Robert J. Huston, Chairman

R. B. "Ralph" Marquez, Commissioner

Kathleen Hartnett White, Commissioner

Jeffrey A. Saitas, Executive Director

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02 AUG -1 AM 9: 23

TEXAS NATURAL RESOURCE CONSERVATION COMMISSION

Protecting Texas by Reducing and Preventing Pollution

July 31, 2002

Mr. Gregg Cooke

Regional Administrator

U.S. Environmental Protection Agency, Region 6

1445 Ross Avenue

Dallas, Texas 75202-2733

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On May 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 of Air Pollution by Permits for New Construction or

-Modification. The adopted changes to Chapter 39 and Chapter 116 concern requirements and .

procedures for the permitting of grandfathered facilities and an incentive program for the reduction of

emissions of nitrogen oxides from ~ertain grandfathered reciprocating interrial combustion engines

associated with pipelines. The new and amended sections of Chapter 39; all sections of Chapter 116,

Subchapter H except §116.776; and the new and amended sections of Chapter 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 of the

public hearing, and the accompanying order. I look forward to your expeditious approval of these SIP

revisions.

ly,

Chairman

RJH/js

cc: The Honorable Rick Perry, Governor of Texas

Ms. Wendy Wyman, Environmental and Natural Resources Policy Director, Office of the

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 • Internet address: www.tnrcc.state.tx.us

prinkJ un r~·cyd~J p<lper lIsing soy-bJ:.eJ ink
Mr. Gregg Cooke

Page 2

bee: Mr. Randolph Wood, Deputy Director, Office of Environmental Policy, Analysis, and

Assessment

Mr. Jim Muse, Director, Policy and Regulations Division

Ms. Heather Evans, 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 of Air Pollution by Permits for

New Construction or Modification; and Chapter 39, Subchapter H

and Subchapter K, concerning Public Notice; and a revision

to the state implementation plan

Rule Log Number 2001-076-116-AI
INTRODUCTION

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

testimony regarding revisions to 30 TAC Chapter 39 and Chapter 116, and to the state implementation plan

(SIP). The public hearings 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, 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 to Chapter 39 and Chapter 116 concer~ requirements and pro~eciures for the permitting.·

of grandfathered facilities and an incentive program for the reduction of emissions of nitrogen oxides from

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

amended sections of Chapter 39 are being submitted to the United States Environmental Protection Agency

(EPA) as a revision to the state implementation plan (SIP). All sections of Subchapter H except §116.776,

are being submitted to the EPA as a revision to the SIP. The new and amended sections of SUbchapter A

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 a complete record of the public hearings

and is divided into the following four sections:
o Public Notification and Proposal

o Written and Oral Testimony

o Evaluation of Testimony

o Staff Recommendations

Additional copies ofthis hearing record are maintained in the TNRCC central office at 12100 Park 35 Circle,

Austin, Texas 78753. For further information, please contact Jill Burditt at (512) 239-0560.
(2) updates citations to the new codified Texas Pharmacy Act

and makes other changes necessary due to the codification.

No comments were received regarding adoption of the amendments.

The amendments are adopted under sections 551.002, 554.051,

and 554.006 of the Texas Pharmacy Act (Chapters 551-566,

Texas Occupations Code). The Board interprets section 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 for the proper administration and enforcement of the

Act. The Board interprets section 554.006 as authorizing the

agency to establish reasonable fees sufficient to cover the costs

of administering the Texas Pharmacy Act.

The statutes affected by this rule: Chapters 551-566, Texas Occupations Code.

This agency hereby certifies that the adoption has been reviewed

by legal counsel and found to be a valid exercise of the agency's

legal authority.

Filed with the Office of the Secretary of State on 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

For further information, please call: (512) 305-8028

• • •

TITLE 30. ENVIRONMENTAL QUALITY

PART 1. TEXAS NATURAL RESOURCE

CONSERVATION COMMISSION

CHAPTER 39. 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 without changes to the proposed text as published

in the January 11, 2002 issue of the 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 a voluntary 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

27 TexReg 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 requirement to obtain permits for construction or modifications of facilities that emit air contaminants.

If grandfathered facilities 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 of grandfathered facilities. This program

is known as the Voluntary Emission Reduction Permit (VERP)

program. The commission adopted rules to implement the VERP

program on December 16, 1999. Since the VERP rules became

effective, the owners and operators of a number ofgrandfathered

facilities have taken advantage of the incentives offered by the

VERP program and submitted VERP applications for their grandfathered facilities. Additionally, the owners and operators of other

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 RegUlatory Act, Subtitle B, Electric Utilities, and created a new Chapter 39, Restructuring of

Electric Utility Industry by adopting SB 7. SB 7 required the commission to implement the permitting and allowance requirements

of new Texas Utilities Code, §39.264, concerning Emissions Reductions of"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).

Under SB 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 subject to the requirement to obtain a permit under TCAA, §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 of SB 7, yet elected to participate in the allowance

trading system.

Most recently, the 77th Legislature, 2001, amended Texas Health

and Safety Code (THSC), TCAA to require that all grandfathered

facilities obtain permits. The mandatory permitting requirements

of HB 2912 are the culmination of legislative efforts, beginning in

1997, to permit or otherwise authorize all grandfathered facilities.

HB 2912 created four new types of permits for grandfathered facilities: existing facility permits, small business stationary source

permits, EGF permits, and pipeline facilities permits. HB 2912

also mandated the dates by which grandfathered facilities must

apply for a permit and have controls operational or submit a shutdown notice. Grandfathered facilities that are addressed by an

application for a VERP are not required to comply with the provisions of HB 2912 for grandfathered facilities. However, grandfathered facilities that withdraw their VERP applications and elect

to submit a permit application for an authorization under HB 2912
will 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, Subchapter A, Definitions; Subchapter H, Permits for Grandfathered

Facilities; and Subchapter I, Electric Generating Facility Permits,

which are published in this iss~e of the Texas Register.

Additionally, revisions to Chapter 39, Public Notice, were necessary to implement the 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 subject to 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

public comment period for an application, during which 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.

Under these procedures, interested persons can request a hearing. The hearing is recorded, and oral comments are accepted.

The commission will provide reasonable accommodations to 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

public comment period, which must be at least 30 days, and may

extend or reopen the comment period if appropriate. 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 under Texas Government Code, Chapter 2001, so

they are not contested case hearings. The commission is required to hold a pUblic hearing on an application, prior to granting

the permit, if 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 requests a hearing. However, the commission

is not required to hold a hearing if the basis of the 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 of the draft permit and the reasons for the 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 by the executive director, found in 30 TAC

Chapter 50 (relating to Actions on Applications and Other Authorizations), to give effect to the intent of the legislature to provide

for the intermediate review, by affected persons, of commission

actions on applications for grandfathered facility permits. Therefore, the commission is not adopting new procedures for grandfathered facility permits in this chapter.

SECTION BY SECTION DISCUSSION

Subchapter H, Applicability and General Provisions

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 not available 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 for a permit under SB 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 for grandfathered facilities permits were subject to notice and hearing requirements as provided by THSC,

§382.05191. The adopted new §39.404 implements this 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 of Application 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 for initial issuance of a permit described 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 of existing facility permits and pipeline facilities permits will not be required to publish

Notice of Application and Preliminary Decision.

ADOPTED RULES June 7, 2002 27 TexReg 4949
Additionally, revisions are adopted for §39.419(e)(3). The existing §39.419(e)(3) specifies publication requirements for a Notice

of Application 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

include a subparagraph (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 orfor requesting a contested case hearing for existing facility

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 of VERPs under THSC,

§382.0519. Additionally, the adopted revisions delete the words

"voluntary emission reduction" since multiple permit types are

referenced in the adopted language.

Subchapter K, Public Notice ofAir Quality Applications

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 for Voluntary Emission Reduction Permits, are necessary to

ensure that alternative means of notice are available for all small

businesses who apply to permit their grandfathered facilities.

FINAL REGULATORY IMPACT ANALYSIS DETERMINATION

The commission reviewed the adopted rulemaking in light of the

regulatory analysis requirements of Texas Government Code,

§2001.0225, and determined that the changes to this chapter

needed to implement the procedural aspects of HB 2912, §§5.02

- 5.04 do not meet the 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 implement the 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 for potential 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 of the 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 implement the HB 2912 sections concerning the substantive permitting requirements are intended to protect the environment or reduce risks to human health from environmental

27 TexReg 4950 June 7, 2002 Texas Register

exposure and may have adverse effects on the economy, productivity, competition, or jobs of the state or a sector of the state,

the adopted new sections of Chapter 39 are merely procedural.

Furthermore, the analysis required by Texas Government Code,

§2001.0225(c) does not apply because the adopted rules do not

meet any of the four applicability requirements of a major environmental rule. The adopted rules do not exceed a standard 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 comply with HB 2912, and do not exceed

the requirements of that bill.

TAKINGS IMPACT ASSESSMENT

The commission completed a takings impact assessment for the

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 advance this purpose by supporting the permitting

system created by HB 2912. This system includes four different

types of permits which cover all 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,

Chapter 2007 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

of governmental 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, nor will they affect any action

or authorization identified in Coastal Coordination Act 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 subject to the CMP; and are not themselves

capable of adversely affecting a coastal natural resource area.

Therefore, the adopted rulemaking is not subject to 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

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.

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

for the Environment (TCE); and Galveston-Houston Association

for Smog Prevention (GHASP).

In addition, the commission received comments from, or on behalf of, the following elected officials: Mr. Larry Green representing the Honorable Sheila Jackson Lee, U.S. House of Representatives, Eighteenth District of Texas; 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 support for the

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 also stated that

the commission should always record public statements so it can

use them later in the comment consideration process. GHASP

stated that requiring comments to be in writing may be a violation of the federal Clean Air Act. Representative Lon Burnam

strongly opposed the requirement to submit all comments in writing.

The commission has made no change in response to these 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 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. Public meetings that may be held in conjunction with a specific air permit are

recorded and oral comments are accepted. The initial issuance

of a grandfather permit, with the exception of small 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 of any prohibition in the federal Clean Air Act relating to the requirement for

submission of written comment.

SCCC, St. Francis, Larry Green, and Council Member Edwards

commented on the need for the pUblic to be notified of facilities

applying for permits. SCCC and Larry Green suggested a 60-

to 90- day notice period. Council Member Edwards suggested

six months to one year for 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 grandfather permit applications within one year of receiving an administratively complete application. Sections 39.418

and 39.603 require all facilities except for facilities 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 municipality nearest the location of the

facility. The newspaper notice must be published no later than

30 days after the executive director declares an application administratively complete. 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 at the site of the facility declaring the filing of an application for the 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 impact analysis determination is fully discussed elsewhere in this preamble.

The commission provides the follOWing discussion to supplement

that determination.

ADOPTED RULES June 7, 2002 27 TexReg 4951
Filed with the Office of the Secretary of State 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

For further information, please call: (512) 239-4712

Filed with the Office of the Secretary of State 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

For further 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 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; §382.0518,

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 for the 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 TWC, §5.103, which authorizes the commission

to adopt rules.

This agency hereby certifies that the adoption has been reviewed

by legal counsel and found to be a valid exercise of the agency's

legal authority.

Implementing HB 2912, §§5.02 - 5.04 required changes to Chapter 39. However, the substantive rule changes required by these

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 of the applicability requirements in Texas Government

Code, §2001.0225(a), and for this reason the adopted rules are

not subject to a regulatory impact analysis under Texas Government Code, §2001.0225.

SUBCHAPTER H. APPLICABILITY AND

GENERAL PROVISIONS

30 TAC §§39.404, 39.411, 39.419, 39.420

STATUTORY AUTHORITY

The amendments and new section 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 of the 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 of the commission; §382.05182, which requires notices

for the 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 agency hereby certifies that the adoption has been reviewed

by legal counsel and found to be a valid exercise of the agency's

legal authority.

27 TexReg 4952 June 7,2002 Texas Register

•

•

•

•

•

•
own property; the property is in a county with a population of less

than 10,000; and they do not charge for the burning. Because

of the limited circumstances under which 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 effect on commission actions subject to the CMP. Therefore,

the rulemaking is consistent with 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 Air Act (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 hereby certifies that the adoption has been reviewed

by legal counsel and found to be a valid exercise of the agency's

legal authority.

Filed with the Office of the Secretary of State on 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

For further information, please call: (512) 239-5017

• • •

CHAPTER 116. CONTROL OF AIR

POLLUTION BY PERMITS FOR NEW

CONSTRUCTION OR MODIFICATION

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

27 TexReg 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 Subchapter A 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 a voluntary 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 Air Act (TCAA) in 1971.

These facilities were not required to comply with (I.e., grandfathered from) the then new requirement to obtain permits for construction or modifications of facilities that emit air contaminants.

If grandfathered facilities 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 of grandfathered facilities. This program

is known as the Voluntary. Emission Reduction Permit (VERP)

program. The commission adopted rules to implement the VERP

program on December 16, 1999. Since the VERP rules became

effective, the owners and operators of a number of grandfathered

facilities have taken advantage of the incentives offered by the

VERP program and submitted VERP applications for their grandfathered facilities. Additionally, the owners and operators of other

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 Regulatory Act, Subtitle B, Electric Utilities, and created a new Chapter 39, Restructuring of

Electric Utility Industry by adopting SB 7. SB 7 required the commission to implement the permitting and allowance requirements

of new Texas Utilities Code, §39.264, concerning Emissions Reductions of "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).

Under SB 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 subject to the requirement to obtain a permit under TCAA, §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 of S8 7, yet elected to participate in the allowance

trading system.
Most recently, the 77th Legislature, 2001, amended Texas Health

and Safety Code (THSC), TCAA to require that all grandfathered

facilities obtain permits. The mandatory permitting requirements

of HB 2912 are the culmination of legislative efforts, beginning in

1997, to permit or otherwise authorize all grandfathered facilities.

HB 2912 created four new types of permits for grandfathered facilities: existing facility permits; small business stationary source

permits; EGF permits; and pipeline facilities permits. HB 2912

also mandated the dates by which grandfathered facilities must

apply for a permit and have controls operational or submit a shutdown notice. Grandfathered facilities that are addressed by an

application for a VERP are not required to comply with the provisions of HB 2912 for grandfathered facilities. However, grandfathered facilities that withdraw their VERP applications and elect

to submit a permit application for an authorization under HB 2912

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 for facilities in East Texas; September 1,

2004 for facilities in West Texas; and for small business stationary source permits, by September 1, 2004, irrespective of the

location of the 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

may request a onetime, 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 of ten-year-old best available 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 a small business stationary source in TCAA, §382.0365(h), and which do

not have to submit emissions inventory information under TCAA,

§382.014. Facilities eligible for small business stationary source

permits may not emit air contaminants after March 1, 2008 if they

do not have a permit or a 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

that were required to obtain a permit under SB 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 for the

criteria pollutants not addressed by the SB 7 permit. 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% of the 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 other state 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 of the 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,

ADOPTED RULES June 7, 2002 27 TexReg 4955
pipeline facilities permits, and small business stationary source

permits are sUbject to judicial review, under TCAA, §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 EPA to provide incentives to owners or operators

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 guidelines for how any money deposited into

this account is to be distributed to owners or operators making

reductions in NO, emissions from grandfathered reciprocating internal combustion engines associated with pipelines. HB 2914

provides for a partial reimbursement for the capital cost of installing technology to reduce emissions that meet certain criteria.

To implement these revisions, the commission is adopting new

§116.776, Distribution of Funds from the Emissions Reductions

Incentives Account for Control of Emissions from 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 for the cost of

controls. The rules also contain the criteria the commission will

consider in determining who will receive money from the account

and how much money a particular facility will receive. In order

to be eligible for reimbursement under this program, the owner

or operator of a 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 necessary to receive reimbursement in order to assure that air quality

benefits will be achieved under this incentive program. Another

criteria for reimbursement is the requirement to obtain a pipeline

facilities permit or replace the grandfathered engine with an electric engine. This implements the HB 2914 requirement that limits

reimbursement to facilities required to achieve a 50% reduction

in NO, emissions. Facilities that obtain pipeline facilities permits

are the only facilities required to achieve a 50% 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 incentives to ensure that reimbursements for emission reductions are prioritized for those reductions

27 TexReg 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 reductions first, 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 of the 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 director the authority to take action on

permit applications for grandfathered facilities. The commission

solicited comment on the proposal to delegate to the executive

director the authority to take any action on these grandfathered

facility permits, and also to make decisions regarding the implementation and administration of the permitting program, generally. The commission received no comments in response to

this solicitation. Therefore, the commission has changed the

rule in the delegation sections to state that the commission delegates to the executive director the authority to take any action 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 rather than 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 of this rulemaking in the Response to Comments portion of this preamble.

To implement these revisions to TCAA, the commission adopts

new and amended rules in Chapter 116, Subchapter A, 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 amendments to Chapter 39 are also published in this issue of the 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 new facility, was constructed prior to August 30, 1971 (or no construction contract

was executed on or before August 30, 1971 that specified a beginning construction date on or before February 29, 1972) and

has not been modified since August 30, 1971.

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 a facility that was
designed to burn either natural gas or fuel oil of a grade approved

by commission rule. In general, physical or operational changes

at a facility to allow the burning of fuel oil will be considered a

part of the design as long as they do not constitute a modification of the facility. It is the commission's position that "designed to

burn" usually means that all of the necessary equipment (including fuel oil tanks, fuel lines, atomizers, and pre-heaters if necessary) were constructed and maintained as part of the grandfathered EGF. Any modification necessary to allow an EGF to 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 at the maximum firing rate at the 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 of the 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 at full capacity simultaneously at

all hours of the 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 infrequently and last only for short 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 of fuel 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 subject to this MACT standard. The commission

has also added language in §116.913(a)(8) that clarifies that the

burning of waste or used oils is not authorized under Subchapter

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 of acceptable 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 or state or federal 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 if a generator that the owner or operator is seeking to permit under an

EGF permit is used not more than 10% of the normal annual operating schedule as required by TCAA, §382.05185(d)(1). The

final rule establishes the normal operating schedule as the maximum number of 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 ~he

highest number of operating hours.

Subchapter H, Permits for Grandfathered Facilities

The adopted amendments to Subchapter H include changing the

subchapter title from "Voluntary Emission Reduction Permits" to

"Permits for Grandfathered Facilities" in order to correctly reflect

the modified content of the subchapter. The subchapter has

been divided into four divisions. The existing sections of the subchapter are 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 new sections of Subchapter H adopted to implement and administer the requirements of HBs 2912 and 2914.

Division 1, General Applicability

Division 1 contains the general requirement for a grandfathered

facility to obtain a permit, permit by rule, or shutdown. The owner

or operator of a grandfathered facility must choose which permitting option is best for his or her facility and situation. If the facility

meets the qualifications, the owner or operator may choose 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

or operator may also choose any other permit type under Chapter 116 or permit by rule under Chapter 106 for which the facility

qualifies as long as the application is submitted by the applicable

deadline contained in this division. Adopted new §116.770, Requirements to Apply, contains the deadlines by which the owner

or operator of a grandfathered facility must apply for a permit to

operate that facility under Chapter 116, qualify for a permit by

rule under 30 TAC Chapter 106, or submit a notice of shutdown.

As required by HB 2912, a permit application or notice of shutdown must be submitted before September 1, 2003, for facilities

located in the East Texas region and before September 1, 2004,

for facilities located in the West Texas region and EI Paso County.

HB 2912 defines the East Texas region as all counties traversed

by or east of Interstate Highway 35 North of San Antonio or traversed by or east of Interstate Highway 37 South of San 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 different from the definition created by SB 7 in that the

SB 7 definition for West Texas region does not include EI Paso

ADOPTED RULES June 7, 2002 27 TexReg 4957
County. Therefore, rather than create a new definition, the commission uses the language, "West Texas Region as defined in

§101.330 of this title (relating to Definitions) and EI Paso County"

in place of the 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, for facilities located in the East Texas 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 of the time to install controls if the 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 a grandfathered facility shutting down must cease 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, if the 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 stationary source permit are 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 of the 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 Facility Permits

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. Only the owners or operators of facilities located at small business stationary sources as defined by TCM,

§382.0365(h), and which are not required by TCM, §382.014

to submit emissions inventories to the commission may apply for

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

or operator has submitted a notice of shutdown under proposed

§116.772, located at a small business stationary source may

not emit air contaminants on or after March 1, 2008, unless the

facility is permitted or has a pending permit application under

Chapter 116, or a pending registration for a 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 of a Texas licensed professional engineer, if required by

27 TexReg 4958 June 7, 2002 Texas Register

§116.11 O(e), and states that the facility's owner or operator is responsible for applying for the permit and 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 or transmission 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 for the 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 clarify that the 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 in the East Texas Region,

is adopted with changes to the proposed text. The adopted new

section implements the requirements of HB 2914, §78 to establish procedures and criteria for reimbursement to owners or operators for the partial cost of installing controls to 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 of those facilities requesting a reimbursement from the Emissions Reductions Incentives Account at the time the permit application is filed.

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 commission also clarified in §116.776(a)(10) that

only the owners or operators of grandfathered engines required

to reduce emissions of NO, by some other state or federal law are

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 of the replacement electric engines. Registration of the 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,

states the facilities which are eligible for an existing facility permit

in accordance with TCAA, §382.05183. The owner or operator

of any grandfathered facility may apply for an existing facility permit. The new section also requires an application for an existing

facility permit to be submitted under the seal of a Texas licensed

professional engineer, ifrequired by §116.110(e), and states that

the facility's owner or operator is responsible for applying for the

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 order to 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 that demonstrates 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, if applicable, it is appropriate to ensure that

these facilities 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 apply to applicants for a pipeline facilities 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 of the 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 hourly emissions rate of NO, and may require up to a 20%

reduction in the hourly emissions rate of VOC, expressed in

terms of g/bhp-hr, for facilities located in the West Texas region

or EI Paso County. In accordance with TCAA, §382.05186(b),

the proposed section allows the owner or operator of 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

order to 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, if the owner or operator chooses to average

among engines located in both the East and West Texas regions

or EI Paso County, the owner or operator must demonstrate

that the sum of the reductions achieved from all of the 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

at one 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 Issuance ofPipeline

Facilities Permits and Existing Facility Permits, is adopted with

changes to the proposed text. The adopted new section requires

that an applicant for a pipeline facilities permit or an existing facility permit publish notice of intent to obtain a permit in 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 TexReg 4959
section specifies the procedures and requirements for the hearing and the rights of affected persons. In accordance with 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 whether or not to 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 of a permit under TCM, §§382.05183, 382.05185(c) or

(d), 382.05186, or382.0519 will be done in the manner of TCM,

§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 §116.783, 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 of the 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 that the 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

rather than 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, unless the facility is a small business stationary source,

as defined by TCM, §382.0365(h), then the fee will 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 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 under Subchapter H, Division 2, and requires that

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

27 TexReg 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 new section specifies that owners or operators

planning the modifications of a facility permitted under Chapter

116, Subchapter H, Division 2, must comply with the requirements of Subchapter B, New Source Review Permits, before beginning the construction of the modification. The new section

also states that amendments and alterations of permits issued

under SUbchapter H, Division 2, are subject to the requirements

of Subchapter B. The commission corrected a typographical 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, identifies the conditions under which a grandfathered facility or group of grandfathered 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 permit for changes of ownership. The new section specifies that the facility's owner or operator is responsible for applying

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 Permit Application, 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, except for the required

level of control. The level of control required by the adopted section, consistent with the requirement of TCM, §382.05183, is at

least as beneficial as ten- year-old BACT, considering the age

and remaining useful life of the 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 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 30-day
comment period, which ends 30 days after pUblication of the notice of intent. The new section specifies the procedures and requirements for the 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 of the 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 of oral 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 manner of TCAA, §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 Permit Applications, is adopted with changes to the 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

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

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 statement that any person affected by the decision

of the commission may petition for rehearing and for judicial review. Because, in §116.807, the commission is now 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 rather than a petition

.for rehearing.

Adopted new §116.798, Permit Fee, establishes a permit fee of

$450 for persons applying for a permit under Subchapter H, Division 3, unless the facility is a small business stationary source facility, as defined by TCAA, §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 of fees. 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 Major Sources (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 a facility under a

standard permit or a permit by rule under Chapter 106. Additionally, the new section specifies that a pollutant specific emission

cap or multiple emission caps and/or individual emission limitations shall be established for each air contaminant for all facilities

authorized by the permit. The new section also lists the general

conditions applicable to every existing facility flexible permit and

states that there may be additional special conditions attached to

an existing facility flexible permit upon issuance or amendment

of the permit that may be more restrictive than the requirements

of the section. These requirements are consistent with the requirements for flexible permits issued under Subchapter 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 of the emission

cap when a facility is shut down, a new facility is brought into

the permit, or a facility becomes subject to any new state or federal regulation which would lower emissions or require an emissions reduction. These requirements are consistent with the requirements for flexible permits issued under Subchapter G, except that there is not an insignificant emission factor specified 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 for Additional

Controls, explains the implementation schedule to be contained

in a permit if the installation of additional controls is required for a

grandfathered facility to meet an emission cap for an air contaminant. As required by TCAA, §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 how the emission cap will be adjusted if such a facility is taken out of service or fails 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.

ADOPTED RULES June 7, 2002 27 TexReg 4961
Adopted new §116.805, Amendments and Alterations for Existing Facility Flexible Permits, specifies that amendments and alterations for existing facility flexible permits are subject to the requirements of Subchapter 8.

Adopted new §116.806, Existing Facility Flexible Permit Renewal, states that existing facility flexible 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 §116.807 the commission delegates

to the executive director the authority to take any action on a permit issued under Subchapter H, Division 3 consistent with the

authority of TCAA, §382.061, and TWC, §5.122. This delegation will allow for efficient processing of permit applications.

With the addition of three new divisions to this subchapter, the

existing requirements for VERPs have been placed under a new

Division 4. There have been no changes to the requirements for

VERPs.

Subchapter I, Electric Generating Facility Permits

The adopted amendments to Subchapter I implement the portions of TCAA, §382.05185, which create a new EGF permit.

The EGF permit will 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: 1) generators that do not generate electric energy for compensation and are not used more

than 10% of the annual operating schedule; and 2) auxiliary fossil-fuel-fired combustion facilities that do not generate electric energy and do not emit more than 100 tpy of any air contaminant.

The adopted changes will also 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. In addition, the amendments to

Subchapter I provide 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 for all air contaminants.

The adopted amendments to Subchapter I include revising the

subchapter title to Electric Generating Facility Permits.

The adopted amendments to §116.910, Applicability, allow the

owners or operators of EGFs who have already applied for a permit required by S8 7, 76th Legislature to apply for an 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 by the permit are identified in §116.119 and the permit document itself. The changes adopted in subsection (f) clarify that

EGFs generating electric energy primarily for internal use are

not required to obtain a permit under this 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 must obtain a permit under either Chapter 116 or qualify for

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

27 TexReg 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 of air contaminants from auxiliary generators or other

combustion equipment that 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 for the additional equipment which

may be permitted under this subchapter. Existing paragraph (2)

of this section is deleted as it is no longer necessary because H8

2912 either considers 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 pollutants for coal-fired EGFs which have obtained

or applied for a 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 that the burning

of waste 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 of fuel 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 only to criteria pollutants instead of all air contaminants

in order to be consistent with TCAA, §382.05185.

New §116.917, Electric Generating Facility PermitApplication for

Certain Grandfathered Coal-Fired Electric Generating Facilities

and Certain Grandfathered Facilities Located at Electric Generating Facility Sites, is adopted with changes to the proposed text.

The adopted new section outlines the application requirements

for grandfathered coal-fired EGFs which choose to permit their

additional criteria pollutants, and the auxiliary generators and the

additional combustion equipment which can now be permitted

under this subchapter. In order to 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 permit to 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 after the permit is issued. If

applicable, facilities would be required to comply with PSD and

nonattainment review as specified in Chapter 116, Subchapter B.

Since grandfathered facilities must comply with federal requirements, if applicable, it is appropriate to ensure that these facilities

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. 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 Electric Generating Facilities

and Certain Grandfathered Facilities Located at Electric Generating Facility Sites, identifies some of the general and special

conditions which may be included in any permit issued under the

adopted §116.917 and states that there may be additional special conditions attached to a permit upon issuance of the 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 consistent with the requirements for permits 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 under this 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 authorizes the 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

for efficient processing of permit applications. In this section the

commission also provides that because of this delegation to the

executive director, the notice of final 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 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 adopted amendments to §116.930, Modifications, include

a revision of the section title to "Amendments and Alterations

of Permits Issued Under this Subchapter." The adopted amendments are intended to clarify that the owner or operator of a facility with a permit issued under this subchapter must comply with

the requirements of Subchapter B prior to beginning the construction of the modification and that any required alteration or

amendment will follow the procedures contained in Subchapter

B.

FINAL REGULATORY IMPACT ANALYSIS DETERMINATION

The commission reviewed the adopted rulemaking in light of the

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 four different types 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, or the public health and safety of the state

or a sector of the state.

Although the adopted rules to implement the HB 2912 sections

are intended to protect the environment or reduce risks to human

health from environmental exposure, they may have adverse effects on the economy, productivity, competition, or jobs of the

state or a sector ofthe state since they require mandatory permitting or shut down of certain grandfathered facilities. However, the

analysis required by Texas Government Code, §2001.0225(c)

does not apply because the adopted rules do not meet any of

the four applicability requirements of a major environmental rule.

The adopted rules do not exceed a standard 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 comply with HB 2912 and related provisions of TCAA, 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 a takings impact assessment for the

adopted rules. The purpose of the adopted rules is to fulfill

the commission's obligation to implement HB 2912, §§5.02 -

ADOPTED RULES June 7, 2002 27 TexReg 4963
5.04 and HB 2914, §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 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.

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 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 safety and significantly advance 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,

Chapter 2007 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

under Texas 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 manner which restricts or limits an owner's right to the property

that would otherwise exist in the absence of governmental 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 or actions subject to 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 Chapter 281, 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

27 TexReg 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 that the rulemaking is consistent with 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 comply with 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., 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 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 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, or on behalf of, the following elected officials: Mr. Larry Green representing the Honorable Sheila Jackson Lee, U.S. House of Representatives, Eighteenth District of Texas; 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, City of 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 of the proposed rules.

TXU supported the comments of AECT. GHASP expressed support for the comments expressed by others regarding the details

of the rules relating to grandfathered pipeline facilities. Representative Lon Burnam expressed support for the 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's office), Representative Edwards, Houston City Council

Member Edwards, GHASP, EPA, and Lee P. Brown, Mayor, City

of Houston, expressed general support for the rule.

The commission appreciates the support.

GHASP commented that any good cause extensions for the installation of controls should not be 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 for the 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 of the 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 manner than 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 risks from a particular facility.

The commission has made no change in response to these comments. The development of the guidance for health effects review will be conducted through a balanced stakeholder process,

which allows for public review and comment from interested persons. The commission does not agree that the use of a guidance

document would allow the commission to act in an arbitrary and

capricious manner with respect to the review for any permit. The

commission appreciates the support for the development of the

health effects review guidance, and looks forward to working 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

either through a review of the compliance history of the facility or

through a detailed look at the off-property impacts of the emissionsfrom the facility. When the commission conducts a detailed

modeling analySIS, the off-property impacts are compared to the

effects screening level (ESL) ofthe compound. The ESL for each

compound is based on the nuisance potential or the potential for

adverse health effects, whichever is lower. In addition, the commission's rule regarding nuisance, 30 TAG §101.4, provides adequate enforcement authority regarding nuisance conditions. The

commission also notes that private citizens may have other private remedies regarding nuisance conditions. Immediate threats

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 higher fee for companies that

did not participate in the VERP program. TCE suggested that the

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 of the facilities

being permitted. TCE also suggested that the commission not

charge a single fee for a permit for 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

ADOpTED RULES June 7, 2002 27 TexReg 4965
resources as reviewing a permit for 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 assess whether changes should be

proposed to permit fees in general. The commission will charge

a fee for each permit application reviewed. Even if an application

for a permit includes multiple facilities associated with a pipeline,

the fee will be a single application fee.

TCE and DARIBSA questioned how the commission will compile

an accurate listing of the additional large, small, and micro-business grandfathered facilities not included in the 1997 emissions

inventory. TCE and DARIBSA also questioned how the addition

of these facilities to the inventory will affect the SIP.

The commission has made no change in response to these 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 most of these 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

of those controls. This requirement applies to any permit issued

under Subchapter H.

EPAcommented that the proposed rules provided that notice and

comment hearing requirements apply only to the initial issuance

of pipeline facilities permits, existing facility permits, existing facility flexible permits, and EGF permits. EPA states that the 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 manner as public participation for federal operating permits. Therefore, for initial issuance, 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 that for modifications

and renewals of pipeline facilities permits, existing facility permits, existing facility flexible permits, and EGF permits must comply with TCAA, §382.0518, which requires public participation

to include publication of newspaper notice, signposting, and an

opportunity to 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

27 TexReg 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 that compliance must be 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 recommendations to EPA for approval as appropriate. These rules and procedures satisfy the requirements of 40 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 assesses the impact of these air contaminants on downwind

areas as part of the permit review process.

TXU commented that the permitting of existing facilities is a new

process and does not necessarily have to be consistent with the

processes for permitting new and modified facilities. TXU stated

that the permitting process for grandfathered facilities should adhere closely to 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 of the fact that these facilities have already been constructed. However, HB 2912 also provides that review and renewal of these permits be completed under existing 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 other than 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 air contaminants, including installation of sampling ports and sampling platforms. In addition, TCE
comments that the rules do not include requirements for certified

monitoring data.

The commission has made no change in response to these comments. These general conditions are included in all permits. The

commission does not agree that it is appropriate to require the

installation of sampling ports and sampling platforms for all facilities. In those cases where the permit engineer determines that it

is appropriate to require sampling and/or monitoring, the permit

will contain specific conditions requiring the provisions for these

activities. In addition, permit engineers are aware of the periodic

monitoring and compliance assurance monitoring requirements

of Title V and permits for grandfathered facilities will satisfy those

requirements where appropriate.

TCE and DARIBSA supported the rule language stating that

there may be special conditions included in the permit that may

be more restrictive than the requirements of the section.

The commission appreciates the support.

HSC commented that the commission should define the criteria

it uses to determine when the basis of a hearing request by a

person who may be affected (by a facility 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

right to withhold from any person the right to 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 for federal operating permits under TCAA, §382.0561. Section 382.0561 provides that the commission is riot required to hold a hearing if

the basis of the 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 near nonattainment areas, as well as reduce

regional haze.

The commission appreciates the support.

EPA commented that §116.772 should clarify thata source which

shuts down and then restarts must be re-permitted under Chapter 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

(except for Division 4 - VERP) prior to September 1, 2004.

EPA asked if Form PI-1GSD, Notice of Shutdown, 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 agrees that public availability is an important component of the permitting process, and has implemented

procedural rules, 30 TAC §1.5, to ensure that the records of the

agency are properly available to the public, subject to appropriate confidentiality restrictions. The commission provides information to the public, subject to 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, prior written 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

why the commission may inclUde a provision requiring prior written 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 of the permit application.

This technical review is available in the permit file available to the

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

order to ensure initial and ongoing compliance. EPA commented

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 response to these 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 periodic monitoring and compliance assurance monitoring requirements in these

permits.

ADOPTED RULES June 7, 2002 27 TexReg 4967
EDef stated that the commission should ensure that the owners and operators of facilities applying for a permit under these

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

New Source Review (NSR) permitting process. EDef stated that

the commission should add a requirement that the maximum capacity under any grandfathered permit may not significantly exceed historical levels.

The owner or operator of a facility for which an application for a

grandfathered facility permit is submitted should be able to document that the facility is truly a grandfathered facility and thus

eligible for one of the four new types of permits for grandfathered

facilities. The commission staff will review this information along

with the remainder of the application information (including utilization, capacity, and throughput information) to ensure that the

facility qualifies for the type of permit for which the application

was submitted. In those cases where applications are submitted

for facilities that are not grandfathered, or for which 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 the grandfathered status of the

facility being permitted, The commission also notes that for those

facilities which have submitted Title V permit applications, the

owner or operator has 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/BSA commented that the proposed rule is of concern since

a recently released EPA study of MOBILE6 projects that vehicles

will emit 90% more NO and 21 % more VOC in 2003 than previously documented, which will result in further reductions necessary for nonattainment areas to meet federal law and protect the

public from harmful air pollution.

The commission has made no change in response to this comment. If the 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 that the 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 work with 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: If the owner or operator applies for both an existing facility permit and a pipeline facilities permit, the commission

27 TexReg 4968 June 7,2002 Texas Register

may be able to coordinate the review for both applications to provide for a single public notice for both applications, concurrent review of the 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 applicant must also ensure that

any deficiencies identified with either application are addressed

quickly so that the coordinated review is not jeopardized.

Lee P. Brown, Mayor, City of Houston urged the commission to

quantify the emissions reductions from both permitting of grandfathered facilities and fewer industrial upsets resulting from the

implementation of HB 2912 as soon as possible. Additionally,

the City of Houston urged the commission to complete air quality

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 no change in response to these 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 commenter makes reference to "the forthcoming fine particle

standard." The commission wishes to clarify that the 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 of the PM" standard, such designations, if deemed appropriate from the monitoring data, could

be made as early as 2003. The designations would be based on

monitoring data from the three- year period 2000 through 2002.

The commenter requests that the commission complete PM,. air

quality modeling to allow the City of Houston to work with regional stakeholders in developing strategies to 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

by the City of Houston and stakeholders to help the area avoid a

PM" nonattainment designation. Participants in this program developed and implemented a number of early PM" control strategies.

In 2000, a field study was 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 Network commented regarding personal observations of increased incidence of diabetes,
lupus, and other diseases with mysterious lupus-like symptoms,

and other various birth defects.

Birds-i Network also expressed concern regarding mercury, and

noted that EPA provides an annual report to 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 a federal grand jury investigating the Rocky Flats nuclear reservation 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 to these comments. The 1990 amendments to the Federal Clean Air Act identified 189 hazardous air pollutants (HAPs). Congress directed

EPA to identify source categories which emit significant amounts

of these HAPs and further directed them to establish standards

requiring reductions in the emissions of these HAPs. One of the

HAPs identified by Congress was mercury, and one ofthe source

categories identified by EPA as emitting mercury was coal-fired

EGFs. As the commission discussed elsewhere in this preamble, the commission expects that EPA will be addressing mercury

emissions from EGFs in the near future. The commission has no

data to support the 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 authority to convene a federal grand jury regarding any matter.

EPA requested additional discussion of what is a "Small Business" under TCAA, §382.014.

The commission has made no change in response to this comment. TCAA, §382.014 does not define "Small Business." TCAA,

§382.014 enables the commission to require a person 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 at the account (site), and applies

to any person or company regardless of whether or not the 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 or operators of pipeline facilities that apply for 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

DARIBSA are concerned that these pipeline facilities may be improperly exempt from 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 meet the eligibility criteria for the 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 for the permitting of grandfathered facilities. The commission notes, however, that the permitting of these facilities will provide for codification of requirements applicable to these facilities,

which may result in air quality benefits from better enforcement.

TCAA, §382.05186(e) clearly states that the commission shall

grant a pipeline facilities' permit for a facility or facilities located

in the East Texas Region, if the commission finds that the conditions of the permit will require a 50% reduction in the hourly emissions 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 of g/bhp-hr. The staff of

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 of a 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 occur from the permitting of grandfathered pipeline facilities. EDef commented that

if the 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, and that the commission will have to do more than 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 after the emission reduction program

established in SB 7.

The commission has made no change in response to these 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.

ADOPTED RULES June 7, 2002 27 TexReg 4969
ATINGP/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 of grandfathered engines of the 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 of VOC, thus creating an implementation problem.

ATINGP/GPA stated 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

engines are not significant sources ofVOC emissions, but dieselfired engines emit relatively significant quantities of VOCs. ATINGP/GPA stated that VOC emission reductions, if warranted by

regional air quality needs, should be imposed on diesel, rather

than natural gas engines. ATINGP/GPA requested that the commission modify the proposed rules to state that grandfathered

engines in East Texas are not required to reduce VOC emissions

in order to obtain a pipeline facilities permit. ATINGP/GPA suggested that ifthere is a demonstrated need for reductions in VOC

emissions, the commission should consider requiring reductions

of up to 50% for VOC emissions from diesel-fueled engines.

The commission has made no change in response to these comments. The regulatory language in §116.779(b)(1) allowing the

commission to request up to a 50% reduction in VOC emissions

is consistent with the statutory language in TCAA, §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 at this time may result in minimal improvement in air quality.

However, the commission will review the emissions from each facility, including diesel-fueled engines, on a case-by-case basis to

determine if reductions in VOC emissions are appropriate.

ATINGP/GPA expressed support for the portion of the 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/BSA are concerned about the commission determining and verifying the following for all pipeline facilities permits:

1) the determination of the emissions rate; 2) verification of the

actual rates prior to and post reduction by the commission; 3)

baseline rate estimation - how will the commission calculate the

baseline emissions for the facilities that are required to make the

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 other state or federal requirement.

The commission has made no changes in response to this comment. With the exception of the guarantee of tonnage reductions,

all of these 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 analyzer to verify before modification emissions, after modification emissions, or both.

27 TexReg 4970 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 of testimony.

EDef requested that the commission define a clear methodology to determine the baseline from which pipeline facilities' emissions reductions are measured. EDef suggested either reqUiring

certified monitoring data for each facility or establishing default

baseline rates for various engine types based on either published

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 different types of engines will require different procedures,

the verification process will be accomplished during the review

of the permit for the engine or engines. Where the commission

determines that 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

number of engines that such guidance will be useful. Any guidance that is developed will be made available through the agency

web site and other appropriate means.

TxOGA and ATINGP/GPA commented that the rules should provide that zero reductions may be 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 any expenditure of funds by industry in West Texas to achieve emissions

reductions is not justified 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,

not to be applied in a blanket-fashion across the breadth of West

Texas, but rather only to meet limited regional air quality needs.

ATINGP/GPA stated that there is no modeling or other evidence

that a 20% or less reduction of the relatively minor emissions

from grandfathered engines would improve public health or any

regional air quality condition. ATINGP/GPA stated that a 1% reduction level is an arbitrary floor. Representative Warren Chisum

expressed support for the 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 no change in response to these comments. The proposed rule language in §116.779(b)(2) closely

tracks the statutory language in TCAA, §382.05186(f), and while
the commission agrees it is appropriate to review, among other

things, health effects and proximity to nonattainment areas, such

reviews will be done on a case-by-case basis. The commission

agrees that there 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 of the control options available to specific facilities. However, the commission has

determined that it is appropriate to ask for reductions from engines located in West Texas when there are measures that can

be applied to the engine that will result in reductions of emissions

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

Park from 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 of the hourly emissions rate of

NO,. The commission notes that there are ongoing efforts relating to regional haze, which are not the subject of this 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 if the

units had been permitted individually.

The commission has made no change in response to these comments. The commission is developing guidance on the procedures to be used to calculate the required emission reductions

from pipeline facilities. This guidance will include the procedures

to be used when the owner or operator elects to average the required reductions over more than one engine. The guidance will

not be finalized until interested stakeholders have had the opportunity to review and comment on the draft gUidance.

ATINGP/GPA indicated support for the 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 for averaging 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 of shut 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 of various 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

into the pipeline facilities permit that documents the creation and

utilization of emission credits; and 8) an entity with excess emission credits should be allowed to transfer or sell 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 that the additional fleXibility provided by an emission trading

program is not authorized by statute and not needed. Owners or

operators electing to average the required emission reductions

over more than one engine will 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 order to 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 engine to achieve the emission reductions required for a pipeline facilities permit. TxOGA also requested that the commission clarify that emission reductions achieved through the VERP program

can be included in the average.

The commission has made no change in response to these comments. The commission agrees that engine shutdowns (or other

emission reductions not required by another state or federal rule)

that occurred on or after January 1, 1997 may be used when averaging reductions among more than one reciprocating internal

combustion engine connected to or part of a gathering or transmission pipeline. The baseline year for purposes of SlP planning

is 1997, and therefore it would be inappropriate to allow the inclusion of shutdowns occurring prior to January 1, 1997 in the

calculation of the average. Please note that if reductions are averaged over more than one engine, and if shutdown engines are

included in the average, the g/bhp-hr emission rate for each shut

down engine, prior to 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 order to be eligible

for the permit apply only to grandfathered facilities. Facilities for

which a VERP has been issued are no longer considered grandfathered facilities and thus cannot be included in the average.

ADOPTED RULES June 7, 2002 27 TexReg 4971
ATI NGP/GPA stated that the 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 or shut

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

comply with this requirement. In order to obtain a pipeline facilities permit, the owner or operator of the facility must demonstrate

that the engine will meet the emissions reductions requirements

contained in the proposed §116.779(b)(2). In addition, these facilities must meet the appropriate emissions reductions required

in the SIP. The owner or operator should be aware that the reductions must satisfy both of these requirements when choosing

how to reduce the emissions. Section 116.779(b)(4) of the proposed rules allow the owner or operator to take credit for any reductions, such as those required by the SIp, which are achieved

after January 1, 2001 as long as the owner or operator does 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/GPA stated 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 of the EPA document attempted to reconcile lower

cost estimates from control equipment vendors with higher costs

27 TexReg 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 for engineering 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 of the grandfathered pipeline permit program as compared to low emission

retrofits presumed in the cost note should result in lower costs in

many instances than 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 determinations for low emission retrofits for compliance with the Chapter

117 engine NO, rule in Beaumont Port/Arthur (75% - 85% NO,reduction) indicate higher engine modification costs than 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 consider costs more specifically with individual permit applications.

HSC stated that the reimbursement criteria, "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 of credits in

achieving the reductions required by these rules. The one exception to this, as also noted elsewhere, is the use of DERCs. The

commission does not anticipate the widespread use of DERCs to

comply with the emission reduction requirements of these 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 for the executive director to halt trading for a

certain area if problems result from trading in a localized area of

concern and provide that increases in emissions by use of credits 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 at the

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 Public Assistance. This program works to help citizens

and neighborhood groups participate in the regUlatory process;

to ensure that agency programs that substantially affect human

health or the environment operate without discrimination; and to

make sure that citizens' concerns are considered thoroughly and

are handled in a way that is fair to all. The Office of Public Assistance can be reached at 1-800-687-4040 for further information.
EPA stated that the provisions of the rule pertaining to the partial

reimbursement of the cost of controls for pipeline facilities does

not need to be submitted as a part of the 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 directly tied 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 East Texas to be eligible for partial reimbursement of the cost of controls. EDef also stated they supported the proposed criteria for the distribution of funds 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 of this 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 subject to 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 or federal law

which specifically requires a reduction in NO, emissions.

ATINGP/GPA expressed general support for the provisions of

proposed §116.775 regarding the distribution of funds from the

Emissions Reductions Incentives Account. ATINGP/GPA and

TXU commented that the criteria requiring a reduction of 50% in

the annual emissions of NO, in order to 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 response to these comments. The commission disagrees with the comment that the requirement to achieve actual reductions in NO emissions from 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 that the 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 hourly emissions of NO, in order to obtain a pipeline facilities permit in East Texas. HB 2914 states that facilities required

to obtain a 50% reduction in NO emissions in East Texas are eligible for a partial reimbursement of the cost of controls from the

Emissions Reductions Incentives Account. Further, HB 2914 directs the commission to develop the criteria for reimbursement

and leaves the criteria to the 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 order to 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 appropriate since these emission reductions

will be needed in order to reach the goal of attainment for ozone

in the East Texas nonattainment areas.

ATINGP/GPA commented that proposed §116.776(a)(6), requiring a pipeline facilities permit to be issued before the owner/operator can request a distribution from the reimbursement account

is awkward, and that the review should take place simultaneously

with the review of the application. ATINGP/GPA suggested that

the rule be revised to require an application for a pipeline facilities

permit to 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 of those facilities requesting a reimbursement from the Emissions Reductions Incentives

Account at the time the permit application is filed. The commission is requesting this information in order to obtain a list of the

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 that the 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 order to 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 clear that 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 greater than 50% reductions in order to qualify for 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

ADOPTED RULES June 7, 2002 27 TexReg 4973
a pipeline that is subject to 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 reinibursement from 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 priorities for 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 of each of the

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 at a later date. 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 MACT controls installed by the date they must submit a

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 that an existing source will not have to be

in compliance with any applicable MACT standard until the compliance date for that standard. The commission does encourage

owners and operators of sources 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 care to ensure that the emission reduction

standards of HB 2912 are consistently met for any facility-wide,

flexible permits.

Any permit issued by the 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.

EPA stated that §116.777, Eligibility for Existing Facility Permits,

should clarify how an "Existing Facility Permit" differs from 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 of this preamble for Division 1 which explains the relationship between the

general requirements in Division 1 and the specific permit requirements contained in Divisions 2 and 3 and Subchapter I. The

"Existing Facility Permit" is one type of permit that 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 document that identifies ten- year BACT for many common

27 TexReg 4974 June 7,2002 Texas Register

grandfathered sources in orderthe streamline the 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. AIthoug h the guidance document itself was developed for different

purposes, the information on ten-year-old BACT can be used as

a starting place for identifying ten-year-old BACT for 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

that the information is still current and the control technology still

meets the ten-year-old BACT requirement.

TCE and DARIBSA expressed support for the commission's position that an insignificant emission factor would 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 not define "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 not specifically define "significant," it states that any increase in emissions from operational or physical changes at an existing facility covered by an

existing facility flexible permit that does not result in an increase

in emissions over the cap is insignificant. As part of the permit

review for an existing facility flexible permit, the commission conducts a review of the emissions as'established in the cap. Therefore, any increase in emissions which does not exceed this cap

has already been reviewed by the commission and the company

is not "avoiding" NSR permitting. In addition, the public has access to all of this information during the permit review process.

Finally, the company is not allowed to install new facilities or emit

a new air contaminant under the cap - either of these activities

will reqUire a new review under the NSR permitting procedures.

EPA requested clarification of how an "Existing Facility Flexible

Permit" is distinguished from a "Flexible Permit" under Subchapter G of the rule.

The commission has made no change in response to this comment. Flexible permits under Subchapter G may be used by

any facility, inclUding grandfathered facilities, provided the facility

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 facility flexible permits are

SUbject to the same renewal and amendment requirements as

flexible permits, including BACT for amendments and an opportunity for a contested case hearing for both amendments and

renewals.
EPA commented that the air pollution control methods discussed

in §116.794(3) should be agreed upon prior to 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 comment and notes that

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 implement the provision, "are considered permitted for all air contaminants" for gas-fired EGFs that were required to obtain a permit

under S8 7 or were exempt from the requirement to 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 of S8 7 is considered permitted for all air contaminants under THSC. Chapter 382. Thus, these EGFs are no

longer considered grandfathered facilities under THSC, Chapter

382. The commission will issue a "permit" to these 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 of all air contaminants" and "all air contaminants," contained in §116.913(a)(1 )(A) and (E), respectively.

The commission has made no change to this comment. In enacting the requirements of H8 2912. the Texas Legislature specifically stated in TCM, §382.05185, that an electric generating facility is considered permitted with respect to all air contaminants

if the facility met certain conditions. Section 116.913 implements

this plain requirement for 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 if the reference as they believe it was

intended is correct then the owner or operator of an EGF seeking

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 requirement for non-EGF combustion

units is to include their emissions 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 permits for coal-fired EGFs for the criteria pollutants other than NO" SO, or opacity if the 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 statutory obligations for EGFs, in the context of the 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

not ensure that adequate information would be provided to meet

the requirements of the 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

of the 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), not just

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 permit or shut down. In addition.

the emissions from the auxiliary generators and other combustion equipment must be included in the amount of allowances

needed for the site in any given year. As stated in H8 2912, no

new allowances will be issued to the site for the operation of this

equipment.

CPS commented that the proposed methodology for adding new

units at existing EGFs brings these new units into the standardized state permitting requirements rather than continuation of the

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.

ADOPTED RULES June 7, 2002 27 TexReg 4975
The commission agrees with the comment that the proposed

methodology for permitting existing combustion equipment at an

EGF is similar to 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

for the additional combustion units will be the NO, allowances for

the site resulting from SB 7. The other air contaminants emitted

from these facilities will have limits included in a MAERT just like

any other NSR permit. The commission believes this approach

is appropriate and is consistent with the statute. These facilities

are required to apply for a permit and specified that any modifications to the permit or renewal of the 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 that they 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 a company to 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 or shut down.

If an auxiliary generator operating at a facility which is required to

obtain a permit under SB 7 operates less than 10% of the normal

operating hours (as defined in §116.10), the owner or operator of

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% of the

normal operating hours of the EGFs at the site may apply for an

EGF permit. Therefore, the commission does not believe it is

appropriate to place any additional limitations on the operating

time of these facilities in order to 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% of the 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 of the 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 of the 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

27 TexReg 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 number of 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 number of operating

hours.

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

years 1997 - 1999 were required to be included in the calculation

of the average, but years 2000 and 2001 were not.

The commission used the heat input for 1997 as the basis for

establishing allowables for EGFs under SB 7. Since HB 2912 requires the emissions from these auxiliary combustion units which

receive an EGF permit to fit under those same allowables, the

commission considers it appropriate to use a similar basis to define "normal operating schedule." However, in order to provide

some additional flexibility, the commission decided to use the

maximum number of 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 number of operating hours. The commission

has changed the language in this definition for the 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 of fuel oil should be allowable. HSC

stated that they support requiring EGF facilities to undergo NSR

permitting if they decide to burn fuel oil rather than natural gas.

The House Committee on Environmental Regulation stated that

the goals of the legislation were to provide for the widest range

of fuel 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 that the intent of the 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 since the commission's effects screening levels

are not standards, the evaluation of fuel 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 limit that was too stringent. The House

Committee on Environmental Regulation and AECT commented

that the commission should allow grandfathered EGFs to burn

any grade of fuel 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 of the 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 rather than a "demonstration" by the owner or

operator of the 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 of this 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 or federal 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 sulfur content 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% sulfur except for specific plants where the modeling indicates there may be a problem. CPS commented that

the commission should consider allowing 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 that the analysis should be an open process that includes a review by the owners of the facilities being modeled to

ensure that the 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 by the 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). AECT stated that based on the regulatory

definitions of "EGF" and "facility" the EGF does not include every

piece of equipment at a grandfathered EGF site that is involved

with the burning of fuel oil. AECT stated that any maintenance or

repairs to any equipment that comprises the EGF, or any 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 if the grade will no longer be considered

acceptable for burning following the adoption of these rules. Similarly, AECT stated that if an EGF is "designed to burn" a grade

of fuel oil, the fact that such fuel oil grade may not be considered

acceptable under the final rules should not prevent the EGF from

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 lighter grade in the future. AECT stated

that proposed §116.18(11) and the associated preamble need to

be revised to clearly provide that the "designed to burn" condition

is met for such an EGF. AECT requested that the 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

that with regard to §116.18(11 )(B), there should be a "replicable"

procedure for how the executive director will determine if "any

other grade of fuel oil" is protective of public health and physical property." AECT specifically requested that the procedure involve submittal of a written request to the commission staff that

includes any necessary fuel and facility information. The commission should then use modeling or monitoring information it already has to evaluate the request, model the request using staff

resources, or request that the applicant conduct the 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 of any 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 that the owner

or operator of the EGF disagrees with the executive director's

determination, the owner or operator may request a reconsideration of that determination under the procedures of Chapter 55."

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

of the location and height of the 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 14 facilities from firing

Number 5 fuel oil to firing Number 2 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 to the proposed rule that

staff was continuing to analyze otherfuel oil grades and refine the

modeling analysis. As a result of this additional analysis ofthe effects of burning fuel oil in grandfathered EGFs and in order to address all of the comments on the burning of fuel oil, the commission changed the proposed definition of "Natural gas-fired EGF"

in §116.18(11) to simply state that for purposes of Subchapter I,

a natural gas- fired EGF is, "an EGF that was designed to burn

either natural gas or an EGF that was 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 that any ASTM grade of fuel oil

with a sulfur content of 0.7% 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 infrequently and last only for short periods of time.

ADOPTED RULES June 7, 2002 27 TexReg 4977
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 of fuel oil burning and submit those 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 SUbject to this MACT standard. The commission

has also added language in §116.913(a)(8) that clarifies that the

burning of waste or used oils is not authorized under Subchapter

I.

EPA recommended adding "as determined by ASTM method

0396" to the end of the sentence in §116.18(11 )(a) which reads

"American Society for Testing and Materials (ASTM) grade number 1 or 2 fuel oil containing not more than 0.3% sulfur by weight."

The commission has made the suggested addition to the condition contained in §116.913(a)(8).

TCE and DAR/BSA commented that the commission should review mercury emissions from grandfathered facilities. Additionally, TCE commented that the commission should review all the

pollutants from grandfathered power plants, 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 of power plants on waterways

that are far from 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 to these comments. Mercury has been raised by many organizations across

the country as an air contaminant of concern for coal-fired power

plants. However, there are significant technical 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/or a MACT standard under development by the EPA. Accordingly, without downplaying the important

issues with respect to mercury, the commission considers it prudent to review the outcomes of the Clear Skies Initiative and the

utility MACT before making further decisions about regulation of

mercury from EGFs in Texas.

Coal-fired EGFs can apply for an EGF permit for the 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 of SO, can cause individuals with

asthma to experience respiratory effects due to bronchial constriction. In fact, the EPA has a proposed intervention level for

SO, of 600 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 112 standard for SO" 30- minute average net ground

level concentration of 400 ppb, helps to minimize the potential

occurrence of five-minute concentrations greater than 600 ppb.

27 TexReg 4978 June 7,2002 Texas Register

Therefore, the commission notes that the required demonstration of compliance with the Chapter 112 standard would alleviate

five-minute SO, concerns.

SUBCHAPTER A. 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

consistent with the policy and purposes of the TCM; §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;

and TWC, §5.103, which authorizes the commission to adopt

rules.

§116.18. Electric Generating Facility Permits Definitions.

The following words and terms, when used in Subchapter I ofthis chapter (relating to Electric Generating Facility Permits) shall have the following meanings, unless the context clearly indicates otherwise.

(1) Allowance - As defined in §101.330(1) ofthis title (relating to Definitions).

(2) Capacity factor - Either:

(A) the ratio of an 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 of an EGF's annual heat input (in millions

ofBritish thermal units (MMBtu» to the EGF's maximum design heat

input (in MMBtu per hour) 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) Compliance account - As defined in §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) of this 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 over a specified period oftime when not restricted by seasonal or other deratings.

(II) Natural gas-fired EGF - For purposes of Subchapter I

ofthis chapter, an EGF that was designed to bum either natural gas or

an EGF that was designed to bum both natural gas and fuel oil.

(12) Normal Annual Operating Schedule - For the purposes

of §116.911 (f)( I) of this title (relating to Electric Generating Facility

Permit Application), the maximum number of operating hours for an

EGF in any 12 consecutive month period between January I, 1997 and

December 31, 1999. For sites with more than one EGF, the owner or

operator may use the EGF with the highest number of operating hours.
(13) Peaking unit - An EGF that has:

(A) an average capacity factor ofno more than 10%during the past three calendar years; and

(B) a capacity factor of no more than 20% in each of

those calendar years.

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

This agency hereby certifies that the adoption has been reviewed

by legal counsel and found to be a valid exercise of the agency's

legal authority.

Filed with the Office of the Secretary of State on 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

For further information, please call: (512) 239-4712

• • •

SUBCHAPTER H. PERMITS FOR

GRANDFATHERED FACILITIES

DIVISION 1. GENERAL APPLICABILITY

30 TAC §§116.770 - 116.772

STATUTORY AUTHORITY

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 of the 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;

and TWC, §5. 103, which authorizes the commission to adopt

rules.

§1J6.771. Implementation Schedule for Additional Controls.

(a) If the installation of additional 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 operation of

controls before March I, 2007 for facilities located in the East Texas

region as defined in §101.330 of this title (relating to Definitions) or

before March I, 2008 for facilities located in the West Texas region as

defined in §101.330 ofthis title or EI Paso County.

(b) The owner or operator of a grandfathered facility that does

not obtain a permit within 12 months of receipt by the commission

of an administratively complete application for a permit may petition

the commission for an extension ofthe time period for the installation

of controls under subsection (a) of this section. The commission may

grant not more than one extension for a facility, for an additional period

of not more than 12 months, ifthe commission finds good cause for the

extension.

This agency hereby certifies that the adoption has been reviewed

by legal counsel and found to be a valid exercise of the agency's

legal authority.

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

TRD-200203182

Stephanie Bergeron

Director, Environmental Law Division

Texas Natural Resource Conservation Commission

Effective date: June 12, 2002

Proposal publication date: January 4, 2002

For further information, please call: (512) 239-4712

• • •

DIVISION 2. SMALL BUSINESS 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

STATUTORY AUTHORITY

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 of the 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, §5.103, which authorizes the

commission to adopt rules; and TWC, §5.122, which provides

for delegation of uncontested matters to the executive director.

§ I J6.774. Eligibility for Small Business Stationary Source Permits.

(a) The owner or operator of a grandfathered facility located at

a small business stationary source, as defined in TCAA, §382.0365(h),

and which is not required to report to the commission under TCAA,

§382.0l4 may apply for a small business stationary source permit before September I, 2004.

(b) The deadlines contained in §I 16.770 of this title (relating

to Requirement to Apply) and §116.771 ofthis title (relating to Implementation Schedule for Additional Controls) do not apply to facilities

eligible to apply for a small business stationary source permit. Any

grandfathered facility, including any facility for which the owner or operator has submitted a notice ofshutdown under §116.772 ofthis title

(relating to Notice ofShutdown), located at a small business stationary

source may not emit air contaminants on or after March 1,2008, unless

the facility is permitted, or has a permit application pending under this

chapter, or has a registration or pending registration for a permit by rule

under Chapter 106 of this title (relating to Permits by Rule).

(c) Applications for a small business stationary source permit

shall be submitted under the seal of a Texas licensed professional engineer, ifrequired by §116.1 10(e) ofthis title (relating to Applicability).

ADOPTED RULES June 7, 2002 27 TexReg 4979
(d) The owner or operator ofthe grandfathered facility, group

of facilities, or account is responsible for applying for the small business stationary permit and for complying with this subchapter.

§116.775. Eligibility for Pipeline Facilities Permits.

(a) The owner or operator of a grandfathered reciprocating internal combustion engine or group of engines that is a part ofprocessing, treating, compression, or pumping facilities connected to or part of

a gathering or transmission pipeline may apply for a pipeline facilities

permit.

(b) Applications for a pipeline facilities permit shall be submitted under the seal of a Texas licensed professional engineer, if required by § lI6.11O(e) ofthis title (relating to Applicability).

(c) The owner or operator of the grandfathered facility, group

of facilities, or account is responsible for applying for the pipeline facilities permit and for complying with this subchapter.

(d) The owner or operator of more than one grandfathered reciprocating internal combustion engine may apply for a pipeline facilities permit for a single grandfathered reciprocating internal combustion engine or a group of the grandfathered reciprocating internal

combustion engines connected to or part ofa gathering or transmission

pipeline.

§116.776. Distribution ofFunds from the Emissions Reductions Incentives Accountfor Control ofEmissions from Grandfathered Reciprocating Internal Combustion Engines Located in the East Te.r:as Region.

(a) Eligible facilities. Owners or operators of grandfathered

reciprocating internal combustion engines are eligible for reimbursement ofa portion ofthe cost ofcontrols from the Emissions Reductions

Incentives Account based on the following criteria.

(I) The owner or operator ofthe grandfathered reciprocating internal combustion engine or engines must make an actual 50% reduction in the annual emissions of nitrogen oxides (NO,) as compared

to the emissions reported from the grandfathered reciprocating internal combustion engine or engines in the 1997 Industrial Point Source

Emissions Inventory.

(2) The grandfathered reciprocating internal combustion

engine or engines must be located in the East Texas region as defined

in §101.330 of this title (relating to Definitions).

(3) The owner or operator must apply for and receive a

pipeline facilities permit or replace the grandfathered reciprocating internal combustion engine with an electric engine.

(4) The project to control emissions must be initiated on or

before September I, 2006.

(5) The project to control emissions must be completed before March 1,2007.

(6) The owner or operator of the grandfathered reciprocating internal combustion engine for which a distribution from the Emissions Reductions Incentives Account is sought, must identify, at the

time the permit application is filed, the facilities for which reimbursement is requested.

(7) The owner or operator who elects to replace a grandfathered reciprocating internal combustion engine with an electric engine

must submit a Registration ofReplacement of a Grandfathered Reciprocating Internal Combustion Engine with an Electric Engine before

the owner or operator can request a distribution from the Emissions

Reductions Incentives Account.

27 TexReg 4980 June 7, 2002 Texas Register

(8) The emissions controls identified in the permit must be

operating before the executive director can authorize payment from 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 required by any other state or federal law to

make reductions in emissions of NO, are not eligible for reimbursement.

(b) Limitations on reimbursement. The commission may reimburse the owner or operator of a grandfathered reciprocating internal

combustion engine or engines for no more than the cost associated with

achieving emissions reductions between 30% and 50% ofthe engine's

hourly emissions of NO, before the addition of contro.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 outlined in subsection (c) ofthis section.

(c) Criteria for distribution. The commission will distribute

any money in the fund based on the following criteria:

(I) whether the facility is located in an attainment area for

ozone or a near nonattainment area for ozone;

(2) the percentage of reduction in the hourly emissions of

NO, on a grams per brake horsepower-hour basis achieved;

(3) the cost effectiveness ofthe controls achieved based on

the tons ofemissions actually reduced per dollar ofthe cost ofthe control method; and

(4) when the reductions are actually achieved.

(d) Verification of emissions reductions. Prior to reimbursement from the Emissions Reductions Incentives Account, the owner or

operator of each grandfathered reciprocating internal combustion engine must provide documentation verifying the amount of actual emission reductions achieved.

§ 116.779. Applications for Small Business Stationary Source Permits, Pipeline Facilities Permits, or Existing Facility Permits.

(a) Any application for a small business stationary source permit, a pipeline facilities permit, or an existing facility permit must include a completed Form PI-IG, Grandfathered Facility Permit Application. The Form PI-IG must be signed by an authorized representative of the applicant. The Form PI-IG specifies additional support

information which must be provided before 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 of the following are met.

(I) Protection of public health and welfare. The emissions

from the grandfathered facility will comply with all rules and regulations of the commission and with the intent of the TCAA, including

protection of the health and physical property of the people.

(2) Measurement of emissions. The permit may have provisions for measuring the emission of air contaminants as determined

by the commission. These provisions may include the installation of

sampling ports on exhaust stacks and construction of sampling platforms in accordance with guidelines in the "Texas Natural Resource

Conservation Commission Sampling Procedures Manual," portable analyzers, or emissions calculations if a known process variable is monitored.
(3) New Source Perfonnance Standards (NSPS). The emissions from each affected facility as defined in 40 Code ofFederal Regulations (CFR) Part 60 will meet at least the requirements of any applicable NSPS as listed under 40 CFR Part 60, promulgated by EPA under

authority granted under FCAA, §III, as amended.

(4) National Emission Standards for Hazardous Air Pollutants (NESHAP). The emissions from each facility as defined in 40

CFR Part 61 will meet at least the requirements of any applicable NESHAP, as listed under 40 CFR Part 61, promulgated by EPA under authority granted under FCAA, §112, as amended.

(5) NESHAPs for source categories. The emissions from

each affected facility shall meet at least the requirements of any applicable maximum achievable control technology (MACT) standard as

listed under 40 CFR Part 63, promulgated by EPA under FCAA, §112,

or as listed in Chapter 113, Subchapter C of this title (relating to National Emission Standards for Hazardous Air Pollutants for Source Categories (FCAA Section 112,40 CFR 63».

(6) Perfonnance demonstration. The grandfathered facility

will achieve the perfonnance specified in the pennit application. The

commission may require the applicant to submit additional engineering

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

detennine ongoing compliance through engineering calculations based

on measured process variables, parametric or predictive monitoring,

stack monitoring, or stack testing.

(7) Nonattainment review. A grandfathered facility in a

nonattainment area shall comply with all applicable requirements under Subchapter B, Division 5 ofthis chapter (relating to Nonattainment

Review).

(8) Prevention of Significant Deterioration (PSD) review.

A grandfathered facility in an attainment area shall comply with all

applicable requirements under Subchapter B, Division 6 ofthis chapter

(relating to Prevention of Significant Deterioration Review).

(9) Air dispersion modeling or ambient monitoring. The

commission may require computerized air dispersion modeling and/or

ambient monitoring to detennine the air quality impacts from the

grandfathered facility.

(10) Federal standards of review for constructed or reconstructed major sources of hazardous air pollutants. Ifthe grandfathered

facility is an affected source as defined in §116.15(1) of this title (relating to Section 112(g) Definitions), the affected source shall comply

with all applicable requirements under Subchapter C of this 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 other requirements of this subchapter, the applicant shall:

(A) identify each facility to be included in the pennit;

(B) identify the air contaminants emitted; and

(C) provide emission rate calculations.

(b) In addition to the requirements ofsubsection (a) ofthis section, an application for a pipeline facilities pennit shall propose a control method and identify the date by which the control method will be

implemented. The proposed control method shall demonstrate compliance with the following requirements.

(I) Facilities located in the East Texas region as defined

in §101.330 of this title (relating to Definitions), shall demonstrate

that each grandfathered reciprocating internal combustion engine will

achieve at least a 50% reduction ofthe hourly emissions rate ofnitrogen

oxides (NOJ, expressed in tenns of grams per brake horsepower-hour

(glbhp-hr). The commission may also require a 50% reduction ofthe

hourly emissions rate of volatile organic compounds (VOC), expressed

in tenns of glbhp-hr for each engine located in the East Texas region

as defined in §101.330 ofthis title.

(2) The commission shall require up to a 20% reduction of

the hourly emissions rate ofNO, and may also require up to a 20% reduction of the hourly emissions rate of VOC, both expressed in tenns

of glbhp-hr, from grandfathered reciprocating internal combustion engines located in the West Texas region as defined in §101.330 of this

title or EI Paso County.

(3) Notwithstanding the requirements of paragraphs (I)

and (2) of this subsection, the owner or operator of more than one

grandfathered reciprocating internal combustion engine may average

the reductions achieved among more than one reciprocating internal

combustion engine connected to or part of a gathering or transmission

pipeline in order to demonstrate the reductions required in paragraphs

(I) and (2) of this subsection. If the owner or operator chooses to

average among engines located in both the East and West Texas

regions as defined in §101.330 of this title it must be demonstrated

that the 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) of this subsection.

For purposes ofthis paragraph, EI Paso County is included in the West

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) of this subsection, 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 paragraphs

(I) and (2) ofthis subsection will be achieved at one account, the reduction may include emission reductions achieved since January 1,2001

in order to comply with another state or federal law.

(c) In addition to the requirements ofsubsection (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 available control technology (BACT) that the commission required or would

have required for a facility of the same class or type as a condition of

issuing a pennit or pennit amendment 120 months before the submittal of the existing facility pennit application, considering the age and

remaining useful life of the facility. The application shall identify the

date by which the control method will be implemented.

§116.780. Public Participationforlnitiallssuance ofPipeline Facilities Permits and Existing Facility Permits.

(a) An applicant for a pipeline facilities pennit or an existing

facility pennit shall publish a notice of intent to obtain the pennit in

accordance with Chapter 39, Subchapters Hand K of this title (relating to Applicability and General Provisions; and Public Notice of Air

Quality Applications).

(b) Any person who may be affected by emissions from a

grandfathered facility may request the commission to hold a notice and

comment hearing on the pipeline facilities pennit application or the

existing facility pennit application. The public comment period shall

end 30 days after the publication of Notice of Receipt of Application

and Intent to Obtain Pennit in accordance with §39.418 of this title

(relating to Notice of Receipt of Application and Intent to Obtain

Pennit). Any request for a notice and comment hearing must be made

in writing during the 30-day public comment period.

ADOPTED RULES June 7, 2002 27 TexReg 4981
• • •

DIVISION 3. EXISTING FACILITY FLEXIBLE

PERMITS

30 TAC §§116.793 -116.802, 116.804 -116.807

STATUTORY AUTHORITY

Stephanie Bergeron

Director, Environmental Law Division

Texas Natural Resource Conservation Commission

Effective date: June 12, 2002

Proposal publication date: January 4, 2002

For further information, please call: (512) 239-4712

The new sections are adopted under THSC, TCAA, §382.011,

which authorizes the commission to administer the requirements of the 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

consistent with the policy and purposes of the 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 for

delegation of uncontested matters to the executive director.

§1/6.797. Notice ofFinal Action on Existing Facility Flexible Permit

Applications.

(a) After the public comment period or the conclusion of any

notice and comment hearing, the commission will send notice by firstclass mail of the final action on the existing facility flexible permit

application to any person who commented during the public comment

period or at the hearing, and to the applicant.

(b) The notice must include the following:

(I) the response to any comments submitted during the

public comment period;

(2) identification of any change in the conditions of the

draft permit and the reasons for the change; and

(3) a statement that any person affected by the decision of

the executive director may file a motion to overturn under the appropriate procedure in Chapter 50 of this title (relating to Action on Applications and Other Authorizations) and may seek judicial review under

TCAA, §382.032, relating to Appeal of Commission Action.

§1/6.807. Delegation.

The commission delegates to the executive director the authority to take

any action on a permit issued under this division, relating to existing

facility flexible permits.

This agency hereby certifies that the adoption has been reviewed

by legal counsel and found to be a valid exercise of the agency's

legal authority.

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

TRD-200203184

(c) Any notice and comment hearing regarding initial issuance

of a pipeline facilities permit or an existing facility permit shall be conducted in accordance with the procedures in §116.781 of this title (relating to Notice and Comment Hearings for Initial Issuance of Pipeline

Facilities Permits and Existing Facility Permits) and not under the APA.

(d) The commission's response to public comments and the

notice of its decision on whether to issue or deny a pipeline facilities

permit or an existing facility permit will be conducted in accordance

with the procedures in §116.783 ofthis title (relating to Notice ofFinal

Action on Pipeline Facilities Permit Applications and Existing Facility

Permit Applications).

(e) A person affected by a decision to issue or deny a pipeline

facilities permit or an existing facility permit may seek review, as appropriate, under the appropriate procedure in Chapter 50 of this title

(relating to Action on Applications and Other Authorizations), and

may seek judicial review under TCAA, §382.032, relating to Appeal

of Commission Action.

§/ / 6.783. Notice ofFinal Action on Pipeline Facilities Permit Applications and Existing Facility Permit Applications.

(a) After the public comment period expires or the conclusion

of any notice and comment hearing, the commission will send notice

by first-class mail of the final action on the pipeline facilities permit

application or the existil'\g facility permit application to any person who

commented during the public comment period or at the hearing, and to

the applicant.

(b) The notice must include the following:

(I) the response to any comments submitted during the

public comment period;

(2) identification of any change in the conditions of the

draft permit and the reasons for the change; and

(3) a statement that any person affected by the decision of

the executive director may file a motion to overturn under the appropriate procedure in Chapter 50 of this title (relating to Action on Applications and Other Authorizations) and may seek judicial review under

TCAA, §382.032, relating to Appeal of Commission Action.

§/ /6.787. Amendments and Alterations ofPermits Issued Under this

Division.

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

TRD-200203183

The owner or operator planning the modification of a facility permitted

under this division relating to small business stationary source permits,

pipeline facilities permits, and existing facility permits must comply

with the requirements of Subchapter B ofthis chapter (relating to New

Source Review Permits) before work begins on the construction ofthe

modification. Amendments and alterations for permits issued under

this division are subject to the requirements of Subchapter B of this

chapter.

§ /16.790. Delegation.

The commission delegates to the executive director the authority to take

any action on a permit issued under this division relating to small business stationary source permits, pipeline facility permits, and existing

facility permits.

This agency hereby certifies that the adoption has been reviewed

by legal counsel and found to be a valid exercise of the agency's

legal authority.

27 TexReg 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: January 4, 2002

For further 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

STATUTORY AUTHORITY

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

for the state's air; §382.017, which authorizes the commission to

adopt rules consistent with the policy and purposes of the 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

for delegation of uncontested matters to the executive director.

§ //6.9//. Electric Generating Facility Permit Application.

(a) Owners or operators of grandfathered or electing electric

generating facilities (EGF) shall submit an application to authorize nitrogen oxides (NO) emissions and, if applicable, sulfur dioxide (SO,)

and particulate matter (PM) emissions. The application must include a

completed Form PI-I-U, General Application. The Form PI-I-U must

be signed by an authorized representative of the applicant. The Form

PI-I-U specifies additional support information which must be provided before the application is deemed complete. In order to be granted

an electric generating facility permit (EGFP), the owner or operator

shall submit information to the commission which demonstrates that

all of the following are met.

(I) Measurement of emissions and performance demonstration. Applicants must propose monitoring and reporting for the

measurement of emissions and demonstration of performance consistent with §I16.914 of this title (relating to Emissions Monitoring and

Reporting Requirements).

(2) Control method. New control methods proposed in initial 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) Air dispersion modeling or ambient monitoring for pollution control projects. Computerized air dispersion modeling and/or

ambient monitoring may be required by the commission's Air Permits

Division where there is an increase in emissions to determine the air

quality impacts from controls proposed under paragraph (2) ofthis subsection.

• • •

meet the opacity limitations of §111.111 of this title (relating to

Requirements for Specified Sources).

(b) Application information for electing EGFs.

(I) In addition to the information required in this section,

EGFP applications regarding electing EGFs shall contain the following

information:

(A) documentation of the emissions from the 1997

Emissions Scorecard from the EPA Acid Rain Program, or if that

information is not available, the actual emissions from that electing

EGF for calendar year 1997;

(B) documentation of fuel consumption, fuel heating

values, and heat input in millions of British thermal units (MMBtu)

for calendar year 1997;

(C) identification of the 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 of this title (relating to Control of Air Pollution' by

Permits for New Construction or Modification), will not be authorized

under this subchapter.

(c) The owner or operator of a grandfathered or electing 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 a permit application was filed under subsection (a) of this section, or for

which a permit has been obtained in 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

application under subsection (a) ofthis section is considered permitted

for the emiSSions of all air contaminants from that EGF.

(e) An owner or operator of a grandfathered coal-fired EGF

with a permit issued in accordance with subsection (a) of this section

or with an application pending under subsection (a) ofthis section may

submit an application for an EGFP in accordance with to §116.917 of

this 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) to authorize the emissions of all criteria pollutants from the

EGF other than NO" SO" and PM as it relates to opacity.

(f) An owner or operator of a grandfathered or electing EGF

with a permit application pending under subsection (a) of this section

or a permit issued in accordance with subsection (a) ofthis section may

submit an application for an EGFP in accordance with §116.917 ofthis

title to also authorize each of the following types of facilities 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% of the 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 of any air contaminant.

(g) Any application submitted in accordance with §116.917 of

this title for facilities identified in subsection (e) ofthis section must be

submitted by September 1,2003. Any application submitted in accordance with §116.917 of this title for facilities identified in subsection

(f)(I) or (2) of this 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 of this title are subject

ADOPTED RULES June 7, 2002 27 TexReg 4983
to the schedule outlined in §116.771 ofthis title (relating to Implementation Schedule for Additional Controls.)

(h) Emissions of air contaminants from facilities identified in

subsection (f)(I) or (2) of this section must be included in each applicable emissions allowance trading program under Chapter 101, Subchapter H, Division 2 of this title (relating to Emissions Banking and

Trading Allowances). The commission will not issue any new emissions allowance for the emissions of any 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. General and Special Conditions.

(a) The following general conditions shall be applicable to every electric generating facility permit (EGFP) unless otherwise specified in the permit.

(I) A permit issued under this subchapter may authorize

the following:

(A) for grandfathered natural gas-fired electric generating facilities (EGFs), emissions of all air contaminants;

(B) for grandfathered coal-fired EGFs, nitrogen oxides

(NO,) emissions, sulfur dioxide (SO,) emissions, and particulate matter

(PM) through opacity limitations as specified in §111.111 ofthis title

(relating to Requirements for Specified Sources);

(C) for electing natural gas-fired EGFs, allowances for

NO, emissions;

(D) for electing coal-fired EGFs, allowances for NO.

emissions, allowances for SO, emissions, and PM through opacity limitations as specified in §111.111 ofthis title; and

(E) for facilities identified in §116.917(a) of this 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 of all criteria pollutants.

(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 Subchapter H of

this chapter (relating to Permits for Grandfathered Facilities) may be

consolidated with a permit issued under this subchapter.

(3) The owner or operator of a grandfathered EGF, an electing EGF, and if applicable, any facility included in an EGFP under

§116.917 of this title, must comply with Chapter 101, Subchapter H,

Division 2 of this title (relating to Emissions Banking and Trading

of Allowances) including the requirement to maintain allowances in

a compliance account. Allowances may be transferred in accordance

with §10I.335 of this title (relating to Allowance Banking and Trading).

(4) Mass emission monitoring and reporting shall be conducted in accordance with §116.914 of this title (relating to Emissions

Monitoring and Reporting Requirements).

(5) On June I after every control period, the owner or operator shall hold a quantity of allowances for emissions of NO. and,

where applicable, SO" in its compliance account that is equal to or

greater than the total emissions of that ,air contaminant emitted during the prior control period for each EGF permitted in accordance with

§116.911(a) and (b) ofthis title (relating to Electric Generating Facility

Permit Application) and for each facility permitted in accordance with

§116.917 of this title.

27 TexReg 4984 June 7,2002 Texas Register

(6) Owners or operators shall submit a report ofthe amount

of emissions of each allocated air contaminant, from the prior control

period to the Air Permits Division consistent with the requirements of

§ I01.336(b) ofthis title (relating to Emission Monitoring, Compliance

Demonstration, and Reporting).

(7) Coal-fired grandfathered and electing EGFs must meet

the opacity limitations of §111.111 of this title.

(8) Natural gas-fired EGFs that were designed to also bum

fuel oil may bum any American Society for Testing and Materials

(ASTM) grade fuel oil or mixture of ASTM grade fuel oils containing

not more than 0.7% sulfur by weight as determined by ASTM Method

D 396. Burning offuel oil does not relieve the owner or operator ofthe

EGF from the responsibility to comply with the emission limitations,

allowances, or conditions of any permit or state or federal regulation.

The burning of waste or used oils is not authorized by this subchapter.

(9) Owners or operators ofnatural gas fired EGFsthat were.

designed to also bum fuel oil shall submit an annual report for the EGFs

that burned fuel oil during each control period. The report shall include the names ofthe unites) burning fuel oil, the date(s) that fuel oil

is bumed, the amount offuel oil burned, and the ASTM grade(s) ofthe

fuel oil or fuel oil mixture that is burned. This report shall be included

with the report required by §I0 I.336(b) ofthis title (relating to Emission Monitoring, Compliance Demonstration, and Reporting).

(b) Special conditions may be included in the EGFP.

§1l6.917. Electric Generating Facility Permit Application for Certain Grandfathered Coal-Fired Electric Generating Facilities andCertain Grandfathered Facilities Located at Electric Generating Facility

Sites,

(a) Any application for an electric generating facility permit

(EGFP) for additional criteria pollutants from grandfathered coal-fired

electric generating facilities (EGFs) identified in §116.911 (e) ofthis title (relating to Electric Generating Facility Permit Application) or for

grandfathered facilities identified in § I 16.91 I(f)(I) or (2) of this title

(relating to Electric Generating Facility Permit Application) must include a completed Form PI-IG, Grandfathered Facility Permit Application. The Form PI-IG must be signed by an authorized representative of the applicant. The Form PI-IG specifies additional support

information which must be provided before the application is deemed

complete. In order to be granted a permit for a grandfathered facility

under this section, the owner or operator of the grandfathered facility

shall submit information to the commission which demonstrates that

all of the following are met.

(I) Protection of public health and welfare. The emissions

from the grandfathered facility will comply with all rules and regulations of the commission and with the intent of the TCAA, including

protection of the health and physical property ofthe people.

(2) Measurement ofemissions. The EGFP may have provisions for measuring the emission of air contaminants as determined by

the commission. These may include the installation ofsampling ports

on exhaust stacks and construction ofsampling platforms in accordance

with guidelines in the "Texas Natural Resource Conservation Commission Sampling Procedures Manual," portable analyzers, or emissions

calculations if a known process variable is monitored.

(3) New Source Performance Standards (NSPS). The emissions from each affected facility as defined in 40 Code ofFederal Regulations (CFR) Part 60 will meet at least the requirements of any applicable NSPS as listed under 40 CFR Part 60, promulgated by the EPA

under authority granted in accordance with FCAA, §III, as amended.

(4) National Emission Standards for Hazardous Air Pollutants (NESHAP). The emissions from each facility as defined in 40
CFR Part 61 will meet at least the requirements of any applicable NESHAP, as listed under 40 CFR Part 61, promulgated by the EPA under

authority granted in accordance with FCAA, §112, as amended.

(5) NESHAPs for source categories. The emissions from

each affected facility shall meet at least the requirements of any applicable maximum achievable control technology (MACT) standard as

listed under 40 CFR Part 63, promulgated by the EPA in accordance

with FCAA, §112, or as listed under Chapter 113, Subchapter C ofthis

title (relating to National Emission Standards for Hazardous Air Pollutants for Source Categories (FCAA, Section 112,40 CFR 63)).

(6) Performance demonstration. The grandfathered facility

will achieve the performance specified in the permit application. The

commission may require the applicant to submit additional engineering data after an EGFP has been issued in order to demonstrate further

that the grandfathered facility will achieve the performance specified in

the permit. In addition, the commission may require initial compliance

testing to determine ongoing compliance through engineering calculations based on measured process variables, parametric or predictive

monitoring, stack monitoring, or stack testing.

(7) Nonattainment review. A grandfathered facility in a

nonattainment area shall comply with all applicable requirements under Subchapter B, Division 5 ofthis chapter (relating to Nonattainment

Review).

(8) Prevention of Significant Deterioration (PSD) review.

A grandfathered facility in an attainment area shall comply with all

applicable requirements under Subchapter B, Division 6 ofthis chapter

(relating to Prevention of Significant Deterioration Review).

(9) Air dispersion modeling or ambient monitoring. The

commission may require computerized air dispersion modeling and/or

ambient monitoring to determine the air quality impacts from the

grandfathered facility.

(10) Federal standards of review for constructed or reconstructed major sources ofhazardous air pollutants. Ifthe grandfathered

facility is an affected source (as defined in §116.15(1) of this title (relating to Section 112(g) Definitions)), the affected source shall comply

with all applicable requirements under Subchapter C of this 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 other requirements of this 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) of this title.

(c) Applications submitted in accordance with this section are

subject to the requirements of § 116.920 ofthis title (relating to Public

Participation for Initial Issuance).

§J J6.928. 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 of Final Action) provides

notification that any person affected by a decision of the commission

may petition for rehearing. Notwithstanding §116.922(b)(3) of this

title, any Notice of Final 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 of this title (relating to Motion to

Overturn Executive Director's Decision) rather than a petition for

rehearing.

This agency hereby certifies that the adoption has been reviewed

by legal counsel and found to be a valid exercise of the agency's

legal authority.

Filed with the Office of the Secretary of State on 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

For further information, please call: (512) 239-4712

• • •

CHAPTER 214. SECONDARY CONTAINMENT

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 without changes to the proposed text as published

in the February 15, 2002 issue of the Texas Register (27 TexReg

1100) and will not be republished.

BACKGROUND AND SUMMARY OF THE FACTUAL BASIS

FOR THE ADOPTED RULES

The purpose ofthe adopted rules is to implement House 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 Containment Required For Tanks 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 if the system is

located in the outcrop of a major aquifer composed of limestone

and associated carbonate rocks of Cretaceous age or older; and

a county that has a population of at least one million and relies

on groundwater for at least 75% of the county's water supply or

has a population of at least 75,000 and is adjacent to a county

that has a population of at least one million and relies on groundwater for at least 75% of the county's water supply.

TWC, §26.3476, applies only to a UST system that is installed,

upgraded, or replaced on or after September 1, 2001 and applies

only to the outcrop of the Edwards (Balcones Fault Zone) and

Trinity aquifers in northern Bexar and Comal Counties as defined

by the Texas Water Development Board (TWDB). For the limited

areas where it is unclear as to which agency rules are applicable

(30 TAC Chapter 213 concerning Edwards Aquifer, the Chapter

214 rules, or the statewide 30 TAC Chapter 334 rules concerning

Underground and Aboveground Storage Tanks), the executive

director will make a determination on a case-by-case basis.

SECTION BY SECTION DISCUSSION

ADOPTED RULES June 7, 2002 27 TexReg 4985