Bryan W. Shaw, Ph.D., Chairman 

Buddy Garcia, Commissioner 

Carlos Rubinstein, Commissioner 

Mark R. Vickery, P.G., Executive Director 

RECEIVED- 6PDL 

AIR PLANNING SEC. 

12 APR 30 PH 5: 23 

TEXAS COMMISSION ON ENVIRONMENfAL QUALI1Y 

Protecting Texas by Reducing and Preventing Pollution 

Alfredo Armendariz, Ph.D. 

Regional Administrator 

April 13,2012 

U.S. Environmental Protection Agency- Region 6 

1445 Ross Avenue 

Dallas, Texas 75202-2733 

Dear Dr. Armendariz: 

Docket No. 2011-1219-RUL 

Rule Project No. 2011-050-114-EN 

On March 28, 2012, the Texas Commission on Environmental Quality (Commission) adopted 

revisions to the State Implementation Plan (SIP). 

The Commission adopted amendments to §114.622 in 30 TAC Chapter 114, Control of Air Pollution 

from Motor Vehicles, Subchapter K, Mobile Source Incentive Programs, Division 3, Diesel Emissions 

Reduction Incentive Program for On-Road and Non-Road Vehicles; and corresponding revisions to 

the SIP. . 

The amendments implement part of House Bi113399, 82nd Legislature, 2011, Regular Session, 

relating to requirements for receiving an incentive grant under the Diesel Emissions Reduction 

Incentive Program. The revisions to Chapter 114 incorporate changes and additions to the program 

eligibility criteria and add provisions stating that the executive director shall waive eligibility 

requirements on a finding of good cause. 

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. 

Sincerely, 

~£!:~~~ Chairman 

BWS/sd 

Enclosures 

cc: The Honorable Rick Perry, Governor of Texas 

Mr. Toby Baker, Office of Budget, Planning and Policy, Office of the Governor 

Mr. Mark R. Vickery, P.G., Executive Director, Texas Commission on Environmental Quality 

P.O. Box 13087 • Austin, Texas 78711-3087 • 512-239-1000 • www.tceq.texas.gov 

How is our custorq.er service? www.tceq.texas.govfgotojcustomersurvey 
TEXAS COMMISSION ON ENVIRONMENTAL QUALITY 

Docket No. 2011-1219-RUL 

THE STATE OF TEXAS 

COUNTY OF TRAVIS 

This is to certify that the attached electronic file is included and that the electronic file is a 

true and correct copy of documents for a revision to the Texas State Implementation Plan, 

adopted on March 28, 2012, pursuant to 40 Code of Federal Regulations § 51.104. I am the 

records administrator for the Air Quality Division of the Texas Commission on 

Environmental Quality (Commission). 

_iL-DavidBer, Directr 

TA.rr Quality Division 

Texas Commission on Environmental Quality 
Texas Commission on Environmental Quality 

Public Hearing 

November 29, 2011 

Concerning Revisions to 30 T AC Chapter 114 

Emissions Reduction Incentive Program Rules 

Project No. 2011-050-114-EN 
INTRODUCTION 

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

November 29, 2011, to receive testimony regarding 30 TAC Chapter 114, Control of Air Pollution 

from Motor Vehicles and corresponding revisions to the state implementation plan. 

The adoption implements part of House Bill (HB) 3399, 82nd Legislature, 2011, Regular Session, 

relating to requirements for receiving an incentive grant under the Diesel Emissions Reduction 

Incentive Program. The revisions to Chapter 114, as required by HB 3399, incorporate changes and 

additions to the program eligibility criteria, including: changes to the period over which a grantfunded vehicle must be operated; establish specific criteria for decommissioning a vehicle or vehicle 

engine under the program; and add provisions to allow a vehicle that has been leased or otherwise 

commercially financed to be replaced under the program. The revisions also include provisions, as 

required by HB 3399, that the executive director shall waive eligibility requirements on a finding of 

good cause. 

The comment period closed on December 5, 2011. All testimony and comments have been 

reviewed and seriously considered. This hearing record contains a complete record of the public 

hearing and is divided into the following four sections: 

o Public Notification and Proposal 

o Written and Oral Testimony 

o Evaluation of Testimony 

o Staff Recommendations/Order 

Additional copies of this hearing record are maintained in the TCEQ central office at 12100 Park 35 

Circle, Austin, Texas 78753. For further information, please contact Stephen Dayton at (512) 239-

6824. 
NOTICE & PROPOSAL 
PUBLIC NOTIFICATION 

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: October 20, 2011 

Beaumont Enterprise: October 20, 2011 

El Paso Times: October 20, 2011 

Fort Worth Star-Telegram: October 20, 2011 

Houston Chronicle: October 20, 2011 

Longview News-Journal: October 20, 2011 

San Antonio Express-News: October 20, 2011 

2. Publication of the proposed rules in the November 4, 2011, issue of the Texas Register (36 

TexReg 7468). 

3. Publication of the Notice of Public Hearing in the November 4, 2011, issue of the Texas Register 

(36 TexReg 7597). 

4. Correspondence forwarding the notice of public hearings to the following officials and agencies: 

Speaker of the House 

Lieutenant Governor 

Alamo Area Council of Governments 

Capital Area Planning Council 

City of Austin, Mayor's Office 

City of Dallas, Department of Environmental Quality 

City of Dallas, Department of Aviation 

City of El Paso, Environmental Services 
City of Fort Worth, Environmental Management Department 

City of Houston, Department of Health and Human Services 

East Texas Council of Governments 

El Paso Metropolitan Planning Organization 

Federal Highway Administration 

Galveston County Health District 

Harris County Public Health and Environmental Services 

North Central Texas Council of Governments 

Houston-Galveston Area Council 

South East Texas Regional Planning Commission 

Texas Department of Transportation 

Travis County Judge 

Victoria Metropolitan Planning Organization 

Arkansas Department of Pollution Control and Ecology 

Louisiana Department of Environmental Quality 

New Mexico Environmental Department 

Oklahoma Department of Environmental Quality 

United States Environmental Protection Agency 
Example of Newspaper Classified Ad 

Austin American-Statesman, October 20, 2011 

NOTICE OF PUBLIC HEARING BY THETEXAS COMMISSION ON ENVIRONMENTAL 

QUALITYON PROPOSED REVISIONS TO 30 TAC CHAPTER 114 AND TO THE STATE 

IMPLEMENTATION PLAN 

The Texas Commission on Environmental Quality (commission) will conduct a public hearing to 

receive testimony regarding proposed revisions to 30 TAC Chapter 114, Control of Air Pollution from 

Motor Vehicles, and corresponding revisions to the state implementation plan (SIP) under the 

requirements of Texas Health and Safety Code, §382.017; Texas Government Code, Chapter 2001, 

Subchapter 8; and 40 Code of Federal Regulations §51.102, and the United States Environmental 

Protection Agency (EPA) concerning SIPs. 

The commission proposes to amend Chapter 114, Subchapter K, Division 3, Diesel Emissions 

Reduction Incentive Program for On-Road and Non-Road Vehicles, to implement changes made to 

Texas Health and Safety Code, Chapter 386, Subchapter C, Diesel Emissions Reduction Incentive 

Program, by House Bill 3399, 82nd Legislature, 2011. The proposed changes and additions involve 

criteria for the use of grant-funded vehicles and engines, destruction of vehicles and engines 

replaced under the program, ownership or lease of vehicles to be replaced under the program, and 

waiver of certain eligibility requirements by the executive director. (Rule Project Number 2011...050-

114-EN) 

The commission proposes to amend Chapter 114, Subchapter K, Division 5, Texas Clean Fleet 

Program, to implement changes made to Texas Health and Safety Code, Chapter 391, Texas Clean 

Fleet Program, by House Bill 3399, 82nd Legislature, 2011. The proposed changes and additions 

involve the number of vehicles that must be registered and operated in Texas by an eligible grant 

applicant, the number of vehicles that must be replaced under a grant, the period of commitment by 

a grant recipient for use of the grant-funded vehicles, requirements on the ownership or lease of the 

vehicles being replaced, and the destruction requirements for the vehicles and engines being 

replaced. (Rule Project Number 2011-051-114-EN) 

The commission proposes to amend Chapter 114, Subchapter K, to add a new Division 6, 

Alternative Fueling Facflities Program. The proposed rulemaking would implement a portion of 

Senate Bill 385, 82nd Legislature, 2011, by adding the criteria that may be used by the executive 

director for prioritizing facilities eligible to receive grants under the Alternative Fueling Facilities 

Program, established under Texas Health and Safety Code, Chapter 393. (Rule Project Number 

2011-052 -114-EN) 

The commission proposes to amend Chapter 114, Subchapter K, to add a new Division 7, Texas 

Natural Gas Vehicle Grant Program. The proposed rulemaking would implement a portion of Senate 

Bill 385, 82nd Legislature, 2011, by adding the criteria that may be used by the executive director 

for prioritizing qualifying vehicles eligible to receive grants under the Texas Natural Gas Vehicle 

Grant Program, established under Texas Health and Safety Code, Chapter 394. (Rule Project 

· Number 2011-053-114-EN)A public hearing on these proposals will be held in Austin on November 

29, 2011, at 10:00 a.m. in Building E, Room 201S, at the commission's central office located at 

12100 Park 35 Circle. The hearing will be structured for the receipt of oral and written comments by 

interested persons. Registration will begin 30 minutes prior to the hearing. Interested persons may 

present oral statements when called upon in order of registration. Open discussion wi!l not be 

permitted during the hearing; however. commission staff members will be available to discuss the 

proposal 30 minutes prior to the hearing. 

Persons planning to attend the hearing who have special communication or other accommodation 

needs should contact Sandy Wong, Texas Register Team, at (512) 239-1802. Requests should be 

made as far in advance as possible. 

Written comments on Rule Project Numbers 2011-050-114-EN and 2011-051-114-EN may be 

submitted to Charlotte Hom, and written comments on Rule Project Numbers 2011-052-114-EN and 

2011-053-114-EN may be submitted to Bruce McAnally, at Texas Register Team, Office of Legal 

Services, Texas Commission on Environmental Quality, MC 205, P.O. Box 13087, Austin, Texas 

78711-3087, or faxed to (512) 239-4808. Electronic comments may be submitted at 

http:J/•NWW5.tceq. state.tx.usfrules/ ecomments/. File size restrictions may apply to comments being 

submitted via the eComments system. All comments should reference the rule project number that 

the comment pertains to: Rule Project Number 2011-050-114-EN for the proposed Diesel Emissions 

Reduction Incentive Program for On-Road and Non-Road Vehicles rule amendments; Rule Project 

Number 2011...051-114-EN for the proposed Texas Clean Fleet Program rule amendments; Rule 

Project Number 2011-052-114-EN for the proposed Alternative Fueling Facilities Program rule; and 

Rule Project Number 2011-053-114-EN for the proposed Texas Natural Gas Vehicle Grant Program 

rule. The comment period closes December 5, 2011. Copies of the proposed rules can be obtained 

from the commission's Web site at http://www.tceq. texas.gov/nav/rules/ propose_adopt.html. For 

additional information regarding the proposed rulemaking, please contact Stephen Dayton, 

Implementation Grants Section, at (512) 239--6824. 
derground storage tank (UST) sys em found to be noncompliant with 

release detection, spill and overfil prevention, and/or, after December 

22, 1998, cathodic protection regu tions of the commission, until such 

time as the owner/operator bring the UST system into compliance 

with those regulations. The com ission proposes a Shutdown Order 

after the owner or operator of a U T facility fails to perform required 

corrective actions within 3 0 days fter receiving notice of the release 

detection, spill and overfill prev ntion, and/or, after December 22, 

1998, cathodic protection· violatio s documented at the facility. The 

commission proposes a Default rder when the staff has sent an 

executive director's preliminary port and petition (EDPRP) to an 

entity outlining the alleged violat ns; the proposed penalty; and the 

proposed technical requirements ecessary to bring the entity back 

into compliance; and the entity fai s to request a hearing on the matter 

within 20 days of its receipt of th EDPRP or requests a hearing and 

fails to participate at the hearing. In accordance with TWC, §7.075, 

this notice of the proposed order nd the opportunity to comment is 

published in the Texas Register n later than the 30th day before the 

date on which the public comme t period closes, which in this case 

is December 5, 2011. The co ission will consider any written 

comments received and the com ission may withdraw or withhold 

approval of aS/DO if a comment iscloses facts or considerations that 

indicate that consent to the propos d S/DO is inappropriate, improper, 

inadequate, or inconsistent with e requirements of the statutes and 

rules within the commission's juri diction, or the commission's orders 

and permits issued in accordance with the commission's regulatory 

authority. Additional notice of c anges to a proposed S/DO is not 

required to be published if those changes are made in response to 

written comments. 

Copies of each of the proposed SID are available for public inspection 

at both the commission's central o ce, located at 12100 Park 35 Cir~ 

cle, Building A, 3rd Floor, Austin Texas 78753, (512) 239~3400 and 

at the applicable regional office li ted as follows. Written comments 

about the S/DO shall be sent to th attorney designated for the S/DO 

at the commission's central office t P.O. Box 13087, MC 175, Austin, 

Texas 78711-3087 and must be re eived by 5:00p.m. on December 

5, 2011. Written comments may a so be sent by facsimile machine to 

the attorney at (51i) 239-3434. T e commission attorneys are available to discuss the S/DOs and/or t e comment procedure at the listed 

phone numbers; however, comme ts on the S/DOs shall be submitted 

to the commission in writing. 

(1) COMPANY: Ali Attayi dba ttayi Service Station; DOCKET 

NUMBER: 2011~0296-PST~E; T Q ID NUMBER: RN102648508; 

LOCATION: 6730 Telephone Ro d, Houston, Harris County; TYPE 

OF FACILITY: underground stora e tank (UST) system and a used car 

lot and mechanic shop; RULES IOLATED: 30 TAC §334.7(d)(3), 

by failing to provide an amend d registration for any change or 

additional information regarding e USTs; 30 TAC §37.815(a) and 

(b), by failing to demonstrate acce table financial assurance for taking 

correction action and for compens ting third parties for bodily injury 

and property damage caused by a cidental releases arising from the 

operation of the petroleum USTs; WC, §26.3475(c)(l) and 30 TAC 

§334.50(b)(1)(A), by failing to ens re that the USTs are monitored in a 

manner which will detect a release t a frequency of at least once every 

month (not to exceed 35 days be een each monitoring); PENALTY: 

$10,273; STAFF ATTORNEY: G Shiu, Litigation Division, MC 

R-12, (713) 422~8916; REGIO AL OFFICE: Houston Regional 

Office, 5425 Polk Avenue, Suite H, Houston, Texas 77023~ 1452, (713) 

767-3500. 

TRD~2011 04609 

Kathleen C. Decker 

Director, Litigation Division 

Texas Commission on Environme 

Filed: October 25, 2011 

• • 

Notice ofPublic Hearing on P posed New 30 TAC Chapter 36 

The Texas Commission on En vir omental Quality (commission) will 

conduct a public hearing to receiv testimony regarding proposed new 

30 Texas Administrative Code (T C) Chapter 36, Suspension or Adjustment of Water Rights During rought or Emergency Water Shortage, under the requirements ofT e. s Government Code, Chapter 200 I, 

Subchapter B. 

The proposed rulemaking would plement House Bill 2694, §5.03, 

82nd Legislature, 2011, relating t the executive director's suspension 

or adjustment of water rights dur· drought or emergency water shortage. The proposed rulemaking wo ld define "drought" and "emergency 

shortage of water," set out proced es for the executive director's order 

under this chapter, provide the te s of the order and conditions that 

must be met before an order can e issued, and establish an appeal of 

the executive director's order tot e commission. 

The commission will hold a public earing on this proposal in Austin on 

December 1, 2011 at 2:00 p.m. in uilding E, Room 20 IS, at the commission's central office located at 12100 Park 35 Circle. The hearing 

is structured for the receipt of or or written comments by interested 

persons. Individuals may present ral statements when called upon in 

order of registration. Open discus ion will not be permitted during the 

hearing; however, commission st members will be available to discuss the proposal30 minutes prio to the hearing. 

Persons who have special com · nication or other accommodation 

needs who are planning to atten the hearing should contact Sandy 

Wong, Office of Legal Services, (512) 239-1802. Requests should 

be made as far in advance as poss ble. 

Written comments may be subm tted to Michael Parrish, MC 205, 

Office of Legal Services, Tex Commission on Environmental 

Quality, P.O. Box 13087, Aus in, Texas 78711~3087, or faxed 

to (512) 239-4808. Electronic comments may be submitted at: 

http://www5.tceq.state.tx.uslrnles comments/.· File size restrictions may apply to comments b ing submitted via the eComments 

system. All comments shoul reference Rule Project Number 

2011~033~036~LS. The comment period closes December 5, 2011. 

Copies of the proposed rulem ing can be obtained from the 

commission's website at http: 'tVWrv.tceq.state.tx.us/nav/ntfes/propose adopt.html. For further info ation, please contact Robin Smith, 

Environmental Law Division, (51 ) 239-0463. 

TRD~20 11 04484 

Robert Martinez 

Director, Environmental Law Divisi n 

Texas Commission on Environmen al Quality 

Filed: October 21, 2011 

• • 

Notice of a Public Hearing on Proposed Revisions to 30 TAC 

Chapter 114 and to the State Implementation Plan 

The Texas Commission on Environmental Quality (commission) will 

conduct a public hearing to receive testimony regarding proposed revisions to 30 TAC Chapter 114, Control of Air Pollution from Mo~ 

tor Vehicles, and corresponding revisions to the state implementation 

plan (SIP) under the requirements of Texas Health and Safety Code, 

§382.017; Texas Government Code, Chapter 2001, Subchapter B; and 

IN ADDITION November 4, 2011 36 TexReg 7597 
40 Code of Federal Regulations §51.102, and the United States Environmental Protection Agency (EPA) concerning SIPs. 

The commission proposes to amend Chapter 114, Subchapter K, Division 3, Diesel Emissions Reduction Incentive Program for On-Road 

and Non-Road Vehicles, to implement changes made to Texas Health 

and Safety Code, Chapter 386, Subchapter C, Diesel Emissions Reduction Incentive Program, by House Bill 3399, 82nd Legislature, 2011. 

The proposed changes and additions involve criteria for the use of 

grant-funded vehicles and engines, destruction of vehicles and engines 

replaced under the program, O\vnership or lease of vehicles to be replaced under the program, and waiver of certain eligibility requirements by the executive director. {Rule Project Number 2011-050-

114-EN) 

The commission proposes to amend Chapter I 14, Subchapter K, Division 5, Texas Clean Fleet Program, to implement changes made to 

Texas Health and Safety Code, Chapter 391, Texas Clean Fleet Program, by House Bill 3399, 82nd Legislature, 2011. The proposed 

changes and additions involve the number of vehicles that must be registered and operated in Texas by an eligible grant applicant, the number 

of vehicles that must be replaced under a grant, the period of commitment by a grant recipient for use of the grant-funded vehicles, requirements on the O\vnership or lease of the vehicles being replaced, and the 

destruction requirements for the vehicles and engines being replaced. 

(Rule Project Number 2011-051-114-EN) 

The corrunission proposes to amend Chapter 114, Subchapter K, to 

add a new Division 6, Alternative Fueling Facilities Program. The 

proposed rulemaking would implement a portion of Senate Bill 385, 

82nd Legislature, 2011, by adding the criteria that may be used by the 

executive director for prioritizing facilities eligible to receive grants 

under the Alternative Fueling Facilities Program, established under 

Texas Health and Safety Code, Chapter 393. (Rule Project Number 

2011-052-114-EN) 

The commission proposes to amend Chapter 114, Subchapter K, to add 

a new Division 7, Texas Natural Gas Vehicle Grant Program. The proposed rulemaking would implement a portion of Senate Bill385, 82nd 

Legislature, 2011, by adding the criteria that may be used by the executive director for prioritizing qualifying vehicles eligible to receive 

grants under the Texas Natural Gas Vehicle Grant Program, established 

under Texas Health and Safety Code, Chapter 394. (Rule Project 

Number 2011-053-114-EN) 

A public hearing on these proposals will be held in Austin on November 29, 2011, at 10:00 a.m. in Building E, Room 201S, at the commission's central office located at 12100 Park 35 Circle. The hearing will 

be structured for the receipt of oral and written comments by interested 

persons. Registration will begin 30 minutes prior to the hearing. Interested persons may present oral statements when called upon in order 

of registration. Open discussion will not be permitted during the hearing; however, commission staff members will be available to discuss 

the proposal 3 0 minutes prior to the hearing. 

Persons planning to attend the hearing who have special communication or other accommodation needs should contact Sandy Wong, Texas 

Register Team, at (512) 239-1802. Requests should be made as far in 

advance as possible. 

Written comments on Rule Project Numbers 2011-050-114-EN 

and 2011-051-114-EN may be submitted to Charlotte Horn, and 

written comments on Rule Project Numbers 2011-052-114-EN and 

2011-053-114-EN may be submitted to Bruce McAnally, at Texas 

Register Team, Office of Legal Services, Texas Commission on 

Environmental Quality, MC 205, P.O. Box 13087, Austin, Texas 

78711-3087, or faxed to (512) 239-4808. Electronic comments may be 

submitted at http:/!wWYV5.tceq.state.tx.uslndeslecomments/. File size 

36 TexReg 7598 November 4, 2011 Texas Register 

restrictions may apply to comments being submitted via the eComments system. All comments should reference the rule project number 

that the comment pertains to: Rule Project Number 2011-050-114-EN 

for the proposed Diesel Emissions Reduction Incentive Program for 

On-Road and Non-Road Vehicles rule amendments; Rule Project 

Number 2011-051-114-EN for the proposed Texas Clean Fleet Program rule amendments; Rule Project Number 2011-052-114~EN for 

the proposed Alternative Fueling Facilities Program rule; and Rule 

Project Number 20 11-053-114-EN for the proposed Texas Natural Gas 

Vehicle Grant Program rule. The comment period closes December 

5, 2011. Copies of the proposed rules can be obtained from the 

commission's website at http:l!vvww.tceq.texas.gov/nav/ndes/propose_adopt.html. For additional information regarding the proposed 

rulemaking, please contact Stephen Dayton, Implementation Grants 

Section, at (512) 239-6824. 

TRD-2011 04480 

Robert Martinez 

Director, Environmental Law Division 

Texas Commission on Environmental Quality 

Filed: October 21, 2011 

• • 

Notice of Receipt of Applicati n and Intent to Obtain a 

Municipal Solid Waste Permit mendment 

APPLICATION. Liquid Enviro ental Solutions of Texas, LLC, 

7651 Esters Boulevard, Suite 2 0, Irving, Dallas County, Texas 

75063, a Type V, liquid waste rocessing facility that de-waters, 

recycles, and pre-treats non-haza ous liquid waste from municipal 

and industrial generators, has ap lied to the Texas Commission on 

Environmental Quality (TCEQ) fo a permit amendment to authorize 

an increase in the permitted liq d waste treatment capacity from 

6 million gallons per month (20 ,000 gallons per day) to 354,500 

gallons per day; the extension of vaste acceptance hours from 7:30 

a.m. -5:30p.m. to 6:30a.m. - 6:3 p.m.; a variance from buffer zone 

requirements; and a name change r the o'vvner/operator from Liquid 

Environmental Solutions of Tex , L.P., to Liquid Environmental 

Solutions of Texas, LLC. The f: cility is located at 250 Gellhorn 

Drive, Houston, Harris County, xas 77013. The TCEQ received 

the application on August 16, 201 . The permit application is available for viewing and copying at he Harris County Public Library, 

1026 Mercury Drive, Houston, arris County, Texas 77029. The 

following link to an electronic m p of the site or facility's general 

location is provided as a public c rtesy and is not part of the application or notice: http://www.tce .texas.gov/assets/public/hb610/index.html?lat=29.785555&ing=-95. 60833&zoom=13&type=r. For 

exact location, refer to application 

ADDITIONAL NOTICE. TCEQ's xecutive Director has determined 

the application is administratively omplete and will conduct a technical review of the application. Afte technical review of the application 

is complete, the Executive Director ay prepare a draft permit and will 

issue a preliminary decision on th application. Notice of the Application and Preliminary Decision w 1 be published and mailed to those 

who are on the county-wide mail" g list and to those who are on the 

mailing list for this application. T at notice will contain the deadline 

for submitting public comments. 

PUBLIC COMMENT/PUBLIC ETING. You may submit public 

comments or request a public meeti g on this application. The purpose 

of a public meeting is to provide t e opportunity to submit comments 

or to ask questions about the appl cation. TCEQ will hold a public 

meeting if the Executive Director termines that there is a significant 

degree of public interest in the ap lication or if requested by a local 

legislator. A public meeting is not contested case hearing. 
Br.yan W. Shaw, Ph.D., Chairman 

Buddy Garcia, Commissioner 

Carlos Rubinstein, Commissioner 

MarkR. Vickery, P.G., Executive Director 

TEXAS COMMISSION ON ENVIRONMENTAL QUALITY 

Protecting Texas by Reducing and Preventing Pollution 

NOTICE OF PUBLIC HEARING BY THE 

TEXAS COMMISSION ON ENVIRONMENTAL QUALI1Y 

ON PROPOSED REVISIONS TO 30 TAC CHAPTER 114 AND TO THE STATE 

IMPLEMENTATION PIAN 

The Texas Commission on Environmental Quality (commission) will conduct a public 

hearing to receive testimony regarding proposed revisions to 30 TAC Chapter 114, 

Control of Air Pollution from Motor Vehicles, and corresponding revisions to the state 

implementation plan (SIP) under the requirements of Texas Health and Safety Code, 

§382.017; Texas Government Code, Chapter 2001, Subchapter B; and 40 Code of 

Federal Regulations §51.102, and the United States Environmental Protection Agency 

(EPA) concerning SIPs. 

The commission proposes to amend Chapter 114, Subchapter K, Division 3, Diesel 

Emissions Reduction Incentive Program for On-Road and Non-Road Vehicles, to 

implement changes made to Texas Health and Safety Code, Chapter 386, Subchapter C, 

Diesel Emissions Reduction Incentive Program, by House Bill3399, 82nd Legislature, 

2011. The proposed changes and additions involve criteria for the use of grant-funded 

vehicles and engines, destruction of vehicles and engines replaced under the program, 

o-vvnership or lease of vehicles to be replaced under the program, and waiver of certain 

eligibility requirements by the executive director. (Rule Project Number 2011-050-

114-EN) 

The commission proposes to amend Chapter 114, Subchapter K, Division 5, Texas Clean 

Fleet Program, to implement changes made to Texas Health and Safety Code, Chapter 

391, Texas Clean Fleet Program, by House Bill 3399, 82nd Legislature, 2011. The 

proposed changes and additions involve the number of vehicles that must be registered 

and operated in Texas by an eligible grant applicant, the number of vehicles that must 

. be replaced under a grant, the period of commitment by a grant recipient for use of the 

P.O. Box 13087 • Austin, Texas 78711-3087 • 512-239-1000 • Internet address: www.tceq.state.tx.us 
grant-funded vehicles, requirements on the ownership or lease of the vehicles being 

replaced, and the destruction requirements for the vehicles and engines being replaced. 

(Rule Project Number 2011-051-114-EN) 

The commission proposes to amend Chapter 114, Subchapter K, to add a nevv Division 6, 

Alternative Fueling Facilities Program. The proposed rulemak:ing would implement a 

portion of Senate Bill385, 82nd Legislature, 2011, by adding the criteria that may be 

used by the executive director for prioritizing facilities eligible to receive grants under 

the Alternative Fueling Facilities Program, established under Texas Health and Safety 

Code, Chapter 393. {Rule Project Number 2011-052-114-EN) 

The commission proposes to amend Chapter 114, Subchapter K, to add a new Division 7, 

Texas Natural Gas Vehicle Grant Program. The proposed rulemaking ·would implement 

a portion of Senate Bill385, 82nd Legislature, 2011, by adding the criteria that may be 

used by the executive director for prioritizing qualifying vehicles eligible to receive 

grants under the Texas Natural Gas Vehicle Grant Program, established under Texas 

Health and Safety Code, Chapter 394· (Rule Project Number 2011-053-114-EN) 

A public hearing on these proposals vvill be held in Austin on November 29, 2011, at 

10:00 a.m. in Building E, Room 201S, at the commission's central office located at 12100 

Park 35 Circle. The hearing vvill be structured for the receipt of oral and written 

comments by interested persons. Registration vvill begin 30 minutes prior to the 

hearing. Interested persons may present oral statements when called upon in order of 

registration. Open discussion vvill not be permitted during the hearing; hovvever, 

commission staff members vvill be available to discuss the proposal 30 minutes prior to 

the hearing. 

Persons planning to attend the hearing vvho have special communication or other 

accommodation needs should contact Sandy Wong, Texas Register Team, at (512) 239-

1802. Requests should be made as far in advance as possible. 
Written comments on Rule Project Numbers 2011-050-114-EN and 2011-051-114-EN 

may be submitted to Charlotte Horn, and written comments on Rule Project Numbers 

2011-052-114-EN and 2011-053-114-EN may be submitted to Bruce McAnally, at Texas 

Register Team, Office of Legal Services, Texas Commission on Environmental Quality, 

MC 205, P.O. Box 13087, Austin, Texas 78711-3087, or faxed to (512) 239-4808. 

Electronic comments may be submitted at 

http://wwws.tceq.state.tx.usjrulesjecomments/. File size restrictions may apply to 

comments being submitted via the eComments system. All comments should 

reference the rule project number that the comment pertains to: Rule 

Project Number 2011-050-114-EN for the proposed Diesel Emissions 

Reduction Incentive Program for On-Road and Non-Road Vehicles rule 

amendments; Rule Project Number 2011-051-114-EN for the proposed Texas 

Clean Fleet Program rule amendments; Rule Project Number 2011-052-114-

EN for the proposed Alternative Fueling Facilities Program rule; and Ruie 

Project Number 2011-053-114-EN for the proposed Texas Natural Gas 

Vehicle Grant Program rule. The comment period closes December 5, 2011. 

Copies of the proposed rules can be obtained from the commission's Web site at 

http:jj1vww.tceq.texas.govjnavjrulesjpropose_adopt.html. For additional 

information regarding the proposed rulernaking, please contact Stephen Dayton, 

Implementation Grants Section, at (512) 239-6824. 

Issued inAustin7 Texas, on October 18, 2011. 
fQ2_ The temporary suspen~ ons or adjustments must be made 

on water rights in the smallest area p acticable that is necessary to allow 

the senior or superior water right h lder to obtain water. 

~3 6. 4. Susoension or Adiustment Order. 

The executive director's temporar suspension or adjustment under 

~36.3 of this title (relating to Execu ve Director Action) must be made 

by a Suspension or Adjustment Or er, as defined in ~36.2(5) of this 

title (relating to Definitions). 

<$36.5. Conditions for Issuance o(Susvension or Adjustment Order. 

ill The executive directon~ay issue a Suspension or Adjustment Order or modify or extend an existing order under ~36.4 of this 

title (relating to Suspension or Adju trnent Order) if the following conditions have been met: 

ill at the time of issuru e of the order all or part of the 

river basin is in a drought, or an em rgency shortage of water exists; 

ill senior water rights a e unable to divert the water they 

need that is authorized under a wate right" 

ill senior water rights ca (l beneficiallv use water as defined 

in Texas Water Code, § 11.002( 4); ru d 

ill suspending or adjust[ng junior water rights would result in conditions under which the se ior water right holder mav divert 

water for a beneficial use. 

ill The executive director s all ensure that the order: 

ill maximizes the benefit:ial use of water; 

ill minimizes the impac on water rights holders; 

ill prevents the waste oJ water; 

ill considers the efforts c fthe affected water right holders 

to develoo and implement the watet conservation plans and drought 

contingency plans required bv Texas !Water Code, Chapter 11; 

ill to the greatest extent racticable, conforms to the order 

of preferences established by Texas v'ater Code, & 11.024; and 

@ does not require the elease of water that at the time 

the order is issued, is lawfully stored in a reservoir under water rights 

associated with that reservoir. 

<$3 6. 6. Contents of a Suspension or Order. 

A Suspension or Adjustment Order is ued under §36.4 of this title (relating to Susoension or Adjustment C rder) must contain: 

ill the specific water rig ts subject to the order, and the 

location, including the river basin anc county, of the suspension or adjustment; 

ill an explanation of the ~asons for the suspension or adjustment; and 

ill the duration ofthe susoension or adjustment. 

fA} The duration of a uspension or Adjustment Order 

may not be longer than 180 days unl ss otherwise specified in a Suspension or Adjustment Order. 

.ill} A Suspension or f\diustment Order may be extended for UP to 90 days for each extt lnsion. 

_(g A Suspension or f djustment Order may be modified by the executive director based o changed conditions and the requirements of this chapter. 

$36. 7. Imvlementation of Water C( nservation Plans and Drouzht 

Contingency Plans. 

36 TexReg 7468 November 4, 2011 Texas Register 

ill The efforts of affected vater right holders to develop and 

implement water conservation and rought contingency plans that the 

executive director will consider wh n deciding whether to issue an order under ~36.4 of this title (relatin to Suspension or Adjustment Order} include but are not limited to: 

ill the water right hold ler's comoliance with commission 

regulations in Chapter 288 of this t i le (relating to Water Conservation 

Plans, Droucrht Contingency Plans, Guidelines and Requirements) and 

approval of the plans by the commi s ion and Texas Water Development 

Board: and 

ill the water right hol er's implementation and enforcement of the plans. 

fQ2. If the executive directc decides not to susoend or adiust 

ajunior water right based on publ c welfare concerns the executive 

director may require the impleme tation of water conservation and 

drought contingency plans at more restrictive levels than required bv 

the junior water rillht's water con lervation and drought contingency 

plans at the time of issuance of the order. 

$36.8. Notice of and Ovvortunit {or Hearinz on the Issuance of a 

Susrzension or Adfustment Order. 

ill An order under this ch~ bter may be issued by the executive 

director without notice and an ooo rtunitv for hearing. 

lhl If an order is issued un ~er this chaoter without notice or a 

hearinQ", the order shall set a time land place for a hearing before the 

commission to affirm, modify, or s t aside the order to be held as soon 

as practicable after the order is iss ed. 

ill Notice of the hearing a which the commission determines 

whether to affirm, modify or set a ide the Suspension or Adjustment 

Order is not subject to the requirerr nts ofTexas Water Code -§11.132. 

but notice shall be given to all ho ders of water rights that were suspended or adjusted under the orde . 

This agency hereby certifies tha 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 Se ~retary of State on October 21, 

2011. 

TRD-2011 04483 

Robert Martinez 

Director, Environmental Law Divisi n 

Texas Commission on Environmen al Quality 

Earliest possible date of adoption: becember 4, 2011 

For further information, please call (512) 239-2548 

+ • + 

CHAPTER 114. CONTROL OF AIR 

POLLUTION FROM MOTOR VEHICLES 

SUBCHAPTER K. MOBILE SOURCE 

INCENTIVE PROGRAMS 

DIVISION 3. DIESEL EMISSIONS 

REDUCTION INCENTIVE PROGRAM 

FOR ON-ROAD AND NON-ROAD VEHICLES 

30 TAC §114.622 

The Texas Commission on Environmental Quality {TCEQ or 

commission) proposes an amendment to §114.622. 
If adopted, the amendment will be submitted to the United States 

Environmental Protection Agency (EPA) as a revision to the state 

implementation plan. 

Background and Summary ofthe Factual Basis for the Proposed 

Rule 

The 77th Legislature, 2001, enacted Senate Bill 5 establishing the Texas Emissions Reduction Plan (TERP). The TERP 

provides financial incentives for reducing emissions of on-road 

heavy-duty motor vehicles and non-road equipment. House Bill 

(HB) 3399, 82nd Legislature, 2011, amended Texas Health and 

Safety Code (THSC), Chapter 386, Subchapter C, to revise existing criteria and add additional criteria for receiving an incentive 

grant under this subchapter. The changes made under HB 3399 

are as summarized in the following paragraphs. 

Under THSC, §386.1 04(i), if the commission determines that a 

heavy-duty motor vehicle or engine must be decommissioned 

as part of the incentive grant requirements, the new subsection 

outlines specific criteria for how the vehicle or engine must be 

destroyed, including making a hole in the engine block and permanently destroying the frame of the vehicle. These requirements are consistent with current practice of the commission in 

administering the grant programs. In addition, the new subsection requires the commission to provide a means for an applicant 

to propose an alternative method for complying with the destruction requirements. 

Under THSC, §386.1 04U), the executive director of the TCEQ 

is to waive any eligibility requirements established under THSC, 

§386.1 04, on a finding of good cause, which may include a 

waiver for short lapses in registration or operation attributable 

to economic conditions, seasonal work, or other circumstances. 

In addition to the new language outlining how vehicles and 

engines are to be destroyed under a grant, this section includes 

requirements for the operation and use of grant-funded vehicles 

and equipment in nonattainment areas and affected counties 

for five years, provisions for meeting cost-effectiveness requirements and other provisions pertaining to the emissions 

reductions to be achieved by a projects, and provisions related 

to grant payments for the incremental costs of a project. Under 

the additional language of THSC, §386.1 04U), any of these 

provisions could potentially be waived by the executive director, 

on a finding of good cause. 

Under THSC, §386.1 04(k), the commission is to consider an application for the replacement of a vehicle that has been owned, 

leased, or otherwise commercially financed by the applicant. Under this new subsection, if a vehicle or engine that is leased or 

otherwise commercially financed must be decommissioned, the 

commission is to ensure that the applicant has the legal right to 

decommission the vehicle or engine before a grant is awarded. 

Under THSC, §386.1 04(1), the commission is to consider an 

application for a vehicfe replacement or fleet expansion for a 

project with an activity life of five years or more, or 400,000 

miles, whichever is earlier. This change modifies the previous 

requirements that vehicles be operated in the nonattainment 

areas and eligible counties for at least five years, without regard 

to the accrued mileage. 

Finally, under THSC, §386.1 04(m), the commission is to provide a form that minimizes, to the maximum extent possible, the 

amount of paperwork required. 

The proposed rule incorporates the changes to THSC, §386.1 04, 

under HB 3399. 

Section Discussion 

§114.622, Incentive Program Requirements 

Section 114.622 would be amended to incorporate changes 

and additions to the program eligibility criteria under THSC, 

§386.1 04(i), (k), and (1). This section would also be amended to 

incorporate the provisions of THSC, §386.6220), directing the 

executive director to waive project eligibility requirements on a 

finding of good cause. 

Changes are proposed to subsection (b) and a subsection 

(c) is proposed to implement the requirements from THSC, 

§386.1 04(1), which require that for a project involving the replacement, purchase, or lease of a motor vehicle, at least 75% of 

the vehicle mileage traveled must occur within a nonattainment 

area or affected county, and including designated highways and 

roadways, for five or more years, or 400,000 miles, whichever 

occurs earlier. 

Subsection (e) is proposed to establish the requirements for how 

a vehicle or engine replaced under a grant must be destroyed, in 

accordance with THSC, §386.1 04(i). This proposed subsection 

would also include a provision for the executive director of the 

TCEQ to allow an applicant to propose an alternative method 

for complying with the destruction requirements, as required by 

THSC, §386.1 04(i). 

Subsection (f) is proposed to implement the requirements of 

THSC, §386.1 04(k). The proposed subsection would require 

that a motor vehicle to be replaced under a grant may have 

been owned, leased, or otherwise commercially financed by 

the applicant and that the applicant must have a legal right to 

replace and recycle or scrap the vehicle and engine before a 

grant is awarded. 

Subsection (h) is proposed to direct the executive director of the 

TCEQ to waive eligibility requirements under subsections (b)- (f) 

on a finding of good cause, as required by THSC, §386.1 040}. 

Existing subsections under this section would also be renumbered to account for the addition of subsections. 

Fiscal Note: Costs to State and Local Government 

Nina Chamness, Analyst, Strategic Planning and Assessment, 

has determined that for the first five-year period the proposed 

rule is in effect, no significant fiscal implications are anticipated 

for the agency as a result of administration or enforcement of the 

proposed rule. The agency will continue to utilize available funding appropriated out of the TERP - Account 5071 to implement 

the changes made to the program in the proposed rule. For the 

2012 - 2013 biennium, appropriated funding for TERP incentive 

grants is approximately $32 million each year. 

The proposed rule would amend Chapter 114 to implement parts 

of HB 3399. Specifically, the proposed rule will: establish the criteria for decommissioning a heavy-duty motor vehicle or engine; 

allow the executive director to consider an alternative method 

of decommissioning; allow the replacement of leased or commercially financed on-road motor vehicles; change the projected 

period of use for on-road motor vehicles purchased with TERP 

funds from five years to the earlier of five years or 400,000 miles; 

and allow the executive director to waive eligibility requirements 

on a finding of good cause. 

Under current TERP grant guidelines, the projected period of use 

is five years or more regardless of mileage, and the replacement 

of leased vehicles is not allowed. State agencies and local governments with leased vehicles or vehicles that meet the new use 

PROPOSED RULES November 4, 2011 36 TexReg 7469 
criteria could experience cost benefits if they qualify for a grant 

that allows them to purchase or lease a replacement vehicle at 

a reduced cost. Some examples of qualifying vehicles include 

commercial trucks, school buses, and transit buses. Applying 

for a grant would be voluntary, and it is not known at this time 

how many state agencies or local governments would do so. Under current rules, the typical grant award ranges from $50,000 

to $100,000. 

Public Benefits and Costs 

Nina Chamness also determined that for each of the first five 

years the proposed rule is in effect, the anticipated public benefit 

will be an improvement in air quality in the 41 counties eligible to 

receive TERP incentive grant funding since a greater number of 

vehicles will become eligible for replacement using grant funds. 

The proposed rule may not have a significant fiscal impact on 

individuals unless they qualify for a TERP grant. Individuals that 

can utilize TERP funding should experience the same cost benefits as a local government or large business. 

Businesses that operate leased vehicles and vehicles that meet 

the reduced period of use under the proposed rule could experience cost benefits if they are eligible to purchase replacement 

vehicles or engines with TERP funds. Under current rule, the 

typical grant award for replacement vehicles or engines ranges 

from $50,000 to $100,000. Sellers of replacement vehicles or 

engines could see revenue increase since the proposed rule has 

the potential to increase the sales volumes of qualifying vehicles. 

Staff is not able to determine how many additional businesses or 

individuals would experience increases in sales or become eligible to apply for a grant as a result of these changes. 

Small Business and Micro-Business Assessment 

No adverse fiscal implications are anticipated for small or micro-businesses as a result of the proposed rule. The proposed 

rule may make it easier for a small or micro-business to qualify 

for a grant under the program, especially if they lease qualifying 

vehicles or their vehicles meet the revised period of use criteria. Small or micro-businesses are expected to experience the 

same benefits as a large business either when buying a vehicle 

or replacement engine or when selling or leasing a replacement 

vehicle or engine. Staff is not able to determine how many additional small and micro-businesses may become eligible to apply 

for a grant or experience increased sales as a result of these 

changes. 

Small Business Regulatory Flexibility Analysis 

The commission has reviewed this proposed rulemaking and determined that a small business regulatory flexibility analysis is not 

required because the proposed rule is required by state law and 

does not adversely affect a small or micro-business in a material 

way for the first five years that the proposed rule is in effect. 

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 rule does not adversely affect a 

local economy in a material way for the first five years that the 

proposed rule is in effect. 

Draft Regulatory Impact Analysis Determination 

The commission reviewed the rulemaking in light of the regulatory analysis requirements of Texas Government Code, 

§2001.0225, and determined that this rule action is not subject 

36 TexReg 7470 November 4, 2011 Texas Register 

to Texas Government Code, §2001.0225, because it does not 

meet the definition of a "major environmental rule" as defined 

in that statute. A "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, productivity, competition, jobs, the environment, or the public health and 

safety of the state or a sector of the state. 

The amended Chapter 114 rule is proposed in accordance with 

HB 3399, which amended THSC, Chapter 386. The proposed 

rule adds or revises eligibility requirements for a voluntary grant. 

Because the proposed rule places no involuntary requirements 

on the regulated community, the proposed rule will not 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. In addition, 

this amendment does not place additional financial burdens on 

the regulated community. 

In addition, a regulatory impact analysis is not required because 

the proposed rule does not meet any of the four applicability criteria for requiring a regulatory analysis of a "major environmental 

rule" as defined in the Texas Government Code. Texas Government Code, §2001.0225, applies only 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. This rulemaking does not exceed a standard set by federal 

law. In addition, this rulemaking does not exceed an express 

requirement of state law and is not proposed solely under the 

general powers of the agency, but is specifically authorized by 

the provisions cited in the Statutory Authority section of this preamble. Finally, this rulemaking does not exceed a requirement 

of a delegation agreement or contract to implement a state and 

federal program. 

The commission invites public comment on the draft regulatory 

impact analysis determination. Written comments on the draft 

regulatory impact analysis determination may be submitted to 

the contact person at the address listed under the Submittal of 

Comments section of this preamble. 

Takings Impact Assessment 

The commission evaluated this rulemaking action and performed 

an analysis of whether the proposed rule is subject to Texas Government Code, Chapter 2007. The primary purpose of the rulemaking is to amend Chapter 114 in accordance with HB 3399. 

The rule makes revisions to a voluntary program and only affects motor vehicles and equipment that are not considered to 

be private real property. The promulgation and enforcement of 

the proposed rule is neither a statutory nor a constitutional taking because it does not affect private real property. Therefore, 

the rule does not constitute a taking under Texas Government 

Code, Chapter 2007. 

Consistency with the Coastal Management Program 

The commission reviewed the proposed rulemaking and found 

the proposal is a rulemaking identified in the Coastal Coordination Act Implementation Rules, 31 TAC §505.11 (b ){2), concerning rules subject to the Texas Coastal Management Program 
(CMP), and will, therefore, require that goals and policies of the 

CMP be considered during the rulemaking process. The commission reviewed this action for consistency and determined the 

rulemaking for Chapter 114 does not impact any CMP goals or 

policies, because it revises a voluntary incentive grant program 

and does not govern air pollution emissions. 

Written comments on the consistency of this rulemaking may be 

submitted to the contact person at the address listed under the 

Submittal of Comments section of this preamble. 

Announcement of Hearing 

The commission will hold a public hearing on this proposal in 

Austin on November 29, 2011, at 10:00 a.m. in Building E, Room 

201S, 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 will not be permitted during the hearing; however, 

commission staff members will be available to discuss the proposal 30 minutes prior to the hearing. 

Persons who have special communication or other accommodation needs who are planning to attend the hearing should contact 

Sandy Wong, Office of Legal Services, at (512) 239-1802. Requests should be made as far in advance as possible. 

Submittal of Comments 

Written comments may be submitted to Charlotte Horn, MC 

205, Office of Legal Services, Texas Commission on Environmental Quality, P.O. Box 13087, Austin, Texas 78711-3087, 

or faxed to (512) 239-4808. Electronic comments may be 

submitted at: http:l!www5.tceq.texas.gov/ruleslecommentsl. 

File size restrictions may apply to comments being submitted 

via the eComments system. All comments should reference 

Rule Project Number 2011-050-114-EN. The comment period 

closes December 5, 2011. Copies of the proposed rulemaking can be obtained from the commission's Web site at 

http:/lwww.tceq.texas.gov/nav/ruleslpropose_adopt.html. For 

further information, please contact Stephen Dayton, Implementation Grants Section, (512) 239-6824. 

Statutory Authority 

The amendment is proposed under Texas Water Code (TWC), 

§5.1 02, which provides the commission with the general powers 

to carry out its duties under the TWC; TWC, §5.1 03, which authorizes the commission to adopt any rules necessary to carry 

out the powers and duties under the provisions of the TWC and 

other laws of this state; and TWC, §5.1 05, which authorizes the 

commission by rule to establish and approve all general policy of 

the commission. The amendment is also proposed under Texas 

Health and Safety Code (THSC), Texas Clean Air Act, §382.017, 

which author'izes the commission to adopt rules consistent with 

the policy and purposes of the THSC; THSC, §382.011, which 

authorizes the commission to establish the level of quality to 

be maintained in the state's air and to control the quality of the 

state's air; THSC, §382.012, which authorizes the commission to 

prepare and develop a general, comprehensive plan for the control of the state's air; and THSC, Chapter 386, which establishes 

the Texas Emission Reduction Program. Finally, the amendment 

is proposed as part of the 'implementation of House Bill 3399. 

The proposed amendment implements THSC, §386.1 04. 

§ 114.622. Incentive Program Requirements. 

(a) Eligible projects include: 

(1) purchase or lease of on-road and non-road diesels; 

(2) emissions-reducing retrofit projects for on-road or nonroad diesels; 

(3) emissions-reducing repower projects for on-road or 

non-road diesels; 

( 4) purchase and use of emissions-reducing add-on equipment for on-road or non-road diesels; 

(5) development and demonstration of practical, low-emissions retrofit technologies, repower options, and advanced technologies for on-road or non-road diesels with lower nitrogen oxides (NO) 

emissions; 

(6) use of qualifying fuel; 

(7) implementation of infrastructure projects; 

(8) replacement of on-road and non-road diesels with 

newer on-road and non-road diesels; and 

(9) other projects that have the potential to reduce anticipated NOxemissions from diesel engines. 

(b) For a proposed project as listed in subsection (a) of this 

section, other than a project involving a marine vessel or engine.l [m'] 

a project involving non-road equipment used for natural gas recovery purposes, a project involving replacement of a motor vehicle, or 

a project involving the purchase or lease of a motor vehicle, not less 

than 75% of vehicle miles traveled or hours of operation projected for 

the five years irrunediately following the award of a grant must be projected to take place in a nonattainment area or affected county of this 

state. The commission may also allow vehicle travel on highways and 

roadways, or portions of a highway or roadway, designated by the commission and located outside a nonattainment area or affected county to 

count towards the percentage of use requirement. 

.{£l For a proposed motor vehicle replacement, purchase, or 

lease project, the period used to determine the emissions reductions 

and cost-effectiveness of each replacement, purchase, or lease activity 

included in the project must extend for five years or more, or 400,000 

miles, whichever occurs earlier. Not less than 75% of the vehicle miles 

traveled projected for the period used to determine the emissions reductions must be projected to take place in a nonattainment area or affected 

county of this state. The commission may also allow vehicle travel on 

highways and roadways, or portions of a highway or roadway, designated by the commission and located outside of a nonattainment coWlty 

or affected countv to count towards the percentage of use requirement. 

fill. [tej] For a proposed project that includes a replacement of 

equipment or a repower, the old equipment or engine must be recycled 

or scrapped provided, however, that the executive director may allow 

permanent removal from the State of Texas in specific grants where 

the applicant has provided sufficient assurances that the old locomotive 

will not be returned to the State of Texas. 

ill For a proposed project to replace a motor vehicle, the vehicle and engine must be decommissioned by crushing the vehicle and 

engine, by making a hole in the engine block and permanently destroying the frame of the vehicle, or by another method approved by the 

executive director that permanently removes the vehicle and engine 

from operation in this state. For a proposed project to repower a motor 

vehicle, the engine being replaced must be decommissioned in a manner consistent with the requirements for decommissioning an engine 

as part of a vehicle replacement project. The executive director shall 

allow an applicant for a motor vehicle replacement or repower project 

to propose an alternative method for complying with the requirements 

of this subsection. 

PROPOSED RULES November 4, 2011 36 TexReg 7471 
ill For a project to replace a motor vehicle, the vehicle being replaced may have been owned, leased, or otherwise commercially 

financed by the applicant. The applicant must have a legal right to 

replace and recycle or scrap the vehicle and engine before a grant is 

awarded for that project. 

_(g)_ [fdj] To be eligible for a grant, the cost-effectiveness of a 

proposed project as listed in subsection (a) of this section, except for 

infrastructure projects and infrastructure purchases that are part of a 

broader retrofit, repower, replacement, or add-on equipment project, 

must not exceed a cost-effectiveness of$15,000 per ton ofNOx emissions reduced. The commission may set lower cost-effectiveness limits 

as needed to ensure the best use of available funds. The commission 

may also base project selection decisions on additional measures to 

evaluate the effectiveness of projects in reducing NOx emissions in relation to the funds to be awarded. 

ill The executive director shall waive eligibility requirements 

established under subsections (b) - (f) of this section on a finding of 

good cause, which may include a waiver of any ownership and use 

requirements established for replacement of a motor vehicle for short 

lapses in registration or operation attributable to economic conditions. 

seasonal work, or other circumstances. 

ill [fef] Projects funded with a grant from this program may 

not be used for credit under any state or federal emissions reduction 

credit averaging, banking, or trading program except as provided under 

Texas Health and Safety Code, §386.056. 

ill [ft)J A proposed project as listed in subsection (a) of this 

section is not eligible if it is required by any state or federal law, rule or 

regulation, memorandum of agreement, or other legally binding document. This subsection does not apply to: 

( 1) an otherwise qualified project, regardless of the fact that 

the state implementation plan assumes that the change in equipment, 

vehicles, or operations will occur, if on the date the grant is awarded 

the change is not required by any state or federal law, rule or regulation, 

memorandum of agreement, or other legally binding document; or 

(2) the purchase of an on-road diesel or equipment required 

only by local law or regulation or by corporate or controlling board 

policy of a public or private entity. 

ill [fgf] A proposed retrofit, repower, replacement, or addon equipment project must achieve a reduction in NOx emissions to 

the level established in the commission's Texas Emissions Reduction 

Plan: Guidelines for Emissions Reduction Incentive Grants Program 

(RG-388) for that type of project compared with the baseline emissions 

adopted by the commission for the relevant engine year and application. 

.ill [W] If a grant recipient fails to meet the terms of a project 

grant or the conditions of this division, the executive director can require that the grant recipient return some or all of the grant funding 

to the extent that emission reductions are not achieved or cannot be 

demonstrated. 

{!!D. [@] Criteria established in the guidelines, including revi· 

sions to the commission's Texas Emissions Reduction Plan: Guidelines 

for Emissions Reduction Incentive Grants Program (RG-388), apply 

to the Texas Emissions Reduction Plan program. Notwithstanding the 

provisions of this chapter, as authorized under Texas Health and Safety 

Code, §386.053(d), revisions to the guidelines may include, among 

other changes, adding additional pollutants; adding stationary engines 

or engines used in stationary applications; adding vehicles and equipment that use fuels other than diesel; or adjusting eligible program cat· 

egories; as appropriate, to ensure that incentives established under this 

program achieve the maximum possible emission reductions. 

36 TexReg 7472 November 4, 2011 Texas Register 

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 October 21, 

2011. 

TRD-2011 04481 

Robert Martinez 

Director, Environmental Law Division 

Texas Commission on Environmental Quality 

Earliest possible date of adoption: December 4, 2011 

For further information, please call: ( 512) 239·0779 

• • 

DIVISION 5. TEXAS LEAN FLEET 

PROGRAM 

30 TAC §§114.650 - 114.654 

The Texas Commission on nvironmental Quality {TCEQ, 

commission, or agency) propo es amendments to §§114.650 • 

114.654. 

If adopted, the amended sectio swill be submitted to the United 

States Environmental Protecti n Agency (EPA) as revisions to 

the state implementation plan. 

Background and Summary ofth Factual Basis for the Proposed 

Rules 

Senate Bill 1759, 81 st Leg isla ure, 2009, amended the Texas 

Health and Safety Code (THS ), by adding Chapter 391, Texas 

Clean Fleet Program (program) This program is designed to encourage eligible fleets to repla diesel vehicles with alternative 

fuel or hybrid vehicles. House ill (HB) 3399, 82nd Legislature, 

2011, amended THSC, Chapt 391, to revise current eligibility 

criteria and add additional crite a. The changes made under HB 

3399 are as summarized in th following paragraphs. 

THSC, §391.002(b), was revis d to reduce the number of qualifying vehicles that an entity mu t place in service in the state in 

order to be eligible to participat in the program from 25 to 20 vehicles. This provision is then qu lified under THSC, §391.002(c), 

to allow for commission funding ffewer than 20 vehicles under a 

grant, as long as an entity's ap ication originally included 20 vehicles for replacement under th program. This provision allows 

an application to be approvabl in the event that the commission does not approve one or ore vehicles for funding during 

the application process. 

THSC, §391.004(a), was revis d to reduce from 100 to 75 the 

number of vehicles that any en ·ty must operate in its fleet in the 

state in order to be eligible to a ply for and receive a grant under 

the program. 

Under a new THSC, §391.004( ), the commission is directed to 

minimize, to the maximum exte t possible, the amount of paperwork required for an applicatio . In addition, an applicant may 

be required to submit a photog a ph or other documentation of a 

vehicle identification number, r istration information, inspection 

information, tire condition, ore gine block identification only if it 

is requested after the com miss n has decided to award a grant 

to the applicant. 

THSC, §391.005(b )(2)(A), was evised to allow a vehicle that has 

been leased or otherwise com ercially financed and registered 
TESTIMONY 
Reference Number 

W-1 

W-2 

W-3 

W-4 

W-5 

INDEX OF WRJTTEN TESTIMONY 

Submitted by 

Todd R. Campbell, on behalf of Clean Energy 

Matt Schrap, Crossroads Equipment Lease & Finance, LLC 

Lynn Lyon, on behalf of Pioneer Natural Resources USA, Inc. 

Danny Smith, UPS 

Guy Donaldson, United States Environmental Protection Agency 
Clean 

~ Energy· 

3020 Old Ranch Parkway, Suite 400 

Seal Beach, California 90740 USA 

562.493.2804 fax: 562.493.4956 

www.deanenergyfuels.com 

Charlotte Hom 

MC 205, Office of Legal Services 

November 30, 2011 

Texas Commission on Environmental Quality 

P.O. Box 13087 

Austin, Texas 78711-3087 

W-1 

Todd R. Campbell, MEM, MPP 

Vice President, Public Policy and Regulatory Affalrs 

Re: Diesel Emissions Reduction Incentive Program Rulemaking 

Rule Project Number 2011-050-114-EN 

Rule Project Number 2011-051-114-EN 

Dear Ms. Hom: 

On behalf of Clean Energy, we appreciate this opportunity to file comments on the 

Texas Commission on Environmental Quality's ("TCEQ") proposed rule changes to 30 

Texas Administrative Code Chapter 114 to implement Section 386.104 and Chapter 391 

of the Texas Health & Safety Code, which was amended by the 82nd Legislature 

through House Bil13399. 

Clean Energy is the leading provider of natural gas (compressed natural gas (CNG) and 

liquefied natural gas (LNG)) for transportation in North America. The company has a 

broad customer base in the refuse, transit, ports, shuttle, taxi, trucking, airport, and 

municipal fleet markets, fueling more than 17,200 vehicles daily at over 190 strategic 

locations across the United States and Canada. Clean Energy was supportive of the 

Texas Legislature's initiative to pass HB 3399 to incorporate changes and additions to 

the Diesel Emission Reduction Incentive Program and Clean Fleet Program.. 

TCEQ staff is to be commended for the hard work and effort they have put into 

developing the these programs and these rules. We look forward to the successful 

implementation of these rules. 

The proposed rulemakings in response to HB 3 3 99 make several administrative changes 

to TERP and Clean Fleet to make these programs work more effectively and efficiently 

for Texas-based fleets. The current application procedures are onerous and create a 

barrier for many fleets to apply. By simplifying the permitting process, fleet operators 

will be able to compete for grant funding, resulting in cost-effective emissions 

reductions. Furthermore, the rulemakings would simplify the paperwork required for 

Clean Fleet applications. Finally, the rulemakings provide that the Executive Director 

1 

North America's leader In dean transportation 
~~ Clean Energy 

shall waive the eligibility requirements when good cause is shown. In other words, 

these rulemakings allow the TCEQ to grant a waiver of the eligibility requirements in 

cases where the purposes of the program would be met- where the TCEQ can certify 

that emissions reductions will be achieved and where the purposes of the program 

would be furthered. 

Clean Energy fully supports TCEQ' s rulemaking. 

2 

North America's leader in dean transportation 

Respectfully, 

wef&_~est::_ 

Todd R. Campbell 

Vice President 

Public Policy and 

Regulatory Affairs 

Clean Energy Fuels 
A ~ 

· ·~ ~ ~ ~ ~CROSSROt\[JS~-··-·~--~·-· ~-,-·~~-,-~~~, ~ . ~ ~ ~ '., . ' .. 

W-2 

November 29~ 2011 

To: Mark R. Vickery, P.O., Executive Director, TCEQ 

From: Matt Schrap, Crossroads Equipment Lease and Finance & Crossroads Fleet Service (CFS) 

Re: Rule Project No. 20 11-050-114-EN 

Dear tvfr. Vickery, 

This letter is in regard to the proposed subsection changes under Texas Health and Safety Code 

(THSC) §386.1 04: Eligibility Requirements for the Diesel Emission Reduction Incentive 

Program, Rule Project Number 2011-050-I 14-EN. 

Crossroads Equipment Lease and Finance is a direct lending company specializing in 

transportation finance. Although based in California, Crossroads is national in scope with clients 

throughout the USA. 

The main focus of our company is in assisting heavy duty truck operators secure zero cost grant 

assistance and financing towards the purchase or lease of new and used commercial vehicles. 

These vehicles meet the cleanest federal Environmental Protection Agency (EPA) engine 

standards across all commercial fuel platforms. 

In order to promote this end> Crossroads created California Fleet Solutions (CFS) in 2010 to help 

California fleets apply for equipment ftmding through various grant programs available in 

California. CFS has been successful in securing millions of dollars in grant funding for 

California fleets with zero up-front costs or commitments from the applicant. 

In 2011 Crossroads started another division dedicated to assisting fleets nationwide. Crossroads 

Fleet Service (CFS) is using expertise gained through our no cost grant securement process in 

order to help trucking fleets across the United States access grant application assistance with zero 

costs and zero commitment. We actively pursue grant opportunities and have been very 

successful in providing residual financing for remaining costs in the truck purchase after the 

grant 

One reason for our continued success is our experience in administration of government finance 

programs directed at truck users who have received a grant for the purchase of clean equipment. 

Crossroads was instrumental in assisting the Ports of Los Angeles and Long Beach (Ports) in 

achieving their ftmding goals under their Clean Air Action Plan (CAAP).One hundred percent of 

the trucks that received funding through the Ports grantprogram were financed by Crossroads. 

The Port Finance Acceptance Company (PF AC) was created specifically through a partnership 

between Crossroads and Daimler Trucks North American (DTNA) and is still in existence today. 

Crossroads is also the administrator for the California Air Resources Board (GARB) Direct Loan 

(DL) Program and is the number one lending entity in the California Capital Access Program 

(Cal CAP) administered through the California State Treasurer's Office. 

..,,._ ........................................... "'._, ____ _ 
,JJ,~ 

·~~~~.CROSSROADS---------· ~. · · ---~-·~·-.. =~,~-~-~-~~ 

: , ·.' 

Both the Ports and the CARB DL programs were put out to competitive bid in a Request for 

Proposals (RFP) process. Crossroads was awarded these contracts due to our specific knowledge 

of the trucking industry and our commitment to providing no cost funding assistance to fleets 

Through our program administration we have gained a firsthand look into the challenges that 

large motor carriers and smaU fleets alike tace in this market. We are an active member of the 

industry and maintain membership as a SmartWay Transport Affiliate Partner, as well as in the 

American Trucking Association (ATA) the California Trucking Association (CTA) and the 

Texas Motor Transport Association (TMTA). 

Crossroads and CPS are no strangers when it comes to the trucking industry and grant program 

administration and distribution. Along those lines, this letter is to commend the TCEQ for taking 

an active leadership role throughout this guideline modification process. 

The suggested changes demonstrate TCEQ's acknowledgement of potential challenges entities 

face when soliciting applicants for funding. Fleets throughout the covered areas in Texas will 

greatly benefit from the subsection changes you have proposed in the Diesel Emission Reduction 

Program Rules. 

Crossroads is looking forward to assisting fleet operators secure TERP grants through the TCEQ, 

and readily .offer ourselves as a unique resource throughout the process. 

Please feel free to contact our offices at the infom1ation below. 

Thank you for taking time to read our comments. 

Sincerely, 

Matt Schrap, Presiaan,=-~~-­

Crossroads Equipment Lease & Finance 

9121 Haven Ave. Ste. 270 

Rancho Cucamonga, CA 91730 
PIONEER W-3 

NATURAL RESOURCES 

Charlotte Hom 

MC 205, Office of Legal Services 

Texas Commission on Envirorunental Quality 

P.O. Box 13087 

Austin, Texas 78711-3087 

Pioneer Natural Resources USA, Inc. 

5205 N. O'Connor Blvd., Suite 200 

Irving, TX 75039-3746 

Tel: (972) 444-9001 

November 30, 2011 

Re: Diesel Emissions Reduction Incentive Program Rulemaking 

Rule Project Number 2011·050-114-EN 

Rule Project Number 2011-051-114-EN 

Dear Ms. Horn: 

On behalf of Pioneer Natural Resources ("Pioneer") we appreciate this opportunity to file 

comments on the Texas Commission on Environmental Quality's {

04TCEQ") proposed 

rule changes to 30 Texas Administrative Code Chapter 114 to implement Section 

386.104 and Chapter 391 of the Texas Health & Safety Code, which was amended by the 

82nd Legislature through House Bill 3399. 

Pioneer is one of the most active oil and gas drillers in Texas, with operations in the 

Permian Basin, Barnet Shale, and Eagle Ford Shale. In particular, Pioneer is the largest 

acreage holder, driller and producer in the Spraberry Field, which covers nine counties in 

West Texas. Overall, Pioneer produces roughly 115,000 barrels of oil equivalent per day, 

operates over 9,200 producing wells, and employs over 2,200 workers. Pioneer was 

supportive of the Texas Legislature's initiative to pass HB 3399 to incorporate changes 

and additions to the Diesel Emission Reduction Incentive Program and Clean Fleet 

Program. 

TCEQ staff is to be commended for the hard work and effort they have put into 

developing the these programs and these rules. We look forward to the successful 

implementation of these rules. 

The proposed rulemakings in response to HB 3399 make several administrative changes 

to TERP and Clean Fleet to make these programs work more effectively and efficiently 

for Texas-based fleets. The current application procedures are onerous and create a 

barrier for many fleets to apply. By simplifying the pennitting process, fleet operators 

will be able to compete for grant funding, resulting in cost-effective emissions reductions. 
[Recipient Name] 

November 30, 201 I 

Page2 

Furthermore, the rulemakings would simplify the paperwork required for Clean Fleet 

applications. Finally, the rulemakings provide that the Executive Director shall waive the 

eligibility requirements when good cause is shown. In other words, these rulemakings 

allow the TCEQ to grant. a waiver of the eligibility requirements in cases where the 

purposes of the program would be met - where the TCEQ can certify that emissions 

reductions will be achieved and where the purposes of the program would be furthered. 

Pioneer fully supports TCEQ~s rulemaking. 

Respectfully, 

Lynn Lyon 

Manager of Strategic Projects 

Domestic Operations 

Pioneer Natural Resources 
660 Fritz Drive 

Coppell, TX 75019 

November 15, 2011 

Steve Dayton 

Rule Project Manager 

Texas Commission·on Environmental Quality 

12100 Park 35 Circle 

Austin, Texas 78711-3087 

Dear Mr. Dayton: 

W-4 

UPS appreciates the opportunity to comment on the proposed rules 

for the Diesel Emissions Reduction Incentive Program, the Texas 

Clean Fleet Program, the Alternative Fueling Facilities Program and 

the Texas Natural Gas Vehicle Grant Program. The Texas 

Legislature has recognized and acted on the need for alternative 

fueled vehicles to reduce harmful emissions in our major cities, 

decrease our dependency on foreign oil 1 and to take advantage of 

Texas' resources, particularly natural gas. 

UPS is a leader in the use of alternative fuel vehicles, with over 1,347 

alternative fuel/technology vehicles nationwide and 1,914 worldwide. 

We are committed to increasing the number of such vehicles in Texas, 

and have made that commitment known to the leadership .of the state 

in public testi many. 

UPS has enjoyed our partnership with TCEQ through our 

participation in the Clean Fleet Program, passed in the 2009 session. 

As you know, UPS received funding through the program to purchase 

55 hybrid electric vehicles and has deployed them in the Houston and 

Austin areas. 

UPS has reviewed the proposed rules for Docket Numbers 2011-

1219-RUL, 2011-1220-RUL, 2011-1221-RUL and 2011-1222 .. RUL. 
We have no suggested changes to the proposed rules and believe 

these proposed rules will assist in making the existing Clean Fleet 

Program function as smoothly and efficiently as possible as well as 

get the new programs for natural gas facilities and vehicles up and 

running quickly. 

We will continue to provide input to TCEQ as the agency moves to 

adopt rules for these programs and will be ready to apply for funding 

once the rules have been approved and the application process has 

begun. It is UPS' intention to apply for funding for both facilities and 

vehicles under the existing Clean Fleet program and the new natural 

gas program. 

We look forward to continuing to work together to make Texas's air 

the cleanest it can be. Should you need any further information 

regarding UPS's ability to commit to these programs, please don't 

hesitate to contact me. 

Sincerely, 

Danny Smi h 

Vice President State Government Affairs 

660 Fritz Drive 

Coppell, Texas 75019 

972-304-6500 
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY 

REGIONS 

1445 ROSS AVENUE. SUITE.1200 

DALLAS TX 75202~2733 

DEC 5 2011 

Ms. Charlotte Hom 

Texas Coill!i1.ission on Environmental Quality 

P.O. Box 13087 

Austin, TX 78711-3087 

Re: Rule Project Number 2011-050-114-EN 

Dear Ms. Hom: 

Thank you for the opportunity to review and comment on proposed revisions to 30 T AC 

Chapter 114, Control of Air Pollution from Motor Vehicles, and corresponding revisions to 

the state implementation plan (SIP). The proposed revisions will amend Chapter 114, 

Subchapter K, Mobile Source Incentive Programs, Division 3} Diesel Emissions Reduction 

Incentive Program for On-Road and Non-Road Vehicles, to implement changes made to 

the Texas Health and Safety Code (THSC), Chapter 386, Subchapter C, by Texas House 

Bill 3399, 82nd Legislature, 2011. The proposed changes and additions involve criteria for 

the use of grant-funded vehicles and engines, destruction of vehicles and engines placed 

under the program, and waiver of certain eligibility requirements by the executive director. 

The Environmental Protection Agency (EPA) appreciates the efforts of the Texas 

Commission on Environmental Quality (TCEQ) to continually improve the control of air 

pollution from motor vehicles and to tighten the requirements for decommissioning of onroad heavy-duty motor vehicles and non-road vehicles. However, the EPA is concerned 

with the proposed revision that amends§ 114.622 by adding subsection (h) to§ 114.622 

which states '~the executive director shall waive eligibility requirements established under 

subsections (b) - (t) of this section on a finding of good cause, which may include a waiver 

of any ownership and use requirements established for replacement of a motor vehicle for 

short lapses in registration or operation attributable to economic conditions, seasonal work, 

or other circumstances." If, as in the past, Texas intends to continue to credit the reductions 

from the TERP program toward attainment demonstrations, this provision for director's 

discretion may be difficult to approve. The EPA suggests the rule language be modified to 

better specify the circwnstances under which waivers could be granted so that the impact 

of such waivers on SIP credit can be determined. In that same vein, the EPA recommends 

that you remove the phrase "or other circumstances" from subsection (h) of §114.622, 

since it is vague and not well defined. 

The EPA Region 6 continues to applaud TCEQ' s efforts to continually improve the state 

implementation plan and we offer our support during the rule revision process. If you have 

Internet Address (URL) • http://www.epa.gov/reglon6 

Recycled/Recyclable • Printed with V£getabfe Oil Based Inks Oli '1 00tJm Recycled Paper, Pro<::ess Chlorine free 

W-5 
any questions or need additional clarification; pleasecontactMr. John Walser of my staff 

at 214-665-7128. Please let us know how \Ve may be offurther assistance. 

Sincerely yours, 

Guy Donaldson 

Chief 

Air Planning Section 
INDEX OF ORAL TESTIMONY 

NO ORAL TESTIMONY WAS RECEIVED PERTAINING TO THIS RULE REVISION 
- 1 -

Texas Commission on Environmental Quality 

Public Hearing Registration 

November 29,. 2011 

1o:ooa.n1. 

Rule Project Nos.: 2011-050-114-EN, 2011-051-114-EN, 2011-052-114-EN, 2011-053-114-EN 

Short Title: HB 3399: Einissions Reduction Incentive Program Rules; HB 3399: Texas Clean Fleet Progrmn Rules; SB 385: Alte~native Fueling 

FacHities Prograrn Rule; SB 385: Texas Natural Gas Vehicle Grant Progrmn 

Location: TCEQ main complex~ 12100 Park 35 Circle, Building E) Room 2018, Austin, Texas 

Concerning: Alnendm(mts to 30 TAC Chapter 114 

Name Representing . Presenting Oral Testimony? 

(Please Print) (Circle One) 

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-2-

Texas Commission on Environmental QualitY 

P.ublic I-Iearing Registratio11 

November 29, 2011 

1o:ooa.m. 

Rule P1~oject Nos.: 2011-050~114-EN, 2011-051-114-EN, 2011-052-114-EN, 2011-053-114,...EN 

Short Title: HB 3399: Emissions Reduction Incentive Progran?- Rules; HB 3399: Texas Clean Fleet Progrmn Rules; SB 385: Alternative Fueling 

Facilities Progtam Rule; SB 385: Texas Natural Gas Vehicle Grant Progran1 

Location: TCEQ main complex, 12100 Park 35 Circle, Building E, Room 2018, Austin, Texas 

Concerning: Alnendn1ents to 30 TA.C.Chapter 114 

Name Representing Presenting Oral Testimony? 

(Please Print) (Circle One) 

:r:1 /}rM ld ()j}5 Yes~ 

n~~~~ :;~~ tL GtPS Yes~ 

12 c/JptL i~ e 0 (/ ~~-t1 fv / JJ T {tiJ t/1 9 1/j Yes --~ 

(' Y\f\ I J c~')U\~\0 ·~~~ c~~-l~o ·, 

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..., ·- / u '" I 

\lfl~ \-\ohQ~ ~\'G~Q.f LLC. Yes rN~ 

Yes No 

·--· 

Yes No 

Yes No 
HEARING OFFICER REPORT 

I am the hearing officer assigned to conduct the public hearing regarding: 

The TCEQ proposal to amend Chapter 114, Subchapter K, Division 3, Diesel Emissions 

Reduction Incentive Program for On-Road and Non-Road Vehicles, to implement 

changes made to Texas Health and Safety Code, Chapter 386, Subchapter C, Diesel 

Emissions Reduction Incentive Program, by House Bill 3399, 82nd Legislature, 2011. 

The proposed changes and additions involve criteria for the use of grant~funded vehicles 

and engines, destruction of vehicles and engines replaced under the program, ownership 

or lease of vehicles to be replaced under the program, and waiver of certain eligibility 

requirements by the executive director. (Rule Project Number 2011-050-114-EN); 

The TCEQ proposal to amend Chapter 114, Subchapter K, Division 5, Texas Clean Fleet 

Program, to implement changes made to Texas Health and Safety Code, Chapter 391, 

Texas Clean F1eet Program, by House Bill 3399, 8.2nd Legislature, 2011. The proposed 

changes and additions involve the number of vehicles that must be registered and 

operated in Texas by an eligible grant applicant, the number of vehicles that must be 

replaced under a grant, the period of commitment by a grant recipient for use of the 

grant-funded vehicles, requirements on the ownership or lease of the vehicles being 

replaced, and the destruction requirements for the vehicles and engines being replaced. 

(Rule Project Number 2011~051-11.4-EN); 

The TCEQ proposal to amend Chapter 114, Subchapter K, to add a new Division 6, 

Alternative Fueling Facilities Program. The proposed rulemaking would implement a 

portion of Senate Bill 385, 82nd Legislature, 2011, by adding the criteria that may be 

used by the executive director for prioritizing facilities eligible to receive grants under 

the Alternative Fueling Facilities Program, established tmder Texas Health and Safety 

Code, Chapter 393. (Rule Project Number 2011~052~114-EN); 

The TCEQ proposal to amend Chapter 114, Subchapter K, to add a new Division 7, Texas 

Natural Gas Vehicle Grant Program. The proposed rulemaking would implement a 

portion of Senate Bill 385, 82nd Legislature, 2011, by adding the criteria that may be 

used by the executive director for prioritizing qualifying vehicles eligible to receive grants 

under the Texas Natural Gas Vehicle Grant Program, established under Texas Health 

and Safety Code, Chapter 394· (Rule Project Number 201.1-053-114-EN). 

A public hearing was scheduled for November 29, 2011, at 10:00 a.m., in Austin in 

Building E, Room 201S, at the commission's central office located at 12100 Park 35 

Circle. 

At 9:30 a.m., the room was open and TCEQ staff members were available to discuss the 

proposal. At io:oo a.m., TCEQ staff and a court reporter were present and the hearing 

was formally opened. After two invitations to the public to provide comment, no one 

present requested to make comment and the public hearing was formally closed. A 

transcript was prepared. 

Hc(t~ 

Date signed 
BEFORE THE TEXAS COMMISSION 

ON ENVIRONMENTAL QUALITY 

Public Meeting for Title 30, ) 

Texas Administrative Code Chapter 114, ) 

Control of Air Pollution for Motor Vehicles 

Room 201S, Building E 

TCEQ Complex 

12100 Park 35 Circle 

Austin, Texas 

Tuesday, 

November 29, 2011 

The above-entitled matter came on for 

hearing, pursuant to notice, at 10:00 a.m. 

BEFORE: 

Bruce McAnally - General Law Division 

Charlotte Horn - General Law Division 

Steve Dayton - Air Quality Division 
TCEQ - Public Hearing - 11/29/2011 

1 PROCEEDINGS 

2 (10:01 a.m.) 

3 BRUCE McANALLY: Good morning, and thank you 

4 for coming to this Texas Commission on Environmental 

5 Quality combined public hearing for four separate 

6 proposed rules. My name's Bruce McAnally. I'm with the 

7 TCEQ General Law Division. With me also is Charlotte 

8 Horn, also with the TCEQ Law Division, Steve Dayton with 

9 the TCEQ Air Quality Division. Steve is a project 

10 manager for all four of the rule projects TCEQ will 

11 receive comments on today. And Betsy Peticolas is the 

12 TCEQ staff attorney assigned to all four of today's rule 

13 projects: 

14 Rule Project Number 2011-050-114-EN 

15 regarding the Emissions Reduction Incentive Program 

16 Rules outlined in House Bill 3399 from the 82nd 

17 Legislature. Rule Project Number 2011-051-114-EN 

18 pertaining to Texas Clean Fleet Program Rules specified 

19 in House Bill 3399 of the 82nd Legislature. Rule 

20 Project Number 2011-052-114-EN for Senate Bill 385 for 

21 the 82nd legislature regarding the Alternative Fuels 

22 Facility Program Rule. And Rule Project Number 

23 2011-053-114-EN for Senate Bill 385 of the 82nd 

24 Legislature dealing with the Texas Natural Gas Vehicle 

25 Grant Program. 

Integrity Legal Support-Solutions 

www.integrity-texas.com 

2 
TCEQ - Public Hearing - 11/29/2011 

1 TCEQ staff are present this morning to 

2 receive oral or written comments on the proposed 

3 revisions to 30 Texas Administrative Code, Chapter 114 

4 concerning Control of Air Pollution for Motor Vehicles. 

5 If you'd like to present oral testimony today and have 

6 not signed in at the registration table, please do so 

7 now. 

8 If you're not familiar with the proposed 

9 changes, copies of the proposals as published in the 

10 Texas Register are available at the registration table. 

11 There are also copies of the hearing notice. So if 

12 anyone would like to submit written comments, you can 

13 find the information on where to fax or mail your 

14 written comments or submit on the internet via the TCEQ 

15 eComments system. 

16 The TCEQ will continue to accept written 

17 comments on these proposals until December 5, 2011. 

18 This hearing is structured strictly for the receipt of 

19 oral or written comments. Open discussion during the 

20 hearing is not allowed. However, if you should you have 

21 any additional questions or comments regarding these 

22 proposals, there will be an opportunity after the 

23 hearing to have your questions answered by TCEQ staff 

24 one on one. 

25 Now, at this time no one has specified on 

Integrity Legal Support Solutions 

www.integrity-texas.com 

3 
TCEQ - Public Hearing - 11/29/2011 

1 registration they would like to speak. So anybody have 

2 anything -- any chance? Okay. Seeing that no one has 

3 requested to make a comment, once again, the TCEQ will 

4 continue to accept written comments on the proposed 

5 revisions to Texas Administrative Code, Chapter 114 

6 concerning the Control of Air Pollution from Motor 

7 Vehicles regarding TCEQ Project Numbers 2011-050, 

8 2011-051, 2011-052 and 2011-053 until December 5, 2011. 

9 And if we have no request to make comments, 

10 our hearing is closed. Thank y'all for coming. 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

(Hearing concluded, 10:05 a.m.) 

Integrity Legal Support Solutions 

www.integrity-texas.com 

4 
TCEQ - Public Hearing - 11/29/2011 

1 C E R T I F I C A T E 

2 

3 IN RE: Public Meeting for Title 30, Texas 

4 Administrative Code Chapter 114, Control of Air 

5 Pollution for Motor Vehicles. 

6 LOCATION: Austin, Texas 

7 Date: November 29, 2011 

8 

9 I, Joy N. Quiroz-Hernandez, Certified 

10 Shorthand Reporter Number 8391 for The State of Texas, 

11 do hereby certify that I did, in computerized stenotype 

12 shorthand, transcribe proceedings in the above-entitled 

13 matter to the best of my ability and hearing, 

14 proceedings before the Texas Commission on Environmental 

15 Quality and that the above and foregoing pages contain a 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

full and correct computer-assisted transcription of my 

computerized stenotype shorthand notes. 

Joy N. Quiroz-Hernandez, CSR 

CSR No. 8391 - Expires 12/31/11 

Integrity Legal Support Solutions 

Firm Registration No. 528 

3100 W. Slaughter Lane, Suite A-101 

Austin, Texas 78748 

(512) 320-8690 

(512) 320-8692 (Fax) 

Integrity Legal Support Solutions 

www.integrity-texas.com 

5 
EVALUATION 
I 

I 

i . 

Texas Coinniission on Environinental Quality 

Interoffice Memorandum 

To: Commissioners Date: March 9, 2012 

Thru: Bridget Bohac, Chief Clerl< 

Mark R. Vickery, P .G., Executive Director -~ 

From: Susana M. Hildebrand, P .E., Chief Engineew IJ 

Docket No.: 2011-1219-RUL 

Subject: Commission Approval for Rulemaldng Adoption 

Chapter 114, Control of Air Pollution from Motor Vehicles 

HB 3399: Emissions Reduction Incentive Program Rules 

Rule Project No. 2011~oso-114-EN 

Background and reason(s) for the rulemaking: 

House Bill (HB) 3399, 82nd Legislature, 2011, Regular Session, by Representatives Legler, 

Strama, Reynolds, and Chisum, amends sections of Texas Health and Safety Code (THSC), 

Chapter 386, Subchapter C. This subchapter establishes the Diesel Emissions Reduction 

Incentive Program (program) to be funded from the Texas Emissions Reduction Plan 

(TERP) Fund and administered by the Texas Commission on Environmental Quality 

(commission). The changes enacted under HB 3399 require amendment of existing rules 

to revise existing provisions and add new provisions. 

S~ope of the rulemaking: 

A.) Summary of what the rulemaldng will do: HB 3399 added new subsections 

under THSC, §386.104, Eligibility Requirements, for the Diesel Emissions Reduction 

Incentive Program. The revisions to 30 TAC Chapter 114, as required by HB 3399, 

incorporate changes and additions to the program eligibility criteria, including: changes to 

the period over which a grant-funded vehicle must be operated, to either five years or 

400,000 miles, whichever occurs earlier; establish specific criteria for decommissioning a 

vehicle or vehicle engine under the program; and.add provisions to allow a vehicle that has 

been leased or otherwise commercially financed to be replaced under the program. The 

revisions also include provisions, as required by HB 3399, that the executive director shall 

waive eligibility requirements on a finding of good cause. 

B.) Scope required by federal regulations or state statutes: The adopted rule is 

required by changes to THSC, Chapter 386, under HB 3399· 

· C.) Additional staff recommendations that are not required by federal rule or 

state statute: Staff is not recommending additional provisions beyond what is required 

under THSC, Chapter 386, as amended by HB 3399· 
Commissioners 

Page2 

March 9, 2012 

Re: Docket No. 2011-1219-RUL 

Statutory authority: 

• Texas Water Code (TWC), §5.102, which provides the commission with the general 

powers to carry out its duties; 

• TWC, §5.103,. which authorizes the commission to adopt any rules necessary to carry 

out the powers and duties under the provisions of the TWC and other laws of the 

state; 

• TWC, §5.105, which authorizes the commission by rule to establish and approve all 

general policy of the commission; 

• THSC, §382.107, which authorizes the commission to adopt rules consistent with 

the policy and purposes of the Texas Clean Air Act; 

• THSC, §382.011, which authorizes the commission to ·establish the level of quality to 

be maintained in the statets air and to control the quality of the state's air; 

• THSC, §382.012, which authorizes the commission to prepare and develop a 

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

• THSC, Chapter 386, which establishes the TERP program. 

Effect on the: 

A.) Regulated community: This rule will not affect regulated entities. 

B.) Public: The changes to the eligibility criteria for the grants will potentially expand the 

number of entities and vehicles eligible to participate in the program. The changes may 

also make it easier for some entities to participate in the program. 

C.) Agency programs: The TERP guidance document, Guidelines for Emissions 

Reduction Incentive Grants (guidelines), will need to be amended. The revised guidelines 

will need to be adopted by the commission after the rule is adopted. Program processes, 

criteria, and forms will need to be updated. Also, a process will need to be developed for 

considering waivers to the eligibility requirements. 

Stakeholder meetings: 

Stakeholder meetings were not held for this rulemaldng. 

Public comment: 

The proposal was published in the November 4, 2011, issue of the Texas Register (36 

TexReg 7468). A public hearing was scheduled for November 29, 2011; however, since no 

one registered to provide comments, the hearing was not officially opened. The comment 

period closed on December 5, 2011. The commission received written comments from 

Clean Energy Fuels (Clean Energy), Crossroads Equipment Lease & Finance (Crossroads), 

Pioneer Natural Resources USA, Inc. (Pioneer), and United Parcel Service (UPS) in 

support of all or part of the rulemaking. The United States Environmental Protection 

Agency Region 6 (EPA) submitted written comments in support of the rulemaking, but 
Commissioners 

Page3 

March 9, 2012 

Re: Docket No. 2011-1219-RUL 

expressed concern and suggested changes to part of the proposal. Significant comments 

and concerns are discussed further. 

Clean Energy and Pioneer commented that the proposed rule changes will make the 

program more effective and efficient for Texas-based fleets by simplifying the application 

process. Crossroads also stated that the proposed rule changes demonstrated an 

acl<nowledgement of the potential challenges entities face when soliciting applicants for 

funding and that fleets in the designated areas will greatly benefit from the rule changes. 

No changes were made to the proposed text as a result of these comments. 

Clean Energy, Pioneer, and UPS expressed support for the addition of §114.622(h) to 

proyide the executive director the authority to waive eligibility requirements when good 

cause is demonstrated. No changes were made to the proposed text as a result of these 

comments. 

The EPA expressed concern with the addition of §114.622(h). EPA stated that if, as in the 

past, Texas intends to continue to credit the reductions from TERP toward the state 

implementation plan, the provision for the executive director's discretion may be difficult 

to approve. EPA recommended the rule language be modified to better specify the 

circumstances under which waivers could be granted so that the impact on such waivers on 

state implementation plan credit can be determined. EPA also recommended that the 

commission remove the phrase 110r other circumstances" from subsection (h), since it is 

vague and not well defined. Changes were made to the proposed text in response to these 

comments, as outlined in the following section regarding significant changes from the 

proposal. 

Significant changes from proposal: 

The provision in §114.622(h) implements requirements added by HB 3399· The intent of 

this provision is to authorize the executive director to consider unique situations that, 

while not meeting the strict letter of the eligibility requirements, will still n1eet the intent of 

the requirements. Therefore, it would be difficult to outline each specific situation where 

good cause would be determined and a waiver granted. The proposed text was not 

changed to try to fu1ther define or specify the situations where a waiver would be granted. 

However, additional language was added to subsection (h) since proposal to state that, in 

granting a waiver, the executive director shall ensure that the projected emissions 

reductions will still be valid and, where applicable, meet the conditions for assignment for 

credit to the state implementation plan. This language is intended to clarify the limits on 

the waiver provisions and to provide assurance that any waiver decision will be made only 

after considering the impact of the waiver on the potential emissions reductions. 

Potential controversial concerns and legislative interest: 

The adopted rule incorporates provisions required under THSC, Chapter 386, as amended 

by HB 3399. The adoption does not go further than what is required to comply with the 

statutory changes. Therefore, staff does not anticipate any concerns being raised about the 
Commissioners 

Page4 

March 9, 2012 

Re: Docket No. 2011-1219-RUL 

rule, beyond the comments received on the proposed text. Staff expects that the legislators 

involved in HB 3399 and stakeholders will be interested in how the commission 

implements the new provisions. 

Does this rulemaking affect any current policies or require development of 

new policies? 

The TERP guidelines will need to be amended to incorporate the changes to the eligibility 

criteria. Program application materials and contract shells will need to be updated. Also, a 

process will need to be developed for considering waivers to the eligibility requirements. 

What are the consequences if this ru.lemaking does not go fo·rward? Are there 

alternatives to rulemaking? 

This rulemaking is required to amend the criteria for implementing the Diesel Emissions 

Reduction Incentive Program under THSC, Chapter 386. If the rulemaldng is not 

completed, implementation of the program under the existing rule would be inconsistent 

with the statutory provisions. Possible alternatives are not adopting the rule or adopting 

the rule at a later date and delaying implementation of the program. 

Key points in the adoption t•ulemaking schedule: 

Texas Register proposal publication date: November 4, 2011 

Anticipated Texas Register publication date: April13, 2012 

Anticipated effective date: Apri119, 2012 

Six-month Texas Register filing deadline: May 4, 2012 

Agency contacts: 

Steve Dayton, Rule Project Manager, 239-6824, Air Quality Division 

Betsy Peticolas, Staff Attorney, 239-1439 

Charlotte Horn, Texas Register Coordinator, 239-0779 

Attachments 

cc: Chief Clerk, 2 copies 

Executive Director's Office 

Susana M. Hildebrand, P .E. 

Anne Idsal 

Curtis Seaton 

Ashley Morgan 

Office of General Counsel 

Steve Dayton 

Charlotte Horn 
EVALUATION OF TESTIMONY 

The Texas Commission on Environmental Quality (TCEQ or commission) adopts an amendment 

to §114.622 with change to the proposed text as published in the November 4, 2011, issue of the 

Texas Register (36 TexReg 7468). 

This amendment will be submitted to the United States Environmental Protection Agency (EPA) 

as a revision to the state implementation plan. 

Background and Summary of the Factual Basis for the Adopted Rule 

The 77th Legislature, 2001, enacted Senate Bill 5 establishing the Texas Emissions Reduction 

Plan (TERP). The TERP provides financial incentives for reducing emissions of on-road heavyduty motor vehicles and non-road equipment. House Bill (HB) 3399, 82nd Legislature, 2011, 

Regular Session, amended Texas Health and,Safety Code (THSC), Chapter 386, Subchapter C, to 

revise existing criteria and add additional criteria for receiving an incentive grant under this 

subchapter. The changes made under HB 3399 are as summarized in the following paragraphs. 

Under THSC, §386.104(i), if the commission determines that a heavy-duty motor vehicle or 

engine must be decommissioned as part of the incentive grant requirements, the new subsection 

outlines specific criteria for how the vehicle or engine must be destroyed, including making a 

hole in the engine block and permanently destroying the frame of the vehicle. These 

requirements are consistent with current practice of the commission in administering the grant 

programs. In addition, the new subsection requires the commission to provide a means for an 

applicant to propose an alternative method for complying with the destruction requirements. 

Under THSC, §386.104(j), the executive director of the TCEQ is to waive any eligibility 

1 
requirements established under THSC, §386.104, on a finding of good cause, which may include 

a waiver for short lapses in registration or operation attributable to economic conditions, 

seasonal work, or other circumstances. In addition to the new language outlining how vehicles 

and engines are to be destroyed under a grant, this section includes requirements for the 

operation and use of grant-funded vehicles and equipment in nonattainment areas and affected 

counties for five years, provisions for meeting cost-effectiveness requirements and other 

provisions pertaining to the emissions reductions to be achieved by a project, and provisions 

related to grant payments for the incremental costs of a project. Under the additional language 

of THSC, §386.104G), any of these provisions could potentially be waived by the executive 

director on a finding of good cause. 

Under THSC, §386.104(k), the commission is to consider an application for the replacement of a 

vehicle that has been owned, leased, or otherwise commercially financed by the applicant. 

Under this new subsection, if a vehicle or engine that is leased or otherwise commercially 

financed must be decommissioned, the commission is to ensure that the applicant has the legal 

right to decommission the vehicle or engine before a grant is awarded. 

Under THSC, §386.104(1), the commission is to consider an application for a vehicle 

replacement or fleet expansion for a project with an activity life of five years or more, or 

400,000 miles, whichever is earlier. This change modifies the previous requirements that 

vehicles be operated in the nonattainment areas and eligible counties for at least five years 

without regard to the accrued mileage. 

Finally, under THSC, §386.104(m), the commission is to provide a form that minimizes, to the 

maximum extent possible, the amount of paperwork required. 

2 
The rule incorporates the changes to THSC, §386.104, under HB 3399. 

Section Discussion 

§114.622, Incentive Program Requirements 

Section 114.622 is amended to incorporate changes and additions to the program eligibility 

criteria under THSC, §386.104(i), (k), and (1). This section is also amended to incorporate the 

provisions ofTHSC, §386.622(j), directing the executive director to waive project eligibility 

requirements on a finding of good cause. Additional language is added since proposal to make it 

clear that, in granting a waiver, the executive director is to determine that the emissions 

reductions attributed to the project will still be valid and, where applicable, will meet the 

conditions for assignment for credit to the state implementation plan. 

Changes are made to subsection (b) and a subsection (c) is added to implement the 

requirements from THSC, §386.104(1), which requires that the commission consider an 

application for a vehicle replacement or fleet expansion for a project with an activity life of five 

years or more, or 400,000 miles, whichever is earlier. Subsection (b) is amended to exclude a 

project involving replacement of a motor vehicle or a project involving the purchase or lease of a 

motor vehicle from the provisions of that subsection. Subsection (c) is added to include the 

requirements from THSC, §386.104(1), for a vehicle replacement, purchase, or lease project. 

Subsection (e) is added to establish the requirements for how a vehicle or engine replaced under 

a grant must be destroyed, in accordance with THSC, §386.104(i). This subsection includes a 

provision for the executive director of the TCEQ to allow an applicant to propose an alternative 

method for complying with the destruction requirements, as required by THSC, §386.104(i). 

Subsection (f) is added to implement the requirements ofTHSC, §386.104(k). This subsection 

3 
requires that a motor vehicle to be replaced under a grant may have been owned, leased, or 

otherwise commercially financed by the applicant and that the applicant must have a legal right 

to replace and recycle or scrap the vehicle and engine before a grant is awarded. 

Subsection (h) is added with changes to the proposed text to direct the executive director of the 

TCEQ to waive eligibility requirements under subsections (b)- (f) on a finding of good cause, as 

required by THSC, §386.104(i). Additional language is added from the proposed text to make it 

clear that, in granting a waiver, the executive director will need to determine that the emissions 

reductions attributed to the project will still be valid and, where applicable, will meet the 

conditions for assignment of credit to the state implementation plan. 

Existing subsections under this section are re-lettered to account for the addition of new 

subsections. 

Final Regulatory Impact Analysis 

The commission reviewed the rulemaking in light of the regulatory analysis requirements of 

Texas Government Code, §2001.0225, and determined that this rule action is not subject to 

Texas Government Code, §2001.0225, because it does not meet the definition of a "major 

environmental rule" as defined in that statute. A "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, 

productivity, competition, jobs, the environment, or the public health and safety of the state or a 

sector of the state. 

The amended Chapter 114 rule is adopted in accordance with HB 3399, which amended THSC, 

Chapter 386. The rule adds or revises eligibility requirements for a voluntary grant. Because 

4 
the rule places no involuntary requirements on the regulated community, the rule will not 

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. In addition, this amendment does not place additional financial burdens on the regulated 

community. 

Furthermore, a regulatory impact analysis is not required because the rule does not meet any of 

the four applicability criteria for requiring a regulatory analysis of a "major environmental rule" 

as defined in the Texas Government Code. Texas Government Code, §2001.0225, applies only 

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. This rulemaking does not 

exceed a standard set by federal law. In addition, this rulemaking does not exceed an express 

requirement of state law and is not adopted solely under the general powers of the agency, but is 

specifically authorized by the provisions cited in the Statutory Authority section of this 

preamble. Finally, this rulemaking does not exceed a requirement of a delegation agreement or 

contract to implement a state and federal program. 

The commission invited public comment regarding the draft regulatory impact analysis 

determination during the public comment period. No comments were received on the draft 

regulatory impact analysis determination. 

5 
Takings Impact Assessment 

The commission evaluated this rulemaking action and performed an analysis of whether the rule 

is subject to Texas Government Code, Chapter 2007. The primary purpose of the rulemaking is 

to amend Chapter 114 in accordance with HB 3399. The rule makes revisions to a voluntary 

program and only affects motor vehicles and equipment that are not considered to be private 

real property. The promulgation and enforcement of the rule is neither a statutory nor a 

constitutional taking because it does not affect private real property. Therefore, the rule does 

not constitute a taking under Texas Government Code, Chapter 2007. 

Consistency with the Coastal Management Program 

The commission reviewed the adopted rulemaking and found the adoption is a rulemaking 

identified in the Coastal Coordination Act Implementation Rules, 31 TAC §sos.u(b)(2), 

concerning rules subject to the Texas Coastal Management Program (CMP), and will, therefore, 

require that goals and policies of the CMP be considered during the rulemaking process. The 

commission reviewed this action for consistency and determined the rulemaking for Chapter 114 

does not impact any CMP goals or policies, because it revises a voluntary incentive grant 

program and does not govern air pollution emissions. 

The commission invited public comment regarding the consistency with the coastal 

management program during the public comment period. No comments were received 

regarding consistency with the CMP. 

Public Comment 

A public hearing was scheduled for November 29, 2011; however, since no one registered to 

provide comments, the hearing was not officially opened. The comment period closed on 

December 5, 2011. The commission received written comments from Clean Energy Fuels (Clean 

6 
Energy), Crossroads Equipment Lease & Finance (Crossroads), Pioneer Natural Resources USA, 

Inc. (Pioneer), and United Parcel Service (UPS) in support of all or part of the rulemaking. EPA 

submitted written comments in support of the rulemaking, but expressed concern and 

recommended changes to part of the proposal. 

Response to Conunents 

Clean Energy, Crossroads, Pioneer, and UPS commented in support of the rule changes. 

Specifically, Clean Energy and Pioneer commented that the proposed rule changes will make the 

program more effective and efficient for Texas-based fleets by simplifying the application 

process. Crossroads provided information on its experience providing financing and assistance 

to entities in California and nationally to obtain grant funding. Crossroads also stated that the 

proposed rule changes demonstrated an acknowledgement of the potential challenges entities 

face when soliciting applicants for funding and that fleets in the designated areas will greatly 

benefit from the rule changes. EPA expressed appreciation of TCEQ's efforts to improve the 

control of air pollution from motor vehicles and to tighten the requirements for 

decommissioning of on-road heavy-duty motor vehicles and non-road vehicles. EPA also 

applauded TCEQ's efforts to continually improve the state implementation plan. 

The conunission appreciates the continued support for the TERP programs. No 

changes were made to the proposed text in response to these conunents. 

Clean Energy, Pioneer, and UPS expressed support for the addition of subsection (h) in §114.622 

to provide the executive director the authority to waive eligibility requirements when good cause 

is demonstrated. 

7 
The commission appreciates the support expressed for this new provision. No 

changes were made to the proposed text in response to these comments. 

EPA expressed concern with the amended §114.622(h). EPA stated that if, as in the past, Texas 

intends to continue to credit the reductions from TERP toward the state implementation plan, 

the provision for the executive director's discretion may be difficult to approve. EPA 

recommended that the rule language be modified to better specify the circumstances under 

which waivers could be granted so that the impact of such waivers on state implementation plan 

credit can be determined. EPA also recommended that the commission remove the phrase "or 

other circumstances" from subsection (h) because it is vague and not well defined. 

The commission appreciates the EPA's comments regarding ensuring that the 

emissions reductions generated from these programs can be credited to the state 

implementation plan. In response to the recommendation that more specific 

details be provided regarding the circumstances under which a waiver would be 

granted, the intent of the waiver provision is to authorize the executive director to 

consider unique situations, including situations not yet contemplated, that may 

not meet the letter of the standard criteria but which will still meet the intent of 

the program requirements. Therefore, it would be difficult to further outline each 

specific instance where good cause may be determined. 

Additionally, the eligibility criteria that may be affected by a waiver under this 

section is already more specific than the criteria outlined in the EPA's guidelines 

for using an Economic Incentive Program to achieve creditable emissions 

reductions, Improving Air Quality with Economic Incentive Programs (EPA452/R-ot-oot), and the EPA's guidelines for diesel retrofit programs, Diesel 

8 
Retrofits: Quantifying and Using Their Benefits in SIPs and Conformity (EP A42oB-o6-oos). 

No change was made to the proposed language to further identify specific 

instances for when a waiver may be granted. The reference to "other 

circumstances" is also retained. However, in order to clarify the limits on the 

waiver provisions and to provide assurance that any waiver decision will be made 

only after considering the impact of the waiver on the emissions reductions, 

additional language was added to §114.622(h) from proposal to state that in 

considering granting a waiver, the executive director shall ensure that the 

emissions reductions attributable to the project will still be valid and, where 

applicable, meet the conditions for assignment for credit to the state 

implementation plan. 

9 
RECOMMENDATION 
SUBCHAPTER K: MOBILE SOURCE INCENTIVE PROGRAMS 

DIVISION 3: DIESEL EMISSIONS REDUCTION INCENTIVE PROGRAM 

FOR ON-ROAD AND NON-ROAD VEHICLES 

§114.622 

Statutory Authority 

This amendment is adopted under Texas Water Code (TWC), §5.102, which provides the 

commission with the general powers to carry out its duties under the TWC; TWC, 

§5.103, which authorizes the commission to adopt any rules necessary to carry out the 

powers and duties under the provisions of the TWC and other laws of this state; and 

TWC, §5.105, which authorizes the commission by rule to establish and approve all 

general policy of the commission. This amendment is also adopted under Texas Health 

and Safety Code (THSC), Texas Clean Air Act, §382.017, which authorizes the 

commission to adopt rules consistent with the policy and purposes of the THSC; THSC, 

§382.011, which authorizes the commission to establish the level of quality to be 

maintained in the state's air and to control the quality of the state's air; THSC, §382.012, 

which authorizes the commission to prepare and develop a general, comprehensive plan 

for the control of the state's air; and THSC, Chapter 386, which establishes the Texas 

Emission Reduction Program. Finally, this amendment is part of the implementation of 

House Bill3399. 

This amendment implements THSC, §386.104. 

1 
§114.622. Incentive Program Requirements. 

(a) Eligible projects include: 

(1) purchase or lease of on-road and non-road diesels; 

(2) emissions-reducing retrofit projects for on-road or non-road diesels; 

(3) emissions-reducing repower projects for on-road or non-road diesels; 

(4) purchase and use of emissions-reducing add-on equipment for on-road 

or non-road diesels; 

(5) development and demonstration of practical, low-emissions retrofit 

technologies, repower options, and advanced technologies for on-road or non-road 

diesels with lower nitrogen oxides (NOx) emissions; 

(6) use of qualifying fuel; 

( 7) implementation of infrastructure projects; 

(8) replacement of on-road and non-road diesels with newer on-road and 

non-road diesels; and 

2 
(g) other projects that have the potential to reduce anticipated NOx 

emissions from diesel engines. 

(b) For a proposed project as listed in subsection (a) of this section, other than a 

project involving a marine vessel or engine, a project involving non-road equipment 

used for natural gas recovery purposes, a project involving replacement of a motor 

vehicle, or a project involving the purchase or lease of a motor vehicle, not less than 75% 

of vehicle miles traveled or hours of operation projected for the five years immediately 

following the award of a grant must be projected to take place in a nonattainment area 

or affected county of this state. The commission may also allow vehicle travel on 

highways and roadways, or portions of a highway or roadway, designated by the 

commission and located outside a nonattainment area or affected county to count 

towards the percentage of use requirement. 

(c) For a proposed motor vehicle replacement, purchase, or lease project, the 

period used to determine the emissions reductions and cost-effectiveness of each 

replacement, purchase, or lease activity included in the project must extend for five 

years or more, or 400,000 miles, whichever occurs earlier. Not less than 75% of the 

vehicle miles traveled projected for the period used to determine the emissions 

reductions must be projected to take place in a nonattainment area or affected county of 

this state. The commission may also allow vehicle travel on highways and roadways, or 

portions of a highway or roadway, designated by the commission and located outside of 

3 
a nonattainment county or affected county to count towards the percentage of use 

requirement. 

(d) For a proposed project that includes a replacement of equipment or a 

repower, the old equipment or engine must be recycled or scrapped provided, however, 

that the executive director may allow permanent removal from the State of Texas in 

specific grants where the applicant has provided sufficient assurances that the old 

locomotive will not be returned to the State of Texas. 

(e) For a proposed project to replace a motor vehicle, the vehicle and engine must 

be decommissioned by crushing the vehicle and engine, by making a hole in the engine 

block and permanently destroying the frame of the vehicle, or by another method 

approved by the executive director that permanently removes the vehicle and engine 

from operation in this state. For a proposed project to repower a motor vehicle, the 

engine being replaced must be decommissioned in a manner consistent with the 

requirements for decommissioning an engine as part of a vehicle replacement project. 

The executive director shall allow an applicant for a motor vehicle replacement or 

repower project to propose an alternative method for complying with the requirements 

of this subsection. 

(f) For a project to replace a motor vehicle, the vehicle being replaced may have 

been owned, leased, or otherwise commercially financed by the applicant. The applicant 

' 

4 
must have a legal right to replace and recycle or scrap the vehicle and engine before a 

grant is awarded for that project. 

(g) To be eligible for a grant, the cost-effectiveness of a proposed project as listed 

in subsection (a) of this section, except for infrastructure projects and infrastructure 

purchases that are part of a broader retrofit, repower, replacement, or add-on 

equipment project, must not exceed a cost-effectiveness of $15,000 per ton of NOx 

emissions reduced. The commission may set lower cost-effectiveness limits as needed to 

ensure the best use of available funds. The commission may also base project selection 

decisions on additional measures to evaluate the effectiveness of projects in reducing 

N Ox emissions in relation to the funds to be awarded. 

(h) The executive director shall waive eligibility requirements established under 

subsections (b) - (f) of this section on a finding of good cause, which may include a 

waiver of any ownership and use requirements established for replacement of a motor 

vehicle for short lapses in registration or operation attributable to economic conditions, 

seasonal work, or other circumstances. In determining good cause and deciding whether 

to grant a waiver, the executive director shall ensure that the emissions reductions that 

will be attributed to the project will still be valid and, where applicable, meet the 

conditions for assignment for credit to the state implementation plan. 

5 
(i) Projects funded with a grant from this program may not be used for credit 

under any state or federal emissions reduction credit averaging, banking, or trading 

program except as provided under Texas Health and Safety Code, §386.056. 

G) A proposed project as listed in subsection (a) of this section is not eligible if it 

is required by any state or federal law, rule or regulation, memorandum of agreement, 

or other legally binding document. This subsection does not apply to: 

(1) an otherwise qualified project, regardless of the fact that the state 

implementation plan assumes that the change in equipment, vehicles, or operations will 

occur, if on the date the grant is awarded the change is not required by any state or 

federal law, rule or regulation, memorandum of agreement, or other legally binding 

document; or 

(2) the purchase of an on-road diesel or equipment required only by local 

law or regulation or by corporate or controlling board policy of a public or private entity. 

(k) A proposed retrofit, repower, replacement, or add-on equipment project must 

achieve a reduction in NOxemissions to the level established in the commission's Texas 

Emissions Reduction Plan: Guidelines for Emissions Reduction Incentive Grants 

Program (RG-388) for that type of project compared with the baseline emissions 

adopted by the commission for the relevant engine year and application. 

6 
(l) If a grant recipient fails to meet the terms of a project grant or the conditions 

of this division, the executive director can require that the grant recipient return some or 

all of the grant funding to the extent that emission reductions are not achieved or cannot 

be demonstrated. 

(m) Criteria established in the guidelines, including revisions to the commission's 

Texas Emissions Reduction Plan: Guidelines for Emissions Reduction Incentive Grants 

Program (RG-388), apply to the Texas Emissions Reduction Plan program. 

Nohvithstanding the provisions of this chapter, as authorized under Texas Health and 

Safety Code, §386.053(d), revisions to the guidelines may include, among other changes, 

adding additional pollutants; adding stationary engines or engines used in stationary 

applications; adding vehicles and equipment that use fuels other than diesel; or 

adjusting eligible program categories; as appropriate, to ensure that incentives 

established under this program achieve the maximum possible emission reductions. 

7 
the TWC; TWC, §5.103, cone rning Rules, that authorizes the 

commission to adopt rules n essary to carry out its powers 

and duties under the TWC; C, §5.105, concerning General 

Policy, that authorizes the co mission by rule to establish and 

approve all general policy oft e commission; and under Texas 

Health and Safety Code (THS ), §382.017, concerning Rules, 

that authorizes the commissi to adopt rules consistent with 

the policy and purposes of the exas Clean Air Act. The repeals 

are also adopted under THS , §382.002, concerning Policy 

and Purpose, that establishe the commission's purpose to 

safeguard the state's air reso ces, consistent with the protection of public health, general elfare, and physical property; 

THSC, §382.011, concerning eneral Powers and Duties, that 

authorizes the commission to c ntrol the quality ofthe state's air; 

and THSC, §382.012, cancer ing State Air Control Plan, that 

authorizes the commission to repare and develop a general, 

comprehensive plan for the pr er control of the state's air. 

The adopted repeals implem nt TWC, §§5.1 02, 5.1 03, and 

5.105; and THSC, §§382.002, 82.011, 382.012, and 382.017. 

This agency hereby certifies th the adoption has been reviewed 

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

legal authority. 

Filed with the Office of the Seer tary of State on March 30, 2012. 

TRD-201201655 

Robert Martinez 

Director, Environmental Law Divisi n 

Texas Commission on Environmen al Quality 

Effective date: April19, 2012 

Proposal publication date: Octobe 21, 2011 

For further information, please call: (512) 239-0779 

• • 

CHAPTER 114. CONTROL OF AIR 

POLLUTION FROM MOTOR VEHICLES 

SUBCHAPTER K. MOBILE SOURCE 

INCENTIVE PROGRAMS 

DIVISION 3. DIESEL EMISSIONS 

REDUCTION INCENTIVE PROGRAM 

FOR ON-ROAD AND NON-ROAD VEHICLES 

30 TAC §114.622 

Th'e Texas Commission on Environmental Quality (TCEQ or 

commission) adopts an amendment to §114.622 with changes 

to the proposed text as published in the November 4, 2011, 

issue of the Texas Register (36 TexReg 7 468). 

This amendment will be submitted to the United States Environmental Protection Agency (EPA) as a revision to the state implementation plan. 

Background and Summary of the Factual Basis for the Adopted 

Rule 

The 77th Legislature, 2001, enacted Senate Bill 5 establishing the Texas Emissions Reduction Plan (TERP). The TERP 

provides financial incentives for reducing emissions of on-road 

heavy-duty motor vehicles and non-road equipment. House Bill 

(HB) 3399, 82nd Legislature; 2011, Regular Session, amended 

Texas Health and Safety Code (THSC), Chapter 386, Subchap37 TexReg 2642 Aprill3, 2012 Texas Register 

ter C, to revise existing criteria and add additional criteria for receiving an incentive grant under this subchapter. The changes 

made under HB 3399 are as summarized in the following paragraphs. 

Under THSC, §386.104(i), if the commission determines that a 

heavy-duty motor vehicle or engine must be decommissioned 

as part of the incentive grant requirements, the new subsection 

outlines specific criteria for how the vehicle or engine must be 

destroyed, including making a hole in the engine block and permanently destroying the frame of the vehicle. These requirements are consistent with current practice of the commission in 

administering the grant programs. In addition, the new subsection requires the commission to provide a means for an applicant 

to propose an alternative method for complying with the destruction requirements. 

Under THSC, §386.1040), the executive director of the TCEQ 

is to waive any eligibility requirements established under THSC, 

§386.1 04, on a finding of good cause, which may include a 

waiver for short lapses in registration or operation attributable 

to economic conditions, seasonal work, or other circumstances. 

In addition to the new language outlining how vehicles and 

engines are to be destroyed under a grant, this section includes 

requirements for the operation and use of grant-funded vehicles 

and equipment in nonattainment areas and affected counties 

for five years, provisions for meeting cost-effectiveness requirements and other provisions pertaining to the emissions 

reductions to be achieved by a project, and provisions related 

to grant payments for the incremental costs of a project. Under 

the additional language of THSC, §386.1040), any of these 

provisions could potentially be waived by the executive director 

on a finding of good cause. 

Under THSC, §386.104{k), the commission is to consider an application for the replacement of a vehicle that has been owned, 

leased, or otherwise commercially financed by the applicant. Under this new subsection, if a vehicle or engine that is leased or 

otherwise commercially financed must be decommissioned, the 

commission is to ensure that the applicant has the legal right to 

decommission the vehicle or engine before a grant is awarded. 

Under THSC, §386.1 04(1), the commission is to consider an 

application for a vehicle replacement or fleet expansion for a 

project with an activity life of five years or more, or 400,000 

miles, whichever is earlier. This change modifies the previous 

requirements that vehicles be operated in the nonattainment 

areas and eligible counties for at least five years without regard 

to the accrued mileage. 

Finally, under THSC, §386.104(m), the commission is to provide a form that minimizes, to the maximum extent possible, the 

amount of paperwork required. 

The rule incorporates the changes to THSC, §386.104, under 

HB 3399. 

Section Discussion 

§114.622, Incentive Program Requirements 

Section 114.622 is amended to incorporate changes and addi~ 

tions to the program eligibility criteria under THSC, §386.1 04(i), 

(k), and (1). This section is also amended to incorporate the provisions of THSC, §386.6220), directing the executive director to 

waive project eligibility requirements on a finding of good cause. 

Additional language is added since proposal to make it clear that, 

in granting a waiver, the executive director is to determine that 

the emissions reductions attributed to the project will still be valid 
and, where applicable, will meet the conditions for assignment 

for credit to the state implementation plan. 

Changes are made to subsection (b) and a subsection (c) is 

added to implement the requirements from THSC, §386.1 04(1), 

which requires that the commission consider an application for 

a vehicle replacement or fleet expansion for a project with an 

activity life of five years or more, or 400,000 miles, whichever 

is earlier. Subsection (b) is amended to exclude a project involving replacement of a motor vehicle or a project involving the 

purchase or lease of a motor vehicle from the provisions of that 

subsection. Subsection (c) is added to include the requirements 

from THSC, §386.1 04(1), for a vehicle replacement, purchase, or 

lease project. 

Subsection (e) is added to establish the requirements for how a 

vehicle or engine replaced under a grant must be destroyed, in 

accordance with THSC, §386.1 04(i). This subsection includes 

a provision for the executive director of the TCEQ to allow an 

applicant to propose an alternative method for complying with 

the destruction requirements, as required by THSC, §386.1 04(i). 

Subsection (f) is added to implement the requirements of THSC, 

§386.1 04(k). This subsection requires that a motor vehicle to 

be replaced under a grant may have been owned, leased, or 

otherwise commercially financed by the applicant and that the 

applicant must have a legal right to replace and recycle or scrap 

the vehicle and engine before a grant is awarded. 

Subsection (h) is added with changes to the proposed text to 

direct the executive director of the TCEQ to waive eligibility requirements under subsections (b)- (f) on a finding of good cause, 

as required by THSC, §386.1040). Additional language is added 

from the proposed text to make it clear that, in granting a waiver, 

the executive director will need to determine that the emissions 

reductions attributed to the project will still be valid and, where 

applicable, will meet the conditions for assignment of credit to 

the state implementation plan. 

Existing subsections under this section are re-lettered to account 

for the addition of new subsections. 

Final Regulatory Impact Analysis 

The commission reviewed the rulemaking in light of the regulatory analysis requirements of Texas Government Code, 

§2001.0225, and determined that this rule action is not subject 

to Texas Government Code, §2001.0225, because it does not 

meet the definition of a "major environmental rule" as defined 

in that statute. A "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, productivity, competition, jobs, the environment, or the public health and 

safety of the state or a sector of the state. 

The amended Chapter 114 rule is adopted in accordance with 

HB 3399, which amended THSC, Chapter 386. The rule adds or 

revises eligibility requirements for a voluntary grant. Because 

the rule places no involuntary requirements on the regulated 

community, the rule will not 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. In addition, this amendment does not 

place additional financial burdens on the regulated community. 

Furthermore, a regulatory impact analysis is not required because the rule does not meet any of the four applicability criteria 

for requiring a regulatory analysis of a "major environmental rule" 

as defined in the Texas Government Code. Texas Government 

Code, §2001.0225, applies only 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. This 

rulemaking does not exceed a standard set by federal law. In addition, this rulemaking does not exceed an express requirement 

of state law and is not adopted solely under the general powers of the agency, but is specifically authorized by the provisions 

cited in the Statutory Authority section of this preamble. Finally, 

this rulemaking does not exceed a requirement of a delegation 

agreement or contract to implement a state and federal program. 

The commission invited public comment regarding the draft regulatory impact analysis determination during the public comment 

period. No comments were received on the draft regulatory impact analysis determination. 

Takings Impact Assessment 

The commission evaluated this rulemaking action and performed 

an analysis of whether the rule is subject to Texas Government 

Code, Chapter 2007. The primary purpose of the rulemaking is 

to amend Chapter 114 in accordance with HB 3399. The rule 

makes revisions to a voluntary program and only affects motor 

vehicles and equipment that are not considered to be private real 

property. The promulgation and enforcement of the rule is neither a statutory nor a constitutional taking because it does not 

affect private real property. Therefore, the rule does not constitute a taking under Texas Government Code, Chapter 2007. 

Consistency with the Coastal Management Program 

The commission reviewed the adopted rulemaking and found the 

adoption is a rulemaking identified in the Coastal Coordination 

Act Implementation Rules, 31 TAC §505.11 (b)(2), concerning 

rules subject to the Texas Coastal Management Program (CMP), 

and will, therefore, require that goals and policies of the CMP be 

considered during the rulemaking process. The commission reviewed this action for consistency and determined the rulemaking for Chapter 114 does not impact any CMP goals or policies, 

because it revises a voluntary incentive grant program and does 

not govern air pollution emissions. 

The commission invited public comment regarding the consistency with the coastal management program during the public 

comment period. No comments were received regarding consistency with the CMP. 

Public Comment 

A public hearing was scheduled for November 29, 2011; however, since no one registered to provide comments, the hearing 

was not officially opened. The comment period closed on December 5, 2011. The commission received written comments 

from Clean Energy Fuels (Clean Energy), Crossroads Equipment Lease & Finance (Crossroads), Pioneer Natural Resources 

USA, Inc. (Pioneer}, and United Parcel Service (UPS) in support 

of all or part of the rulemaking. EPA submitted written comments 

in support of the rulemaking, but expressed concern and recommended changes to part of the proposal. 

Response to Comments 

ADOPTED RULES April13, 2012 37 TexReg 2643 
Clean Energy, Crossroads, Pioneer, and UPS commented in 

support of the rule changes. Specifically, Clean Energy and 

Pioneer commented that the proposed rule changes will make 

the program more effective and efficient for Texas-based fleets 

by simplifying the application process. Crossroads provided information on its experience providing financing and assistance 

to entities in California and nationally to obtain grant funding. 

Crossroads also stated that the proposed rule changes demonstrated an acknowledgement of the potential challenges entities 

face when soliciting applicants for funding and that fleets in the 

designated areas will greatly benefit from the rule changes. EPA 

expressed appreciation of TCEQ's efforts to improve the control 

of air pollution from motor vehicles and to tighten the requirements for decommissioning of on-road heavy-duty motor vehicles and non-road vehicles. EPA also applauded TCEQ's efforts 

to continually improve the state implementation plan. 

The commission appreciates the continued support for the TERP 

programs. No changes were made to the proposed text in response to these comments. 

Clean Energy, Pioneer, and UPS expressed support for the addition of subsection (h) in §114.622 to provide the executive director the authority to waive eligibility requirements when good 

cause is demonstrated. 

The commission appreciates the support expressed for this new 

provision. No changes were made to the proposed text in response to these comments. 

EPA expressed concern with the amended §114.622(h). EPA 

stated that if, as in the past, Texas intends to continue to credit 

the reductions from TERP toward the state implementation 

plan, the provision for the executive director's discretion may be 

difficult to approve. EPA recommended that the rule language 

be modified to better specify the circumstances under which 

waivers could be granted so that the impact of such waivers on 

state implementation plan credit can be determined. EPA also 

recommended that the commission remove the phrase "or other 

circumstances" from subsection (h) because it is vague and not 

well defined. 

The commission appreciates the EPA's comments regarding ensuring that the emissions reductions generated from these programs can be credited to the state implementation plan. In response to the recommendation that more specific details be provided regarding the circumstances under which a waiver would 

be granted, the intent of the waiver provision is to authorize the 

executive director to consider unique situations, including situations not yet contemplated, that may not meet the letter of the 

standard criteria but which will still meet the intent of the program 

requirements. Therefore, it would be difficult to further outline 

each specific instance where good cause may be determined. 

Additionally, the eligibility criteria that may be affected by a 

waiver under this section is already more specific than the 

criteria outlined in the EPA's guidelines for using an Economic 

Incentive Program to achieve creditable emissions reductions, Improving Air Quality with Economic Incentive Programs 

(EPA-452/R-01-001 ), and the EPA's guidelines for diesel retrofit 

programs, Diesel Retrofits: Quantifying and Using Their Benefits in SIPs and Conformity (EPA420-B-06-005). 

No change was made to the proposed language to further identify specific instances for when a waiver may be granted. The 

reference to "other circumstances" is also retained. However, in 

order to clarify the limits on the waiver provisions and to provide 

37 TexReg 2644 Apri/13, 2012 Texas Register 

assurance that any waiver decision will be made only after considering the impact of the waiver on the emissions reductions, 

additional language was added to §114.622(h) from proposal to 

state that in considering granting a waiver, the executive director shall ensure that the emissions reductions attributable to the 

project will still be valid and, where applicable, meet the conditions for assignment for credit to the state implementation plan. 

Statutory Authority 

This amendment is adopted under Texas Water Code (TWC), 

§5.1 02, which provides the commission with the general powers 

to carry out its duties under the TWC; TWC, §5.103, which authorizes the commission to adopt any rules necessary to carry 

out the powers and duties under the provisions of the TWC and 

other laws of this state; and TWC, §5.105, which authorizes the 

commission by rule to establish and approve all general policy of 

the commission. This amendment is also adopted under Texas 

Health and Safety Code (THSC), Texas Clean Air Act, §382.017, 

which authorizes the commission to adopt rules consistent with 

the policy and purposes of the THSC; THSC, §382.011, which 

authorizes the commission to establish the level of quality to 

be maintained in the state's air and to control the quality of the 

state's air; THSC, §382.012, which authorizes the commission to 

prepare and develop a general, comprehensive plan for the control of the state's air; and THSC, Chapter 386, which establishes 

the Texas Emission Reduction Program. Finally, this amendment is part of the implementation of House Bill 3399. 

This amendment implements THSC, §386.1 04. 

§ 114.622. Incentive Program Requirements. 

(a) Eligible projects include: 

( 1) purchase or lease of on-road and non-road diesels; 

(2) emissions-reducing retrofit projects for on-road or nonroad diesels; 

(3) emissions-reducing repower projects for on-road or 

non-road diesels; 

( 4) purchase and use of emissions-reducing add-on equipment for on-road or non-road diesels; 

(5) development and demonstration of practical, low-emissions retrofit technologies, repower options, and advanced technologies for on-road or non-road diesels with lower nitrogen oxides (NO) 

emissions; 

(6) use of qualifying fuel; 

(7) implementation of infrastructure projects; 

(8) replacement of on-road and non-road diesels with 

newer on-road and non-road diesels; and 

(9) other projects that have the potential to reduce anticipated NOxemissions from diesel engines. 

(b) For a proposed project as listed in subsection (a) of this section, other than a project involving a marine vessel or engine, a project 

involving non-road equipment used for natural gas recovery purposes, 

a project involving replacement of a motor vehicle, or a project involving the purchase or lease of a motor vehicle, not less than 75% 

of vehicle miles traveled or hours of operation projected for the five 

years immediately following the award of a grant must be projected to 

take place in a nonattainment area or affected county of this state. The 

commission may also allow vehicle travel on highways and roadways, 

or portions of a highway or roadway, designated by the commission 
and located outside a nonattainment area or affected county to count 

towards the percentage ofuse requirement. 

(c) For a proposed motor vehicle replacement, purchase, or 

lease project, the period used to determine the emissions reductions 

and cost~effectiveness of each replacement, purchase, or lease activity 

included in the project must extend for five years or more, or 400,000 

miles, whichever occurs earlier. Not less than 75% of the vehicle miles 

traveled projected for the period used to determine the emissions reduc~ 

tions must be projected to take place in a nonattainment area or affected 

county of this state. The commission may also allow vehicle travel on 

highways and roadways, or portions of a highway or roadway, desig~ 

nated by the commission and located outside of a nonattainment county 

or affected county to count towards the percentage of use requirement. 

(d) For a proposed project that includes a replacement of 

equipment or a repower, the old equipment or engine must be recycled 

or scrapped provided, however, that the executive director may allow 

permanent removal from the State of Texas in specific grants where the 

applicant has provided sufficient assurances that the old locomotive 

will not be returned to the State of Texas. 

(e) For a proposed project to replace a motor vehicle, the ve~ 

hicle and engine must be decommissioned by crushing the vehicle and 

engine, by making a hole in the engine block and permanently destroy~ 

ing the frame of the vehicle, or by another method approved by the 

executive director that permanently removes the vehicle and engine 

from operation in this state. For a proposed project to repower a motor 

vehicle, the engine being replaced must be decommissioned in a manner consistent with the requirements for decommissioning an engine 

as part of a vehicle replacement project. The executive director shall 

allow an applicant for a motor vehicle replacement or repower project 

to propose an alternative method for complying with the requirements 

of this subsection. 

(f) For a project to replace a motor vehicle, the vehicle being replaced may have been owned, leased, or otherwise commercially 

financed by the applicant. The applicant must have a legal right to 

replace and recycle or scrap the vehicle and engine before a grant is 

awarded for that project. 

(g) To be eligible for a grant, the cost-effectiveness of a proposed project as listed in subsection (a) of this section, except for infra~ 

structure projects and infrastructure purchases that are part of a broader 

retrofit, repower, replacement, or add-on equipment project, must not 

exceed a cost-effectiveness of $15,000 per ton of NOx emissions reduced. The commission may set lower cost~effectiveness limits as 

needed to ensure the best use of available funds. The commission may 

also base project selection decisions on additional measures to evalu~ 

ate the effectiveness of projects in reducing NOx emissions in relation 

to the funds to be awarded. 

(h) The executive director shall waive eligibility requirements 

established under subsections (b) - (f) of this section on a finding of 

good cause, which may include a waiver of any ownership and use 

requirements established for replacement of a motor vehicle for short 

lapses in registration or operation attributable to economic conditions, 

seasonal work, or other circumstances. In determining good cause and 

deciding whether to grant a waiver, the executive director shall ensure 

that the emissions reductions that will be attributed to the project will 

still be valid and, where applicable, meet the conditions for assignment 

for credit to the state implementation plan. 

(i) Projects funded with a grant from this program may not 

be used for credit under any state or federal emissions reduction credit 

averaging, banking, or trading program except as provided under Texas 

Health and Safety Code, §386.056. 

U) A proposed project as listed in subsection (a) of this section 

is not eligible if it is required by any state or federal law, rule or regu~ 

lation, memorandum of agreement, or other legally binding document. 

This subsection does not apply to: 

( 1) an otherwise qualified project, regardless of the fact that 

the state implementation plan assumes that the change in equipment, 

vehicles, or operations will occur, if on the date the grant is awarded 

the change is not required by any state or federal law, rule or regulation, 

memorandum of agreement, or other legally binding document; or 

(2) the purchase of an on-road diesel or equipment required 

only by local law or regulation or by corporate or controlling board 

policy of a public or private entity. 

(k) A proposed retrofit, repower, replacement, or add~on 

equipment project must achieve a reduction in NOx emissions to the 

level established in the commission's Texas Emissions Reduction 

Plan: Guidelines for Emissions Reduction Incentive Grants Program 

(RG-388) for that type of project compared with the baseline emissions adopted by the commission for the relevant engine year and 

application. 

(l) If a grant recipient fails to meet the terms of a project grant 

or the conditions of this division, the executive director can require that 

the grant recipient return some or all of the grant funding to the extent 

that emission reductions are not achieved or carmot be demonstrated. 

(m) Criteria established in the guidelines, including revisions 

to the commission's Texas Emissions Reduction Plan: Guidelines for 

Emissions Reduction Incentive Grants Program (RG-388}, apply to the 

Texas Emissions Reduction Plan program. Notwithstanding the pro~ 

visions of this chapter, as authorized under Texas Health and Safety 

Code, §386.053(d), revisions to the guidelines may include, among 

other changes, adding additional pollutants; adding stationary engines 

or engines used in stationary applications; adding vehicles and equipment that use fuels other than diesel; or adjusting eligible program cat~ 

egories; as appropriate, to ensure that incentives established under this 

program achieve the maximum possible emission reductions. 

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 March 30, 2012. 

TRD-201201663 

Robert Martinez 

Director, Environmental Law Division 

Texas Commission on Environmental Quality 

Effective date: April 19, 2012 

Proposal publication date: November 4, 2011 

For further information, please call: (512) 239-0779 

• • 

DIVISION 5. TEXAS LEAN FLEET 

PROGRAM 

30 TAC §§114.650- 114.654 

The Texas Commission on E vironmental Quality (TCEQ or 

commission) adopts the amen ments to §§114.650- 114.654. 

Section 114.653 is adopted wit changes to the proposed text as 

published in the November 4, 11, issue of the Texas Register 

(36 TexReg 7472). Sections 14.650- 114.652, and 114.654 

are adopted w;thout changes t the proposed text and will not 

be republished. 

ADOPTED RULES Apri/13, 2012 37 TexReg 2645 
THE STATE OF TEXAS 

COUNTY OF TRAVIS 

TEXAS COMMISSION ON ENVIRrJlh~mrmfy_~trtN~~ t'1Je and corre~t copy of a vtex~ ecJrlithisW>Il-ail'Ehvironmentat Quahty document, 

;<;..'P.'\ E op , w~~ch is file~ in ~he permanent records of the Commission. 

5;;l) r ~ G1ven u.nder my h~~d-~_nd t~e seal of office on 

t' y;:;l · 6P<rtf;.C.~ APR 0 3 2012 

Bridget C. ohac, Chief Clerk 

Texas Commission on Environmental Quality 

ORDER ADOPTING AMENDED RULE AND REVISIONS TO THE STATE 

IMPLEMENTATION PLAN 

Docket No. 2011-1219-RUL 

On March 28, 2012, the Texas Commission on Environmental Quality (Commission), 

during a public meeting, considered adoption of amended §114.622. The Commission adopts 

this amendment in Chapter 114, 114, Control of Air Pollution from Motor Vehicles, 

Subchapter K, Mobile Source Incentive Programs, Division 3, Diesel Emissions Reduction 

Incentive Program for On-Road and Non-Road Vehicles; and corresponding revision to the 

state implementation plan (SIP). The revisions to Chapter 114 incorporate changes and 

additions to the program eligibility criteria and add provisions stating that the executive 

director shall waive eligibility requirements on a finding of good cause. Under Tex. Health & 

Safety Code Ann.§§ 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 rule was published for comment in the November 4, 20012, issue of the 

Texas Register (36 TexReg 7568). 

Pursuant to Tex. Health & Safety Code Ann.§ 382.017 (Vernon 2001), Tex. Gov't Code 

Chapter 2001 (Vernon 2008), and 40 Code of Federal Regulations§ 51.102, and after proper 

notice, the Commission conducted a public hearing to consider the amended rule and revision 

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, Texas, on 

November 29, 2011. 

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 vvas invited to submit data, vievvs, and 

recommendations on the proposed amended rule and SIP revision, either orally or in \YTiting, 

at the hearing or during the comment period. Prior to the scheduled hearing, copies of the 

proposed amended rule and SIP revision vvere available for public inspection at the 

Commission's central office and on the Commission's Web site. 

Data, vievvs, and recommendations of interested persons regarding the proposed 

amended nlle and SIP revision were submitted to the Commission during the comment 

period, and vvere 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 

amended rule and the SIP revision and their position concerning the same. 
' \ I' ~ ! ; j 

s lo v ;~ ·. '.,;,: ,::. ;; ~~' :,: .':.> :.::,:;~':,: -~~;~~~~2 ··,~: rr•u~~ ~~{~:·~./~r:.lS iQ~~~:OM-Q:l\Q~~.p BY THE C~MMISSION that the amended rule and 

.fi('lt:e- i(,'( 1hteWSibnitortfue SI~:}ncorporated byrreference to th1s Order are hereby adopted. The 

._ . Co1n'$i~si:q\:{f;Ltffi:li~r.::a:ttlJibrizescstjtffto make any non-substantive revisions to the rule 

-C ...... --~-~_ii)Q~$~~t9~~~~~1:inth}ra~s.=.g~gister requirements. The adopted rule and the preamble 

to ~e; adci:pte¢I;~:I:b1J~and th.exevisipn1to the SIP are incorporated by reference in this Order as 

if setrf~I;\;~' ~t~:~ertgtn ·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 rule and 

revision to the SIP, to the Regional Administrator of the EPA as a proposed revision to the 

Texas SIP pursuant to the Federal Clean Air Act, codified at 42 U.S. Code Ann. §§ 7401-

7671q, as amended. 

This Order constitutes the Order of the Commission required by the Administrative 

Procedure Act, Tex. Gov't Code, § 2001.033 (Vernon 2008). 

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. 

Date issued: APR 0 3 2012 

TEXAS COMMISSION ON 

ENVIRONMENTAL QUALITY