### 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 andPreventing Pollution



## Alfredo Armendariz, Ph.D. Regional Administrator April 

## 13,2012

U.S. Environmental ProtectionAgency- Region 6 1445 Ross Avenue Dallas, Texas 75202-2733 Dear Dr. Armendariz: 

## DocketNo. 2011-1219-RUL Rule ProjectNo. 2011-050-114-EN

On March 28, 2012, the Texas Commission on Environmental Quality (Commission) adopted revisions to the State Implementation Plan (SIP). TheCommission adopted amendments to §114.622 in 30 TAC Chapter 114, Control ofAir Pollution from MotorVehicles, Subchapter K, Mobile Source Incentive Programs, Division 3, Diesel Emissions Reduction Incentive Program for On-Road andNon-RoadVehicles; and corresponding revisions to the SIP.

. The amendments implementpart ofHouse Bi113399, 82nd Legislature, 2011, Regular Session, relating to requirements for receiving anincentive grant underthe Diesel Emissions Reduction Incentive Program. The revisions to Chapter 114 incorporate changes and additions to theprogram eligibility criteria and addprovisions stating thatthe executive director shall waive eligibility requirements on a finding ofgood cause. Enclosed are the proposed revisions to the SIP, a public hearing certification, a complete record ofthe publichearing, and the accompanying order. I lookforward toyour expeditious approval ofthese SIP revisions. Sincerely,

# ~£!:~~~ Chairman BWS/sd Enclosures

cc: The Honorable Rick Perry, Governor ofTexas Mr. Toby Baker, Office ofBudget, Planning and Policy, Office ofthe 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 OFTEXAS
COUNTY OFTRAVIS



# This is to certify that the attached electronic file isincluded andthatthe electronic file is a
true and correct copy ofdocumentsfor a revision tothe Texas State ImplementationPlan, adopted on March 28, 2012, 

# pursuantto 40 

# Code ofFederal Regulations § 51.104. 

# I am the records administratorfor theAir Quality Division oftheTexas Commission on Environmental Quality (Commission).

_iL-DavidBer, Directr 

# TA.rr Quality Division Texas Commission onEnvironmental Quality

### Texas Commission on Environmental Quality Public Hearing November 29, 2011 Concerning Revisions to 30 TAC 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 ofAir 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 orvehicle engine underthe program; and add provisions to allow a vehicle that has been leased orotherwise commercially financed to be replaced underthe 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 ofthis hearing record are maintained in the TCEQ central office at 12100 Park 35 Circle, Austin, Texas 78753. Forfurther 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 ofthe Texas Register(36 TexReg 7468).

3. Publication ofthe Notice of Public Hearing in the November 4, 2011, issue ofthe 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 ofAviation 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 MotorVehicles, 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 bythe executive director for prioritizing facilities eligible to receive grants underthe Alternative Fueling Facilities Program, established underTexas 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 underthe Texas Natural Gas Vehicle Grant Program, established underTexas 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, cathodicprotection regu tions ofthe 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 ofa U T facility fails to perform required corrective actions within 30 days fter receiving notice ofthe 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 ofits receipt ofth EDPRP or requests a hearing and fails to participate at the hearing. In accordance with TWC, §7.075, this notice ofthe 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 ofaS/DO ifa comment iscloses facts or considerations that indicate that consent to the propos d S/DO is inappropriate, improper, inadequate, or inconsistent with e requirements ofthe statutes and rules within the commission'sjuri 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 ofeach ofthe 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 OFFACILITY: 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 ofthe petroleum USTs; WC, §26.3475(c)(l) and 30 TAC §334.50(b)(1)(A), by failing to ens re thatthe USTs are monitored in a mannerwhich 

### will detect a release t a frequency ofat leastonce 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 ofWater Rights During rought orEmergency Water Shortage, underthe requirements ofT e. s Government Code, Chapter 200I, Subchapter B. The proposed rulemaking would plement House Bill 2694, §5.03, 82nd Legislature, 2011, relating t the executive director's suspension or adjustment ofwaterrights dur· drought or emergency water shortage. The proposedrulemakingwo ld define "drought" and "emergency shortage ofwater," set outproced es for the executive director's order under this chapter, provide the te s ofthe 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. Thecommissionwillhold apublic earing onthis proposal in Austin on December 1, 2011 at 2:00 p.m. in uilding E, Room 20IS, at the commission's central office located at 12100 Park 35 Circle. The hearing is structured for the receipt ofor or written comments by interested persons. Individuals may present ral statements when called upon in order ofregistration. 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 ofLegal 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. Forfurther 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 ofa 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 ofTexas Health and Safety Code, §382.017; Texas Government Code, Chapter 2001, Subchapter B; and



## INADDITION November 4, 2011 36 TexReg 759740 Code ofFederal 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 ofvehicles and engines replaced under the program, O\vnership or lease ofvehicles 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 ofvehicles thatmust be registered and operated in Texas by an eligible grant applicant, the number ofvehicles that must be replaced under a grant, the period ofcommitment by a grant recipient for use ofthe grant-funded vehicles, requirements on the O\vnership or lease ofthe vehicles being replaced, andthe 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 ofSenate 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 ofSenate Bill385, 82nd Legislature, 2011, by adding the criteria that may be used by the executive director for prioritizing qualifying vehicles eligible to receive grants underthe Texas Natural Gas Vehicle GrantProgram, 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 oforal 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 ofregistration. Open discussion will not be permitted during the hearing; however, commission staffmembers 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 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 ProjectNumber 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 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 ofReceipt ofApplicati 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 ofthe 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 atechnical review ofthe application. Afte technical review ofthe application is complete, the Executive Director ay prepare a draft permit and will issue a preliminary decision on th application. Notice ofthe Application and Preliminary Decision w 1be 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 ofa 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 ifthe Executive Director termines that there is a significant degree ofpublic interest in the ap lication or ifrequested 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., 

### ExecutiveDirector 

## TEXAS COMMISSION ON ENVIRONMENTAL QUALITY Protecting Texas 

### by Reducing andPreventing Pollution


## NOTICE OF PUBLIC HEARINGBYTHE 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 proposedrevisions to 30 TAC Chapter 114, Control ofAir Pollutionfrom MotorVehicles, and corresponding revisions to the state implementationplan (SIP) under the requirements ofTexas Health and Safety Code, §382.017; Texas Government Code, Chapter 2001, Subchapter B; and40 Code of Federal Regulations §51.102, and the United States Environmental ProtectionAgency (EPA) concerning SIPs.

The commission proposes to amend Chapter 114, Subchapter K, Division 3, Diesel Emissions Reduction Incentive Programfor On-Road andNon-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 ofgrant-funded vehicles and engines, destruction ofvehicles and engines replaced under the program, o-vvnership or lease ofvehicles to be replaced under the program, and waiver ofcertain eligibility requirementsbythe executive director. 

## (Rule ProjectNumber 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, 82ndLegislature, 2011. The proposed changes and additions involve the number ofvehicles that mustbe registered and operated in Texas by an eligible grant applicant, the number ofvehicles that must

. be replaced under a grant, the period ofcommitmentby a grant recipient for use ofthe

P.O. Box 13087 • Austin, Texas 78711-3087 • 512-239-1000 • Internet address: www.tceq.state.tx.us

## grant-fundedvehicles, requirements onthe ownership orlease ofthevehicles being replaced, and the destruction requirements for thevehicles and engines being replaced. 

## (Rule ProjectNumber 2011-051-114-EN)



## The commission proposes to amend Chapter 114, Subchapter K, to add a nevv Division 6, Alternative Fueling Facilities Program. The proposedrulemak:ing wouldimplement a portion ofSenate Bill385, 82nd Legislature, 2011, by adding the criteriathat maybe usedbythe executive director for prioritizing facilities eligible to receive grants under theAlternative Fueling Facilities Program, established under Texas Health and Safety Code, Chapter 393. 

## {Rule ProjectNumber 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 ofSenate Bill385, 82nd Legislature, 2011, by adding the criteriathat maybe usedbythe executive director for prioritizing qualifying vehicles eligible to receive grants under the Texas Natural Gas Vehicle Grant Program, establishedunderTexas Health and Safety Code, Chapter 394· 

## (Rule ProjectNumber 2011-053-114-EN)



## A publichearing on these proposals vvill beheldinAustin 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. Thehearing vvill be structuredfor the receipt oforal and written commentsbyinterested persons. Registrationvvill begin 30 minutespriortothe hearing. Interestedpersons maypresentoral statements when called upon in order of registration. Open discussion vvill notbepermitted during the hearing; hovvever, commission staffmembers vvill be available to discuss the proposal 30 minutes prior to the hearing.

Persons planningto attendthe hearing vvho have special communication or other accommodation needs should contact SandyWong, Texas Register Team, at (512) 239- 1802. Requests shouldbe made as far in advance as possible.

## Written comments on Rule Project Numbers 2011-050-114-EN and 2011-051-114-EN maybe submitted to Charlotte Horn, and written comments on Rule Project Numbers 2011-052-114-EN and 2011-053-114-EN maybe submittedto Bruce McAnally, at Texas Register Team, Office ofLegal Services, Texas Commission on Environmental Quality, MC 205, P.O. Box 13087,Austin, Texas 78711-3087, orfaxed to (512) 239-4808. Electronic comments maybe submitted at 

# http://wwws.tceq.state.tx.usjrulesjecomments/. File size restrictions may apply to comments being submittedvia the eComments system. All comments should reference the rule project number that the commentpertains to: Rule Project Number 2011-050-114-ENfor the proposedDiesel Emissions Reduction Incentive Programfor On-Road andNon-RoadVehicles rule amendments; Rule Project Number 2011-051-114-ENfor the proposedTexas Clean Fleet Programrule amendments; Rule ProjectNumber 2011-052-114- ENfor the proposedAlternative FuelingFacilities Program rule; and Ruie Project Number 2011-053-114-ENfor the proposedTexas Natural Gas Vehicle Grant Programrule. The commentperiodcloses December 5, 2011. 

## Copies ofthe proposed rules canbe 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 inAustin 7 

# Texas, on October 18, 2011.

### fQ2_ The temporary**suspen~** ons or adjustments must be made onwaterrights inthe smallest areap acticable that is necessary to allow the senior or superior water right h lder to obtain water.**~3**

### 6.4. Susoension orAdiustment Order. The executive director's temporar suspension or adjustment under**~36.3** ofthis title (relating to Execu ve Director Action) mustbe made by a Suspension or Adjustment Or er, as defined in**~36.2(5)** ofthis title (relating to Definitions). <$36.5. ConditionsforIssuance o(Susvension orAdjustment Order. 

## ill The executive**directon~ay** issue a Suspension or Adjustment Order or modify or extend an existing order under**~36.4** ofthis title (relating to Suspension orAdju trnent Order) ifthe following conditions have been met: 

## ill at the time ofissuru e ofthe order all or part ofthe river basin is in a drought, or an em rgency shortage ofwater exists; 

## ill senior water rights a e unable to divert the water they need that is authorized under a wate right" 

## ill senior waterrights ca (lbeneficiallv 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 waterright holder mav divert water for a beneficial use. 

## ill The executive director s all ensure that the order: 

## ill maximizes the benefit:ial use ofwater; 

## ill minimizes the impac onwaterrights holders; 

## ill prevents the waste oJ water; 

## ill considers the efforts cfthe 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 ofpreferences established by Texas v'ater Code, 

### & 11.024; and 

### @ does not require the elease ofwater that at the time the order is issued, is lawfully stored in a reservoir under water rights associated with that reservoir. <$36. 6. Contents of a Suspension or Order. A Suspension orAdjustment Order is ued under §36.4 ofthis title (relating to Susoension or Adjustment 

### Crder) must contain: 

## ill the specific water rig ts subject to the order, and the location, including the river basin anc county, ofthe suspension or adjustment; 

## ill an explanation ofthe**~asons** for the suspension or adjustment; and 

## ill the duration ofthe susoension or adjustment. 

### fA} The duration ofa 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 ofthis chapter. $36. 7. Imvlementation of Water C( nservation Plans and Drouzht Contingency Plans.



## 36 TexReg 7468 November 4, 2011 

## Texas Register ill The efforts ofaffected 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** ofthis title (relatin to Suspension orAdjustment Order} include but are not limited to: 

## ill the water right holdler's comoliance with commission regulations in Chapter 

### 288 ofthis ti le(relating to Water Conservation Plans, Droucrht Contingency Plans, Guidelines and Requirements) and approval ofthe plansbythe commis ion andTexas WaterDevelopment Board: and 

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

### fQ2. Ifthe 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 ofissuance ofthe order. $36.8. Notice of and Ovvortunit {or Hearinz on the Issuance of a Susrzension orAdfustment Order. 

## ill An orderunderthis**ch~** btermay be issued by the executive director without notice and an ooo rtunitv for hearing. 

## lhl Ifan 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 ofthe hearing a whichthe commission determines whether to affirm, modify or set a ide the Suspension or Adjustment Order is not subjectto the requirerr nts ofTexasWater Code 

### -§11.132. but notice shall be given to all ho ders ofwater 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 forthe 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 criteriafor 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 meansfor 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. UnderTHSC, §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 ofa 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 ofthe 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 ofadministration or enforcement ofthe 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 motorvehicles; change the projected period of use for on-road motor vehicles purchased with TERP funds from five years to the earlier offive 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 orvehicles that meet the new use



## PROPOSED RULES November 4, 2011 36 TexReg 7469criteria 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 ofqualifying 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 regulatoryflexibility 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 ofthe state or a sector ofthe 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 ofa "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 ofthefederal governmentto 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 ofthis 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 ofwhetherthe 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 ofthe 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 orwritten 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 ofthis 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 AirAct, §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 forthe control ofthe state's air; and THSC, Chapter 386, which establishes the Texas Emission Reduction Program. Finally, the amendment is proposed as part ofthe '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 ofon-road and non-road diesels; (2) emissions-reducing retrofit projects for on-road ornonroad diesels; (3) emissions-reducing repower projects for on-road or non-road diesels; (4) purchase and use ofemissions-reducing add-on equipment for on-road or non-road diesels; (5) development and demonstration ofpractical, low-emissions retrofit technologies, repower options, and advanced technologies for on-road or non-road diesels with lower nitrogen oxides 

### (NO) emissions; (6) use ofqualifying fuel; (7) implementation ofinfrastructure 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) ofthis 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 ofa motor vehicle, not less than 75% ofvehicle miles traveled or hours ofoperation projected for the five years irrunediately following the award ofa grant must be projected to take place in a nonattainment area or affected county ofthis state. The commission may also allow vehicle travel on highways and roadways, orportions ofahighway orroadway, designated by the commission and located outside a nonattainment area or affected county to count towards the percentage ofuse requirement. .{£l For a proposed motor vehicle replacement, purchase, or lease project, the period used to determine the emissions reductions and cost-effectiveness ofeach 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%ofthe vehicle miles traveledprojected for the periodusedto determine the emissions reductions mustbe projected to take place in a nonattainmentareaoraffected county ofthis state. The commission may also allow vehicle travel on highways and roadways, or portions ofa highway or roadway, designated by the commission and locatedoutside ofa nonattainment coWlty or affected countv to count towards the percentage ofuse requirement. 

## fill. [tej] For a proposed projectthat 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 thatthe old locomotive will not be returned to the State ofTexas. 

## 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 proposedproject 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 ofa 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 ofthis 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, orotherwise 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 ofa proposed project as listed in subsection (a) ofthis section, except for infrastructure projects and infrastructure purchases that are part ofa broader retrofit, repower, replacement, or add-on equipment project, must not exceed a cost-effectiveness of$15,000 per ton ofNOx emissions reduced. The commissionmay set lower cost-effectiveness limits as needed to ensure the best use ofavailable funds. The commission may also base project selection decisions on additional measures to evaluate the effectiveness ofprojects 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 ofa 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, ortradingprogram except as provided under Texas Health and Safety Code, §386.056. 

## ill [ft)J A proposed project as listed in subsection (a) ofthis section is not eligible ifit is required by any state or federal law, rule or regulation, memorandum ofagreement, or other legally binding document. This subsection does not apply to: (1) an otherwise qualifiedproject, regardless ofthe fact that the state implementation plan assumes that the change in equipment, vehicles, or operations will occur, ifon the date the grant is awarded the change is notrequired by any state or federal law, rule orregulation, memorandum ofagreement, or other legally binding document; or (2) the purchase ofan on-road diesel orequipment required only by local law or regulation or by corporate or controlling board policy ofa 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 thattype ofproject compared withthe baseline emissions adoptedby the commissionfortherelevantengineyear and application. 

### .ill [W] Ifa grant recipient fails to meet the terms ofa project grant or the conditions ofthis division, the executive director can require that the grant recipient return some or all ofthe 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 EmissionsReduction Plan: Guidelines for Emissions Reduction Incentive Grants Program (RG-388), apply to the Texas Emissions Reduction Plan program. Notwithstanding the provisions ofthis 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 otherthan 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 thatthe 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. Ifadopted, 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 orderto be eligible to participat in the program from 25 to 20 vehicles. This provision is then qu lified under THSC, §391.002(c), to allowfor commission funding ffewerthan 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 aph 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 commiss n has decided to award a grant to the applicant. THSC, §391.005(b)(2)(A), was evised to allow avehicle 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 behalfofClean Energy
Matt Schrap, Crossroads Equipment Lease & Finance, LLC Lynn Lyon, on behalfofPioneer Natural Resources USA, Inc. Danny Smith, UPS Guy Donaldson, United States Environmental Protection Agency

# ~ CleanEnergy· 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 ofLegal ServicesNovember 30, 2011

Texas Commission onEnvironmental 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 ofnatural 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 ofthe 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 ofthese rules.
Theproposed rulemakings 

## in response to HB 3 399 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

NorthAmerica's leaderIn 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 ofthe eligibility requirements 

## in cases where the purposes ofthe 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

NorthAmerica'sleaderin 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. 2011-050-114-EN Dear tvfr. 

## Vickery, This letter is in

## regard to the proposed subsection changes underTexas Health and Safety Code (THSC) §386.104: 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 ofour company is in assisting heavy duty truck operators secure 

## zero cost grant assistance and financing towards the purchase orlease ofnew 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 grantprograms available in California. CFS has been successful in securing millions ofdollars 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 orderto 

## 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 ofgovernment finance programs directed at truck users who have received a grant for the purchase ofclean equipment. Crossroads was instrumental in assisting the Ports ofLos 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 (PFAC) was created specifically through a partnership between Crossroads and Daimler Trucks North American (DTNA) and is still in existence today. Crossroads is also the administratorforthe California Air 

## Resources Board (GARB) Direct Loan (DL) Program and is the number one lending entity in the California Capital Access Program (CalCAP) 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 ofthe trucking 

## industry and 

## our commitmentto providing no cost funding assistance to fleets Through our program administration we have gained a firsthand look into the challenges that 

## large motorcarriers and smaU 

## fleets alike 

## tace in this market. We are an active member ofthe 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 TransportAssociation (TMTA). Crossroads and CPS are no strangers when itcomes to the trucking industry and grantprogram administration and distribution. Along those lines, this letteris to commend the TCEQ for taking an active leadership role throughout this guideline modification process. The suggested changes demonstrate TCEQ's acknowledgement ofpotential 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 atthe infom1ation below. Thank you fortaking 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 ofLegal 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 behalfofPioneer Natural Resources ("Pioneer") we appreciate 

## this opportunity to file comments on the Texas Commission on Environmental Quality's { 04

## TCEQ") proposed rule changes to 30 Texas Administrative Code Chapter 114 to implement Section 386.104 and Chapter 391 ofthe Texas Health & Safety Code, which was amended by the 82nd Legislature through House Bill 3399. Pioneer is one ofthe 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 ofoil equivalent per day, operates over 9,200 producing wells, and employs over 2,200 workers. Pioneer was supportive ofthe Texas Legislature'sinitiative to pass 

## HB 3399 to incorporate changes and additions to the Diesel Emission Reduction Incentive Program and Clean Fleet Program. TCEQ staffis 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 ofthese 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 ofthe program would be furthered. Pioneer fully supports**TCEQ~s** 

## rulemaking.

Respectfully,

Lynn Lyon Manager ofStrategic Projects Domestic Operations PioneerNatural Resources660 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 testimany. 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 DALLASTX**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 TAC 

## Chapter 114, 

## Control 

## ofAir 

## Pollution from Motor Vehicles, 

## and corresponding 

## revisions to the 

## stateimplementation 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 ofgrant-funded 

## vehicles and engines, destruction of

## vehicles and 

## engines placed under the program, 

## and waiver ofcertain 

## eligibility requirements by

## the executive 

## director.
The 

## Environmental Protection Agency (EPA) appreciates

## the efforts ofthe 

## Texas Commission on

## Environmental Quality (TCEQ) to 

## continually improve the control ofair 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) 

## ofthis section on a finding ofgood cause, which may include a waiver ofany ownership and 

## use requirements 

## established for replacement ofa 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 ofsuch 

## 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 supportduring the 

## rule revision process. Ifyou 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 ofmy 

## 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 ORALTESTIMONY



## NO ORALTESTIMONYWAS RECEIVED PERTAININGTOTHIS RULE REVISION

## - 1

- 

# Texas CommissiononEnvironmental Quality Public Hearing Registration
November29,. 2011 

### 1o:ooa.n1. 

## Rule ProjectNos.: 2011-050-114-EN, 2011-051-114-EN, 2011-052-114-EN, 2011-053-114-EN 

## ShortTitle: 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 

## GrantProgrmn Location: TCEQ main**complex~** 12100 

## Park 35 Circle, Building E) Room 2018,

## Austin, Texas Concerning: Alnendm(mts to 30TAC Chapter 114



## Name Representing . Presenting Oral Testimony? 

### (Please Print) (Circle One) 

# f;$:**At-~,~6 b~V\~** **~~VV'** 

# {vte._ 

# lrJ**~** V\\ 0-- 

### VV\ ) 

## Yes®
(/ 

# 1JIAA Yes

# te..**6aJ~J**

# ~-Jo {--\-CAJvv\ 

# S_)

# ~ __jM_ 

# 'du 

# Hl**r~** !/-'**~** J ('

### v~.**{Jc~** 

# Yes(9**N~ ~** **\.~X~(.r\** __

# ~~**LtJ,vl~-j ~~,._,___** **~1t., ~**  

# oz
I

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# Yes@**D~(IA_** . 

# .4fl.( 

# M**Lvc~l**

# ltvy 

# _su,""'l A

# ~A \\ s 

# ·:)h v1 ·vv 

# 1<- \-e

# ~-**f~~ss** 

# Yes**~\** c:_ )

.. 0 

# }(.a rr 

# I

# ~e-w / 

# rVV'-J**?~L-if/Vi..-·{C I~**  '

# ~ ssvc- 

# Yes 

# Q

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# .-~~VI !\ 

# L¥fJ(\

. 

# v- 0Y\_{"

# eI

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# {\IQ-~- tJi

# d [2e )o 

# vv**c~-s**

# Yes0~J-

# ~**~\** 

# 7f;vu{ / 

# u7>s 

# Yes €0

## -2- 

# Texas CommissiononEnvironmental

# 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 

## ShortTitle: 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 

## maincomplex, 12100 

## Park 35 Circle, Building E, Room 2018,

## Austin, Texas Concerning: Alnendn1ents to 30

## TA.C.Chapter 114
Name Representing 

## Presenting OralTestimony? (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 

# {tiJt/1 

# 91/j Yes

# --~ 

# (' Y\f\ I

# J**c~')U\~\0** -· 7**~**

# ·~~~**c~~-l~o** 

# ·,**(~v'l;§ ~'1**  Yes

..., 

## ·- / 

### u 

# '" I

# \lfl~**\-\ohQ~ ~\'G~Q.f**  

# LLC. Yes

## rN~
Yes No

·--· 

### Yes No



## Yes No

## HEARING OFFICERREPORT
I am the hearing officer assignedto conductthe publichearingregarding: 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 ofvehicles and engines replacedunder the program, ownership or lease of vehicles to be replaced under the program, and waiver of certain eligibility requirements

## by theexecutive director. 

## (RuleProjectNumber 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. 

## (RuleProjectNumber**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 usedbythe executive director for prioritizing qualifying vehicles eligible to receive grants under the Texas Natural Gas Vehicle Grant Program, established under Texas Health and SafetyCode, Chapter 394· 

## (RuleProjectNumber 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 staffmembers were available to discuss the proposal. At 

## io:oo a.m., TCEQ staffand 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 transcriptwas 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

# EVALUATIONI I 

## i . 

# Texas Coinniission on Environinental Quality InterofficeMemorandum To: Commissioners 

## Date: March 

## 9, 2012 

# Thru: Bridget Bohac, ChiefClerl< 

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

# From: Susana M. Hildebrand, 

# P.E., Chief

## Engineew

# IJ

DocketNo.: 2011-1219-RUL 

## Subject: Commission Approvalfor RulemaldngAdoption Chapter 114, 

## Control ofAir Pollution from MotorVehicles HB 3399: Emissions Reduction Incentive Program Rules Rule Project No.**2011~oso-114-EN** 

## Backgroundandreason(s) for therulemaking: House Bill (HB) 3399, 82ndLegislature, 2011, 

## Regular Session,byRepresentatives Legler, Strama, Reynolds, and Chisum, amends sections ofTexas Health and Safety Code (THSC), Chapter 386, Subchapter C. This subchapterestablishesthe Diesel Emissions Reduction Incentive Program (program) tobefunded from theTexas Emissions Reduction Plan (TERP) Fund and administeredbytheTexas Commission on Environmental Quality (commission). The changesenactedunder HB 3399require amendmentofexisting rules to revise existing provisions and add newprovisions.**S~ope** 

# ofthe

# rulemaking: A.) 

## Summary

# ofwhatthe

## rulemaldngwill

# do: HB 3399 added new subsections underTHSC, §386.104, Eligibility Requirements, forthe Diesel Emissions Reduction Incentive Program. Therevisions to 30 TAC Chapter 114, 

## asrequired

# by HB 3399, incorporate changes and additionsto the program eligibility criteria, including: changes to theperiod overwhich a grant-funded vehicle mustbe operated, to eitherfive years or 400,000 

## miles, whichever occurs earlier; establish specific criteria for decommissioning a vehicle orvehicle engineundertheprogram; and.add provisionsto allow a vehicle thathas been leasedor otherwise commerciallyfinancedtobereplacedunderthe program. The revisions also include provisions, as requiredby HB 3399,thatthe executive director shall waive eligibility requirements on a finding ofgoodcause. 

## B.) Scoperequired

# byfederal regulations or 

## statestatutes: The adoptedrule is required

## by changes to THSC, Chapter386, under HB 3399·



## · C.) 

## Additional staffrecommendationsthat are notrequired

# byfederalrule or

state statute: Staffis 

## not recommending additional provisionsbeyondwhatisrequired 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 withthe general powersto carry out its duties; • TWC, §5.103,. 

## which authorizesthe commissionto adoptanyrules necessaryto carry outthepowers and duties underthe provisions oftheTWC and other laws ofthe state; • TWC, §5.105, 

## which authorizes the commissionbyruleto establish and approve all general policy ofthe commission; • THSC, §382.107, 

## which authorizesthe commission to adoptrules consistentwith thepolicy andpurposes oftheTexas CleanAir Act; • THSC, §382.011, 

## which authorizes the commission to ·establishthelevel ofqualityto bemaintained in the statets air andto control thequality ofthe state's air; • THSC, §382.012, 

## which authorizes the commissiontoprepare and develop a general, comprehensiveplan for the control ofthestate's air; and • THSC, Chapter 386, which establishes theTERP

## program. 

# Effect onthe: 

# A.) Regulatedcommunity: This rule will not affect regulated entities. B.) 

# Public: The changes tothe eligibility criteriafor the grants will potentiallyexpandthe numberofentities andvehicles eligible toparticipateintheprogram. The changes may also makeiteasierfor some entitiesto participateintheprogram. C.)

## Agencyprograms: TheTERP guidance document, 

## Guidelines forEmissions Reduction

## Incentive Grants (guidelines), will needtobe amended. The revised guidelines will needto

## beadopted

## bythe commission aftertherule is adopted. Program processes, criteria, andforms will needtobeupdated. Also, a process will needto be developed for considering waivers tothe eligibility requirements. 

# Stakeholdermeetings: Stakeholder meetings were not heldfor this rulemaldng. 

# Public comment: The proposalwas publishedinthe November 4, 2011, 

## issue ofthe 

## Texas Register (36 TexReg 7468). 

## Apublichearing was scheduledfor November 29, 2011; 

## however, since no oneregisteredtoprovide comments, thehearingwas notofficially opened. The comment period closed on December 5, 2011. 

## The commission receivedwritten commentsfrom CleanEnergy Fuels (Clean Energy), Crossroads Equipment Lease & 

## Finance (Crossroads), Pioneer Natural Resources USA, Inc. (Pioneer), andUnited Parcel Service (UPS) in supportofall orpart ofthe rulemaking. The United States Environmental Protection Agency Region 6 (EPA) submitted written comments in support ofthe rulemaking, but

## Commissioners Page3 March 9, 2012 

## Re: Docket No. 2011-1219-RUL


## expressedconcern andsuggestedchanges to partofthe proposal. Significant comments and concerns are discussed further. Clean Energy andPioneer commentedthattheproposed rule changes will make the program more effective and efficient for Texas-basedfleets bysimplifying the application process. Crossroads also statedthatthe proposedrule changes demonstrated an acl<nowledgement ofthepotential challenges entitiesface when soliciting applicants for funding andthatfleets inthe designated areas will greatlybenefit from therule changes. No changes were madetothe proposedtext as a resultofthese comments. Clean Energy, Pioneer, andUPS expressed supportfor the addition of §114.622(h)to proyide theexecutive directorthe authorityto waive eligibilityrequirementswhen good causeis demonstrated. No changes were madeto the proposedtext as a result ofthese comments. The EPA

## expressedconcernwiththe addition of §114.622(h). EPA statedthat if, as inthe past, Texas intends to continue to creditthe reductions from TERP towardthe state implementationplan,theprovisionforthe executive director's discretion maybe difficult to approve. EPA recommendedthe rule languagebe modifiedtobetter specifythe circumstances underwhich waivers could

# be granted so thatthe impacton such waivers on stateimplementation plan credit canbedetermined. EPA also recommendedthatthe commission remove the phrase 11

## 0rother circumstances" from subsection (h), since it is vague andnotwell defined. Changes were made tothe proposedtext in response tothese comments, as outlinedinthe following section regarding significant changesfrom the proposal. 

## Significantchanges from proposal: Theprovision in §114.622(h) implements requirements addedbyHB 3399· The intent of this provisionis to authorize theexecutive directorto considerunique situations that, while notmeeting the strictletterofthe eligibility requirements, will still n1eet theintent of the requirements. Therefore, itwouldbe difficultto outline each specific situation where goodcause wouldbe determined and a waiver granted. The proposedtextwas not changedto try

## tofu1ther define or specifythe situations where a waiver would begranted. However, additionallanguage was addedto subsection (h) sinceproposal to statethat, in granting a waiver, the executive director shall ensurethatthe projectedemissions reductions will stillbevalid and, where applicable, meet theconditions forassignmentfor credit tothe stateimplementationplan. Thislanguage is intendedto 

# clarify thelimits on the waiverprovisions andto provide assurancethat anywaiver decisionwill bemade only afterconsidering the impactofthewaiver onthe potential emissions reductions. 

## Potential controversial concerns andlegislativeinterest: The adopted ruleincorporatesprovisions requiredunderTHSC, Chapter 386, as amended byHB 3399. The adoption does not go further than whatis requiredto complywith the statutorychanges. Therefore, staffdoes not anticipate any concerns being raised aboutthe

## Commissioners Page4 March 9, 2012 

# Re: Docket

# No. 2011-1219-RUL


## rule, beyondthe commentsreceived on theproposedtext. Staffexpects thatthelegislators involvedin HB 3399 

## and stakeholders will 

## beinterestedinhowthe commission implements the newprovisions. 

# Doesthis rulemaking affect any currentpolicies orrequiredevelopment 

# of newpolicies? TheTERP guidelines will needtobe amended toincorporatethe changestothe eligibility criteria. Program application materials and contractshells will needto beupdated. Also, a 

# process will need to

# be developed for considering waivers to the eligibility

# requirements. Whatarethe 

# consequences

# ifthisru.lemakingdoesnot

# go fo·rward? 

# Arethere alternativesto rulemaking? This rulemaking isrequiredto amendthe criteria for implementing

## the Diesel Emissions ReductionIncentive Program underTHSC, Chapter 386. Ifthe rulemaldng 

## is not completed, implementation oftheprogram underthe existing rule wouldbeinconsistent withthe statutoryprovisions. Possible alternatives are not adopting therule oradopting 

## the rule at

## a later

## date and

## delaying implementation oftheprogram. 

## Keypoints

# inthe adoption

# t•ulemaking schedule: 

# TexasRegisterproposalpublication date: November 4, 2011 

## Anticipated 

# TexasRegisterpublication date: April13, 2012 

## Anticipated

# effective date: Apri119, 2012 

## Six-month 

# TexasRegisterfiling deadline: May 4, 2012 

# Agencycontacts: Steve Dayton, Rule Project Manager, 239-6824, Air

## QualityDivision Betsy Peticolas, StaffAttorney, 239-1439 

## Charlotte Horn, Texas Register Coordinator, 239-0779 

## Attachments

cc: ChiefClerk, 2 

## copies Executive Director's Office SusanaM. Hildebrand, P.E. Anne Idsal Curtis Seaton Ashley Morgan 

# Office ofGeneral Counsel Steve Dayton Charlotte Horn

## EVALUATION OFTESTIMONY



## The Texas Commission on Environmental Quality (TCEQ or commission) adopts an amendment
to §114.622 with change to the proposedtext as publishedinthe November 4, 2011, issue ofthe Texas Register (36 TexReg 7468).

This amendmentwill be submittedto the United States Environmental ProtectionAgency (EPA)

as a revision tothe state implementationplan.



## Background and Summaryofthe FactualBasisfor theAdoptedRule The 77th Legislature, 2001, enacted Senate Bill 5 establishing theTexas Emissions Reduction Plan (TERP). The TERP provides financial incentives for reducing emissions ofon-roadheavydutymotorvehicles and non-road equipment. House Bill (HB) 3399, 82nd Legislature, 2011, Regular Session, amendedTexas Health and,Safety Code (THSC), Chapter 386, Subchapter C, to revise existing criteria and add additional criteria for receiving anincentive grant underthis subchapter. The changes made under HB 3399 are as summarizedin thefollowing paragraphs.

UnderTHSC, §386.104(i), ifthe commission determines that a heavy-duty motorvehicle or engine mustbe decommissioned as part ofthe incentive grant requirements, the new subsection outlines specific criteria for how thevehicle or engine mustbe destroyed, including making a hole in the engine block andpermanently destroying the frame ofthe vehicle. These requirements are consistentwith current practice ofthe commission in administeringthe grant
programs. In addition, the new subsection requires the commission to provide a means for an applicanttopropose an alternative methodfor complying with the destruction requirements.

Under THSC, §386.104(j), the executive director ofthe TCEQ is towaive any eligibility

1

## requirements established under THSC, §386.104, on a finding ofgood cause, which mayinclude

a waiver for shortlapses inregistration oroperation attributable to economic conditions, seasonal work, or othercircumstances. In addition tothe newlanguage outlining howvehicles andengines are tobe destroyed under a grant, this section includes requirements for the operation anduse ofgrant-fundedvehicles and equipment in nonattainment areas and affected counties for five years, provisions for meeting cost-effectiveness requirements and other provisions pertainingto the emissions reductions tobe achievedby a project, andprovisions related to grant payments for the incremental costs ofa project. Underthe additional language ofTHSC, §386.104G), any ofthese provisions could potentiallybewaivedbythe executive director on a finding ofgood cause.

UnderTHSC, §386.104(k), the commission is to consider an application for the replacement ofa vehicle thathas been owned, leased, orotherwise commerciallyfinanced bythe applicant. Under this new subsection, ifa vehicle or engine that is leased or otherwise commercially financed mustbe decommissioned, the commission is to ensure thatthe applicanthasthe legal right to decommissionthe vehicle or enginebefore a grant is awarded.

UnderTHSC, §386.104(1), the commission is to consider an application for a vehicle replacement orfleet expansion for a project with an activitylife offive 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 atleastfive years without regard to the accrued mileage.

Finally, underTHSC, §386.104(m), the commission is to provide a form that minimizes, to the maximum extent possible, the amount ofpaperworkrequired.

2

## The rule incorporates the changes toTHSC, §386.104, under HB 3399.



## Section Discussion §114.622, 

## Incentive ProgramRequirements Section 114.622 is amended to incorporate changes and additions to the program eligibility criteria underTHSC, §386.104(i), (k), and (1). This section is also amendedto incorporate the provisions ofTHSC, §386.622(j), directing the executive director to waive project eligibility requirements on a finding ofgood cause. Additional language is added since proposal to make it clear that, in granting a waiver, the executive director is to determine thatthe emissions reductions attributed to the projectwill stillbevalid and, where applicable, will meet the conditions for assignment for credittothe state implementation plan.

Changes are made to subsection (b) 

## and a subsection (c) is addedto implementthe requirements fromTHSC, §386.104(1), which requires that the commission consider an application for a vehicle replacement orfleet expansion for a projectwith an activity life offive
years or more, or400,000 miles, whichever is earlier. Subsection (b) is amendedto exclude a project involving replacement ofa motorvehicle or a project involving the purchase orlease ofa
motorvehicle from the provisions ofthat subsection. Subsection (c) is added to include the requirements from THSC, §386.104(1), for a vehicle replacement, purchase, orlease project.

Subsection (e) is addedto establish the requirements for how a vehicle orengine replaced under

a grant mustbe destroyed, in accordance withTHSC, §386.104(i). This subsection includes a provision for the executive director oftheTCEQ to allow an applicant topropose an alternative methodfor complying with the destruction requirements, as requiredbyTHSC, §386.104(i).

Subsection (f) 

## is added to implementthe requirements ofTHSC, §386.104(k). This subsection


# 3

## requires that a motorvehicle tobe replaced under a grant may have been owned, leased, or otherwise commercially financed bythe applicant andthat the applicant musthave a legal right
to replace and recycle or scrap thevehicle and enginebefore a grantis awarded.

Subsection (h) is addedwith changes to the proposedtextto direct the executive director ofthe TCEQ to waive eligibility requirements under subsections (b)- 

## (f) 

## on a finding ofgood cause, as requiredby THSC, §386.104(i). 

## Additionallanguage is added from the proposed text to make it clearthat, in granting a waiver, the executive director will need to determine thatthe emissions reductions attributedto the project will stillbevalid and, where applicable, will meetthe conditions for assignment ofcredit to the state implementation plan.

Existing subsections underthis section are re-letteredto accountfor the addition ofnew subsections.



## Final RegulatoryImpactAnalysis The commission reviewed the rulemaking inlight ofthe regulatory analysis requirements of Texas Government Code, §2001.0225, 

## and determinedthatthis rule action is not subjectto Texas Government Code, §2001.0225, 

## because it does notmeet the definition ofa "major environmental rule" as defined in that statute. A "major environmental rule" means a rule the specific intent ofwhich is to protectthe environment or reduce risks tohuman health from environmental exposure andthat may adversely affect in a materialway the economy, productivity, competition,jobs, the environment, orthepublichealth and safety ofthe state or a
sector ofthe state.

The amended Chapter 114 

## rule is adopted in accordance with HB 3399, 

## which amendedTHSC, Chapter 386. 

## The rule adds orrevises 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 ofthe economy, productivity, competition,jobs, the environment, orthe public health and safety ofthe state or a sector ofthe
state. In addition, this amendmentdoes notplace additional financial burdens on the regulated community.

Furthermore, a regulatory impact analysis is notrequiredbecause the rule does not meet any of thefour applicability criteria for requiring a regulatory analysis ofa "major environmental rule"

as defined in theTexas Government Code. Texas Government Code, §2001.0225, 

## applies only
to a major environmental rule the result ofwhich is to: 1) 

## exceed a standard setbyfederal law, unless the rule is specifically requiredby statelaw; 2) 

## exceed an express requirement ofstate law, unless the rule is specifically requiredbyfederal law; 3) 

## exceed a requirement ofa delegation agreement orcontractbetween the state and an agency orrepresentative ofthe federal governmentto implement a state andfederal program; or4) adopt a rule solely under the general powers ofthe agency instead ofunder a specific state law. This rulemaking does not exceed a standard setbyfederal law. In addition, this rulemaking does not exceed an express requirement ofstatelaw and is not adopted solelyunder the general powers ofthe agency, butis specifically authorizedbythe provisions cited inthe StatutoryAuthority section ofthis preamble. Finally, this rulemaking does not exceed a requirement ofa delegation agreement or
contractto implement a state andfederal program.

The commission invited public commentregarding the draft regulatory impact analysis determination during the public comment period. No comments were received onthe draft regulatoryimpact analysis determination.

5

## Takings ImpactAssessment The commission evaluatedthis rulemaking action andperformed an analysis ofwhetherthe rule is subjecttoTexas Government Code, Chapter 2007. 

## The primarypurpose ofthe rulemaking is
to amend Chapter 114 

## in accordance with HB 3399. 

## The rule makes revisions to a voluntary
program and only affects motorvehicles and equipment that are not considered tobeprivate real property. The promulgation and enforcement oftherule is neither a statutorynor a constitutional takingbecause it does not affect private real property. Therefore, the rule does
not constitute a taking underTexas Government Code, Chapter 2007.



## Consistencywiththe CoastalManagementProgram The commission reviewed the adopted rulemaking andfound the adoption is a rulemaking identified in the Coastal CoordinationAct Implementation Rules, 31

## TAC §sos.u(b)(2), 

## concerning rules subjecttotheTexas Coastal Management Program (CMP), andwill, therefore, require thatgoals andpolicies ofthe 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 orpolicies, because itrevises a voluntaryincentive grant
program and does not govern air pollution emissions.

The commission invitedpublic comment regarding the consistencywith the coastal managementprogram during the public comment period. No comments were received regarding consistencywith the CMP.



## PublicComment Apublic hearing was scheduled for November 29, 2011; 

## however, since no one registered to provide comments, the hearing was not officially opened. The commentperiod closed on December 5, 2011. 

## The commission received written commentsfrom Clean Energy Fuels (Clean


# 6

## Energy), Crossroads Equipment Lease 

## &Finance (Crossroads), PioneerNatural Resources USA, Inc. (Pioneer), and United Parcel Service (UPS) in support ofall orpartofthe rulemaking. EPA submittedwritten comments in supportofthe rulemaking, but expressed concern and recommended changes to part oftheproposal.



## Response to Conunents Clean Energy, Crossroads, Pioneer, and UPS commented in support ofthe rule changes. Specifically, Clean Energy and Pioneer commented thatthe proposed rule changes will make the
program more effective and efficient for Texas-based fleets by simplifying the application
process. Crossroads provided information onits experience providing financing and assistance
to entities in California andnationally to obtain grantfunding. Crossroads also stated thatthe proposed rule changes demonstrated an acknowledgement ofthepotential challenges entities face when soliciting applicants for funding andthat fleets in the designated areas will greatly benefit from the rule changes. EPA expressed appreciation ofTCEQ's efforts to improve the control ofair pollution from motor vehicles andto tighten the requirements for decommissioning ofon-roadheavy-duty motorvehicles and non-roadvehicles. EPA also applaudedTCEQ's efforts to continuallyimprove the state implementation plan.



## The conunissionappreciates the continuedsupportfor the TERPprograms. No changes were made to the proposedtextinresponse to these conunents.

Clean Energy, Pioneer, and UPS expressed supportfor the addition ofsubsection (h) in §114.622


## to provide the executive directorthe authoritytowaive eligibility requirements when good cause is demonstrated.



# 7

## The commission appreciatesthe supportexpressedforthis newprovision. No changeswere madetotheproposedtext inresponseto these comments.

EPA expressed concernwith the amended §114.622(h). EPA statedthat 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 maybe difficult to approve. EPA recommendedthatthe rule language be modifiedtobetter specify the circumstances under which waivers couldbe granted so thatthe impact ofsuchwaivers on state implementation plan creditcanbe determined. EPA also recommended thatthe commission remove the phrase "or othercircumstances" from subsection (h) because itis vague and not well defined.



## The commission appreciates the EPA's comments regardingensuringthatthe emissions reductions generatedfrom theseprograms canbe creditedtothe state implementationplan. In responseto the recommendationthatmore specific detailsbeprovidedregardingthe circumstancesunderwhich a waiverwouldbe granted, the intent ofthe waiverprovisionisto authorizethe executive directorto considerunique situations, including situations notyet contemplated, thatmay not meetthe letterofthe standardcriteriabutwhichwill stillmeetthe intent of theprogramrequirements. Therefore, itwouldbe difficulttofurther outline each specificinstance where good cause maybe determined.

Additionally, the eligibilitycriteriathat maybe affectedbya waiverunderthis sectionis alreadymore specificthanthe criteriaoutlinedinthe EPA's guidelines forusing anEconomic Incentive Programto achieve creditable emissions reductions, ImprovingAir Qualitywith Economic Incentive Programs (EPA452/R-ot-oot), 

## andthe EPA's guidelinesfor dieselretrofitprograms, Diesel


# 8

## Retrofits: Quantifying andUsingTheirBenefitsin SIPs and Conformity (EPA42oB-o6-oos).

No changewas madetotheproposedlanguagetofurther identifyspecific instances for when a waivermaybegranted. Thereferenceto "other circumstances" is also retained. However, in orderto clarifythelimits onthe waiverprovisions andtoprovide assurancethat anywaiver decisionwillbemade onlyafter consideringtheimpact ofthewaiveronthe emissionsreductions, additionallanguagewas addedto §114.622(h) from proposalto statethatin consideringgranting a waiver, the executive director shall ensurethatthe emissions reductions attributableto theprojectwill stillbevalidand, where applicable, meetthe conditionsfor assignmentfor credittothe state implementationplan.

9

# RECOMMENDATION

## SUBCHAPTERK: MOBILE SOURCE INCENTIVE PROGRAMS DIVISION 3: DIESEL EMISSIONS REDUCTION INCENTIVE PROGRAM FORON-ROADAND NON-ROADVEHICLES §114.622


## StatutoryAuthority 

# This amendmentis adoptedunderTexas Water Code (TWC), §5.102, which provides the commission with the general powers to carry outits duties under the TWC; TWC, §5.103, which authorizes the commission to adopt any rules necessaryto carryoutthe
powers and duties undertheprovisions oftheTWC and otherlaws ofthis state; and TWC, §5.105, which authorizes the commissionbyrule to establish and approve all general policy ofthe commission. This amendmentis also adopted underTexas Health and Safety Code (THSC), Texas Clean Air Act, §382.017, which authorizes the commission to adopt rules consistentwiththe policy andpurposes ofthe THSC; THSC, §382.011, which authorizes the commissionto establish thelevel ofqualitytobe maintainedinthe state's air andto control the quality ofthe state's air; THSC, §382.012, which authorizes the commission to prepare and develop a general, comprehensive plan for the control ofthe state's air; andTHSC, Chapter 386, which establishes the Texas Emission Reduction Program. Finally, this amendmentis part ofthe implementation of
House Bill3399.

This amendment implements THSC, §386.104.

1

## §114.622. 

# Incentive Program Requirements.



# (a) Eligible projects include:

(1) 

# purchase orlease ofon-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 anduse ofemissions-reducing add-on equipmentfor on-road

or non-road diesels;

(5) development and demonstration ofpractical, low-emissions retrofit technologies, repower options, andadvancedtechnologies for on-road or non-road diesels with lower nitrogen oxides (NOx) emissions;

(6) use ofqualifying fuel;

(7) 

# implementation ofinfrastructure projects;

(8) replacement ofon-road and non-road diesels with newer on-road and non-road diesels; and 2

# (g) otherprojects thathave thepotential to reduce anticipated NOx emissions from diesel engines.

(b) 

# For a proposedproject as listedin subsection (a) ofthis section, otherthan a project involving a marinevessel orengine, a project involving non-road equipment used for natural gas recoverypurposes, a project involving replacement ofa motor vehicle, or a project involving the purchase orlease ofa motorvehicle, not less than 75% ofvehicle miles traveled orhours ofoperation projectedfor the five years immediately following the award ofa grant mustbe projectedto take place in a nonattainment area

or affected county ofthis state. The commission may also allowvehicle travel on highways androadways, orportions ofa highway orroadway, designatedbythe commission andlocated outside a nonattainment area oraffected countyto count towards the percentage ofuse requirement.

(c) For a proposedmotorvehicle replacement, purchase, orlease project, the periodusedto determine the emissions reductions and cost-effectiveness ofeach replacement, purchase, orlease activity includedinthe project must extend for five
years or more, or 400,000 

# miles, whichever occurs earlier. Notless than 75% ofthe vehicle miles traveled projectedfor the periodusedto determine the emissions reductions mustbe projectedtotake place in a nonattainment area oraffected county of this state. The commission may also allowvehicle travel on highways androadways, or portions ofa highway orroadway, designatedbythe commission andlocated outside of
3

# a nonattainment county or affected countyto counttowards the percentage ofuse requirement.

(d) For a proposed projectthatincludes a replacement ofequipment or a repower, the oldequipment or engine mustbe recycled or scrappedprovided, however, thatthe executive director may allowpermanentremoval from the State ofTexas in specific grants where the applicant has provided sufficient assurances thatthe old locomotive will notbe returnedto the State ofTexas.

(e) For a proposedproject to replace a motorvehicle, the vehicle and engine must be decommissionedbycrushingthevehicle and engine, by making a hole in the engine block andpermanentlydestroying theframe ofthe vehicle, orby anothermethod approvedbythe executive directorthatpermanentlyremoves the vehicle and engine from operation in this state. For a proposedproject to repower a motorvehicle, the engine being replaced mustbe decommissionedin a manner consistent withthe requirements for decommissioning an engine as partofa vehicle replacement project. The executive director shall allow an applicant for a motorvehicle replacement or repower project to propose an alternative methodfor complying with the requirements ofthis subsection.

(f) 

# For a project to replace a motorvehicle, the vehicle being replaced mayhave been owned, leased, orotherwise commercially financed bythe applicant. The applicant '



## 4

# musthave a legal right to replace andrecycle or scrap thevehicle and engine before a grantis awardedfor thatproject.

(g) To be eligible for a grant, the cost-effectiveness ofa proposedproject as listed in subsection (a) ofthis section, except for infrastructure projects andinfrastructure purchases that are part ofa broaderretrofit, repower, replacement, or add-on equipment project, must not exceed a cost-effectiveness of $15,000 

# perton ofNOx emissions reduced. The commission may setlower cost-effectiveness limits as neededto

ensure the bestuse ofavailable funds. The commission may also base project selection decisions on additional measures to evaluate the effectiveness ofprojects in reducing N

# Oxemissions in relation tothe funds tobe awarded.

(h) The executive director shall waive eligibilityrequirements establishedunder subsections (b)

- (f) 

# ofthis section on a finding ofgood cause, which mayinclude a waiver ofany ownership anduse requirements establishedfor replacement ofa motor vehicle for shortlapses in registration or operation attributableto economic conditions, seasonal work, or other circumstances. In determining good cause and deciding whether
to grant a waiver, the executive director shall ensurethatthe emissions reductions that will be attributedto the projectwill stillbe valid and, where applicable, meetthe conditions for assignment for credit to the state implementation plan.

5

## (i) 

# Projects funded with a grantfrom this program may notbeused for credit under any state orfederal emissions reduction credit averaging, banking, ortrading
program except as provided under Texas Health and Safety Code, §386.056.


# G) Aproposedproject as listedin subsection (a) ofthis section is not eligible ifit is requiredby any state orfederal law, rule orregulation, memorandum ofagreement,

or otherlegallybinding document. This subsection does not apply to:

(1) 

# an otherwise qualified project, regardless ofthe fact thatthe state implementation plan assumes thatthe change in equipment, vehicles, or operations will
occur, ifonthe date the grant is awardedthe change is notrequiredby any state or federal law, rule orregulation, memorandum ofagreement, or otherlegallybinding document; or

(2) 

# the purchase ofan on-roaddiesel orequipment required onlybylocal law orregulation orbycorporate or controllingboardpolicy ofa public orprivate entity.

(k) A 

# proposed retrofit, repower, replacement, or add-on equipment project must achieve a reduction inNOxemissions tothelevel established in the commission's 

# Texas Emissions Reduction Plan: Guidelines for EmissionsReductionIncentive Grants Program (RG-388) for thattype ofproject comparedwith thebaseline emissions adoptedbythe commission for the relevant engineyear and application.

6

## (l) 

# Ifa grantrecipient fails to meetthe terms ofa project grant orthe conditions ofthis division, the executive director can requirethatthe grantrecipient return some or all ofthe grantfunding tothe extentthat emission reductions are not achieved orcannot be demonstrated.

(m) Criteria establishedinthe guidelines, including revisions tothe commission's 

# Texas EmissionsReduction Plan: Guidelines forEmissions ReductionIncentive Grants Program (RG-388), applyto the Texas Emissions Reduction Plan program. Nohvithstandingthe provisions ofthis chapter, as authorized underTexas 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; addingvehicles and equipmentthatuse fuels otherthan diesel; or adjusting eligible program categories; as appropriate, to ensure thatincentives establishedunderthis program achieve the maximum possible emission reductions.

7the 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 ofthe 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 ofthe 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 ofthe agency's legal authority. Filed with the Office ofthe 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 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 ofthe 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, Subchap

## 37 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 ofthe 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 underTHSC, §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, orotherwise commercially financed bythe 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 ofgood cause. Additional language is added since proposal to make it clearthat, in granting a waiver, the executive director is to determine that the emissions reductions attributed to the projectwill still be validand, 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 ofTHSC, §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 undersubsections (b)- 

### (f) on afinding ofgood 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 underthis 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 ofthe economy, productivity, competition, jobs, the environment, orthe public health and safety ofthe 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 ofthe four applicability criteria for requiring a regulatory analysis ofa "major environmental rule" as defined in the Texas Government Code. Texas Government Code, §2001.0225, applies only to a major environmental rule the result ofwhich 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; or4) adopt a rule solely under the general powers ofthe 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 ofthe agency, but is specifically authorized by the provisions cited in the Statutory Authority section ofthis preamble. Finally, this rulemaking does not exceed a requirement of a delegation agreement or contractto 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 ofwhether the rule is subject to Texas Government Code, Chapter 2007. The primary purpose ofthe 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 equipmentthat 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 subjectto the Texas Coastal Management Program (CMP), and will, therefore, require that goals and policies ofthe 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 ofthe rulemaking. EPA submitted written comments in support ofthe rulemaking, but expressed concern and recommended changes to part ofthe proposal. Response to Comments



## ADOPTED RULES April13, 2012 37 TexReg 2643Clean 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 ofthe 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 ofTCEQ'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 appreciatesthe continued support forthe 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 thatthe 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 ofthe 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 butwhich will still meetthe intent ofthe 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 AirAct, §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 ofthe state's air; and THSC, Chapter 386, which establishes the Texas Emission Reduction Program. Finally, this amendment is part ofthe 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 ofon-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 ofemissions-reducing add-on equipment for on-road or non-road diesels; (5) development and demonstration ofpractical, low-emissions retrofit technologies, repower options, and advanced technologies for on-road or non-road diesels with lower nitrogen oxides 

### (NO) emissions; (6) use ofqualifying fuel; (7) implementation ofinfrastructure 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) Fora proposedprojectas listed in subsection (a) ofthis 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% ofvehicle miles traveled or hours ofoperation projected for the five years immediately following the award ofa grant must be projected to take place in a nonattainment area or affected county ofthis state. The commission may also allow vehicle travel on highways and roadways, or portions of a highway or roadway, designated by the commissionand 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** ofeach 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% ofthe vehicle miles traveled projected fortheperiod usedto determine the emissions**reduc~** tions must be projectedto take place in a nonattainment area or affected county ofthis state. The commission may also allow vehicle travel on highways and roadways, or portions ofa highway or roadway,**desig~** natedby the commission and located outside ofa nonattainment county or affected county to count towards the percentage ofuse 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 ofTexas in specific grants where the applicant has provided sufficient assurances that the old locomotive will not be returned to the State ofTexas. (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 ofthe 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 orrepower project to propose an alternative method for complying with the requirements ofthis 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 ofa proposed project as listed in subsection (a) ofthis section, except for**infra~** structure projects and infrastructure purchases that are part ofabroader 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 ofavailable funds. The commission may also base project selection decisions on additional measures to**evalu~** ate the effectiveness ofprojects 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) ofthis section on a finding of good cause, which may include a waiver of any ownership and use requirements established for replacement ofa 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, ortrading program except as provided underTexas Health and Safety Code, §386.056. U) A proposedproject as listed in subsection (a) ofthis section is not eligible ifit is required by any state or federal law, rule or**regu~** lation, memorandum ofagreement, or other legally binding document. This subsection does not apply to: (1) an otherwise qualifiedproject, regardless of the fact that the state implementation plan assumes that the change in equipment, vehicles, or operations will occur, ifon the date the grant is awarded the change is not required by any state orfederal law, rule orregulation, memorandum ofagreement, or other legally binding document; or (2) the purchase ofanon-road diesel orequipmentrequired only by local law or regulation or by corporate or controlling board policy ofa 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: Guidelinesfor 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) Ifa grant recipient fails to meet the terms ofa project grant orthe conditions ofthis division, the executive director can require that the grant recipient return some or all ofthe 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: Guidelinesfor EmissionsReductionIncentive GrantsProgram (RG-388}, apply to the Texas Emissions Reduction Plan program. Notwithstanding the**pro~** visions ofthis 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 thatthe adoption has been reviewed by legal counsel and found to be a valid exercise ofthe agency's legal authority. Filed with the Office ofthe Secretary ofState 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 changesto the proposed text as published in the November 4, 11, issue ofthe 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 ofa

### 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 ofoffice on 

# t' 

# y;:;l ·**6P<rtf;.C.~** 

# APR 0

# 3 2012 Bridget 

## C. ohac, Chief Clerk Texas Commission on Environmental Quality 

## ORDERADOPTINGAMENDED RULE AND REVISIONS TO THE STATE IMPLEMENTATION PLAN



# DocketNo. 2011-1219-RUL 

## On March 28, 2012, the Texas Commission on Environmental Quality (Commission), during a public meeting, considered adoption ofamended §114.622. The Commission adopts this amendmentin Chapter 114, 114, Control ofAir Pollution from MotorVehicles, Subchapter K, Mobile Source Incentive Programs, Division 3, Diesel Emissions Reduction Incentive Program for On-Road and Non-RoadVehicles; and corresponding revision to the state implementation plan (SIP). The revisions to Chapter 114 incorporate changes and additions tothe program eligibility criteria and addprovisions stating thatthe executive director shall waive eligibility requirements on a finding ofgood cause. Under Tex. Health & 

## Safety Code Ann.§§ 382.011, 382.012, and 382.023 (Vernon 2001), the Commission has the authorityto control the quality ofthe state's air andto issue orders consistentwith the policies andpurposes ofthe Texas Clean Air Act, Chapter 382 ofthe Tex. Health & 

## Safety Code. The proposedrulewas publishedfor commentinthe November 4, 20012, issue ofthe 

# Texas Register (36 TexReg 7568). Pursuantto Tex. Health 

# &Safety Code Ann.§ 382.017 (Vernon 2001), Tex. Gov't Code Chapter 2001 (Vernon 2008), 

## and 40 Code ofFederal Regulations§ 51.102, and after proper notice, the Commission conducted a publichearing to considerthe amendedrule andrevision to the SIP. Proper notice included prominent advertisement inthe areas affected atleast 30 days prior to the date ofthehearing. Apublichearing was held inAustin, Texas, on November 29, 2011. The Commission circulated hearing notices ofits intended action to the public, including interestedpersons, the Regional Administrator ofthe EPA, and all applicable local air pollution control agencies. The public vvas invitedto submit data, vievvs, and recommendations onthe proposed amended rule and SIP revision, either orally or in \YTiting, at the hearing or duringthe commentperiod. Prior to the scheduled hearing, copies ofthe proposed amended rule and SIP revision vvere available for public inspection atthe Commission's central office and onthe Commission's Web site. Data, vievvs, and recommendations ofinterestedpersons regarding the proposed amended nlle and SIP revision were submittedto the Commission duringthe comment period, and vvere consideredby the Commission as reflected inthe analysis oftestimony incorporated byreference to this Order. The Commission finds thatthe analysis oftestimony includes the names ofall interested groups or associations offering commentonthe proposed amendedrule andthe SIP revision andtheir position concerningthe same.' \ I'**~** ! ; j



### s lo v

# ;~ ·. '.,;,:,::. ;;

# ~~' :,:

# .':.>**:.::,:;~':,: -~~;~~~~2** **··,~: rr•u~~** **~~{~:·~./~r:.lS iQ~~~:OM-Q:l\Q~~.p**  BY THE

# C~MMISSION thatthe amendedrule and .fi('lt:e- i(,'( 1

## hteWSibnitortfue

## SI~:}ncorporated

# byrreference toth1s Order arehereby 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 adoptedrule andthepreamble to**~e; adci:pte¢I;~:I:b1J~and** 

# th.exevisipn1to the SIP are incorporatedbyreference inthis Order as if

# setrf~I;\;~'**~t~:~ertgtn**

# ·verbatim·in this-,Order. IT IS FURTHER ORDERED BY THE COMMISSION that onbehalfofthe Commission, the Chairman shouldtransmit a copy ofthis Order, togetherwith the adopted rule and revision to the SIP, tothe Regional Administrator ofthe EPA as a proposed revision tothe Texas SIP pursuantto the Federal CleanAir Act, codified at42 U.S. Code Ann. §§ 

# 7401- 7671q, as amended. This Order constitutes the Order ofthe Commission requiredbytheAdministrative Procedure Act, Tex. Gov't Code, § 2001.033 

# (Vernon 2008). 

# Ifanyportion ofthis Order is for anyreasonheldtobeinvalidby a court ofcompetent jurisdiction, the invalidity ofanyportion shall not affect thevalidity ofthe remaining portions.

Date issued: 

# APR 03 2012

TEXAS COMMISSION ON ENVIRONMENTAL QUALITY