ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R06-0AR-2005-TX-0032; FRL-__-'

Approval and Promulgation of Implementation 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 of Texas 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 SIP requirements 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].
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ADDRESSES: EPA has established a docket for this action under Docket ID 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 of 8:30am and 4:30pm weekdays

except for legal holidays. Contact the person listed in the FOR FURTHER

INFORMATION CONTACT paragraph below to make an appointment. If possible,

please make the appointment at least two working days in advance of your visit. There

will be a 15 cent per page fee for making photocopies of documents. 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:
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Texas Commission on Environmental Quality, Office of Air Quality,

12124 Park 35 Circle, Austin, Texas 78753.

FOR FURTHER INFORMATION 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 of Federal Regulations - Protection

ofthe Environment.

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

the Act.

• "NSR" means new source review, a phrase intended to encompass the

statutory and regulatory programs that regulate the construction and
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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.

• "Minor NSR" means NSR established under section 110 ofthe Act and 40

CFR 51.160.

• "NNSR" means nonattainment NSR established under Title I, section 110

and part D ofthe Act, and 40 CFR 51.165.

• "PSD" means prevention ofsignificant deterioration of air quality

established under Title I, section 110 and part C ofthe Act, and 40 CFR

51.166.

• "Major NSR" means any new or modified source that is subject to 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 CFR part 50.
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• "MRR" means monitoring, reporting, and recordkeeping requirements.

Table of Contents

I. What Action is EPA Taking?

II. What is the Background?

A. Summary of Our 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. Whether the Flexible Permits Program Meets the Requirements for a

Substitute Major NSR SIP Revision

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

NSR SIP Revision

2. Requirements for Major NSR Applicability Determinations

3. Circumvention of Major NSR

4. Use of Allowable Emissions in Major NSR

5. Retention of Major NSR Permit Terms and Conditions

6. Protection ofthe NAAQS Attainment under Major NSR
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D. Whether the Flexible Permits Program Meets the Requirements for a

Minor NSR SIP Revision

I. Applicability for a Minor NSR Program

2. Establishment ofthe Emission Cap under Minor NSR

3. Enforceability of a Minor NSR Program

4. Revocation ofMajor NSR Permits under a Minor NSR Program

5. Protection ofthe NAAQS under a Minor NSR Program

E. Definition of Account

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 Minor NSR 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 Reviews
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I. What Action 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;

September 4,2002; October 4,2002; 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 of Air 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 of existing 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 thereof is discussed in section III below. In the proposal and in the
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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 Minor NSR SIP revision. Our grounds for disapproval as

a Minor NSR SIP revision include the following:

• The submitted Program has no express regulatory prohibition clearly limiting

its use to Minor NSR and has no regulatory provision clearly prohibiting the

use ofthis submitted Program from circumventing the Major NSR 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 of compliance.

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 of a Flexible Permit, and it cannot assure compliance

with the Program or ofthe affected source;
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• It lacks the necessary more specialized monitoring, recordkeeping, and

reporting (MRR) requirements required for this type of Minor NSR program,

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 of any 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 a judicial proceeding to enforce the Flexible

Permit;

• It lacks replicable, specific, established implementation procedures for

establishing the emissions cap in a Minor NSR Flexible Permit;

• It fails to ensure that the terms and conditions of Major NSR 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.
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Holders of Major NSR SIP permits are not prohibited from using the

submitted Program's allowables-based emissions cap. The Act prohibits the

use of an 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 Minor NSR

SIP revisions; and

• Based upon, among other things, the lack of any 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 ofsufficient MRR requirements for this type of

permit program, and the lack of enforceability, EPA lacks sufficient

information to 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 other requirement ofthe Act.

We are disapproving the submitted Texas Flexible Permits State Program as not

meeting the requirements for a substitute Major NSR SIP revision. EPA understands that

the TCEQ intended for the submitted Program to be a Minor NSR program but we are

required to review it as a substitute Major NSR SIP revision because the State should

have included express language stating that, as it did in the two other Minor NSR SIP
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alternative permit options (Standard Permits and Pennits by Rule), that the submitted

Program is clearly limited to Minor NSR and prohibits circumvention ofMajor NSR.

Our grounds for disapproval as a substitute Major NSR SIP revision include the

following:

• It is not clearly limited to Minor NSR thereby potentially exempting new

major stationary sources to construct and major modifications to occur

without a Major NSR permit;

l;

• It has no regulatory provisions clearly prohibiting the use ofthis Program

from circumventing the Major NSR 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 Major NSR preconstruction permit;

• 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 Major NSR

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 Major NSR SIP program;
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• 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 Major NSR, it fails to meet the statutory and regulatory

requirements for a Major NSR SIP revision and is not consistent with EPA

policy and guidance on Major NSR 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 Major NSR revised 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 sufficient MRR

requirements for this type of permit program, 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 nonseverab1e
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definitions in the Flexible Permits Definitions and the General Definitions were not

submitted to meet a mandatory requirement ofthe 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 ofOur Proposed Action

On September 23,2009, EPA proposed to disapprove revisions to the SIP

submitted by the State of Texas 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 of existing facility" under Texas's General Definitions in Chapter 116,

Control of Air Pollution by Permits for New Construction or Modification. EPA finds

that these submitted provisions and definitions are not severable from each other.

B. Summary ofthe Submittals Addressed in this Final Action

Tables 1 and 2 below summarize the changes that are in the SIP revision

submittals. A summary of EPA's evaluation of each section and the basis for this final
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action is discussed in sections III through V ofthis preamble. The TSD (which is in the

docket) includes a detailed evaluation ofthe submittals.

T bl 1 Sa e ummary 0 f each SIP b . su mittaI t at h IS afflecte )y t db hiIS action.

Title of SIP 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 of existing

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
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h ffl db h' 1 . T bi 2 Sa e ummary 0 f each regu anon t at IS a ecte )y t IS action,

Section Title Date Date Comments

Submitted Adopted by

State

Chapter 116 - Control of Air 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 of existing 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)
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• 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 existing paragraphs

(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

Changes
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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 Relevant Actions on the Texas Permitting SIP Revision Submittals

The Settlement Agreement 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 submitted NSR SIP by August 31, 2010, as provided in the

Consent Decree 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 current Flexible Permits rules. We will, of

course, consider any rule changes if and when they are submitted to EPA for review.
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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 behalf ofBCCA Appeal Group (BCCA); Baker Botts,

L.L.P., on behalf of Texas Industrial Project (TIP); Bracewell & Guiliani, L.L.P., on

behalf ofthe Electric Reliability Coordinating Council (ERCC); Gulf Coast Lignite

Coalition (GCLC); Office ofthe Mayor - City of Houston, Texas (City of Houston);

Harris County Public Health and Environmental Services (HCPHES); Sierra Club -

Houston Regional Group (Sierra Club); 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 of Texas at Austin School of Law - Environmental Clinic on

behalf of Environmental 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,
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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 of Houston, 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 pollution permits being issued by TCEQ utilizing TCEQ's

current illegal policy; creating a moratorium on the operations of any new coal fired

power plants; 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 stronger rules in place in order to reduce global-warming emissions
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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, creates jobs in Texas, and protects the air

quality, health, and communities.

In addition, SCMS sent 273 similar letters (sent via e-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 of commitment by TCEQ to protect air quality, the need

for clean energy efficient growth, impacts upon human health, endangerment of wildlife,

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 of our

proposed action relating to the Flexible Permits Program.
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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 of our 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 relief and should consider penalty only

cases.

Response: EPA enforcement ofthe CAA in Texas is outside the scope of our

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 of providing operational flexibility. In 1990,

Congress added Title V to the CAA and it specifies that state Title V programs must

include provisions to allow changes within a permitted facility without requiring a permit
22

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 of emissions 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 program requirements

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 Program because it provides for the establishment of emissions 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 of 40 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 74
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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 of operational

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 of equal 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 of operational 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 a permit 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 a representative 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 Permit rule, 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 craft flexible 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 operator to 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 of data

sufficient to 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 of another 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 a judicial 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 parameter monitoring 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 of any 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

I employment ofspecific monitoring approaches, providing the technical specifications for

each ofthe specific allowable monitoring systems, and requiring replicable procedures

for the approval of any 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 a judicial proceeding to enforce the

Flexible Permit.

The federal Flexible Air Permit Rule, although it is not a NSR SIP program but a

Title V program that provides for an alternative NSR SIP approach, is a cap program but

it too requires replicable methodologies and sufficient MRR requirements. The

submitted Program does not contain a replicable methodology for establishing the

emissions cap and sufficient MRR requirements. 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 comment 4) concerning MRR for the proposed

Indian Country Minor NSR rule.

Comment 7: GCLC, TIP, BCCA, and TCC comment that EPA ignores the fact

that the Texas Flexible Permit Program has had a significant impact on improving air

quality in Texas. TCEQ commented that significant emission reductions have been

achieved by the submitted Program through the large number of participating

grandfathered facilities, which resulted in improved air quality based upon the monitoring

data.

BCCA, TAB, TxOGA, and ERCC comment that the legal standard for evaluating

a SIP revision for approval is whether the submitted revision 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 of continued 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 of approved 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 Program because it is not

enforceable, it lacks an objective, 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, is ambiguous
28

regarding circumvention of Major NSR, and there is not sufficient information to 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); Natural Resources 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 of emission 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 comment that the concepts embedded in the

Program have been part ofthe Title V, NSR, and PAL programs for many years and were

upheld as consistent with the Clean Air Act by the U.S. Supreme Court in Chevron v.

NRDC, 467 S.C. 837 (June 25,1984). Texas' Program is actually more stringent than

EPA's interpretation ofthe NSR program 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 relevant to 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 a per se 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 the
30

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 a review

process that always determines the applicability of federal 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 implement the

submitted Program in such a manner that the submitted Flexible Permit Program does not

supersede the duty to comply with the Texas Major NSR SIP. In contrast to the

submitted Program, however, in its Minor NSR SIP for Permits by Rule and Standard

Permits, TCEQ included additional regulatory language that explicitly prohibits the use

ofthe Permits by Rule alternative permit program and the Standard Permits alternative

permit program from being used for major stationary sources and major modifications
31

and explicitly prohibits circumvention ofthe Major NSR requirements. I Specifically, the

Standard Permits and Permits by Rule NSR SIP rules explicitly require a Major NSR

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 a Major NSR applicability

determination. The Flexible Permits Program is also an alternative permit program. If

the State wishes for it to be considered as solely a Minor NSR 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 other Minor NSR alternative permit options. This submitted Program

lacks such language. While the inclusion ofsuch specific language is not ordinarily a

minimum NSR SIP program element, we conclude that the inconsistent treatment

between the similar types ofNSR programs creates the potential for an unacceptable

ambiguity about a permit holder'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 submitted regulations for their legal

1 Although the Texas Minor NSR SIP rules for Permits by Rule and Standard Permits remain acceptable for

a Minor NSR SIP revision, EPA is conducting a review of each individual Permit by Rule and/or Standard

Permit, EPA is conducting this review to ensure that the 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 of Flexible

Permits as only a Minor NSR option and concludes that TCEQ's rules therefore do not

intend for the Flexible Permits Program to be an equivalent to a Major NSR program.

Response: We disagree that 30 TAC 116.711 identifies the use of Flexible Permits

as only a Minor NSR permitting option. Contrary to commenter's assertion, this rule

merely replicates certain general permitting requirements that are also common to

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 of Flexible

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 Major NSR and explicitly prohibiting

circumvention ofthe Major NSR requirements, 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 SIP revision submittal for a substitute Major NSR SIP revision. It has

always viewed the Program as a Minor NSR program. 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

Permit Program 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 of existing

similar Texas Minor NSR SIP programs, as it contains no express provision that clearly

limits the Program to Minor NSR and no explicit provision 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 Major NSR Applicability Determinations

Comment 1: Although TCEQ comments that the Flexible Permit Program requires

that the applicability of Major 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 consider rulemaking to ensure Major NSR

applicability requirements are included in Flexible Permit reviews, and that the

requirements ofthe appropriate Major NSR permitting program are met when triggered.

Response: EPA appreciates TCEQ's understanding that the Program lacks clarity

on the issue ofthe applicability ofMajor NSR requirements and that the State plans to

revise its rules to ensure it is clear that the Major NSR applicability determination

requirements are required before one can use the Program, and that the requirements of

the appropriate Major NSR permitting 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

Minor NSR 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 Permit rules 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

of public health and welfare and does not address applicability of Major 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 of no 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 Major NSR review and if necessary,

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 of not meeting the

federal NSR SIP requirements, not because it embeds the concepts of a cap program.

The commenter's comments are also at odds with TCEQ's comments. TCEQ comments

that its Program is intended to be a Minor NSR SIP program only and not intended to

address Major NSR SIP requirements. In contrast, the commenter describes the

submitted Program as covering major modifications and having a Flexible Permit (not a

Major NSR SIP permit) altered to reflect the Major NSR 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 of Major 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 of actual rates, project emission
37

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 a program consistently with the federal requirements even though not

constrained to 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

similar to the Minor NSR SIP provisions for Minor NSR SIP Permits by Rule and

Standard Permits that prohibit circumvention ofthe Major NSR requirements. Both the

SIP-codified rules for Permits by Rule and the SIP-codified rules for Standard Permits

contain clear regulatory provisions prohibiting the use ofthese Minor NSR permits from

circumventing Major NSR. There are no regulatory provisions prohibiting circumvention
38

of Major 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.

Comment 2: TCC and ERCC comment that the Flexible Permit Program does not

circumvent Major NSR review. The Program is explicit in that any new major stationary

source or major modification must go through Major NSR and the Flexible Permit must

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 Major NSR

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 provision that prohibits circumvention ofthe Major

NSR requirements. This lack ofsuch express provisions distinguishes the Flexible

Permit Program 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 explicit requirement to the submitted Program. Rather, it
39

applies to a separate class of Existing Facility Flexible Permits that is severable from the

Flexible Permits Program.

4. Use of Allowable 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 of actual baseline

emissions to determine whether a project 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 Minor NSR SIP BACT. This lack ofspecificity by industry

contributes to EPA's concerns about whether the submitted Program is clearly limited to

Minor NSR. We recognize that the application of either 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 of a Flexible Permit. However, the

commenter provided no information to show a comparison of actual emission to potential

to emit for changes that occur after the Flexible Permit is issued to evaluate that the net
40

emission increase is based upon changes from baseline actual to either projected 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 of actual baseline emissions to determine whether a project will result in an increase

that triggers Major NSR applicability. See 74 FR 48480, at 48489-48490, for further

information.

5. Retention ofMajor NSR Permit Terms and Conditions

Comment: TAB, ERCC, and TxOGA comment that the submitted Program

requires that conditions of an existing PSD or Nonattainment permit be 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 of a

Flexible Permit still be required to continue to comply with all ofthe terrns and

conditions in the pre-existing Major NSR SIP permits. Federal NSR SIP regulations do

not provide for a blanket elimination of emission limits at individual units. The

submitted Program does not assure the retention ofthe pre-existing Major NSR SIP

permits' terms and conditions.
41

EPA's long-held position is that permits issued under federally approved PSD,

NNSR, and Minor NSR 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 relevant permitting 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 of enforceability and adequacy ofthe MRR requirements in the

submitted Program contributes to EPA's concern that not all ofthe conditions of a PSD

or NNSR SIP permit existing before the issuance of a 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 of section 11O(a)(2)(A) - (C) ofthe Act, which requires that SIP revision

submittals be enforceable. 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 of

the enforceability of permits issued under the Program. We are concerned with the broad

director discretion whether to include MRR requirements in a Flexible Permit and the

2 See EPA Letter from John Seitz, Director, Office of Air Quality Planning and Standards, to Robert

Hodanbosi and Charles Lagges, STAPPN ALAPCO, dated May 20, 1999.
42

lack of adequacy ofthe MRR requirements 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 of an existing PSD or Nonattainment permit 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 MRR requirements in order to 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 of each 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 Major NSR

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: Without the required demonstration from the State showing how the

customized Major NSR SIP revision is in fact as stringent as EPA's Major NSR revised

program and without, among other things, an objective, replicable methodology for

establishing the emission cap, the too broad director discretion provision for whether or

not to include MRR conditions in a Flexible Permit, the lack ofsufficient MRR

requirements for this type of permit program, and the lack of enforceability ofthe

submitted Program, EPA lacks sufficient information to make a finding that the

submitted Program, as a substitute for a Major NSR 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 a Minor NSR Program

Comment 1: The Clinic comments that the Flexible Permit rules do not include

adequate provisions for ensuring that changes that should trigger Major NSR 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. If a source has a Flexible Permit that does not contain all the facilities

located at that source and a project within the Flexible Permit triggers netting, all

facilities (under the cap and outside the cap) at the source are evaluated to determine

whether a net significant emissions increase at the source has occurred. If a 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 comment that 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 Minor NSR sources and does not

limit its scope to federally regulated pollutants. EPA applies the term "modification"

differently in the Minor NSR context and the Major NSR context. Therefore, it also is

within Texas's discretion to define the term differently for purposes of Minor NSR.

Citing the EAB in In re Tennessee Valley Authority, 9 EAD 357,461(EAB Sept. 15,

2000) commenters maintain that 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 Minor NSR. 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 clear on

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 of a Flexible Permit. Therefore

based upon the ambiguities in the Program's rules, we disagree that the Flexible Permit

Program is exclusively a Minor NSR program. 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 prohibit use 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 comment that the submitted Program's rules do

contain an established and replicable method for determining an emissions cap. TAB and

TxOGA comment that EPA provides no example of any unsuccessful attempt to replicate

an emission cap using the current TCEQ rules. TAB and TxOGA comment that 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 emission rates. While BACT determinations may vary between specific types of

sources, the use of federal and state BACT guidance results in a replicable 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 a particular site. Both sources

and emissions that are not incorporated into a Flexible Permit are subject to 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

Permit may also impose individual emission limits where necessary to ensure satisfaction

of offsite screening levels of hazardous air pollutants or NAAQS for criteria pollutants,

or to prevent violation of any federal permitting requirement.
47

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 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 criteria for 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 of State 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 Permit that is a summation

ofBACT requirements (or a more stringent requirement if applicable). 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 of not 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 if a 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 covered by 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 of a Flexible Permit; establish

individual emissions limitations for each site, a facility on the site, a group of units on the

site; or for one pollutant but 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

Program pursuant to the CAA.
49

3. Enforceability of a Minor NSR Program

Comment 1: TCEQ comments that although the 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 MRR requirements. 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 Program to address MRR requirements, the submitted Program

lacks these requirements. See section lILA (response to comment 6) for further

information. EPA must evaluate the 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. 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-approved permitting." The City ofHouston also noted that the structure ofthe

Flexible Permit Program fails to assure compliance with the Major NSR requirements

and that these Flexible Permits are essentially unenforceable. The City of Houston

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 of pollutants.

Response: EPA agrees with these comments. Texas has opted for a program that

allows the permit holder to select which new facilities and/or new modifications to

include under the umbrella of a Flexible Permit. The submitted Program fails to provide

clear criteria for determining what type ofMRR requirements are needed and furthermore

leaves the choice to the director, including whether to include any MRR requirements in

a Flexible Permit. See section lILA (response to comment 6) for further information.

Without the appropriate specialized MRR requirements, 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, or just the cap, or just

the individual emission limitation. Without the appropriate MRR requirements, it is

generally impractical to determine if a covered unit is subject to the cap or an individual

emission limitation, if a unit is subject to both the cap and a limitation, or whether a cap

or a limitation applies at what time. Further, there can be existing units on the site not

covered under the Flexible Permit cap 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 sufficient MRR requirements, 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 of emissions 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.

Without specialized MRR requirements, 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 covered unit 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 comment that the submitted

Program contains comprehensive and stringent provisions for monitoring, recordkeeping,

and reporting. These are more than adequate to ensure compliance on the part of permit

holders, enforceability by TCEQ, and protection of public 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 of existing SIP permits' major and minor NSR terms, limits

and conditions, and whether such requirements are incorporated into a Flexible Permit or

they remain outside the coverage ofthe Flexible Permit. Minor and Major NSR permits,

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 sufficient provisions requiring the holder of a Flexible Pennit to maintain

recordkeeping sufficient to ensure that all terms and conditions of existing permits

(including representations in the applications for such permits) that are incorporated into

the Flexible Pennit continue to be met. Paragraph (c)(6) ofsubmitted 30 TAC 116.715
53

generally requires maintenance of data sufficient to 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.

Comment 4: 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 tailored to 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 Minor NSR rules. 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 within two weeks, which in the view of

this commenter is more stringent than 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 of air 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 of process 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 other things, there are adequate means for

ensuring compliance by each holder of a 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 a NAAQS 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 Attachment to 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 of MRR requirements that are necessary to ensure that all

ofthe movement of emissions 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 MRR requirements 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 NSR rules 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 of national

scope to serve as a model or comparison for development of State Minor NSR programs.

See 71 FR 48695, at 48700 (August 21, 2006). EPA regulations require that it review a

Minor NSR SIP revision to determine if a plan includes "legally enforceable procedures"

that enable the permitting agency to determine whether a minor source will cause or
56

contribute to violations of applicable 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 MRR provisions in

the submitted Program and any MRR provisions in the proposed Indian Country Minor

NSR rules but a determination whether the submitted Program has sufficient legally

enforceable procedures that enable the permitting agency to determine whether a minor

source will cause or contribute to violations of applicable portions ofthe control strategy.

As stated above, the submitted Program lacks provisions explicitly addressing the type of

MRR requirements that are necessary to ensure that all ofthe movement of emissions

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.

Comment 5: TIP, BCCA, TAB, and TxOGA also point out that there is a wide

array of additional Texas rules specifying monitoring, recordkeeping, and reporting

requirements. For instance, the Texas Flexible Permit rules 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 Permit holders are subject to 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 MRR requirements, it is generally impractical

to determine information such as which emission points are covered, and which

modifications of existing non-covered emission points are covered. See section III.D.3

(response to comment 2) for further information. Without replicable implementation

procedures for establishing the emission cap and sufficient and MRR requirements, 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.

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, Shutdown Reporting and

Recordkeeping Requirements. These two referenced sections concern emission events

that are a subset ofthe universe of air emissions. Emission events are unauthorized

emissions by nature. See 30 TAC 101.1(28). Malfunction related emissions are those
58

unauthorized emissions that result from a sudden and unavoidable breakdown of process

or control equipment.6 EPA's concern with the structure ofthe Program and its lack of

specific MRR requirements is not with how malfunction and SSM emissions are treated

concerning MRR but 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 whether to 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 of a 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 comment that 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 Attachment to 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 comment that 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 sufficient to 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 sufficient even 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 itselfmust 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

criteria for determining what type ofMRR requirements are needed. The Program is too

complex to leave the choice ofMRR requirements up to the individual issuance of a

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 whether the Executive Director's choice ofMRR

requirements will be effective in terms of enforceability, 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 comment that EPA does not provide any example

of a permit or permits the review of which led to that conclusion that absence of certain

recordkeeping and reporting made it difficult 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 implement rulemaking 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 Permit rules contemplate that additional recordkeeping

requirements many be tailored to 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 NSR rules 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 should have 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 sufficient recordkeeping and reporting

requirements. This is necessary to ensure that not only does the submitted Program not
61

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 for Enforcement and

Compliance Monitoring, entitled "Review of State Implementation Plans and Revisions

for Enforceability and Legal Sufficiency" provides EPA's guidance for interpreting this

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 enforcement requirement. Specific,

objective, and replicable criteria are to be set forth for determining whether this new type

ofNSR permit will be truly equivalent to the other minor NSR SIP permits in terms of

being consistent with 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 sufficient to 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 umbrella of a Flexible Permit. Without the

appropriate specialized MRR requirements, it is generally impractical to determine

information such as which emission points are covered, and which modifications of

existing non-covered emission points are covered. See section I1I.D.3 (response to
62

comment 2) for further information. Submitted 116.711(7) is an illustration of our

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

MRR requirements 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 sufficient to 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 of monitor readings, 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 Minor NSR 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 prompt reports of deviations from permit requirements, including those
63

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 Minor NSR Program. The MRR provisions ofthe Texas

Flexible Pennit Program do not contain this level of MRR or otherwise sufficient MRR

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 permit program will be truly equivalent to

the other Minor NSR SIP permit programs in terms of being consistent with the levels

specified in the control strategies, including air quality impacts, etc. Appropriate MRR

provisions are necessary to establish how compliance will be detennined and be

sufficient to ensure that the NAAQS and Texas control strategies are protected.

Without replicable 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 Permit rules fail to require adequate monitoring and reporting for those

emission limits and requirements that are included in the Flexible Permit. The rules

require measurement of emissions "as determined by the executive director." See

submitted 30 TAC 116.711(2). They also require that unspecified "information and data

sufficient to 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 insufficient to demonstrate compliance with emission caps

applicable to dozens of dissimilar 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 must be 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 of pennits issued under the 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 of compliance. 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 an affected source, and it

cannot assure compliance with the Program or by the holder of a 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 a Flexible Permit should not be left to director discretion.

This complex and intricate Program, for enforceability purposes, requires sufficient MRR

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 of each affected entity under both

Major and Minor NSR. See section IILD.3 (response to comment 2) for further

information.

8 EPA's letter of March 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 MRR requirements that ensure compliance with all terms and

conditions of each 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 of pre-existing NSR permits 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, it reported only the Flexible Permit and its associated caps as the applicable

limits, rather than the limits from the pre-existing Major NSR SIP permits.

Response: The submitted Program lacks adequate program requirements for

whether or not the terms and conditions of pre-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 of appropriate MRR requirements in the Program. An individual

commenter states that as an air quality investigator for the City of Houston Bureau of Air

Quality Control, investigating documentation of compliance for a Flexible Permit was

presented an entire roomful of binders, 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 highlight
68

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 all ofthe movement of emissions 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. This comment also highlights the lack

of adequate program requirements for the tracking of existing SIP permits' major and

minor NSR 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 NSR Permits under a Minor NSR Program

Comment: The Clinic comments that Flexible Permits are used to eliminate or

amend existing Nonattainment NSR and PSD permit terms 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 of a Flexible Permit to make de facto

amendments of existing SIP permits, including changes in the terms and conditions (such

as throughput, fuel type, hours of operation) of minor and major NSR permits, without a

preconstruction review 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 Tulsa Municipal Waste-Incinerator

Facility," from Gary McCutchen, Chief ofOAQPS 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 Minor NSR 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 of a 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 of enforceability, 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 ofAccount

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 equivalent to multiple "facilities" (a facility is a discrete piece of

equipment or source of air 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 NSR purposes.

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 to
71

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 of a Flexible Permit to 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, a petroleum 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 of a 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 of air 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 of equipment. This submitted Program establishes an emissions

cap over a group of one 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" cannot be interpreted to be limited to a single major stationary source.

Comment 2: BCCA, TCC, TIP and TAB, and TxOGA comment that 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 account to 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 together they

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 if a Flexible Permit could be obtained for more than one site, the only

reasonably construction ofthe rule would be " ... a facility, group offacilities, account or

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 comment that 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 concern that 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's
73

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 permit program 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 other requirements

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

limited to a single major stationary source and may include multiple major stationary

sources, or in other circumstances, may include a subset of a major stationary source.
74

F. Public Participation

Comment 1: Tee comments that anyfuture changes in the public 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 present rulemaking.

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 Minor NSR permits and modifications, the requirements under 40 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 of Flexible Permits and amendments

to a Flexible Permit ifthe action involves construction of a new facility or meets certain

criteria, including modifications resulting in allowable emissions increases of 250 tons

per year of carbon monoxide and nitrogen oxides or 25 tons per year of other pollutants.

See 30 TAC 39.403(b). This restriction is inconsistent with federal requirements for both
75

Major and Minor NSR. The commenters further object to the use of alterations and

permits by rule to change Flexible Permit terms and conditions; such changes should be

made through permit amendment with at least 30-days public notice and comment.

Response: In the proposal, EPA 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.

The comments relating to the provisions in 30 TAC Chapter 39, the use of permit

alterations and Permits by Rule in lieu of permit amendment with at least 30-days public

notice and comment are outside the scope ofthis action.

Comment 3: GCLC provided comments on Texas's submitted public 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 air permit application and TCEQ is obligated to respond whereas

under federal requirements only affected persons 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 well
76

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 brief discussion of how 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 of new 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 of the Texas Flexible Permits

State Program?

EPA is disapproving revisions to the SIP submitted by the State of Texas 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 federally
77

approved Texas SIP and may be subject to enforcement actions for violations of the 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 of Air

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 isfor a Major or Minor

NSR SIP Revision

Several commenters claim that the submitted Program is clear that every project

for which a Flexible Permit is 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 Program requires compliance
78

with the Major NSR requirements. The latter commenters agree with EPA's analysis of

the submitted Program in the proposal and comment that 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 exempt facilities 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 of Major 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 of Major

NSR. The absence of a similar Major NSR applicability determination requirement and a
79

similar regulatory prohibition for circumvention ofthe Major NSR SIP permitting

requirements in the submitted Flexible Permits Program creates unacceptable ambiguity.

The commenters opposing our proposed action fail to provide an explanation of why the

TCEQ did not write the submitted Flexible Permit rules with the same provisions as the

Texas Minor NSR 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 Minor NSR Permits by Rule and Standard

Permit SIP rules. The State, however, did not include such provision 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 Not Approvable as a Substitute Major NSR

SIP Revision

Because ofthe State's disavowal of any intent to have this SIP revision submittal

treated as a substitute for a Major NSR 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 Major NSR SIP program requirements. It also did not explain how

the submitted Program is consistent with the Act's requirements for a Major NSR 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 Rule
80

NSR SIP programs. This lack of a similar regulatory structure creates the ambiguities

whether the submitted Program is truly limited to Minor NSR and whether it prohibits the

circumvention ofthe federal Major NSR SIP requirements. Without the required

demonstration and with the ambiguities, EPA is disapproving the Program as not meeting

the Major NSR SIP requirements that require the Major NSR applicability requirements

be met and that prevent circumvention of Major 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 criteria for

a Major NSR 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 emission cap 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 of emissions of a subset of units 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 Major NSR SIP requirements and is inconsistent with Alabama

Powerv. Costle, 636 F.2d 323, 401-403 (D.C. Cir. 1980) and Asarco v. 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 a baseline to determine applicability.

Therefore, this use of allowables is inconsistent with the requirements ofthe Act for

Major NSR and is contrary to New York v. 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 of an existing PSD or Nonattainment NSR 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 comment that the submitted Program

contains no such requirement and that TCEQ regularly voids existing Nonattainment and

PSD NSR permits when it issues a Flexible Permit. The submitted Flexible Permit

Program is not clear and explicit that Flexible Permits cannot be used to eliminate or

amend existing Nonattainment and PSD NSR SIP permit terms and conditions. There are

not sufficient provisions in the submitted Program requiring the holder of a Flexible

Permit to maintain recordkeeping sufficient to ensure that all terms and conditions of preexisting 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 of existing SIP permits' Major NSR

terms, limits and conditions, and whether such requirements are incorporated into a

Flexible Permit or theyremain outside the coverage of the Flexible Permit. The

submitted Program is ambiguous and can be interpreted to allow holders of a Flexible

Permit to make de facto amendments of existing SIP permits, including changes in the

terms and conditions (such as throughput, fuel type, hours of operation) of Major NSR

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

ofMajor NSR SIP permits upon the issuance of a 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 Major NSR SIP that differs from the Federal Major NSR base 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 Major NSR 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 stringent than the Federal Major NSR SIP

base program. The State did not submit such a demonstration because it did not view the

submitted Program as a substitute for a Major NSR SIP revision.
83

Without the required customized Major NSR demonstration, the lack of a

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 MRR requirements, and the lack of enforceability, EPA

lacks sufficient information to make a finding that the submitted Flexible Permits

Program will prevent interference with NAAQS attainment and RFP or violations of any

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 is Not Approvable as a Minor NSR SIP Revision

Several commenters claim the Texas Flexible Permit Program explicitly requires

permit holders to comply with the federal Major NSR rules. 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 Program prohibits
84

circumvention ofMajor NSR. Another commenter 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 of applicable

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 prevent the

source from doing so (see 40 CFR 51.160(b)). There is, however, no express provision in

the submitted Flexible Permit Program rules that prohibits its use for Major NSR. There

is no express regulatory provision in the submitted Program requiring that it cannot be

used to circumvent the requirements of Major NSR. There are no regulatory provisions

clearly prohibiting circumvention of Major NSR. 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 Major NSR SIP requirements.

Several commenters state that the submitted Program does contain comprehensive

and stringent provisions for MRR or assert that there is a wide array of additional 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
85

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 Major 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 of each affected source under both Major and Minor NSR. These are needed

to make the submitted Program enforceable and to ensure that the issuance ofthe Flexible

Permits does not cause or contribute to a NAAQS 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 of any 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
86

minimum legal requirements for admissibility in a judicial 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 of emissions

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. The commenters' assertion that there 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 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 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. See 74 FR 48480, at 48492, and section IILD.3 for further information.

Accordingly, the submitted Program lacks requirements necessary for enforcement and

assurance of compliance. There are no specific up-front methodologies in the Program to
87

be able to determine compliance. It fails to meet the enforceability requirements as a

program or by a holder of a 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 stringent provisions for MRR or assert that there is a wide array of additional 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 commenter notes that the submitted Program

does not contain adequate MRR requirements 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 MRR requirements at 30 TAC 116.711(2) and 116.715(c)(4) - (6), as do the SIP

rules codified in Subchapter B ofChapter 116, the underpinnings ofthe submitted

Program are so complex that even for a Minor NSR SIP program, there should be more

detailed MRR requirements 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 a NSR SIP revision,

there is a greater need for detailed MRR requirements whether to ensure that a project
88

triggering the Major NSR SIP requirements is covered under Major NSR or to ensure that

there are adequate means for ensuring compliance of each affected entity under both

Major and Minor NSR. See 74 FR 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 individual emission 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 74 FR 48480, at 48492, and section III.D.3 ofthis notice for

further information. Accordingly, the Program lacks requirements necessary for

enforcement and assurance of compliance. 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 of a Flexible Permit, and it cannot assure

compliance with the Program or by the holder of a 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 prohibit the

issuance of a Flexible Permit that could interfere with attainment of a NAAQS or violate

a control strategy. Because ofits lack of enforceability, 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 with
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attainment and maintenance ofthe NAAQS or violations of any 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 claim that the submitted Program requires the retention of

the conditions of an existing PSD or Nonattainment NSR 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 comment that the submitted Program

contains no such requirement and that TCEQ regularly voids existing Nonattainment and

PSD NSR permits when it issues a Flexible Permit. The submitted Flexible Permit

Program is not clear and explicit that Flexible Permits cannot be used to eliminate or

amend existing Nonattainment and PSD NSR SIP permit terms and conditions. The

regulatory structure ofthe submitted Program does not ensure that existing Major NSR

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 comment process,

the record, and most importantly the structuring of each Flexible Permit) clearly identify

each covered point of emissions; which existing Minor NSR permits and their types (e.g.,

Minor NSR SIP permit, Minor NSR SIP standard permit, Minor NSR SIP permit by

rule); and which oftheir permitted 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
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the Flexible Permit. Finally, there are not sufficient provisions in the submitted Program

requiring the holder of a Flexible Permit to maintain recordkeeping sufficient to ensure

that all terms and conditions of existing 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 program requirements for the tracking of

existing SIP permits' Major and Minor NSR terms, limits and conditions, and whether or

not such requirements are incorporated into a Flexible Permit. Minor and Major NSR

permits, 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. The

submitted Program also allows holders of a Flexible Permit to make de facto

amendments of existing SIP permits, including changes in the terms and conditions (such

as throughput, fuel type, hours of operation) ofMinor and Major NSR permits, without a

preconstruction review by 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

of Major NSR SIP permits upon the issuance of a Flexible Permit, as is required for a

Minor NSR SIP revision and allows for revision of existing 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 claim
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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 of units 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 of new 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 information to determine whether this alternative is as stringent as the existing

Texas Minor NSR SIP. Consequently, the submitted Program could create a risk of

interference with NAAQS attainment, RFP, or any other requirement ofthe Act.

Additionally, the legal test for whether an alternative Minor NSR permit approach can be

approved is whether it is consistent with the need for a plan to 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 Minor NSR SIP revision because it does not meet sections 11 0(a)(2)(C) and
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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 of enforceability ofthe 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 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. Another commenter 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 fully
93

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 Program because 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 consistent terminology between state

and federal programs. TCEQ comments that its definition of an "account" references the

term "source" as defined in Texas law. According to TCEQ, within this rule, it interprets

"sources" as being equivalent to multiple "facilities" (a discrete piece of equipment or

source of air 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 NSR purposes. 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 NSR purposes.
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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 point to 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 together they provide sufficient safeguards against a major stationary source

netting a significant emissions increase against a decrease occurring outside a site using a

Flexible Permit. Another commenter comments if a Flexible Permit could be obtained

for more than one site, the only reasonably construction ofthe rule would be " ...a

facility, group offacilities, account or accounts..." but the rule is not so constructed

because it does not extend a Flexible Permit to 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 significant emissions 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 of a 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.
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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 of a 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 comment process, the record, and most importantly the structuring of each

Flexible Permit in such a manner 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 permit but 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 of SIP 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, September 4,2002, 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 Major 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.

VI. Statutory and Executive Order Reviews

A. Executive Order 12866, Regulatory Planning and Review

This final action has been determined not to be a "significant regulatory action"

subject to review by the Office ofManagement and Budget under Executive Order 12866

(58 FR 51735, October 4, 1993).

B. Paperwork Reduction Act

This action does not impose an information collection burden under 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-of itself create 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,

the Paperwork Reduction Act doesnot apply.

C. Regulatory Flexibility Act

The Regulatory Flexibility Act (RFA) generally requires an agency to conduct a

regulatory flexibility analysis of any rule subject to notice and comment rulemaking

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 governmental jurisdictions. 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 governmental jurisdiction that is a government of a city,

county, town, school district or special district with a population of less 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 disapproval
98

will not affect any existing State requirements applicable to small entities in the State of

Texas. Federal disapproval of a 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 Reform Act

This action contains no Federal mandates under the provisions of Title 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.
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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

Order to 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 of government."

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 of power 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 of power 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 would
100

not apply in Indian country located in the State, and EPA notes that it will not impose

substantial direct costs on tribal governments or preempt tribal 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 of power 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 ofChildren 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 Order has the potential to influence the

regulation. This action is not subject to Executive Order 13045 because it is

not an economically significant regulatory 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-ofitself create

any new regulations but simply disapproves certain State requirements for inclusion into

the SIP.
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H Executive Order 13211, Actions That Significantly Affect Energy Supply,

Distribution, or Use

This rule is not subject to Executive Order 13211 (66 FR28355, May 22,2001)

because it is not a significant regulatory action under Executive Order 12866.

1 National Technology Transfer and Advancement Act

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 of Section 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.
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J Executive Order 12898: Federal Actions to Address Environmental Justice in

Minority Populations and Low-Income Populations

Executive Order 12898 (59 FR 7629, (February 16, 1994)) establishes Federal

executive policy on environmental justice. Its main provision directs Federal agencies, to

the greatest extent practicable and permitted by law, to make environmental justice part

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 environmental justice 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

subchapter I, part D ofthe Clean Air Act and will not in-and-of itself create 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. Congressional Review Act

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 that
103

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 "major rule" as defined by 5 U.S.C. 804(2).

1. Petitionsfor Judicial Review

Under section 307(b)(l) ofthe Clean Air Act, petitions for judicial review ofthis

action must be filed in the United States Court of Appeals for the appropriate circuit by

[FEDERAL REGISTER OFFICE: insert date 60 days from date of publication of

this document in the Federal Register]. Filing a petition for reconsideration by 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 a petition for judicial 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).)
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List of Subjects in 40 CFR Part 52

Environmental protection, Air pollution control, Carbon monoxide,

Intergovernmental relations, Lead, Nitrogen dioxide, Ozone, Particulate matter,

Reporting and recordkeeping requirements, Sulfur oxides, Volatile organic compounds.

0/3 D /10

Dated:
105

40 CFR part 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 of Air Pollution by Permits for New Construction or Modification as

follows:

(1) The following provisions under 30 TAC Chapter 116, Subchapter ADefinitions:
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(A) Portion ofthe definition of "modification of existing 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 September 4,2002;

(B) 30 TAC 116.13 - Flexible Permit Definitions, adopted November 16, 1994

and submitted November 29, 1994; repealed and readopted June 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 submitted November 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

submitted November 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 submitted November 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 submitted November 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 September 4,2002;

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 submitted November 29, 1994;

(F) 30 TAC 116.717 - Implementation Schedule for Additional Controls -

adopted November 16, 1994 and submitted November 29, 1994;

(G) 30 TAC 116.718 - Significant Emission Increase - adopted November 16,

1994 and submitted November 29, 1994;
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(H) 30 TAC 116.720 - Limitation on Physical and Operational Changesadopted November 16,1994 and submitted November 29,1994;

(I) 30 TAC 116.721 - Amendments and Alterations - adopted November 16,

1994 and submitted November 29,1994; 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 - adopted November 16, 1994 and

submitted November 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

submitted November 29, 1994; and revised June 17, 1998 and submitted July 22, 1998;
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(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 - adopted November 16, 1994 and

submitted November 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 October 4, 2002;

(N) 30 TAC 116.760 - Flexible Permit Renewal - adopted November 16, 1994

and submitted November 29, 1994.