### ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 52 [EPA-R06-0AR-2005-TX-0032; FRL-

__-'
Approval and Promulgation ofImplementation Plans; Texas; Revisions to the New Source Review (NSR) State Implementation Plan (SIP); Flexible Permits

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

SUMMARY: EPA is taking final action to disapprove revisions to the SIP submitted by the State ofTexas that relate to the State's Flexible Pennits Program (the Texas Flexible Permits Program or the Program). EPA is disapproving the Texas Flexible Permits Program because it does not meet the Minor NSR SIP requirements nor does it meet the NSR SIPrequirements for a substitute Major NSR SIP revision. We are taking this action under section 110, part C, and part D, ofTitle I ofthe Federal Clean Air Act (the ActorCAA).

DATE: This rule is effective on [INSERT DATE 30 DAYS AFTER PUBLICATION IN THE FEDERAL REGISTER].

### 2 ADDRESSES: EPA has established a docket for this action under DocketID No. EPAR06-0AR-2005-TX-0032. All documents in the docket are listed on the 

### www.regulations.gov web site. Although listed in the index, some information is not publicly available, e.g., confidential business information or other information whose disclosure is restricted by statute. Certain other material, such as copyrighted material, is not placed on the Internet and will be publicly available only in hard copy form. Publicly available docket materials are available either electronically through www.regulations.gov or in hard copy at the Air Permits Section (6PD-R), Environmental Protection Agency, 1445 Ross Avenue, Suite 700, Dallas, Texas 75202-2733. The file will be made available by appointment for public inspection in the Region 6 Freedom of Information Act Review Room between the hours of8:30am and 4:30pm weekdays exceptfor legal holidays. Contactthe person listed in the FOR FURTHER INFORMATION CONTACTparagraph below to make an appointment. Ifpossible, please make the appointment at least two working days in advance ofyour visit. There will be a 15 cent per page fee for making photocopies ofdocuments. On the day ofthe visit, please check in at the EPA Region 6 reception area at 1445 Ross Avenue, Suite 700, Dallas, Texas.

The State submittals, which are part ofthe EPA record, are also available for public inspection at the State Air Agency listed below during official business hours by appointment:

### 3
Texas Commission on Environmental Quality, Office ofAir Quality, 12124 Park 35 Circle, Austin, Texas 78753.

FOR FURTHERINFORMATION CONTACT: Mr. Stanley M. Spruiell, Air Permits Section (6PD-R), Environmental Protection Agency, Region 6, 1445 Ross Avenue, Suite 700, Dallas, Texas 75202-2733, telephone (214) 665-7212; fax number 214-665-7263; email address spruiell.stanley@epa.gov.

SUPPLEMENTARY INFORMATION: Throughout this document, the following terms have the meanings described below:

• "we," "us," and "our" refer to EPA.

• "Act" and "CAA" mean the Federal Clean Air Act.

• "40 CFR" means Title 40 ofthe Code ofFederal Regulations

- Protection ofthe Environment.

• "SIP" means State Implementation Plan established under section 110 of the Act.

• "NSR" means new source review, aphrase intended to encompass the statutory and regulatory programs that regulate the construction and4 modification ofstationary sources as provided under CAA Title I, section 110(a)(2)(C) and parts C and D, and 40 CFR 51.160 through 51.166.

• "MinorNSR" means NSR established under section 110 ofthe Act and 40 CFR 51.160.

• "NNSR" means nonattainmentNSR established under Title I, section 110 and part D ofthe Act, and 40 CFR 51.165.

• "PSD" means prevention ofsignificant deterioration ofair quality established under Title I, section 110 and part C ofthe Act, and 40 CFR 51.166.

• "MajorNSR" means any new or modified source that is subjectto NNSR and/or PSD.

• "Program" means the SIP revision submittals from the TCEQ concerning the Texas Flexible Permits State Program.

• "TSD" means the Technical Support Document for this action.

• "NAAQS" means any national ambient air quality standard established under 40 CFRpart 50.5

• "MRR" means monitoring, reporting, and recordkeeping requirements.

Table of Contents I. What Action is EPA Taking? II. What is the Background? A. Summary ofOur Proposed Action B. Summary ofthe Submittals Addressed in this Final Action C. Other Relevant Actions on the Texas Permitting SIP Revision Submittals III. Response to Comments A. General Comments B. Whether the Flexible Permits Program is clearly a Minor, not a Major, NSR SIP Revision C. Whetherthe Flexible Permits Program Meets the Requirements for a Substitute MajorNSR SIP Revision 1. General Comment on whetherthe Program is a Substitute Major NSR SIP Revision 2. Requirements for MajorNSR Applicability Determinations 3. Circumvention ofMajorNSR 4. Use ofAllowable Emissions in Major NSR 5. Retention ofMajor NSR PermitTerms and Conditions 6. Protection ofthe NAAQS Attainment under MajorNSR6 D. Whether the Flexible Permits Program Meets the Requirements for a Minor NSR SIP Revision I. Applicability for a Minor NSR Program 2. Establishmentofthe Emission Cap under MinorNSR 3. Enforceability ofa MinorNSR Program 4. Revocation ofMajorNSR Permits under a Minor NSR Program 5. Protection ofthe NAAQS under a MinorNSR Program E. Definition ofAccount F. Public Participation IV. What are the Grounds for this Disapproval Action ofthe Texas Flexible Permits State Program? A. The Texas Flexible Permits Program is Unclear Whether it is for a Major
or MinorNSR SIP Revision 

### B. The Texas Flexible Permits Program is Not Approvable as a Substitute Major NSR SIP Revision C. The Texas Flexible Permits Program is Not Approvable as a Minor NSR SIP Revision D. The Texas Flexible Permits Program does not meet the NSR Public Participation Requirements E. Definition of"account" V. Final Action VI. Statutory and Executive Order Reviews7 

### I. 

### WhatAction is EPA Taking?

EPA is taking final action to disapprove the Texas Flexible Permits State Program, as submitted by Texas on November 29, 1994, as revised by severable portions ofthe March 13, 1996, SIP revision submittal, and severable portions ofthe July 22, 1998 SIP revision submittal that repealed and replaced portions of, as well as revised, the 1994 submittal and repealed and replaced all ofthe 1996 submittal; and as revised by severable portions ofthe October 25, 1999; September 11,2000; April 12, 2001; September4,2002; October4,2002; and September 25,2003; SIP revision submittals. These submittals include revisions to Title 30 ofthe Texas Administrative Code (30 TAC) at 30 TAC Chapter 116

- Control ofAir Pollution by Permits for New Construction or Modification. This includes the following regulations under Chapter 116: 30 TAC 116.110(a)(3), 30 TAC Subchapter G - Flexible Permits, the definitions in 30 TAC 116.13 - Flexible Permit Definitions, and the definition in 30 TAC 116.10(11)(F) of"modification ofexisting facility." These state regulations and definitions do not meet the requirements ofthe Act and EPA's NSR regulations. EPA has concluded that none ofthese identified elements for the submitted Flexible Permits Program is severable from each other.

EPA proposed an action for the above SIP revision submittals on September 23, 2009 (74 FR 48480). We accepted comments from the public on this proposal from September 23,2009, until November 23,2009. A summary ofthe comments received and our evaluation thereofis discussed in section III below. In the proposal and in the8 Technical Support Document (TSD), we described our basis for the actions identified above. The reader should refer to the proposal, the TSD, section IV ofthis preamble, and the Response to Comments in section III ofthis preamble for additional information relating to our final action.

EPA is disapproving the submitted Texas Flexible Permits State Program as not meeting the requirements for a MinorNSR SIP revision. Our grounds for disapproval as
a MinorNSR SIP revision include the following:

• The submitted Program has no express regulatory prohibition clearly limiting its use to MinorNSR and has no regulatory provision clearly prohibiting the
use ofthis submitted Program from circumventing the MajorNSR SIP requirements, thereby potentially exempting new major stationary sources and major modifications from the EPA Major NSR SIP requirements;

• It is not an enforceable NSR permitting program. The submitted Program lacks requirements necessary for enforcement and assurance ofcompliance. There are no specific up-front methodologies in the Program to be able to determine compliance. It fails to meet the enforceability requirements as a program or by a holder ofa Flexible Permit, and it cannot assure compliance with the Program or ofthe affected source;

### 9

• It lacks the necessary more specialized monitoring, recordkeeping, and reporting (MRR) requirements required for this type ofMinorNSRprogram,
as selected by Texas, to ensure accountability and provide a means to determine compliance. The submitted Program is generic concerning the types ofmonitoring that is required rather than identifying the employment of specific monitoring approaches, providing the technical specifications for each ofthe specific allowable monitoring systems, and requiring replicable procedures for the approval ofany alternative monitoring system. It also lacks the replicable procedures that are necessary to ensure that (I) adequate monitoring is required that would accurately determine emissions under the Flexible Permit cap, (2) the Program is based upon sound science and meets generally acceptable scientific procedures for data quality and manipulation; and (3) the information generated by such system meets minimum legal requirements for admissibility in ajudicial proceeding to enforce the Flexible Permit;

• It lacks replicable, specific, established implementationprocedures for establishing the emissions cap in a MinorNSR Flexible Permit;

• It fails to ensure that the terms and conditions ofMajorNSR SIP permits are retained. Major stationary sources and major modifications can use this submitted Program to fundamentally change the way they comply with specific terms and conditions established in their Major NSR SIP permits.

### 10 Holders ofMajorNSR SIP permits are not prohibited from using the submitted Program's allowables-based emissions cap. The Act prohibits the
use ofan allowables-based cap for Major NSR SIP permittees;

• It fails to meet the statutory and regulatory requirements for a Minor NSR SIP revision and is not consistent with EPA policy and guidance on MinorNSR SIP revisions; and
• Based upon, among other things, the lack ofany objective, replicable methodology for establishing the emission cap, the too broad director discretion provision regarding whether or not to include MRR conditions in a Flexible Permit, the lack ofsufficientMRR requirements for this type of permitprogram, and the lack ofenforceability, EPA lacks sufficient informationto determine that the requested revision to add the new permit option to the Texas Minor NSR SIP will not interfere with any applicable requirement concerning attainment and reasonable further progress (RFP), or any otherrequirement ofthe Act.

We are disapproving the submitted Texas Flexible Permits State Program as not meeting the requirements for a substitute MajorNSR SIP revision. EPA understands that the TCEQ intended for the submitted Program to be a Minor NSRprogram but we are required to review it as a substitute MajorNSR SIP revision because the State should have included express language stating that, as it did in the two other Minor NSR SIP

### 11 alternative permit options (Standard Permits and Pennits by Rule), that the submitted Program is clearly limited to MinorNSR and prohibits circumvention ofMajor NSR. Our grounds for disapproval as a substitute MajorNSR SIP revision include the following:

• It is not clearly limited to MinorNSR thereby potentially exempting new major stationary sources to construct and major modifications to occur without a MajorNSR permit;

l; • It has no regulatory provisions clearly prohibiting the use ofthis Program from circumventing the MajorNSR SIP requirements, thereby allowing sources to use a Flexible Pennit to avoid the requirement to obtain preconstruction permit authorizations for projects that would otherwise require a MajorNSRpreconstructionpermit;

• It does not include a demonstration from the TCEQ, as required by 40 CFR 51.165(a)(2)(ii) and 51.166(a)(7)(iv), showing how the use of "modification" is at least as stringent as the definition of"modification" in the EPA MajorNSR SIP program and meets the Act;

• It does not include a demonstration from the TCEQ, as required by 40 CFR 51.165(a)(2)(ii) and 51. 166(a)(7)(iv), showing the submitted Program is at least as stringent as the EPA MajorNSR SIP program;

### 12

• It does not include the requirement to make Major NSR applicability determinations based on actual emissions and on emissions increases and decreases (netting) that occur within a major stationary source;

• To the extent that major stationary sources and major modifications are exempted from MajorNSR, it fails to meet the statutory and regulatory requirements for a MajorNSR SIP revision and is not consistentwith EPA policy and guidance on MajorNSR SIP revisions;

• Because it fails to include, among other things, the required demonstration from the State showing how the customized Major NSR SIP revision is in fact
as stringent as EPA's MajorNSRrevised program, any objective, replicable methodology for calculating the emissions cap, provides too broad director discretion regarding whether or not to include monitoring, recordkeeping, and reporting (MRR) conditions in a Flexible Permit, lacks sufficientMRR requirements for this type ofpermitprogram, and is not enforceable, EPA lacks sufficient information to make a finding that the submitted Program will
ensure protection ofthe national ambient air quality standards (NAAQS), and noninterference with the Texas SIP control strategies and RFP.

The provisions in these submittals relating to the Texas Flexible Permits State Program that include the Chapter 116 regulatory provisions and the nonseverab1e13 definitions in the Flexible Permits Definitions and the General Definitions were not submitted to meet a mandatory requirementofthe Act. Therefore, this final action to disapprove the submitted Texas Flexible Permits State Program does not trigger a sanctions or Federal Implementation Plan clock. See CAA section l79(a).


### II. What is the Background?

A. Summary of OurProposedAction

On September 23,2009, EPA proposed to disapprove revisions to the SIP submitted by the State ofTexas that relate to the Flexible Permits Program. These affected provisions include regulatory provisions at 30 TAC l16.1l0(a)(3) and 30 TAC Subchapter G - Flexible Permits, definitions in 30 TAC 116.13, Flexible Permits Definitions, and a nonseverable portion ofthe definition at subparagraph 116.1O(11 )(F) of"modification ofexisting facility" under Texas's General Definitions in Chapter 116, Control ofAir Pollution by Permits for New Construction or Modification. EPA finds that these submitted provisions and definitions are not severable from each other.

B. Summary of the SubmittalsAddressedin this FinalAction

Tables 1 and 2 below summarize the changes that are in the SIP revision submittals. A summary ofEPA's evaluation ofeach section and the basis for this final14 action is discussed in sections III through V ofthis preamble. The TSD (which is in the docket) includes a detailed evaluation ofthe submittals.

ffl db hi 

### f h SIP b . 

### I h Tbl 1 Sa eummary 0 eac su mitta t at IS a ecte )y t IS action. Title ofSIP Submittal Date Date of Regulations Affected Submitted State

to EPA Adontion Flexible Permits 11/29/1994 11/16/1994 • Revision to 30 TAC 116.110. • Adoption ofNew 30 TAC 116.13 and New

Subchapter G, 30 TAC 116.710, 116.711, 116.714,116.715,116.716,116.717, 116.718, 116.720,116.721,116.722, 115.730, 116.740, 116.750, and 116.760. Qualified Facilities and 3/13/1996 2/14/1996 • Revision 000 TAC 116.10 to add new Modifications to Existing definition of"modification ofexisting Facilities facility" at (F). NSR Rule Revisions; section 7/22/1998 6/17/1998 • Repeal and new 30 TAC 116.1O(9)(F), 112(g) Rule Review for 116.13 and 116.110(a)(3) adopted. Chapter 116. • Revisions to Subchapter G, 30 TAC 116.710,116.711,116.714,116.715, 116.721, 116.730, and 116.750. Public Participation (HB 801) 10/25/1999 9/2/1999 • Revision to Subchapter G, 30 TAC 116.740. I Air Penni" (SB-766) - Phase 9/11/2000 8/9/2000 • Revisions to Subchapter G, 30 TAC

II 116.710,116.715,116.721, 116.722, and 116.750. Emissions Banking and 4/12/2001 3/7/2001 • Revisions to Subchapter G, 30 TAC Trading 116.711 and 116.715. House Bill 3040: Shipyard 9/4/2002 8/21/2002 • Revision to 30 TAC 116.10, redesignating Facilities and NSR 30TAC 116.1O(9)(F)to 116.1O(l1)(F). Maintenance Emissions • Revisions to Subchapter G, 30 TAC 116.711 and 116.715. Air Fees 10/4/2002 9/25/2002 • Revisions to Subchapter G, 30 TAC 116.750. Offset Certification, New 9/25/2003 8120/2003 • Revision to Subchapter G, 30 TAC Source Review Permitting 116.715. Processes and Extensions for Construction

### 15 db h' 

### ffl h 

### 1 . f h T bi 2 Sa eummary 0 eac regu 

### anon t at IS a ecte )y t IS action, Section Title Date Date Comments Submitted Adopted by State Chapter 116 - Control ofAir Pollution by Permits for New Construction or Modification Subchapter A - Definitions Section General 3/13/1996 2/14/1996 • Revised to add new definition of 116.10(11)(F) Definitions "modification ofexisting facility" at (F) 7/22/1998 6/1711998 • Repealed and Adopted new 30 TAC 116.10(9)(F). 9/4/2002 8/2l/2002 • Redesignated 30 TAC 116.1O(9)(F) to 30 TAC 116.IO(ll)(F). Section 116.13 Flexible Permit 11/29/1994 11/16/1994 • Initial Adoption. Definitions 7/22/1998 6/17/1998 • Repealed and Adopted new 30 TAC 116.13.
• Subchapter B - New Source Review Permits • Division 1 - Permit Application Section 116.110 Applicability 11/29/1994 11/16/1994 • Revised (a) to add reference to Flexible Permits. 7/22/1998 6/17/1998 • Repealed and adopted a new 30 TAC 116.110.

II • Included reference to Flexible

Permits in new 30 TAC 116.1IO(a)(3)16

• Subchapter G - Flexible Permits Section 116.710 Applicability 11/29/1994 11/16/1994 • Initial adoption. 7/22/1998 6/17/1998 • Revised subsection (a).
• Removed subsection (b) and
• Redesignated existing subsections

(c)-(e) to subsections (b)-(d).
• Revised subsections (b)-(d) as

redesignated. 9/11/2000 8/9/2000 • Revised subsection (b). Section 116.711 Flexible Permit 11/29/1994 11/16/1994 • Initial adoption. Application 7/22/1998 6/17/1998 • Revised introductory paragraph and paragraphs (1)-(5);
• Added new paragraphs (6) and (II):
• Redesignated existingparagraphs

(6)-(9)to paragraphs (7)-(10) and existing paragraphs (10)-(11) to paragraphs (12)-(13); and • Revised paragraphs (8)-(10) as

redesignated. 4/12/2001 3/7/2001 • Added new paragraph (12); and
• Redesignated existing paragraphs

(12)-(13) to paragraphs (13)-04). 9/4/2002 8/21/2002 • Designated existing as subsection
. (a); • Added new subsection (b); and • Revised paragraphs (a)(8)-(l1) as

redesignated. Section 116.714 Application 11/29/1994 11/16/1994 • Initial adoption. Review Schedule 7/22/1998 6/17/1998 • Revised introductory paragraph. Section 116.715 General and 11/29/1994 11/16/1994 • Initial adoption. Special 7/22/1998 6/17/1998 • Revised subsection (a), and Conditions paragraphs (c)(3)-(6), and (9)-( 10). 9/11/2000 8/9/2000 • Revised subsection (a). 4/12/2001 3/7/2001 • Revised paragraph (c)(3).

I 9/4/2002 8/21/2002 • Revised paragraph (c)(9).

I 9/25/2003 8/20/2003 • Revised paragraphs (c)(I) and (c)(9). Section 116.716 Emission Caps 11/29/1994 11/16/1994 • Initial adoption. and Individual Limitations Section 116.717 Implementation 11/29/1994 11/16/1994 • Initial adoption. Schedule for Addition Controls Section 116.718 Significant 11/29/1994 11/16/1994 • Initial adoption. Emission Increase Section 116.720 Limitation on 11/29/1994 11/16/1994 • Initial adoption. Physical and Operational Changes17
Section 116.721 Amendments 11/29/1994 11/16/1994 • Initial adoption. and Alterations 7/22/1998 6/17/1998 • Revised paragraphs (b)(2) and (d)(l)-(2). 9/11/2000 8/9/2000 • Revised subsection (d) and paragraph (d)(l). Section 116.722 Distance 11/29/1994 11/16/1994 • Initial adoption. Limitations 9/11/2000 8/9/2000 • Revised introductory paragraph. Section 116.730 Compliance 11/29/1994 11/16/1994 • Initial adoption. History 7/22/1998 6/17/1998 • Revised introductory paragraph. Section 116.740 Public Notice 11/29/1994 11/16/1994 • Initial adoption. and Comment 7/22/1998 6/17/1998 • Designated existing text as subsection (a); and • Added new subsection (b). 10/25/1999 9/2/1999 • Revised subsections (aj-Ib). Section 116.750 Flexible Permit 11/29/1994 11/16/1994 • Initial adoption. Fee 7/22/1998 6/17/1998 • Revised subsections (b)-(d)' 9/11/2000 8/9/2000 • Revised subsection (d). 10/4/2002 9/25/2002 • Revised subsections (b)-(c). Section 116.760 Flexible Permit 11/29/1994 11/16/1994 • Initial adoption. Renewal 

### C. Other RelevantActions on the Texas Permitting SIP Revision Submittals

The SettlementAgreement in BCCA Appeal Group v. EPA, Case No. 3:08-cv01491-N (N.D. Tex), as amended, currently provides that EPA will take final action on the State's Public Participation SIP revision submittal by October 29,2010. EPA intends to take final action on the submittedNSR SIP by August 31, 2010, as provided in the ConsentDecree entered on January 21, 2010 in BCCA Appeal Group v. EPA, Case No. 3:08-cv-01491-N (N.D. Tex). EPA published its final action on the Texas Qualified Facilities Program and its associated General Definitions on April 14,2010 (See 75 FR 19467) as provided in the Consent Decree.
Additionally, EPA acknowledges that TCEQ is developing a proposed rulemaking package to address EPA's concerns with the currentFlexible Permits rules. We will, of course, consider any rule changes ifand when they are submitted to EPA for review.

### 18 However, the rules before us today are those ofthe current Flexible Permits Program, and we have concluded that the current Program is not approvable for the reasons set out in this notice.

III. Response to Comments
In response to our September 23,2009, proposal, we received comments from the following: Baker Botts, L.L.P., on behalfofBCCA Appeal Group (BCCA); BakerBotts, L.L.P., on behalfofTexas Industrial Project (TIP); Bracewell & Guiliani, L.L.P., on behalfofthe Electric Reliability Coordinating Council (ERCC); GulfCoast Lignite Coalition (GCLC); Office ofthe Mayor - City ofHouston, Texas (City ofHouston); Harris County Public Health and Environmental Services (HCPHES); Sierra Club - Houston Regional Group (SierraClub); Sierra Club Membership Services (including 2,062 individual comment letters) (SCMS); Texas Chemical Council (TCC); Texas Commission on Environmental Quality (TCEQ); Members ofthe Texas House of Representatives; Texas Association ofBusiness (TAB); Texas Oil and Gas Association (TxOGA); and University ofTexas at Austin School ofLaw - Environmental Clinic on behalfofEnvironmental Integrity Project (the Clinic), Environmental Defense Fund, Galveston-Houston Association for Smog Prevention, Public Citizen, Citizens for Environmental Justice, Sierra Club Lone Star Chapter, Community-In-Power and Development Association, KIDS for Clean Air, Clean Air Institute ofTexas, Sustainable Energy and Economic Development Coalition, Robertson County: Our Land, Our Lives,19
Texas Protecting Our Land, Water and Environment, Citizens for a Clean Environment, Multi-County Coalition and Citizens Opposing Power Plants for Clean Air.



### A. General Comments

Comment 

### 1: The following commenters support EPA's decisions to disapprove the Flexible Permits State Program: HCPHES; several members ofthe Texas House of Representatives; the Sierra Club; the City ofHouston, and the Clinic.


### Response: Generally, these comments support EPA's analysis ofTexas's Flexible Permits Program as discussed in detail at 74 FR 48480, at 48485-48494, and further support EPA's action to disapprove the Flexible Permits Program submission.



### Comment 

### 2: The SCMS sent numerous similar letters via e-mail that relate to this action. These comments include 1,789 identical letters (sent via e-mail), which support EPA's proposed ruling that major portions ofthe TCEQ air permitting program do not adhere to the CAA and should be thrown out. While agreeing that the proposed disapprovals are a good first step, the commenters state that EPA should take bold actions such as halting any new air pollutionpermits being issued by TCEQ utilizing TCEQ's currentillegal policy; creating a moratorium on the operations ofany new coal fired powerplants; reviewing all permits issued since TCEQ adopted its illegal policies and requiring that these entities resubmit their applications in accordance with the Federal CAA; and putting strongerrules in place in order to reduce global-warming emissions

### 20
and to make sure new laws and rules do not allow existing coal plants to continue polluting with global warming emissions.

The commenters further state that Texas: (1) Has more proposed coal and petroleum coke fired power plants than any other state in the nation; (2) Is number one in carbon emissions; and (3) Is on the list for the largest increase in emissions over the past five years. Strong rules are needed to make sure the coal industry is held responsible and that no permits are issued under TCEQ's illegal permitting process. Strong regulations
are vital to cleaning up the energy industry and putting Texas on a path to clean energy technology that boosts economic growth, createsjobs in Texas, and protects the air quality, health, and communities.

In addition, SCMS sent 273 similar letters (sent viae-mail) that contained additional comments that Texas should rely on wind power, solar energy, and natural gas
as clean alternatives to coal. Other comments expressed general concerns related to: impacts on global warming, lack ofcommitmentby TCEQ to protect air quality, the need for clean energy efficient growth, impacts upon human health, endangerment ofwildlife, impacts on creation offuture jobs in Texas, plus numerous other similar concerns.
Response: To the extent that the SCMS letters comment on the proposed disapproval ofthe Flexible Permits Program, they support EPA's action to disapprove the Flexible Permits submission. The remaining comments are outside the scope ofour proposed action relating to the Flexible Permits Program.

### 21

Comment 3: The Clinic comments that EPA should issue an immediate SIP call for Texas' failure to enforce the current SIP and should require those facilities operating under a Flexible Permit to apply for a SIP-approved permit.
Response: This final rulemaking only addresses the approvability ofthe Texas Flexible Permits Program as a SIP revision submittal. Therefore, comments related to other EPA action are outside the scope ofour proposed action relating to the Flexible Permits Program.

Comment

### 4: The ERCC comments that to avoid negative economic consequences EPA should exercise enforcement discretion statewide for sources that obtained government authorization in good faith and as required by TCEQ, the primary permitting authority. EPA should not require any injunctive reliefand should considerpenalty only
cases.
Response: EPA enforcement ofthe CAA in Texas is outside the scope ofour proposed action relating to the Flexible Permits Program.

Comment 5: TIP, BCCA, TAB, and TxOGA comment that the federal NSR SIP regulations recognize the importance ofproviding operational flexibility. In 1990, Congress added Title V to the CAA and it specifies that state Title V programs must includeprovisions to allow changes within a permitted facility without requiring apermit22 revision ifthe changes are not modifications under any provision ofTitle I ofthe Act and do not exceed the emissions allowable under the permit (whether expressed therein as a rate ofemissions or in terms oftotal emissions). See section 502(b)(l0) ofthe Act. In order to provide operational flexibility, EPA adopted 40 CFR 70.4(b)(l2) which requires that states establish Title V programs that allow three specific avenues to establish operational flexibility, including establishment offederally-enforceable emission caps in their Title V programs. See 40 CFR 70.4(b)(l2)(iii). EPA emphasized the importance of enabling plant sites to maintain operational flexibility in the preamble ofto 40 CFR part 70. See 57 FR 32250, at 32267 (July 21, 1992).


### Response: EPA acknowledges that the Title V federal programrequirements allow a state to provide for operational flexibility using the establishment offederally enforceable emissions caps. EPA, however, must review the submitted Program as a SIP revision submittal under Title I ofthe Act, not Title V. We are not disapproving the submitted Programbecause it provides for the establishment ofemissions caps. As discussed in the proposal and this final action, EPA is disapproving the submitted Program for inclusion in the Texas NSR SIP because it is not enforceable, does not include any replicable methodology for calculating the emissions caps, provides too broad director discretion regarding the monitoring, recordkeeping, and reporting (MRR) requirements, and lacks sufficient MRR requirements. The submitted Program fails to meet section 110 and parts C and D ofthe Act and the requirements of40 CFR part 51. As stated elsewhere in the proposal and throughout this final action, we have identified areas in which the submitted Program does not meet these statutory requirements. See 7423 FR 48480, at 48490,48491-48492, and 48492-48493; and sections IILD.3 and IV.C, for further information.

Comment 

### 6: BCCA, TIP, TAB, and TxOGA comment on several federal Flexibility Permitting rules in which EPA promotes permit flexibility. These include the following:
• Flexible Permit Pilot Study. EPA focused on the importance ofoperational flexibility in a decade-long Flexible Permit pilot study that included flexible emission cap permits in six states and found that flexible permits worked well and could be used to further both environmental protection and administrative flexibility. Both states and EPA recognized the need to respond rapidly to market signals and demand in today's increasingly global markets while delivering products faster, at lower cost, and ofequal or better quality than their competitors. EPA recognized that the flexible permits could reduce the administrative "friction" oftime, costs, delay, uncertainty, and risk associated with certain types ofoperational changes.

• Plantwide Applicability Limits (PALs). EPA recognized the advantages of emissions caps in permits in promulgating its NSR Reform in 1996 and 2002. These advantages include the ability to make changes an emissions cap that do not require apermit for each change so long as the plant's emissions do not exceed the cap rather than face piecemeal applicability decisions for each and

### 24
every contemplated change. EPA further noted environmental benefits that could result from PALs because sources participating in a cap-based program strive to create enough headroom for future expansion by voluntarily controlling emissions.

• EPA's Proposed Indian Country Rule. In the 2006 proposed rule for Indian Country, EPA recognized the importance offlexibility in air permitting programs. EPA intended this rule to be arepresentative template ofstate NSR programs that serve to provide operational flexibility while leveling the regulatory playing field.

• EPA's Flexible Air Permit Rule
.. In October 2009, EPA promulgated the federal Flexible Air Permitrule, which incorporated changes to the Title V rules that were intended to clarify and reaffirm opportunities for accessing operational flexibility under existing regulations. EPA recognized that state permitting authorities have discretion to pre-approve minor changes and reaffirms pre-existing authority for state to craftflexible air permits.
Response: EPA acknowledges that each ofthese cap-based permitting programs has resulted in, or has the potential to result in, increased operational flexibility and may enable the owner or operatorto make certain changes without the need to apply for and receive a permit for each individual change whenever the change does not result in emissions that exceed the cap. However, ofthe four identified programs, one was a pilot

### 25 study and one has not been finalized. The State did not submit the Flexible Permits Program for consideration by EPA as a PALs NSR SIP revision. Moreover, the submitted Flexible Permits Program does not meet the minimum requirements contained in the PALs NSR SIP regulations, which include procedures for establishing replicable emission caps, protecting the NAAQS and control strategies, and MRR requirements sufficient to ensure compliance with the terms and conditions ofthe permit that establishes the emissions cap. As we discussed in the proposal and now through this final action, the submitted Flexible Program does not meet the requirements for the establishment ofreplicable emissions caps and sufficient MRR requirements. The submitted Program has no specific, only general, requirements pertaining to MRR. Paragraph (c)(6) ofsubmitted 30 TAC 116.715 generally requires maintenance ofdata sufficientto demonstrate continuous compliance with emission caps and individual emission limits contained in the Flexible Permit. That is all. To contrast, the submitted Flexible Permit Program lacks the specific requirements ofanother cap-base program, the federal PAL SIP rule. The federal PAL SIP rule requires that the program require each PAL permit to contain enforceable requirements for the monitoring system that accurately determines plantwide emissions ofthe PAL pollutant in terms ofmass per unit oftime. The PAL SIP rule further provides that the monitoring system must be based upon sound science and meet generally acceptable scientific procedures for data quality and manipulation; and the information generated by such system must meet minimum legal requirements for admissibility in ajudicial proceeding to enforce the PAL permit. The SIP requirements for an approvable PAL monitoring system are the employment of
one or more ofthe following approaches: mass balance calculations for activities using

### 26 coatings or solvents, continuous emission monitoring system, predictive emission monitoring system, continuous parametermonitoring system, and emission factors, if approved by the reviewing authority. The PAL SIP rule provides the technical specifications for each ofthe allowable monitoring systems and provides replicable procedures for the approval ofany alternative monitoring system. See 40 CFR 51.165(f)(12) and 51.166(w)(12). The submitted Flexible Permit Program, in contrast, is generic concerning the types ofmonitoring that is required rather than identifying the

Iemployment ofspecific monitoring approaches, providing the technical specifications for each ofthe specific allowable monitoring systems, and requiring replicable procedures for the approval ofany alternative monitoring system. It also lacks the replicable procedures that are necessary to ensure that (1) adequate monitoring is required that would accurately determine emissions under the Flexible Permit cap, (2) the Program is based upon sound science and meets generally acceptable scientific procedures for data quality and manipulation; and (3) the information generated by such system meets minimum legal requirements for admissibility in ajudicial proceeding to enforce the Flexible Permit.

The federal Flexible Air Permit Rule, although it is not aNSR SIP program but a Title V program that provides for an alternative NSR SIP approach, is a cap programbut it too requires replicable methodologies and sufficientMRRrequirements. The submitted Program does not contain areplicable methodology for establishing the emissions cap and sufficient MRRrequirements. See 74 FR 48480, at 48490,48491- 48492, and 48492-48493; and sections III.D.3 and IV.C, for further information.27 Finally, see section III.D.3 (response to comment4) concerning MRR for the proposed Indian Country MinorNSR rule.

Comment 7: GCLC, TIP, BCCA, and TCC commentthat EPA ignores the fact that the Texas Flexible PermitProgram has had a significantimpact on improving air quality in Texas. TCEQ commented that significant emissionreductions have been achieved by the submitted Program through the large number ofparticipating grandfathered facilities, which resulted in improved air quality based upon the monitoring data.
BCCA, TAB, TxOGA, and ERCC commentthat the legal standard for evaluating a SIP revision for approval is whether the submittedrevision mitigates any efforts to attain compliance with a NAAQS. EPA's failure to assess the single most important factor in the submitted Program, the promotion ofcontinued air quality improvement, is inconsistent with case law and the Act and is a deviation from the SIP consistency process and national policy. EPA should perform a detailed analysis ofapproved SIP programs through the United States and initiate the SIP consistency process within EPA to ensure fairness to Texas industries.
Response: We are disapproving the submitted Programbecause it is not enforceable, it lacks an objective, replicable methodology for establishment ofthe emissions caps, it provides broad directordiscretion concerning whether or not to include a MRR condition in a Flexible Permit, lacks sufficientMRR requirements, is ambiguous28 regarding circumvention ofMajor NSR, and there is not sufficient informationto enable EPA to make a finding that the submitted Program will protect the NAAQS and control strategies. EPA is required to review a SIP revision submission for its compliance with the Act and EPA regulations. CAA llO(k)(3); See also BCCA Appeal Group v. EPA, 355 F 3d. 817,822 (5th Cir. 2003); NaturalResources Defense Council, Inc. v. Browner, 57 F.3d 1122, 1123 (D.C Cir. 1995). Also see section lILA (response to comment 6) for further information.

Even ifthe commenters' premises are to be accepted, they fail to substantiate their claim that the Texas Flexible Permit Program has had a significant impact on improving air quality in Texas by producing data showing that any such gains are directly attributable to the submitted Program, and are not attributable to the SIP-approved control strategies (both state and federal programs) or other federal and state programs. They provide no explanation or basis for how their numbers were derived. Moreover, since the submitted Program is not enforceable, claims ofemission reductions are not assured on a continuous basis.
EPA is not required to initiate the SIP consistency process within EPA unless the pending SIP revision appears to meet all the requirements ofthe Act and EPA's regulations but raises a novel issue. EPA is disapproving the submitted Program because it fails to meet the Act and EPA's regulations. Because the submitted Program fails to meet the requirements for a SIP revision, the SIP consistency process is not relevant.29 Furthermore, since the commenters thought EPA was acting inconsistently, they should have identified SIPs that are inconsistent with our actions and provided technical, factual information, not bare assertions.

Comment 

### 8 : BCCA and ERCC commentthat the concepts embedded in the Program have beenpart ofthe Title V, NSR, and PAL programs for many years and were upheld as consistent with the CleanAir Act by the U.S. Supreme Court in Chevron v. NRDC, 467 S.C. 837 (June 25,1984). Texas' Program is actually more stringentthan EPA's interpretation ofthe NSRprogram upheld by the Supreme Court.
Response: The US Supreme Court found, in the cited case, that the pertinent legislative history was silent on the precise issue ofthe bubble concept as it related to what constituted a major stationary source and found that EPA should have wide discretion in implementing the policies ofthe 1977 amendments. Id at 862. This opinion is not relevantto EPA's grounds for disapproving the submitted Program. Not only is it not relevant but none ofthe concepts cited by the commenters was before the Court in Chevron. EPA's disapproval is not based on aperse finding that a preconstruction program based on emissions caps is unacceptable or more or less stringent than the SIP requirements. We are disapproving the submitted Program because it is not enforceable, it lacks a replicable methodology for establishment ofthe emissions caps, it provides broad director discretion concerning whether or not to include a MRR condition in a Flexible Permit, lacks sufficient MRR requirements, and there is not sufficient information to enable EPA to make a finding that the submitted Program will protect the30 NAAQS and control strategies. See section lILA (response to comment 6) for further information.

B. Whether the Flexible Permits Program is Clearly a Minor, not a Major, NSR SIP Revision

Comment 1: TCEQ comments that though it has always considered the Flexible Permit Program to be a Minor NSR program, this fact is not specifically stated in the rule. TCEQ, nevertheless, asserts that its implementation ofthe Program includes areview process that always determines the applicability offederal Major NSR, as well as any other Federal and State requirements. The TCEQ states that it understands EPA's
concerns regarding, among other things, applicability, clarity, enforceability, replicable procedures, recordkeeping, and compliance assurance.
Response: We acknowledge TCEQ's description that it intends to implementthe submitted Program in such a mannerthat the submitted Flexible Permit Program does not supersede the duty to comply with the Texas Major NSR SIP. In contrastto the submitted Program, however, in its MinorNSR SIP for Permits by Rule and Standard Permits, TCEQ included additional regulatory language that explicitlyprohibits the use ofthe Permits by Rule alternative permitprogram and the Standard Permits alternative permit program from being used for major stationary sources and major modifications31 and explicitlyprohibits circumvention ofthe MajorNSR requirements. I Specifically, the Standard Permits and Permits by Rule NSR SIP rules explicitly require a MajorNSR applicability determination at 30 TAC 116.61O(b) and 30 TAC 106.4(a)(3). In each, the State specifically expressed its intention to require aMajorNSR applicability determination. The Flexible Permits Program is also an alternative permit program. If the State wishes for it to be considered as solely a MinorNSR SIP revision submittal, the TCEQ should have included express language stating that it explicitly prohibits the use of the Flexible Permit Program from being used for major stationary sources and major modifications and explicitly prohibits circumvention ofthe Major NSR requirements, as it did in the two otherMinor NSR alternative permit options. This submitted Program lacks such language. While the inclusion ofsuch specific language is not ordinarily a minimumNSR SIP program element, we conclude that the inconsistenttreatment betweenthe similartypes ofNSRprograms creates the potential for an unacceptable ambiguity about apermitholder's obligations to continue to comply with the Major NSR requirements.

EPA reviews a SIP revision submission for its compliance with the Act and EPA regulations. CAA 11O(k)(3). See also BCCA Appeal Group v. EPA, 355 F 3d. 817, 822 (5th Cir. 2003); Natural Resources Defense Council, Inc. v. Browner, 57 F.3d 1122, 1123 (D.C. Cir. 1995). This includes an analysis ofthe submittedregulations fortheir legal

1 Although the Texas Minor NSR SIP rules for Permits by Rule and Standard Permits remain acceptable for a MinorNSR SIP revision, EPA is conducting a review ofeach individual Permit by Rule and/or Standard Permit, EPA is conducting this review to ensure thatthe TCEQ is implementing the SIP appropriately and that each such individual Minor NSR SIP permit protects the NAAQS and control strategies and is enforceable.32 interpretation. The Program's rules are ambiguous and therefore unapprovable. See 74 FR 48480, at 48485-48487 for further information.

Comment 2: TCC notes that 30 TAC 116.711 identifies the use ofFlexible Permits as only a Minor NSR option and concludes that TCEQ's rules therefore do not intend for the Flexible Permits Programto be an equivalentto a Major NSRprogram.
Response: We disagree that 30 TAC 116.711 identifies the use ofFlexible Permits as only a Minor NSR permitting option. Contrary to commenter's assertion, this rule merely replicates certain general permitting requirements that are also commonto Subchapter B, that also apply to all Texas Major and Minor NSR SIP permits. There are
no requirements or terms in 30 TAC 116.711 that expressly identify use ofFlexible Permits as only a Minor NSR option. As noted above in section 

### III.B (response to comment 1), the TCEQ should have included express additional regulatory language prohibiting the use ofthe submitted Program for MajorNSR and explicitly prohibiting circumvention ofthe Major NSRrequirements, as it did in the two other Minor NSR SIP alternative permit options.

### 33 C. Whether the Flexible Permits Program Meets the Requirementsfor a Substitute Major NSR SIP Revision

1. General Comment on whether the Program is a Substitute Major NSR SIP Revision

Comment: TCEQ comments that it did not view the Flexible Permit Program as a substitute Major NSR SIP revision when it adopted it nor does it wish for it to be considered as a SIPrevision submittal for a substitute Major NSR SIP revision. It has always viewed the Program as a Minor NSRprogram. In its implementation ofthe Program, TCEQ comments that it requires a federal applicability demonstration but acknowledges that the submitted Program's rules are not clear on this point. TCEQ states that it will confirm through upcoming rulemaking and SIP revision that the Program is not a substitute Major NSR SIP revision.
Response: EPA appreciates TCEQ's statement that it does not view its Flexible PermitProgram as a substitute Major NSR SIP revision submittal. However, EPA must review the content ofthe Program as submitted for inclusion into the Texas SIP. The submitted Program is ambiguous when compared to the regulatory structure ofexisting similarTexas Minor NSR SIP programs, as it contains no express provisionthat clearly limits the Program to Minor NSR and no explicitprovision that prohibits circumvention ofthe Major NSR SIP requirements. See 74 FR 48480, at 48488 and section III.B (response to comment 1) ofthis notice for further information.34 2. Requirements for MajorNSR Applicability Determinations

Comment 1: Although TCEQ comments that the Flexible PermitProgram requires that the applicability ofMajor NSR requirements be evaluated prior to considering whether the new construction or modification can be authorized under a Flexible Permit, TCEQ also comments that it understands EPA's concerns with issues regarding Major NSR applicability vis a vis the submitted Program, based upon the application oftoday's legal requirements. TCEQ undertakes to considerrulemaking to ensure MajorNSR applicability requirements are included in Flexible Permit reviews, and that the requirements ofthe appropriate Major NSRpermitting program are met when triggered.
Response: EPA appreciates TCEQ's understanding that the Program lacks clarity on the issue ofthe applicability ofMajorNSR requirements and that the State plans to revise its rules to ensure it is clear that the MajorNSR applicability determination requirements are required before one can use the Program, and that the requirements of the appropriate MajorNSRpermitting program are met when triggered. Nonetheless, EPA must review the content ofthe Program as submitted for inclusion into the Texas SIP. The submitted Program's regulations do not contain any emission limitations, applicability statement, or regulatory provision restricting the construction or change to MinorNSR as was included in the SIP rules for Standard Permits and Permits by Rule. See section III.B (response to comment 1) for additional information.

Comment 2: TAB, TxOGA, TIP, and BCCA comment that there are safeguards in the Texas Flexible Permitrules at 30 TAC 116.711(1), (8), (9), 116.718, and 116.720 that

### 35 constrain regulated community from making major changes without complying with Major NSR requirements.
Response: The regulations cited by the commenters do not explicitly require sources to comply with the Major NSR rules. 30 TAC 116.711(1) provides for protection ofpublic health and welfare and does not address applicability ofMajor NSR. 30 TAC 116.711(8) and (9) generally require compliance with all applicable requirements for nonattainment and PSD review within that Chapter ofthe rules. Despite commenters contentions there are no express terms or requirements within the cited rules that compel a Major NSR applicability determination. The cited regulations do not contain any emission limitations, applicability statement, or regulatory provision restricting the construction or change to Minor NSR or clearly prohibiting circumvention ofMajor NSR, as was included in the SIP rules for Standard Permits and Permits by Rule. The absence ofsuch provisions in the submitted Flexible Permit rules creates an unacceptable ambiguity. 30 TAC 116.718 and 116.720 do not address Major NSR. See section III.B (response to comment 1) for additional information.

Comment 3: ERCC comments that the concepts embedded in the Flexible Permit Program have been a part ofthe NSR program for many years and are well-settled law. The fact that the emission rates used in the calculation ofthe cap(s) are reflected in a "bubble" permit is ofno consequence and is consistent with applicable statutory and regulatory requirements under the Clean Air Act.36 The submitted Program explicitly requires any new source or major modification that is applying for a Flexible Permit to go through MajorNSR review and ifnecessary, have the Flexible Permit altered.
Response: EPA disagrees with these comments. First, the submitted Program has not been a part ofthe Texas NSR SIP "for many years." Therefore, it is not "well-settled law." Furthermore, any source operating under a Flexible Permit risks potential federal enforcement action. Second, it is being disapproved today because ofnot meeting the federal NSR SIP requirements, not because it embeds the concepts ofa cap program. The commenter's comments are also at odds with TCEQ's comments. TCEQ comments that its Program is intended to be a MinorNSR SIP program only and not intended to address MajorNSR SIP requirements. In contrast, the commenter describes the submitted Program as covering majormodifications and having a Flexible Permit (not a MajorNSR SIP permit) altered to reflectthe MajorNSR review. TCEQ disputes this concept in its comments. See our response to TCEQ's comments section III.C.3 (response to comment I).

3. Circumvention ofMajor NSR

Comment 1: TCEQ comments that it understands EPA concerns regarding the "the lack ofspecificity" in its rules but maintains that the Program does**n~t** circumvent Federal Rules. TCEQ maintains that its implementation ofthe submitted rules includes federal applicability review that includes determination ofactual rates, project emission37 increases, and net emission increases. It also includes BACT analysis to establish the cap, NAAQS and increment analysis ifPSD is triggered; and LAER and offsets if Nonattainment Review is triggered. TCEQ states that its implementation also includes a Federal Major NSR Review which is conducted parallel with the Minor NSR Review and TCEQ does not allow applicant to use Flexible Permits to circumvent Major NSR. TCEQ plans to confirm EPA's concerns in future rulemaking.
Response: EPA appreciates TCEQ's understanding ofits concerns regarding the "lack ofspecificity." While it is commendable that TCEQ may implement the Program in a manner consistent with the Federal Major NSR requirements, we cannot approve the Program as submitted. See CAA 110(k)(3). See also BCCA Appeal Group v. EPA, 355 F 3d. 817, 822 (5th Cir. 2003); Natural Resources Defense Council, Inc. v. Browner, 57 F.3d 1122, 1123 (D.C. Cir. 1995). Moreover, relying upon an agency to continue to implement aprogram consistently with the federal requirements even though not constrainedto do so by its rules, makes EPA, the agency, industry, and the public vulnerable to the agency's unfettered discretion to change how it implements its program.
In this instance, there is no express provision in the submitted Subchapter G similarto the Minor NSR SIP provisions for Minor NSR SIP Permits by Rule and Standard Permits that prohibit circumvention ofthe Major NSRrequirements. Both the SIP-codifiedrules for Permits by Rule and the SIP-codifiedrules for Standard Permits contain clear regulatory provisions prohibiting the use ofthese MinorNSR permits from circumventing Major NSR. There are no regulatoryprovisions prohibiting circumvention38 ofMajor NSR in the submitted Chapter 116, Subchapter G, for Flexible Permits. See 74 FR 48480, at 48488 and section III.B (response to comment 1) for further information. The BACT analysis that TCEQ references for establishing the cap upon a plain reading of the rules and the associated Texas Registers means the Texas Minor NSR SIP BACT requirement, not the PSD Major NSR SIP BACT requirement. The failure to distinguish in the Program's rules that it is Minor NSR SIP BACT that is used to create the cap contributes to the confusion ofthe reach ofthe Program.

Comment2: TCC and ERCC commentthat the Flexible PermitProgram does not circumventMajor NSR review. The Program is explicitin that any new major stationary
source or major modification must go through Major NSR and the Flexible Permitmust be altered. See 30 TAC 116.805. Moreover, the Flexible Permits employ two emissions cap, an initial cap and a final cap, which combine to ensure that the MajorNSR permitting requirements are not circumvented.
Response: EPA disagrees with commenters. Unlike the Texas Minor NSR SIP rules for Permits by Rule and Standard Permits, the submitted Program's regulations do not contain any express regulatory provisionthat prohibits circumvention ofthe Major NSR requirements. This lack ofsuch express provisions distinguishes the Flexible PermitProgram and contributes to its nonapprovability. See 74 FR 48480, at 48488, and section III.B (response to comment 1) ofthis notice. Furthermore, the referenced 30 TAC 116.805 does not add an explicitrequirement to the submitted Program. Rather, it39 applies to a separate class ofExisting Facility Flexible Permits that is severable from the Flexible Permits Program.

4. Use ofAllowable Emissions in Major NSR

Comment: TCC, TAB, and TxOGA comment that when TCEQ is evaluating emissions increases on a project level, the Program requires the use ofactual baseline emissions to determine whether aproject will result in an increase that triggers Major NSR applicability. TCC further states that the application ofBACT to facilities subject to the emission cap results in an allowable that is lower than the pre-change actual emissions.
Response: As noted above in the preceding response, EPA must evaluate the submitted Program based upon the content ofthe regulations and associated record that have been submitted and are currently before EPA for appropriate approval or disapproval action. The commenters are not clear whether they are referring to PSD BACT or the Texas MinorNSR SIP BACT. This lack ofspecificity by industry contributes to EPA's concerns about whether the submitted Program is clearly limited to MinorNSR. We recognize that the application ofeither type ofBACT to facilities subject to the emission cap could result in allowable emissions that are lower than the pre-change actual emissions at the initial issuance ofa Flexible Permit. However, the commenterprovided no information to show a comparison ofactual emission to potential to emit for changes that occur after the Flexible Permit is issued to evaluate that the net40 emission increase is based upon changes from baseline actual to eitherprojected actual emissions or potential to emit. In such case, the baseline actual emissions resulting from such proposed change must be established as provided under applicable federal requirements. See 40 CFR 51. 165(a)(2)(ii) and (a)(l)(vi)(A)(2) and 51. 166(a)(7)(iv)(c)- (d) and (b)(3)(i)(b). Accordingly, there are no provisions in the Program that require the
use ofactual baseline emissions to determine whether aproject will result in an increase that triggers MajorNSR applicability. See 74 FR 48480, at 48489-48490, for further information.

5. Retention ofMajorNSR Permit Terms and Conditions

Comment: TAB, ERCC, and TxOGA commentthat the submitted Program requires that conditions ofan existing PSD or Nonattainmentpermitbe carried forward into a Flexible Permit. The submitted Program does not "void" the pre-existing Major NSR SIP permits.
Response: The submitted Program does not explicitly provide that the holder ofa Flexible Permit still be required to continue to comply with all ofthe terrns and conditions in the pre-existing MajorNSR SIP permits. Federal NSR SIP regulations do not provide for ablanket elimination ofemission limits at individual units. The submitted Program does not assure the retention ofthe pre-existing MajorNSR SIP permits' terms and conditions.

### 41
EPA's long-held position is that permits issued under federally approved PSD, NNSR, and MinorNSR SIP programs must remain in effect because they are the legal mechanism through which the underlying NSR requirements (from the Act, federal regulations, and federally approved SIP regulations) become applicable, and remain applicable, to individual sources. NSR programs enable the relevantpermitting authority to impose source-specific NSR terms and conditions in legally enforceable permits, and provide states, EPA, and citizens with the authority to enforce these permits, SIPapproved permits impose continual operational requirements and restrictions upon a source's air pollution activities and, accordingly, may not expire so long as the source operates.i

The lack ofenforceability and adequacy ofthe MRRrequirements in the submitted Program contributes to EPA's concern thatnot all ofthe conditions ofa PSD
or NNSR SIP permit existing before the issuance ofa Flexible Permit were carried forward into the Flexible Permit fully and completely. See section lILA (response to comment 6) for further 

### information, The submitted Program does not meet the requirements ofsection 11O(a)(2)(A) - (C) ofthe Act, which requires that SIP revision submittals be enforceable. Section 116.711(2) ofthe submitted Programprovides that emissions will be measured "as determined by the executive director." This broad discretion lacks accountability, replicability and fails to provide for a full evaluation of the enforceability ofpermits issued under the Program. We are concerned with the broad director discretion whether to include MRRrequirements in a Flexible Permit and the

2 See EPA Letter from John Seitz, Director, Office ofAir Quality Planning and Standards, to Robert Hodanbosi and Charles Lagges, STAPPN ALAPCO, dated May 20, 1999.

### 42
lack ofadequacy ofthe MRRrequirements in the submitted Program.' EPA has interpreted the Act's requirements for enforceability as specifying that SIP revision submittals must "specify clear, unambiguous, and measurable requirements." See 57 FR at 13567. There must be legal means in a SIP revision for ensuring compliance when conditions ofan existing PSD orNonattainmentpermit are carried forward in a Flexible Permit. The submitted Program does not contain sufficient enforceable means. This submitted Program is an intricate program, thus to be approved as a Major (as well as a Minor) NSR SIP revision, it requires detailed MRRrequirements in order to ensure, among other things, that aprojecttriggering the MajorNSR SIP requirements is covered under MajorNSR or there are adequate means for ensuring compliance ofeach affected entity.

Without clear, objective, requirements in the submitted Program for retaining and distinguishing the Flexible Permits terms and conditions from the Texas Major NSR SIP permits terms and conditions, the submitted Program lacks clear, unambiguous, and measurable requirements necessary for approval as a SIP revision. The submitted Program does not ensure the retention ofthe pre-existing Major NSR SIP permits' terms and conditions.

3 EPA's letter ofMarch 12,2008, on pages 12 to 13 ofthe Enclosure provides some examples of, and concepts on how to establish replicable recordkeeping, reporting, tracking, and monitoring requirements up-front in a NSR program without requiring every director discretion decision to be adopted and submitted to EPA for approval as a source-specific SIP revision.

### 43
6. Protection ofthe NAAQS Attainment under MajorNSR

Comment: The Clinic comments that the Program represents a relaxation ofthe current SIP and is inadequate to assure protection ofthe NAAQS, increments, and control strategies.
Response: Withoutthe required demonstration from the State showing how the customized MajorNSR SIP revision is in fact as stringent as EPA's Major NSRrevised program and without, among other things, an objective, replicable methodology for establishing the emission cap, the too broad directordiscretion provision for whether or not to include MRR conditions in a Flexible Permit, the lack ofsufficientMRR requirements for this type ofpermitprogram, and the lack ofenforceability ofthe submitted Program, EPA lacks sufficient information to make a finding that the submitted Program, as a substitute for a MajorNSR SIP program, will ensure protection ofthe NAAQS, and noninterference with the Texas SIP control strategies and RFP, as required by section 110(1) ofthe Act. See section lILA (response to comment 6) for further information.

### 44
D. Whether the Flexible Permits Program Meets the Requirementsfor a Minor NSR SIP Revision

1. Applicability for aMinorNSR Program

Comment 

### 1: The Clinic comments that the Flexible Permitrules do not include adequate provisions for ensuring that changes that should trigger MajorNSR are subject to technology and air quality analysis requirements.
Response: EPA agrees with this comment. See section III.B (responses to comments 1 and 2), section III.C.1 (response to comment), and section III.Co2 (responses to comments 1,2, and 3), and section III.C.3 (responses to comments 1 and 2) for further information.

Comment 2: TCC comments that the Flexible Permit authorization method used at a source does not exempt any facilities located at a source from Major NSR permitting requirements. Ifa source has a Flexible Permitthat does not contain all the facilities located at that source and a project within the Flexible Permittriggers netting, all facilities (under the cap and outside the cap) at the source are evaluatedto determine whether a net significant emissions increase at the source has occurred. Ifa resulting net emissions increase is significant, Major NSR is triggered.

### 45 Response: We disagree with this comment. See section IILD.l (response to comment 1, above) for further information.

Comment

### 3: TIP, BCCA, and TCC commentthat TCEQ rules provide two separate "modification" definitions. The first is at 30 TAC 116.12(18) for Major NSR applicability. The second is at 30 TAC 116.1O(11) for MinorNSR sources and does not limit its scope to federally regulatedpollutants. EPA applies the term "modification" differently in the Minor NSR context and the Major NSR context. Therefore, it also is within Texas's discretionto define the term differently for purposes ofMinor NSR. Citing the EAB in In re Tennessee ValleyAuthority, 9 EAD 357,461(EAB Sept. 15, 2000) commenters maintainthat Texas has the discretion to define the term differently for purposes ofMinor NSR.
Response: EPA acknowledges that that TCEQ defines the term "modification" differently for Major NSR and for MinorNSR. However, the submitted Program does not specifically state which definition ofmodification it uses the one for Major NSR or the one for Minor NSR. This contributes to making the submitted Program not clearon its face that the Major NSR applicability requirements must be evaluated and met when triggered and that the State is required under its submitted Program to apply the Major NSR applicability concepts during the technical review ofa Flexible Permit. Therefore based upon the ambiguities in the Program's rules, we disagree that the Flexible Permit Program is exclusively a Minor NSRprogram. EPA is required to review a SIP revision submission for its compliance with the Act and EPA regulations. This includes an

### 46 analysis ofthe submitted regulations for their legal interpretation. The Program's rules
are ambiguous and therefore do not adequately prohibituse under Major NSR. See section III.B (response to comment 1) for further information.

2. Establishment ofthe Emission Cap under Minor NSR

Comment: TIP and BCCA commentthat the submitted Program's rules do contain an established and replicable method for determining an emissions cap. TAB and TxOGA commentthat EPA provides no example ofany unsuccessful attempt to replicate
an emission cap using the currentTCEQ rules. TAB and TxOGA commentthat the submitted Program requires that each Flexible Permit establish a cap by simple summation ofBACT emission rates. Each Flexible Permit involves the summing of BACT emissionrates. While BACT determinations may vary between specific types of sources, the use offederal and state BACT guidance results in areplicable procedure for establishing caps. In addition, the authorization under a Flexible Permit has no effect on
sources or pollutants not covered in the Flexible Permit for aparticular site. Both sources and emissions that are not incorporated into a Flexible Permitare subjectto whatever rules or authorizations are in effect or should be applied to those emissions. An applicant for a Flexible Permit is required to meet BACT standards as applicable to all facilities individually contributing to an emission cap. In addition to an emission cap, a Flexible Permitmay also impose individual emission limits where necessary to ensure satisfaction ofoffsite screening levels ofhazardous air pollutants or NAAQS for criteria pollutants, or to preventviolation ofany federal permitting requirement.47

Response: The proper scope ofreview for this SIP revision submittal does not include areview ofthe State's individually issued Flexible Permits to determine whether there are replicable caps in each permit. Instead, EPA's review is focused on the structure ofthe submitted Program, ensuring that it includes legally sufficient objective and replicable criteriafor establishment ofthe cap in each Flexible Permit and information submitted by the state to demonstrate that the program meets the requirements ofthe Act. Review based on the submittal, rather than improper implementation, is necessary to ensure that as structured the submitted Program does not interfere with NAAQS attainment, the Texas SIP control strategies, and RFP, and is enforceable pursuant to section 11O(a) (2)(A)-(C) ofthe Act. The September 23, 1987, Memorandum from J. Craig Potter, Assistant Administrator for Air and Radiation, and Thomas L. Adams Jr., Assistant Administrator for Enforcement and Compliance Monitoring, entitled "Review ofState Implementation Plans and Revisions for Enforceability and Legal Sufficiency" provides EPA's guidance for interpreting this provision in the Act. A copy ofthis document is in the docket at document ID EPA-R06- OAR-2005-TX-0032-0022.4 See also the "General Preamble for the Implementation of Title I ofthe Clean Air Act Amendments of 1990," (GP) 57 FR 13498 at page 13556 (April 10, 1992).

The submitted Program establishes a cap in a Flexible Permitthat is a summation ofBACT requirements (or a more stringentrequirement ifapplicable). The submitted

4 You can access this document directly at: http://www.regulations.gov/search/Regs/home.html#documentDetail?R=0900006480a2bccd.48 rules are not clear as to how the State does the summation. Even the State fails in its comment letter to clarify whether the cap includes the summation ofnot only the minor stationary sources and minor modifications but also the major stationary sources' and major modifications' emissions limitations. This failure to clarify the methodology for the establishment ofthe cap contributes to the ambiguity ofthe submitted Program. Specific, objective, and replicable criteria are to be set forth for determining the emissions cap.

The commenter states that ifa source or emissions are not covered under a Flexible Permit, then they are subject to whatever rules or authorizations are in effect or should be applied to those emissions. EPA is however concerned that it is not clear which facilities are coveredby a Flexible Permit. The submitted Program does not clearly delineate which emissions are covered by a Flexible Permit. EPA proposed disapproval because the submittal lacks specific, established, replicable procedures providing available means to determine independently how the source or the State will calculate an emission cap; determine the coverage ofa Flexible Permit; establish individual emissions limitations for each site, a facility on the site, a group ofunits on the site; or for one pollutantbut not another. Without a clearly defined replicable process for determining what the process is, and how the emission cap is adjusted for the addition of new facilities, the public and EPA cannot independently calculate an emission cap and reach the same conclusions as the State. Therefore, the submitted Program is unapprovable. This conclusion was reached based on our review ofthe submitted Programpursuantto the CAA.49

3. Enforceability ofa Minor NSR Program

Comment 1: TCEQ comments that althoughthe submitted rules do not specify special conditions that ensure recordkeeping, reporting, and testing to assure compliance with the Flexible Permit, the State issues Flexible Permits containing special conditions requiring periodic stack testing, continuous emissions monitoring, and other parametric monitoring requirements, along with recordkeeping requirements to ensure compliance with the Flexible Permit cap and BACT. Because ofthe wide variety ofindustrial source types, TCEQ has carefully drafted its rules to ensure it has the ability to adequately implement specific and detailed MRRrequirements. TCEQ will address EPA concerns in a forthcoming rulemaking and SIP revision.
Response: Although TCEQ plans in a future rulemaking action to add specific conditions as part ofthe Programto address MRRrequirements, the submitted Program lacks these requirements. See section lILA (response to comment 6) for further information. EPA must evaluate the Program based uponthe content ofthe regulations and associated record that have been submitted and are currently before EPA for appropriate approval or disapproval action. Any SIP revision must have adequate recordkeeping, reporting, testing, and monitoring requirements to assure there can be compliance with the submitted plan and ensure that the plan is enforceable, as well as ensure that each affected entity can be easily identified and that there are means to determine its compliance. See New York 1,413 F.3d at 33-36. There is further discussion

### 50 in the General Preamble about EPA's interpretation ofthe Act's requirements for enforceability and that submitted rules must "specify clear, unambiguous, and measurable requirements." See the GP 57 FR 13498 at page 13567.

Comment 2: The City ofHouston states that it has long opposed the use of Flexible Permits. Quoting its comments on TCEQ's proposed renewal ofthe Flexible Permit issued to a refinery in Houston, it states that "[t]he permit terms violate federal law and are not federally enforceable. This refinery (and others) could have sought other SIP-approvedpermitting." The City ofHouston also noted that the structure ofthe Flexible Permit Program fails to assure compliance with the Major NSRrequirements and that these Flexible Permits are essentially unenforceable. The City ofHouston strongly supports the EPA's decision to seek the changes necessary in the Flexible Permit Program to make it federally enforceable, consistent with the CAA and ensure that emissions are controlled and reduced from the state's largest sources ofpollutants.
Response: EPA agrees with these comments. Texas has opted for aprogram that allows the permitholder to select which new facilities and/or new modifications to include under the umbrellaofa Flexible Permit. The submitted Program fails to provide clear criteriafor determining what type ofMRRrequirements are needed and furthermore leaves the choice to the director, including whetherto include any MRR requirements in
a Flexible Permit. See section lILA (response to comment 6) for further information. Without the appropriate specialized MRRrequirements, it is generally impractical to determine for instance, which emission points are covered, which modifications of

### 51 existing non-covered emission points are covered, etc. Texas also chose to allow both a cap and an individual emission limitation to apply to selected units, orjustthe cap, orjust the individual emission limitation. Without the appropriate MRRrequirements, it is generally impractical to determine ifa covered unit is subject to the cap or an individual emission limitation, ifa unit is subjectto both the cap and a limitation, or whether a cap
or a limitation applies at whattime. Further, there can be existing units on the site not covered under the Flexible Permitcap that may be modified, and use the provisions ofthe Flexible Permit Program for the modification. Without replicable implementation procedures for establishing the emission cap and sufficientMRRrequirements, EPA cannot find that the submitted Program is enforceable, as required by section 110(a)(2) (A) and (C) ofthe Act. See 74 FR 48480, at 48492.

The submitted Program lacks provisions explicitly addressing the type ofMRR requirements that are necessary to ensure that all ofthe movement ofemissions between the emission points, units, facilities, plants, etc., still meet the cap for the pollutant, still meet the individual emissions limitations, and still meet any other applicable state or federal requirement. In addition, there are no limits on the types ofsources that can be included in the cap. It is also difficult to quantify emissions from some units, such as tanks, fugitive emissions from leaking valves, or wastewater emissions points that can be included in a Flexible Permitunder this Program.

Without specialized MRRrequirements, it is difficult for EPA or the public to determine which units are covered by a Flexible Permit, which modifications to non-52 covered units are covered by a Flexible Permit, whether a coveredunit is subject to the emission cap or an individual emission limitation, whether a unit is subject to both the cap and a limitation, or whether a cap or a limitation applies and at what time.

Comment 3: TIP, BCCA, TAB, and TxOGA commentthat the submitted Program contains comprehensive and stringentprovisions for monitoring, recordkeeping, and reporting. These are more than adequate to ensure compliance on the part ofpermit holders, enforceability by TCEQ, and protection ofpublic health. See 30 TAC 116.715(c). They require the regulated community to monitor and submit information sufficient to safeguard environmental quality.
Response: EPA disagrees with commenters. The commenters failed to point to any such specific provisions. The submitted Program lacks adequate program requirements for the tracking ofexisting SIP permits' major and minor NSRterms, limits and conditions, and whether such requirements are incorporated into a Flexible Permit or they remain outside the coverage ofthe Flexible Permit. Minor and MajorNSRpermits, as well as Minor NSR SIP Permits by Rule and Standard Permits, can be incorporated into a Flexible Permit without any program requirement in place that ensures the SIP permits' terms and conditions are included in the Flexible Permit. EPA finds that there are not sufficientprovisions requiring the holder ofa Flexible Pennit to maintain recordkeeping sufficientto ensure that all terms and conditions ofexisting permits (including representations in the applications for such permits) that are incorporated into the Flexible Pennitcontinue to be met. Paragraph (c)(6) ofsubmitted 30 TAC 116.715

### 53 generally requires maintenance ofdata sufficientto demonstrate continuous compliance with emission caps and individual emission limits contained in the Flexible Permit but lacks the necessary specificity and replicability needed to ensure the enforceability ofthe submitted Program and the protection ofthe NAAQS and control strategies. See section Ill.A (response to comment 6) for further information.

Comment4: TIP, BCCA, TAB, and TxOGA note that TCEQ also may impose additional recordkeeping requirements appropriate for a specific source covered by a Flexible Permit. The submitted Program's rules contemplate that additional recordkeeping requirements may be tailoredto the type ofsource covered by a Flexible Permit. TIP comments that the submitted Flexible Permits rules are as stringent as EPA's proposed Indian Country MinorNSRrules. This commenter claims that with respect to emission events and maintenance, startup, and shutdown emissions (SSM), the submitted rules go far beyond federal benchmarks because they require compliance with 30 TAC 101.201 and 101.211. Section 101.201 includes record-keeping requirements to report all reportable and non-reportable emissions events withintwo weeks, which in the view of this commenter is more stringentthan the "prompt" reporting requirement ofthe proposed Indian Country counterpart. Again citing Section 101.201, commenter claims the record retention requirements ofthe submitted Program for records ofreportable and non-reportable emissions events are similar to their proposed Indian Country counterparts.54 Response: EPA disagrees with this comment. Commenters' reliance upon the Texas rules for malfunction emissions and maintenance, startup, and shutdown emissions is misplaced. Section 101.201 concerns Emissions Event Reporting and Recordkeeping Requirements; and Section 101.211 concerns Scheduled Maintenance, Startup, Shutdown Reporting and Recordkeeping Requirements. These two referenced sections concern emission events that are a subset ofthe universe ofair emissions. Emission events are unauthorized emissions by nature. See 30 TAC 101.1(28). Malfunction related emissions are those unauthorized emissions that result from a sudden and unavoidable breakdown ofprocess or control equipment.5
EPA agrees that the submitted Program's rules contemplate that additional recordkeeping requirements may be required (at the discretion ofthe director). Yet as EPA noted in the proposal, the submitted Program is an intricate program and therefore, for approvability as a Major or Minor NSR SIP revision, there is a greater need for detailed MRR requirements to ensure, among otherthings, there are adequate means for ensuring compliance by each holderofa Flexible Permit. Without detailed MRR requirements, the program is unenforceable. The MRR requirements are needed additionally to ensure that the issuance ofthe Flexible Permits does not cause or contribute to aNAAQS violation, violate the Texas control strategy, or violate any other CAA requirement. See 74 FR 48480, at 48490. The submitted Program lacks provisions

5 See Footnote 1 ofthe Attachmentto the Memo entitled "State Implementation Plans: Policy Regarding Excess Emissions During Malfunctions, Startup, and Shutdown" (September 1999 Policy) from Steve Herman and Robert Perciasepe. You can access this document at: http://epa.gov/ttn/oarpg/t5/memoranda/exemmpol092099.pdf.

### 55 explicitly addressing the type ofMRR requirements that are necessary to ensure that all ofthe movement ofemissions between the emission points, units, facilities, plants, etc., still meet the cap for the pollutant, still meet the individual emissions limitations, and still meet any other applicable state or federal requirement. In addition, there are no limits on the types ofsources that can be included in the cap. It is also difficult to quantify emissions from some units, such as tanks, fugitive emissions from leaking valves, or wastewater emissions points that can be included in a Flexible Permit under this Program. The underpinnings ofthe submitted Program are so complex as to necessitate more detailed MRRrequirements to ensure that the emission cap and/or individual emissions limitations in the issued Flexible Permits are enforceable.
Without the appropriate specialized MRR requirements, it is generally impractical to determine for instance, which emission points are covered, which modifications of existing non-covered emission points are covered, etc. See section III.D.3 (response to comment 2) for further information.

Commenter's comparison ofthe submitted Program to EPA's proposed Indian Country Minor NSRrules is misplaced in the context ofthis action. As an initial point,
we clearly stated in the proposed rule that we did not intend for this regulation ofnational scope to serve as a model or comparison for development ofState Minor NSRprograms. See 71 FR 48695, at 48700 (August 21, 2006). EPA regulations require that it review a Minor NSR SIP revision to determine ifa plan includes "legally enforceable procedures" that enable the permitting agency to determine whether a minor source will cause or56 contribute to violations ofapplicable portions ofthe control strategy, 40 CFR 51.160(a)(1), or "interference with a national ambient air quality standard," 40 CFR 51.160(a)(2), and to prevent the source from doing so, 40 CFR 51.160(b).

We believe the reporting requirements we proposed for the Indian Country Minor NSR rules will ensure protection ofthe NAAQS and control strategy. Moreover, the standard ofreview in this instance is not a comparison between the MRRprovisions in the submitted Program and any MRRprovisions in the proposed Indian Country Minor NSRrules but a determination whether the submitted Program has sufficientlegally enforceable procedures that enable the permitting agency to determine whether a minor source will cause or contribute to violations ofapplicable portions ofthe control strategy. As stated above, the submitted Program lacks provisions explicitly addressing the type of MRRrequirements that are necessary to ensure that all ofthe movement ofemissions between the emission points, units, facilities, plants, etc., still meet the cap for the pollutant, still meet the individual emissions limitations, and still meet any other applicable state or federal requirement.

Comment5: TIP, BCCA, TAB, and TxOGA also point out that there is a wide array ofadditional Texas rules specifying monitoring, recordkeeping, and reporting requirements. For instance, the Texas Flexible Permitrules also require compliance with section 101.201, related to reporting and recordkeeping ofmalfunction emissions, and section 101.211, related to reporting ofmaintenance, startup, and shutdown emissions. Commenters claim that there are many detailed monitoring, recordkeeping and reporting

### 57 requirements that Flexible Permitholders are subjectto and there are indeed very explicit. requirements that adequately document the operations ofsources covered by Flexible Permits.
Response: EPA disagrees with this comment. The submitted Program does not have provisions explicitly specifying the monitoring requirements for this Program.

Without the appropriate specialized MRRrequirements, it is generally impractical to determine information such as which emission points are covered, and which modifications ofexisting non-covered emission points are covered. See section III.D.3 (response to comment 2) for further information. Withoutreplicable implementation procedures for establishing the emission cap and sufficient and MRRrequirements, EPA lacks sufficientinformation to make a finding that the submitted Program, as a Minor NSR SIP program, will ensure protection ofthe NAAQS, and noninterference with the Texas SIP control strategies and RFP.
Further, commenters' reliance upon the Texas rules for malfunction emissions and maintenance, startup, and shutdown emissions is misplaced. Section 101.201
concerns Emissions Event Reporting and Recordkeeping Requirements; and Section 101.211 concerns Scheduled Maintenance, Startup, ShutdownReporting and Recordkeeping Requirements. These two referenced sections concern emission events that are a subsetofthe universe ofair emissions. Emission events are unauthorized emissions by nature. See 30 TAC 101.1(28). Malfunctionrelated emissions are those58 unauthorized emissions that result from a sudden and unavoidable breakdown ofprocess or control equipment.6 EPA's concern with the structure ofthe Program and its lack of specific MRRrequirements is not with how malfunction and SSM emissions are treated concerning MRRbut with the emissions that are normally emitted and how one can determine ifthe emitted emissions are meeting the Flexible Permit's emission limitations. See section lILA (response to comment 6) for further information.
As EPA noted in the proposal, the submitted Program is an intricate program and therefore, for approvability as a Major or Minor NSR SIP revision, there is a greater need for detailed MRR requirements whetherto ensure, among other things, that a project triggering the Major NSR SIP requirements is covered under Major NSR or there are adequate means for ensuring compliance by each holder ofa Flexible Permit. These are needed additionally to ensure that the issuance ofthe Flexible Permits does not cause or contribute to a NAAQS violation, violate the Texas control strategy, or violate any other CAA requirement. See 74 FR 48480, at 48490, and section IILD.3 (response to comment 4) for further information.

Comment 6: TAB and TxOGA commentthat the submitted Flexible Permit rules provide for the enumeration ofspecial conditions including requirements for monitoring, testing, recordkeeping, and reporting (MRR). Commenter also asserts that EPA does not

6 See Footnote 1 ofthe Attachmentto the Memo entitled "State Implementation Plans: Policy Regarding Excess Emissions During Malfunctions, Startup, and Shutdown" (September 1999 Policy) from Steve Herman and Robert Perciasepe. You can access this document at: http://epa.gov/ttn/oarpg/t5/memoranda/exemmpo1092099.pdf.

### 59 include any analysis that might lead one to understand what additional specificity or detail is necessary, or how or why the many detailed requirements in TCEQ's rules (specifically 30 TAC 101.10, 115.116, 117.801 and 111.111) are inadequate. Response: EPA disagrees with this commentthat the Agency has not provided a reasonable basis for it findings. Appropriate MRR provisions are necessary to establish how compliance will be determined and be sufficientto ensure that the NAAQS and control strategies are protected. There is further discussion in the General Preamble about EPA's interpretation ofthe Act's requirements for enforceability and that submitted rules must "specify clear, unambiguous, and measurable requirements." See 57 FR at 13567. The Program's rules do not contain specific enumerated requirements for MRR. It is not legally sufficienteven ifthe State is issuing individual Flexible Permits with special conditions requiring MRR. In order for the Program to be approvable as a SIP revision, the Program itself must contain specific objective, replicable MRR requirements that ensure compliance with all terms and conditions of each Flexible Permit issued by the TCEQ. There are no provisions providing clear criteriafor determining what type ofMRR requirements are needed. The Program is too complex to leave the choice ofMRR requirements up to the individual issuance ofa Flexible Permit, and up to the discretion ofthe Executive Director ofthe TCEQ. EPA finds such director discretion provisions are not acceptable for inclusion in SIPs, unless each director decision is required under the plan to be submitted to EPA for approval as a single-source SIP revision. This Program does not contain specific, objective, and replicable criteria for determining whetherthe Executive Director's choice ofMRR requirements will be effective in terms ofenforceability, compliance assurance, and

### 60 ambient impacts. See 74 FR 48480, at 48490, and section IILA (response to comment 6) for further information.

Comment 7: TAB and TxOGA commentthat EPA does not provide any example ofa permit or permits the review ofwhich led to that conclusion that absence ofcertain recordkeeping and reporting made itdifficult to derive information from Flexible Permits. TCC notes that there is significant difference in the types ofsources that apply for a Flexible Permit; therefore, it is difficult for TCEQ to implementrulemaking for every type ofrecordkeeping, monitoring and tracking requirements that may apply. Attempting to incorporate these variable components into one comprehensive rule could severely limit TCEQ's ability to implement adequately these requirements. BCCA comments that the Flexible Permitrules contemplate that additional recordkeeping requirements many be tailoredto the type ofsource covered by a Flexible Permit making them as least as stringent as their federal counterparts. BCCA highlights a comparison to the proposed Indian Country Minor NSRrules to make this point.
Response: The proper scope ofreview for this SIP revision submittal does not include a review ofthe State's individually issued Flexible Permits to determine whether there are adequate recordkeeping and reporting requirements in each permit. These Flexible Permits never shouldhave been issued since the submitted Program is not part of the Texas NSR SIP. EPA's review is instead focused on the structure ofthe submitted Program, ensuring that it includes legally sufficientrecordkeeping and reporting requirements. This is necessary to ensure that not only does the submitted Program not61 interfere with NAAQS attainment, the Texas SIP control strategies, and RFP, but the proposed revision is enforceable pursuant to section llO(a) )(2)(A)-(C) ofthe Act. The September 23, 1987, Memorandum from 

### 1.Craig Potter, Assistant Administrator for Air and Radiation, and Thomas 

### L. Adams Jr., Assistant Administrator forEnforcement and Compliance Monitoring, entitled "Review ofState Implementation Plans and Revisions for Enforceability and Legal Sufficiency" provides EPA's guidance for interpretingthis provision in the Act. See also the General Preamble at page 13566. Submitted rules that are clear as to who must comply, and explicit in their applicability to regulated sources
are appropriate means for achieving the statutory enforcementrequirement. Specific, objective, and replicable criteria are to be set forth for determining whetherthis new type ofNSRpermit will be truly equivalentto the other minor NSR SIP permits in terms of being consistentwith the levels specified in the control strategies, including air quality impacts, etc. Appropriate testing, recordkeeping, reporting, and monitoring provisions
are necessary to establish how compliance will be determined and be sufficientto ensure that the NAAQS and PSD increments are protected. See 74 FR 48480, at 48492. Furthermore, any permitting rule will apply to a variety ofsources (unless it is a permit adopted specifically for a source category and limited to that affected source category).

The submitted Program allows a Flexible Permit holder to selectively include new facilities and/or new modifications under the umbrellaofa Flexible Permit. Without the appropriate specialized MRR requirements, it is generally impractical to determine information such as which emissionpoints are covered, and which modifications of existing non-covered emission points are covered. See section I1I.D.3 (response to62
comment 2) for further information. Submitted 116.711(7) is an illustration ofour
concerns. It states that initial compliance testing with ongoing compliance by engineering calculations "may be required." This means that under the Program, compliance testing may, or may not, be required and provides no guidance for when monitoring will be required. See section lILA (response to comment 6) for further information.

The submitted Flexible Permit Program does not compare favorably with the MRRrequirements that are proposed in the proposed Indian Country Minor NSR rules. The proposed Indian Country Minor NSR Rules would require the permit to include monitoring sufficientto assure compliance with any control technology requirements containedin the permit. Monitoring approaches may include continuous emission monitoring systems, predictive emission monitoring systems, continuous parameter monitoring systems, periodic manual logging ofmonitorreadings, equipment inspections, mass balances, periodic performance tests, and/or emission factors, as appropriate for the minor source. None ofthese monitoring approaches is addressed in the submitted Program. The proposed Indian County MinorNSR Rules also would require the permit to include recordkeeping sufficient to assure compliance with enforceable emission limitations in the permit and require retention ofthe records for five years from the date ofthe record. The submitted Program lacks this specificity for the recordkeeping requirements. The proposed Indian County Minor NSR Rules also would require annual monitoring reports showing whether the permittee has complied with the permit emission limitations and promptreports ofdeviations from permitrequirements, including those63 attributable to upset conditions, probable cause ofsuch deviations, and any corrective or preventative measures taken. See 71 FR 48695, at 48715-48716 and 48738 (August 21, 

### 2006). Thus even assuming such a comparison represented the proper scope ofreview, the MRR provisions ofthe submitted Program do not compare favorably to those in the proposed Indian Country MinorNSR Program. The MRR provisions ofthe Texas Flexible Pennit Program do not contain this level ofMRR or otherwise sufficientMRR provisions given the features ofthe Program.

Comment 

### 8: The Clinic comments that there are no provisions for ensuring that emission reductions are real, permanent, and enforceable.
Response: Specific, objective, and replicable criteria are required to be set forth for determining whether this new type ofNSR permitprogram will be truly equivalent to the other Minor NSR SIP permit programs in terms ofbeing consistent with the levels specified in the control strategies, including air quality impacts, etc. Appropriate MRR provisions are necessary to establishhow compliance will be detennined and be sufficientto ensure that the NAAQS and Texas control strategies are protected. Withoutreplicable procedures for establishing the emissions caps, the lack of enforceability, the director discretion regarding whether or not to require MRR and the lack ofsufficient MRR requirements, EPA cannot be assured that the submitted Program does indeed produce permanent emission reductions. See section lILA (response to comment 6) for further information.

### 64
Comment 9: The Clinic comments that the Flexible Permit rules fail to assure that permits include enforceable limits, as required by the Clean Air Act. There is no required monitoring or reporting to assure compliance with the terms and conditions. Likewise, the Flexible Permitrules fail to require adequate monitoring and reporting for those emission limits and requirements that are included in the Flexible Permit. The rules require measurement ofemissions "as determined by the executive director." See submitted 30 TAC 116.711(2). They also require that unspecified "information and data sufficientto demonstrate continuous compliance with the emission caps and individual emission limitations contained in the flexible permit" be kept at the plant site and made available for TCEQ inspection. See submitted 30 TAC 116.715(c)(6). These requirements are clearly insufficientto demonstrate compliance with emission caps applicable to dozens ofdissimilar emission units. For a program as complex as the Texas Program, stringent monitoring must not be left up to the discretion ofthe Executive Director. Instead, stringent monitoring and reporting requirements mustbe required by regulation for all units covered under a Flexible Permit. Because the Texas Flexible Permit is more complex than either the PAL or the Green Groups proposal, it should include monitoring at least as stringent as required by those rules.
Response: EPA generally agrees with these comments. The submitted Program does not meet the requirements ofsection 110(a)(2)(A)

- (C) ofthe Act, which require that SIP revision submittals be enforceable." There are no specific up-front

7 Section 116.711(2) ofthe submitted Program provides that emissions will be measured "as determined by the executive director." This broad discretion lacks accountability, replicability and fails to provide for a full evaluation ofthe enforceability ofpennits issued underthe Program.65 methodologies in the submitted Program to be able to determine compliance. There are
no sufficient MRR provisions in the submitted Program. Accordingly, the Program lacks requirements necessary for enforcement and assurance ofcompliance. There are no specific up-front methodologies in the Program to be able to determine compliance. It fails to meet the enforceability requirements as aprogram or for an affected source, and it cannot assure compliance with the Program or by the holder ofa Flexible Permit. See 74 FR 48480, at 48490, section lILA (response to comment 6) for further information.
Instead, MRR requirements appropriate for such a complex Program must be required by regulation for all units covered under a Flexible Permit. Whether or not to require MRR requirements in aFlexible Permit should not be left to director discretion. This complex and intricate Program, for enforceability purposes, requires sufficientMRR requirements for each Flexible Permit. In the proposal, we stated that we are concerned with the adequacy ofthe MRR requirements in the submitted Program". This submitted Program is an intricate program and therefore, for approvability as a NSR SIP revision, there is a greater need for detailed MRR requirements whether to ensure that a project triggering the Major NSR SIP requirements is covered under Major NSR or to ensure that there are adequate means for ensuring compliance ofeach affected entity under both Major and Minor NSR. See section IILD.3 (response to comment 2) for further information.

8 EPA's letter ofMarch 12,2008, on pages 12 to 13 ofthe Enclosure provides some examples of, and concepts on how to establish replicable recordkeeping, reporting, tracking, and monitoring requirements up-front in a NSR program without requiring every director discretion decision to be adopted and submitted to EPA for approval as a source-specific SIP revision.66 Finally, the commenter stated that because the Texas Flexible Permit Program is
more complex than either the federal PAL SIP rule or the federal Green Groups proposal, it should include monitoring at least as stringent as required by those rules. EPA is not requiring that the Program include the specific MRR as required or proposed for another program. As stated above, to be approvable as a SIP revision, the Program must contain specific, replicable MRRrequirements that ensure compliance with all terms and conditions ofeach Flexible Permit issued by the TCEQ. See section IILC.6 (response to comment 2) for additional information.

Comment 10: The Clinic comments that the Program does not assure that permit terms ofpre-existing NSRpermits remain as part ofthe Flexible Permit and therefore enforceable. The Clinic provided information on a refinery that had a PSD permit and subsequently received a Flexible Permit from TCEQ. The PSD permit included emission limits for two fluid catalytic cracking units (FCCDs). When the Flexible Permit was issued, these emission limits in the PSD permit were not included as separate from the limits in the Flexible Permit; instead, the Flexible Permit included the FCCDs among the units subject to the emission caps. When the refinery subsequently reported emission events, itreported only the Flexible Permit and its associated caps as the applicable limits, rather than the limits from the pre-existing MajorNSR SIP permits.
Response: The submitted Program lacks adequate programrequirements for whether or not the terms and conditions ofpre-existing Major and Minor SIP permits are incorporated into a Flexible Permit or they remain outside the coverage ofthe Flexible

### 67 Permit. While the comments on implementation ofthe submitted Program as related to a particular source are not relevant to this action, they do highlight EPA's concerns about why the submitted Program is not approvable. The submitted Flexible Permit Program also lacks sufficient recordkeeping provisions to ensure that all terms and conditions of pre-existing Major and Minor NSR SIP pennits (including representations in the applications for such permits) that are incorporated into the Flexible Permit continue to be met. These underlying Major and Minor NSR SIP permits remain legally enforceable but the lack ofspecificity in the submitted Program impacts practical enforceability. See 74 FR 48493, and section IILA (response to comment 6) and section IILD.3 (response to comment 11,below) for further information.

Comment 11: A member ofthe Sierra Club cites to references from the proposal that relate to the lack ofappropriate MRRrequirements in the Program. An individual commenter states that as an air quality investigator for the City ofHouston Bureau ofAir Quality Control, investigating documentation ofcompliance for a Flexible Permit was presented an entire roomful ofbinders, containing emissions information for different sources under one cap. The company representative said that this was the documentation ofthe company's compliance with the Flexible Permit. Confronted with these practical difficulties, the commenter was unable to determine the company's compliance with its Flexible Permit Cap.
Response: The EPA agrees with these comments. While the comments on implementation ofthe submitted Program are not relevant to this action, they do highlight68 EPA's concerns about why the submitted Program is not approvable. The submitted Program lacks provisions explicitly addressing the type ofmonitoring requirements that
are necessary to ensure that 

### allofthe movement ofemissions between the emission points, units, facilities, plants, etc., still meet the cap for the pollutant, still meet the individual emissions limitations, and still meet any other applicable state or federal requirement. In addition, there are no limits on the types ofsources that can be included in the cap. It is also difficult to quantify emissions from some units, such as tanks, fugitive emissions from leaking valves, or wastewater emissions points that can be included in a Flexible Permitunder this Program. This comment also highlights the lack ofadequate programrequirements for the tracking ofexisting SIP permits' major and minorNSR terms, limits and conditions, and whether such requirements are incorporated into a Flexible Permit or they remain outside the coverage ofthe Flexible Permit. This further highlights the lack ofMRR sufficient to establish how compliance will be determined and to ensure that NAAQS and Texas control strategies are protected. See 74 FR 40480, at 40493, section IILD.3 (responses to comment 1,2,4,5, 7, and 10, above), and section lILA (response to comment 6) for further information.

4. Revocation ofMajor NSRPermits under a MinorNSR Program

Comment: The Clinic comments that Flexible Permits are used to eliminate or amend existingNonattainment NSR and PSD permitterms without following SIP required procedures for permit amendments.69 Response: We are disapproving the submitted Program because it is ambiguous and could be interpreted to allow holders ofa Flexible Permit to make defacto amendments ofexisting SIP permits, including changes in the terms and conditions (such
as throughput, fuel type, hours ofoperation) ofminor and majorNSRpermits, without a preconstructionreview by Texas. While we have recognized that under certain circumstances changes to PSD permits may be appropriate, such changes are generally not allowed without a review ofthe new circumstances by the permitting authority. As EPA has explained, any time a change to a permit limit founded in BACT is being considered, a corresponding reevaluation (or reopening) ofthe original BACT determination may be necessary. See, "Request for Determination on Best Available Control Technology (BACT) Issues - Ogden Martin TulsaMunicipal Waste-Incinerator Facility," from Gary McCutchen, ChiefofOAQPS NSR Section (Nov. 19, 1987). See 74 FR 40480, at 48493 and a copy ofthe document is in the docket at document ID EPAR06-0AR-2005-TX-0032-0025.9

5. Protection ofthe NAAQS under a Minor NSR Program

Comment: The Clinic comments that the submitted Flexible Permits Program is inadequate to assure protection ofthe NAAQS, increments, and control strategy.
Response: Approval ofthe submitted Program as a MinorNSR SIP revision requires that it include legally enforceable procedures that enable the State to determine

9 You can access this document directly at: http://www.regulations.gov/searchIRegs/home.html#documentDetail?R=0900006480a2bdld.70 whether construction or modification by a holder ofa Flexible Permit would violate a control strategy or interfere with attainment or maintenance ofthe NAAQS. See 40 CFR 51.160(a)-(b). Without a replicable methodology for establishing the emissions caps, the lack ofenforceability, the director discretion concerning whether or not to require MRR conditions in a Flexible Permit, and the lack ofsufficient MRR requirements in the submitted Program, EPA lacks sufficient information to make a finding that the submitted Program, as a Minor NSR SIP program, will ensure protection ofthe NAAQS, and noninterference with the Texas SIP control strategies and RFP. See 74 FR 48480, at 48490- 48492, and section lILA (response to comment 6) for further information.

E. Definition of Account

Comment 

### 1: TCEQ does not agree with EPA's understanding ofthe term "account" as applied by TCEQ. TCEQ maintains that it has included in each ofits permitting rules appropriate definitions to meet state and federal requirements. TCEQ interprets an "account" to include multiple "sources." Within this rule, it interprets "sources" as being equivalentto multiple "facilities" (a facility is a discrete piece of equipment or source ofair contaminants) under Texas Minor Source definitions. A Flexible Permit cannot cover more than one major stationary source, as the term is used by EPA and TCEQ for federal NSRpurposes.
Response: We appreciate TCEQ's explanation ofthe terms "account," "facility" and "source" as it intends them to apply in the submitted Program. We are pleased to71 learn that the State does not intend to allow a Flexible Permit to cover multiple major stationary sources and that companies complying with a Flexible Permit understand the continued obligation to comply with the SIP-approved Major NSR program at all major stationary sources and major modifications. Nonetheless, we believe that the definitions are not sufficiently limiting to preclude issuance ofa Flexible Permitto multiple major stationary sources. This is because the terms "source" and "account" rely on the term "site" which does not contain the SIC code limitation contained in the federal definitions. Without this limitation, the broad terms can encompass more than one major stationary source. For example, apetroleum refiner (SIC code 2911) may be collocated with a Plastic Materials and Resins manufacturer (SIC code 2821) and be under common control and ownership, and neither source is a support facility to the other. But, under the Major NSR program, these two facilities would be considered separate major stationary sources by virtue ofa difference in each facility's SIC irrespective ofthe fact that they are located at the same "site." Notably this is not the case for the Title V and Section 112 programs. A single Title V permit can be issued to the "site." TCEQ asserts that an account includes multiple sources and that the term "source" is limited to a discrete piece of equipment or source ofair contaminants. There is nothing in the submitted Program's rules and definitions that limit the term "account" to one "major stationary source" much less to a discrete piece ofequipment. This submitted Program establishes an emissions cap over a group ofone or more emissions points located at an "account" site. 30 TAC 101.1(1). The Texas SIP defines an "account" to include an entire company site, which could include more than one plant and certainly more than one major stationary source.72 See the approved SIP rule 30 TAC 101.1(1), second sentence. On its plain face, the term "account" cannotbe interpreted to be limited to a single major stationary source.

Comment 2: BCCA, TCC, TIP and TAB, and TxOGA commentthat the definition of"account" is tied to the definition of"site" at 30 TAC 101.1(1) and (87). These commenters view this as limiting an accountto a specific plant site. Commenters also point to the Title V rules as providing additional limitation. Citing 30 TAC 116.71O(a)(1) and (4), the commenters point out that only one Flexible Permit may be issued at an account site and a Flexible Permit may not cover sources at more than one account site. In summary, commenters conclude that ifthese rules are read togetherthey provide sufficient safeguards against a major stationary source netting a significant emissions increase against a decrease occurring outside a site using a Flexible Permit. TAB comments ifa Flexible Permit could be obtained for more than one site, the only reasonably construction ofthe rule would be " ... a facility, group of facilities, accountor accounts..." but the rule is not so constructed because it does not extend a Flexible Permit to more than one site.
Response: EPA disagrees with the comment. Concerning the commentthat an account is limited to a site and that the submitted Flexible Permit Program limits only one Flexible Permit at an account does not address our concernthat an account may include more than one major stationary source. See the section IILD.l (response to comment 1) and 74 FR 48480, at 48489 for further information. The commenter's73 reliance on the Title V rules does not identify a specific provision in the Texas Title V program that supports the commenter's position.
Furthermore, the reliance on the Title V program as providing additional limitation for limiting an account to a major stationary source does not address this matter. The Title V program is an operating permitprogram that incorporates the applicable requirements ofthe CAA (including the requirements ofthe approved SIP) into the operating permit. See 40 CFR 70.2

- definition of"applicable requirement" and 70.6(a)(1). The Title V Program generally does not create applicable requirements independently ofthe applicable requirements in the approved SIP and otherrequirements ofthe CAA. Public Citizen v. EPA, 343 F.3d 449,453 (5th Cir. 2003) ("Title V permits do not impose additional requirements on sources but, to facilitate compliance, consolidate all applicable requirements in a single document. See 42 U.S.C. 

### § 7661a(a); see also Virginia v. Browner, 80 F.3d 869,873 (4th Cir.1996) (Title V permit "is a source-specific bible for [CAA] compliance"), cert. denied, 519 U.S. 1090, 117 S.Ct. 764, 136 L.Ed.2d 711 (1997)."); Sierra Club v. Georgia Power Co., 443 F.3d 1346,1348 (11th Cir. 2006) (Title V "generally does not impose new substantive air quality control requirements.")

In summary, for the reasons stated above, the definition of"account" is not limitedto a single major stationary source and may include multiple major stationary sources, or in other circumstances, may include a subset ofa major stationary source.

### 74 F. Public Participation

Comment 

### 1:Tee 

### comments that anyfuture changes in thepublic participation aspects ofthe Flexible Permit program should apply prospectively and have no effect on the existing permits.
Response: EPA cannot comment on what actions it will take regarding any future changes in the public participation aspects ofthe Flexible Permit Program and therefore defers responding because those changes are outside the scope ofthe presentrulemaking. We wish to note, however, existing Flexible Permits were not issued under the Texas NSR SIP, and any future Flexible Permits also will not be issued under the Texas NSR SIP.

Comment 2: The Clinic comments that the CAA and its implementing regulations include minimal requirements for public participation in permitting. This includes, for Major and MinorNSRpermits and modifications, the requirements under40 CFR 51.161 and for PSD permits, additional requirements as provided under 40 CFR 51.166(q). Texas public participation rules for Flexible Permits in 30 TAC Chapter 39 require 30- days public notice and comment on initial issuance ofFlexible Permits and amendments to a Flexible Permit ifthe action involves construction ofa new facility or meets certain criteria, including modifications resulting in allowable emissions increases of250 tons per year ofcarbon monoxide and nitrogen oxides or 25 tons per year ofother pollutants. See 30 TAC 39.403(b). This restriction is inconsistent with federal requirements for both75 Major and Minor NSR. The commenters further object to the use ofalterations and permits by rule to change Flexible Permitterms and conditions; such changes should be made throughpermit amendment with at least 30-days public notice and comment.
Response: In the proposal, EPA proposed to disapprove 30 TAC 116.740 because this submittedrule relates to the public participation requirements ofthe submitted Flexible Permit Program, and is not severable from the Program. Because we are disapproving the Flexible Permit Program, we are likewise disapproving the inseverable provisions in 30 TAC 116.740, Public Notice, for the Program. See 74 FR 40480, at 48491 and 48493.

The comments relating to the provisions in 30 TAC Chapter 39, the use ofpermit alterations and Permits by Rule in lieu ofpermit amendment with at least 30-days public notice and comment are outside the scope ofthis action.

Comment 3: GCLC provided comments on Texas's submittedpublic participation program that it is robust and fully compliant with federal requirements and in fact exceeds federal requirements. GCLC comments that even parties not residing in the state may comment on an airpermit application and TCEQ is obligated to respond whereas under federal requirements only affectedpersons are allowed to comment and trigger a response obligation. GCLC asserts that the "public meeting" component ofthe state program is equivalent to the "public hearing" component ofthe federal program. GCLC comments that the trial-type contested hearing process in the Texas program goes well76 beyond the federal requirements which permit only interested parties to participate during the notice and comment period.


### Response: We recognize that our proposal included a briefdiscussion ofhow the submitted Flexible Permit Program requires compliance with provisions in Chapter 39 of the Texas Administrative Code. On November 26, 2008, EPA proposed limited approval/limited disapproval ofthe Texas submittals relating to public participation for air permits ofnew and modified facilities (73 FR 72001). In our November 26,2008, proposal ofthe Texas Public Participation rules, we proposed no action on 30 TAC 116.740 and stated that we would address that section in a separate action. See 73 FR 72001, at 72015. In our proposal ofthe Texas Flexible Permits Program, we proposed to disapprove 30 TAC 116.740 because this submitted rule relates to the public participation requirements ofthe submitted Flexible Permit Program, and is not severable from the Program. Because we are disapproving the Flexible Permit Program, we are likewise disapproving the inseverable provisions in 30 TAC 116.740, Public Notice, for the Program. See 74 FR 40480, at 48491 and 48493.



### IV. What are the Grounds for this Disapproval Action ofthe Texas Flexible Permits State Program?

EPA is disapproving revisions to the SIP submittedby the State ofTexas that relate to the Flexible Permits State Program, identified in the above Tables 1 and 2. Sources are reminded that they remain subject to the requirements ofthe federally77 approved Texas SIP and may be subject to enforcement actions for violations ofthe SIP. See EPA's Revised Guidance on Enforcement during Pending SIP Revisions, (March 1, 1991). You can access this document at: http://www.epa.gov/compliance/resources/policies/civil/caa/stationary/enj-siprev-rpt.pdf However, this final disapproval action does not affect Federal enforceability ofMajor and Minor NSR SIP permits.

The provisions affected by this disapproval action include regulatory provisions at 30 TAC 116.l10(a)(3), 116.710, 116.711, 116.714,116.715,116.716, 116.717, 116.718, 116.720, 116.721, 116.722, 116.730, 116.740, 116.750, and 116.760; and definitions at 30 TAC 116.10(l1)(F), and 30 TAC 116.13 under 30 TAC Chapter 116, Control ofAir Pollution by Permits for New Construction or Modification. EPA finds that these submitted provisions and definitions in the submittals affecting the Texas Flexible Permits State Program are not severable from each other. Specifically, EPA is making the following findings and taking the following actions as described below:

A. The Texas Flexible Permits Program is Unclear Whether It is for a Major or Minor NSR SIP Revision

Several commenters claim that the submitted Program is clear that every project for which a Flexible Permitis issued must also comply with Major NSR requirements, and therefore was not intended to be a Major NSR SIP revision. Other commenters disagree and say the rules are not clear on their face that the Programrequires compliance

### 78 with the Major NSR requirements. The latter commenters agree with EPA's analysis of the submitted Program in the proposal and commentthat we correctly stated that we were required to review the submittal as a substitute for a Major NSR program because the submittal is not clearly limited to minor sources and minor modifications. TCEQ states that the Flexible Permit Program was not intended to be a substitute for the Major NSR permitting requirements but that it understands EPA's concerns with ambiguity regarding the applicability ofthe submitted Program, that this is not specifically stated in the submitted Program's regulations. Furthermore, the TCEQ commits to revise its rules to make it clear that the Program is limited to Minor NSR.

The submitted Program is analogous to two other Minor NSR programs (Standard Permits and Permits by Rule) in Texas's SIP because they too provide a different permit option for facilities. In particular, these programs exemptfacilities from obtaining a source-specific (i.e., case-by case) permit. Unlike the submitted Program, however, the SIP rules for Standard Permits and Permits by Rule include an applicability statement and
a regulatory provision that expressly limits applicability to minor sources and minor modifications. The Standard Permits rules explicitly require a Major NSR applicability determination at 30 TAC 116.61O(b), and prohibit circumvention ofMajor NSR at 30 TAC 116.610(c). Likewise, the Permits by Rule provisions explicitly require a Major NSR applicability determination at 30 TAC 106.4(a)(3), and prohibit circumvention of Major NSR at 30 TAC 106.4(b). In each, the State specifically expressed its intention to require a Major NSR applicability determination and prohibit circumvention ofMajor NSR. The absence ofa similar MajorNSR applicability determination requirement and a79 similarregulatory prohibition for circumvention ofthe MajorNSR SIP permitting requirements in the submitted Flexible Permits Program creates unacceptable ambiguity. The commenters opposing our proposed action fail to provide an explanation ofwhy the TCEQ did not write the submitted Flexible Permitrules with the same provisions as the Texas MinorNSR Permits by Rule and Standard Permit SIP rules. A clear intention to limit the submitted Program to minor sources and minor modifications would have resulted in a similar structure to the Texas MinorNSR Permits by Rule and Standard Permit SIP rules. The State, however, did not include suchprovision in the submitted Flexible Permits Program. See 74 FR 48480, at 48487, and section IILB (response to comment I) for further information.

B. The Texas Flexible Permits Program is NotApprovable as a Substitute Major NSR SIP Revision

Because ofthe State's disavowal ofany intentto have this SIP revision submittal treated as a substitute for a MajorNSR SIP program, it did not submit a demonstration as required by 40 CFR 51.165(a)(2)(ii) and 51.166(a)(7)(iv) to show that its Program was as stringent as the EPA MajorNSR SIP program requirements. It also did not explain how the submitted Program is consistent with the Act's requirements for a MajorNSR SIP revision. As discussed at 74 FR 38480, at 48487, and in section III.B (response to comments 1 and 2), section III.C.I (responses to comments 1 and 2), and section IILC.3 (responses to comments I and 2) ofthis notice, the State did not structure the submitted Program in a similar fashion as the Texas Minor Standard Permits and Permits by Rule80 NSR SIP programs. This lack ofa similarregulatory structure creates the ambiguities whether the submitted Program is truly limited to Minor NSR and whether it prohibits the circumvention ofthe federal MajorNSR SIP requirements. Without the required demonstration and with the ambiguities, EPA is disapproving the Program as not meeting the MajorNSR SIP requirements that require the Major NSR applicability requirements be met and that prevent circumvention ofMajor NSR. See 74 FR 48480, at 48488, section III.B (response to comment l) and section III.C.l ofthis notice for further information.

Some commenters assert that the submitted Program meets the netting criteriafor
a MajorNSR SIP revision. Others argue differently. Under the submitted Program, not all emission points, units, facilities, major stationary sources, minor modifications to an existing major stationary source, and so forth, at a site are required to be included in the site's Flexible Permit. The submitted Program allows an emissioncap to be established under a Flexible Permit account to include multiple major stationary sources and allow a major stationary source to net a significant emissions increase against a decrease occurring outside the major stationary source, from facilities on the account's site, and, in other circumstances, allowing an evaluation ofemissions ofa subset ofunits at a major stationary source. As a result, the regulated community may apply these regulations inconsistently and in a way that fails to evaluate emissions changes at the entire major stationary source correctly as required by the Major NSR SIP regulations. See section III.E (responses to comments 1 and 2) for further information.81 Therefore, the submitted Program does not meet the 

### CANs definition of "modification" and the MajorNSR SIP requirements and is inconsistentwith

### Alabama Powerv. 

### Costle, 636 F.2d 323, 401-403 (D.C. Cir. 1980) and

### Asarcov. 

### EPA, 578 F.2d 320 (D.C. Cir.1978). The submitted Program does not meet the Major NSR SIP requirements for netting. Second, the Program authorizes existing allowable emissions, rather than actual emissions, to be used as abaseline to determine applicability. Therefore, this use ofallowables is inconsistent with the requirements ofthe Act for Major NSR and is contrary to

### New Yorkv. 

### EPA, 413 F.3d 3, 38-40 (D.C. Cir. 2005) ("New York I"). See 74 FR 48480, at 48489-48490, and section III.Co2 (response to comment 2) for further information.

Several commenters claim that the submitted Program requires the retention of the conditions ofan existing PSD or NonattainmentNSR permit and that the TCEQ is required under the submitted Program to carry forward such terms and conditions in a Flexible Permit. On the other hand, there was a commentthat the submitted Program contains no such requirement and that TCEQ regularly voids existingNonattainment and PSD NSR permits when it issues a Flexible Permit. The submitted Flexible Permit Program is not clear and explicitthat Flexible Permits cannot be used to eliminate or amend existing Nonattainment and PSD NSR SIP permit terms and conditions. There are not sufficientprovisions in the submitted Program requiring the holder ofa Flexible Permit to maintain recordkeeping sufficientto ensure that all terms and conditions ofpreexisting permits (including representations in the applications for such permits) that are incorporated into the Flexible Permit continue to be met. The submitted Program lacks

### 82 adequate program requirements for the tracking ofexisting SIP permits' MajorNSR terms, limits and conditions, and whether such requirements are incorporated into a 

### Flexible Permitor theyremain outside thecoverage of theFlexible Permit. The submitted Program is ambiguous and can be interpreted to allow holders ofa Flexible Permit to make defacto amendments ofexisting SIP permits, including changes in the terms and conditions (such as throughput, fuel type, hours ofoperation) ofMajorNSR permits, without a preconstruction review by Texas. See section III.C.5 for further information.
Therefore, the submitted Program does not require the retention ofthe conditions ofMajorNSR SIP permits upon the issuance ofa Flexible Permit, as is required for a Major NSR SIP revision.

Pursuant to 40 CFR 51.165(a)(2)(ii) and 51.166(a)(7)(iv), where a State submits a revision to its MajorNSR SIP that differs from the Federal MajorNSRbase program SIP requirements, the State has an affirmative obligation to explain how the submitted program satisfies the CAA and to demonstrate why the submitted program is in fact at least as stringent as the MajorNSR SIP requirements ofthe Federal base program. It is not EPA's obligation to surmise how the submitted program might work and ifit may under certain circumstances be more or less stringentthan the Federal MajorNSR SIP base program. The State did not submit such a demonstrationbecause it did not view the submitted Program as a substitute for a MajorNSR SIP revision.

### 83 Without the required customized Major NSR demonstration, the lack ofa replicable methodology for the establishment ofthe emissions cap, the provision allowing director discretion in deciding whether or not to include a MRR condition in a Flexible Permit, the lack ofsufficient MRRrequirements, and the lack ofenforceability, EPA lacks sufficient information to make a finding that the submitted Flexible Permits Program will prevent interference with NAAQS attainment and RFP or violations ofany State control strategy that is required by the Texas NSR SIP, or any other applicable CAA requirement. See 74 FR 48480, at 48492, section lILD.3, and section lILA (response to comment 6) for further information.
Therefore, the Program does not meet the requirements ofthe Act and EPA regulations for a substitute Major NSR SIP.

In summary, EPA is disapproving the submitted Flexible Permits Program as not meeting the Major NSR SIP requirements.



### C. The Texas Flexible Permits Program isNotApprovable as aMinorNSR SIP Revision

Several commenters claim the Texas Flexible Permit Program explicitly requires permit holders to comply with the federal Major NSRrules. In contrast, another commenter says that the submitted Program does not include adequate provisions for ensuring that changes that should trigger Major NSR are subject to technology and air quality analysis requirements. Commenters assert that the submitted Programprohibits84 circumvention ofMajor NSR. Anothercommenter notes to the contrary. We evaluated the submitted Program under CAA section 11O(a)(2)(C),which requires each State to include a Minor NSR program in its SIP. EPA regulations implementing the Act require that a plan include "legally enforceable procedures that enable" the permitting agency to determine whether a minor source will cause or contribute to violations ofapplicable portions ofthe control strategy (see 40 CFR 51.160(a)(l)), or "interference with a national ambient air quality standard," (see 40 CFR 51.160(a)(2)), and to preventthe source from doing so (see 40 CFR 51.160(b)). There is, however, no express provision in the submitted Flexible Permit Programrules that prohibits its use for Major NSR. There is no express regulatory provision in the submitted Programrequiring that it cannot be used to circumventthe requirements ofMajor NSR. There are no regulatory provisions clearly prohibiting circumvention ofMajorNSR. See 74 FR 48480, at 48486, and section III.D.I for further information.
Therefore, EPA is disapproving the submitted Program as a Minor NSR SIP revision because it is not clearly limited to Minor NSR and it does not prevent circumvention ofthe MajorNSR SIP requirements.

Several commenters state that the submitted Program does contain comprehensive and stringentprovisions for MRR or assert that there is a wide array ofadditional Texas rules specifying MRRrequirements. A commenternotes that there is significant difference in the types ofsources that apply for a Flexible Permit; therefore, requiring
one comprehensive rule could severely limit TCEQ's ability to implement adequately85 these requirements. In contrast, another commenter notes that the submitted Program does not contain adequate MRR requirements to assure compliance with the emission limits in Flexible Permits. On the other hand, 

### TCEQ admits the submitted Program does not specify special conditions that ensure recordkeeping, reporting, testing, and reporting to assure compliance with the Flexible Permit.

The submitted Program is an intricate and complex program and therefore, for approvability as a MajorNSR SIP revision, there is a greater need for detailed MRR requirements whether to ensure that a projecttriggering the MajorNSR SIP requirements is covered under MajorNSR or to ensure that there are adequate means for ensuring compliance ofeach affected source underboth Major and MinorNSR. These are needed to make the submitted Program enforceable and to ensure that the issuance ofthe Flexible Permits does not cause or contribute to aNAAQS violation, the Texas control strategy, or violate any other CAA requirement. The submitted Flexible Permit Program is generic concerning the types ofmonitoring that is required rather than identifying the employment ofspecific monitoring approaches, providing the technical specifications for each ofthe specific allowable monitoring systems, and requiring replicable procedures for the approval ofany alternative monitoring system. It also lacks the replicable procedures that are necessary to ensure that (1) adequate monitoring is required that would accurately determine emissions under the Flexible Permit cap, (2) the Program is based upon sound science and meets generally acceptable scientific procedures for data quality and manipulation; and (3) the information generated by such system meets86 minimum legal requirements for admissibility in ajudicial proceeding to enforce the Flexible Permit.

The submitted Program therefore lacks provisions explicitly addressing the type ofMRR requirements that are necessary to ensure that all ofthe movement ofemissions between the emission points, units, facilities, plants, etc., still meetthe cap for the pollutant, still meet the individual emissions limitations, and still meet any other applicable state or federal requirement. The commenters' assertion thatthere are additional MRR SIP requirements applicable to the submitted Program is incorrect; there
are no such additional applicable MRR SIP requirements. Moreover, the submitted Program leaves it to the director's discretion to require a MRR condition in a Flexible Permit. See 74 FR 48480, at 48490, and section IILe.5 (response to comment), IILD.3 (response to comments 4,5, and 9), and section lILA (response to comment 6) for further information.

Without specialized MRRrequirements in the submitted Program, it is difficult for EPA or the public to determine which units are covered by a Flexible Permit, which modifications to non-covered units are covered by a Flexible Permit, whether a covered unit is subject to the emission cap or an individual emission limitation, whether a unit is subject to both the cap anda limitation, or whether a cap or a limitation applies and at what time. See 74 FR 48480, at 48492, and section IILD.3 for further information. Accordingly, the submitted Program lacks requirements necessary for enforcement and
assurance ofcompliance. There are no specific up-front methodologies in the Programto87 be able to determine compliance. 

### It fails to meet the enforceability requirements as a program or by a holder ofa Flexible Permit, and it cannot assure compliance with the Program or ofthe affected source.

Several commenters state that the submitted Program does contain comprehensive and stringentprovisions for MRR or assert that there is a wide array ofadditional Texas rules specifying MRR requirements. A commenter notes that there is significant difference in the types ofsources that apply for a Flexible Permit; therefore, requiring
one comprehensive rule could severely limit TCEQ's ability to implement adequately these requirements. In contrast, another commenternotes that the submitted Program does not contain adequate MRRrequirements to assure compliance with the emission limits in Flexible Permits.
First, the commenters point to no other specific SIP rules that apply to Flexible Permits and are detailed MRR requirements. Although the submitted Program requires the same MRRrequirements at 30 TAC 116.711(2) and 116.715(c)(4) - (6), as do the SIP rules codified in SubchapterB ofChapter 116, the underpinnings ofthe submitted Program are so complex that even for a MinorNSR SIP program, there should be more detailed MRRrequirements to ensure that the emission cap and/or individual emissions limitations in the issued Flexible Permits are enforceable. See 74 FR 48480, at 48492, and section IILD.3 for further information. Secondly, the submitted Flexible Permit Program is complex and intricate and therefore, for approvability as aNSR SIP revision, there is a greater need for detailed MRRrequirements whether to ensure that a project88 triggering the Major NSR SIP requirements is covered under Major NSR or to ensure that there are adequate means for ensuring compliance ofeach affected entity under both Major and Minor NSR. See 

### 74FR 

### 48480, at

### 48490, section lILA (response to comment 6), and section 

### m.D.3 (response to comment 2) for further information.

Moreover without specialized MRR requirements in the submitted Program, it is difficult for EPA or the public to determine which units are covered by a Flexible Permit, which modifications to non-covered units are covered by a Flexible Permit, whether a covered unit is subject to the emission cap or an individualemission limitation, whether a unit is subject to both the cap and a limitation, or whether a cap or a limitation applies and when it applies. See 

### 74FR 48480, at 48492, and section III.D.3 ofthis notice for further information. Accordingly, the Program lacks requirements necessary for enforcement and assurance ofcompliance. There are no specific up-front methodologies in the Program to be able to determine compliance. It fails to meet the enforceability requirements as a program or for a holder ofa Flexible Permit, and it cannot assure compliance with the Program or by the holder ofa Flexible Permit.
Therefore, the submitted Program is not enforceable, as required by section 11O(a)(2)(A)

- (C) ofthe Act for a Minor NSR SIP revision, and it fails to prohibitthe issuance ofa Flexible Permit that could interfere with attainment ofa NAAQS or violate a control strategy. Because ofits lack ofenforceability, EPA lacks sufficient information to make a finding that the Flexible Permits Program is adequate to ensure that no construction and changes authorized under the Program will prevent interference with89 attainment and maintenance ofthe NAAQS or violations ofany State control strategy that is required by the Texas NSR SIP. See 74 FR 48480, at 48492, and section IILD.3 for further information.

Several commenters claimthat the submitted Programrequires the retention of the conditions ofan existing PSD orNonattainmentNSR permit and that the TCEQ is required under the submitted Program to carry forward such terms and conditions in a Flexible Permit. On the other hand, there was a commentthat the submitted Program contains no such requirement and that TCEQ regularly voids existing Nonattainment and PSD NSRpermits when it issues a Flexible Permit. The submitted Flexible Permit Program is not clear and explicitthat Flexible Permits cannotbe used to eliminate or amend existing Nonattainment and PSD NSR SIP permitterms and conditions. The regulatory structure ofthe submitted Program does not ensure that existing MajorNSR SIP permits' terms and conditions are retained. It lacks legally enforceable procedures to ensure that both the permit application and the State's permitting processes (i.e., the State's review, supporting technical information, the public notice and commentprocess, the record, and most importantly the structuring ofeach Flexible Permit) clearly identify each coveredpoint ofemissions; which existingMinorNSRpermits and their types (e.g., Minor NSR SIP permit, MinorNSR SIP standard permit, MinorNSR SIP permitby rule); and which oftheirpermitted terms, limits, conditions and representations in the permit application, are moved into the Flexible Permit. The regulatory structure ofthe submitted Program also is not clear which existing permits and their types and terms, limits, conditions and representations in the permit application, are not being moved into

### 90 the Flexible Permit. Finally, there are not sufficientprovisions in the submitted Program requiring the holder ofa Flexible Permit to maintain recordkeeping sufficientto ensure that all terms and conditions ofexisting permits (including representations in the applications for such permits) that are incorporated into the Flexible Permit continue to be met. The submitted Program lacks adequate programrequirements for the tracking of existing SIP permits' Major and MinorNSR terms, limits and conditions, and whether or not such requirements are incorporated into a Flexible Permit. Minor and MajorNSR permits, as well as MinorNSR SIP Permits by Rule and Standard Permits, can be incorporated into a Flexible Permit without any programrequirement inplace that ensures the SIP permits' terms and conditions are included in the Flexible Permit. The submitted Program also allows holders ofa Flexible Permit to make defacto amendments ofexisting SIP permits, including changes in the terms and conditions (such
as throughput, fuel type, hours ofoperation) ofMinor and Major NSRpermits, without a preconstruction reviewby Texas. See section IILC.5 and section III.D.3 (response to comment 10) for further information.
Therefore, the submitted Program does not require the retention ofthe conditions ofMajorNSR SIP permits upon the issuance ofa Flexible Permit, as is required for a MinorNSR SIP revision and allows for revision ofexisting permits without adequate public notice and comment as required by 40 CFR 51.160-161.

Several commenters claim that the submitted Program does contain an established and replicable method for determining an established emissions cap; others claim91 differently. The submitted Program does not describe in sufficient detail the calculation methodologies and underlying technical analyses used to determine a cap. It lacks specific, established, replicable procedures in the submitted regulations providing available means to determine independently, and for different scenarios, how the State will calculate a Flexible Permit's cap and/or individual emissions limitations for a company's site, plants on the site, major stationary sources on the site, a facility within a major stationary source on the site, facilities on the site, a group ofunits on the site, for
one pollutant but not another, etc. The process also is not clear for how the emission cap is adjusted for the addition ofnew facilities. See 74 FR 48480, at 48491 and section III.D.2 for additional information.
Therefore, the submitted Program lacks replicable procedures for the establishment ofthe emissions cap, as is required for a Minor NSR SIP revision.
The submitted Program provides an alternative permit option but there is not sufficient informationto determine whetherthis alternative is as stringent as the existing Texas MinorNSR SIP. Consequently, the submitted Program could create a risk of interference with NAAQS attainment, RFP, or any other requirementofthe Act. Additionally, the legal test for whether an alternative MinorNSRpermit approach can be approved is whether it is consistentwith the need for aplanto include legally enforceable procedures to ensure that the State will not permit a source that will violate the control strategy or interfere with NAAQS attainment, as required by 40 CFR 51.160(a)-(b). 74 FR 48480, at 48491. Therefore, we are disapproving the submitted Flexible Permits Program as a MinorNSR SIP revision because it does not meet sections 11 0(a)(2)(C) and92
11O(1) ofthe Act and 40 CFR 51.160. Without a replicable methodology for establishing the emission caps, the provision allowing director discretion whether or not to include a MRR condition in a Flexible Permit, the lack ofsufficient MRR requirements and the lack ofenforceability ofthe submitted Program, EPA lacks sufficient information to make a finding that the submitted Program, as a MinorNSR SIP program, will ensure protection ofthe NAAQS, and noninterference with the Texas SIP control strategies and RFP. See 74 FR 48480, at 48492, and section lILA (response to comment 6) for further information.
Based upon the above, overall, the submitted Program fails to include sufficient legally enforceable safeguards to ensure that the NAAQS and control strategies are protected. Therefore, EPA is disapproving the Program for not meeting the requirements for a Minor NSR SIP revision.

D. The Texas Flexible Permits Program does not meet the NSR Public Participation Requirements

A commenter stated that any future changes in public participation aspects ofthe Flexible Permit Program should apply prospectively and should have no effect on existing permits. Anothercommenter stated that the submitted Program lacks the minimum public participation in 40 CFR 51.161 for a NSR SIP submittal and for a PSD SIP submittal, the public participation requirements in 40 CFR 5l.l66(q). Another commenter asserts that the submitted public participation program is robust and fully93 compliant with federal requirements and in fact exceeds federal requirements because of its broader scope and trial-type contested hearings process.

The submitted rule is not severable from the Programbecause it relates to the public participation requirements ofthe submitted Program. We are disapproving the Texas Flexible Permits State Program, and we are disapproving the submitted 30 TAC 116.740, because this submitted rule for public participation is not severable from the submitted Program. See 74 FR 48480, at 48490 and 48493 and section III.F for further information.

E. 

### Definition of"account"
TCEQ does not agree with EPA's understanding ofthe term "account" as applied by TCEQ. It further states that it has integrated and translated the many federal definitions ofthe "source" in an attempt to maintain consistentterminology between state and federal programs. TCEQ comments that its definition ofan "account" references the term "source" as defined in Texas law. According to TCEQ, within this rule, it interprets "sources" as being equivalentto multiple "facilities" (a discrete piece ofequipment or
source ofair contaminants) under Texas Minor Source definitions. TCEQ further commented that a Flexible Permit cannot cover more than one major stationary source, as the term is used by EPA and TCEQ for federal NSRpurposes. See comment 1 under section III.E. To be approvable, a Flexible Permit cannot cover more than one major stationary source, as the term is used by EPA and TCEQ for federal NSRpurposes.94 Other commenters note that the definition of"account" is tied to the definition of"site" at 30 TAC 101.1(1) and (87). This, in their view limits an account to a specific plant site. These commenters also pointto the Title V rules as providing additional limitation. Citing 30 TAC l16.71O(a)(1) and (4), these commenters point out that only one Flexible Permit may be issued at an account site and a Flexible Permit may not cover sources at
more than one account site. In summary, these commenters conclude that ifthese rules are read togetherthey provide sufficient safeguards against a major stationary source netting a significant emissions increase against a decrease occurring outside a site using a Flexible Permit. Anothercommenter comments ifa Flexible Permit could be obtained for more than one site, the only reasonably construction ofthe rule would be "
...

### a facility, group of facilities, accountor accounts. .." but the rule is not so constructed because it does not extend a Flexible Permitto more than one site. After considering these comments EPA observes that that an account could include an entire company site, which could include multiple major stationary sources, the submitted SIP revisions may allow a major stationary source to net a significantemissions increase against a decrease occurring outside the stationary source from facilities on the account site that are covered under a Flexible Permit. An account may also allow an emission increase to be determined based on an evaluation ofa subset offacilities within a major stationary source. See section lII.E (response to comment 1) above and 74 FR 48480, at 48489 for further information. The commenter's reliance on the Title V rules does not identify a specific provision in the Texas Title V program that supports the commenter's position.95 In summary, for the reasons stated above, the definition of"account" is not clearly limited to a single major stationary source and may include multiple major stationary sources, or in other circumstances, may include a subset ofa major stationary source. The submitted Program is not approvable because it does not include legally enforceable procedures for ensuring that both the permit application and the State's permitting processes (i.e., the State's review, supporting technical information, the public notice and commentprocess, the record, and most importantly the structuring ofeach Flexible Permitin such amanner as to be clear) will clearly inform the public, other governmental agencies, or a court, which facilities are included under the permit and cap, and which are included under the permitbut subject to individual limitations. See 74 FR 48480, at 48485 and section III.E for further information.



# v. Final Action

EPA is disapproving the Texas Flexible Permits State Program submitted in a series ofSIP revisions, identified in the Tables in section II ofthis preamble. These affected provisions are addressed in Texas' November 29, 1994 SIP revision submittal, as revised by severable portions in the March 13, 1996, SIP revision submittal, and severable portions ofthe July 22, 1998 SIP revision submittal that repealed and replaced portions of, as well as revised, the 1994 submittal and repealed and replaced all ofthe 1996 submittal; and as revised by severable portions in the October 25, 1999, September 11,2000, April 12, 2001, September4,2002, October 4,2002, and September 25,2003, SIP revision submittals.96

EPA is disapproving the submitted Texas Flexible Permits State Program as a Minor NSR SIP revision because it does not meet the Act and EPA's regulations and is not consistent with applicable statutory and regulatory requirements as interpreted in EPA guidance and policy. We also are disapproving the submitted Texas Flexible Permits State Program as a substitute MajorNSR SIP revision, because it does not meet the Act and EPA's regulations and is not consistent with applicable statutory and regulatory requirements as interpreted in EPA guidance and policy.


### VI. Statutory and Executive Order Reviews

A. Executive Order 12866, 

### RegulatoryPlanning andReview

This final action has been determined not to be a "significantregulatory action" subjectto review by the Office ofManagement and Budgetunder Executive Order 12866 (58 FR 51735, October4, 1993).



### B. PaperworkReduction Act

This action does not impose an information collection burdenunder the provisions ofthe Paperwork Reduction Act, 44 U.S.C. 3501 

### et seq., because this SIP disapproval under section 110 and subchapter I, part D ofthe Clean Air Act will not inand-ofitselfcreate any new information collection burdens but simply disapproves

### 97 certain State requirements for inclusion into the SIP. Burden is defined at 5 CFR 1320.3(b). Because this final action does not impose an information collection burden, 

### thePaperworkReduction Act doesnotapply.

C. Regulatory FlexibilityAct

The Regulatory Flexibility Act (RFA) generally requires an agency to conduct a regulatory flexibility analysis ofany rule subject to notice and commentrulemaking requirements unless the agency certifies that the rule will not have a significant economic impact on a substantial number ofsmall entities. Small entities include small businesses, small not-for-profit enterprises, and small governmentaljurisdictions. For purposes of assessing the impacts oftoday's rule on small entities, small entity is defined as: (1) A small business as defined by the Small Business Administration's (SBA) regulations at 13 CFR 121.201; (2) a small governmentaljurisdiction that is a government ofa city, county, town, school district or special district with a population ofless than 50,000; and (3) a small organization that is any not-for-profit enterprise which is independently owned and operated and is not dominant in its field. This rule will not have a significant impact on a substantial number ofsmall entities because SIP approvals and disapprovals under section 110 and part D ofthe Clean Air Act do not create any new requirements but simply approve or disapprove requirements that the States are already imposing.
Furthermore, as explained in this action, the submissions do not meet the requirements ofthe Act and EPA cannot approve the submissions. The final disapproval98 will not affect any existing State requirements applicable to small entities in the State of Texas. Federal disapproval ofa State submittal does not affect its State enforceability. After considering the economic impacts oftoday's rulemaking on small entities, and because the Federal SIP disapproval does not create any new requirements or impact a substantial number ofsmall entities, I certify that this action will not have a significant economic impact on a substantial number ofsmall entities. Moreover, due to the nature ofthe Federal-State relationship under the Clean Air Act, preparation offlexibility analysis would constitute Federal inquiry into the economic reasonableness ofstate action. The Clean Air Act forbids EPA to base its actions concerning SIPs on such grounds. 

### Union Electric Co., v. 

### Us. EPA, 427 U.S. 246, 255-66 (1976); 42 74l0(a)(2).


### D. Unfunded Mandates ReformAct

This action contains no Federal mandates under the provisions ofTitle II ofthe Unfunded Mandates Reform Act of 1995 (UMRA), 2 U.S.c. 1531-1538 "for State, local, or tribal governments or the private sector." EPA has determined that the disapproval action does not include a Federal mandate that may result in estimated costs of$100 million or more to either State, local, or tribal governments in the aggregate, or to the private sector. This Federal action determines that pre-existing requirements under State or local law should not be approved as part ofthe Federally approved SIP. It imposes no
new requirements. Accordingly, no additional costs to State, local, or tribal governments, or to the private sector, result from this action.99

E. Executive Order 13132, Federalism

Executive Order 13132, entitled "Federalism" (64 FR 43255, August 10, 1999), requires EPA to develop an accountable process to ensure "meaningful and timely input by State and local officials in the development ofregulatory policies that have Federalism implications." "Policies that have Federalism implications" is defined in the Executive Orderto include regulations that have "substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels ofgovernment."

This action does not have Federalism implications. It will not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution ofpower and responsibilities among the various levels of government, as specified in Executive Order 13132, because it merely disapproves certain State requirements for inclusion into the SIP and does not alter the relationship or the distribution ofpower and responsibilities established in the Clean Air Act. Thus, Executive Order 13132 does not apply to this action.

F Executive Order 13175, Coordination With Indian Tribal Governments

This action does not have tribal implications, as specified in Executive Order 13175 (59 FR 22951, November 9, 2000), because the SIP EPA is disapproving would100 not apply in Indian country located in the State, and EPA notes that it will not impose substantial directcosts on tribal governments or preempttribal law. This final rule does not have tribal implications, as specified in Executive Order 13175. 

### It will not have substantial direct effects on tribal governments, on the relationship between the Federal government and Indian tribes, or on the distribution ofpower and responsibilities between the Federal government and Indian tribes. This action does not involve or impose any requirements that affect Indian Tribes. Thus, Executive Order 13175 does not apply to this action.

G. 

### Executive Order 13045, Protection of Children From Environmental Health Risks and Safety Risks

EPA interprets Executive Order 13045 (62 FR 19885, April 23, 1997) as applying only to those regulatory actions that concern health or safety risks, such that the analysis required under section 5-501 ofthe Executive Orderhas the potential to influence the regulation. This action is not subjectto Executive Order 13045 because it is not an economically significantregulatory action based on health or safety risks subject to Executive Order 13045 (62 FR 19885, April 23, 1997). This SIP disapproval under section 110and subchapter I, part D ofthe Clean Air Act will not in-and-ofitselfcreate any new regulations but simply disapproves certain State requirements for inclusion into the SIP.101

H Executive Order 13211, Actions That SignificantlyAffectEnergy Supply, Distribution, or Use

This rule is not subjectto Executive Order 13211 (66 FR28355, May 22,2001) because it is not a significant regulatory action under Executive Order 12866.

1 National Technology Transfer andAdvancementAct
Section 12(d) ofthe National Technology Transfer and Advancement Act of 1995 ("NTTAA"), Public Law No. 104-113, section 12(d) (15 U.S.C. 272 note) directs EPA to
use voluntary consensus standards in its regulatory activities unless to do so would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards
are technical standards (e.g., materials specifications, test methods, sampling procedures, and business practices) that are developed or adopted by voluntary consensus standards bodies. NTTAA directs EPA to provide Congress, through the Office ofManagement and Budget, explanations when the Agency decides not to use available and applicable voluntary consensus standards. The EPA believes that this action is not subject to requirements ofSection 12(d) ofNTTAA because application ofthose requirements would be inconsistent with the Clean Air Act. Today's action does not require the public to perform activities conducive to the use ofVCS.102 J Executive Order 

### 12898: Federal Actions toAddress EnvironmentalJustice in Minority Populations andLow-Income Populations

Executive Order 12898 (59 FR 7629, (February 16, 1994)) establishes Federal executive policy on environmentaljustice. Its main provision directs Federal agencies, to the greatest extentpracticable and permitted by law, to make environmentaljusticepart oftheir mission by identifying and addressing, as appropriate, disproportionately high and adverse human health or environmental effects oftheir programs, policies, and activities on minority populations and low-income populations in the United States.

EPA lacks the discretionary authority to address environmentaljustice in this action. In reviewing SIP submissions, EPA's role is to approve or disapprove state choices, based on the criteria ofthe Clean Air Act. Accordingly, this action merely disapproves certain State requirements for inclusion into the SIP under section 110 and subchapterI, part D ofthe Clean Air Act and will not in-and-ofitselfcreate any new requirements. Accordingly, it does not provide EPA with the discretionary authority to address, as appropriate, disproportionate human health or environmental effects, using practicable and legally permissible methods, under Executive Order 12898.



### K. CongressionalReviewAct

The Congressional Review Act, 5 U.S.c. section 801 et seq., as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that103 before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy ofthe rule, to each House ofthe Congress and to the Comptroller General ofthe United States. EPA will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House ofRepresentatives, and the Comptroller General ofthe United States prior to publication ofthe rule in the Federal Register. A major rule cannot take effect until 60 days after 

### it is published in the Federal Register. This action is not a "majorrule" as defined by 5 U.S.C. 804(2).

1. Petitionsfor Judicial Review

Under section 307(b)(l) ofthe Clean Air Act, petitions forjudicial review ofthis action must be filed in the United States Court ofAppeals for the appropriate circuit by [FEDERAL REGISTER OFFICE: insert date 60 days from date ofpublication of this document in the Federal Register]. Filing a petition for reconsiderationby the Administrator ofthis final rule does not affect the finality ofthis rule for the purposes of judicial review nor does it extend the time within which apetition forjudicial review may be filed, and shall not postpone the effectiveness ofsuch rule or action. This action may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)104

List ofSubjects in 40 CFR Part 52

Environmental protection, Air pollution control, Carbon monoxide, Intergovernmental relations, Lead, Nitrogen dioxide, Ozone, Particulate matter, Reporting and recordkeeping requirements, Sulfuroxides, Volatile organic compounds. 

# 0/ 3 D/10 Dated:105 40 CFRpart 52 is amended as follows:



### PART 52-[AMENDED]

1. The authority citation for part 52 continues to read as follows:


### Authority: 42 U.S.C. 7410 et seq.


### Subpart SS-Texas
2. § 52.2273 is revised by adding a new paragraph (c) to read as follows:
§ 

### 52.2273 Approval status.



## * * * * *
(c) EPA is disapproving the Texas SIP revision submittals under 30 TAC Chapter 116 - Control ofAir Pollution by Permits for New Construction or Modification as follows:
(1) The following provisions under 30 TAC Chapter 116, Subchapter ADefinitions:

### 106 (A) Portion ofthe definition of"modification ofexisting facility" in 30 TAC 116.10(11)(F), submitted March 13, 1996; repealed and readopted June 17, 1998 and submitted July 22, 1998; adopted August 9, 2000 and submitted September 11, 2000; and revised August 21,2002 and submitted September4,2002;
(B) 30 TAC 116.13 - Flexible Permit Definitions, adopted November 16, 1994 and submittedNovember 29, 1994; repealed and readoptedJune 17, 1998 and submitted July 22, 1998;
(2) The following provision in 30 TAC Chapter 116, Subchapter B - New Source Review Permits, Division 1 - Permit Application: 30 TAC 116.11O(a)(3)- Applicability, adopted November 16, 1994 and submittedNovember 29, 1994; repealed and readopted June 17,1998 and submitted July 22, 1998;
(3) The following sections in 40 TAC Chapter 116, Subchapter G - Flexible Permits:
(A) 30 TAC 116.710 - Applicability

- adopted November 16,1994 and submittedNovember 29, 1994; revised June 17, 1998 and submitted July 22, 1998; and adopted August 9, 2000 and September 11, 2000;
(B) 30 TAC 116.711 - Flexible Permit Application

- adopted November 16, 1994 and submitted November 29, 1994; revised June 17, 1998 and submitted July 22,107 1998; revised March 7, 2001 and submitted April 12, 2001; and revised August 21, 2002 and submitted September 4,2002;
(C) 30 TAC 116.714 - Application Review Schedule - adopted November 16, 1994 and submittedNovember 29, 1994, and revised June 17, 1998 and submitted July 22, 1998;
(D) 30 TAC 116.715 - General and Special Conditions - adopted November 16, 1994 and submittedNovember 29,1994; revised June 17,1998 and submitted July 22, 1998; adopted August 9,2000 and submitted September 11,2000; revised March 7, 2001 and submitted April 12, 2001; revised August 21,2002 and submitted September4,2002; and revised August 20, 2003 and submitted September 25,2003;
(E) 30 TAC 116.716

- Emission Caps and Individual Limitations

- adopted November 16, 1994 and submittedNovember 29, 1994;
(F) 30 TAC 116.717 - Implementation Schedule for Additional Controls - adopted November 16, 1994 and submittedNovember 29, 1994;
(G) 30 TAC 116.718 - Significant Emission Increase - adopted November 16, 1994 and submittedNovember 29, 1994;108 (H) 30 TAC 116.720 - Limitation on Physical and Operational Changesadopted November 16,1994 and submitted November29,1994;
(I) 30 TAC 116.721 - Amendments and Alterations

- adoptedNovember 16, 1994 and submittedNovember29,1994; revised June 17,1998 and submitted July 22, 1998; and revision adopted August 9, 2000 and submitted September 11, 2000;
(J) 30 TAC 116.722 - Distance Limitations

- adoptedNovember 16, 1994 and submittedNovember 29, 1994; and revision adopted August 9, 2000 and submitted September 11, 2000;
(K) 30 TAC 116.730 - Compliance History - adopted November 16, 1994 and submittedNovember 29, 1994; and revised June 17, 1998 and submitted July 22, 1998;109

(L) 30 TAC 116.740 - Public Notice and Comment

- adopted November 16, 1994 and submitted November 29, 1994; revised June 17, 1998 and submitted July 22, 1998; and revision adopted September 2, 1999 and submitted October 25, 1999;
(M) 30 TAC 116.750 - Flexible Permit Fee - adoptedNovember 16, 1994 and submittedNovember 29, 1994; revised June 17, 1998 and submitted July 22, 1998; adopted August 9, 2000 and submitted September 11,2000; and revision adopted September 25, 2002 and submitted October4, 2002;
(N) 30 TAC 116.760 - Flexible Permit Renewal

- adopted November 16, 1994 and submittedNovember 29, 1994.