7 statutory goals. The individual EGF, to meet its allocated emissions level, can

either choose to install pollution controls, shut down operations, or purchase 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 Pollution by 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," that
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establishes a regional cap and trade system to distribute emission allowances for use by EGFs.

The new Division 2, Chapter 101, Subchapter H, concerning EBTA, sets out the allowance

system to 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

of grandfathered facilities. The second category of EGFs consist of currently permitted EGFs

that are not subject to the permitting requirements mandated by SB 7, yet elect to participate in

the allowance trading system. These are referred to as "electing" EGFs and participation in the

permitting program will allow electing EGFs to obtain allowances under the 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 application requirements, methods for monitoring and reporting

emissions and public 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, Subchapter H,

Division 2, concerning Emissions Banking and Trading of Allowances, 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

of grandfathered EGFs, will achieve the Legislature's SB 7 emissions reductions goals.

Compliance with these revisions will cause decreased air emissions ofNOx, S02, and PM, due
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to the shutdown ofthe source, participation in the EBTA, or installation of pollution controls on

grandfathered sources that had previously been exempt from having to use pollution controls.

Because the revisions will cause additional emission reductions from these sources, they will

better serve to protect the public health and welfare. The revisions will also continue to

contribute to improvement of air quality and attainment or maintenance ofthe federal air quality

standards. Overall, these provisions serve to improve the existing SIP.

Lastly, these provisions meet the requirement in 40 CFR S1.160(a) that each plan include

legally enforceable procedures to determine whether the construction or modification of a

facility, building, structure, or installation, or combination ofthese will result in (I) a violation of

applicable portions ofthe control strategy; or (2) interference with attainment or maintenance of

a national standard in the State in which the proposed source (or modification) is located or in 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 submitted by the State ofTexas on January 3, 2000. We are also

proposing to fully approve the revision to Title 30, Chapter 116, ofthe TAC submitted by the

State ofTexas on July 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 approve
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aU ofthis 2000 submittal but for the severable reference in 30 TAC 116.911(a)(2) that, if

approved, would allow the use of a Texas 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 of a 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 on January 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.
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Representative sections of Subchapter I include: 116.911, Electric Generating Facility

Pennit Application; 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 of grandfathered or electing EGFs shall submit an

application to TCEQ to authorize nitrogen oxides (NOx) emissions and, if applicable,

sulfur dioxide (S02) and particulate matter (PM) emissions before September II, 2000.

The section requires 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," which references section 116.617, Standard Pennits for Pollution Control

Projects (PCPs). Under I 16.91 I(a)(2), if an EGF pennit applicant proposes the use of

new control methodsl in its initial application, then compliance with particular

subsections in 116.617 is required and TCEQ may require air dispersion modeling or

ambient monitoring. The Texas PCP SP is not part ofthe Texas NSR SIP. Moreover,

EPA has proposed to disapprove it on September 23,2009. See 74 FR 48467. Final

action was signed on August 31, 20 I0, under the BCCA consent decree. Furthennore,

the D.C. Circuit Court of Appeals issued a court decision, New York v. EPA, No. 02-

1387 (June 24, 2005) that addressed the use ofPCPs and disapproved their use for Major

NSR requirements. In that decision, the court vacated the provisions ofthe 2002 NSR

Refonn rule that specifically related to Clean Units and Pollution Control Projects.

1 TCEQ does not interpret "new control methods" to include the use of combustion techniques.

Consequently, no PCP SP is required. Also, if a grandfathered facility chooses to impose add-on

controls, this does not fall under the PCP SP requirement either. As a result, a PCP SP is

required only for collateral emissions of CO.
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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 clarification that the court's ruling on PCP's applies only prospectively.

On December 9, 2005, the D.C. Circuit ordered that "EPA's request for clarification as to

any retroactive effect ofthe ruling on Pollution Control Projects be denied." The court

also stated that because there was no specific retroactive application ofthis provision

before the court, it was premature to rule on this request. Based on TCEQ's Technical

Supplement, EPA believes that any collateral emissions increases due to controls

installed to limit NOx, S02 or PM under the submitted 30 TAC 91 I(a)(2) are above the

significance level for Prevention of Significant Deterioration (PSD) review for CO

collateral emissions increases only, and that these 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 a Texas PCP SP rather than a Major NSR SIP

permit. They obtained their PCP SP before the court decision was issued. Furthermore,

based upon the Technical Supplement, EPA believes that all ofthe resultant collateral CO

increases across the State of Texas (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 of any NAAQS. Nevertheless, based

on the above court decision and the PCP SP not being 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 of Texas is currently in attainment for CO.
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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 requirement to

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 Docket R06-0AR-2005-TX-00l2).

Section 116.914, specifies the monitoring and reporting requirements for EGFPs.

The rule authorizes the use ofContinuous Emission Monitoring (CEM) under the 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 subject to 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 meet either the Part 75 monitoring requirements,

or the requirements of Title 40 CFR Part 60; or, the EGF may provide an alternative

monitoring plan that would be incorporated into the permit conditions. This alternate

monitoring plan must meet state and federal requirements for approval. Monitoring and
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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 for the initial issuance of

EGFPs. If a hearing is requested by a person who may be affected by emissions from the

grandfathered or electing EGF, and that request is reasonable, the commission will hold a

hearing. The section requires that notice of hearing on a draft EGFP be published in the

public notice section of one issue of a newspaper of general circulation in the

municipality or the nearest municipality where the EGF is located. The notice must be

published at least 30 days prior to a hearing.

The State of Texas submitted the SIP revision to EPA after adequate notice and

public hearing on January 3, 2000. The Technical Supplement was submitted on August

5,2009. See our Technical Support Document, Attachment C, 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; Subchapter H: "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 Subchapter I: "Electric Generating Facility

Permits." In addition, Texas submitted TAC Chapter 39, "Public Notice," which includes
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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-referenced provisions contained in 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 of grandfathered 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 of emissions of nitrogen 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 Subchapter A, 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 constructed prior to 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 not been 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, it now is part of

the Texas NSR SIP already.
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The submitted amendments to Subchapter A, Section 116.18, "Electric

Generating Facility Permits Definitions," add a definition for "natural gas-fired electric

generating facility" for consistency only with the EGF permit requirements ofHB 2912.

HB 2912 provides that a natural gas fued EGF includes a facility that was designed to

bum both natural gas and fuel oil. The amendments also include a definition for "normal

annual operating schedule," to establish the 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 of Subchapter I include: 116.911, Electric Generating Facility

Permit Application; 116.913, General and Special Conditions; 116.917, Electric

Generating Facility Permit Application 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 Permit Application,

a new EGF permit will allow the owners or operators of EGFs who have already applied

for a permit required by SB 7 to apply for a permit 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 100 tpy of any air contaminant. The adopted
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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 other than NOx, S02, and PM as it

relates to opacity.

Section 116.913, General and Special Conditions, is amended to update the

conditions of any pennit issued under 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 pennit to these facilities.

Section 116.917, Electric Generating Facility Pennit Application 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 pennit their additional

criteria pollutants, and the auxiliary generators and the additional combustion equipment

which can now be permitted under Subchapter 1. To be consistent with the current review

process for pennits and applicable federal requirements, 116.917 requires the owner or

operator of a grandfathered facility applying for an EGF pennit to demonstrate that the

facility meets applicable federal New Source Perfonnance Standards (NSPS) and

National Emission Standard for Hazardous Air Pollutants (NESHAP). If applicable,

facilities would be required to comply with PSD and nonattainment review as specified in

Chapter 116, Subchapter B, New Source Review Pennits.
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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 under the adopted section 116.917. The

holders of a permit shall comply with all such conditions. General conditions include:

Sampling requirements, equivalency of methods, recordkeeping, maximum allowable

emission rates, maintenance of emission control, and compliance with rules. The holders

of permits shall also comply with all special conditions contained in the permit document.

The State of Texas submitted the SIP revision to EPA after adequate notice and

public hearing on July 31, 2002. See our Technical Support Document, Attachment B,

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 of SB 7 that for the 12-

month period beginning May I, 2003, and for each 12-month period following, annual

emissions ofNOx from grandfathered EGFs not exceed 50% ofthe NOx emissions

reported to the Commission for 1997. Furthermore, it is the intent ofthe legislation that

emissions of S02 from coal-fired EGFs not exceed 75% ofthe S02 emissions reported to

the Commission in 1997, and to contain appropriate opacity limitations by way of
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permitting the emissions of particulate matter. These provisions will cause additional

emission reductions and ensure better protection of public health and welfare, and

improve the existing SIP. These provisions, with the exception of 116.91 I(a)(2)

discussed above, meet the requirement in 40 CFR S1.160(a) that each plan

include legally enforceable procedures to determine whether the construction or

modification of a facility, building, structure, or installation, or combination ofthese will

result in (I) a violation of applicable portions ofthe control strategy; or (2) interference

with attainment or maintenance of a national standard in the State in which the proposed

source (or modification) is located or in a neighboring State.

The revision also meets 40 CFR 51.160(e) by identifying a type offacility that

will be subject to review under 40 CFR SI.160(a). In this case, TCEQ specifically

identified grandfathered and electing electric generating facilities. See our Technical

Support Document, Attachment A, for more details.

B. July 31, 2002 submittal

Regarding the July 31, 2002 submittal, this rulemaking allows the owners or

operators of previously grandfathered and electing EGFs who have already applied for a

permit required 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 permit for criteria pollutants other than NO" S02, and PM as it relates to

opacity. The permits issued for these facilities are expected to result in reduced emissions

of air contaminants and improved compliance with state and federal air pollution control

requirements. Further, these permits should achieve better protection of public health
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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

whether the construction or modification of a facility, building, structure, or installation,

or combination ofthese will result in (1) a violation of applicable portions ofthe control

strategy; or (2) interference with attainment or maintenance of a national standard in the

state in which the proposed source (or modification) is located or in a neighboring state.

The revision also meets 40 CFR 51.160(e) by identifying a type offacility that

will be subject to review under 40 CFR 51.160(a). In this case, Texas specifically

identified grandfathered and electing electric generating facilities. See our Technical

Support Document, Attachment B, for more details.

C. CAA 110(1) Analysis

Each revision to an implementation plan submitted by a State under this Act shall

be adopted by such State after reasonable notice and public hearing. The Administrator

shall not approve a revision of a plan ifthe revision would interfere with any applicable

requirement concerning 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 throughout the State of Texas and

include reducing precursors to ozone (NOx), S02 emissions, and PM emissions. The

NOx emissions reductions in certain regions ofthe State were assumed in Texas' ozone

attainment demonstration plans and will provide benefits in reducing ozone

concentrations in nonattainrnent areas and near nonattainment areas, as well as attainment

areas. There are no S02 nonattainment areas in Texas. The only PM-l0 nonattainrnent
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area in 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 installed to limit NOx do not interfere with attainment or maintenance 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 of grandfathered sources will

benefit the public due to reductions of air contaminants emitted from affected EGFs, and

present the opportunity for public participation and comment in the permitting procedures

for formerly grandfathered EGFs and other participating EGFs. The program establishes

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 on January 3, 2000.

EPA is proposing to approve all ofthe January 3, 2000, SIP revision submittal as

part ofthe Texas NSR SIP but for 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 under the Texas PCP SP.

Further, EPA is proposing to approve revisions to the Texas SIP that include 30

TAC Chapter 116, Subchapter A: "Definitions," section 116.18; and Subchapter I:
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"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 on July 31,

2002. We are proposing to take no action on Chapter 116, Subchapter H: "Permits for

Grandfathered Facilities," which Texas submitted on July 31, 2002. The State

understands that EPA will take future action on Subchapter H 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 of approving the revisions.

We have evaluated the State's submittal, determined that it meets the applicable

requirements ofthe CAA and EPA air quality regulations, and is consistent with EPA

policy.

V. Statutory and Executive Order Reviews

A. Executive Order 12866, Regulatory Planning and Review

This action is not a "significant regulatory action" under the terms of Executive

Order 12866 (58 FR 51735, October 4, 1993) and is therefore not subject to review under

the Executive Order.

B. Paperwork Reduction Act

This action does not impose an information collection burden under the

provisions ofthe Paperwork Reduction Act, 44 U.S.C. 3501 et seq. because this proposed
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SIP disapproval under section 110 and subchapter I, part D ofthe Clean Air Act will not

in-and-of itself create any new information collection burdens 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 of any rule subject to notice and cornment rulemaking

requirements unless the agency certifies that the rule will not have a significant economic

impact on a substantial number ofsmall entities. Small entities include small businesses,

small not-for-profit enterprises, and small governmental jurisdictions. 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 governmental jurisdiction that is a government of a city,

county, town, school district or special district with a population ofless than 50,000; and

(3) a small organization that 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 that this 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 Air Act will not in-and-ofitself create 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 or
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reporting requirements or timetables or exemptions from all or part ofthe rule. The fact

that the Clean Air Act prescribes that various consequences (e.g., higher offset

requirements) mayor will flow from this disapproval does not mean that EPA either can

or must conduct a regulatory flexibility analysis for this action. Therefore, this action will

not have 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 under the provisions of Title II ofthe

Unfunded Mandates Reform Act of 1995 (UMRA), 2 U.S.C. 1531-1538 "for State, local,

or tribal governments or the private sector." EPA has determined that the proposed

disapproval action does not include a Federal mandate that may result in estimated costs

of $1 00 million or more to either State, local, or tribal governments in the aggregate, or to

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, or tribal governments, or to 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

Order to include regulations that have' 'substantial direct effects on the States, on the
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relationship between the national government and the States, or on the distribution of

power and responsibilities among the various levels of government."

This action does not have federalism implications. It will not have substantial

direct effects on the States, on the relationship between the national government and the

States, or on the distribution of power 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 alter the relationship or

the distribution of power and responsibilities established in the Clean Air Act. 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 or preempt tribal 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 that concern health or safety risks, such that the

analysis required under section 5-501 ofthe Executive Order has the potential to

influence the regulation. This action is not subject to Executive Order 13045 because it

because it is not an economically significant regulatory action based on health or safety

risks subject to Executive Order 13045 (62 FR 19885, April 23, 1997). This proposed SIP
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disapproval under section 110 and subchapter I, part D ofthe Clean Air Act will not inand-of itself create 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 subject to Executive Order 13211 (66 FR 28355, May

22, 2001) because it is not a significant regulatory action under Executive Order 12866.

1. National Technology Transfer and Advancement Act

Section l2(d) ofthe National Technology Transfer and Advancement Act of

1995 ("NTTAA"), Public Law No. 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 inconsistent with applicable law or otherwise impractical. Voluntary consensus

standards are technical standards (e.g., materials specifications, test methods, 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 Agency decides not to use available and applicable voluntary consensus

standards.

The EPA believes that this action is not subject to requirements of Section l2(d)

ofNTTAA because application ofthose requirements would be inconsistent with the

Clean Air Act.

J. Executive Order 12898: Federal Actions To Address Environmental Justice in

Minority Populations and Low-Income Populations
27

Executive Order 12898 (59 FR 7629 (Feb. 16, 1994» establishes federal

executive policy on environmental justice. Its main provision directs federal agencies, to

the greatest extent practicable and permitted by law, to make environmental justice part

oftheir mission by identifying and addressing, as appropriate, disproportionately high

and adverse human health or environmental effects oftheir programs, policies, and

activities on minority populations and low-income populations in the United States.

EPA lacks the discretionary authority to address environmental justice 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-of itself create any

new requirements. Accordingly, it does not provide EPA with the discretionary authority

to address, as appropriate, disproportionate human health or environmental effects, using

practicable and legally permissible methods, under Executive Order 12898.
List of Subjects 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 et seq.

Dated: Lawrence E. Starfield,

Acting Regional Administrator, Region 6.