### RobertJ. Huston, 

### Chairman
R. B. 

### "Ralph" Marquez, 

### Commissioner
Kathleen HartnettWhite, 

### Commissioner JeffreyA. 

### Saitas, 

### ExecutiveDirector

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02 AUG -1 AM 9: 23 

# TEXAS NATURAL RESOURCE CONSERVATION COMMISSION

Protecting Texas by

### ReducingandPreventingPollution



## July 

## 31, 2002

Mr. Gregg Cooke Regional Administrator U.S. Environmental ProtectionAgency, Region 6 1445 Ross Avenue Dallas, Texas 

## 75202-2733

DearMr. Cooke:**r-...~** 

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## OnMay 

## 22,2002, the Texas Natural Resource Conservation Commission (Commission) adopted revisions to the State Implementation Plan (SIP).

The Commission adopted new and amended sections to Chapter 

## 39, Public Notice; and new and amended sections to Chapter 

## 116, Control ofAir Pollutionby Permits for New Construction or -Modification. The adopted changes to Chapter 

## 39 and Chapter 116 concern requirements and

. procedures for the permitting ofgrandfathered facilities and an incentive programfor the reduction of emissions ofnitrogen oxides from**~ertain** 

## grandfatheredreciprocating interrial combustion engines associated withpipelines. The new and amended sections ofChapter 

## 39; all sections ofChapter 

## 116, SubchapterH except §116.776; and the new and amended sections ofChapter 116, Subchapters A and I are being submitted as a revision to the SIP.

Enclosed are the proposed revisions to the SIP, a public hearing certification, a complete record ofthe public hearing, andthe accompanying order. I lookforward to your expeditious approval ofthese SIP revisions.

ly,

Chairman



## RJH/js

cc: The Honorable Rick Perry, Governor ofTexas Ms. WendyWyman, Environmental and Natural Resources Policy Director, Office ofthe Governor ' Mr. Jeffrey A. Saitas, P.E., Executive Director, Texas Natural Resource Conservation Commission

Enclosures

-

# . P.O. Box 13087 • Austin, Texas 78711-3087 • 5121239-1000 • 

### Internetaddress: www.tnrcc.state.tx.us
prinkJ un**r~·cyd~J** p<lper lIsing soy-bJ:.eJ ink

## Mr. Gregg Cooke Page 2

bee: Mr. RandolphWood, Deputy Director, Office of Environmental Policy, Analysis, and Assessment Mr. 

## JimMuse, Director, Policy and Regulations Division Ms. HeatherEvans, Strategic Assessment Division Ms. Jill Burditt, Policy and Regulations Division OEPAA file

### Texas Natural Resource Conservation Commission Public Hearings January 22-24, 28, 29, 2002
Concerning revisions to 30 TAC Chapter 116, Subchapters A, H, and I, Control ofAir Pollution by Permits for New Construction or Modification; and Chapter39, Subchapter H and Subchapter K, concerning Public Notice; and a revision to the state implementation plan Rule Log Number2001-076-116-AI

### INTRODUCTION

The Texas Natural Resource Conservation Commission (commission) held public hearings to receive

testimony regarding revisions to 30TAC Chapter39 and Chapter 116, and tothestate implementation plan

(SIP). The public hearings were held at the following times and locations: January 22, 2002, 7:00 p.m.,
TylerJuniorCollege Regional Training and DevelopmentCenter, Room 104, 1530 South Southwest Loop

323, Tyler; January 23, 2002, 7:00 p.m., City of Houston, City Council Chambers, 2nd Floor, 901 Bagby,

Houston; January 24, 2002, 7:00 p.m., City of Odessa, City Council Chambers; 5th Floor, 411 West 8th

Street, Odessa; January 28, 2002, 6:30 p.m., City of Irving, Central Library Auditorium, 801 West Irving

..
Boulevard, Irving; and January 29, 2002, 2:00 p.m., Texas Natural Resource Conservation Commission,

12100 North 1-35, Building F, Room 2210, Austin.

This volume concerns new and amended sections to Chapter 39, Public Notice; and new and amended

sections to Chapter 116, Control of Air Pollution by Permits for New Construction or Modification. The

adopted changes toChapter39 and Chapter 116

# concer~ requirements and

# pro~eciures forthe permitting.·

ofgrandfathered facilities and an incentive program forthe reduction ofemissions of nitrogen oxides from

certain grandfathered reciprocating internal combustion engines associated with pipelines. The new and

amended sectionsofChapter39are being submittedtothe United States Environmental ProtectionAgency

(EPA) as a revision to the state implementation plan (SIP). All sections ofSubchapter H except 

## §116.776,

are being submitted to the EPAas a revision to the SIP. The new and amended sections of SUbchapterA

and I are also being submitted to the EPA as a revision to the SIP.

Written comments were accepted through January 29, 2002. All testimony and comments have been

reviewed and seriously considered. This hearing record contains acomplete record ofthe public hearings

and is divided into the following foursections:

### o Public Notification and Proposal

o Written and Oral Testimony

o Evaluation ofTestimony

o Staff Recommendations

Additional copiesofthis hearing record are maintained in theTNRCC central officeat 12100 Park35 Circle,

Austin, Texas 78753. Forfurther information, please contact Jill Burditt at (512) 239-0560.(2) updates citations to the new codified Texas Pharmacy Act and makes otherchanges necessary due to the codification.
No comments were received regarding adoption ofthe amendments.
The amendments are adopted undersections 551.002, 554.051, and 554.006 of the Texas Pharmacy Act (Chapters 551-566, Texas Occupations Code). The Board interpretssection 551.002
as authorizing the agency to protect the public through the effective control and regulation of the practice of pharmacy. The Board interprets section 554.051 as authorizing the agency to adopt rules forthe properadministration and enforcement ofthe Act. The Board interprets section 554.006 as authorizing the agencyto establish reasonable fees sufficient to coverthe costs of administering the Texas PharmacyAct.
The statutes affected by this rule: Chapters 551-566, Texas Occupations Code.
This agencyherebycertifiesthatthe adoption has been reviewed by legal counsel and found to be avalid exercise ofthe agency's legal authority.

Filed with the Office ofthe Secretary ofState on May 24, 2002.
TRD-200203224 Gay Dodson, R.Ph. Executive Director/Secretary Texas State Board of Pharmacy Effective date: June 13, 2002 Proposal pUblication date: March 15, 2002 Forfurther information, please call: (512) 305-8028 

# • 

# • • TITLE 30. ENVIRONMENTAL QUALITY


# PART 1. TEXAS NATURAL RESOURCE CONSERVATION COMMISSION

CHAPTER39. PUBLIC NOTICE

The Texas Natural Resource Conservation Commission (commission) adopts new §39.404, Applicability for Certain Initial Applications for Air Quality Permits for Grandfathered Facilities. The commission also adopts amendments to §39.411, Text of Public Notice; §39.419, Notice of Application and Preliminary Decision; §39.420, Transmittal of the Executive Director's Response to Comments and Decisions; §39.603, Newspaper Notice; §39.604, Sign-Posting; and §39.606, Alternative Means of Notice for Voluntary Emission Reduction Permits. Sections 39.404, 39.411, 39.419, 39.420, 39.603, 39.604, and 39.606
are adopted withoutchanges to the proposed text as published in the January 11, 2002 issue ofthe Texas Register(27 TexReg 353) and will not be republished. The new and amended sections of Chapter 39 will be submitted to the United States Environmental Protection Agency (EPA) as a revision to the state implementation plan (SIP).
BACKGROUND AND SUMMARY OF THE FACTUAL BASIS FOR THE ADOPTED RULES During the 75th Legislature, 1997, House Bill (HB) 3019 directed the commission to develop avoluntary emissions reduction plan for the permitting of existing significant sources. These existing significant sources are commonly known as grandfathered facilities. A grandfathered facility is one that existed at the time



## 27TexReg 4948 

## June 7,2002 Texas Register the legislature created the Texas Clean Air Act (TCAA) in 1971. These facilities were not required to comply with (I.e., grandfathered from) the then new requirementto obtain permits forconstruction or modifications offacilities that emit aircontaminants. Ifgrandfatheredfacilities had not been modified since 1971, they continued to be authorized to operate without a permit. The intent of HB 3019 was to create a program that would encourage the remaining grandfathered facilities to voluntarily obtain permits that would reduce the emissions from those facilities. In response to HB 3019, the commission created the Clean Air Responsibility Enterprise (CARE) Committee to develop recommendations for the voluntary permitting of grandfathered facilities.
In 1999, the 76th Legislature used the CARE Committee's recommendation as the basis for Senate Bill (SB) 766, which directed the commission to develop rules containing incentives for the voluntary permitting ofgrandfatheredfacilities. This program is known as the Voluntary Emission Reduction Permit (VERP) program. The commission adopted rulesto implementthe VERP program on December 16, 1999. Since the VERP rules became effective, the owners and operatorsofa numberofgrandfathered facilities have taken advantage of the incentives offered by the VERP program and submitted VERP applicationsfortheirgrandfathered facilities. Additionally, the owners and operatorsofother grandfathered facilities have submitted permit-by-rule registrations and other new source review permit applications to permit their grandfathered facilities. The deadline to apply for a VERP
was August 31, 2001. Additionally, the 76th LegiSlature, 1999 amended the Texas Utilities Code, Title 2, Public Utility RegUlatoryAct, Subtitle B, Electric Utilities, and created a new Chapter 39, Restructuring of Electric Utility Industryby adopting SB 7. SB 7 required the commission to implementthe permitting and allowance requirements ofnewTexas Utilities Code, §39.264, concerning Emissions Reductionsof"Grandfathered Facilities." SB 7 required the commission to develop a mass cap and trade system to distribute emission allowances for use by electric generating facilities (EGFs). UnderSB 7, two categories of EGFs are eligible to use the proposed trading system. The first category consisted of EGFs in existence on January 1, 1999, which were not subjectto the requirementto obtain a permit underTCAA, §382.0518(g). These facilities are commonly referred to as grandfathered facilities. SB 7 also mandated that grandfathered EGFs apply for a permit on or before September 1, 2000, and obtain a permit by or cease operation after May 1, 2003. The second category of EGFs consisted of permitted EGFs that were not subject to the permitting requirements ofSB 7, yet elected to participate in the allowance trading system.
Most recently, the 77th Legislature, 2001, amended Texas Health and SafetyCode (THSC), TCAAto require thatall grandfathered facilities obtain permits. The mandatory permitting requirements of HB 2912 are the culmination of legislative efforts, beginning in 1997, to permitorotherwise authorize all grandfatheredfacilities. HB 2912 created four newtypes of permits forgrandfathered facilities: existing facility permits, small business stationarysource permits, EGF permits, and pipeline facilities permits. HB 2912 also mandated the dates by which grandfathered facilities must applyfora permitand have controls operational orsubmita shutdown notice. Grandfathered facilities that are addressed by an application foraVERP are not required to complywith the provisions of HB 2912 for grandfathered facilities. However, grandfathered facilities that withdraw their VERP applications and elect to submitapermitapplication foran authorization underHB2912will forfeit those incentives, including eligibility for amnesty from enforcement.
To implement these revisions to the TCM, the commission adopts new and amended rules in 30 TAC Chapter 116, SubchapterA, Definitions; Subchapter H, Permits for Grandfathered Facilities; and Subchapter I, Electric Generating Facility Permits, which are published in this**iss~e** ofthe Texas Register. Additionally, revisions to Chapter 39, Public Notice, were necessaryto implementthe provisions of

### HB 2912, §§5.02

- 5.05. The revisions to Chapter 39 are necessary to implement the public participation requirements of

### HB 2912. THSC, TCM, §382.05181 (h) provides that applications for pipeline facility permits, existing facility permits, existing facility flexible permits, and EGF permits are subjectto the public notice and hearing requirements of §382.05191. TCM, §382.05191 prOVides that public participation for initial issuance of a permit under §§382.05183, 382.05185(c) or (d), 382.05186, or 382.0519 will be done in the manner of TCM, §382.0561, concerning Federal Operating Permit; Hearing, and §382.0562, concerning Notice of Decision. THSC, TCM, §382.0561 requires the commission to provide a publiccomment period foran application, duringwhich members of the public can submit written statements to the commission regarding the application. The initial issuance of a grandfather permit, with the exception of small business stationary source permits, is subject to notice and comment hearing procedures. Underthese procedures, interested personscan requesta hearing. The hearing is recorded, and oral comments are accepted. The commission will provide reasonable accommodationsto any individual who may wishto comment on a permit but has difficulty providing those comments in writing, including assistance for those persons who are blind, deaf, or require interpreter assistance. The commission requests that such individuals notify the commission staff sufficiently early that arrangements can be made to afford these individuals the opportunity to participate in the permitting process. The commission requires notice of the publiccomment period, which must be at least30 days, and may extend or reopen the comment period ifappropriate. The notice must meet the requirements of §382.056, which provides specifications relating to the specifics of the newspaper notice and sign-posting, and other requirements for notice. THSC, TCM, §382.0561 also requires that public hearings not be conducted underTexas Government Code, Chapter2001, so they are not contested case hearings. The commission is requiredto hold apUblic hearing on an application, priorto granting the permit, ifa person who may be affected by the emissions or a member ofthe legislature from the general area in which the facility is located requests a hearing. However, the commission is not required to hold a hearing ifthe basis ofthe request by a person who may be affected is determined to be unreasonable. The commission is required to consider all comments received during the comment period and hearing in determining whether to issue the permit and what conditions should be included if a permit is issued. THSC, TCM, §382.0562 provides for the mailing of notice of the commission's decision on an application to all persons who submitted comments, and to the applicant. The notice must include a response to all comments, and identify any changes to the conditions ofthe draft permitand the reasonsforthe change. Additionally, TCM, §382.05191 requires the opportunity for a motion for rehearing and judicial review under §382.032. The commission will utilize existing procedural rules concerning motions to overturn action bythe executivedirector, found in 30 TAC Chapter50 (relating toActions on Applications and OtherAuthorizations), to give effectto the intent ofthe legislature to provide for the intermediate review, by affected persons, of commission actions on applications forgrandfathered facility permits. Therefore, the commission is not adopting new procedures for grandfathered facility permits in this chapter.
SECTION BY SECTION DISCUSSION SubchapterH, Applicabilityand GeneralProvisions
The adopted new §39.404, Applicability for Certain Initial Applications for Air Quality Permits for Grandfathered Facilities, is necessary to implement requirements of 

### HB 2912, §§5.02

- 5.05. The existing §39.403, Applicability, was notavailable to be opened to propose and adopt changes to include applicability of public notice procedures for the new grandfathered facility permits. The commission believes that the requirements of 

### HB 2912, §§5.02

- 5.05 should be implemented**expeditiou~ly,** and therefore adopts new §39.404 to specify the applicability of Chapter 39 to the new grandfathered facility permits. 

### HB 2912, §5.03 created a new THSC, §382.05185, which established a new EGF permit for certain facilities located at a site for which the owner or operator has already applied for a permit under SB 7 and for the permitting of additional criteria pollutants at grandfathered coal-fired EGFs for which the owner or operator has already applied fora permit underSB 7. Section 382.05185 also provided that the permit application for such a permit be subject to notice and hearing requirements as proVided by THSC, §382.05191, as revised by HB 2912. The adopted new §39.404 implements this requirement by specifying the portions of Chapter 39, Subchapters Hand K, that apply to applications for an EGF permit.
HB 2912 also created new THSC, §382.05183 and §382.05186, which established existing facility permits and pipeline facilities permits, respectively, and §382.05181, which required that the permit applications forgrandfathered facilities permits were subject to notice and hearing requirements as provided by THSC, §382.05191. The adopted new§39.404 implementsthis requirement by specifying the portions of Chapter 39, Subchapters H and K, that apply to applications for existing facility permits and pipeline facilities permits.
The adopted amendments to §39.411, Text of Public Notice,
are necessary due to the addition of new §39.404, which adds existing facility permits and pipeline facilities permits. The existing §39.411 (b)(1 O)(B) specifies the requirement to include a statement in the public notice concerning the right to request
a notice and comment hearing in the text of the public notice for air applications described in §39.403(b)(11) or (12). The adopted §39.411 (b)(1 O)(B) specifies requirements for applications described in §39.403(b)(11) or (12), or §39.404 to include existing facility, pipeline facility, and EGF permits.
The adopted amendments to §39.419, Notice ofApplication and Preliminary Decision, are necessary due to the addition of new §39.404, which adds existing facility permits and pipeline facilities permits. The existing §39.419(e)(1)(D) refers to an application forinitial issuance ofa permitdescribed in §39.403(b)(11) or (12). The adopted §39.419(e)(1)(D) refers to an application for initial issuance of a permit described in §39.403(b)(11) or (12),
or §39.404. Applicants for initial issuance ofexisting facility permits and pipeline facilities permits will not be required to publish Notice ofApplication and Preliminary Decision.



## ADOPTEDRULES June 

## 7, 2002 

## 27 TexReg4949

### Additionally, revisions are adopted for §39.419(e)(3). The existing §39.419(e)(3) specifies publication requirementsfora Notice ofApplication and Preliminary Decision for permits that are not exempt under §39.419(e)(1)(A)

- (C) from publication requirements. The exemptions from publication in §39.419(e)(1) also includeasubparagraph (D). The adopted §39.419(e)(3) correctly refers to exemptions under §39.419(e)(1)(A)

- (D).
The adopted amendments to §39.420, Transmittal of the Executive Director's Response to Comments and Decision, are necessary to indicate that the transmittal is not required to include instructions for reconsideration of the executive director's decision orforrequesting acontested case hearingforexistingfacility permits, EGF permits, and pipeline facilities permits, in addition to VERPs, because permits for grandfathered facilities are not subject to the contested case hearing process. The adopted rules include a reference to THSC, §§382.05183, 382.05185, and 382.05186 in §39.420(c)(1). The existing §39.420(c)(1) only refers to applications for initial issuance ofVERPs underTHSC, §382.0519. Additionally, the adopted revisions delete the words "voluntary emission reduction" since multiple permit types are referenced in the adopted language. SubchapterK, Public Notice ofAirQualityApplications


### The adopted amendments to §39.603, Newspaper Notice,
are necessary to correct a subsection reference. The existing §39.603(e)(1) specifies that a small business applicant does not have to comply with subsection (a)(2) if certain conditions
are met. The reference to (a)(2) is incorrect. The adopted §39.603(e)(1) corrects this reference to subsection (c)(2), which specifies the requirements for the publication in the newspaper other than the legal section of the newspaper. The adopted amendments to §39.604, Sign-Posting, are necessary to correct
a typographical error in the existing rule.
The adopted amendments to §39.606, Alternative Means of Notice forVoluntary Emission Reduction Permits, are necessaryto
ensure that alternative means ofnotice are available for all small businesses who apply to permittheir grandfathered facilities.
FINAL REGULATORY IMPACTANALYSIS DETERMINATION
The commission reviewed the adopted rulemaking in lightofthe regulatory analysis requirements of Texas Government Code, §2001.0225, and determined that the changes to this chapter needed to implementthe procedural aspects of HB 2912, §§5.02

- 5.04 do not meetthe definition of a "major environmental rule"
as defined in that statute. The 77th Legislature, 2001, amended THSC to require that all grandfathered facilities obtain permits. The adopted rules implementthe procedural requirements associated with the permitting system created by HB 2912, including four different types of permits which will cover all grandfathered facilities, and provide forpotential emission reductions. The substantive requirements of the permitting system created by HB 2912 are contained in the 30 TAC Chapter 116 rulemaking, also adopted in this issue ofthe Texas Register.


### 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. Although the Chapter 116 rules adopted to implementthe HB 2912 sections concerning the substantive permitting requirements are intended to protect the environment or reduce risks to human health from environmental



## 27TexReg4950 June 7, 

## 2002 TexasRegister exposure and may have adverse effects on the economy, productivity, competition, orjobs ofthe state orasectorofthe state, the adopted new sections of Chapter 39 are merely procedural. Furthermore, the analysis required byTexas Government Code, §2001.0225(c) does notapply because the adopted rules do not meet any ofthe four applicability requirements of a major environmental rule. The adopted rules do not exceed astandard set by federal law, exceed an express requirement of state law, exceed a requirement of a delegation agreement, or adopt a rule solely under the general powers of the agency. The rules are adopted specifically to complywith HB 2912, and do not exceed the requirements ofthat bill.
TAKINGS IMPACT ASSESSMENT
The commission completed atakings impactassessmentforthe adopted rules. The purpose of the adopted rules is to create the procedural provisions necessary for the implementation of the substantive permitting requirements of HB 2912, and the adopted rules advancethis purpose bysupporting the permitting system created by HB 2912. This system includes four different types of permitswhich coverall grandfathered facilities, and provide for potential emission reductions.
The commission evaluated the adopted rules and performed
an assessment of whether Texas Government Code, Chapter 2007 is applicable. The commission's assessment indicated that Texas Government Code, Chapter 2007 does not apply to the adopted rules because this action qualifies for two exceptions to the application of Chapter 2007. First, this action is reasonably taken to fulfill an obligation mandated by federal law, and is therefore exempt under Texas Government Code, §2007.003(b)(4). The action is mandated by federal law because the rules will be submitted for EPA approval as part of the SIP, which is mandated by 42 United States Code (USC), §7410. Also, the adopted rules are a necessary component of the permitting program created by HB 2912 and implemented by the changes to Chapter 116, and implement requirements of 42 USC, §7410. Second, §2007.003(b)(13) states that Chapter 2007 does not apply to an action that: 1) is taken in response to a real and substantial threat to public health and safety; 2) is designed to significantly advance the health and safety purpose; and 3) does not impose a greater burden than is necessary to achieve the health and safety purpose. Although the rule revisions do not directly prevent a nuisance or prevent
an immediate threat to life or property, they do prevent a real and substantial threat to public health and safety. The revisions also significantly advance the health and safety purpose. The reductions in nitrogen oxides and volatile organic compounds that will occur through the implementation of the permitting. program created by HB 2912 significantly advance a health and safety purpose by assisting the state's efforts to attain the
ozone national ambient air quality standards set by the EPA under 42 USC, §7409 for nonattainment areas of the state, and maintain the quality of the state's air in attainment areas. Because any reductions required by these rules are no greater than those required by HB 2912 to implement the procedural requirements specified by the legislature, this action does not impose a greater burden than is necessary to achieve the health and safety purpose. In conclusion, this action is taken in response to a real and substantial threat to public health and safety, designed to significantly advance the health and safety purpose, and does not impose a greater burden than is necessary to achieve the health and safety purpose. Thus, this action is exempt from the application of Texas Government Code, Chapter2007 under§2007.003(b)(4) and §2007.003(b)(13).Finally, adoption and enforcement of these rules will not burden private real property. The adopted rules do not affect private property in a manner which restricts or limits an owner's right to the property that would otherwise exist in the absence ofgovernmental action. Consequently, the adopted rules do not meet the definition of a taking under Texas Government Code, §2007.002(5).
CONSISTENCY WITH THE COASTAL MANAGEMENT PROGRAM
The commission reviewed the rulemaking and found that the rules are neither identified in Coastal Coordination Act Implementation Rules, 31 TAC §505.11, norwill they affect any action
orauthorization identified in Coastal CoordinationAct Implementation Rules, 31 TAC §505.11. Although commission rules governing air pollutant emissions are subject to the Texas Coastal Management Program (CMP), the adopted actions concern only the procedural rules of the commission; do not govern or authorize any actions subjectto the CMP; and are not themselves capable of adversely affecting a coastal natural resource area. Therefore, the adopted rulemaking is not subjectto the CMP.
HEARING AND COMMENTERS
Public hearings on this rulemaking were held at the following times and locations: January 22, 2002, 7:00 p.m., Tyler Junior College Regional Training and Development Center, Room 104, 1530 South Southwest Loop 323, Tyler; January 23, 2002, 7:00 p.m., City of Houston City Council Chambers, 2nd Floor, 901 Bagby, Houston; January 24, 2002, 7:00 p.m., City of Odessa CityCouncil Chambers, 5th Floor, 411 West8th Street, Odessa; January28,2002, 6:30 p.m., Cityof Irving Central LibraryAuditorium, 801 West Irving Boulevard, Irving; and January 29, 2002, 2:00 p.m., Texas Natural Resource Conservation Commission, 12100 North 1-35, Building F, Room 2210, Austin.
The commission received comments from the following organizations and companies: Southeast Coalition of Civic Clubs (SCCC); St. Francis Xavier Catholic Church (St. Francis); Sierra Club Houston Regional Group (HSC); Texas Campaign forthe Environment (TCE); and Galveston-Houston Association for Smog Prevention (GHASP).
In addition, the commission received comments from, oron behalfof, the following elected officials: Mr. Larry Green representing the Honorable Sheila Jackson Lee, U.S. House of Representatives, Eighteenth District ofTexas; the Honorable Lon Burnam, District 90, Fort Worth, Texas House of Representatives; and the Honorable Ada Edwards, Council Member, District D, City of Houston. Representative Lon Burnam expressed supportforthe comments submitted by the Houston Sierra Club.
All commenters suggested changes to the proposed rules.
RESPONSE TO COMMENTS
HSC and GHASP commented that the commission should not require comments to be made in writing at a public meeting, since there are circumstances where individuals may prefer to make oral statements instead. HSC and GHASP alsostated that the commission should always record publicstatements so itcan use them later in the comment consideration process. GHASP stated that requiring comments to be in writing may be a violation ofthe federal Clean AirAct. Representative Lon Burnam stronglyopposed the requirementto submitall comments in writing. The commission has made no change in response tothese comments. The commission does accept oral comments made at formal public hearings. The commission will provide reasonable accommodations to any individual who may wish to comment
on a perll1it but has difficulty providing those comments in writing, inclUding assistance forthose persons who are blind, deaf,
or require interpreter assistance. The commission requests that such individuals notifythe commission staffsufficiently earlythat arrangements can be made to afford these individuals the opportunity to participate in the permitting process. Public meetings that may be held in conjunction with aspecificair permitare recorded and oral comments are accepted. The initial issuance ofagrandfatherpermit, with the exception ofsmall business stationary source permits, will be SUbject to notice and comment hearing procedures. Under these procedures, interested persons can request a hearing. The hearing is recorded, and oral comments are accepted. The commission is unaware ofany prohibition in thefederal Clean AirAct relating tothe requirementfor submission ofwritten comment. SCCC, St. Francis, Larry Green, and Council Member Edwards commented on the need forthe pUblic to be notified offacilities applying for permits. SCCC and Larry Green suggested a 60- to 90- day notice period. Council Member Edwards suggested six months to one yearfor notification of a facility applying for a permit.
The commission has made no changes to the rule in response to these comments. The commission agrees that it is important for the public to be notified of pending permit applications, and included adequate notice provisions in the proposed rules. The suggested notice periods of six months to one year would not provide adequate permit review and processing time because THSC, -§382.05181 (f) requires the commission to take final action on grandfatherpermit applicationswithin one yearofreceiving an administratively complete application. Sections 39.418 and 39.603 require all facilities except forfacilities qualifying for a small business stationary source permit to publish notice in a newspaper of general circulation in the municipality in which the facility is located or in the municipalitynearestthe location ofthe facility. The newspaper notice must be published no laterthan 30 days after the executive director declares an application administrativelycomplete. This notice is followed by a 30-day public comment period and is intended to give notification early in the permitting process that an application is under review. The 30-day comment period is not a notice that a permit is going to be issued in 30 days. If a hearing is requested and granted during this comment period, the comment period is actually extended beyond 30 days to the end of the hearing. Additionally, §39.604 requires applicants to place signs atthe site ofthe facility declaring the filing ofan application forthe permit and stating the manner in which the commission may be contacted for further information. Small business stationary source permits are exempted from the requirement to publish newspaper notice by THSC, §382.05184(f).
TCE requested clarification of the commission's determination that the changes to public notice requirements in Chapter 39 implementing HB 2912 §§5.02

- 5.04 do not meet the definition of a major environmental rule.
The commission's analysis regarding the regulatory impactanalysis determination is fully discussed elsewhere in this preamble. The commission providesthefollOWing discussion tosupplement that determination.



## ADOPTEDRULES June 7, 

## 2002 27 

## TexReg4951Filed with the Office ofthe Secretary ofState on May 23, 2002. TRD-200203187 Stephanie Bergeron Director, Environmental Law Division Texas Natural Resource Conservation Commission Effective date: June 12, 2002 Proposal publication date: January 11, 2002 Forfurther information, please call: (512) 239-4712 Filed with the Office ofthe Secretary ofState on May 23, 2002.
TRD-200203186 Stephanie Bergeron Director, Environmental Law Division Texas Natural Resource Conservation Commission Effective date: June 12, 2002 Proposal publication date: January 11, 2002 Forfurther information, please call: (512) 239-4712



## SUBCHAPTER K. PUBLIC NOTICE OF AIR QUALITY APPLICATIONS

30 TAC §§39.603, 39.604, 39.606
STATUTORY AUTHORITY
The amendments are adopted under THSC, TCAA, §382.011, which authorizes the commission to administerthe requirements of the TCAA; §382.012, which provides the commission the authority to develop a comprehensive plan for the state's air; §382.017, which authorizes the commission to adopt rules consistent with the policy and purposes of the TCAA; §382.0518, which authorizes the commission to issue permits for construction of new facilities or modifications of existing facilities; §382.05181, which requires grandfathered facilities to apply for
a permit and comply with its conditions by certain dates, and requires certain actions of the commission; §382.05182, which requires notices forthe shutdown ofcertain grandfathered facilities; §382.05183, which requires certain grandfathered facilities to obtain an existing facility permit; §382.05184, which requires certain grandfathered facilities to obtain a small business stationary source permit; §382.05185, which requires certain EGFs to obtain a permit; §382.05186, which requires certain reciprocating internal combustion engines to obtain a permit; §382.05191, which requires applications for certain permits to pUblish notice consistent with the procedures for federal operating permits; §382.05192, which requires that certain permits to be renewed in accordance with §382.055; §382.055, which authorizes the commission to establish procedures for review or renewal of a permit; §382.056, which authorizes the commission to require public notice of certain permit applications and procedures for requesting hearings and responding to comments; §382.0561, which authorizes hearing proceduresfor federal operating permits; §382.0562, which requires notices of decision; and TWC, §5.103, which authorizes the commission to adopt rules.
This agencyherebycertifiesthatthe adoption has been reviewed by legal counsel and found to be avalid exercise ofthe agency's legal authority. Implementing HB 2912, §§5.02

- 5.04 required changes to Chapter39. However, the substantive rule changes required bythese HB 2912 sections are found in Chapter 116. The changes in Chapter 39 are procedural support for the permitting changes in Chapter 116. Whether or not the rules are characterized as a major environmental rule, a regulatory impact analysis is required only if the rulemaking meets any of the four applicability requirements in Texas Government Code, §2001.0225(a). By applying these four factors to the adopted rules, the commission determined that the rules do not: 1) exceed a standard set by federal law; 2) exceed an express requirement of state law; 3) exceed a requirement of a delegation agreement or contract between the state and an agency or representative of the federal government to implement a state and federal program; or 4) adopt a rule solely under the general powers of the agency instead of under a specific state law. The rules are adopted specifically to comply with HB 2912 and do not exceed the requirements of that bill. The Chapter 39 adopted rules do not meet any ofthe applicability requirements in Texas Government Code, §2001.0225(a), and forthis reason the adopted rules are not subjectto a regulatory impact analysis underTexas Government Code, §2001.0225. 

## SUBCHAPTER H. 

## APPLICABILITY AND GENERAL PROVISIONS

30 TAC §§39.404, 39.411, 39.419, 39.420
STATUTORYAUTHORITY
The amendments and new section are adopted under THSC, TCAA, §382.011, which authorizes the commission to administerthe requirements ofthe TCAA; §382.012, which prOVides the commission the authority to develop a comprehensive plan for the state's air; §382.017, which authorizes the commission to adopt rules consistentwith the policy and purposesofthe TCAA; §382.0365, which authorizes and governs the commission's small business stationary source program; §382.0518, which authorizes the commission to issue permits for construction of
new facilities or modifications of existing facilities; §382.05181, which requires grandfathered facilities to apply for a permit and comply with its conditions by certain dates, and requires certain actions ofthe commission; §382.05182, which requires notices forthe shutdown of certain grandfathered facilities; §382.05183, which requires certain grandfathered facilities to obtain an existing facility permit; §382.05184, which requires certain grandfathered facilities to obtain a small business stationary
source permit; §382.05185, which requires certain EGFs to obtain a permit; §382.05186, which requires certain reciprocating internal combustion engines to obtain a permit; §382.05191, which requires applications for certain permits to publish notice consistent with the procedures for federal operating permits; §382.05192, which requires that certain permits to be renewed in accordance with §382.055; §382.055, which authorizes the commission to establish procedures for review or renewal of a permit; §382.056, which authorizes the commission to require public notice of certain permit applications and procedures for requesting hearings and responding to comments; §382.0561, which authorizes hearing procedures for federal operating permits; §382.0562, which requires notices of decision; and Texas Water Code (TWC)

, §5.103, which authorizes the commission to adopt rules.
This agencyherebycertifiesthatthe adoption has been reviewed by legal counsel and found to be avalid exercise ofthe agency's legal authority.



## 27TexReg 4952 

## June 7,2002 Texas Register 

# •

• 

# •

• 

# •

•own property; the property is in acountywith apopulation of less than 10,000; and they do not charge for the burning. Because ofthe limited circumstances underwhich burning is authorized, the commission anticipates that promulgation and enforcement of the adopted rule will not have a direct or significant adverse effect on any CNRAs, nor will the rulemaking have a substantive effecton commission actions subjecttothe CMP. Therefore, the rulemaking is consistentwith the applicable goals and policy. The commission invited public comment on CMP consistency determination, and no comments were received.
HEARING AND COMMENTERS
A public hearing on the proposal was offered in Austin on March 28, 2002. The public comment period closed on April 1, 2002, and no comments were received.
STATUTORY AUTHORITY
The amendment is adopted under Texas Health and Safety Code, Texas Clean AirAct (TCAA), §382.011, which authorizes the commission to administer the requirements of the TCAA; §382.012, which provides the commission the authority to develop a comprehensive plan for the state's air; §382.017, which authorizes the commission to adopt rules consistent with the policy and purposes of the TCAA; §382.018, which authorizes the commission to control outdoor burning; and §382.085, which prohibits unauthorized air emissions; and Texas Water Code, §5.103, which authorizes the commission to adopt rules.
This agency herebycertifiesthatthe adoption has been reviewed by legal counsel and found to be avalid exercise ofthe agency's legal authority.

Filed with the Office ofthe Secretary of State on May 23, 2002.
TRD-200203189 Stephanie Bergeron Director, Environmental Law Division Texas Natural Resource Conservation Commission Effective date: June 12, 2002 Proposal publication date: March 1, 2002 Forfurther information, please call: (512) 239-5017 

# • • 

# •
CHAPTER 116. CONTROL OF AIR POLLUTION BY PERMITS FOR NEW CONSTRUCTION ORMODIFICATION

The Texas Natural Resource Conservation Commission (commission) adopts amendments to SUbchapter A, Definitions, §116.10 and §116.18; and Subchapter I, Electric Generating Facility Permits, §§116.910, 116.911, 116.913, 116.921, and 116.930. The commission adopts new §§116.770

- 116.772, 116.774

- 116.777, 116.779

- 116.781, 116.783, 116.785

- 116.788, 116.790, 116.793

- 116.802, and 116.804

- 116.807 in Subchapter H, Permits for Grandfathered Facilities; and
new §§116.917, 116.918, 116.926, and 116.928 in Subchapter I. Sections 116.18, 116.771, 116.774 -116.776, 116.779, 116.780, 116.783, 116.787, 116.790, 116.797, 116.807, 116.911, 116.913, 116.917, and 116.928 are adopted 

### with changes to the proposed text as pUblished in the January 4, 2002 issue of the 

### Texas Register (27 TexReg 78). Sections 116.10,116.770,116.772,116.777,116.781,116.785,116.786, 116.788, 116.793

- 116.796, 116.798

- 116.802, 116.804

- 116.806, 116.910, 116.918, 116.921, 116.926, and 116.930



## 27TexReg 4954 

## June 7, 

## 2002 Texas Register are adopted 

### without changes and will not be republished. All sections of Subchapter H except, §116.776, will be submitted to the United States Environmental Protection Agency (EPA) as a revision to the state implementation plan (SIP). The new and amended sections of SubchapterA and I will also be submitted to the EPA as a revision to the SIP.
BACKGROUND AND SUMMARY OF THE FACTUAL BASIS FOR THE ADOPTED RULES During the 75th Legislature, 1997, House Bill (HB) 3019 directed the commission to develop avoluntary emissions reduction plan for the permitting of existing significant sources. These existing significant sources are commonly known as grandfathered facilities. A grandfathered facility is one that existed at the time the legislature created the Texas Clean AirAct (TCAA) in 1971. These facilities were not required to comply with (I.e., grandfathered from) the then new requirementto obtain permits forconstruction or modifications offacilities that emit air contaminants. Ifgrandfatheredfacilities had not been modified since 1971, they continued to be authorized to operate without a permit. The intent of HB 3019 was to create a program that would encourage the remaining grandfathered facilities to voluntarily obtain permits that would reduce the emissions from those facilities. In response to HB 3019, the commission created the Clean Air Responsibility Enterprise (CARE) Committee to develop recommendations for the voluntary permitting of grandfathered facilities.
In 1999, the 76th Legislature used the CARE Committee's recommendation as the basis for Senate Bill (SB) 766, which directed the commission to develop rules containing incentives for the voluntary permitting ofgrandfathered facilities. This program is known as the Voluntary. Emission Reduction Permit (VERP) program. The commission adopted rulesto implementtheVERP program on December 16, 1999. Since the VERP rules became effective, the owners and operatorsofa numberofgrandfathered facilities have taken advantage of the incentives offered by the VERP program and submitted VERP applicationsfortheirgrandfathered facilities. Additionally, the owners and operatorsofother grandfathered facilities have submitted permit-by-rule registrations and other new source review permit applications to permit their grandfathered facilities. The deadline to apply for a VERP
was August 31, 2001. Additionally, the 76th Legislature, 1999, amended the Texas Utilities Code, Title 2, Public Utility RegulatoryAct, Subtitle B, Electric Utilities, and created a new Chapter 39, Restructuring of Electric Utility Industryby adopting SB 7. SB 7 required the commission to implementthe permitting and allowance requirements of newTexas Utilities Code, §39.264, concerning Emissions Reductionsof"Grandfathered Facilities." SB 7required the commission to develop a mass cap and trade system to distribute emission allowances for use by electric generating facilities (EGFs). UnderSB 7, two categories of EGFs are eligible to use the proposed trading system. The first category consisted of EGFs in existence on January 1, 1999, which were not subjectto the requirementto obtain a permit underTCAA, §382.0518(g). These facilities are commonly referred to as grandfathered facilities. SB 7 also mandated that grandfathered EGFs applyfor a permit on or before September 1, 2000, and obtain a permit by, or cease operation after May 1, 2003. The second category of EGFsconsisted of permitted EGFs that were not subjectto the permitting requirements ofS8 7, yet elected to participate in the allowance trading system.

### Mostrecently, the 77th Legislature, 2001, amended Texas Health and SafetyCode (THSC), TCAAto requirethatall grandfathered facilities obtain permits. The mandatory permitting requirements of HB 2912 are the culmination of legislative efforts, beginning in 1997, to permitorotherwise authorize all grandfatheredfacilities. HB 2912 created four newtypes of permits for grandfathered facilities: existing facility permits; small business stationarysource permits; EGF permits; and pipeline facilities permits. HB 2912 also mandated the dates by which grandfathered facilities must applyforapermitand have controls operational orsubmitashutdown notice. Grandfathered facilities that are addressed by an application foraVERP are not required to complywith the provisions of HB 2912 for grandfathered facilities. However, grandfathered facilities that withdrawtheirVERP applications and elect tosubmitapermitapplication foran authorization underHB2912 will forfeit those incentives, including eligibility for amnesty from enforcement.
HB 2912 specifies certain requirements based upon the geographic location of the grandfathered facility. Grandfathered facilities must submit permit applications or notices of shutdown by September 1, 2003 forfacilities in East Texas; September 1, 2004 forfacilities in West Texas; and for small business stationary source permits, by September 1, 2004, irrespective of the location ofthe facility. The commission is required to act on applications by the first anniversary after receipt of an administratively complete application. HB 2912 provides that the applicant mayrequestaonetime, one-year, "good cause" extension oftime to install controls if the permit is not issued within the one year from receipt of an administratively complete application. This provision for a good cause extension has been added as new §116.771(b). Existing facility permits are available for all grandfathered facilities, and require consideration often-year-old bestavailable control technology (BACT), considering the age and remaining useful life of the facility. Existing facility flexible permits are also available for grandfathered facilities and facilities permitted under a VERp, located at a single site. Small business stationary
source permits are available for sources defined as asmall business stationary source in TCAA, §382.0365(h), and which do not have to submitemissions inventory information underTCAA, §382.014. Facilities eligible forsmall business stationary source permits may notemitaircontaminants after March 1, 2008 ifthey do not have apermit ora pending application. HB 2912 provides that gas-fired EGFs that were required to obtain a permit under SB 7, or were exempt from the requirement to obtain a SB 7 permit, are considered permitted for all air contaminants. The commission will issue a "permit" to these facilities. The permit will identify the facilities which have been permitted and will contain the general provisions in §116.913. Permits issued under §116.917 will receive the additional general and special conditions in §116.918. HB 2912 also provided that coal-fired EGFs thatwere required to obtain a permit underSB 7 are considered**~ermitted** 

### for nitrogen**o~ides** 

### (NO.),**sUlf~r** 

### dioxide (S02)' and particulate matter (PM) as It relates to opacity. HB 2912 further provides that coal-fired EGFs are eligible for an EGF permit forthe criteria pollutants notaddressed bythe SB 7permit. Additionally, TCAA, §382.05185 provides for the permitting of: 1) generators that do not generate electric energy for compensation and are not used more than 10% ofthe annual operating schedule; and 2) auxiliary fossil-fuel-fired combustion facilities that do not generate electric energy and do not emit more than 100 tons per year (tpy)of any air contaminant. Grandfathered reciprocating internal combustion engines that
are part of the processing, treating, compression, or pumping facilities connected to, or part of, a gathering or transmission pipeline may apply for a pipeline facilities permit. In the proposed rule, the commission provided that an applicant could apply for a single permit for all engines connected to a pipeline
or a separate permit for all discrete and separate engines. In this final rule, the commission is changing the rule language to read that the applicant may apply for a single permit for a group of engines connected to a pipeline or a separate permit for all discrete and separate engines. The commission is making this change in part due to the difficulty in determining where one pipeline ends and another begins, thus making it difficult to determine if all engines have been included in the permit. Additionally, the commission must allow for mandatory emission reductions to be achieved at either a single engine or by averaging reductions among multiple engines connected to
a pipeline. HB 2912 requires a 50% reduction in NO, emissions at facilities located in East Texas, and allows the commission to require up to a 50% reduction in volatile organic compounds (VOC). For facilities located in West Texas, the commission may require up to a 20% reduction in NO, and VOC emissions. For facilities located in West Texas, the commission will focus
on reductions that can be achieved at little or no capital cost. Owners or operators who elect to average among more than
one account cannot include reductions made to comply with other state or federal requirements. However, if the owner or operator does not average emissions to aChieve the mandatory reductions, they may include reductions made since January 1, 2001 to comply with otherstate or federal requirements. TCAA, §382.05181(h), provides that applications for pipeline facilities permits, existing facility permits, existing facility flexible permits, and EGF permits are subject to the public notice and hearing requirements of TCAA, §382.05191. TCAA, §382.05191 provides that public participation for initial issuance of a permit under TCAA, §§382.05183, 382.05185(c) or (d), 382.05186, or 382.0519 will be done in the manner of TCAA, §382.0561, concerning Federal Operating Permit; Hearing, and TCAA, §382.0562, concerning Notice of Decision. These sections allow for notice and comment hearings instead of contested case hearings under Texas Government Code, Chapter 2001. Notice and comment hearing procedures provide for public inspection of the draft permit and a 30-day comment period. In this comment period, any person may submit a written statement to the commission. Additionally, a person who may be affected by the emissions or a member of the legislature from the general area in which the facility is located
can request a hearing. At the hearing, any person may submit

an oral or written statement concerning the application. The public comment period extends to the close ofthe hearing. The commission will send notice of the final action on the permit to all persons who comment during the public comment period
or at a pUblic hearing. The notice will include a response to any comment submitted during the public comment period. The notice and comment hearing process is the same process authorized for VERPs by SB 766.
Small business stationary source permits are not subject to these notice and comment hearing procedures. Review and renewals of existing facility permits, EGF permits, pipeline facilities permits, and small business stationary source permits will be conducted under the same procedures for preconstruction permits, generally. Existing facility permits, EGF permits,



## ADOPTEDRULES June 7, 

## 2002 27 

## TexReg4955

### pipeline facilities permits, and small business stationary source permits are sUbject to judicial review, underTCAA, §382.032.
HB 2914, §78, 77th Legislature, 2001, created a new incentive program to assist in retrofitting reciprocating internal combustion engines associated with pipelines. The new TCAA, §382.051865, Reimbursement Program for Certain Emissions Reductions from Reciprocating Internal Combustion Eogines Associated with Pipelines, provides that the commission may develop a program, in cooperation with local governments, other agencies, and EPAto provide incentives to owners oroperators of reciprocating internal combustion engines that are required to make a 50% reduction in NO emissions under new TCAA, §382.05186, Pipeline Facilities Permits.
HB 2914, §78 also established an Emissions Reductions Incentives Account within the Clean Air Account Number 151. The section establishes guidelinesfor how any moneydeposited into this account is to be distributed to owners or operators making reductions in NO, emissionsfrom grandfathered reciprocating internal combustion engines associated with pipelines. HB 2914 provides for a partial reimbursement for the capital cost of installingtechnologyto reduce emissionsthat meetcertain criteria. To implement these revisions, the commission is adopting new §116.776, Distribution of Funds from the Emissions Reductions IncentivesAccountfor Control of Emissionsfrom Grandfathered Reciprocating Internal Combustion Engines Located in the East Texas Region, in Subchapter H. The section identifies the facilities which are eligible for a partial reimbursement forthe cost of controls. The rules also contain the criteria the commission will considerin determining whowill receive moneyfrom the account and how much money a particular facility will receive. In order to be eligible for reimbursement under this program, the owner oroperatorofa grandfathered reciprocating internal combustion engine must make at least a 50% reduction in actual emissions of NO. as compared to the emissions reported for the facility in the 1997 industrial point source emissions inventory. The commission believes that an actual reduction in emissions is necessaryto receive reimbursement in orderto assure that air quality benefits will be achieved underthis incentive program. Another criteria for reimbursement is the requirementto obtain a pipeline facilities permitorreplacethe grandfathered enginewith an electric engine. This implementsthe HB 2914 requirementthat limits reimbursement to facilities required to achieve a 50% reduction in NO, emissions. Facilities that obtain pipeline facilities permits
are the onlyfacilities required to achieve a50% reduction in NO,

. emissions and the replacement of grandfathered engines with electric engines will eliminate that source of NO, emissions. In response to comments, the commission has made changes to when the owner or operator of a pipeline facility must request reimbursement from the Emissions Reductions Incentives Account. These changes are described in the response to comments. The commission also changed §116.776(a)(10) to clarify that only facilities required by any other state or federal law to make reductions in emissions of NO, are not eligible for reimbursement. In the proposed rule, the commission identified the following criteria for distribution: location of the facility; percentage of reduction in the hourly emissions of NO,; cost effectiveness of the controls; and when the reductions are actually achieved and the request for reimbursement is received. Due to the changes in when the request for reimbursement must be received, the commission is deleting when the request for reimbursement is received as a criteria for reimbursement. The remaining criteria will provide incentivesto ensure that reimbursementsforemission reductions are prioritized forthose reductions



## 27TexReg 4956 

## June 7, 

## 2002 Texas Register that occur in areas of the state where those reductions will be beneficial, for projects that achieve the highest percentage reductionsfirst, are most cost effective, and for projects that occur early. Weighting the criteria to provide for larger, cost effective, earlier reductions considering the area of the state where the reduction is proposed will maximize the air quality benefits for the state. Guidance concerning the implementation ofthe reimbursement program is still under development by the commission. Interested stakeholders will be provided the opportunity to comment on the guidance before the guidance is finalized.
The proposal contained language allowing the commission to delegate to the executive directorthe authorityto take action on permit applications for grandfathered facilities. The commission solicited comment on the proposal to delegate to the executive directorthe authority to take any action on these grandfathered facility permits, and also to make decisions regarding the implementation and administration ofthe permitting program, generally. The commission received no comments in response to this solicitation. Therefore, the commission has changed the rule inthe delegation sections to statethatthe commission delegatesto the executive directorthe authorityto take anyaction on these grandfathered facility permits, and also to make decisions regarding the implementation and administration of the permitting program, generally. As a consequence of this delegation, it is necessary for the commission to change the Notice of Final Action sections of the rule to allow for the filing of a motion to overturn ratherthan a petition for rehearing. In addition, the commission has added language to §116.928 that states that any Notice of Final Action sent regarding a permit action under Subchapter I will state that a person affected by a decision of the executive director may file a motion to overturn the executive director's decision under §50.139 rather.than a petition for rehearing. It was necessary to add this language to §116.928 because the commission did not originally propose changes to §116.922 (relating to Notice of Final Action). The commission has proVided further detail concerning the specifics ofthis rulemaking in the Response to Comments portion ofthis preamble.
To implement these revisions to TCAA, the commission adopts
new and amended rules in Chapter 116, SubchapterA, Definitions; Subchapter H, Permits for Grandfathered Facilities; and Subchapter I, Electric Generating Facility Permits. Additionally, revisions to 30 TAC Chapter 39, Public Notice, are necessary to implement the provisions of HB 2912. The adopted amendmentsto Chapter39 are also published in this issue ofthe Texas Register.


### SECTION BY SECTION DISCUSSION Subchapter

### A, Definitions


### The adopted amendment to §116.1 0, General Definitions, revises the definition of "grandfathered facility" to be consistent with TCAA, §382.0518(g). The revised definition clarifies that
a grandfathered facility is one that is not a newfacility, was constructed prior to August 30, 1971 (or no construction contract
was executed on or before August 30, 1971 that specified a beginning construction date on or before February 29, 1972) and has not been modified since August 30, 1971.
The amendments to §116.18, Electric Generating Facility Permits Definitions, are adopted with changes to the proposed text. The adopted amendments add a definition for "natural gas-fired electric generating facility" for consistency with the EGF permit requirements of HB 2912. HB 2912, in TCAA, §382.05185(i), provides that a natural gas-fired EGF includes afacility thatwas

### designed to burn eithernatural gas orfuel oil ofagradeapproved by commission rule. In general, physical oroperational changes at a facility to allow the burning of fuel oil will be considered a part ofthe design as long as they do not constitute a modification ofthefacility. Itisthe commission's position that"designedto burn" usually meansthat all ofthe necessaryequipment (including fuel oil tanks, fuel lines, atomizers, and pre-heaters if necessary) were constructed and maintained as partofthe grandfathered EGF. Any modification necessaryto allowan EGFto burn fuel oil will be required to comply with the requirements of Subchapter B, New Source Review Permits, before beginning the construction.
The commission conducted a modeling analysis of grandfathered EGFs with the potential to burn fuel oil in all areas of the state. The commission looked at the maximum short-term emission rate for SO, associated with burning fuel oil. The modeling approach assumed all facilities operated continuously at maximum firing rate. This approach is conservative because not all grandfathered gas-fired EGFs designed to burn fuel oil will be firing fuel oil atthe maximum firing rate atthe same time. A screening procedure was used for the initial analysis. For those sites that did not meet screening criteria, a more detailed analysis was performed. The commission first looked at firing fuel oil with a sulfur content of 0.3% by weight or less for those facilities in Harris and Jefferson Counties and fuel oil with a sulfur content of 0.7% by weight or less for all other counties in the state. Facilities in Harris and Jefferson Counties are limited to burning fuel oil with a sulfur content of 0.3% by weight or less by current rules. Using the approach outlined previously, the SO, maximum predicted ground level concentrations were compared to relevant air standards. For the initial screening procedure, all concentrations were below standards, with the exception ofthe state SO, 30-minute standard. Two sites were identified as potentially exceeding the state SO, standard. These sites were then modeled again using a more detailed analysis. The number of hours these sites were predicted to exceed the SO, standard were counted at each point and found to be less than 0.15% of all hours modeled. Due to the conservative nature of the modeling demonstration, which
assumes all sources operating atfull capacity simultaneously at all hours ofthe year, 100% compliance with the state SO, standard is expected. Metals have been identified as the primary hazardous air pollutant associated with the burning of fuel oil. Adverse impacts from metals are caused by long-term exposure to unacceptable levels of emissions. The commission does not expect long-term exposure to metals emissions because fuel oil is only burned for short periods of time due to natural gas curtailments or extremely high natural gas prices. Historical data has shown that these curtailments and high natural gas prices have occurred infrequentlyand lastonly forshort periods of time. Thus, the commission does not expect any adverse health effects associated with the burning of fuel oil. However, the commission has added a general condition to §116.913 requiring the EGF to keep records offuel oil burning and submit those records with the report required under §101.336(b). In addition, EPA is developing a maximum achievable control technology (MACT) standard which is expected to address emissions of metals, primarily nickel, from fuel oil fired EGFs. Any EGF which burns fuel oil for any extended period of time would likely be subjectto this MACT standard. The commission has also added language in §116.913(a)(8) that clarifies thatthe burning ofwaste or used oils is notauthorized underSubchapter I. 

### Based on this analysis, and with the limitations mentioned previously, the commission's Toxicology and Risk Assessment Section has concluded that burning American Society for Testing and Materials (ASTM) grades of fuel oil or any blend of ASTM grades of fuel oil, as limited by the adopted rules, will not pose adverse health or welfare effects in the general public. The establishment ofacceptable fuel oil grades does not relieve the owner or operator of a natural-gas-fired EGF from the responsibility to comply with any emissions limitations or conditions of any permit orstate orfederal regulation.
The adopted amendments also add a definition for "normal annual operating schedule." This definition is needed to establish the normal annual operating schedule at an EGF site. The normal annual operating schedule is needed to determine ifa generatorthat the owner or operator is seeking to permit under an EGF permit is used not more than 10% ofthe normal annual operating schedule as required by TCAA, §382.05185(d)(1). The final rule establishes the normal operating schedule as the maximum numberofoperating hours for an EGF in any 12 consecutive month period between 1997 and 1999. For sites with more than one EGF, the owner or operator may use the EGF with**~he** 

### highest number of operating hours. SubchapterH, Permits forGrandfatheredFacilities


### The adopted amendmentsto SubchapterH include changing the subchaptertitle from "Voluntary Emission Reduction Permits" to "Permits for Grandfathered Facilities" in orderto correctly reflect the modified content of the subchapter. The subchapter has been divided intofourdivisions. The existing sections ofthe subchapterare placed into Division 4, Voluntary Emission Reduction Permits. Division 1, General Applicability; Division 2, Small Business Stationary Source Permits, Pipeline Facilities Permits, and Existing Facility Permits; and Division 3, Existing Facility Flexible Permits contain newsections ofSubchapter H adoptedto implement and administerthe requirements of HBs 2912 and 2914.
Division 

### 1, GeneralApplicability


### Division 1 contains the general requirement for a grandfathered facilityto obtain apermit, permit by rule, orshutdown. The owner oroperatorofa grandfathered facility mustchoose which permitting option is bestfor his or herfacility and situation. Ifthefacility meets the qualifications, the owneroroperator maychoose one of the new types of types of permits for grandfathered facilities contained in Division 2 and 3 of this subchapter or the electric generating facility permit contained in Subchapter 

### I. The owner oroperator may also choose any other permittype underChapter 116 or permit by rule underChapter 106forwhich the facility qualifies as long as the application is submitted bythe applicable deadline contained in this division. Adopted new §116.770, Requirements to Apply, contains the deadlines by which the owner
oroperator of a grandfathered facility must applyfor a permit to operate that facility under Chapter 116, qualify for a permit by rule under30 TAC Chapter 106, orsubmit a notice ofshutdown. As required by HB 2912, a permit application or notice of shutdown must be submitted before September 1, 2003, forfacilities located in the EastTexas region and before September 1, 2004, forfacilities located in theWestTexas region and EI Paso County. HB 2912 defines the EastTexas region as all counties traversed by or east of Interstate Highway 35 North of San Antonio ortraversed byoreast of Interstate Highway 37 South ofSan Antonio, including Bexar, Bosque, Coryell, Hood, Parker, Somervell, and Wise Counties. The West Texas region is then defined as all counties not contained in the East Texas region. This definition is slightly differentfrom the definition created by SB 7 in thatthe SB 7 definition for West Texas region does not include EI Paso



## ADOPTEDRULES June 7, 

## 2002 27 

## TexReg4957

### County. Therefore, ratherthan create a new definition, the commission uses the language, "West Texas Region as defined in §101.330 ofthistitle (relating to Definitions) and EI PasoCounty" in place ofthe West Texas region as defined by HB 2912.
New §116.771, Implementation Schedule for Additional Controls, is adopted with changes to the proposed text. The adopted new section explains in subsection (a) the implementation schedule to be contained in a permit if the installation of additional controls is required for a grandfathered facility to meet an emissions limit for a pollutant. As required by HB 2912, required controls must be installed and operating before March 1, 2007, forfacilities located in the EastTexas region and before March 1, 2008, for facilities located in the West Texas region and EI Paso County. Also as provided by HB 2912 the applicant may request a onetime, up to one-year "good cause" extension ofthe time to install controls ifthe permit is not issued within one year of the receipt of an administratively complete application. This good cause extension language has been added as §116.771(b).
Consistent with TCM, §382.05182, Notice of Shutdown, adopted new §116.772, Notice of Shutdown, establishes the procedures for submitting a notice of shutdown in lieu of obtaining a permit for a grandfathered facility, and the deadlines by which agrandfatheredfacilityshutting down mustcease emitting air contaminants. Facilities for which the owner or operator submits a notice of shutdown by the application deadlines contained in §116.770 may continue to operate until March 1, 2007, ifthe facility is located in the East Texas region or March 1, 2008, if the facility is located in the West Texas region or EI Paso County. The deadlines for sources eligible for a small business stationarysource permitare described in the following discussion of §116.774. Facilities that have been shut down and for which a notice of shutdown has been submitted must obtain authorization under Chapter 116 or Chapter 106 prior to restarting operations. In order to enable the commission to keep better track of facilities which are shut down, the notice of shutdown will be required to include, at a minimum, an identification ofthe facility being shut down, the date the facility intends to cease operating, and an inventory of the type and amount of emissions that will be eliminated.
Division 

### 2, Small Business Stationary Source Permits, Pipeline Facilities Permits, and Existing FacilityPermits


### New §116.774, Eligibility for Small Business Stationary Source Permits, is adopted with changes to the proposed text. The adopted new section states the facilities which are eligible for
a small business stationary source permit in accordance with TCM, §382.05184. Onlythe owners oroperators offacilities located at small business stationarysources as defined by TCM, §382.0365(h), and which are not required by TCM, §382.014 to submitemissions inventories to the commission mayapplyfor
a small business stationary source permit. The owner or operator must apply for the small business stationary source permit before September 1, 2004. The new section specifies that any grandfathered facility, inclUding any facility for which the owner oroperator has submitted a notice ofshutdown underproposed §116.772, located at a small business stationary source may not emit aircontaminants on or after March 1, 2008, unless the facility is permitted or has a pending permit application under Chapter 116, ora pending registration fora permit by rule under Chapter 106. The new section also requires an application for a small business stationary source permit to be submitted under the seal ofaTexas licensed professional engineer, if required by



## 27TexReg 4958 

## June 7, 

## 2002 Texas Register §116.11 O(e), and states thatthefacility's owneroroperatoris responsible forapplying forthe permitand complying with the subchapter. The commission revised §116.774(b) to clarify that a small business stationary source may not emit air contaminants
on or after March 1, 2008, unless the facility is permitted, has a permit application pending, or has a registration or pending registration for a permit by rule.
New §116.775, Eligibility for Pipeline Facilities Permits, is adopted with changes to the proposed text. The adopted new section identifies the facilities which are eligible for a pipeline facilities permit in accordance with TCM, §382.05186. The
owner or operator of a grandfathered reciprocating internal combustion engine or group of engines that are part of processing, treating, compression, or pumping facilities connected to or part of a gathering ortransmission pipeline may apply for
a pipeline facilities permit. The new section also requires an application for a pipeline facilities permit to be submitted under the seal of a Texas licensed professional engineer, if required by §116.110(e), and states that the facility's owner or operator is responsible for applying forthe permit and complying with the subchapter. The new section allows the owner or operator of
more than one grandfathered reciprocating internal combustion engine to apply for a pipeline facilities permit for a single grandfathered engine or for a group of grandfathered engines connected to or part of a gathering or transmission pipeline. The commission revised §116.775(d) to clarifythatthe owner or operator may apply for a permit for a single engine or a group of engines.
New§116.776, Distribution of Funds from the Emissions Reductions Incentives Account for Control of Emissions from Grandfathered Reciprocating Engines Located inthe EastTexas Region, is adopted with changes tothe proposed text. The adopted new section implements the requirements of HB 2914, §78 to establish procedures and criteriafor reimbursementto owners oroperatorsforthe partial costofinstalling controlsto reduce emissions from grandfathered reciprocating internal combustion engines at facilities associated with pipelines. The new section establishes which facilities will be eligible for reimbursement, the limitations
on reimbursement, and the criteria for distribution. The adopted subsection (a)(6) was revised to require identification ofthosefacilities requesting a reimbursement from the Emissions Reductions IncentivesAccountatthetimethe permitapplication isfiled. However, no money can be paid to a facility until the permit is issued and the required reductions have been accomplished at thefacility. The commission also clarified in §116.776(a)(10) that only the owners or operators of grandfathered engines required to reduce emissionsof NO, bysomeotherstate orfederal laware not eligible for reimbursement. Because grandfathered engines in nonattainment areas for ozone are required to reduce emissions of NO" they are not eligible for reimbursement. Therefore, the adopted criteria for distribution in subsection (c)(1) will only consider whether a facility is located in an attainment area for
ozone or a near nonattainment area for ozone. Although HB 2912 limits reimbursement to the owners or operators of those facilities required to reduce emissions of NO, 

### by 50% because they are seeking a pipeline facilities permit, the commission believes it is also appropriate to provide the opportunity for reimbursement to certain owners or operators who choose to replace their grandfathered internal combustion engines with new electric engines. This section will allow the commission to process requests for reimbursement for the replacement of grandfathered reciprocating internal combustion

### engines through the registration ofthe replacement electric engines. Registration ofthe electric engines is necessary because there is no requirement to permit an electric engine since there
are no emissions associated with electric engines. Adopted new §116.777, Eligibility for Existing Facility Permits, statesthefacilities which are eligibleforan existingfacility permit in accordance with TCAA, §382.05183. The owner or operator ofanygrandfatheredfacility mayapplyforan existing facility permit. The new section also requires an application for an existing facility permitto be submitted underthe seal ofaTexas licensed professional engineer, ifrequired by§116.110(e), and statesthat the facility's owneroroperator is responsible for applying forthe permit and complying with Subchapter H.
New §116.779, Applications for Small Business Stationary Source Permits, Pipeline Facilities Permits, cir Existing Facility Permits, is adopted with changes to the proposed text. The adopted new section specifies the application requirements and demonstrations which must be met in order for a facility to be granted a small business stationary source permit, pipeline facilities permit, or existing facility permit. These requirements
are consistent with the requirements for other permits issued under Chapter 116. Adopted new §116.779(a)(1) provides that the emissions from the facility must comply with the rules and regulations of the commission, including the protection of public health and physical property. The commission may not issue a permit for
a grandfathered facility if it finds that the emissions from the grandfathered facility will not be protective of public health and physical property. The requirement to protect public health and physical property is also included in the adopted §116.794(1), concerning existing facility flexible permits and the adopted §116.917(a)(1), concerning permits for certain grandfathered coal-fired EGFs and certain grandfathered facilities located at EGF sites. In order to assure that permits are protective of public health and property, the commission will conduct an appropriate health effects review for each permit application for
a grandfathered facility. Details of what the review will entail will be developed and provided in a guidance document. The guidance document will be published at a later date, and the commission will invite stakeholder input prior to finalizing the guidance. The permit may also have provisions for the measurement of air contaminants, including installation of sampling ports and sampling platforms.
In orderto be consistent with the current review process for permits and applicable federal requirements, §§116.779, 116.794, and 116.917 require the owner or operator of a grandfathered facility applying for a small business stationary source permit, pipeline facilities permit, existing facility permit, existing facility flexible permit, or EGF permit to be able to demonstrate that they meet applicable federal New Source Performance Standards (NSPS) and National Emission Standards for Hazardous Air Pollutants (NESHAP). Facilities must be able to meet performance standards specified in the application and may be required to provide information thatdemonstrates ongoing compliance after the permit is issued. If applicable, facilities would be required to comply with Prevention of Significant Deterioration (PSD) and nonattainment review as specified in Chapter 116, Subchapter B. Since grandfathered facilities must comply with federal requirements, ifapplicable, it is appropriateto ensurethat thesefacilities are in compliance with federal requirements in the process of reviewing applications. These sections also require the facility to submit air dispersion modeling if a more refined health effects review is required. Finally, these sections require the application to identify each grandfathered facility to be included in the permit, identify the air contaminants emitted, and provide emission rate calculations. Adopted new §116.779(b) specifies additional requirements which applyto applicants fora pipelinefacilities permit. In accordance with TCAA, §382.05186(e), facilities located in the East Texas region will be required to demonstrate that each engine will achieve at least a 50% reduction of the hourly emissions rate of NO" and may also be required to demonstrate a 50% reduction ofthe hourly emissions rate of VOC, both expressed in terms of grams per brake horsepower-hour (g/bhp-hr). Consistent with TCAA, §382.05186(f), the new section also states that the commission shall require up to a 20% reduction in the hourlyemissions rate of NO, and may require up to a20% reduction in the hourly emissions rate of VOC, expressed in terms ofg/bhp-hr, forfacilities located in the West Texas region
or EI Paso County. In accordance with TCAA, §382.05186(b), the proposed section allows the owner oroperatorof more th.an
one grandfathered reciprocating internal combustion engine to average the reductions achieved among more than one engine connected to or part of a gathering or transmission pipeline in orderto demonstrate the required reductions or to demonstrate that the required reductions will be achieved at each individual facility. Consistent with TCAA, §382.05186(c) and (d), the new section states that, ifthe owner or operator chooses to average among engines located in both the East and WestTexas regions
or EI Paso County, the owner or operator must demonstrate that the sum of the reductions achieved from all ofthe engines located in the East Texas region will achieve the 50% reduction required for facilities located in the East Texas region. If the emission reductions required by this adopted subsection will be achieved by averaging reductions, the rule also states that the average may not include emission reductions achieved in order to comply with any other state or federal law. If the emission reductions required by this adopted subsection will be achieved atone account, the rule allows the reduction to include emission reductions achieved since January 1, 2001 in order to comply with another state or federal law. Adopted §116.779(c) specifies additional requirements with which applicants for an existing facility permit will have to comply. In accordance with TCAA, §382.05183(b), applicants for existing facility permits will have to propose an air pollution control method that is at least as beneficial as the BACT that the commission required or would have required for a facility of the same class or type as a condition of issuing a permit or permit amendment 120 months (ten-year-old BACT) before the submittal of the existing facility permit application, considering the age and remaining useful life of the facility, and identify the date by which the control method will be implemented.
New§116.780, Public Participation for Initial IssuanceofPipeline Facilities Permits and Existing Facility Permits, is adopted with changestothe proposed text. The adopted newsection requires thatan applicantfora pipeline facilities permitoran existingfacility permitpublish notice ofintentto obtain a permitin accordance with Chapter 39, Subchapters Hand K. The new section establishes that any person who may be affected by emissions from the grandfathered facility seeking a permit may request that the commission hold a notice and comment hearing on the permit application. The new section states that any hearing request must be submitted during the 3D-day comment period, which ends 30 days after publication of the notice of intent. The new



## ADOPTED

## RULES June 7, 

## 2002 27 

## TexReg4959

### section specifies the procedures and requirements forthe hearing and the rights ofaffected persons. In accordancewith TCM, §382.05181, small business stationary source permits are not subject to these notice and comment hearing procedures. The commission corrected a typographical error in §116.780(d) to correctly reference procedures in §116.783. Adopted new §116.781, Notice and Comment Hearings for Initial Issuance of Pipeline Facilities Permits and EXisting Facility Permits, specifies the applicability of the hearing requirements in the section, the responsibilities of the commission in determining whetheror notto hold a hearing, the applicant's responsibilities if a hearing is to be held, and the requirements regarding submission of oral or written statements and data concerning a draft permit. TCM, §382.05181(h) provides that applications for pipeline facilities permits, existing facility permits, existing facility flexible permits, and EGF permits are subject to the public notice and hearing requirements of TCM, §382.05191. TCM, §382.05191 provides that public participation for initial issuance ofa permit underTCM, §§382.05183, 382.05185(c) or (d), 382.05186, or382.0519will be done in the mannerofTCM, §382.0561, concerning Federal Operating Permit; Hearing, and §382.0562, concerning Notice of Decision. These sections allow for notice and comment hearings instead of contested case hearings underTexas Government Code, Chapter2001, and require the commission to send notice of final action to persons who comment during the comment period or during a hearing.
New §116.783, Notice of Final Action on Pipeline Facilities Permit Applications and Existing Facility Permit Applications, is adopted with changes to the proposed text. The adopted new section specifies the commission's responsibilities for sending notice ofthe final action on an application for a pipeline facilities permit or an existing facility permit, and the information that

. the. commission must include in the notice. The new section

will require the commission to individually notify persons who commented during the public comment period or at a permit hearing, of the final action of the commission. The notice must be sent by first-class mail to the commenters and to the applicant. The proposed rule stated thatthe notice must include the response to comments, the identification of any changes in the permit, and a statement that any person affected by the decision of the commission may petition for rehearing and for judicial review. Because, in §116.790, the commission is delegating to the executive director the authority to take any action on a permit issued under this division, this section now requires that the notice state that any person affected by the decision of the executive director may file a motion to overturn ratherthan a petition for rehearing. Adopted new §116.785, Permit Fee, establishes a permit fee of $450 for persons applying for a permit under Subchapter H, Division 1, unlessthe facility is asmall business stationarysource, as defined by TCM, §382.0365(h), then the fee will be $100. These fees will allow the commission to partially offset the cost ofprocessing the applications. The newsection also establishes requirements for payment and return of fees. TCM, §382.062 authorizes the commission to establish fees for permits. Adopted new §116.786, General and Special Conditions, allows the commission to include general and special conditions in the permits issued underSubchapter H, Division 2, and requiresthat permit holders comply with any and all general and special conditions that the permit may contain. The new section also lists the general conditions permit holders are SUbject to, regardless



## 27TexReg 4960 June 7, 

## 2002 Texas Register of whether they are specifically stated within the permit document. These requirements are consistent with the requirements for other permits issued under Chapter 116.
New §116.787, Amendments and Alterations of Permits Issued Under this Division, is adopted with changes to the proposed text. The adopted newsection specifiesthatowners oroperators planning the modifications of a facility permitted under Chapter 116, Subchapter H, Division 2, must comply with the requirements ofSubchapter B, New Source Review Permits, before beginning the construction of the modification. The new section also states that amendments and alterations of permits issued underSUbchapter H, Division 2, are subjectto the requirements of Subchapter B. The commission corrected atypographical error in this section. Adopted new §116.788, Renewal of Permits Issued Under this Division, implements TCM, §382.055 and the changes to §382.05192 to require that small business stationary source permits, pipeline facilities permits, and existing facility permits be renewed in accordance with Chapter 116, Subchapter D, Permit Renewals.
New §116.790, Delegation, is adopted with changes to the proposed text. In accordance with the commission's authority under TCM, §382.061, and Texas Water Code (TWC)

, §5.122, adopted new §116.790 delegates to the executive director the authority to take any action on a permit issued under Subchapter H, Division 2.

Division 

### 3, Existing Facility Flexible Permits 

### Adopted new §116.793, Eligibility for EXisting Facility Flexible Permits, identifiesthe conditions underwhich agrandfatheredfacility orgroup ofgrandfathered facilities is eligible for an existing facility flexible permit in accordance with TCM, §382.05183(c)

. Consistent with §382.05183(c), the new section also allows facilities permitted under §382.0519 to be included in the existing facility flexible permit. The new section requires an application for an existing facility flexible permit to be submitted under the seal of a Texas licensed professional engineer, if required by §116.110(e). The new section also requires specific actions by
owners or operators of facilities covered by an existing facility flexible permitforchanges ofownership. The newsection specifiesthatthefacility's owneroroperatoris responsibleforapplying for the permit and complying with Subchapter H, except after a change of ownership as explained in the section. Adopted new§116.794, Existing Facility Flexible PermitApplication, specifies the application requirements and demonstrations which must be met in order for a facility to be granted an existing facility flexible permit. These requirements are consistent with current flexible permit requirements, exceptforthe required level ofcontrol. The level ofcontrol required bythe adopted section, consistentwith the requirement ofTCM, §382.05183, is at least as beneficial as ten- year-old BACT, considering the age and remaining useful life ofthe facility. Adopted new §116.795, Public Participation for Initial Issuance of Existing Facility Flexible Permits, requires that an applicant for an existing facility flexible permit publish notice of intent to obtain a permit in accordance with Chapter 39, Subchapters H and 

### K. The new section establishes thatany person who may be affected by emissions from the grandfathered facility seeking a permit may request thatthe commission hold a notice and comment hearing on the permit application. The new section states that any hearing request must be submitted during the 30-daycomment period, which ends 30 days after pUblication ofthe notice of intent. The new section specifies the procedures and requirements forthe hearing and the rights of affected persons. Adopted new §116.796, Notice and Comment Hearings for Initial Issuance of Existing Facility Flexible Permits, specifies the applicability of the hearing requirements in the section, the responsibilities ofthe commission in determining whether or not to hold a hearing, the applicant's responsibilities if a hearing is to be held, and the requirements regarding submission oforal or written statements and data concerning a draft permit. TCAA, §382.05181(h) provides that applications for pipeline facilities permits, existing facility permits, existing facility flexible permits, and EGF permits are subject to the public notice and hearing requirements of §382.05191. TCAA, §382.05191 provides that public participation for initial issuance of a permit under §§382.05183, 382.05185(c) or (d), 382.05186, or 382.0519 will be done in the mannerofTCAA, §382.0561, concerning Federal Operating Permit; Hearing, and §382.0562, concerning Notice of Decision. These sections allow for notice and comment hearings instead of contested case hearings under Texas Government Code, Chapter 2001, and require the commission to send notice of final action to persons who comment during the comment period or during a hearing.
New §116.797, Notice of Final Action on Existing Facility Flexible PermitApplications, is adopted with changes tothe proposed text. The adopted new section specifies the commission's responsibilities for sending notice of the final action on an application for an existing facility flexible permit and the information thatthe commission must include in the notice. The newsection requires the commission to individually notify persons who commented during the public comment period or at a permit hearing, of the final action of the commission. The notice must be sent by first-class mail to the commenters and to the applicant. The proposed rule stated that the notice must include the response to comments, the identification of any changes in the permit, and a statementthatany person affected bythe decision ofthe commission may petition for rehearing and forjudicial review. Because, in §116.807, the commission is now delegating tothe executive directorthe authoritytotake any action on a permit issued underthis division, this section now requires that the notice state that any person affected bythe decision ofthe executive director mayfile a motion to overturn ratherthan a petition .for rehearing. Adopted new §116.798, Permit Fee, establishes a permit fee of $450forpersons applying fora permit underSubchapter H, Division 3, unlessthefacility is a small business stationarysource facility, as defined byTCAA, §382.0365(h), and then the fee would be $100. These fees will allow the commission to partially offset the cost of processing the applications. The new section also establishes requirements for payment and return offees. TCAA, §382.062 authorizes the commission to establish fees for permits. Adopted new §116.799, General and Special Conditions, requires that permit holders comply with any and all general and special conditions that the existing facility flexible permit may contain. The new section states that upon a specific finding by the executive director that an increase of a particular air contaminant could result in a significant impact on the air environment, or could cause the facility, group of facilities, or account to become subject to review under §116.150 and §116.151 and §§116.160

- 116.163 (relating to Nonattainment Review or Prevention of Significant Deterioration Review), or Subchapter C of Chapter 116 (relating to HazardOUS Air Pollutants: Regulations Governing Constructed or Reconstructed MajorSources (FCAA, §112(g), 40 CFR Part 63)), the permit may include a special condition which requires the permittee to obtain written approval from the executive director before constructing afacility undera standard permitora permit by rule underChapter 106. Additionally, the new section specifies that a pollutant specific emission cap or multiple emission caps and/or individual emission limitations shall be established foreach aircontaminantforall facilities authorized by the permit. The new section also lists the general conditions applicable to every existing facility flexible permit and statesthatthere may be additional special conditions attachedto
an existing facility flexible permit upon issuance or amendment ofthe permitthat may be more restrictive than the requirements of the section. These requirements are consistent with the requirements forflexible permits issued underSubchapter G. Adopted new §116.800, Emission Caps and Individual Emission Limitations, specifies the criteria for establishing the emission cap for a specific pollutant and the criteria for establishing ?:In individual emission limitation for a pollutant. The new section also specifies the requirements for readjustment ofthe emission cap when a facility is shut down, a new facility is brought into the permit, orafacility becomes subjectto any new state orfederal regulation which would lower emissions or require an emissions reduction. These requirements are consistent with the requirements for flexible permits issued under Subchapter G, exceptthatthere is notan insignificantemission factorspecified for grandfathered facilities. The commission does not believe that
an insignificant emission factor would be necessary or appropriate for grandfathered facilities, since use of the ten-year-old BACT control method will provide sufficient flexibility for these facilities. Adopted new §116.801, Implementation SChedule forAdditional Controls, explains the implementation schedule to be contained in a permit ifthe installation ofadditional controls is required fora grandfathered facilityto meet an emission cap foran aircontaminant. As required byTCAA, §382.05181, installation of required controls must be completed before March 1, 2007, for facilities located in the East Texas region, and before March 1, 2008, for facilities located in the West Texas region or EI Paso County. The new section also specifies howthe emission cap will be adjusted ifsuch afacility is taken out ofservice orfails to install the additional control equipment as provided by the implementation schedule in the permit. Adopted new §116.802, Significant Emission Increase, defines when an increase in emissions from operational or physical changes at an existing facility covered by an existing facility flexible permit will be considered insignificant for the purposes of state new source review under Subchapter H, and will not require a permit amendment. The new section states that any increase in emissions from a new facility or emissions of an air contaminant not previously emitted by an existing facility will require a permit amendment. Adopted new §116.804, Limitation on Physical and Operational Changes, states that neither operational nor physical changes at an account may result in an increase in actual emissions at facilities not covered by the existing facility flexible permit unless those affected facilities are authorized in accordance with §116.110, Applicability.



## ADOPTEDRULES June 7, 

## 2002 27 

## TexReg4961

### Adopted new §116.805, Amendments and Alterations for Existing Facility Flexible Permits, specifies that amendments and alterations for existing facility flexible permits are subjectto the requirements of Subchapter 8. Adopted new §116.806, Existing Facility Flexible Permit Renewal, statesthatexisting facilityflexible permits will be renewed in accordance with the requirements of Subchapter D, Permit Renewals, consistent with the permit requirements of Chapter 116.
New §116.807, Delegation, is adopted with changes to the proposed text. In adopted new§116.807the commission delegates tothe executivedirectorthe authoritytotake anyaction on a permit issued under Subchapter H, Division 3 consistent with the authority of TCAA, §382.061, and TWC, §5.122. This delegation will allowfor efficient processing of permit applications.
With the addition ofthree new divisions to this subchapter, the existing requirements forVERPs have been placed undera new Division 4. There have been no changes to the requirementsfor VERPs. SubchapterI, Electric Generating FacilityPermits


### The adopted amendments to Subchapter I implement the portions of TCAA, §382.05185, which create a new EGF permit. The EGF permitwill allow the owners oroperators of EGFs who have already applied for a permit required by S8 7, 76th Legislature to apply for a permit for: 1) generators that do not generate electric energy for compensation and are not used more than 10% ofthe annual operating schedule; and 2) auxiliaryfossil-fuel-fired combustionfacilitiesthatdo notgenerateelectricenergy and do not emit more than 100 tpy of any aircontaminant. The adopted changes will also allow coal-fired EGFs which were required to applyfor apermit under S8 7, 76th Legislatureto apply for an EGF permit for criteria pollutants otherthan NO" SO" and PM as it relates to opacity. In addition, the amendments to Subchapter I provide thatgas-fired EGFswhich were required to be permitted under S8 7, 76th Legislature orwere exempt from the requirement to apply for such a permit are considered permitted for all air contaminants.
The adopted amendments to Subchapter I include revising the subchaptertitle to Electric Generating Facility Permits.
The adopted amendments to §116.910, Applicability, allow the
owners oroperators of EGFs who have alreadyapplied fora permit required by S8 7, 76th Legislatureto applyforan EGF permit for certain auxiliary generators or other combustion equipment. The amendments delete the old subsection (e) as unnecessary since this section deals with applicability and the pollutants covered bythe permitare identified in §116.119 and the permitdocument itself. The changes adopted in subsection 

### (f) clarify that EGFs generating electric energy primarily for internal use are not required to obtain a permit underthis subchapter. However, since these internal use generators are grandfathered, TCAA, §382.05181, as codified in §116.770, requires that the owners or operators obtain authorization from the commission. The facility mustobtain a permit undereitherChapter 116 orqualifyfor
a permit by rule under Chapter 106.
The amendments to §116.911, Electric Generating Facility Permit Application, are adopted with changes to the proposed text. The adopted amendments clarify that gas-fired EGFs which were required to be permitted under S8 7, 76th Legislature or were exempt from the requirement to apply for such
a permit are considered permitted under the TCAA for all air



## 27TexReg 4962 

## June 7,2002 Texas Register contaminants. The adopted additions to this section also allow the owners or operators of EGFs who have already applied for a permit required by S8 7, 76th Legislature to apply for
a permit for generators that do not generate electricity for compensation and are not used more than 10% of the normal operating schedule, or for other combustion equipment that does not generate electric energy and does not emit more than 100 tpy of any air contaminant. The adopted amendments to this section allow coal-fired EGFs which were required to apply for a permit under S8 7, 76th Legislature to apply for an EGF permit for criteria pollutants other than NO" SO" and PM as it relates to opacity. The adopted additions to this section identify the date by which applications must be filed and state that emissions ofaircontaminants from auxiliarygenerators orother combustion equipmentthat is permitted must be included in the allowance trading program created by S8 7, 76th Legislature. The commission revised §116.911(d) and 

### (e) for clarification and to correct a typographical error. The amendments to §116.913, General and Special Conditions,
are adopted with changes to the proposed text. The adopted amendments update the conditions of any permit issued under this subchapter, inclUding the pollutants or allowances that may be authorized for each permit and the requirements of the S8 7 allowance trading program forthe additional equipmentwhich may be permitted underthis subchapter. Existing paragraph (2) ofthis section is deleted as it is no longernecessary because H8 2912 eitherconsiders these additional air contaminants already permitted for gas-fired EGFs which have obtained or applied for
a permit under S8 7, or provides for the permitting of the additional criteria pollutantsfor coal-fired EGFs which have obtained
orapplied fora S8 7 permit. SUbsequent paragraphs have been renumbered

..Permits for certain grandfathered coal-fired EGFs and certain grandfathered facilities located at EGF sites authorized under§116.917 will contain additional general and special conditions, as identified in adopted new§116.918. The proposed rule established ASTM Grade Number 2 fuel oil containing not
more than 0.3% sulfur by weight as acceptable. The commission stated in the preamble to the proposed rule that staff was continuing to analyze other fuel oil grades and refine the modeling analysis. As a result of this additional analysis, the commission has determined that any ASTM grade of fuel oil with a sulfur content of 0.7% by weight or less is acceptable, except in those areas where a lower sulfur content is required by 30 TAC Chapter 112. This limitation has been added to the general conditions in §116.913 along with a clarification thatthe burning ofwaste or used oils is not authorized under Subchapter 

### I. The commission has also added a general condition to §116.913 requiring the EGF to keep records offuel oil burning and submit those records with the report required under§101.336(b). Additionally, the commission made a minor language clarification in §116.913(a)(2) and clarified the language in §116.913(a)(1)(E) to apply onlyto criteria pollutants instead of all aircontaminants in order to be consistent with TCAA, §382.05185.
New§116.917, ElectricGenerating Facility PermitApplication for Certain Grandfathered Coal-Fired Electric Generating Facilities and Certain Grandfathered Facilities Located at Electric Generating Facility Sites, isadoptedwith changes tothe proposedtext. The adopted new section outlines the application requirements for grandfathered coal-fired EGFs which choose to permit their additional criteria pollutants, and the auxiliarygeneratorsand the additional combustion equipment which can now be permitted underthis subchapter. In orderto be consistent with the current review process for permits and applicable federal requirements,§116.917 requires the owner or operator of a grandfathered facility applying for an EGF permitto be able to demonstrate that the facility meets applicable federal NSPS and NESHAP. Facilities must be able to meet performance standards specified in the application and may be required to provide information that demonstrates ongoing compliance afterthe permit is issued. If applicable, facilities would be required to comply with PSD and nonattainmentreviewasspecified in Chapter 116, SubchapterB. Since grandfathered facilities must comply with federal requirements, ifapplicable, itis appropriateto ensurethatthesefacilities
are in compliance with federal requirements in the process ofreviewing applications. These sections also require the facility to submit air dispersion modeling if a more refined health effects review is required. Finally, these sections require the application to identifyeach grandfatheredfacilityto be included inthe permit, identify the air contaminants emitted, and provide emission rate calculations. The commission revised an incorrect reference to §116.611(t)(1) and (2) to correctly reference §116.911(t)(1) and 

### (2). Adopted new §116.918, Additional General and Special Conditions for Grandfathered Coal- Fired ElectricGenerating Facilities and Certain Grandfathered Facilities Located at Electric Generating Facility Sites, identifies some of the general and special conditions which maybe included in any permit issued underthe adopted §116.917 and states that there may be additional special conditions attached to a permit upon issuance ofthe permit that may be more restrictive than the requirements of the section. Additional general and special conditions are required by §116.913. Permit holders are required to comply with any and all general and special conditions that the permit may contain. These requirements are consistentwith the requirementsforpermits issued under Chapter 116.
The adopted amendments to §116.921, Notice and Comment Hearings for Initial Issuance, are necessary to include the auxiliary generators and additional combustion equipment described in adopted §116.911 (t), which may be permitted underthis subchapter, as facilities subject to the notice and hearing requirements of this section. These changes implement the requirement contained in TCAA, §382.05191. Adopted new §116.926, Permit Fee, is necessary to allow the commission to collect application fees for any permits issued in accordance with §116.917. These fees will allow the commission to partially offset the cost of processing the applications. TCAA, §382.062 authorizesthe commission to establish fees for permits.
New §116.928, Delegation, is adopted with changes to the proposed text. In new §116.928, the commission delegates to the executive director the authority to take any action on a permit issued under this subchapter, consistent with the authority of TCAA, §382.061, and TWC, §5.122. This delegation will allow forefficient processing of permit applications. In this section the commission also provides that because ofthis delegation to the executive director, the notice offinal action under §116.922 will
now notify the persons affected by the executive director's decision of the opportunity to file a motion to overturn ratherthan
a petition for rehearing. It was necessary to add this language to §116.928 because the commission did not originally propose changes to §116.922 (relating to Notice of Final Action).
The adopted amendments to §116.930, Modifications, include
a revision of the section title to "Amendments and Alterations of Permits Issued Underthis Subchapter." The adopted amendments are intended to clarifythatthe owneroroperatorofafacility with a permit issued underthis subchapter must comply with the requirements of Subchapter B prior to beginning the construction ofthe modification and that any required alteration or amendment will follow the procedures contained in Subchapter 

## B.

FINAL REGULATORY IMPACTANALYSIS DETERMINATION
The commission reviewed the adopted rulemaking in light ofthe regulatory analysis requirements of Texas Government Code, §2001.0225, and determined that the changes to this chapter needed to implement the substantive permitting requirements of HB 2912, §§5.02

- 5.04 meet the definition of a "major environmental rule" as defined in that statute. However, the adopted rulemaking implementing HB 2914, §78 does not meet the definition of a major environmental rule. The 77th Legislature amended THSC to require that all grandfathered facilities obtain permits. These rules implement the comprehensive permitting system created by HB 2912, including fourdifferenttypes of permits which will cover all grandfathered facilities, and provide for potential emission reductions. The rules implementing HB 2914 specify the procedures and criteria governing reimbursement from the Emissions Reductions Incentives Account, established to assist certain owners or operators making reductions in emissions from grandfathered reciprocating internal combustion engines associated with pipelines.
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, orthe public health and safetyofthe state
or a sector ofthe state. Although the adopted rules to implement the HB 2912 sections
are intended to protectthe environment orreduce risksto human health from environmental exposure, they may have adverse effects on the economy, productivity, competition, or jobs of the state orasectorofthestate sincethey require mandatorypermitting orshutdown ofcertain grandfatheredfacilities. However, the analysis required by Texas Government Code, §2001.0225(c) does not apply because the adopted rules do not meet any of the fourapplicability requirements ofa majorenvironmental rule. The adopted rules do not exceed a standard set by federal law, exceed an express requirement of state law, exceed a requirementofa delegation agreement, oradopt a rule solely underthe general powers ofthe agency. The rules are adopted specifically to complywith HB 2912 and related provisions ofTCAA, and do not exceed the requirements of either.
The adopted rules to implement the HB 2914 sections are intended to protect the environment or reduce risks to human health from environmental exposure. Because this is an incentive program designed to provide financial assistance to certain facilities, the adopted rules will not 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. Therefore, the adopted rules implementing the HB 2914 sections do not fit the definition of a major environmental rule, and the analysis required by §2001.0225(c) does not apply.
TAKINGS IMPACT ASSESSMENT
The commission completed atakings impactassessmentforthe adopted rules. The purpose of the adopted rules is to fulfill the commission's obligation to implement HB 2912, §§5.02

-



## ADOPTEDRULES June 7, 

## 2002 27 

## TexReg49635.04 and HB2914, §78, concerning grandfathered facilities. The adopted rules advance this purpose by creating a comprehensive permitting system including four different types of permits which cover all grandfathered facilities, and provide the potential for emission reductions. The rules also contain procedures and criteria governing partial reimbursementfrom the Emissions Reductions Incentives Account, established to assist certain owners or operators making reductions in emissions from grandfathered reciprocating internal combustion engines associated with pipelines.
The commission evaluated the adopted rules and performed an assessmentofwhetherTexas Government Code, Chapter 2007 is applicable. The commission's assessment indicated that Texas Government Code, Chapter 2007 does not apply to the adopted rules because this is an action that is reasonably taken to fulfill an obligation mandated by federal law, which is exempt under Texas Government Code, §2007.003(b)(4). Section 2007.003(b)(13) states that Chapter 2007 does not apply to an action that: 1) is taken in response to a real and substantial threat to public health and safety; 2) is designed to significantly advance the health and safety purpose; and 3) does not impose
a greater burden than is necessary to achieve the health and safety purpose. Although the rule revisions do not directly prevent a nuisance or prevent an immediate threat to life or property, they do prevent a real and substantial threat to public health and safetyand significantlyadvance the health and safety purpose. In addition, these rules fulfill an obligation mandated by federal law. The adopted rules implement requirements of 42 United States Code (USC), §7410. The reductions in NO, and VOC significantly advance a health and safety purpose by assisting the state's efforts to attain the ozone national ambient air quality standards (NAAQS) set by the EPA under 42 USC, §7409, for nonattainment areas of the state and maintain the quality of the state's air in attainment areas. The action is mandated by federal law because the rules will be submitted for EPA approval as part of the SIP. Texas Government Code, Chapter2007 also does not apply because this is an action that is taken in response to a real and substantial threat to public health and safety, that is designed to significantly advance the health and safety purpose, and that does not impose a greater burden than is necessary to achieve the health and safety purpose. Reductions required by these rules will be no greater than those required by HB 2912. Thus, this action is exempt underTexas Government Code, §2007.003(b)(13). Adoption and enforcement of these rules will not burden private real property. The adopted rules do not affect private property in
a mannerwhich restricts orlimits an owner's righttothe property thatwould otherwise exist in the absence ofgovernmental action. Consequently, the adopted rules do not meet the definition of a taking under Texas Government Code, §2007.002(5).
CONSISTENCY WITH THE COASTAL MANAGEMENT PROGRAM
The commission determined that the rulemaking relates to an action oractions subjectto the Texas Coastal Management Program (CMP) in accordance with the Coastal Coordination Act of 1991, as amended (Texas Natural Resources Code, §§33.201 et seq.), and the commission rules in 30 TAC Chapter281, Subchapter B, Consistency with the CMP. As required by 31 TAC §505.11 (b)(2) and 30 TAC §281,45(a)(3) relating to actions and rules subject to the CMp, commission rules governing air pollutant emissions must be consistent with the applicable goals and policies of the CMP. The commission reviewed the rulemaking



## 27TexReg

## 4964 June 

## 7, 2002 Texas Register for consistency with the CMP goals and policies in accordance with the rules of the Coastal Coordination Council, and determined thatthe rulemaking is consistentwith the applicable CMP goals and policies. The CMP goal applicable to this rulemaking is the goal to protect, preserve, and enhance the diversity, quality, quantity, functions, and values of coastal natural resource
areas (31 TAC §501.12(1». The CMP policy applicable to this rulemaking is the policy (31 TAC §501.14(q» that commission rules complywith federal regulations in 40 Code of Federal Regulations (CFR) to protect and enhance air quality in the coastal
area (31 TAC §501.14(q». This rulemaking requires the owners
or operators of all previously grandfathered facilities to obtain a permit for those facilities in order to continue to operate. The permits issued for these facilities are expected to result in reduced emissions of air contaminants and improved compliance with state and federal air pollution control requirements. Therefore, this rulemaking is consistent with the applicable policy and goal.
No comments on the CMP consistency determination were received.
HEARING AND COMMENTERS
PUblic hearings on the proposal were held at the following times and locations: January 22, 2002, 7:00 p.m., TylerJuniorCollege Regional Training and Development Center, Room 104, 1530 South Southwest Loop 323, Tyler; January 23, 2002, 7:00 p.m., City of Houston City Council Chambers, 2nd Floor, 901 Bagby, Houston; January24,2002, 7:00 p.m., CityofOdessa CityCouncil Chambers, 5th Floor, 411 West 8th Street, Odessa; January 28, 2002, 6:30 p.m., City of Irving Central Library Auditorium, 801 West Irving Boulevard, Irving; and January 29, 2002, 2:00 p.m., Texas Natural ResourceConservation Commission, 12100 North 1-35, Building F, Room 2210, Austin.

The commission received comments from the following organizations and companies: Birds-i Network (BIN); Southeast Coalition of Civic Clubs (SCCC); St. Francis Xavier Catholic Church (St. Francis); League of Women Voters of Dallas (LOWV); TXU Business Services Company, on behalf of TXU Energy (TXU); Texas Oil & Gas Association (TxOGA); Texas Campaign for the Environment (TCE); Sierra Club Houston Regional Group (HSC); Galveston-Houston Association for Smog Prevention (GHASP); United States Environmental Protection Agency (EPA); Environmental Defense (EDef); Downwinders at Risk/Blue Skies Alliance (DARlBSA); Association of Texas Intrastate Natural Gas Pipelines/Gas Processors Association (ATINGP/GPA); Association of Electric Companies of Texas (AECT); and City Public Service of San Antonio (CPS).
In addition, the commission received comments from, oron behalf of, the following elected officials: Mr. Larry Green representing the Honorable Sheila Jackson Lee, U.S. House of Representatives, Eighteenth District ofTexas; House Committee on Environmental Regulation, Texas House of Representatives, the Honorable Warren Chisum, Chairman; the Honorable Warren Chisum, District 88, Texas House of Representatives; the Honorable Lon Burnam, District 90, Fort Worth, Texas House of Representatives; the Honorable AI Edwards, District 146, Houston, Texas House of Representatives; the Honorable Lee Brown, Mayor, Cityof Houston; and the Honorable Ada Edwards, Council Member, District D, City of Houston. SCCC, St. Francis, Larry Green (Congresswoman Sheila Jackson Lee's office), Representative Edwards, Houston City Council Member Edwards, GHASP, EPA, and Lee P. Brown, Mayor,City of Houston, generally supported the proposed rulemaking. All commenters suggested changes to some portion ofthe proposed rules.
TXU supported the comments ofAECT. GHASP expressed supportforthe comments expressed by others regarding the details of the rules relating to grandfathered pipeline facilities. Representative Lon Burnam expressed supportforthe comments submitted by the Houston Sierra Club and the Texas Campaign for the Environment.
RESPONSE TO COMMENTS SCCC, St. Francis, Larry Green (Congresswoman Sheila Jackson Lee'soffice), Representative Edwards, Houston CityCouncil Member Edwards, GHASP, EPA, and Lee 

### P. Brown, Mayor, City of Houston, expressed general support forthe rule.
The commission appreciates the support.
GHASP commented that any good cause extensions forthe installation ofcontrols should notbe automatic, and the duration of the extensions should be minimized. TCE commented that the commission should provide definitions or conditions that justify the extension. Lee 

### P. Brown, Mayor, City of Houston urged the commission to complete the review of permit applications within six to 12 months after receipt.
The commission appreciates the comments, and has designated the proposed §116.771 as subsection (a) and added new language under subsection (b) to provide forthe possible good
cause extensions. The commission is committed to completing the permit review for these facilities within the required time frame. The commission will make every effort to review and act on all permit applications submitted in accordance with these rules within one· year from the date of receipt of the administratively complete application.
TCE expressed concern that many aspects of the implementation of the legislation are being left to guidance documents and that the public has a limited role in the guidance document process, and suggested that a balanced work group be used to develop the guidance documents.
The commission has made no change in response to this comment. The development of guidance documents will be conducted through a balanced stakeholder process, which allows for public review and comment from interested persons. HSC and DARIBSA commented that the proposed rules should specify the details ofthe health effects review, so that the public may review and comment on the criteria. HSC also commented that they wanted specific criteria in the rules to prevent the commission from acting arbitrarily and capriciously by treating some facilities in a more beneficial mannerthan others. ATINGP/GPA expressed support for the commission's proposals regarding health effects review guidance and encouraged the commission to ensure that the extent and nature of the review corresponds to the potential health risksfrom a particularfacility.
The commission has made nochange in response tothese comments. The development of the guidance for health effects reviewwill be conducted through a balanced stakeholder process, which allows forpublic review and comment from interested persons. The commission does notagreethatthe use ofaguidance document would allow the commission to act in an arbitrary and capricious mannerwith respectto the reviewforany permit. The commission appreciates the support for the development ofthe health effects reviewguidance, and looks forward toworking with all stakeholders in its development.
TCE and GHASP commented that the health effects review should include a review of complaints against the facility. Additionally, GHASP commented that health effects reviews should include a review of notices of violation, and any other compliance information that might indicate past problems at a site. GHASP commented that adding these items to the health effects review would be particularly important for facilities that will not be required to make pollution reductions in exchange for a permit. TCE also stated that they want to make sure that the compliance history of grandfathered plants is thoroughly reviewed, including, but not limited to, violations and complaints, before permits are issued to grandfathered facilities

- small and large.
The commission has made no change in response to this comment. The commission notes that the classification and use of compliance history in all types of permit reviews, including permits for grandfathered facilities, is currently being addressed in separate rulemakings. Notices of violation are now included in the components of a person's compliance history.
TCE commented that the rule should specifically address the prevention of public nuisance and the prevention of immediate threat to life or property in addition to the rule inclusion for prevention of real and substantial threat to pUblic health and safety.
The commission has made no change in response to the comment. Generally, the health effects reviews conducted by the commission will consider the nuisance effects from compounds eitherthrough a review ofthe compliance historyofthe facility or through a detailed look at the off-property impacts of the emissionsfrom thefacility. When the commission conducts adetailed modeling analySIS, the off-property impacts are compared to the effectsscreening level (ESL) ofthe compound. The ESLforeach compound is based on the nuisance potential orthe potential for adverse health effects, whichever is lower. In addition, the commission's rule regarding nuisance, 30TAG §101.4, provides adequate enforcement authority regarding nuisance conditions. The commission also notes that private citizens may have other private remedies regarding nuisance conditions. Immediatethreats to life and property from potential acute exposures will also be considered during the permit review. GHASP, DARIBSA, and TCE commented that the $450 fee is too low for large businesses, but support the low fee for small business sources. HSC also commented that the $450 fee was too low, and that the fee should be a minimum of $1,000. TCE commented that there should be a higherfee for companies that did notparticipate in the VERP program. TCE suggestedthatthe commission use the existing fee structure for new and modified

sources. TCE suggested that the commission consider hiring persons with accounting backgrounds, rather than engineering backgrounds, to determine the appropriate value ofthe facilities being permitted. TCE also suggested that the commission not charge asingle fee for a permitfor numerous facilities located on a pipeline.
The commission has made no change in response to this comment. The commission does not agree that it is appropriate to
use the existing fee structure for facilities that were constructed
over 30 years ago, and that have not been modified. The permitting of these facilities is not anticipated to require as many



## ADOpTEDRULES June 7, 

## 2002 27 

## TexReg4965resources as reviewing a permitfor new construction. The commission notes, however, that fees for the permitting of grandfathered facilities have been included in a review of permit fees currently being conducted to assesswhetherchanges should be proposed to permitfees in general. The commission will charge
afee foreach permitapplication reviewed. Even ifan application forapermit includes multiple facilities associated with a pipeline, the fee will be a single application fee.
TCE and DARIBSAquestioned howthe commission will compile
an accurate listing ofthe additional large, small, and micro-business grandfathered facilities not included in the 1997 emissions inventory. TCE and DARIBSA also questioned how the addition ofthese facilities to the inventory will affect the SIP.
The commission has made no change in response tothese comments. The commission will not attempt to compile a list of the additional large, small, and micro-business grandfathered facilities which are not included in the 1997 emissions inventory. The commission will make efforts to outreach to as many businesses
as possible to make sure they are aware that any grandfathered facilities they may have will need to be permitted. However, the emissions from mostofthese businesses are already accounted for in the inventory, and thus the SIP, by established procedures used to estimate the emissions from area sources. Thus, there should be little or no impact on the SIP.
EPA commented that the proposed §§116.771, 116.776, 116.779, 116.794, and 116.801 should clarify that control
measures and implementation schedules be agreed upon prior to permit issuance and included in permits.
The commission agrees that control measures and implementation schedules should be codified in the permit, when controls
are required. The proposed §116.771 specifies that if any additional controls are required by a permit for a grandfathered facility, the permit will specify a schedule for the implementation ofthose controls. This requirement applies to any permit issued under Subchapter H.
EPAcommented thatthe proposed rules provided thatnoticeand comment hearing requirements apply only to the initial issuance of pipeline facilities permits, existing facility permits, existing facilityflexible permits, and EGF permits. EPAstatesthatthe commission should require public notice for revisions and modifications of pipeline facilities permits, existing facility permits, existing facility flexible permits, and EGF permits to meet 40 CFR §51.161.
The commission has made no change in response to this comment. HB 2912 provided that public participation for 

### initial issuance of pipeline facilities permits, existing facility permits, existing facility flexible permits, and EGF permits, would be conducted in the same manneras public participation forfederal operating permits. Therefore, for 

### initialissuance, public participation includes a requirement for publication of newspaper notice, signposting, and an opportunity to request a notice and comment hearing. However, HB 2912 prOVided thatfor 

### modifications and renewals of pipeline facilities permits, existing facility permits, existing facilityflexible permits, and EGF permits mustcomply with TCAA, §382.0518, which requires public participation to include publication of newspaper notice, signposting, and an opportunityto request a contested case hearing. Proposed and adopted §§116.787, 116.788, 116.805, and 116.806 require that modifications and renewals of small business stationary source permits, pipeline facilities permits, existing facility permits, and



## 27TexReg 4966 

## June 7,2002 Texas Register existing facility flexible permits comply with Chapter 116, Subchapters Band D, and therefore, meet the requirements of 40 CFR §51.161. Adopted §116.930 requires that modifications of EGF permits comply with SUbchapter B and existing §116.931 requires that renewals of EGF permits comply with SUbchapter D, thus also satisfying the requirements of 40 CFR §51.161 for EGF permits.
EPA commented that proposed §§116.786(b)(2), 116.799(c)(2), and 116.918(b)(2) do not meet the requirements of 40 CFR §51.212(c), which prOVides thatcompliance mustbe determined by methods in 40 CFR 51 Appendix M; 40 CFR 60 Appendix A;
or as approved by the EPA administrator.
The commission has made no change in response to this comment. The rules as written continue the current practice of reviewing any alternate method requests and sending recommendationsto EPAforapproval as appropriate. These rules and procedures satisfythe requirements of40 CFR §51.212(c).
LOWV expressed concern regarding whether the hearing process has any impact on permit issuance. LOWV also stated that air contaminants are carried by prevailing winds, can be carried far away from sources, and the wind currents are not always the same. Lastly, LOWV commented that the agency response to this issue has been very weak and industries do not have the right to pollute the air. LOWV stated that citizens have the right to breathe clean air.
The commission has made no changes to the rule in response to these comments. The commission supports input from the public in all permitting decisions through both public comment and the opportunity to request a hearing where authorized by statute. The commission agrees that. certain air contaminants may be carried some distance by prevailing winds. The commission assessesthe impactofthese aircontaminants on downwind
areas as part ofthe permit review process. TXU commented thatthe permitting of existing facilities is a new process and does not necessarily have to be consistent with the processes for permitting newand modified facilities. TXU stated thatthe permitting process forgrandfathered facilities should adhere closelyto what is authorized in SB 7 and HB 2912 and not add on traditional permitting procedures.
The commission has made no change in response to this comment. The commission agrees that HB 2912 provides specific permitting requirements for grandfathered facilities in acknowledgment ofthe fact that these facilities have already been constructed. However, HB 2912 also provides that review and renewal ofthese permits be completed underexisting Chapter 116 procedures. This requires that the commission harmonize the review of grandfathered facilities in the context of the existing structure for permitting new and modified facilities.
TxOGA requested that the commission create a "regional permit for aggregated facilities" for grandfathered tank or pipeline facilities otherthan engines. TxOGA's proposed regional permit would require that the aggregate allowable emissions meet the equivalent overall emission limit of current BACT.
The commission appreciates the suggestion; however, this suggestion is beyond the scope of this rulemaking, so no change has been made in response to this comment.
TCE and DAR/BSA requested that the commission change the word "may" to "shall" in the sections of the rules relating to the provision for measurement of aircontaminants, including installation ofsampling ports and sampling platforms. In addition, TCE

### commentsthatthe rules do not include requirementsforcertified monitoring data.
The commission has made no change in responsetothese comments. These general conditions are included in all permits. The commission does not agree that it is appropriate to require the installation ofsampling ports and sampling platformsforall facilities. In those caseswhere the permitengineerdeterminesthat it is appropriate to require sampling and/or monitoring, the permit will contain specific conditions requiring the provisions forthese activities. In addition, permitengineers are aware ofthe periodic monitoring and compliance assurance monitoring requirements ofTitleV and permits forgrandfatheredfacilities will satisfythose requirements where appropriate.
TCE and DARIBSA supported the rule language stating that there may be special conditions included in the permitthat may be more restrictive than the requirements ofthe section.
The commission appreciates the support.
HSC commented thatthe commission should define the criteria it uses to determine when the basis of a hearing request by a person who may be affected (by afacility requesting a permit) is determined to be unreasonable. HSC's perspective is that any person who is breathing or may breathe the air contaminants from a facility is affected and the commission does not have the rightto withhold from any person the rightto have a public hearing.
The commission has made no changes in response to these comments. The public notice provisions in the adopted rules implement the requirements of HB 2912, §§5.02

- 5.05 to provide for pUblic notice and an opportunity for a notice and comment hearing, in the same manner as provided forfederal operating permits under TCAA, §382.0561. Section 382.0561 provides that the commission is riot required to hold a hearing if the basis ofthe request by a person who may be affected is determined to be unreasonable. Therefore, reasonableness is the statutory standard by which requests for hearings are required to be judged by the commission. Although the commission believes that "reasonableness" is a term that is circumstantial and not required to be defined by the commission, the factors relevant to a determination of reasonableness have previously been discussed in the commission's procedural rules, and the commission could use those factors as guidance.
EPA commented that these regional reductions will not only result in improvements to air quality near the specific facilities, but should also provide benefits in reducing ozone levels in the
nonattainment and nearnonattainment areas, as well as reduce regional haze.
The commission appreciates the support.
EPAcommented that§116.772 should clarifythatasourcewhich shuts down and then restarts must be re-permitted underChapter 116, SUbchapter B or under Chapter 106.
The commission has made no change in response to this comment. The proposed §116.772(c) requires that the owner or operator of a source which is shut down and which the owner or operator then elects to restart must obtain authorization under Chapter 116 or Chapter 106 prior to operating the facility. The permitting is not limited to Chapter 116, Subchapter B. For instance, if an owner or operator of a grandfathered facility located in West Texas shuts the facility down in 2002, but elects to re-start the facility, the owner or operator may submit an application for a grandfathered facility permit under SUbchapter H (exceptfor Division 4 - VERP) priorto September 1, 2004.
EPAasked if Form PI-1GSD, Notice ofShutdown, along with application forms for Small Business Stationary Source Permits, Pipeline Facilities Permits, and Existing Facility Permits were available for public review and comment.
The forms to implement these grandfather permitting rules are being developed. The forms will be made available to the public when they have been completed, and the commission always welcomes public comment on how forms and guidance can be improved.
EPA commented that §116.786(b)(3) should also discuss public availability of records, and that records should be available to the public upon request unless determined to be confidential business information under 40 CFR 2.
The commission has made no change in response to this comment. The commission agreesthat publicavailabilityis an important component ofthe permitting process, and has implemented procedural rules, 30 TAC §1.5, to ensure that the records ofthe agency are properly available to the public, subjectto appropriate confidentiality restrictions. The commission provides information to the public, subjectto the limitations provided in TCAA, the Texas Public Information Act, and copyright law.
EPA commented that §116.786(c)(2)(A), special conditions for written approval, should provide that the public record for any permit application should document the basis for requiring, or not requiring, priorwritten approval from the executive director.
The commission has made no change in response to this comment. The proposed §116.786(c)(2)(B) identifies the reasons whythe commission may inclUde a provision requiring priorwritten approval before constructing a source under certain authorizations. The basis for including such a condition in a permit will be identified in the technical review ofthe permit application. This technical review is available in the permitfile available tothe public.
EPA commented that permits for coal-fired EGFs and certain grandfathered facilities located at EGF sites as identified in §116.917 should contain provisions for measuring the emissions of air contaminants as determined by the commission. Specifically, EPA commented with regard to §116.917(a)(6), that the commission should require both initial and ongoing compliance measures (for example, periodic monitoring), in orderto ensure initial and ongoing compliance. EPAcommented that the pipeline facilities permit needs to specify the method for determining how the source will demonstrate achievement of 50% and 20% reduction, respectively, on a continual basis. DAR/BSA also commented that the emissions from these pipeline facilities should be reliably monitored and tracked to
ensure greatest reductions.
The commission has made no change in responsetothese comments. Permits issued by the commission include any appropriate measures needed to ensure initial and ongoing compliance with the permit and any underlying standards. In addition, most, if not all, of these facilities are required to obtain a Title V permit and are subject to acid rain permitting requirements. The commission is required to place the appropriate periodicmonitoring and compliance assurance monitoring requirements in these permits.



## ADOPTEDRULES June 7, 

## 2002 27 

## TexReg4967

### EDef stated that the commission should ensure that the owners and operators of facilities applying for a permit underthese proposed rules cannot use the permit to make operational or physical changes such as increasing the utilization, capacity, or throughput of existing units without going through the normal NewSource Review (NSR) permitting process. EDefstated that the commission should add a requirementthatthe maximum capacity under any grandfathered permit may notsignificantly exceed historical levels.
The owner or operator of a facility forwhich an application for a grandfathered facility permit is submitted should be able to document that the facility is truly a grandfathered facility and thus eligibleforone ofthe four newtypes ofpermitsforgrandfathered facilities. The commission staffwill reviewthis information along with the remainder of the application information (including utilization, capacity, and throughput information) to ensure thatthe facility qualifies for the type of permit for which the application
was submitted. In those cases where applications are submitted forfacilitiesthat are notgrandfathered, orforwhich the applicant is requesting physical or operational changes to the facility that would constitute a modification the applicant will be directed to submit the appropriate type of NSR permit application.
EDef requested that the commission require in the final rules a certification, signed by a responsible official that the facility has not been modified since 1971.
The commission has made no change in response to this comment. The commission does not believe that a certification of grandfathered status is necessary. As mentioned previously, the
owner or operator of the grandfathered facility must be able to provide documentation regarding thegrandfathered status ofthe facility being permitted, The commission also notesthatforthose facilities which have submitted Title V permit applications, the
owneroroperatorhas proVided information regarding the grandfathered status of the facilities with applicable requirements at the site and has certified that the information provided is true and accurate.
DAR/BSAcommented thatthe proposed rule is ofconcern since
a recently released EPAstudyofMOBILE6 projects thatvehicles will emit 90% more NO and 21 % more VOC in 2003 than previously documented, which will result in further reductions necessaryfor nonattainmentareas to meetfederal lawand protectthe public from harmful air pollution.
The commission has made no change in response to this comment. Ifthe new mobile source model predicts more emissions than the previous model, the commission, along with the local stakeholders, may be required to identify more reductions in NO and/or VOC emissions in order to reach attainment of the NMOS in the nonattainment areas. The need for additional reductions will be evaluated after the results from the new mobile source model are evaluated.
ATINGP/GPA requested thatthe commission establish a procedure whereby all permit applications for grandfathered facilities at the same account be processed at the same time.
The commission has made no change in response to this comment. The commission will workwith any applicant and is developing internal procedures to coordinate the review and issuance of permits to the extent that the requirements are similar.
For example: Ifthe owner or operator applies for both an existing facility permitand a pipeline facilities permit, the commission



## 27TexReg 4968 

## June 7,2002 Texas Register may be able to coordinatethe reviewforboth applications to provideforasingle publicnoticeforboth applications, concurrent review ofthe applications, and issuance of a single permit. Such coordination of review and issuance will require the assistance of the applicant. Both applications must be submitted together and must clearly identify the request for a single permit number and combined public notice. The applicantmustalso ensure that any deficiencies identified with either application are addressed quicklyso that the coordinated review is notjeopardized.
Lee P. Brown, Mayor, City of Houston urged the commission to quantifythe emissions reductions from both permitting ofgrandfathered facilities and fewer industrial upsets resulting from the implementation of HB 2912 as soon as possible. Additionally, the Cityof Houston urged the commission to complete airquality modeling to determine resulting ozone and fine particle reductions to allow the City of Houston to work with regional stakeholders in developing strategies to avoid nonattainment for the forthcoming fine particle standard.
The commission has made nochange in response tothese comments. Although the comments address areas beyond the scope of this rulemaking, the commission appreciates the comments and provides the following response. The commission agrees that emission reductions of ozone precursors resulting from the implementation of HB 2912 should be quantified. These emission reductions will be quantified as part of the ozone modeling for the Houston/Galveston Area's mid-course review. Phase I of the modeling for the midcourse review is currently in progress.
The commentermakes referenceto "theforthcoming fine particle standard." The commission wishes to clarifythatthe federal fine particle (PM,,) standards were promulgated in'1997. However, nonattainment designations for PM" have not yet been made by the state and the EPA. Pending further guidance from EPA regarding the implementation ofthe PM" standard, such designations, if deemed appropriate from the monitoring data, could be made as earlyas 2003. The designationswould be based on monitoring data from the three- year period 2000 through 2002.
The commenterrequests thatthe commission complete PM,. air quality modeling to allow the City of Houston to work with regional stakeholders in developing strategiesto avoid PM" nonattainment in the Houston area. The commission does not plan to conduct PM" modeling in advance of any PM" nonattainment designations. However, the commission would conduct such modeling should the Houston area be designated nonattainment, as part of the development of an attainment demonstration SIP.
The commission acknowledges the program begun in late 1999 bythe Cityof Houston and stakeholders to help the area avoid a PM" nonattainmentdesignation. Participants inthis programdeveloped and implemented a numberof early PM" control strategies.
In 2000, afield studywas conducted by universities, with assistance from the commission, to better understand the formation and transport of PM" in the Houston area. Data from the study
are being analyzed, and will provide an enhanced scientific basis for evaluating the effectiveness of potential controls should the area be designated nonattainment for PM".
The representative from the Birds-i Networkcommented regarding personal observations of increased incidence of diabetes,lupus, and otherdiseases with mysterious lupus-like symptoms, and other various birth defects.
Birds-i Networkalso expressed concern regarding mercury, and noted that EPA provides an annual reportto Congress regarding mercury that appears to indicate that mercury from utility emissions is responsible for birth defects and immune illnesses.
Birds-i Network commented that all lignite fired plants have no filters on the smokestacks.
Birds-i Network commented that afederal grand jury investigating the Rocky Flats nuclearreservation in Colorado issued more than 60 criminal indictments for how that plant was being operated, and that the federal grand jury should be convened to take testimony from utility officials about what occurred during the nineties, regarding mercury. The commission has made no change in response tothese comments. The 1990amendmentstothe Federal Clean AirAct identified 189 hazardous air pollutants (HAPs). Congress directed EPAto identifysource categories which emitsignificant amounts ofthese HAPs and further directed them to establish standards requiring reductions in the emissions ofthese HAPs. One ofthe HAPs identified byCongresswas mercury, and one ofthe source categories identified by EPA as emitting mercurywas coal-fired EGFs. As the commission discussed elsewhere in this preamble, thecommission expectsthat EPAwill be addressing mercury emissionsfrom EGFs in the nearfuture. The commission has no datato supportthe comments regarding the alleged increases in various diseases or birth defects. The commission has no information regarding events at the Rocky Flats nuclear reservation in Colorado and the commission does not have authorityto convene a federal grandjury regarding any matter.
EPA requested additional discussion of what is a "Small Business" underTCAA, §382.014.
The commission has made no change in response to this comment. TCAA, §382.014does notdefine "Small Business." TCAA, §382.014 enablesthe commission to require aperson whose activities cause emissions of air contaminants to submit information the commission needs in order to develop an inventory of emissions in Texas. The requirement to submit this information needed to develop the inventory is based on the level of emissions from the facilities located atthe account (site), and applies to any person orcompany regardless ofwhether or notthe person or company is a small business. As stated in §116.774(a), small business is defined in TCAA, §382.0365(h).
TCE and DARIBSA stated that industry representatives testified at legislative hearings that they do not have exact emission figures for all pipeline facilities. TCE and DARIBSA are concerned that the owners oroperators of pipeline facilities that applyfor a small business stationary source permit may indeed be above the 50 tpy threshold of any regulated air pollutant or may emit more than 75 tpy of all regUlated air pollutants. TCE and DARIBSAare concerned thatthese pipelinefacilities may be improperly exemptfrom having to obtain an existing source permit.
The commission has made no changes in response to this comment. The commission anticipates that most pipeline facilities will receive pipeline facilities permits. However, there may be
some pipeline facilities that will qualify for a small business stationary source permit. The commission will review each application to ensure that it meets the eligibility criteria, inclUding the emission limits to be considered a small business source. Any applicant who does not meetthe eligibility criteria forthe type of application submitted will be required to submit a new application appropriate for the facility.
TCE and DAR/BSA commented that the proposed rules will not necessarily result in significant reductions in emissions, and therefore, do not accurately reflect legislative intent. TCE commented that the proposed rules require a reduction in the rate of emissions for a pipeline facilities permit rather than a reduction in the tonnage of emissions. TCE stated that permits that require a 50% reduction in NO, emission rates, in addition to VOC reductions, should not be issued without substantial changes to those facilities.
The rule provisions may not result in reductions in emissions. This is consistent with the statute since reductions are not required in all cases, as noted in other responses to comment in this rulemaking. HB 2912 provides clear statutory direction for the situations in which emission reductions or controls are required forthe permitting ofgrandfathered facilities. The commission notes, however, thatthe permitting ofthesefacilities will provideforcodification ofrequirements applicable to thesefacilities, which may result in airquality benefits from betterenforcement. TCAA, §382.05186(e) clearly states that the commission shall grant a pipeline facilities' permit for a facility orfacilities located in the EastTexas Region, ifthe commission finds that the conditions ofthe permitwill require a50% reduction in the hourlyemissions rate of NO, expressed in terms of g/bhp-hr. The statute also requires up to a 50% reduction in VOC emissions from facilities located in East Texas, and up to a 20% reduction in NO, and VOC emissions from facilities located in West Texas. All of these reductions are expressed in terms ofg/bhp-hr. The staffof the Air Permits Division (APD) will be reviewing the applications for these facilities to ensure that any reductions claimed are a result of real and substantial changes at the facility. There will be no claims ofa 50% reduction in NO emissions allowed where there has not been any physical or op'erational change made to the facility in order to achieve those reductions.
EDef commented that the commission should use its general authority to protect public health and adopt stronger rules that
ensure predictable and significant reductions occurfrom the permitting ofgrandfathered pipeline facilities. EDefcommented that ifthe commission is going to claim credit for permitting grandfathered emissions in the SIp, it must provide reasonable assurance that the projected emission reductions will be achieved in practice, andthatthe commission will haveto do morethan adopt
a 50% reduction in emissions from pipeline facilities in order for this measure to be creditable under the SIP. EDef commented that the commission should establish a cap on emissions from pipeline facilities, modeled afterthe emission reduction program established in SB 7.
The commission has made no change in response tothese comments. Section 382.05186(e) clearly states that the commission shall issue a permit for a pipeline facility or facilities located in East Texas if the conditions of the permit will require a 50% reduction in the hourly emissions rate of NO expressed in terms of g/bhp-hr. However, if these reductions 'overall do not result in the amount of NO, emissions predicted for SIP purposes, the commission, along with the local stakeholders, may be required to identify additional reductions of NO emissions in order for the ozone nonattainment areas to achieve compliance with the NAAOS.



## ADOPTEDRULES June 7, 

## 2002 27 

## TexReg 4969ATINGP/GPA stated that the use of the word "may" in the proposed §116.779(b)(1) for an up to 50% reduction in VOC emissions does not provide due notice to owners/operators ofgrandfathered engines ofthe level of reductions that may be required by the commission to obtain a permit. ATINGP/GPA stated that
some types of NO, controls will actually result in an increase in the emissions ofVOC, thus creating an implementation problem. ATINGP/GPAstated that the commission should not require any VOC reductions without a demonstrated regional air quality or public health need. ATINGP/GPA stated that natural gas-fired enginesare notsignificantsourcesofVOC emissions, butdieselfired engines emit relatively significant quantities of VOCs. ATINGP/GPAstated thatVOC emission reductions, ifwarranted by regional air quality needs, should be imposed on diesel, rather than natural gas engines. ATINGP/GPA requested thatthe commission modify the proposed rules to state that grandfathered engines in EastTexas are not required to reduce VOC emissions in orderto obtain a pipeline facilities permit. ATINGP/GPA suggested that ifthere is ademonstrated needforreductions in VOC emissions, the commission should consider requiring reductions of up to 50% forVOC emissions from diesel-fueled engines.
The commission has made no change in response tothese comments. The regulatory language in §116.779(b)(1) allowing the commission to request up to a 50% reduction in VOC emissions isconsistentwith the statutory language inTCAA, §382.0518(e). The commission acknowledges that some NO, reduction techniques may result in increases in VOC emissions. The commission also acknowledges that the

# vc5c emissions from gas-fired engines are minimal and requiring control of these VOC emissions atthistime mayresult in minimal improvementin airquality. However, the commission will reviewthe emissionsfrom each facility, including diesel-fueled engines, on acase-by-case basisto determine if reductions in VOC emissions are appropriate.
ATINGP/GPA expressed support forthe portion ofthe proposed rule requiring reductions for pipeline engines on a g/bhp-hr basis. ATINGP/GPA stated that this conforms to legislative intent to protect a pipeline's capacity and not impair the deliverability of natural gas throughout Texas.
The commission appreciates the support.
TCE and DAR/BSAare concerned aboutthe commission determining andverifying thefollowing forall pipelinefacilities permits: 1) the determination ofthe emissions rate; 2) verification ofthe actual rates prior to and post reduction by the commission; 3) baseline rate estimation

- how will the commission calculate the baseline emissions forthe facilities thatare required to makethe 50 and 20% reductions in the emissions; 4) guarantee of tonnage reductions; and 5) commission verification of applicants that choose to average emissions are not also including reductions made to comply with otherstate orfederal requirement.
The commission has made no changes in response to this comment. With theexception oftheguaranteeoftonnage reductions, all ofthese items will be reviewed and verified by the permit engineer actually assigned to the permit. The actual method of verification will depend on the specific situation. For example, there may be cases where the permit engineer determines that there is enough data available about the emissions associated with a particular engine type that no additional testing or monitoring is necessary. In other cases, the permit engineer may request the use of a portable analyzerto verify before modification emissions, after modification emissions, or both.



## 27TexReg4970 June 7,2002 Texas Register With regard to the guarantee of tonnage reductions, the statutory language does not support the position that the legislature intended a tpy reduction from these facilities. Therefore, these rules will not require a reduction in annual emissions except in the cases where the owner or operator is seeking partial reimbursement for the cost of controls from the Emissions Reductions Incentives Account. In this case, the commission asserts that reductions in annual emissions are appropriate for reasons outlined elsewhere in this analysis oftestimony.
EDef requested that the commission define a clear methodologytodeterminethe baselinefrom which pipelinefacilities' emissions reductions are measured. EDefsuggested eitherreqUiring certified monitoring data for each facility or establishing default baseline ratesforvariousenginetypes based on eitherpublished emissions data or certified testing of a representative sampling of engines in Texas.
The commission has made no change in response to this comment. The commission will establish procedures to verify both before and after control emissions from pipeline facilities to ensure that the specified reductions are actually achieved. Because differenttypes ofengineswill require different procedures, the verification process will be accomplished during the review of the permitforthe engine or engines. Where the commission determinesthat the same type of information is needed to verify emissions for a particular type of engine, the commission may develop guidance for that engine type if there are a sufficient numberof engines that such guidance will be useful. Any guidance thatis developedwill be made available through the agency web site and otherappropriate means. TxOGA and ATINGP/GPA commented that the rules should providethatzero reductions maybe acceptable in instances in West Texas where reductions cannot be economically achieved, and ATINGP/GPA commented that the statutory language does not mandate reductions of either VOC or NO from facilities located in West Texas, but instead allows the commission to find that
zero reduction is required. ATINGP/GPA stated that anyexpenditure offunds by industry in West Texas to achieve emissions reductions is notjustified and serves to consume personnel and capital resources that could otherwise be directed toward making improvements in the East Texas and nonattainment regions of the state. ATINGP/GPA stated that unless the commission ties a requirement to reduce emissions to a specific finding of need to protect the public health, general welfare, or physical property, the requirement to reduce emissions is not authorized by the Clean Air Act. ATINGP/GPA stated that the legislature viewed the West Texas reductions as a very narrow provision, notto be applied in a blanket-fashion across the breadth ofWest Texas, but rather onlyto meet limited regional air quality needs. ATINGP/GPA stated thatthere is no modeling orother evidence that a 20% or less reduction of the relatively minor emissions from grandfathered engines would improve public health orany regional air quality condition. ATINGP/GPA stated that a 1% reduction level is an arbitraryfloor. RepresentativeWarren Chisum expressed supportforthe proposed language regarding the potential reductions for NO, and VOC from pipeline facilities applying for a permit in West Texas. Representative Chisum commented that it was not the intent of the legislature to require at least a 1% reduction, and that in some cases a 0.0% reduction would be completely appropriate in West Texas.
The commission has made nochange in response tothese comments. The proposed rule language in §116.779(b)(2) closely tracksthe statutory language in TCAA, §382.05186(f), and whilethe commission agrees it is appropriate to review, among other things, health effectsand proximityto nonattainmentareas, such reviews will be done on a case-by-case basis. The commission agreesthatthere may be some instances where reductions cannot be economically achieved based on specific engine models
or configurations or the age and remaining life of the engine. Decisions regarding the level of control required, if any, will be based on technical and economic evaluations ofthe control options availableto specificfacilities. However, thecommission has determined that it is appropriate to ask for reductions from engines located in West Texas when there are measures that can be applied tothe enginethatwill result in reductions ofemissions at little or no capital cost.
HSC commented that the commission should maximize the emission reduction requirements for pipeline facilities in West Texas so that they will be 20%, not "up to a 20%" reduction. HSC commented that the commission has been negligent in protecting important natural resources such as the Guadalupe Mountains National Park, Big Bend National Park, Big Bend Ranch State Natural Area, Franklin Mountains State Park, Hueco Tanks State Historic Park, and Fort Davis State Historic Parkfrom visibility problems, and that now is the time to require maximum reductions, not delay.
The commission has made no change to this comment. TCAA, §382.05186(f) specifically requires that the commission grant a permit if the commission finds that the conditions of the permit will require up to a 20% reduction ofthe hourlyemissions rate of NO,. The commission notes that there are ongoing efforts relating to regional haze, which are notthe subjectofthis rUlemaking.
EDef stated that the commission should define how average emissions from multiple pipeline facilities are calculated. EDef stated that the averaging process needs to ensure that there is not a reduction in the actual amount of emissions reduction that would have been achieved through the permitting process ifthe units had been permitted individually.
The commission has made no change in response tothese comments. The commission is developing guidance on the procedures to be used to calculate the required emission reductions from pipeline facilities. This guidancewill include the procedures to be used when the owneroroperatorelects to average the required reductions over more than one engine. The guidance will not befinalized until interested stakeholders have had the opportunity to review and comment on the draft gUidance.
ATINGP/GPA indicated support forthe rule proposals that allow the permitting of more than one engine under a single pipeline facilities permit and the provisions allowing the owner/operator to average among more than one engine statewide in order to achieve any necessary emission reductions.
The commission appreciates the support.
ATINGP/GPA recommended that the criteria foraveraging emission reductions among more than one engine be incorporated into the rule and recommended the following criteria: 1) use g/bhp-hr in the emissions averaging calculations and extend the g/bhp-hr for engines of different horsepowers; 2) enable use of emissions reductions achieved as a result ofshut down engines in the permitting of operating engines; 3) enable use of emissions reductions achieved as a result of engines shut down after September 1, 1997 in any emissions averaging calculations; 4) ATINGP/GPA stated this would be rewarding, not penalizing, early participants in the voluntary program; 5) the commission should create a mechanism to bank and utilize emission reduction credits. In the alternative, an accounting of emission reduction credits that are generated or utilized should be kept by the permittee/commission; 6) enable use ofvarious emissions credits available under other agency emissions credit programs for the purposes of emission averaging, such as discrete emission reduction credit (DERC), emission reduction credit (ERC), and mobile emission reduction credit (MERC); 7) if emission averaging is utilized, a supporting schedule should be incorporated intothe pipeline facilities permitthatdocuments the creation and utilization ofemission credits; and 8) an entitywith excess emission credits should be allowed to transferorsell those credits to another entity.
The commission believes that there is sufficient flexibility built into the statute and rule by allowing owners and operators to average the required emissions reductions across multiple sites and thatthe additional fleXibility provided by an emission trading program is notauthorized bystatute and not needed. Owners or operators electing to average the required emission reductions
over morethan one enginewill be required to establish the emission rate for each engine and will not be allowed to establish a cap and make changes to individual engine emission rates to stay under the cap. The emission rate for each engine will be identified in the pipeline facilities permit. Since the commission will not establish a cap and trade type system for pipeline facilities, the owners or operators will not be allowed to transfer or sell "credits" to another entity. Existing rules regarding the use of ERCs or MERCs would have to be modified to allow the use of ERCs and MERCs to comply with the required emission reductions needed in orderto obtain
a pipeline facilities permit. However, since the rules for DERCs allow the use of these credits for compliance with any SIP requirement, the commission will allow the use of DERCs to comply with the required emission reductions.
TxOGA requested that the commission clarify that engine shutdowns can be used when averaging among more than one engineto achievethe emission reductions required fora pipeline facilities permit. TxOGA also requested that the commission clarifythatemission reductions achieved through theVERP program can be included in the average.
The commission has made no change in response tothese comments. The commission agrees that engine shutdowns (orother emission reductions not required by anotherstate orfederal rule) thatoccurred on orafterJanuary 1, 1997 may be used when averaging reductions among more than one reciprocating internal combustion engine connected to or part of a gathering ortransmission pipeline. The baseline yearfor purposes ofSlP planning is 1997, and therefore it would be inappropriate to allow the inclusion of shutdowns occurring prior to January 1, 1997 in the calculation ofthe average. Please note that if reductions are averaged over more than one engine, and ifshutdown engines are included in the average, the g/bhp-hremission rate for each shut down engine, priorto the shutdown, must be included in the average to determine the amount emissions must be reduced to meet the appropriate reduction requirement. Engines for which an owner or operator has received a VERP
are not eligible for inclusion in an average. The pipeline facilities permit and the requirement for reductions in orderto be eligible forthe permit apply only to grandfathered facilities. Facilities for which aVERP has been issued are no longerconsidered grandfathered facilities and thus cannot be included in the average.



## ADOPTEDRULES June 7, 

## 2002 27 

## TexReg4971

### ATINGP/GPAstated thatthe language in proposed §116.779(b) does not specifically state that engines in nonattainment areas are subject to the provisions of the SIP for the area rather than the emission reduction requirements of these proposed sections. ATINGP/GPA suggested that the commission include language clarifying the applicability of the emission reductions requirements of these proposed rules to engines located in nonattainment areas. The commission has made no change in response to this comment. Pipeline facility engines located in nonattainment areas are subject to both the requirements of the SIP for the area and the requirements of these sections. These rules require all grandfathered facilities in the state to obtain a permit orshut down. Grandfathered reciprocating internal combustion engines associated with pipelines, including those located in nonattainment areas, can apply for a pipeline facilities permit in order to complywith this requirement. In orderto obtain a pipeline facilities permit, the owneroroperatorofthe facility mustdemonstrate thatthe engine will meetthe emissions reductions requirements contained in the proposed §116.779(b)(2). In addition, these facilities must meetthe appropriate emissions reductions required in the SIP. The owner or operator should be aware that the reductions mustsatisfy both ofthese requirementswhen choosing how to reduce the emissions. Section 116.779(b)(4) ofthe proposed rules allowthe owneror operatorto take credit forany reductions, such as those required bythe SIp, which are achieved afterJanuary 1, 2001 as long as the owner oroperatordoes not average emissions from more than one account.
ATINGP/GPA expressed support for the provision in §116.779(a)(9) stating that the commission may require computerized air dispersion modeling if the modeling is necessary to determine impacts from the facility. However, ATINGP/GPA stated that the provision for ambient monitoring contained in this same subsection is generally not warranted because of the expense and time involved in performing the monitoring in remote areas of the state where many of these facilities are located.
The commission has made no change in response to this comment. Although not often required, there may be situations where ambient monitoring is appropriate and useful. The commission reserves the ability to require ambient monitoring in those situations. In addition, a few applicants have elected to perform ambient monitoring in order to establish the level of impacts from their facility on the surrounding property or to provide for an ongoing compliance demonstration.
ATINGP/GPAstated that the commission's cost analysis fails to take into account the engineering costs and studies that must be performed to study and analyze the types of controls that will be successful in achieving controls on a particular engine. ATINGP/GPA stated that no one-size-fits-all control technology
or parametric controls will work for every engine. ATINGP/GPA specifically cited the commission's cost estimates for low emission combustion technology and non-selective catalytic reduction as being too low. In both instances, ATINGP/GPA cited the commission's failure to account for any needed engine/exhausUintake/etc modifications necessary to make the control systems operate properly.
The commission's cost estimates were based on publicly available information, the EPA's alternative control techniques (ACT) document for NO, controls on stationary reciprocating engines. The authors ofthe EPA document attempted to reconcile lower costestimatesfrom control equipmentvendors with highercosts



## 27TexReg 4972 

## June 7,2002 Texas Register suggested by the regulated community. Although hundreds of stationary gas-fired engines have been modified to reduce NO emissions in the last decades, complete cost documentation is often guarded by engine owners for competitiveness or other
reasons. The published cost estimates are only rough approximations, using standard estimating factors forengineering costs. Qualitatively, a population of older engines is likely to require
more costly engineering analysis of control options compared to a newer one because engine conditions become more varied over time. Nonetheless, once engineering studies are completed, the more modest emission reduction goals ofthe grandfathered pipeline permit program as compared to low emission retrofits presumed in the cost note should result in lowercosts in many instancesthan the cost note. From limited cost information in applications for use determination filed with the commission in conjunction with property tax abatements for pollution control systems, it appears that the capital costs for non-selective catalytic reduction agree fairly well with the ACT. Two use determinationsfor lowemission retrofitsforcompliancewith the Chapter 117engine NO, rule in Beaumont Port/Arthur(75%

- 85% NO, reduction) indicate higherengine modification coststhan identified in the ACT. These higher costs may result from a combination of additional modifications necessary to make the control systems operate properly, not identified in the ACT, and upgrades which provide both qualitative emission benefit and more quantitative operational benefit. Sometimes it is difficult to separate these costs. The commission will have the opportunity to considercosts more specificallywith individual permit applications.
HSC stated thatthe reimbursementcriteria, "highest percentage reductions" and "projects that occur early" should be weighed
more heavily than those that "are most cost effective." HSC stated that "cost effectiveness" is a company determination, not a commission determination. HSC also commented that the use of purchased emission credits allows companies to ignore environmental justice and local community impacts of emissions.
The commission has made no change in response to this comment. However, as noted elsewhere in the response to comments, the commission is not going to allow the use ofcredits in achievingthe reductions required bythese rules. The one exception to this, as also noted elsewhere, is the use of DERCs. The commission does notanticipatethewidespread useof DERCsto comply with the emission reduction requirements ofthese rules. The commission also wishes to note that the commission has addressed environmental justice issues relating to the cap and trade program in a previous rulemaking regarding that program. Those rules prOVide forthe executive directorto halttrading fora certain area ifproblems result from trading in a localized area of
concern and provide that increases in emissions by use ofcredits are allowed on a temporary basis, not perpetually, and are limited to 25 tons for NO. and five tons for VOC in any 12-month period. All other uses would allow sources only to remain atthe current emission rates or lower. Additionally, the commission has made a strong policy commitment to address environmental equity by creating an environmental equity program within the Office of PublicAssistance. This program works to help citizens and neighborhood groups participate in the regUlatory process; to ensure that agency programs that substantially affect human health orthe environment operate without discrimination; and to make sure thatcitizens' concerns are considered thoroughlyand
are handled in awaythat is fairto all. The Office of PublicAssistance can be reached at 1-800-687-4040forfurther information.

### EPAstated thatthe provisions ofthe rule pertaining to the partial reimbursement ofthe cost of controls for pipeline facilities does not need to be submitted as a part ofthe SIP.
The commission agrees with the commenter, and has removed the sections of the rule regarding reimbursement from the SIP submittal, since the reimbursement portion of the rules will be effective for a limited duration, and are not directlytied to attainment or maintenance of air quality.
TCE and EDef expressed general support for the proposed requirement for a 50% reduction in annual emissions in order for pipeline facilities located in EastTexasto be eligibleforpartial reimbursement ofthe cost of controls. EDefalso stated they supported the proposed criteriaforthe distribution offunds with one exception

- they state funds should not be used for reductions already required in a SIP. ATINGP/GPA stated that proposed §116.776(c)(1) contains a typo in that it still has a reference to
a facility that is located in a nonattainment area for ozone. ATINGP/GPA stated that this clause should be deleted to make it consistent with other subsections ofthis section.
The commission appreciates the support, and agrees that facilities required to make reductions in NO, emissions by another state or federal requirement are not allowed to request reimbursement from the Emissions Reductions Incentives Account. This restriction was included in §116.776(a), and has been clarified in §116.776(c)(1) by removing"

...located in... a nonattainment area for ozone" from the criteria to be considered.
ATINGP/GPA expressed support for the proposed provision that makes engines required to reduce emissions by some other state or federal law ineligible for reimbursement from the Emissions Reductions Incentives Account, but asked that the commission clarify the intent of this section, otherwise the section could be misconstrued to make ineligible those engines that will be subjectto a MACT standard.
The commission appreciates the support. The commission has changed the language of §116.776(a)(10) to state, "Facilities required by any other state or federal law to make reductions in emissions of NO, are not eligible for reimbursement." MACT standards are intended to regulate emissions of hazardous air pollutants, and not NO,. Therefore, the commission agrees that
an engine subject to a MACT standard is still eligible for reimbursement as long as it is not subject to any state orfederal law which specifically requires a reduction in NO, emissions.
ATINGP/GPA expressed general support for the provisions of proposed §116.775 regarding the distribution offunds from the Emissions Reductions Incentives Account. ATINGP/GPA and TXU commented thatthe criteria requiring a reduction of50% in the annual emissions of NO, in orderto qualify for a reimbursement of a portion of the cost of controls for pipeline facilities in East Texas should be deleted, since HB 2912 and HB 2914 require only a 50% reduction in hourly emissions of NO

.. The commission has made no change in responsetothese comments. The commission disagrees with the commentthatthe requirementto achieveactual reductions in NO emissionsfrom the 1997 emissions inventory detracts from requirement to obtain a 50% reduction in g/bhp-hr in order to obtain a pipeline facilities permit. Indeed, the commission believes thatthe requirement to make reductions in annual NO emissions from the 1997 emissions inventory actually helps to achieve the purpose behind the reimbursement program. which was to encourage real, annual reductions in NO emissions from sources outside the nonattainment areas in East Texas. HB 2912 does require a 50% reduction in hourlyemissions of NO, in orderto obtain a pipeline facilities permit in EastTexas. HB 2914 states thatfacilities required to obtain a50% reduction in NO emissions in EastTexas are eligible for a partial reimbursement ofthe cost ofcontrols from the Emissions Reductions Incentives Account. Further, HB 2914 directs the commission to develop the criteria for reimbursement and leavesthe criteriatothe commission's discretion. The Emissions Reductions Incentives Account was created to provide for
a partial reimbursement of the cost of controls for pipeline engines outside the nonattainment areas in East Texas because the owners and operators of these engines are being asked to make reductions in NO, emissions in orderto help nonattainment
areas reach attainment. The commission believes that setting
one of the criteria for reimbursement as a reduction in annual emissions of NO, is appropriatesince these emission reductions will be needed in orderto reach the goal ofattainmentforozone in the East Texas nonattainment areas. ATINGP/GPAcommented that proposed §116.776(a)(6), requiring a pipelinefacilities permitto be issued beforetheowner/operator can request a distribution from the reimbursement account isawkward, andthatthe reviewshouldtake placesimultaneously with the review ofthe application. ATINGP/GPA suggested that the rule be revised to require an application forapipelinefacilities permitto be filed and undergoing review before the owner/operator may request a distribution from the fund.
The commission agrees with this comment and has changed §116.776(a)(6)to require identification ofthosefacilities requesting a reimbursement from the Emissions Reductions Incentives Account at the time the permit application is filed. The commission is requesting this information in orderto obtain a list ofthe facilities potentially eligible for reimbursement as early as possible. However, no money can be paid to a facility until the permit is issued and the required reductions have been accomplished at the facility. The actual process for reimbursement is still under development at this time and will be provided in a guidance document at a later date.
ATINGP/GPA requested thatthe commission delete the requirement in proposed §116.779(b)(1) to obtain "at least" a 50% reduction of the hourly emissions rate of NO" expressed in g/bhp-hr, in orderto be eligible for reimbursement. ATINGP/GPA indicated they thought that the "at least" should be removed so that it will not be construed that the commission may require reductions beyond 50% from facilities in East Texas in order to get a pipeline facilities permit.
The commission has made no change in response to this comment. The "at least" language was included in this rule to make it clearthat a 50% reduction in the emissions of NO,. expressed in terms of g/bhp-hr, is the 

### minimum amount of reductions that will be needed in order to be eligible for a pipeline facilities permit. Any reductions over the required 50% are welcomed and encouraged by the commission. However, the commission will not require greaterthan 50% reductions in orderto qualifyfor a pipeline facilities permit.
TCE commented that they did not find any language relating to HB 2914 emission rate reductions in the proposed rules.
The commission has not made any change in response to this comment. HB 2914 itself does not specify any emissions rate reductions. HB 2914 does require that a facility be a grandfathered reciprocating internal combustion engine associated with



## ADOPTEDRULES June 7, 

## 2002 27 

## TexReg4973a pipeline that is subjectto the requirement to reduce emissions 

### by 50%. HB 2914 also specifies that the engine be reducing its hourly emissions of NO, by 50% in order to request reinibursementfrom the Emissions Reductions Incentives Account.
TCE requested clarification regarding the specific criteria the commission is referring to in the proposed language regarding the distribution of funds from the Emissions Reductions Incentives Account.
The criteria that the commission will use in determining the prioritiesfor reimbursement from the Emissions Reductions Incentives Account are listed in §116.776(c). However, the actual process that will be used to assess the weighting ofeach ofthe criteria to determine the priority and amount of distribution from the Emissions Reductions Incentives Account is still under development at this time and will be addressed in guidance which will be provided ata laterdate. The commission will invite stakeholder input prior to finalizing the guidance.
ATINGP/GPA requested clarification of the proposed §116.779(a)(5), regarding demonstration of compliance with any applicable MACT standard. ATINGP/GPA requested clarification that the commission did not expect the owner/operator of an engine subject to a MACT standard to have any required MACTcontrols installed bythe date they mustsubmita permit application when the MACT standard provides for a later date by which controls must be installed.
The commission has made no change in response to this comment, but does confirm thatan existing source will not have to be in compliancewith any applicable MACTstandard until the compliance date forthatstandard. The commission does encourage owners and operators ofsources that are required to install controls to obtain a permit for a grandfathered source to take into consideration any additional controls that may be required by an applicable MACT standard.
Lee P. Brown, Mayor, City of Houston stated that the commission should take extra careto ensure thatthe emission reduction standards of HB 2912 are consistently met for any facility-wide, flexible permits. Any permit issued bythe commission, including any flexible permit or existing facility flexible permit, will specify the emissions limits and control requirements necessary to obtain the permit. The permit will also contain conditions necessary to ensure ongoing compliance with those emissions limitations and control requirements.
EPAstated that §116.777, Eligibilityfor Existing Facility Permits, should clarify how an "Existing Facility Permit" differsfrom a permit to operate under §116.770.
The commission has made no rule change in response to this comment. The proposed §116.770 states the general requirement for the owners or operators of all grandfathered facilities to obtain a permit for those facilities. Additional language was added to the Section by Section Discussion portion ofthis preamble for Division 1 which explains the relationship between the general requirements in Division 1 and the specific permit requirementscontained in Divisions2 and 3and Subchapter 

### I. The "Existing Facility Permit" is one type of permitthat the owners or operators of certain grandfathered facilities may use to satisfy the requirements of §116.770 to obtain a permit.
ATINGP/GPA requested that the commission develop a guidance documentthat identifies ten-year BACTfor many common



## 27TexReg 4974 

## June 7,2002 TexasRegister grandfathered sources in orderthe streamlinethe review process for existing facility permits.
The commission has existing guidance which is updated annually and identifies ten-year-old BACT for many common types of sources. The document is entitled, "Guidance for Air Quality

- Qualified Changes Under Senate Bill 1126." Appendix A of this document contains the information on ten-year-old BACT. Appendix A can be found on the APD web site at: www.tnrcc.state.tx.us/permitting/airperm/nsr_permits/bact.htm
You may also contact the APD for a copy of this guidance. AIthough the guidance document itselfwas developed fordifferent purposes, the information on ten-year-old BACTcan be used as
a starting place for identifying ten-year-old BACTfor existing facility permits. However, this is a guidance document, and is not
a final determination of acceptability by the commission. APD
or the individual permit engineer should be contacted to ensure thatthe information is still current and the control technologystill meets the ten-year-old BACT requirement.
TCE and DARIBSAexpressed supportforthe commission's position that an insignificant emission factorwould not be included when calculating the emissions limit for and existing facility flexible permit.
The commission appreciates the support.
HSC commented that the proposed §116.802 provides for the avoidance of NSR permitting for any company that increases its emissions. HSC stated thatthe commission does notdefine "significant," and that the pUblic should allowed to review and comment on the definition.
The commission has made no change in response to this comment. Although the proposed §116.802 does notspecifically define "significant," itstatesthatany increase in emissionsfrom operational or physical changes atan existing facility covered by an existing facility flexible permitthat does not result in an increase in emissions over the cap is insignificant. As part ofthe permit reviewforan existing facilityflexible permit, the commission conducts a reviewofthe emissions as'established in the cap. Therefore, any increase in emissions which does not exceed this cap has already been reviewed bythe commission and the company is not "avoiding" NSR permitting. In addition, the public has access to all ofthis information during the permit review process. Finally, the company is notallowed to install newfacilities oremit
a new air contaminant underthe cap
- either ofthese activities will reqUire a new review underthe NSR permitting procedures.
EPA requested clarification of how an "Existing Facility Flexible Permit" is distinguished from a "Flexible Permit" underSubchapter G ofthe rule.
The commission has made no change in response to this comment. Flexible permits under Subchapter G may be used by anyfacility, inclUding grandfatheredfacilities, provided thefacility meets the requirements of Subchapter G. Existing facility flexible permits are only available for grandfathered facilities. Additionally, flexible permits require BACT and an opportunity for a contested case hearing and existing facility flexible permits require ten-year-old BACT and a notice and comment hearing for initial issuance. Once issued, eXisting facilityflexible permits are SUbject to the same renewal and amendment requirements as flexible permits, including BACTfor amendments and an opportunity for a contested case hearing for both amendments and renewals.

### EPAcommented thatthe airpollution control methods discussed in §116.794(3) should be agreed upon priorto permit issuance and incorporated as terms and conditions into the permit.
The commission has made no change in response to this comment. The commission agrees with this commentand notesthat the control methods necessary for any air permitting process must be identified in the application, agreed to prior to permit issuance, and appropriately incorporated into the issued permit.
EPA requested clarification of how the commission will implementthe provision, "are considered permitted for all aircontaminants" for gas-fired EGFs that were required to obtain a permit underS8 7 orwere exemptfrom the requirementto obtain a permit under S8 7.
S8 7 required the commission to establish allowances for NO, emissions from gas-fired EGFs. However. the permits required by S8 7 are issued under the Texas Utilities Code. H8 2912 clearly states that any gas-fired EGF which satisfies the permitting requirements of S8 7 or which is exempt from the permitting requirements ofS8 7 is considered permitted forall aircontaminants underTHSC. Chapter382. Thus, these EGFs are no longer considered grandfathered facilities underTHSC, Chapter 382. The commission will issue a"permit" tothese facilities. The permit will identify the facilities which have been permitted and will contain the general and special conditions in §116.913. Permits issued under §116.917 will receive the additional general and special conditions in §116.918.
EPA commented that the commission should clarify and explain the phrases "emissions ofall aircontaminants" and "all air contaminants," contained in §116.913(a)(1 )(A) and (E), respectively.
The commission has made no changetothis comment. In enacting the requirements of H8 2912. the Texas Legislature specifically stated in TCM, §382.05185, that an electricgenerating facility is considered permitted with respect to all aircontaminants ifthefacility metcertain conditions. Section 116.913implements this plain requirementfor electric generating facility permits. "Air contaminant" is defined in TCM, §382.003.
TXU identified what they assumed was a typographical error in the proposed §116.917(a). TXU stated that they believed the reference to an application for grandfathered facilities identified in §116.611(f)(1) or (2) should instead reference §116.911(f)(1) and (2). TXU stated that ifthe reference as they believe it was intended is correctthen theowneroroperatorofan EGFseeking
an EGF permit must demonstrate that the facility will meet protection of public health and welfare requirements. TXU states that the only requirement for coal-fired EGFs is to look at criteria pollutants, and the only requirementfor non-EGF combustion units isto includetheiremissions in the emission allowance trading program without additional allowances. TXU states that the term "air contaminants" in §116.917(a)(11) should be replaced with "relevant criteria pollutants."
The commission agrees with the comment regarding the typographical error and has changed the rule to reflect the correct citation of §116.911(f)(1) or (2).
The statutory language of TCM. §382.05185 clearly requires the commission to issue permitsforcoal-fired EGFsforthe criteria pollutants otherthan NO" SO, oropacityifthe emissions from the facility will not contravene the intent of the TCM, including the protection of the public's health and physical property. The commission has determined that the appropriate way to implement this requirement is to require that EGF permits be subject to permitting application and issuance requirements similar to the requirements for NSR permits. This will ensure consistent permit reviews with appropriate emphasis on the relevant statutoryobligationsfor EGFs, in the contextofthe appropriate permit review.
The commission agrees that §382.05185(e) clearly requires emissions from non-EGF combustion units to be included in the emission allowance trading program, and the commission may not issue new allowances. However, the commission also observes that the allowance program only provides for emissions on NO,. while the legislature clearly contemplated that these EGF permits would address all air contaminants, and that emissions from these facilities would not contravene the intent of the TCM. including the protection of the public's health and physical property.
The commission has not changed the language of §116.917(a)(11), since limiting the required information submitted in applications to "relevant criteria pollutants" wO\Jld notensure that adequate information would be provided to meet the requirements ofthe complete permit review, which includes the requirement to ensure that emissions from the facility will not contravene the intent of the TCM, including the protection ofthe public's health and physical property.
CPS opposes the application of §116.771 to EGFs because it implies that controls are mandated and that an implementation schedule must be provided for the installation and operation of such controls.
The commission has made no change in response to this comment. The commission disagrees that §116.771 implies any mandate for controls since this section begins with the conditional phrase,' "If the installation of additional controls is required

....'· Although the commission does not anticipate any control requirement for EGFs beyond any controls necessary to comply with S8 7. TCM, §382.05181 specifies that the requirement to have any additional controls installed prior to March 1, 2007 in East Texas and March 1, 2008 in West Texas applies to any

### facility affected by TCM. §382.0518(g), notjust any non-EGF facility.
CPS stated that they hope the commission will continue to consider EGF permits unique from other permits in providing the flexibility of control and allocation of allowances based on annuallimits provided for Chapter 101, Subchapter H, Division 2.
The commission has made no change in response to this comment. The commission intends to continue to allow EGFs the flexibility to meet the allowance requirements for air contaminants covered by S8 7. However. the commission will issue permits with maximum allowable emission rate tables (MAERT) for grandfathered auxiliary generators and other grandfathered combustion equipment located at an EGF site, but which is also required by H8 2912 to obtain a permitorshutdown. In addition. the emissions from the auxiliary generators and other combustion equipment must be included in the amount of allowances needed forthe site in any given year. As stated in H8 2912, no new allowances will be issued to the site forthe operation ofthis equipment.
CPS commented thatthe proposed methodologyforadding new units at existing EGFs brings these new units into the standardized state permitting requirements ratherthan continuation ofthe flexible allowance based system of S8 7. CPS stated that the proposed language needs to be changed to provide for the allowance based system envisioned by S8 7.



## ADOPTEDRULES June 7, 

## 2002 27 

## TexReg4975The commission agrees with the comment that the proposed methodologyfor permitting existing combustion equipmentatan EGF is similarto the methodology for permitting new and modified units. However, the allowance based system provided by SB 7 is retained in §382.05185(e) and the proposed methodology provides the flexibility of SB 7 permits for emissions of NO, in that the only limit on NO, emissions contained in the permit forthe additional combustion unitswill be the NO, allowances for the site resulting from SB 7. The other aircontaminants emitted from these facilities will have limits included in a MAERTjust like any other NSR permit. The commission believes this approach is appropriate and is consistent with the statute. These facilities
are required to applyfor a permit and specified that any modifications to the permit or renewal ofthe permit be reviewed under the existing requirements contained in the act. Because these EGF permits will follow the existing procedures for modification and renewal, it is appropriate that they use similar methodology and look as similar as possible to permits for new and modified
sources. This harmonizes the requirements of HB 2912 and the pre-existing TCAA permitting requirements.
HSC and GHASP commented thatthey oppose allowing a company to operate for 10% of its operating hours without applying for a permit. HSC and GHASP also commented that this operation could occur during peak ozone season, which would have the most impact on citizen's health and welfare. GHASP stated that the provision should be revised to establish a maximum weekly operating limit of 20 hours in addition to the proposed restriction.
The commission has made no changes in response to these comments. The proposed rules do not allow acompanyto operate any unit for 10% of its normal operating hours and avoid the requirement to obtain a permit. The proposed rules require 

### all grandfathered facilities in Texas to obtain a permit orshut down. Ifan auxiliarygeneratoroperating atafacilitywhich is required to obtain a permitunderSB 7 operates lessthan 10% ofthe normal operating hours (as defined in §116.10), the owneroroperatorof the facility may apply for an EGF permit rather than some other type of permit. Although these auxiliary generators could operate during the ozone season, there will not be any additional annual emissions of NO, from these facilities since they do not get any additional allowances under SB 7.
The statute is clear that facilities operating less than 10% ofthe normal operating hours ofthe EGFs atthe site may applyforan EGF permit. Therefore, the commission does not believe it is appropriate to place any additional limitations on the operating time of these facilities in orderto obtain an EGF permit.
TCE is concerned that if impacts are found, the commission might not request changes to the permit if an aUXiliary generator is operated less than 10% ofthe time.
The commission has made no change in response to this comment. If a facility is found to violate a standard such as the NAAQS, the commission may not issue a permit to that facility
no matter what percent ofthe time it operates.
TXU commented that the definition of "normal operating schedule" should be based on the normal operating schedule of the grid (8,760 hours per year) rather than the normal operating schedule ofthe EGFs at a particular site.
The commission does not agree that the "normal operating schedule" should be the operating schedule of the electric grid. The statutory language in TCAA, §382.05185(d) refers to facilities, not the electric grid. There is no indication in the



## 27TexReg 4976 

## June 7, 

## 2002 Texas Register statutory requirements for electric generating facility permits that the legislature intended to rely upon such a schedule, in lieu of the schedule applicable to a specific site. However, the commission does agree that the statute may be interpreted to provide some additional flexibility, and the commission has changed the language in this definition to establish the normal operating schedule as the maximum numberof operating hours for an EGF in any 12 consecutive month period between 1997 and 1999. For sites with more than one EGF, the owner or operator may use the EGF with the highest numberofoperating hours.

EPA commented that there was no basis specified for the definition of "Normal Annual Operating Schedule," particularly why years 1997

- 1999were required to be included in the calculation ofthe average, but years 2000 and 2001 were not.
The commission used the heat input for 1997 as the basis for establishing allowables for EGFs underSB 7. Since HB 2912 requiresthe emissions from these auxiliarycombustion unitswhich receive an EGF permit to fit under those same allowables, the commission considers it appropriateto use a similar basis to define "normal operating schedule." However, in order to provide
some additional flexibility, the commission decided to use the maximum numberofoperating hours for an EGF in any 12 consecutive month period between 1997 and 1999. For sites with
more than one EGF, the owner or operator may use the EGF with the highest number of operating hours. The commission has changed the language in this definition forthe reasons mentioned in the response to the previous comment.
TCE expressed concern that the modeling for grandfathered EGF's designed to burn fuel oil is not sufficient to make a determination that any grade offuel oil should be allowable. HSC stated thatthey support requiring EGF facilities to undergo NSR permitting if they decide to burn fuel oil ratherthan natural gas. The House Committee on Environmental Regulation stated that the goals ofthe legislation were to provide for the widest range offuel oil use possible to give grandfathered EGFs a meaningful choice of fuel and to ensure that emissions controls would not interfere with the SIPs, specifically with regard to NO,. AECT stated thatthe intent ofthe legislature regarding acceptable fuel oil grades was that the commission would designate as being acceptable as broad a range of grades of fuel oil as possible,

as long as air quality standards would be met. AECT stated that designation of a broad range of acceptable grades of fuel oil is critical to ensure maximum fuel flexibility and continued availability of reliable electric power in Texas. AECT stated that the proposed §116.18(11) unnecessarily and unreasonably limits the range of fuel oil grades that could be burned in grandfathered EGFs. AECT and the House Committee on Environmental Regulation stated that the legislative intent was to limit the commission's review of acceptable fuel oil grades to "standards," and sincethe commission's effectsscreening levels
are not standards, the evaluation offuel oil firing with respect to the ESLs is contrary to legislative intent. AECT stated that the methodology the commission used to establish the acceptable fuel oil grades proposed in §116.18(11) was unnecessarily restrictive and resulted in a limitthatwas too stringent. The House Committee on Environmental Regulation and AECT commented that the commission should allow grandfathered EGFs to burn any grade offuel oil that meets the specifications in §112.9, as long as the owner or operator of the grandfathered EGF can ensure that the burning of the desired grade of fuel oil in the EGF will not cause a violation ofthe SO, property line standard. AECT also requested that the rule language in proposed

### §116.18(11 )(B) be changed to refer to a "determination" by the executive director ratherthan a "demonstration" by the owneror operatorofthe facility. The House Committee on Environmental Regulation and AECT suggested that proposed §116.18(11) be revised to reads as follows: "11) Natural gas-fired EGF

- For purposes of Subchapter I ofthis chapter, an EGF that was designed to burn either natural gas or fuel oil, and that when burning fuel oil only burns fuel oil of a grade determined by the commission to be acceptable. Burning of a fuel oil designated by this definition as acceptable does not relieve the owner or operator of the EGF from the responsibility to comply with the emission limitations, allowances, or conditions of any permit or state orfederal regulation, such as the applicable sulfur dioxide (SO,) property line standard in §112.3. Acceptable fuel oil grades are: A) Any American Society for Testing and Materials (ASTM) grade of fuel oil, the burning of which will comply with the applicable limits in §112.9. B) Any other grade of fuel oil which the executive director determines is protective of the SO, property line standard in §112.3."
TXU stated that it had a great deal of concern over the process being used by the commission to establish acceptable fuel oil grades. TXU and CPS stated that the maximum fuel oil sulfur content that should be modeled by the commission should be 0.7% because a higher sulfurcontent would result in a stack concentration that exceeds the limit in Chapter 112. TXU stated that the grade of acceptable fuel oil should be changed to any grade with 0.7% sulfurexceptforspecific plants where the modeling indicates there may be a problem. CPS commented that the commission should considerallowing utilities to burn fuel oil at levels of sulfur at or below 0.7% or at least consider modeling these levels to determine impacts with the state standards. TXU stated thatthe analysis should be an open process that includes a review by the owners ofthe facilities being modeled to
ensure thatthe model inputs are accurate. AECT and the House Committee on Environmental Regulation commented that the commission's interpretation of the the term "designed to burn" is more narrow than allowed bythe statutory language in TCAA, §382.05185(i). The House Committee on Environmental Regulation and AECT commented that "designed to burn" should only prohibit a physical change that would constitute a modification under§116.1 0(9). AECTstated that based on the regulatory definitionsof "EGF" and "facility" the EGF does not include every piece of equipment at a grandfathered EGF site that is involved with the burning offuel oil. AECT stated thatany maintenance or repairsto any equipmentthatcomprisesthe EGF, orany like-kind replacement of any such equipment, that is necessary to allow the EGF to burn fuel oil, should not prevent the EGF from being considered to be "designed to burn" fuel oil. The House Committee on Environmental Regulation stated that "designed to burn" in TCAA, §382.05185(i) means a facility was designed to burn any fuel oil grade

- even ifthe grade will no longerbe considered acceptableforburning following the adoption ofthese rules. Similarly, AECT stated that if an EGF is "designed to burn" a grade offuel oil, the fact that such fuel oil grade may not be considered acceptable underthe final rules should not preventthe EGFfrom meeting the "designed to burn" condition. The House Committee commented that the statute only limits the grade of fuel oil prospectively, but does not mean the grade historically burned should prohibit burning a lightergrade in thefuture. AECTstated that proposed §116.18(11) and the associated preamble need to be revised to clearlyprovide thatthe "designed to burn" condition is metforsuch an EGF. AECT requested thatthe review process for case-by-case determinations be made quick and simple and be based on modeling and/or monitoring results related to the impact of burning of the desired grade of fuel oil on the ability of the site to meet the SO, property line standard. EPA stated thatwith regard to §116.18(11 )(B), there should bea "replicable" procedure for how the executive director will determine if "any other grade of fuel oil" is protective of public health and physical property." AECTspecifically requested thatthe procedure involve submittal of a written request to the commission staffthat includes any necessary fuel and facility information. The commission should then use modeling ormonitoring information italready has to evaluate the request, model the request using staff resources, or requestthatthe applicant conductthe modeling or monitoring anaysis and submit it to the staff for review. AECT requested that this case-by-case determination process be discussed in the preamble to the final rule. AECT also requested that §116.18(11)(B) provide for an opportunity to request reconsideration ofany determination of acceptable fuel oil grades under 30 TAC Chapter 55. AECT requested that the following language be used for §116.18(11 )(B): "In the event thatthe owner
or operator of the EGF disagrees with the executive director's determination, the owneroroperator may request a reconsideration ofthat determination underthe procedures ofChapter55."
TXU stated that facilities should be allowed to combust the fuel they have on-site and any limitations should be placed on the receipt of any new fuel oil. TXU stated that limiting the ability of utilities to fire residual oils will limit the market for these fuels in Texas and could result in the fuels being combusted by
sources that would have a higher impact on the public because ofthe location and heightofthe emissions. TXU also stated that prohibiting the burning of Number 5 fuel oil could impact winter reliability if natural gas is curtailed before a conversion to Number 2 oil can be accomplished. TXU stated that it would cost them $30 million to $40 million to convert 14facilities from firing Number5 fuel oil to firing Number2 fuel oil with the majority of the cost being to change out the fuel.
The proposed rule established ASTM Grade Number 2 fuel oil containing not more than 0.3% sulfur by weight as acceptable. The commission stated in the preamble tothe proposed rulethat staffwas continuing to analyze otherfuel oil gradesand refinethe modeling analysis. As a resultofthis additional analysisofthe effects ofburning fuel oil in grandfathered EGFs and in orderto address all ofthe comments on the burning offuel oil, the commission changed the proposed definition of "Natural gas-fired EGF" in §116.18(11) to simply state that for purposes ofSubchapter I,
a natural gas- fired EGF is, "an EGF that was designed to burn either natural gas oran EGFthatwas designed to burn both natural gas and fuel oiL" The conditions governing the burning of fuel oil at grandfathered EGFs have been added as general conditions §116.913(a)(8) and (9).
The commission has determined thatanyASTM grade offuel oil with a sulfurcontent of0.7% by weight or less is acceptable, except in areas where sulfur content is limited further by Chapter 112. This limitation has been added to the general conditions in**§~** 

### 16.913. The modeling analysis for SO, concluded that there Will not be any exceedances of the NAAQS or state standards in Chapter 112. Metals have been identified as the primary hazardous air pollutant associated with the burning of fuel oil. Adverse impacts from metals are caused by long term exposure to unacceptable levels of emissions. The commission does not expect long term exposure to metals emissions because fuel oil is only burned for short periods of time due to natural gas curtailments or extremely high natural gas prices. Historical data has shown that these curtailments and high natural gas prices have occurred infrequentlyand lastonlyforshort periods oftime.



## ADOPTEDRULES June 7, 

## 2002 27 

## TexReg4977Thus, the commission does not expect any adverse health effects associated with the burning offuel oil. However, the commission has added a general condition to §116.913 requiring the EGFto keep records offuel oil burning and submitthose records with the report required under §101.336(b). In addition, EPA is developing a MACT standard which is expected to address emissions of metals, primarily nickel, from fuel oil fired EGFs. Any EGF which burns fuel oil for any extended period of time would likely be SUbjectto this MACTstandard. The commission has also added language in §116.913(a)(8) that clarifiesthatthe burning ofwaste or used oils is notauthorized underSubchapter 

### I.

EPA recommended adding "as determined by ASTM method 0396" to the end ofthe sentence in §116.18(11 )(a) which reads "American SocietyforTesting and Materials (ASTM) grade number 1 or2fuel oil containing notmorethan 0.3%sulfurbyweight."
The commission has made the suggested addition to the condition contained in §116.913(a)(8).
TCE and DAR/BSAcommented that the commission should review mercury emissions from grandfathered facilities. Additionally, TCE commented that the commission should review all the pollutantsfrom grandfathered powerplants, including five-minute exposure to sulfur compounds. TCE stated that they were concerned about places where people congregate in close proximity to power plants and the effects ofpower plants on waterways that are farfrom the facility. DARl8SA also expressed concern regarding lead emissions, and commented that this rulemaking would be a good opportunity to obtain lower emissions of mercury and lead.
The commission has made no change in response tothese comments. Mercury has been raised by many organizations across the country as an aircontaminant ofconcern forcoal-fired power plants. However, there are significanttechnical and policy questions which need to be answered before a comprehensive strategy to handle mercury emissions from EGFs can be fully developed. Mercury emissions associated with these units will be addressed in the future by the President's Clear Skies Initiative multi-pollutant strategy and/ora MACTstandard under developmentbythe EPA. Accordingly, withoutdownplaying the important issueswith respectto mercury, the commission considers it prudentto review the outcomes ofthe Clear Skies Initiative and the utility MACT before making further decisions about regulation of mercury from EGFs in Texas.
Coal-fired EGFs can apply foran EGF permitforthe criteria pollutants not addressed by S8 7, and once they obtain this EGF permit, they are no longer considered grandfathered facilities. The commission notes that lead is a criteria pollutant; therefore, these EGFs will have to address any lead emissions in the EGF permit application.
The commission agrees that numerous studies have shown that five-minute exposure to bursts ofSO, can cause individuals with asthma to experience respiratory effects due to bronchial constriction. In fact, the EPA has a proposed intervention level for SO, of600 parts per billion (ppb) (five-minute averaging period), above which asthmatics may experience shortness of breath, chest tightness, wheezing, and disruption of normal activities. While the NMOS is not protective of these five-minute bursts, the Chapter 112standard forSO" 30- minuteaverage netground level concentration of 400 ppb, helps to minimize the potential
occurrence of five-minute concentrations greaterthan 600 ppb.



## 27TexReg 4978 

## June 7,2002 Texas Register Therefore, the commission notes that the required demonstration ofcompliance with the Chapter 112 standard would alleviate five-minute SO, concerns. 

## SUBCHAPTERA. 

## DEFINITIONS

30 TAC §116.10, §116.18
STATUTORY AUTHORITY
The amendments are adopted under THSC, TCM, §382.011, which authorizes the commission to administer the requirements of the TCM; §382.012, which provides the commission the authority to develop a comprehensive plan for the state's air; §382.017, which authorizes the commission to adopt rules consistentwith the policy and purposes ofthe TCM; §382.051, which authorizes the commission to issue a permitfor numerous similarsources; §382.0518, which authorizes the commission to issue permits for construction of new facilities or modifications of existing facilities; §382.05181, which requires grandfathered facilities to apply for a permit and comply with its conditions by certain dates, and requires certain actions of the commission; and TWC, §5.103, which authorizes the commission to adopt rules. 

### §116.18. Electric GeneratingFacilityPermits Definitions. Thefollowingwordsandterms, whenusedinSubchapterIofthis chapter(relating to Electric Generating Facility Permits) shallhave the following meanings, unless the context clearly indicates otherwise. (1) Allowance

- As definedin §101.330(1) ofthis title (relating to Definitions). (2) Capacity factor

- Either: (A) the ratio ofan electric generating facility's (EGF) actual annual .electric output (expressed in megawatt-hours) to the EGF's nameplate capacity times**8~760** hours; or (B) the ratio ofan EGF's annualheatinput (in millions ofBritishthermal units (MMBtu» to the EGF's maximum designheat input (in MMBtuperhour) times 8,760 hours. (3) Coal

- As defined in §101.330(6) ofthis title. (4) Coal-fired

- As defined in §101.330(7) ofthis title. (5) Complianceaccount

-Asdefinedin §101.330(8)ofthis title. (6) Control period

- As defined in §I01.330(9) ofthis title. (7) Electing EGF

- As defined in §101.330(11) ofthis title.
(8) Electric generating facility (EGF)

- As defined in §I0I.330(12) ofthis title. (9) Grandfathered EGF

- As defined in §101.330(14) of this title. (10) Nameplate capacity

- The maximum electrical output (expressed in megawatts) that an EGF can sustain overa specifiedperiod oftime when notrestricted by seasonal orotherderatings. (II) Natural gas-fired EGF

-Forpurposes ofSubchapter I ofthis chapter, an EGFthat was designed to bumeithernatural gas or
an EGF that was designed to bumboth natural gas and fuel oil. (12) NormalAnnualOperatingSchedule

-Forthepurposes of§116.911 (f)(I) ofthis title (relating to Electric Generating Facility Permit Application), the maximum number ofoperating hours for an EGFin any 12 consecutive monthperiodbetweenJanuary I, 1997 and December 31, 1999. For sites with more than one EGF, the owner or operatormay use the EGF with thehighestnumberofoperating hours.(13) Peaking unit

- An EGFthat has:
(A) anaveragecapacityfactorofnomorethan 10%during the past three calendaryears; and (B) a capacity factor ofno more than 20% in each of those calendaryears. (14) Person

- As defined in §101.330(17) ofthis title.


### This agencyherebycertifiesthatthe adoption has been reviewed by legal counsel and found to be avalid exercise ofthe agency's legal authority.

Filed with the Office ofthe Secretary ofState on May 23, 2002.

TRD-200203181 Stephanie Bergeron Director, Environmental Law Division Texas Natural Resource Conservation Commission Effective date: June 12, 2002 Proposal publication date: January 4, 2002 Forfurther information, please call: (512) 239-4712 

# • • 

# •
SUBCHAPTER H. PERMITS FOR GRANDFATHERED FACILITIES DIVISION 1. GENERAL APPLICABILITY

30 TAC §§116.770

- 116.772
STATUTORYAUTHORITY
The new sections are adopted under THSC, TCAA, §382.011, which authorizes· the commission to administer the requirements olthe TCM; §382.012, which provides the commission the authority to develop a comprehensive plan for the state's air; §382.017, which authorizes the commission to adopt rules consistent with the policy and purposes ofthe TCAA; §382.051, which authorizesthe commission to issue a permitfor numerous similarsources; §382.0518, which authorizes the commission to issue permits for construction of new facilities or modifications of existing facilities; §382.05181, which requires grandfathered facilities to apply for a permit and comply with its conditions by certain dates, and requires certain actions of the commission; and TWC, §5. 103, which authorizes the commission to adopt rules. §1J 6.771. Implementation ScheduleforAdditional Controls.

(a) Ifthe installation ofadditional controls is required for a grandfathered facility to meet an emission limit for a pollutant, the permit shall specify an implementation schedule for such additional controls. Any such schedule shall require installation and operationof controls before March I, 2007 for facilities located in the East Texas region as defined in §101.330 ofthis title (relating to Definitions) or before March I, 2008 for facilities located in the WestTexas region as defined in §101.330 ofthis title orEI Paso County. (b) The owneroroperatorofagrandfathered facilitythatdoes
not obtain a permit within 12 months ofreceipt by the commission ofan administratively complete application for a permit may petition the commission for an extension ofthe time period for the installation ofcontrols under subsection (a) ofthis section. The commission may grantnotmorethanoneextensionfor afacility, foranadditionalperiod ofnotmore than 12months, ifthecommissionfinds goodcauseforthe extension. 

### Thisagencyherebycertifiesthatthe adoption has been reviewed by legal counsel and found to be avalid exercise ofthe agency's legal authority.

Filed with the Office ofthe Secretary of State on May 23, 2002.

TRD-200203182 Stephanie Bergeron Director, Environmental Law Division Texas Natural Resource Conservation Commission Effective date: June 12, 2002 Proposal publication date: January4, 2002 Forfurtherinformation, please call: (512) 239-4712 

# • • •
DIVISION2. SMALLBUSINESS STATIONARY SOURCE PERMITS, PIPELINE FACILITIES PERMITS, AND EXISTING FACILITY PERMITS

30 TAC §§116.774

- 116.777, 116.779 -116.781, 116.783, 116.785

- 116.788, 116.790
STATUTORYAUTHORITY
The new sections are adopted under THSC, TCAA, §382.011, which authorizes the commission to administer the requirements of the TCAA; §382.012, which provides the commission the authority to develop a comprehensive plan for the state's air; §382.017, which authorizes the commission to adopt rules consistent with the policy and purposes ofthe TCAA; §382.051, which authorizes the commission to issue a permitfor numerous similarsources; §382.0518, which authorizes the commission to issue permits for construction of new facilities or modifications of existing facilities; §382.05181, which requires grandfathered facilities to apply for a permit and comply with its conditions by certain dates, and requires certain actions of the commission; §382.061, which provides for delegation of powers and duties to the executive director; TWC, §5.103, which authorizes the commission to adopt rules; and TWC, §5.122, which provides for delegation of uncontested matters to the executive director. §IJ6.774. EligibilityforSmallBusiness StationarySource Permits.
(a) Theowneroroperatorofagrandfathered facility locatedat

a small business stationary source, as defined inTCAA, §382.0365(h), and which is not required to report to the commission under TCAA, §382.0l4 may apply for a small business stationary sourcepermitbefore September I, 2004. (b) The deadlines contained in §I 16.770 ofthis title (relating
to Requirementto Apply) and §116.771 ofthis title (relatingto Implementation Schedule for Additional Controls) do notapply to facilities eligible to apply for a small business stationary source permit. Any grandfatheredfacility, includingany facility forwhichtheowneroroperatorhas submitted a notice ofshutdown under §116.772 ofthis title (relatingtoNotice ofShutdown), locatedatasmall business stationary

source maynotemitaircontaminantson orafterMarch 1,2008, unless the facility is permitted, orhas apermit applicationpendingunderthis chapter, orhas aregistrationorpendingregistration forapermitbyrule underChapter 106 ofthis title (relating to Permits by Rule). (c) Applications for a small business stationary sourcepermit shall be submittedunderthe sealofaTexas licensedprofessionalengineer, ifrequired by §116.1 10(e) ofthis title (relating to Applicability).



## ADOPTEDRULES June 7, 

## 2002 27 

## TexReg4979(d) The owneroroperatorofthe grandfathered facility, group offacilities, or account is responsible for applying for the small business stationary permit and for complying with this subchapter.
§116.775. EligibilityforPipelineFacilities Permits.
(a) The owneroroperatorofagrandfatheredreciprocating internal combustion engine orgroup ofengines that is apart ofprocessing, treating, compression, orpumpingfacilities connectedto orpartof

a gathering ortransmission pipelinemay apply for apipeline facilities permit.
(b) Applications for a pipeline facilities permit shall be submitted underthe seal ofa Texas licensed professional engineer, ifrequiredby §lI6.11O(e) ofthis title (relating to Applicability).
(c) The owneror operatorofthe grandfathered facility, group offacilities, or accountis responsible for applying for the pipeline facilities permit and for complying with this subchapter.
(d) The owneroroperatorofmore thanone grandfathered reciprocating internal combustion engine may apply for a pipeline facilities permit for a single grandfathered reciprocating internal combustion engine or a group ofthe grandfathered reciprocating internal combustionengines connectedto orpartofagathering ortransmission pipeline.
§116.776. Distribution of Fundsfrom the Emissions ReductionsIncentivesAccount for Controlof Emissionsfrom GrandfatheredReciprocating Internal Combustion Engines Located in the East Te.r:as Region.
(a) Eligible facilities. Owners or operators ofgrandfathered reciprocating internal combustion engines are eligible for reimbursementofaportion ofthecostofcontrolsfrom theEmissions Reductions Incentives Account based on the following criteria.
(I) The owneroroperatorofthe grandfatheredreciprocatinginternalcombustionengineorenginesmustmake anactual 50% reduction in the annual emissions ofnitrogen oxides (NO,) as compared
to the emissions reported from the grandfathered reciprocating internal combustion engine orengines in the 1997 Industrial Point Source Emissions Inventory.
(2) The grandfathered reciprocating internal combustion engine orengines must be located in the East Texas region as defined in 

### §101.330 ofthis title (relating to Definitions).
(3) The owner or operator must apply for and receive a pipeline facilities permitorreplacethe grandfatheredreciprocatinginternal combustion engine with an electric engine.
(4) Theprojectto control emissionsmustbe initiatedon or before September I, 2006.
(5) Theprojectto control emissions mustbecompletedbefore March 1,2007.
(6) Theowneroroperatorofthe grandfatheredreciprocating internal combustion engine forwhich adistribution from the Emissions Reductions Incentives Account is sought, must identify, at the time the permitapplication is filed, the facilities for which reimbursement is requested.
(7) The owneroroperatorwho elects to replace a grandfatheredreciprocatinginternalcombustionenginewithanelectricengine
must submit a Registration ofReplacement ofa Grandfathered Reciprocating Internal Combustion Engine with an Electric Engine before the owner or operator can request a distribution from the Emissions Reductions Incentives Account.



## 27TexReg4980 June 7, 

## 2002 Texas Register (8) The emissions controls identifiedinthepermitmustbe operatingbeforethe executivedirectorcanauthorizepaymentfrom the Emissions Reductions Incentives Account.
(9) For grandfathered reciprocating internal combustion engines replaced by electric engines, the electric engine must be installed and operating and the grandfathered reciprocating internal combustion engine must be permanently shut down before the executive director can authorize payment from the Emissions Reductions Incentives Account.
(10) Facilities requiredby any otherstate orfederal law to make reductions in emissions ofNO, are not eligible for reimbursement. (b) Limitations on reimbursement. The commission may reimbursetheowneroroperatorofagrandfatheredreciprocatinginternal combustionengineorenginesfornomorethanthecostassociatedwith achieving emissions reductions between 30% and 50% oftheengine's hourly emissions ofNO, before the addition ofcontro.ls. !he commission may distribute less than the amount calculated III thiS manner based on the amount ofmoney contributed to the fund and the criteria for distribution outlinedin subsection (c) ofthis section.
(c) Criteria for distribution. The commission will distribute
any money in the fund based on the following criteria:
(I) whetherthe facility is located in an attainment areafor

ozone or a near nonattainment area for ozone; (2) the percentage ofreduction in the hourly emissions of NO, on a grams perbrake horsepower-hourbasis achieved;
(3) the costeffectiveness ofthe controls achieved based on the tons ofemissions actually reducedperdollarofthe costofthe control method; and
(4) when the reductions are actually achieved.
(d) Verification ofemissions reductions. Prior to reimbursementfrom the Emissions Reductions Incentives Account, the owneror operator ofeach grandfathered reciprocating internal combustion engine mustprovide documentation verifyingthe amount ofactual emission reductions achieved.
§ 116.779. Applicationsfor Small Business Stationary Source Permits, PipelineFacilities Permits, orExistingFacilityPermits.
(a) Any application for a small business stationary sourcepermit, a pipeline facilities permit, or an existing facility permit must include a completed Form PI-IG, Grandfathered Facility PermitApplication. The Form PI-IG must be signed by an authorized representative ofthe applicant. The Form PI-IG specifies additional support information which must be providedbefore the application is deemed complete. In order to be granted a permit, the owner or operator of the grandfathered facility shall submit information to the commission which demonstrates that all ofthe following are met. (I) Protection ofpublic health and welfare. The emissions from the grandfathered facility will comply with all rules and regulations ofthe commission and with the intent ofthe TCAA, including protection ofthe health and physical property ofthe people.
(2) Measurement ofemissions. The permit may have provisions for measuring the emission ofair contaminants as determined by the commission. These provisions may include the installation of sampling ports on exhaust stacks and construction ofsampling platforms in accordance with guidelines in the "Texas Natural Resource ConservationCommissionSamplingProceduresManual," portableanalyzers, or emissions calculations ifa known process variable is monitored.

### (3) NewSourcePerfonnanceStandards(NSPS). Theemissions fromeach affectedfacility as definedin40 CodeofFederalRegulations (CFR) Part60 will meetatleasttherequirements ofany applicableNSPS aslistedunder40CFRPart60, promulgatedbyEPAunder authority granted underFCAA, §III, as amended. (4) National Emission Standards for Hazardous AirPollutants (NESHAP). The emissions from each facility as defined in 40 CFR Part 61 will meetatleastthe requirements ofany applicable NESHAP, as listedunder40 CFRPart 61, promulgated byEPAunderauthority granted underFCAA, §112, as amended. (5) NESHAPs for source categories. The emissions from each affected facility shall meet at least the requirements ofany applicablemaximumachievablecontroltechnology(MACT) standardas listedunder40 CFR Part63,promulgatedbyEPAunderFCAA, §112,

oras listed in Chapter 113, SubchapterC ofthis title (relating to NationalEmissionStandardsforHazardousAirPollutants forSourceCategories (FCAA Section 112,40 CFR 63». (6) Perfonnancedemonstration. Thegrandfatheredfacility will achieve the perfonnance specified in the pennit application. The commissionmayrequiretheapplicantto submitadditionalengineering data after the pennit has been issued in order to demonstrate further that the facility will achieve the perfonnance specified in the pennit. In addition, the commission may require initial compliance testing to detennineongoingcompliancethroughengineering calculationsbased

on measured process variables, parametric or predictive monitoring, stack monitoring, orstack testing. (7) Nonattainment review. A grandfathered facility in a nonattainment area shall comply with all applicable requirements underSubchapterB, Division5 ofthis chapter(relatingtoNonattainment Review). (8) Prevention ofSignificant Deterioration (PSD) review. A grandfathered facility in an attainment area shall comply with all applicablerequirements underSubchapterB, Division6ofthis chapter (relating to Prevention ofSignificantDeterioration Review). (9) Air dispersion modeling or ambient monitoring. The commission mayrequire computerizedairdispersion modeling and/or ambient monitoring to detennine the air quality impacts from the grandfathered facility. (10) Federal standards ofreview for constructed or reconstructedmajorsourcesofhazardous airpollutants. Ifthegrandfathered facility is an affected source as defined in §116.15(1) ofthis title (relating to Section 112(g) Definitions), the affected source shall comply with all applicable requirements under Subchapter C ofthis chapter (relating to Hazardous Air Pollutants: Regulations Governing Constructed or Reconstructed Major Sources (FCAA, Section 112(g), 40 CFR Part 63». (II) Application content. In addition to any otherrequirements ofthis subchapter, the applicant shall: (A) identify each facility to be included inthepennit; (B) identify the air contaminants emitted; and
(C) 

### provide emission rate calculations. (b) Inadditiontotherequirements ofsubsection (a) ofthis section, an application for apipeline facilities pennit shall propose a control method and identifythe date by whichthe control method will be implemented. The proposedcontrol method shalldemonstrate compliance with the following requirements. (I) 

### Facilities located in the East Texas region as defined in §101.330 ofthis title (relating to Definitions), shall demonstrate that each grandfathered reciprocating internal combustion engine will achieveatleasta50%reductionofthehourlyemissionsrateofnitrogen oxides (NO

## J, expressed in tenns ofgrams perbrake horsepower-hour (glbhp-hr). The commissionmay also require a 50% reduction ofthe hourlyemissionsrate ofvolatileorganic compounds (VOC),expressed in tenns ofglbhp-hr for each engine located in the East Texas region

as defined in §101.330 ofthis title. (2) Thecommission shallrequire up to a20% reduction of the hourly emissions rate ofNO, andmayalso require up to a20% reduction ofthe hourly emissions rate ofVOC, bothexpressed in tenns ofglbhp-hr, from grandfatheredreciprocating internal combustionengines located in the West Texas region as defined in §101.330 ofthis title orEI Paso County. (3) Notwithstanding the requirements of paragraphs (I) 

### and (2) ofthis subsection, the owner or operator ofmore than one grandfathered reciprocating internal combustion engine may average the reductions achieved among more than one reciprocating internal combustion engine connected to orpartofagathering ortransmission pipeline in orderto demonstrate thereductions required inparagraphs (I) 

### and (2) ofthis subsection. Ifthe owner or operator chooses to average among engines located in both the East and West Texas regions as defined in §101.330 ofthis title it must be demonstrated thatthe sum ofthe reductions achieved from all ofthe engines located in the East Texas region as defined in §101.330 of this title will achieve the reductions required in paragraph (I) 

### ofthis subsection. Forpurposes ofthis paragraph, EI Paso Countyis included intheWest Texas region as defined in §101.330 ofthis title. (4) Ifthe emissions reductions required by paragraphs (I) 

### and (2) ofthis subsection will be achieved by averaging reductions as allowed by paragraph (3) ofthis subsection, the average may not include emission reductions achieved in orderto comply with any other state orfederal law. Ifthe emission reductions requiredbyparagraphs (I) and(2) ofthis subsectionwillbeachieved atoneaccount, thereduction may include emission reductions achieved since January 1,2001 in orderto comply with another state orfederal law. (c) Inadditiontotherequirementsofsubsection(a) ofthis section, an application for an existing facility pennit shall propose an air pollution control method that is at least as beneficial as the best availablecontroltechnology(BACT)thatthecommissionrequiredorwould have required for a facility ofthe same class ortype as a condition of issuing apennit orpennit amendment 120 months before the submittal ofthe existing facility pennit application, considering the age and remaining useful life ofthe facility. The application shall identify the date by which the control method will be implemented. §116.780. PublicParticipationforlnitiallssuanceof PipelineFacilities Permits andExistingFacility Permits.
(a) An applicant for a pipeline facilities pennit oran existing facility pennit shall publish a notice ofintent to obtain the pennit in accordance with Chapter 39, Subchapters Hand Kofthis title (relating to Applicability and General Provisions; and Public Notice ofAir Quality Applications). (b) Any person who may be affected by emissions from a grandfathered facilitymayrequestthe commissiontoholdanotice and
comment hearing on the pipeline facilities pennit application or the existing facility pennit application. The public commentperiod shall end 30 days afterthe publication ofNotice ofReceipt ofApplication and Intent to Obtain Pennit in accordance with §39.418 ofthis title (relating to Notice of Receipt of Application and Intent to Obtain Pennit). Any request for anotice and commenthearing must bemade in writing during the 30-day public commentperiod.



## ADOPTEDRULES June 7, 

## 2002 27 

## TexReg4981

# • 

# • 

# •
EXISTING FACILITY FLEXIBLE DIVISION 3. PERMITS

30TAC §§116.793 -116.802, 116.804 -116.807
STATUTORYAUTHORITY Stephanie Bergeron Director, Environmental Law Division Texas Natural Resource Conservation Commission Effective date: June 12, 2002 Proposal publication date: January4, 2002 Forfurther information, please call: (512) 239-4712

The new sections are adopted under THSC, TCAA, §382.011, which authorizes the commission to administer the requirements ofthe TCAA; §382.Q12, which provides the commission the authority to develop a comprehensive .plan for the state's air; §382.017, which authorizes the commission to adopt rules consistentwith the policy and purposes ofthe TCAA; §382.051, which authorizes the commission to issue a permitfor numerous similarsources; §382.0518, which authorizes the commission to issue permits for construction of new facilities or modifications of existing facilities; §382.05181, which requires grandfathered facilities to apply for a permit and comply with its conditions by certain dates, and requires certain actions of the commission; §382.061, which provides for delegation of powers and duties to the executive director; TWC, §5.1 03, which authorizes the commission to adopt rules; and §5.122, which provides for delegation of uncontested matters to the executive director. 

### §1/6.797. Noticeof FinalAction onExistingFacilityFlexiblePermit Applications.
(a) Afterthe public comment periodorthe conclusion ofany noticeandcommenthearing, the commissionwill sendnoticeby firstclass mail ofthe final action on the existing facility flexible permit application to any person whocommented during the public comment period oratthe hearing, and to the applicant. (b) The notice must include the following: (I) the response to any comments submitted during the public commentperiod; (2) identification of any change in the conditions ofthe draft permitand the reasons for the change; and (3) a statement that any person affectedby the decision of theexecutive directormayfile amotionto overturnundertheappropriate procedure in Chapter 50 ofthis title (relating to Action on Applications and OtherAuthorizations) and may seekjudicial review under TCAA, §382.032, relating to Appeal ofCommission Action. §1/6.807. Delegation.

Thecommissiondelegatestotheexecutivedirectortheauthoritytotake any action on a permit issued under this division, relating to existing facility flexible permits.
This agencyherebycertifiesthatthe adoption has been reviewed by legal counsel and found to be avalid exercise ofthe agency's legal authority.

Filed with the Office ofthe Secretary of State on May 23, 2002.
TRD-200203184 (c) Anynoticeandcommenthearingregardinginitialissuance ofapipelinefacilities permitoranexisting facilitypermitshall beconductedin accordance withthe procedures in §116.781 ofthis title (relatingtoNoticeandCommentHearingsforInitialIssuanceofPipeline FacilitiesPermits andExistingFacilityPermits)andnotundertheAPA. (d) The commission's response to public comments and the notice ofits decision on whetherto issue or deny a pipeline facilities permit or an existing facility permit will be conducted in accordance withtheprocedures in §116.783 ofthis title (relating toNoticeofFinal Action onPipelineFacilities PermitApplications andExistingFacility Permit Applications).
(e) Aperson affectedbya decisionto issueordeny apipeline facilities permitor an existing facility permit may seekreview, as appropriate, under the appropriate procedure in Chapter 50 ofthis title (relating to Action on Applications and Other Authorizations), and may seekjudicial review underTCAA, §382.032, relating to Appeal ofCommission Action. 

### §/ /6.783. Noticeof FinalActiononPipelineFacilitiesPermitApplications andExistingFacilityPermitApplications.
(a) Afterthepublic commentperiodexpires ortheconclusion ofany notice and comment hearing, the commission will send notice by first-class mail ofthe final action on the pipeline facilities permit applicationortheexistil'\gfacilitypermitapplicationtoanypersonwho commentedduringthepublic commentperiodoratthehearing, andto the applicant. (b) The notice must include the following: (I) the response to any comments submitted during the public comment period;
(2) identification ofany change in the conditions ofthe draftpermitand the reasons for the change; and (3) a statementthat any person affectedby the decision of theexecutive directormayfile amotiontooverturnundertheappropriate procedure in Chapter 50 ofthis title (relating to Action on Applications and OtherAuthorizations) and may seekjudicial review under TCAA, §382.032, relating to Appeal ofCommissionAction. §//6.787. AmendmentsandAlterations of PermitsIssued Underthis Division.

Filed with the Office ofthe Secretary of State on May 23, 2002.
TRD-200203183 Theowneroroperatorplanningthemodificationofafacilitypermitted underthis divisionrelatingto smallbusiness stationarysourcepermits, pipeline facilities permits, and existing facility permits must comply withthe requirements ofSubchapterB ofthis chapter(relating toNew Source Review Permits) before workbegins on the construction ofthe modification. Amendments and alterations for permits issued under this division are subject to the requirements ofSubchapter B ofthis chapter. 

### §/16.790. Delegation.

Thecommissiondelegatestotheexecutivedirectortheauthoritytotake any action on apermitissuedunderthis divisionrelatingto smallbusiness stationary source permits, pipeline facility permits, and existing facility permits.
This agencyherebycertifiesthatthe adoption has been reviewed by legal counsel and found to be avalid exercise ofthe agency's legal authority.



## 27TexReg

## 4982 June 

## 7, 2002 Texas Register(4) Opacity limitations for coal-fired grandfathered and electing EGFs. The coal-fired grandfathered and electing EGFs must Stephanie Bergeron Director, Environmental Law Division Texas Natural Resource Conservation Commission Effective date: June 12, 2002 Proposal publication date: January4, 2002 Forfurther information, please call: (512) 239-4712



## SUBCHAPTER I. 

## ELECTRIC GENERATING FACILITY PERMITS

30 TAC §§116.910, 116.911, 116.913, 116.917, 116.918, 116.921,116.926, 116.928, 116.930
STATUTORYAUTHORITY
The amendments and new sections are adopted under THSC, TCAA, §382.011, which authorizes the commission to administer the requirements of the TCAA; §382.012, which provides the commission the authority to develop a comprehensive plan forthe state's air; §382.017, which authorizes the commission to adopt rules consistentwith the policyand purposesofthe TCAA; §382.051, which authorizes the commission to issue a permit for numerous similar sources; §382.0518, which authorizes the commission to issue permits for construction of new facilities or modifications of existing facilities; §382.05181, which requires grandfathered facilities to apply for a permit and comply with its conditions by certain dates, and requires certain actions of the commission; §382.061, which provides for delegation of powers and duties to the executive director; TWC, §5.1 03, which authorizes the commission to adopt rules; and §5.122, which provides fordelegation of uncontested matters to the executive director.


### §//6.9//. Electric GeneratingFacilityPermitApplication.
(a) Owners or operators ofgrandfathered or electing electric generating facilities (EGF) shall submitan applicationto authorize nitrogen oxides (NO) emissions and, ifapplicable, sulfurdioxide (SO,) andparticulatematter(PM) emissions. The application mustinclude a completed Form PI-I-U, General Application. The Form PI-I-U must be signed by an authorized representative ofthe applicant. The Form PI-I-U specifies additional support information which must be providedbeforetheapplication is deemedcomplete. Inorderto begranted

an electric generating facility permit (EGFP), the owner or operator shall submit information to the commission which demonstrates that all ofthe following are met. (I) Measurement ofemissions and performance demonstration. Applicants must propose monitoring and reporting for the
measurement ofemissions and demonstration ofperformance consistent with §I16.914 ofthis title (relating to Emissions Monitoring and Reporting Requirements). (2) Control method. New control methodsproposedininitial applications must comply with the requirements in §I 16.617(1), (3), (4)(A), and (B) and (5)

- (9) ofthis title (relating to Standard Permit for Pollution Control Projects).
(3) Airdispersionmodelingorambientmonitoringforpollution control projects. Computerized air dispersion modeling and/or ambientmonitoring may berequired by the commission's AirPermits Division where there is an increase in emissions to determine the air qualityimpacts from controlsproposed underparagraph(2) ofthis subsection. 

# • 

# • • meet the opacity limitations of §111.111 of this title (relating to Requirements for Specified Sources). (b) Application information forelecting EGFs. (I) In addition to the information required in this section, EGFPapplicationsregardingelectingEGFsshall containthefollowing information: (A) documentation of the emissions from the 1997 Emissions Scorecard from the EPA Acid Rain Program, or ifthat information is not available, the actual emissions from that electing EGF for calendaryear 1997; (B) documentation offuel consumption, fuel heating values, and heat input in millions ofBritish thermal units (MMBtu) for calendar year 1997; (C) identification ofthe electing EGFs to be included. (2) Emissions of air contaminants from electing EGFs other than NO" and if applicable, SO, and PM, already authorized by Chapter 116 ofthis title (relating to Control ofAir Pollution'by Permits forNew ConstructionorModification), will notbe authorized under this subchapter. (c) The owneroroperatorofa grandfatheredorelecting EGF
must submit an application for a permit under this subchapter on or before September 1,2000. (d) Any grandfathered natural gas-fired EGF for which apermit application was filed under subsection (a) ofthis section, or for which apermithas been obtainedin accordance with subsection(a) of this section, or which is excluded in accordance with §116.910(d) of this title (relating to Applicability) from the requirement to submit an applicationunder subsection (a) ofthis sectionis consideredpermitted forthe emiSSions ofall aircontaminants from thatEGF. (e) An owner or operator ofa grandfathered coal-fired EGF with a permit issued in accordance with subsection (a) ofthis section

orwith anapplicationpendingundersubsection(a) ofthis sectionmay submit an application for an EGFP in accordance with to §116.917 of this title (relating to Electric Generating Facility Permit Application forCertainGrandfatheredCoal-FiredElectricGeneratingFacilitiesand Certain Grandfathered Facilities Located atElectric Generating Facility Sites) to authorize the emissions ofall criteria pollutants from the EGF otherthan NO" SO" andPM as it relates to opacity. (f) An owner or operator ofa grandfathered or electing EGF with a permit application pendingunder subsection (a) ofthis section

orapermitissuedinaccordance withsubsection (a) ofthis sectionmay submitan application for anEGFPinaccordance with §116.917 ofthis title to also authorize each ofthe following types offacilities that are located at the same site as the EGF: (I) a generator that does not generate electric energy for compensation and is used not more than 10% ofthe normal annual operating schedule; or (2) an auxiliary fossil-fuel-fired combustion facility that does not generate electric energy and does not emit more than 100
tons per year ofany air contaminant. (g) Anyapplication submittedinaccordancewith §116.917of this title forfacilities identifiedin subsection(e) ofthis sectionmustbe submitted by September 1,2003. Any application submitted in accordance with §116.917 ofthis title for facilities identified in subsection (f)(I) or (2) ofthis section must be submitted by September I, 2002. Any additional controls specified in an EGF permit issued in accordance with an application filed under §116.917 ofthis title are subject



## ADOPTEDRULES June 7, 

## 2002 27 

## TexReg4983tothe scheduleoutlinedin §116.771 ofthis title (relatingto Implementation Schedule for Additional Controls.) (h) Emissions ofair contaminants from facilities identified in subsection (f)(I) or (2) ofthis sectionmust be included in each applicable emissions allowance trading program under Chapter 101, Subchapter H, Division 2 ofthis title (relating to Emissions Banking and Trading Allowances). The commission will not issue any new emissions allowance forthe emissions ofany air contaminant from such a facility. (i) All applications for an EGFP shall be submitted under the seal of a Texas licensed professional engineer if required by §116.11O(e) ofthis title (relating to Applicability). 

### §Jl6.913. GeneralandSpecial Conditions. (a) Thefollowing general conditions shallbeapplicabletoevery electric generating facility permit (EGFP) unless otherwise specified in the permit. (I) A permit issued under this subchapter may authorize the following: (A) forgrandfatherednatural gas-firedelectric generating facilities (EGFs), emissions ofall aircontaminants; (B) for grandfathered coal-fired EGFs, nitrogen oxides (NO,) emissions, sulfurdioxide (SO,) emissions, and particulatematter (PM) through opacity limitations as specified in §111.111 ofthis title (relating to Requirements for Specified Sources);
(C) forelecting natural gas-firedEGFs, allowances for NO, emissions; (D) for electing coal-fired EGFs, allowances for NO. emissions, allowances forSO, emissions, andPM throughopacitylimitations as specified in §111.111 ofthis title; and (E) for facilities identified in §116.917(a) ofthis title (relating to Electric Generating Facility Permit Application for Certain Grandfathered Coal-Fired Electric Generating Facilities and Certain Grandfathered Facilities Located at Electric Generating Facility Sites), emissions ofall criteriapollutants. (2) Permits for grandfathered facilities as defined in §116.10 of this title (relating to General Definitions) at sites with grandfathered or electing EGFs and permitted under SubchapterH of this chapter (relating to Permits for Grandfathered Facilities) may be consolidated with apermit issuedunderthis subchapter. (3) TheowneroroperatorofagrandfatheredEGF, anelecting EGF, and ifapplicable, any facility included in an EGFP under §116.917 ofthis title, must comply with Chapter 101, Subchapter H, Division 2 ofthis title (relating to Emissions Banking and Trading ofAllowances) including the requirement to maintain allowances in

a compliance account. Allowances may be transferred in accordance with §10I.335 ofthis title (relating to Allowance Banking and Trading). (4) Mass emission monitoring and reporting shall be conducted in accordance with §116.914ofthis title (relatingto Emissions Monitoring and Reporting Requirements). (5) On June I after every control period, the owneroroperator shall hold a quantity ofallowances for emissions ofNO. and, where applicable, SO" in its compliance account that is equal to or greater than the total emissions ofthat,air contaminant emitted duringthepriorcontrolperiodforeachEGFpermittedinaccordance with §116.911(a)and(b) ofthis title(relatingtoElectricGeneratingFacility Permit Application) and foreach facility permitted in accordance with §116.917 ofthis title.



## 27TexReg 4984 

## June 7,2002 Texas Register (6) Ownersoroperators shallsubmitareportoftheamount ofemissions ofeach allocated aircontaminant, from the priorcontrol periodto the AirPermits Divisionconsistentwiththerequirements of § I01.336(b) ofthis title (relatingtoEmissionMonitoring, Compliance Demonstration, and Reporting). (7) Coal-firedgrandfatheredandelectingEGFs mustmeet the opacity limitations of§111.111 ofthis title. (8) Natural gas-firedEGFs thatwere designedto alsobum fuel oil may bum any American Society for Testing and Materials (ASTM) grade fuel oil ormixture ofASTM grade fuel oils containing
notmorethan0.7% sulfurbyweightas determinedbyASTM Method D 396. Burning offuel oil does notrelieve the owneroroperatorofthe EGF from the responsibility to comply withthe emission limitations, allowances, orconditions ofany permit or state or federal regulation. Theburning ofwaste orused oils is not authorizedbythis subchapter. (9) OwnersoroperatorsofnaturalgasfiredEGFsthatwere. designedto alsobumfuel oil shall submitanannualreportfortheEGFs that burned fuel oil during each control period. The report shall include the names ofthe unites) burning fuel oil, the date(s) thatfuel oil isbumed, the amountoffuel oilburned, andtheASTMgrade(s) ofthe fuel oil orfuel oil mixturethatis burned. Thisreport shallbeincluded with thereport requiredby §I0I.336(b) ofthis title (relating to Emission Monitoring, Compliance Demonstration, and Reporting). (b) Special conditions maybe included in the EGFP. 

### §1l6.917. Electric Generating Facility PermitApplicationfor Certain GrandfatheredCoal-FiredElectric GeneratingFacilitiesandCertain GrandfatheredFacilities LocatedatElectric GeneratingFacility Sites, (a) Any application for an electric generating facility permit (EGFP) foradditional criteriapollutants from grandfatheredcoal-fired electric generatingfacilities (EGFs) identifiedin §116.911 (e) ofthistitle (relating to Electric Generating Facility PermitApplication) orfor grandfathered facilities identified in § I16.91 I(f)(I) or (2) ofthis title (relating to Electric Generating Facility Permit Application) must include acompleted Form PI-IG, Grandfathered Facility Permit Application. The Form PI-IG must be signed by an authorized representative ofthe applicant. The Form PI-IG specifies additional support information which must beprovided before the application is deemed complete. In order to be granted a permit for a grandfathered facility under this section, the owneroroperator ofthe grandfathered facility shall submit information to the commission which demonstrates that all ofthe following are met. (I) Protection ofpublic health and welfare. The emissions from the grandfathered facility will comply with all rules and regulations ofthe commission and with the intent ofthe TCAA, including protectionofthe health andphysical property ofthe people. (2) Measurementofemissions. TheEGFPmayhaveprovisions formeasuringtheemission ofaircontaminants as determinedby the commission. These may include the installation ofsamplingports

onexhauststacksandconstructionofsamplingplatformsinaccordance withguidelines inthe "Texas Natural ResourceConservationCommission Sampling Procedures Manual," portable analyzers, or emissions calculations ifaknown process variable is monitored. (3) NewSourcePerformance Standards(NSPS). Theemissions fromeach affected facility as definedin40 CodeofFederal Regulations (CFR) Part60 will meetatleasttherequirements ofany applicable NSPS as listed under40 CFR Part 60, promulgated by the EPA underauthority granted in accordance with FCAA, §III, as amended. (4) National Emission Standards forHazardous Air Pollutants (NESHAP). The emissions from each facility as defined in 40CFRPart 61 will meet atleastthe requirements ofany applicable NESHAP, as listed under40 CFRPart 61, promulgatedby the EPAunder authoritygranted in accordance with FCAA, §112, as amended. (5) NESHAPs for source categories. The emissions from each affected facility shall meet at least the requirements ofany applicable maximumachievablecontrol technology (MACT) standard as listed under 40 CFR Part 63, promulgated by the EPA in accordance withFCAA, §112, oras listedunderChapter 113, SubchapterCofthis title (relatingtoNational Emission Standards for Hazardous AirPollutants for Source Categories (FCAA, Section 112,40 CFR 63)). (6) Performancedemonstration. Thegrandfatheredfacility will achieve the performance specified in the permit application. The commission may require the applicant to submit additional engineeringdata afteran EGFP hasbeen issuedin orderto demonstrate further thatthegrandfatheredfacilitywillachievetheperformancespecifiedin the permit. In addition, thecommission mayrequire initialcompliance testing to determine ongoing compliance through engineering calculations based on measured process variables, parametric orpredictive monitoring, stack monitoring, or stacktesting. (7) Nonattainment review. A grandfathered facility in a nonattainment area shall comply with all applicable requirements underSubchapterB, Division 5ofthis chapter(relatingto Nonattainment Review). (8) Prevention ofSignificant Deterioration (PSD) review. A grandfathered facility in an attainment area shall comply with all applicablerequirements underSubchapterB, Division6ofthis chapter (relating to Prevention ofSignificant Deterioration Review).
(9) Air dispersion modeling or ambient monitoring. The commission mayrequire computerized airdispersion modeling and/or ambient monitoring to determine the air quality impacts from the grandfathered facility. (10) Federal standards ofreview for constructed orreconstructedmajorsourcesofhazardous airpollutants. Ifthegrandfathered facility is an affected source (as defined in §116.15(1) ofthis title (relatingto Section 112(g) Definitions)), the affected source shall comply with all applicable requirements under Subchapter C ofthis chapter (relating to Hazardous Air Pollutants: Regulations Governing Constructed or Reconstructed Major Sources (FCAA, Section 112(g), 40 CFR Part 63)).
(II) Application content. In addition to any otherrequirements ofthis subchapter, the applicant shall: (A) identify each facility to be included in the electric generating facility permit; (B) identify the air contaminants emitted; and
(C) provide emission rate calculations. (b) Upon request, the commission shall consolidate an application submitted in accordance with this section with an application pending in accordance with §116.911(a) ofthis title. (c) Applications submitted in accordance with this section are subjectto the requirements of§116.920 ofthis title (relating to Public Participation for Initial Issuance). §JJ6.928. Delegation. The commission delegates to the executive director the authority to take any action on a permit issued under this subchapter. Section 116.922(b)(3) ofthis title (relating to Notice ofFinal Action) provides notification that any person affected by a decision ofthe commission may petition for rehearing. Notwithstanding §116.922(b)(3) ofthis title, any Notice ofFinal Action sent regarding a permit action under this subchapter will state that a person affected by a decision of the executive director may file a motion to overturn the executive director's decision under §50.139 ofthis title (relating to Motion to Overturn Executive Director's Decision) rather than a petition for rehearing.

This agencyherebycertifiesthatthe adoption has beenreviewed by legal counsel and found to be a valid exercise ofthe agency's legal authority.

Filed with the Office ofthe Secretary ofState on May 23, 2002.

TRD-200203185 Stephanie Bergeron Director, Environmental Law Division Texas Natural Resource Conservation Commission Effective date: June 12,2002 Proposal publication date: January 4, 2002 Forfurther information, please call: (512) 239-4712 

# • 

# • •
CHAPTER214. SECONDARYCONTAINMENT REQUIREMENTS FOR UNDERGROUND STORAGE TANK SYSTEMS LOCATED OVER CERTAIN AQUIFERS

30 TAC §§214.1

- 214.3

The Texas Natural Resource Conservation Commission (commission) adopts new Chapter 214, Secondary Containment Requirements for Underground Storage Tank Systems Located Over Certain Aquifers, §§214.1

- 214.3. Sections 214.1

- 214.3

are adopted 

### withoutchanges to the proposed text as published in the February 15, 2002 issue ofthe 

### TexasRegister(27 TexReg 1100) and will not be republished.

BACKGROUND AND SUMMARY OF THE FACTUAL BASIS FOR THE ADOPTED RULES

The purposeofthe adopted rules is to implementHouse Bill (HB) 2912, Article 13, §13.01 and Article 18, §18.13, 77th Legislature, 2001. House Bill 2912 adds Texas Water Code (TWC)
, §26.3476, Secondary ContainmentRequired ForTanks Located Over Certain Aquifers. TWC, §26.3476, specifies that an underground storage tank (UST) system, at a minimum, shall incorporate a method for secondary containment ifthe system is located in the outcrop ofa major aquifercomposed oflimestone and associated carbonaterocks ofCretaceous age orolder; and

a county that has a population ofat least one million and relies

on groundwater for at least 75% ofthe county's water supply or has a population of at least 75,000 and is adjacent to a county thathas a population ofatleastone million and relies on groundwater for at least 75% ofthe county's water supply.
TWC, §26.3476, applies only to a UST system that is installed, upgraded, orreplaced on orafterSeptember 1, 2001 and applies only to the outcrop ofthe Edwards (Balcones Fault Zone) and Trinityaquifers in northern Bexarand Comal Counties as defined by the Texas WaterDevelopment Board (TWDB). Forthe limited

areas where it is unclearas to which agency rules are applicable (30 TAC Chapter 213 concerning Edwards Aquifer, the Chapter 214 rules, orthe statewide 30TAC Chapter334rules concerning Underground and Aboveground Storage Tanks), the executive director will make a determination on a case-by-case basis.

SECTION BY SECTION DISCUSSION



## ADOPTEDRULES June 7, 

## 2002 27 

## TexReg4985