Buddy Garcia, Chairman 

Larry R. Soward, Commissioner 

Bryan W. Shaw, Ph.D., Commissioner 

Glenn Shankle, Executive Director 08 JAH 24 PH 3: 40 

Protecting Texas by Reducing und Preventing Pollution 

January 17,2008 

Docket No. 2007-0939-RUL 

Mayor Riclial-d E. Greene, Regional Administrator 

U.S. Environmental Protection Agency - Region 6 

1445 Ross Avenue 

Dallas, Texas 75202-2733 

Dear Mayor Greene: 

On December 5, 2007, the Texas Commission on Environmental Quality (Comniission) adopted a revision to 

tlie State Implementation Plan (SIP). 

The Commission adopled an amendment to 30 Texas Administrative Code, Chapter 114, Control of Air 

Pollution fro111 Motor Vehicles, Subcliapter K, Mobile Source Incentive Programs, Division 3, $ 114.622, aiid 

con-esponding I-evision to the SIP. The adoption inlplenients Senate Bill 12 (SB 12), 80"' Legislature, 2007. 

Tlie adopted I-uleiiiakiiig anleiids 5 1 14.622 to authorize the Coniinission to designate highways and roadways or 

portions of a liigliway or roadway 011 wliich travel by grant-funded veliicles may count towards the requirement 

that vehicles be operated at least 75 percent of the annual ~iiiles in tlie nonattainment areas aiid affected counties. 

The adopted ruleniaking also aiiiends S; 114.622 to iiicl*ease the ~iiaxinium cost-effectiveness limits for a project 

froiii $13,000 per ton of nitrogen oxides reduced to $15,000 per ton. Finally, the adopted rulemaking amends 

$ 114.622 to remove the option for grant recipients to permanently remove fro111 tlie State of Texas tlie old 

equipment or engines replaced under a grant project. Under this aiiiendnient, the Executive Director may still 

allow a locomotive to be permanently removed from the state in lieu of recycling or scrapping, if the grant 

reci~ielit has provided sufficient assurances that the old locolnotive will not be returned to the State of Texas. 

Enclosed is the proposed revision to tlie SIP, a public hearing certification, a complete record of the public 

hearings, and the accompanying order. 1 look forward to your expeditious approval of this SIP revision. 

Sincerely, 

WY u dy arcia 'I:~w" 

Chairman I I 

Enclosures 

cc: The I-lonorable Rick Perry, Governor of Texas 

MI-. Auburii Mitchell, Office oEBudget, Planning and Policy, Office of the Governor 

Mr. Glenn Sliankle, Executive Director, Texas Comniission 011 Environmental Quality 

P.O. Box 13087 Aust~n, Texas 78711-3087 512-239-1000 Internet address: wwv.tceq.state.tx.us 

,I 1 I/ 
TlIE S17A1'E 01: 'TEXAS 

COUNTY OF TRAVIS 

Tliis is to certify the attached are true and correct copies of docu~nents for revisioil to the Texas State 

Iniplcmentation Plan, adoptccl on December 5, 2007, pursuant to 40 Code of Federal Regulations (C.F.R.) 8 

51.104. I am the records admi11ist1-ator for the Air Quality Division of the Tcxas Commission on Environmental 

Quality. 

Director, Air Q~~ali ty Division 

Texas Commission on Environmental Quality 
Texas Commission on Environmental Quality 

Public Hearings 

September 11, 2007 

Concerning Revisions to Chapter 114 

Control of Air Pollution from Motor Vehicles 

SB 12 Texas Emission Reduction Plan Program Revisions 

Rule Project Number 2007-022-1 14-EN 
INTRODUCTION 

The Texas Commission on Environmental Quality (commission) held public hearings in Austin, 

Houston, and Arlington on September 11, 2007, to receive testimony regarding proposed revisions 

to $1 14.622 and to the state implementation plan (SIP). 

The rulemaking authorizes the commission to allow travel on highways and roadways designated by 

the commission to count towards the requirement that grant-funded vehicles operate at least 75 

percent of the annual miles in the eligible counties as authorized in Senate Bill 12,80th Legislature, 

Regular Session, 2007; raises the cost-effectiveness criteria from $1 3,000 per ton of nitrogen oxides 

reduced to $1 5,000 per ton as authorized in Senate Bill 12,80th Legislature, 2007; and removes the 

option that vehicles, equipment, and engines replaced under the program may be removed from the 

state in lieu of being recycled or scrapped. 

The comment period closed on September 12, 2007. All testimony and comments have been 

reviewed and seriously considered. This hearing record contains a complete record of the public 

hearing and is divided into the following four sections: 

0 Public IVotification and Proposal 

0 Written and Oral Testimony 

0 Evaluation of Testimony 

0 Staff Recommendations/Order 

Additional copies of this hearing record are maintained in the TCEQ central office at 12100 Park 35 

Circle, Austin, Texas 78753. For further information, please contact Steve Dayton at (512) 239- 

6824. 
PUBLIC

NOTIFICATION AND

PROPOSAL
PUBLIC NOTIFICATION 

Notification to the public of the proposed revisions was conducted by the following procedures: 

1. Publication of notice of public hearing in the following newspapers on the date listed: 

Austin American-Statesman, August 10, 2007 

Beaumont Enterprise, August 10, 2007 

Corpus Christ; Caller-Times, August 10, 2007 

El Paso Times, Aug~ist 10, 2007 

Fort Worth Star-Telegram, August 10, 2007 

Houston Chronicle, A~lgust 10, 2007 

Longview-News, August 10, 2007 

San Antonio Express-News, August 10, 2007 

Victoria Advocate, August 10, 2007 

2. Publication of the proposed rules in the August 24, 2007, issue of the Texas Register (32 

TexReg 5324). 

3. Publication of the Notice of Public Hearings the August 24, 2007, issue of the Texas Register 

(32 TexReg 5491). 

4. Correspondence forwarding the notice of public hearing to the following officials and agencies: 

Speaker of the House 

Lieutenant Governor 

Alamo Area Council of Governments 

Capital Area Planning Council 

City of Victoria Planning Department 

Dallas Department of Environmental and Health Services 

Dallas Department of Aviation 
East Texas Council of Governments 

El Paso Clty-County Health and Environmental District 

El Paso Metropolitan Planning Organization 

Federal Highway Administration 

Fort Worth Environmental Management Department 

Galveston County Health District 

Houston Department of Health and Human Services 

Harris County Publ~c Health and Environmental Services 

North Central Texas Council of Governments 

Houston-Galveston Area Council 

South East Texas Regional Planning Commission 

Texas Department of Transportation 

Texas Transportation Institute 

Arkansas Department of Pollution Control and Ecology 

Louisiana Department of Environmental Quality 

New Mexico Environmental Department 

Oklahoma Department of Environmental Quality 

U. S. Environmental Protection Agency 

Harris County Judge 

Mayor, City of Arlington 

hilayor, City of Austin 

Mayor, City of Houston 

Tarrant County Judge 

Travis County Judge 
Example oi : Newspaper Classified Ad 

San Antonio E 

-- - 

NOTICE OF PUBLIC 

HEARINGS ON 

PROPOSED RWISIONS 

TO 30 TAC 

CHAPTER 114 AND 

TO THE STATE 

IMPLEMENTATION PLAN 

The Texas Commissiofi on 

Environmental Q~allt~ 

(commiss~on) will conduct 

public hear~ngs to redelve 

testimony regarding proposed ievislom to 30 TAC 

Chapter 114;Control of Air 

Pollution from Motor Vehlcles, 114.622, and to the 

state implementation plan 

(SIP), under the requirements of Texas Health and 

Safety Code, 382.017; Tex- as Government Code, Chapter 2001, Subchqpter 8; and 

40 Code of Federal Regulations 51.102 of the Un~ted 

States Environmental Protectlon Agency (EPA) .regulat~ons concerning SIPS. 

The proposed rulemeking 

would author~ze the corn- mission to aftow travel on h~ghways and roadways 

designaled by the cbmrn~ssion to count towards the 

requrrement that grantfunded vehicles operate at 

least 7596 of the annual 

miles In the'ef~gible counties; raise the costeffectivenek criterla from 

$13,NHl per ton of nltrogen 

oxides reduced to $15,000 

per ton; and remove the 

option that vehicles, eQulpment, and engines replaced 

under the program may be 

remove8 from the state In 

lie&' of "beinfj ,recycled or 

scrapped; . 

Public hearings on this proposal wTil be held Austin, 

Texas,' un" 'September 11 

2007, at 1130 a.m., In 

Building F, Room 2210, at 

the Texas Cammis~ion on Envponmental Qualiiy'complex located at 12100 Park 

35 Circle: in Houston, Texas, on ~eptdmber 11,2007, 

at 3:30 p.m. at the Houston-Galveston Area Council 

located at 3555 Tlmrnom 

Lane, Sufte 120, Room A; 

and ir) ~rlingdn, Texas, on September 11, 2007, at 

330 p.m. at the North 

Central Texas Council of 

Governments at 86 Six 

Flags Drlvi?, Centerpoint 11, 

In the MetropleX Confer- ence Room. The hearings 

will be structured'for the 

receipt of oral or written 

comments by idere~ted 

persons. RegisIration Will 

begin 30 minutes prior to 

the hearings, Individuals 

may present oral statements when called upon In 

order of legistrat~on, 

There w~ll be no open 

discussion during the hearings; howwer, commlsston 

staff members will be available to discuss the proposal 

30 minutes prlor to the 

hearings. 

xpress-News, August 10,2007 

Persons &&&g to ettend 

the hear&#& who have 

speclal ~un~catiorl or other ,';sffcommodation 

fieeds, sM contact Patncia Durbnt+mce of Legal 

Sewlces, at (512) 

299-6082 *&quests should 

be made as far In advance as possibte.; 

Comments may be submrtted to Ratrioa Durbn, MC 

205, Offtce of Legat Serv~ces, Texas;,Commrss~on on Envtronme~l ljuality, P.0, 

Box 1308ZLAustin, Texas 

78711-3087; OF faxed to 

(512) 23-8. Electron~c 

comments*miai be suhmitted at~~.www5 

tc~.slate.fjrus/rules/ 

edomments. Rle slze restrictions may apply to 

copnents. submitted 

through eCommW 

1syste"i: !s& taeom&&ts 

shou~d* pm-. 

ject .Number 2W@-O22-114- 

EN. The e'c6qmknt period 

closes'Se &2, 2007. 

Issued in Austin, Texas, on August 8, 2007. 
Il;~thleen !-Ihrtnc:: \!'hitc. C'iiiti~nla:; 

L;11-!-y Ii. Sowi~rd, C'or;/missioizu?- 

If. S. Buddy GiJ~.ci;l. Co,nrnissioi7ci. 

Glenn Shanlilc, Exccutirw Di~~'clor 

Protc~ctiny 7cxas by Reducing and Acl~enliny Pollrition 

NOTICE OF PUBLIC HEARINGS 

ON PROPOSED REVISIONS TO 30 TAC CHAPTER 114 AND 

TO THE STATE IMPLEMENTATION PLAN 

The Texas Commission on Environmental Quality (commission) will conduct public liearings to receive 

testimo~iy regarding proposed revisions to 30 TAC Chapter 114; Control of Air Pollution from Motor 

Vehicles, $1 14.622, and to the state implementation plan (SIP), ~~ncler the requirements of Texas Health and 

Safety Code, $382.01 7; Texas Government Code, Chapter 2001, Subchapter B; and 40 Code of Federal 

Regulations $5 1.102 of tlie United States Environmental Protection Agency (EPA) regulations concerning 

SIPS. 

The proposed rulemaking would autliorize the commission to allow travel on liigliways and roadways 

designated by the commission to count towards the requirement that grant-funded vehicles operate at least 

75% of the annual miles ill the eligible counties; raise tlie cost-effectiveness criteria from $13,000 per ton of 

nitrogen oxides reduced to $15.000 per ton; and remove tlie option that veliicles, equipment, and engines 

replaced under tlie program may be removed from tlie state in lieu of being ~eecycled or scrapped. 

Public liearings on this proposal will be held in Austin, Texas. on September 11, 2007. at 11.00 a.m., in 

Building F, Room 2210, at the Texas Commission on Environmental Quality complex located at 12 100 Park 

35 Circle; in Houston, Texas, on September 11, 2007. at 3.30 p.m. at the Houston-Galveston Area Council 

located at 3555 Timmons Lane, Suite 120, Room A; and in Arlington, Texas, on September l I, 2007, at 3:30 

p.m. at tlie North Central Texas Co~~ncil of Governments at 616 Six Flags Drive, Centel-point 11, in tlie 

Metroplex Conference Room. The liearings will be structured for the receipt of oral 01. written comments by 

interested persons. Registration will begin 30 minutes prior to tlie liearings. Individuals may present oral 

statements when called upon in order of registration. There will be no open discussion during tlie hearings; 

however, co~nmission staff members ~/ilI be available to discuss the proposal 30 minutes prior to the hearings. 

Persons planning to attend the liearings, vlho have special comm~~nication or other accommodation needs, 

sliould contact Patricia Duron, Office of Legal Services, at (5 12) 239-6087. Requests should be made as far in 

advance as possible. 

Comments may be submitted to Patricia Dulon, MC 205, Office of Legal Services, Texas Commission on 

Environmental Quality, P.O. Box 13087, Austin, Texas 7871 1-3087, or faxed to (5 12) 239-4808. Electronic 

comments may be submitted at ~~~~I://~~~W~~I~~.~CCCJ.SIU~C.~X.US/I.ZI~~~/~L.~IIIIII~~~~S File size restrictions may apply 

to comments sublnitted througli the ecomments system. All comments sliould reference Rule Prqject Number 

2007-022-1 14-EN. The comment period closes September 12, 2007. Copies of the proposed rule can be 

obtained from the commission's Web site a1 M~,:/~i,r~i~~~ii~. /ccc/..s/a/r. /.Y. us/r~m~/~.~rlesil,~^o~~o,se crc/op/. ht~i~l. For 

ful-tlier information, please contact Donna Huff, Air Quality Division, at (5 12) 239-6628. 

Issued ir7 Au,rlin, Texu.~, or7 Ar,[gz[.r/ 8, 3007 
Notice of Public Hearings on Pr+posed Revisions to 30 TAC 

Chapter I 14 # 

1 The Texas Commission on Environ ental Quality (commission) will 

conduct public ileanngs to receive tflitimony concerning proposed revisions to 30 TAC Chapter 114. C6ntroi of Air Pollution from Motor Vehicles, under the requirementsiof exa as Health and Safety Code. 

$382.017; Texas Government code] chapter 2001. Subchapter B. 

The proposed rulemaking would i fplement revisions to the Low In- "t come Repair Assistance, Retrofit, and Accelerated Vehicle Retirement 

Progam (LIRAP) as a result of ~enlte Bill 12. 80th Legislature. 2007. 

The revisions would expand vehicle bwner financial eligibility to 300% 

of the federal poverty rate and proylde incentives for certain vehicle 

owners to retire and replace their p&sent vehicles with newer, cleaner 

running vehicles. 3 z 

The commission will hold public h ings on this proposal in Houston 

on September 11. 2007, at 

Council located at 3555 T 

September 1 1, 2007, at 1 :3 

of Governments located at 

Metroplex Conference Room; and ib Austin on September 11,2007 at 

9:30 a.m. at the Texas Commissio' on Environmental Quality Complex located at 121 00 Park 35 Circle in Building F, Room 22 10 The 

hearings will be structured for the 

by interested persons. Registratio 

hearings. Individuals may present 

order of registration. There will be 

ings; however, commission staff wi 

the proposal 30 minutes before the 

Persons who have special comm&ication or other accommodation 

needs who are planning to attend 

Williamson, Office of Legal Servi 

htp://~~ill~5.tceq.srufe.tx.us/rules nts. File size restrictions 

may apply to comments submitted the ecomments system. All 

comments should reference Rule Number 2007-026-1 14-EN. 

(512) 239-1769. 

TRD-200703513 

Robert Martinez 

Filed: August 10, 2007 

Notice of Public Hearings on Proposed Revisions to 30 TAC 

Chapter 114 and to the State Iinpleinentation Plan 

The Texas Commission on Environmental Quality (commission) will 

conduct public hearings to receive testimony regarding proposed revisions to 30 TAC Chapter 114. Control of Air Pollution from Motor 

Vehicles, $1 14.622, and to the state implementation plan (SIP), under 

the requirements of Texas Health and Safety Code, $382.017: Texas 

Government Code, Chapter 2001. Subchapter B: and 40 Code of Federal Regulations $5 1.102 of the United States Environmental Protection Agency (EPA) regulations concerning SIPS. 

The proposed rulemaking would authorize the con~mission to allou: 

travel on highways and roadways designated by the commission to 

count towards the requirement that pant-funded vehicles operate at 

least 7591 of the annual miles in the eligible counties: raise the cost-effectiveness criteria from $1 3.000 per ton of nitrogen oxides reduced to 

$15.000 per ton; and remove the option that vehicles, equipment, and 

engines replaced under the program may be removed from the state in 

lieu of being recycled or scrapped. 

Public hearings on this proposal will be held in Austin. Texas, on 

September 11. 2007. at 11:OO a.m., in Building F, Room 2210, at 

the Texas Commission on Environmental Quality complex located 

at 12100 Park 35 Circle; in Houston, Texas, on September 11, 2007. 

at 3:30 p.m. at the Houston-Galveston Area Council located at 3555 

Timmons Lane. Suite 120, Room A; and in Arlington, Texas. on 

September 11. 2007. at 3:30 p.m. at the North Central Texas Council 

of Governments at 61 6 Six Flags Drive, Centerpoint 11, in the Metroplex Conference Room. The hearings will be structured for the receipt 

of oral 01. written comments by interested persons. Registration will 

begin 30 minutes prior to the hearings. Individuals may present oral 

statements when called upon in order of registration. There will be 

no open discussion during the hearings; however, commission staff 

members will be available to disc~~ss the proposal 30 minutes prior to 

the hearings. 

Persons planning to attend the hearings, who have special communication or other accommodatioil needs, should contact Patricia Duron, 

Office of Legal Services, at (512) 239-6087. Requests should be made 

as far in advance as possible. 

Comments may be submitted to Patricia Duron, MC 205. Office of Legal Services, Texas Commission on Environmental 

Quality, P.O. Box 13087, Austin, Texas 7871 1-3087, or faxed 

to (512) 239-4808. Electronic comments may be submitted at 

Irtp://~vww5.tceq.state.tx us/rules/ecomments. File size restriciions 

ma?: app!i, ro conlnlents szrbmitted throz~gh the econlrnents s-vsrem. All 

comments should reference Rule Project Nlmber 2007-0-72-114-EAT. 

The conlnleni pel-iod closes Septenlber 12, 2007. Copies oj the 

proposed I-ule can be obtained ,from the commissio~ik Web site at 

Irtlp://,vww.tceq.statc.a:~~hzav/rules/proposc~adopt.lztml. For ,further info,-l?iafio~i, please contacr Donna Hzifl Air Quulih, Division, at 

(512) 239-6628. 

TRD-200703518 

Robert Mart~nez 

Director, Environmental Law Division 

Texas Commission on Environmental Quality 

Filed: August 10, 2007 

Notice of Water Quality cat cations 

The following notices were issued during the period of July 26, 2007 

through August 9, 2007. 1 

NOTICE. 

IN ADDITION August 24, 200 7 32 TexReg 5491 
(3) dismantled and its par s sold as used parts or used in the 

LIRAP: I 

compliance, and used as a reNot more than 10% of all vehid as replacement vehicles. 

facility. 

Notwithstanding subsectjbn (b) of this section, the dismak 

(b) - (c) (No change.) 

tler of a vehicle shall destroy the 

glne,aertifvs have been c 

market place. The dismantler shall 

accordance with any state and federel 

The dismantler shall pro 

has been destroyed to the automobile 

has taken receipt of a vehicle for 

(d) A participating county. s designated entity, a participating 

recognized emissions repair facility and a participating vehicle retirement facility s [&] allow the ecutive director to conduct audits 

and inspections. 1 

emi;sions contrwuipment and enestroyed and not resold into the 

-emove any mercury switches in 

laws. 

vide certification that the vehicle. 

dealer from whom the dismantler 

retjement. 

(e) (No change.) I 

TRD-200703515 

Roberl Martinez 

Director, Environmental Law Divisi 

A person who causes. SL 

of1 14.66(c) and (dl of this title 

Subchapter D, Chapter 7, Water Cc 

violation occurs with each frauduleilt 

This agency hereby certifies that 

by legal counsel and found to be 

ity to adopt. 

SUBCHAPTER K. M 

IlVCENTIVE PROGRA 

ffers, allows. or permits a violation 

s subject to a civil penalty under 

de, for each violation. A separate 

certification or prohibited resale. 

:he proposal has been reviewed 

~ithin the agency's legal authorDIVISION 3. DIESEL EMISSIONS 

REDUCTION INCENTIVE PROGRAM 

FOR ON-ROAD AND NON-ROAD VEHICLES 

30 TAC $114.622 

The Texas Commission on Environmental Quality (commission) 

proposes an amendment to $1 14.622. 

The amended section is proposed to be submitted to the United 

States Environmental Protection Agency (EPA) as a revision to 

the state implementation plan. 

BACKGROUND AND SUMMARY OF THE FACTUAL BASIS 

FOR THE PROPOSED RULES 

Senate Bill 12 (SB 12), 80th Legislature, 2007, amended the 

Texas Health and Safety Code, Chapter 386, Texas Emissions 

Reduction Plan (TERP) Program. Most of the new provisions 

add to existing project categories and do not require amendment 

of the rules for implementation. The TERP Guidelines will be 

revised to include the additional grant criteria established by SB 

12. 

The proposed rulemaking amends s114.622 to implement the 

cost-effectiveness increase from $13,000 per ton of nitrogen oxides reduced to $15,000 per ton under Texas Health and Safety, 

§386.106(a), as required by SB 12. Senate Bill 12 also authorizes the commission to designate highways and roadways or 

portions of a highway or roadway on which travel by grant-funded 

vehicles may count towards the requirement that vehicles be operated at least 75 percent of the annual miles in the nonattainment areas and affected counties. 

In addition to the amendment proposed to implement SB 12, the 

rule will be amended to remove the option for grant recipients to 

permanently remove from the State of Texas the old equipment 

or engines replaced under a grant project. With this amendment, 

grant recipients will be required to recycle or scrap the old equipment or engine. This amendment has been implemented for 

grants issued beginning in fiscal year 2007 and the rule change 

is intended to align the rules with current practice. 

SECTION BY SECTION DISCUSSION 

The proposed amendment would increase the cost-effectiveness of eligible projects and allow the commission to designate 

vehicle travel on highways and roadways to count towards the 

percentage of use requirement. The proposed amendment will 

also omit the option to move replaced equipment from the State 

of Texas. For proposed projects that include the replacement 

or repower of equipment, the old equipment or engine must be 

recycled or scrapped. 

$714.622. Incentive Program Requirements. 

The proposed amendment to §114.622(b) allows the commission to designate highways and roadways or portions of a highway or roadway on which travel by grant-funded vehicles may 

count towards the requirement that vehicles be operated at least 

75 percent of the annual miles in the nonattainment areas and 

affected counties. Section 114.622(b) currently establishes a usage commitment of 75 percent for vehicle miles traveled or hours 

of operation to occur in a nonattainment area or affected county. 

The proposed amendment to §I 14.622(c) requires grant recipients to recycle or permanently scrap old equipment and engines. 

Section 114.622(c) currently includes an option for grant recipients to permanently remove from the state equipment or engines 

32 TexReg 5324 August 24, 200 7 Texas Register 
replaced under the program, in lieu of recycling or scrapping. 

Beginning with grants issued in fiscal year 2007, the commission has not allowed grant recipients to use the removal option 

and has required that the old equipment or engine to be recycled 

or scrapped. After evaluating the implementation of the replacement and repower grants for several years, staff found that it was 

difficult to ensure that old equipment and engines were actually 

removed from the state and, if removed, would not be returned 

to the state in the future. Staff determined that the best way to 

ensure that the reductions in emissions of nitrogen oxides are 

achieved is to not allow this option and to require'that the old 

equipment and engines be recycled or scrapped. 

The proposed amendment to §114.622(d) increases the costeffectiveness for projects from the current $13,000 per ton of 

nitrogen oxides emissions reduced to $15,000 per ton of nitrogen 

oxides emissions reduced. 

FISCAL NOTE: COSTS TO STATE AND LOCAL GOVERNMENT 

Jeff Howath, Analyst, Strategic Planning and Assessment, has 

determined that, for the first five-year period the proposed rule 

is in effect, no significant fiscal implications are anticipated for 

the agency and or other units of state or local government due 

to administration or enforcement of the proposed rule. The proposed rule implements portions of SB 12,80th Legislature, 2007, 

Regular Session, relating to the TERP program. The proposed 

amendment would expand the authorized area of use of grantfunded vehicles, ensure old equipment and engines are recycled 

or scrapped, and increase the cost-effectiveness limits for TERP 

grant funded projects. 

Senate Bill 12 amended Texas Health and Safety Code, Chapter 386, relating to the TERP program, including changes to the 

diesel emissions reduction incentive grant programs. The proposed amendment would implement portions of SB 12 by allowing travel on highways and roadways designated by the commission, to count towards the requirement that grant-funded vehicles operate at least 75 percent of the annual miles in the eligible counties; and raise the cap of the cost-effectiveness criteria 

for grant funded projects from $13,000 per ton of nitrogen oxides 

reduced to $1 5,000 per ton. 

In addition to the changes required under SB 12, staff recommends changes to 5114.622 to remove the option that vehicles, 

equipment, and engines replaced underthe program may be removed from the state in lieu of being recycled or scrapped. 

The proposed amendment will expand the a'uthorized area of 

use for grant funded vehicles, and this change is expected to result in a greater number of vehicle owners that may qualify for 

a grant. In addition, the proposed rule will increase the cost-effectiveness limits for eligible projects potentially bringing more 

types of projects into the program. As a result of both of these 

changes, the pool of eligible grant applicants is anticipated to 

expand. The agency was appropriated approximately $147 million in fiscal year 2008 and approximately $150 million in fiscal 

year 2009 for incentive payments for the Diesel Emissions Reduction Program. In addition, the agency was appropriated approximately $2.2 million In fiscal year 2008 and $2.2 million in 

fiscal year 2009 to administer the program. The proposed rule 

changes are not anticipated to affect the overall grant funding 

amounts nor costs to the agency for implementation of the program. 

PUBLIC BENEFITS AND COSTS 

Mr. Horvath also determined that for each year of the first five 

years the proposed rule is in effect, the public benefit anticipated 

from the changes seen in the proposed rule will be an improvement in air quality due to an expanded pool of eligible grant applicants for diesel emissions reduction incentive grants. 

No fiscal implications are anticipated for businesses and individuals as a result of the proposed rule. The proposed rulemaking 

is related to a voluntary incentive grant program. The changes 

expand the authorized area of use of grant-funded vehicles, ensure old equipment and engines are recycled or scrapped, and 

increase the cost-effectiveness limits for eligible grants. The proposed changes do not directly impact businesses and individuals, except to the extent those entities may apply for a grant. 

SMALL BUSINESS AND MICRO-BUSINESS ASSESSMENT 

No adverse fiscal implications are expected for small or microbusinesses as a result of the proposed rule. Participation in the 

program is voluntary. The proposed changes do not directly impact businesses and individuals, except to the extent those entities may apply for a grant. 

LOCAL EMPLOYMENT IMPACT STATEMENT 

The commission has reviewed this proposed rulemaking and determined that a local employment impact statement is not required because the proposed rule does not adversely affect a 

local economy in a material way for the first five years that the 

proposed rule is in effect. 

DRAFT REGULATORY IMPACT ANALYSIS DETERMINKTION 

The commission reviewed the rulemaking in light of the regulatory analysis requirements of Texas Government Code, 

§2001.0225, and determined that this rule action is not subject 

to 52001.0025 because it does not meet the definition of a 

"major environmental rule" as defined in that statute. A "major 

environmental rule" means a rule the specific intent of which 

is to protect the environment or reduce risks to human health 

from environmental exposure and that may adversely affect in a 

material way the economy, productivity, competition, jobs, the 

environment, or the public health and safety of the state or a 

sector of the state. 

The proposed amendment to Chapter 114 modifies the existing rules in accordance with SB 12, 80th Legislature. which 

amended Texas Health and Safety Code, Chapter 386. The 

proposed rule amendment is part of a voluntary incentive program with the goal of reducing diesel emissions and as such, 

the proposed rule will not adversely affect in a material way the 

economy, a sector of the economy, productivity, competition, 

jobs, the environment, or the public health and safety of the 

state or a sector of the state. 

In addition, a regulatory impact analysis is not required because 

the proposed rule does not meet any of the four applicability criteria for requiring a regulatory analysis of a "major environmental 

rule" as defined in the Texas Government Code. Texas Government Code, 52001.0225 applies only to a major environmental 

rule the result of which is to: 1) exceed a standard set by federal law, unless the rule is specifically required by state law; 2) 

exceed an express requirement of state law, unless the rule is 

specifically required by federal law; 3) exceed a requirement of 

a delegation agreement or contract between the state and an 

agency or representative of the federal government to implement 

a state and federal program; or 4) adopt a rule solely under the 

general powers of the agency instead of under a specific state 

law. This rulemaking does not exceed a standard set by fed3SED RULES August 24,2007 32 TexReg 5325 
era1 law, and the proposed technical requirements are consistent with applicable federal standards. In addition, this rulemaking does not exceed an express requirement of state law and is 

not proposed solely under the general powers of the agency, but 

is specifically authorized by the provisions cited in the STATUTORY AUTHORITY section of this preamble. Finally, this rulemaking does not exceed a requirement of a delegation agreement or contract to implement a state and federal program. 

The commission invites public comment on the draft regulatory 

impact analysis determination. 

TAKINGS IMPACT ASSESSMENT 

The commission evaluated this rulemaking action and performed 

an analysis of whetherthe proposed rule is subject to Texas Government Code, Chapter 2007. The primary purpose of the rulemaking is to amend Chapter 114 in accordance with SB 12, 80th 

Legislature. The amendment implements a voluntary program 

and only affects motor vehicles and equipment which are not 

considered to be private real property. Therefore, promulgation 

and enforcement of this proposed rule is neither a statutory nor a 

constitutional taking because it does not affect private real property. Therefore, the rule does not constitute a taking under Texas 

Government Code, Chapter 2007. 

CONSISTENCY WITH THE COASTAL MANAGEMENT PROGRAM 

The commission reviewed the proposed rulemaking and found 

the proposal is a rulemaking identified in the Coastal Coordination Act Implementation Rules, 31 TAC 5505.11(b)(2), concerning rules subject to the Texas Coastal Management Program 

(CMP) and will therefore, require that goals and policies of the 

CMP be considered during the rulemaking process. The commission reviewed this action for consistency and determined the 

rulemaking for Chapter 114 does not impact any CMP goals or 

policies, because it adds criteria to a voluntary incentive grant 

program and does not govern air pollution emissions. Written 

comments on the consistency of this rulemaking may be submitted to the contact person at the address listed under the SUBMITTAL OF COMMENTS section of this preamble. 

ANNOUNCEMENT OF HEARINGS 

Public hearings on this proposal will be held in Austin, Texas, on 

September 11, 2007, at 11 :00 a.m., in Building F, Room 2210, 

at the Texas Commission on Environmental Quality complex located at 12100 Park 35 Circle; in Houston, Texas, on September 

11, 2007, at 3:30 p.m. at the Houston-Galveston Area Council 

located at 3555 Timmons Lane, Suite 120, Room A; and in Arlington, Texas, on September 11,2007, at 3:30 p.m. at the North 

Central Texas Council of Governments at 61 6 Six Flags Drive, 

Centerpoint II, in the Metroplex Conference Room. The hearings 

will be structured for the receipt of oral or written comments by interested persons. Registration will begin 30 minutes prior to the 

hearings. Individuals may present oral statements when called 

upon in order of registration. There will be no open discussion 

during the hearings; however, commission staff members will be 

available to discuss the proposal 30 minutes prior to the hearings. 

Persons planning to attend the hearings, who have special communication or other accommodation needs, should contact Patricia Duron, Office of Legal Services, at (512) 239-6087. Requests should be made as far in advance as possible. 

SUBMITTAL OF COMMENTS 

Comments may be submitted to Patricia Duron, MC 205, 

Office of Legal Services, Texas Commission on Environmental Quality, P.O. Box 13087, Austin, Texas 78711-3087, or 

faxed to (512) 239-4808. Electronic comments may be submitted at http://www5.tceq.state.tx.us/rules/ecomments. File 

size restrictions may apply to comments submitted through 

the ecomments system. All comments should reference 

Rule Project Number 2007-022-114-EN. The comment period closes September 12, 2007. Copies of the proposed 

rule can be obtained from the commission's Web site at 

http://www.tceq.state.tx.us/nav/rules/proposeadopt.html. For 

further information, please contact Donna Huff, Air Quality 

Division, at (512) 239-6628. 

STATUTORY AUTHORITY 

The amendment is proposed under Texas Water Code, 55.102, 

which provides the commission with the general powers to carry 

out its duties under the Texas Water Code; 55.103, which authorizes the commission to adopt any rules necessary to carry 

out the powers and duties under the provisions of the Texas Water Code and other laws of this state; and 55.105, which authorizes the commission by rule to establish and approve all 

general policy of the commission. The amendment is also proposed under Texas Health and Safety Code, Texas Clean Air Act, 

5382.017, which authorizes the commission to adopt rules consistent with the policy and purposes of the Texas Clean Air Act; 

5382.002, which establishes the commission's purpose to safeguard the state's air resources, consistent with the protection of 

public health, general welfare, and physical property: 5382.011, 

which authorizes the commission to establish the level of quality 

to be maintained in the state's air and to control the quality of the 

state's air; 5382.012, which authorizes the commission to prepare and develop a general, comprehensive plan for the control 

of the state's air; and Chapter 386, which establishes the TERP. 

Finally, the amendment is proposed as part of the implementation of SB 12, 80th Legislature, 2007. 

The proposed amendment implements Texas Clean Air Act, 

55382.002, 382.011, 382.012, 382.017, Chapter 386 of the 

Texas Health and Safety Code, and SB 12, 80th Legislature, 

2007. 

$114.622. Iizcentive PI-ograrn Requirements. 

(a) (No change.) 

(b) For a proposed project as listed in subsection (a) of this section. other than a project involving a marine vessel or engine, not less 

than 75% of vehicle miles traveled or hours of operation projected for 

the five years immediately following the award of a grant must be projected to take place in a nonattainment area or affected county of this 

state. The commission may also allow vehicle travel on highways and 

roadways, or portions of a highway or roadway. designated by the commission and located outside a nonattainment area or affected county to 

countn 

(c) For a proposed project that includes a replacement of 

equipment or a repower, the old equipment or engine must be recycled 

- 

or [;I scrapped [; er etkefM.tfe f3mme&y-Mhwtrf 

-1. 

(d) To be eligible for a grant, the cost-effectiveness of a proposed project as listed in subsection (a) of this section, except for infrastructure projects and infrastructure purchases that are part of a broader 

retrofit, repower, replacement, or add-on equipment project, must not 

exceed a cost-effectiveness of $1 5.000 [%kW3] per ton ofNO> emissions reduced. The commission may set lower cost-effectiveness limits 

as needed to ensure the best use of available funds. The commiss~on 

32 TexReg 5326 August 24, 2007 Texas Register 
may also base project selection decisions on additional measures to 

evaluate the effectiveness of projects in reducing NO< emissions in relation to the funds to be awarded. 

(e) - (i) (No change.) 0420, (51 2) 424-5028. 

This agency hereby certifies that the proposal has been reviewed 

by legal counsel and found to be within the agency's legal authority to adopt. 

Filed with the Ofice of the Secretary of State on August 10,2007. 

TRD-200703517 

Robert Martinez 

Director, Environmental Law Division 

Texas Commission on Environmental Quality 

Earliest possible date of adoption: September 23, 2007 

For further information, please call: (512) 239-6087 

TIONS 

PUBLIC SAFETY 

COMMUNICATIONS 

37 TAC 589.31 - 9.34 

work. 

year period the rule 

as a result of enforci 

effectiveness of the 

senior citizens. Ther 

on individuals, small 

ment regarding this rule. 

PROPOSED RULES August 24,2007 32 TexReg 5327 
WRITTEN AND 

ORAL TESTIMONY
INDEX OF WRITTEN TESTIMONY 

Reference Number 

W-I 

W -2 

W -3 

W -4 

Submitted By 

Robert Stewart, BNSF Railway Company 

Laura Fiffick, City of Dallas 

Kathi L. Harris, EMISSTAR 

Brinton Payne, Fort Worth Chamber of 

commerce 

David L. Powell, Genesee & Wyoming Inc. 

Jay Barksdale, Greater Dallas Chamber 

Cal Hodge, Neste Oil 

Chris Klaus, North Central Texas Council of 

Governments 

Charlie Jenkins, Port of Houston Authority 

Railpower Hybrid Technologies Corp. 

Jerry Roane, on behalf of himself 

Matthew G. Paulson, Union Pacific Railroad 

Company 

Guy Donaldson, U.S. Environmental 

Protection Agency 
KELLY HART & HALLMAN LLP 

301 CONGRESS AVENUE, SUITE 2000 

AUSTIN, TEXAS 78701 

Telephone: (512) 495-6400 

Telecopy: (51 2) 495-661 7 

Writer's Direct Dial: (51 2) 495-6426 

Ernail Address: bob.stewart@khh.com 

September 12,2007 

Patricia Duron 

MC 205 - Office of Legal Services 

Texas Commission on Environmental Quality 

PO Box 13087 

Austin, TX 7871 1-3087 

201 Main Street, Suite 2500 

Fort Worth, Texas 76102 

1000 Louisiana, Suite 4700 

Houston, Texas 77002 

RECEIVED 

SEP 1 2 2007 

TEXAS REGISTER TEAM 

Re: Rule Project No. 2007-022- 1 14-EN 

Dear Ms. Duron: 

These comments are submitted on behalf of the BNSF Railway Company ("BNSF") 

regarding the above-referenced rule project on changes to 3 0 T.A.C. Chapter 1 14, Control of Air 

Pollution fiom Motor Vehicles. BNSF is opposed to the change to Section 114.622, to remove 

the option that vehicles, equipment, and engines replaced under the incentive program may be 

removed from the state in lieu of being recycled or scraped. BNSF understands that incentive 

grant procedures implemented by TCEQ staff were modified in 2007 along these same lines. 

BNSF understands that it has been difficult for TCEQ staff to insure that old equipment 

and engines were actually removed from the state, and if removed, would not be returned to the 

state in the future. This would appear to be an especially difficult problem with respect to trucks. 

Moreover, truck engines and equipment are likely able to be readily recycled. 

The situation is vastly different with respect to locomotives. Thi locomotives replaced as 

part of the incentive grant program are not appropriate to use as cores for Gen Sets. This is due 

to different platform lengths and design of the frames. Moreover, the locomotives that are 

displaced out of Texas are often more dependable and reliable than other locomotives used in 

other locations within the BNSF system. The value of these displaced locomotives is often even 

greater than the book value due to a limited market. It is economically wasteful and unnecessary 

to require these locomotives to be recycled or scraped. 

The requirement to recycle or scrap would greatly increase the cost of future locomotive 

replacements in Texas and will likely result in less grant applications from BNSF. This will be a 

lose-lose situation for BNSF and air quality in the state of Texas. Up to January, 2007, 

locomotives have made up only 2% of the incentive grant projects but have resulted in 40% of 

the project NOx reductions. Having such large emissions reductions concentrated in such few 

projects results in efficiencies for TCEQ staff. 
BNSF is confident that less draconian measures can be developed with regard to 

locomotives than requiring replaced locomotives to be recycled or scraped. For example, an 

exception to the requirement to recycle or scrape could be developed specifically for locomotives 

that install and maintain a global positioning device. With such a device, TCEQ staff could 

observe at BNSF headquarters in Fort Worth the positions of the each of these locomotives on a 

real time basis. Of course, for locomotives sold to a third party, the purchaser would be 

responsible for maintaining the global positioning device and for ensuring that the locomotives 

are not operated in Texas. 

BNSF understands the difficulties that TCEQ staff has identified with respect to trucks. 

However, the broad proposed change in the rule is not justified and is economically wasteful 

with respect to locomotives. Other less draconian measures are available to insure that 

locomotives are not returned to the state of Texas. BNSF would be happy to discuss these 

alternatives further with TCEQ staff and appreciates the opportunity to comment on the proposed 

rules. 

Sincerely, 

Robert T. Stewart 

Attorney for BNSF 
CIN OF DALLAS. 

September 12,2007 

Texas Commission on Environmental Quality 

Office of Lcgal Services 

Ms. ~csle~ Williamson 

MC 205 P,O. Box 13087 

Austin, TX 787 11 

Dear Ms. Wj.Uiarnson 

. RE;, Rile Project Numb+ 2007-026-1 14-EN and Rule Project Number 2007-022-1 14-EN 

The City of Dallas appreciates the o&ortunity to commcnt On the proposcd changs to. 

the Low Income Repair Assistance,.Rerrofi and Accelerated Vehicle Retirement 

Program (LIRAP) dd the Texas Emission ~eduction Program (TERP). 7216 successes of 

these programs are of great impoltance in order to improve air quality and protect the 

health of citizens who live and work i.n North CentraI Texas. 

The City of Dallas supports the proposed changes to &he LLEL4P program which wa 

expand the eligibility chtcria to allow for more participation in Ule program us well as 

provide a grearcr incentive for the retirement of high emitting vehicles. Kn the ~allas.fiort 

Worth'(DFW) non-attainmant region approximately 300,000 vehicles fail the emissions 

test each year which results in an increase of emissions of nitrogen oxides. Because thc 

DFW &county region is a non-attainment area for ozone, tl~ere .is a need for peater 

participation in the LRAP program in order to replace these high emitting vehicles that 

are negatively affecting the regions air quality. l3ckasin.g the qualifying income levels 

and allowing for the retirement and replacement of vehicles at least 10 years or older 

regardless of passing an emissioas test will Qow for moh vehicic owner participation in . the progm. According to statistics from the North Central Texas Council of 

Govomrncnts Air Check Texas and Replacement Assistance Program, in the past 5 yeam, . . 

over 2,000 applicants have been denied assistance to replace or repair high eemitting 

vehicles because of incornc and vehicle requkeno,ents. ' 
The City is also very suppodve of i:ncreasing rlk retirzmeat incentive and including . 

hybrid vehicles in. the type of cars that can be purchased. However, we have some 

concerns over tbe stringent requirements for eligible replacement vehicles. Many lowincome families will face challenges. with purchasing a 'three year old or newer vehicle 

even with the cxtra incentive. We would advocatc that more flexiblc options for 

purchasing vehicles be coisidered for ].ow income families. 

The City would also like t3e Commission to consider changing the vehiclc inspection and 

~naintenance program to includc the Environmental Protection Agency fmal acceleration 

s,i.mnulation mode emissions standards also ,bowt~ as the "final. cut-points" emissions test. 

Thesc standards would cnsura ehat.vehicles are passing' the most stringent tests for 

cleaner vehicles. 

TERP 

The City of DalIas is very supportive of the Texas Emissions Reduction Plan. and its 

overall god to assist with the purchase of cleaner engines, vt$~icl.es, and equipment. 

Raising thc TERP cost effectiveness to $15,000 per ton allows additional candidates to be 

considcred for funding. Given that approximately 70 percent of emissions in the DallasFort Worth area are from non-road and on-mad sources, it is of utmost importance that 

participation in this grant funded program to replace high cmitting engines, vehicles, arid 

equipment that have a negative impact on our air quality is increased. 

Howcver, while the City supports TCEQ's guidelines to evaluate projects baed on cost 

effectiveness, we fcd that there are additional dteria that could be given cqual or greater 

wejght We suggest that TCEQ consider induding additional factors, such as 

predominate location of the emission sourcce wwitfin the region, when evaluating wh,i.ch 

projects should rccei,ve rnonctary incentives under th6 7Ti~'pro~arn. 

In reference to the change proposed by staff of TCEQ to omit the option to remove o1.d 

cquipmefit and engines Erom the State, the City of Dajlas isvery supportive. Ensuring that , 

ol,d, high emitting equipment and engines wjll be scrapped or r~c~cicd will resultin. 

cmission reductions and improvements in the region's air quality, 

, The City of Dallas is also supportive of the.devclopment and support of a diesel, testing 

centcr to cvaluate retrofits and advanced technologies to determine their effectiveness in 

achieving emissions reductions as outlined in SB 1.2. There is cunenfly a lack of verified 

testing centers h the State of Texas. New tecbno1ogy.j.s critidal to reducing emissions and 

a new testing ccnter would help provide options for NOx controls in our region. We . 

believe that vsrl.fication of retrofits has been umecessarily slow due to the costs and 

excessive requirements of the EPA verification pmgram, 
FAGE bd05 

In an iffort to encourage paaicjpation in bolb tl,se TERP and L.RP programs, the City of 

,Dallas is planning to lke an outreach coordinator, The purpose of the new position is to 

work with private contractors to the City as wdl as citizens at auto pounds and inspection 

stations to rai.se awareness about both programs and . provide . assistance with filling out 

applications. 

We look fo.ward to our continued invol,vement in c1e'an air issues across the segion and 

futu~ discussions between the City of Dallas and TCEQ. If you have any questions ' 

concerning thc efforts of thc City of Dallas, pSease feel free to contact me at . 

Office of ~nvironm$ml Quality 
September 1 1,2007 

Texas Commission on Environmental Quality 

Austin, TX 7871 1-3087 

Dear TCEQ Commissioners and Staff, 

We would like to thank the TCEQ Commissioners for their support of the Texas 

Emissions Reduction Plan (TERP) and the TERP staff for their diligence in overseeing 

and improving the TERP program. Emisstar LLC believes TERP is an integral part of 

the effort to improve air quality in Texas, and we appreciate TCEQ's support of the 

program and its participants. 

As the TCEQ is considering proposed changes to TERP rules and guidelines, we 

would like to make the following comments regarding the proposed rule changes: 

I. Authorize travel on highways and roadways desipated by the commission to 

count towards the requirement that grant-funded vehicles operate at least 75 

percent of the annual piles in the eligible counties. 

Emisstar supports this rule change because the additional mileage 

allowance may encourage more participation in TERP by on-road operators and 

businesses who might not otherwise meet the 75% requirement for operation in 

TERP-eligible counties. 

2. Raise the cost-effectiveness cl-iteria porn $13,000 cost per ton of nitrogen 

oxides reduced to $1 5,000per ton. 

Emisstar supports this rule change because the average cost per ton of 

NOx reduced would be expected to grow over time. The costs to replace 

engines and equipment are not likely to decrease at the same rate that the 

"dirtiest" engines and equipment (i.e., those emitting the most NOx) are being 

MEbV YQRK HEW ENGLAND TEXAS 

982 Iv'lontauk i-[igmvay, site 8 21 Susan Road 731 Brazes Streei, Suits 550D 

Z~~yport. NY 17735 E+Ievf E33sion. hlH 0293 Austin, T3: 791M 
removed from operation. As a result, the cost per ton of NOx reduced will 

continue to increase, and for TERP to remain a successful program for 

improving air quality in Texas through 2013, it will need the flexibility to fund 

projects that have higher costs per ton. For comparison, the Carl Moyer 

program in California has a legislative cost per ton cap of $14,300. 

3. Remove the option that vehicles, eqzripnzent, and engines replaced under the 

program may be removedfiom the state in lieu of being recycled or scrapped. 

Emisstar does not support this rule change. We have information that 

potential TERP participants have been unwilling to participate in TEW for the 

past few grant rounds because the change in guidelines would not allow 

transfers or sales of equipment out of state. Emisstar understands the need for 

the State of Texas to ensure that equipment or engines being replaced or 

repowered through TERP no longer operate in the state, to meet attainment 

standards specified by the federal Clean Air Act. However, this need is 

addressed by the stipulation in the TERP contract that the grant recipient ensure 

that the equipment remains out of state. In our opinion, this rule would 

eliminate projects that might otherwise sigdicantIy improve ah- quality, 

especially in key areas, such as at ports or in dense industrial areas. 

To illustrate, our understanding is that some of the stevedoring companies 

at Texas ports have elected not to participate in TERP since the rules were 

revised. They continue to operate older equipment (e.g,, materials handling 

equipment such as forklifts), and may actually be adding new equipment to their 

fleets, effectively increasing emissions in those areas because old equipment is 

neither scrapped nor moved out of state. In 2006, eleven stevedoring companies 

participated in TERP; a year later, after TCEQ be,gan a policy of not allowing 

sales or transfers out of state, only 6 stevedoring companies appear to have 

participated. 

-- -- 'HEW YORK MEW ENGLAND TEXAS 

952 Montauk I-l~yl~i~ay, Suite 8 21 Susan Road 701 Brazas Street, Suite 500 

Bayport, NY 11 705 New Busion, NH ON70 Austin, T'X 70701 
Emisstar suggests adopting the following strategy to increase TERP 

participation, which will ultimately lead meeting the emissions reductions goals 

specified by the program: 

- Allow TERF' participants the option of choosing whether to take a 

salvage value of $1000 and scrap the engine or equipment, or 

- Transfer or sell the engine or equipment out of state, requiring that 

the TERP participant is contractually liable for ensuring the engine or 

equipment never.returns to Texas. 

Thank you very much for taking the time to read these comments. Ernisstar 

looks forward to continued involvement with TCEQ and the TERP program. 

Sincerely, 

Kathi L. Harris 

Program Director, Emisstar LLC 

MEW YORK NEW ENGLA46P TEXAS 

932 !dogtau k Highway, %YE 8 21 S~isan Road 701 Bia~a Sbeei, SuZe 6h,D 

Bayport, NY 17705 id*f Bmion, lrJH 03070 Ailstin, TX 78701 
From: ~bpayne@fortworthchamber.comz 

To : <bpayne@fortworthchamber.comz 

Date: Wed, Sep 12, 2007 3:44 PM 

Subject: 2007-022-114-EN 

This email is a confirmation of the comment that was submitted for the 

referenced rulemaking. 

First Name: Brinton 

Last Name: Payne 

Company/Organization: Fort Worth Chamber of Commerce 

E-mail Address: bpayne@fortworthchamber.com 

Street Address: 777 Taylor St 

City: Fort Worth 

State: TX 

Zip Code: 76102 

Phone Number: 817-336-2491 

Fax Number: 817-877-4034 

Rule: 2007-022-114-EN 

Comments : 

September 12, 2007 

Ms. Lesley Williamson 

Texas Commission on Environmental Quality 

Office of Legal Services 

MC 205 - P.O. BOX 13087 

Austin, TX 78711-3087 

Re: Rule Project Numbers 2007-026-114-EN and 2007-022-114-EN 

Dear Ms. Williamson: 

During the 80th Session of the Texas Legislature, the Fort Worth Chamber, and 

other regional groups, strongly advocated on behalf of our members for the 

passage of Senate Bill 12; specifically for its enhancement and extension of 

the Low Income Repair and Assistance Program (LIRAP) and the Texas Emissions 

Reduction Plan (TERP). The efficient and effective implementation of these 

two programs is imperative to our region's air quality goals. 

We urge you to make available all of the TERP funds appropriated for the 

program by increasing the cost effectiveness threshold to $15,000 per ton of 

NOx reduced, for both on- and off-road equipment. This increase from the 

current limit of $5,000 for on-road and $10,000 for off-road sources, would 

encourage greater participation in TERP by individuals in the North Texas. 

We sincerely hope that in making adjustments to the LIRAP and TERP programs, a 

common goal of ensuring both emissions reductions and State Implementation 

Plan credits by allowing the largest number of North Texans to participate in 
and benefit from these vital programs. 

Thank you again for your ongoing corrlrnitment to improving our s~atels air 

quality. 

Sincerely, 

Brinton Payne 

Senior Director 

Goverrmient and Urban Affairs Division 
David L. Powell 

Vir':~ prcsid.en.t - Motive Power 

August 30, 2007 

Ms. Patricia Duron 

MC-205, Ofice of Legal Services 

Texas Commission on Environmental Quality 

PO Box 13087 

Austin, TX 7871 1-3087 

Faxed to: 51 2-239-4808 

Reference: Rule Project umber 2007-022-1 14-EN 

Dear Ms. Duron: 

I am writing this letter in response to the TCEQ proposals contained in Senate 

Bill 12, related to TERP Program Revisions. Our company has been and 

continues to monitor emissions funding opportunities for locomotives in Texas. 

While the proposed increase in cost-effectiveness (CE) might appear to be a 

good thing on the surface it also appears to mean very little in the end. The 

TCEQ has used a much lower level of CE in past requests for projects (RF,Ps), 

The latest RFP from earlier this year required every type of project to meet a 

much lower CE, Past legislation also requires TCEQ to always maintain both 

Locomotive and Marine projects at a lower CE than other project types. 

With thisin mind, then, I am doubtful that any project will be permitked to use the 

$15,00O/ton threshold and it seems especially doubtful it could be used for a 

railroad locomotive project. The part of this proposal most damagingto a railroad 

operator is that we can not abide by the statement; "With this amendment, qrant 

recipients will be'required to recvcle -or scrap the old equipment or enqine". 

Our company currently operates 47 individual railroads, performs rail switching 

services in 12 US port facilities and provides rail switching services to dozens of 

industrial customers in 26 states including Texas. In light of this new proposal, it 

is unfortunate that we can not and will not participate in a program where we are 

forced to scrap an otherwise viable locomotive asset that could be redeployed to 

another region, state or rail operation. Our locomotives have significant asset 

value and disposing of even one of these assets would be economically 

unacceptable, 

Gcncscc & Wyoming Inc. 4::537 Pak)ln Oaks I;ri:lrt, Suite 102, ,Tncksonville. Flon'rJa 32224, 904-596-7781 Fax 9()&223-4.50,7 
If these proposals become effective as we interpret them, then TERP (TCEQ) will 

most likely remove all incentive for railroad locomotive operators to participate. 

Certainly you can appreciate that while locomotive projects constitute only about 

2% of all funded projects and only 5% of all activities, they make up almost half 

of the total emissions reductions realized from the program. 

TCEQ must also realize that it will most assuredly not receive any more 

locomotive project submittals if these proposals are adopted with such restrictive 

requirements. Further, locomotive projects although perhaps a relatively small 

number in activity size, require less overall TCEQ project time and cost to 

manage simply by virtue of there being less projects to track, audit and report: on 

as opposed to, say, projects for trucks and highway vehicles. 

I appreciate the opportunity to respond to this proposal. Considering these new 

changes, TERP funding just isn't realistic for our company as proposed. 

ILlost sincerely, 

vice President - Motive ower 

Genesee & Wyoming In k ,- 

4337 Pablo Oaks Court, Ste. 101 

Jacksonville, FL 32224 

2 

Gcrlevee I% Wyoming Tnc. 4337 PaMo Oaks Court? SL~W 102, Jacksonville, Elcnrida 32224! 904-596-7781 Fax 904.-223-4503 
GREATER CHAMBER 

A repiotinl business ulliance 

September 12,2007 

Ms. Lesley \Xlfiamson 

Texas Commission on Environmental Quality 

Office of Legal Services 

MC 205 - I1.O. Box 13087 

Austin, TX 7871 1-3087 

Re: h//e l'roject Nwnbers 2007-026- 1 14-EN atrd 2007-022- 1 I4-EAT 

Dear bIs. Wfiamson: 

During the 8ut" Session of the Texas Legislature, the Greater Dallas Chamber strongly advocated on 

behalf of our members for the passage of Senate BLU 12; specifically for its enhancement and 

extension of the Low Income Repair and Assistance Program (LIMP) and the Texas Emissions 

Reducuon Plan (TERP). Because mobile sources are the greatest source of nitrogen oxide POX) 

emissions in the Dallas-Fort Worth regon, the efficient and effective implementation of these two 

programs is crucial to our region's air quality goals. 

With regard to proposed adjustments to LIRAP, we urge you to choose flexible alternatives when 

considering restrictions that would prevent large numbers of otherwise qualified fades from 

parucipating in the program, such as prohbitive restrictions on vehcle replacement. In keeping 

with the oliginal intent of the legslation, we want the program to be available to as many qualified 

Texans as possible in order to get the largest number of older, hgh-emitting vehcles off our roads. 

Addtionally, we urge you to make available all of the TERP funds appropriated for the program by 

increasing the cost effectiveness threshold to $15,000 per ton of NOx reduced, for both on- and 

off-road equipment. This increase from the current ht of $5,000 for on-road and $10,000 

for off-road sources, would encourage greater pamcipauon in TERP by indviduals in the North 

Texas. 

It is the Chamber's hope, that when mahg adjustments to the LIRAP and TERP programs, you 

w~Ll remain mindful of our shared desire to ensure both emissions reductions and State 

Implementation Plan credt by allowing the largest number of North Texans to participate in and 

benefit from these vital programs. 

On behalf of the Greater Dallas Chamber, we thank you for your consideration of our concerns and 

for the TCEQ's on-going commitment to improving our state's air quality. 

Sincerely, 

Jay Darksdale 

Trice President 

Government Relations 

700 NORTH PEARL, SUITE 1200 DALLAS, TEXAS 75201 214-746-6600 www.dallaschamber.org 
September 11, 2007 

Patricia Duron, MC205 

Office of Legal Services 

Texas Commission on Environmental Quality 

P.O. Box 13087 

Austin, Texas 7871 1-3087 

Via fax to (512) 239-4808. 

Re: Rule Project IVumber 2007-022-1 14-EN 

Good afternoon. My name is Cal Hodge. I am speaking on behalf of IVeste Oil. Neste has two 

refineries in Finland. Neste employs about 4,700 people. Neste scientists have developed a 

renewable diesel technology that reduces Green House Gases (GHG), increases demand for 

agricultural products and improves energy security while reducing NOx emissions when added to 

diesel fuel. This science is so impressive that I came out of retirement to help bring it to America. 

Thank you for the opportunity to comment on the proposed rulemaking to amend §114.622 to 

implement the cost-effectiveness increase from $13,000 per ton of nitrogen oxides reduced to 

$15,000 per ton under Texas Health and Safety, §386.106(a), as required by SB 12. 

$15,000 per ton of nitrogen oxides reduced is a big number. I just want to make sure TCEQ 

knows that Neste's technology can produce some low hanging fruit that should be harvested 

along the way to $15,000 per ton. This technology produces renewable diesel fuel from either 

vegetable oils or animal fats by adding hydrogen to the bio feedstock to make renewable 

paraffinic hydrocarbons also known as alkanes. This technology is important to today's issue, 

NOx reduction cost, because adding alkanes to diesel fuel tends to reduce NOx emissions. It is 

low hanging NOx reduct~on fruit because it is cost competitive with the Fatty Acid Methyl Ester 

(FAME) technology that makes one form of biodiesel. 

Alkanes have been in diesel fuel since diesel fuel was first distilled from crude oil. As such they 

fit the existing blending, distribution and consumption infrastructure. The standalone process 

developed by Neste Oil's scientists makes this ultra high cetane, ultra low sulfur, essentially 

aromatic free diesel fuel. By controlling the operating conditions essentially constant quality 

product can be made from a wide range of vegetable and animal sources. By further adjusting 

operating conditions winter grade product with a Cloud Point of minus 20" C can also be 

produced. Being saturated hydrocarbons (That means containing as much hydrogen as 

possible.) they tend to burn more cleanly that typical diesel fuels and are stable and therefore 

suitable for use in emergency, standby and tactical applications. With the addition of the 

standard ultra low sulfur diesel fuel lubricity additive package NExBTLTM meets both ASTM D 975 

Standard Specification for Diesel Fuel Oils and Texas Low Emission Diesel (TxLED) Standards. 

Neste has the only commercial standalone renewable diesel production facility in the world. They 

are building a second one and have a joint venture agreement to build a third in Europe. Neste is 

seeking plant sites in the U.S. Texas is a good potential location. However, Texas needs to keep 

the door open. Therefore, TCEQ needs to be aware of the process. 

Adding these renewable alkanes to diesel fuels tends to reduce emissions of particulate matter 

(PM), hydrocarbons (HC), carbon monoxide (CO), toxic air pollutants (TAP) and NOx, the focus 

of today's comments. 

19 Serenade Pines Place + The Woodlands, Texas 77382-2005 
The following chart is based on test results that show NExBTLTM reduces HC and CO emissions 

in heavy duty trucks. 

Comparison of HC and CO Emissions from Truck Engines 

- NExBTL" and Other Premium Diesels vs. ULSD EN590 

+ RsducUon HC change % lnoreese + 

-30 -20 -10 0 10 20 30 

t NExBTLm and GTL2 result in reductions in both HC and CO 

emissions, while GTLI and MKI are increasing the emissions. 

GTL1,Z 

Source: Sunin 

= Gas-to-Liquid 

NMEC 15th lnternallonal 

diesels; MKl 

Colloquium Fuels 

= Swedish Envir. 

I Jan 

Class 

12,2005 

1 diesel - Averaoss olall Bsb with Scanla Euro A enoine 

The next chart illustrates the impact of NExBTLm on NOx and PM emission from heavy trucks. 

Similar tests on light duty diesel engines did not show the improvement in NOx emissions. 

However, given the vehicle population in America, the truck tests are much more important. 

Another important fact is that the base fuels, ULSD EN590 diesel and the MKI Swedish Envir. 

Class 1 diesel, are clean diesel fuels like TxLED. 

nESTE OIL 

Comparison of NOx and PM Emission from Truck Engines 

- NExBTL" and 0ther.P:remium Diesels vs. ULSD EN590 

+ Reducfion NOx change (%) 

b NExBTLm results in largest reductions in both NOx and PM 

emissions. 

GTLl.2 = Gas-lo-Liquld diesels; MKI = Swedish Envir. Class ? diesel 

Sourcs: Scanla NMECI 5th lnternallonal Colloqulurn Fuels I Jan 12. ZOOS 

Averages of ail tests wil)PScafili Eum A engine NCZIO WI ;3 

These observed NOx emissions reductions are consistent with TCEQ's Unified Model that 

predicts NOx emissions based upon diesel fuel properties. Everyone one of NExBTL'sTM 

19 Serenade Pines Place + The U'oodlands, Texas 77382-2005 

Phone: 281.844.4162 + Fax: 281 966.6914 + Email: A2ndOpinionlnc@~aol.com 
properties is on the clean side of the base fuel in the Unified Model. When NExBTL'sTM 

properties are inserted into the Unified Model it predrcts NOx emissions decrease about 22% as 

the model's minimum aromatics and maximum cetane limits are encountered. If the model is 

extrapolated to reflect NExBTL'sTM actual aromatic content and blending cetane, the predicted 

NOx reduction increases to 30%. This implies that at a 20% renewable diesel (R20) 

concentration a 4 to 6% decrease is NOx emissions is likely. Given the NOx problem is some air 

sheds, this looks like a technology TCEQ should explore and possibly champion. 

n-TE OIL 

Unified Model Validates NExBTL NQx Reduction 

NOx Change Vs Cetane 

30 40 50 80 

Unified Model predicts 

NExBTL NOx reduction of: 

/ b???!= 8-16% Vs, Swedish 

11 -21% Vs. TxLED 

Cetane Difference 

Currently NExBTLTM is undergoing EPA's Section 211 Fuel and Fuel Additives registration 

process. Because alkanes have always been in petroleum based diesel fuel the test results and 

registration process are expected to proceed smoothly. 

Given the GHG, National Security and agriculture sector benefits of diesel fuels made from 

biomass there are political forces at work to create mandates and/or subsidies that reduce GHG 

and America's dependence on imported oil. In the haste to accomplish these goals definitions 

are being written that could exclude this newer technology and prevent TCEQ from harvesting 

this low hanging NOx reduction fruit. We will appreciate any assistance TCEQ can provide in 

maintaining a level playing field for this and other evolving technology that helps achieve these 

important goals. 

I look forward to answering TCEQ's questions about this technology and providing additional data 

as needed. Thank you for your time. 

For A 2"d Opinion, I nc. 

(2-2- 

Cal Hodge 

19 Serenade Pines Place + The Woodlands, Texas 77362-2005 

Phone: 281.844.4162 t Fax: 281 966.6914 + Email: A2ndOpinionInc@aol.com 
1'401th Central Texas Council C)i Governm~ents 

September 11, 2007 

Texas Commission on Environmental Quality 

Office of Legal Services 

Ms. Lesley Williamson 

MC 205 

P.O. Box 13087 

Austin, TX 7871 1-3087 

Re: Rule Project Number 2007-026-1 14-EN and Rule Project Number 2007-022-1 14-EN 

Dear Ms. Williamson: 

The North Central Texas Councll of Governments (NCTCOG), committed to improving air 

quality in North Texas, reviewed the proposed rule amendments to the Low Income Repair 

Assistance, Retrofit, and Accelerated Vehicle Retirement Program (LIRAP) and the Texas 

Emissions Reduction Plan (TERP) which the Texas Commission on Environmental Quality 

(TCEQ) issued in response to Senate Bill (SB) 12 passed by the 8oth Texas Legislature (LIRAP: 

Rule Project Number 2007-026-1 14-EN; TERP: Rule Project Number 2007-022-1 14-Ell). 

NCTCOG is asking the TCEQ to consider the following comments before final adoption of the 

proposed rules and in future implementation of these programs. 

LIRAP 

While NCTCOG agrees with the proposed amendments based on SB 12 to Chapter 114, 

Control of Air Pollution from Motor Vehicles $1 14.62, $1 14.64, §I 14.66, and §I 14.70 

recommended by the commission, NCTCOG would like to take this opportunity to alert the 

commission to concerns the region has regarding LIRAP. 

1. In an effort to appropriately budget administrative expenditures for LIRAP, NCTCOG is 

requesting the commission formally define the following section regarding appropriate 

administrative funding: 

§I 14.62. LIRAP Funding. 

id) In a county with a vehicle emissions inspection and maintenance program under 

9382.302, Health and Safety Code, not more than 10 percent of tlie money provided for 

LIRAP may be used for administration of the proqram. 

2. IVCTCOG is in the process of briefing all nine nonattainment county commissio~iers co~irts in 

North Texas on the legislative changes to LIRAP and TERP. All nine counties express serious 

concern over the matching requirement set forth by SB 12 in relation to the Local Initiatives 

Projects. The counties state the funds made available for the Local Initiative Projects were 

6'16 51:. Fiag:. Dii\/e Senterpo~nl Two 

P G. Bor 5388. Arlir~gton. Texas 76005-5008 

(8171 640-3300 FAX 817-640-7836 @ recyclr-c papor 

www.nrtcoy.org 
Ms. Lesley Williamson 

Page Two 

September 1 1, 2007 

originally collected from their counties, but now are only available if the county matches these 

funds, which essentially equates to double-taxation. 

3. Local elected officials also express grave concern over the replacement vehicle structure. 

By placing such stringent purchasing restrictions on eligible replacement vehicles, fear exists 

that few families will be able to take advantage of the replacement component of the program. 

More flexible options should have been considered for lower income families. 

4. In an effort to capture more high-emitting vehicles, NCTCOG strongly encourages the 

commission to improve the vehicle inspection and maintenance program by adopting the more 

stringent United States Environmental Protection Agency 'final acceleration simulation mode . 

emissions standards, also known as the "final cut-points", emissions test. 

TERP 

NCTCOG concurs with proposed amendments to Chapter 1 14, Control of Air Pollution from 

Ivlotor Vehicles $1 14.622 resulting from SB 12, and would like to provide comment to the 

Commission regarding future implementation of TERP. 

1. To further encourage participation in TERP, NCTCOG supports increasing the costeffectiveness threshold in future Requests for Grant Applications up to the $1 5,000 per ton of 

nitrogen oxides (NOx) reduced as proposed in this rulemaking. 

2. In addition to allowing vehicle travel on highways and roadways, or portions of a highway or 

roadway, designated by the commission and located outside a nonattainment area or affected 

county to count towards the percentage of use requirement, NCTCOG urges the Commission to 

use all flexibility allowed in applying this clause to determining project cost-effectiveness. 

3. In order to ensure emissions reductions and State Implementation Plan credit, NCTCOG 

supports removing the option that vehicles, equipment, and engines replaced under the 

program may be removed from the State in lieu of being recycled or scrapped. 

3. In the past, TERP funding has been strategically allocated to assist Nonattainment and Early 

Action Compact Areas with achieving emissions reductions required for compliance with the 

federal ozone standard. P,s North Central Texas faces a very near ozone attainment year of 

2009, NCTCOG requests the Commission's support and provision of grant allocations 

necessary to meet the region's air quality goals. 

4. Having previously partnered with TCEQ to achieve the goals of TERP, NCTCOG supports 

the award of third-party grants. Much value can be added through local implementation of 

TERP projects. As a regional agency, NCTCOG has the proximity and relationships necessary 

to encourage participation, target specific sources for emissions reductions, and provide 

assistance throughout the application and reporting processes. 

5. As provided for in SB 12, NCTCOG encourages the development and support of a diesel 

jesting center. New technology is vital to reducing emissions and complying federal air quality 

standards; however, there is currer~tly a lack of veri.lied options for controlljng NOx from mobile 
Ms. Lesley Williamson 

Page Three 

sources. A diesel testing center is an opportunity for the State to fulfill this need and prov~de 

increased options for NOx controls in nonattainment areas. 

6. Due to the lack of available NOx control technology for mobile sources, NCTCOG also 

suggests that the Commission consider expanding requirements for technology verified by the 

U.S. Environmental Protection Agency and the California Air Resources Board to include 

technology verified by testing programs outside the country. Other states have determined the 

need for and permitted technology verified through similar processes in Europe and Asia to be 

included in their ail- quality programs. 

Thank you for reviewing NCTCOG's comments concerning the proposed rule amendments to 

and future implementation of LlRAP and TERP. We appreciate your careful consideration and 

know that the commission shares our commitment to Improving air quality in North Central 

Texas. By implementing IVCTCOG's proposed suggestions, we have an opportunity to fulfill this 

goal. If you have any questions or would like further clarification, please contact me at (817) 

695-9286 or at cklaus@nctcos.orq. 

Senior Program Manager 

cc: The Honorable Chad Adams, Ellis County Judge and Chair, North Texas Clean Air Steering 

Committee 

Mike Eastland, Executive Director, NCTCOG 

Michael Morris, P.E., Transportation Director, ICTCOG 
September 12,2007 

Texas Commission on Environmental Quality 

P.O. Box 13087 

Austin, Texas 787 11 -3087 

Attn: Ms. Patricia Duron 

Re: Rule Project Number 2007-022-114-EN 

Dear Ms. Duron: 

The Port of Houston Authority (PHA) has long been an avid supporter of the Texas Emission 

Reduction Plan (TERP) program as well as an active program participant. Since the program's 

inception, the PHA has sought and obtained numerous grants that have been successful in 

reducing pollution in the Houston, Galveston, and Brazoria County nonattainment area. 

The PHA welcomes the opportunity to comment on the proposed TERP rule changes as 

authorized by Senate Bill 12 and offers the following two comments on the proposed rules. 

The PHA supports the rule change requiring recycling or scrappage of old equipment for 

a project that involves replacement or repowering. The PHA concurs with the Texas 

Commission on Environmental Quality (TCEQ) that the current version of the rule, 

allowing tracking of equipment that has been removed from the state, makes it difficult to 

determine whether the equipment permanently leaves the state. 

If the Commission decides to proceed with the designation of highways or roadways 

located outside of a nonattainment area, for purposes of determining eligibility or 

compliance with the percentage of use requirement, the PHA requests that the 

designation process include a notice and comment opportunity for stakeholders to have 

input. 

Again, the PHA thanks the TCEQ TERP staff for all their hard work in making this program a 

success. 

Sincerely, 

Charlie Jenkins 

Director, Planning and Environment 
September 12: 2007 

t-lybrid Technologies Corp. 

Comments On the Proposed Amendment to Texas Emissions Reduction Plan 

(TERP) Rules In 30 Texas Administrative Code 5 114.622 

Rule Project Number 2007-022-114-E 

Railpower Hybrid Technologies Corp is appreciative of the opportunity to coinment on 

the proposed rule changes to the TERP program. The commission is aware of the impact of the 

locomotive projects on the success of the TERP program. The following graphs were taken from 

the "TERP Summary Reports - Grants Funded by Emission Source" and dated January 26, 2007 

and posted on the TERP website. 

Nurn ber of Projects 

Locorrutive, 

Slalionary, 2% 

ACTIVITY 

EMISSION 

SOURCE 

Locomotive 

Marine 

Non-Road 

On-Road 

Stationary 

On-Road, 

42% 

Non-Road, 

51% 

TOTAL NO, 

(TONS) 

40451 .I 728 

11 099.7206 

16954.5425 

291 51.91 50 

2925.2504 

100,582.6013 

NUMBER 

OF 

PROJECTS 

28 

61 

764 

640 

20 

1513 

NUMBER 

OF 

ACTIVITIES 

289 

455 

2241 

2932 

31 

5,948 

TONS 

PER 

DAYIN 

2007 

9.2972 1 

5.2258 

9.5772 I 

14.6460 

1.61 74 

40.3636 

TONS 

PER 

DAYIN 

2008 

9.4362 

6.3445 

10.7735 

14 1528 

1.6455 

42.3525 

GRANT 

AMOUNT 

$1 55,278,298.38 

$35,882,870.60 

$88,449,569.52 

$1 19,814,133.51 

$7,374,854.70 

$406,799,726.71 

TONS 

PER 

DAYIN 

2009 

12.5670 

6.3445 

10.6396 

13.91 39 

1.6455 

45.1104 

COST 

PER TON 

$3,838.66 

$3,232.77 

$5,216.87 

$4,109.99 

$2,521 .I 0 

$4,044.43 
Total NO, (tons) 

Stationary, 3% 

It is quite clear that the locomotive projects are vital to the programs success. The locomotive 

projects makeup only 2% of the 1,513 projects and only 5% of the nearly 6,000 total activities 

while producing nearly half of tht: total NOx reductions. If the proposed change of eliminating 

the option for locomotive projects to permanently remove the replaced locomotive out of the 

State of Texas is adopted, the railroad companies will find very few future opportunities to 

continue to apply to the TERP program, thus resulting in a severe shrinkage of the large piece of 

emission reduction pie that has contributed heavily to the great success of a nationally-renowned, 

clean air program. Can the program afford to eliminate this source of emissions reductions? 

The railroad partners that have worked with TERP on previous locomotive projects have 

demonstrated that the mechanisms are in place to ensure that the older, high-polluting locomotive 

do not return to the State of Texas. It is working and can continue to do so. California Air 

Districts have acknowledged that the railroads can and will fulfill this control of the displaced 

locomotives with the Carl Moyer emission reduction projects and will continue to allow this 

option for locomotive applicants. Railpower knows that the railroad partners that are currently 

working with TERP will explain in further details the value of the older locomotives in other 

parts of the country, so we will not bother to restate those issues. 

Railpower would like to highly recommend that the commission reconsider eliminating 

this permanent removal option for of the baseline equipment for locomotive projects for the sake 

of the continued success of the TERP progl-am. If the TERP program's priority is to succeed in 

playing a significant role in cleaning the air in the State of Texas and in helping produce and 

maintain an acceptable State Implementation Plan for the State, then locoinotive projects must 

remain a viable participant in the program. 

Thank you for your consideration to.this very importailt issue to the State of Texas. 

Sincerely, 

Railpower Hybrid Technologies Corp 

General Manager - Emissions 
Patricia Dur6n 

MC205, Office of Legal Services 

Texas Commission on Environmental Quality 

P.O. Box 13087 

Austin, Texas 78711-3087 

AUTOMOTIVE R 1 Z . . . . , , : . . . .I <. 

. .. 

RECEIVED 

SEP I 0 2007 

TEXAS REGISTER TEAM 

Dear Sirs 

I would like to comment on the TERP program in reference to Senate Bill 12. 

In the past I have submitted proposals to the TCEQ both as unsolicited proposal and as a 

TERP applicant and each time was turned down for funding because of the diesel contingent. 

My project is the TriTrack electrified guideway that has the potential to actually clean up 

Texas air to healthy standards in the unhealthy population centers of Texas. The TERP 

program has since specifically listed diesel engines as the only thing that will be considered 

which is a blessing to those who would try to propose a real solution and waste the& scarce 

resources on a program that will eventually crush the concept based on a predisposition for 

diesel power. 

As you know or should know diesel engines produce significant NOx pollution based on the 

brake horsepower rating of the engine. The NOx production is a function of the fundamental 

part of the self-igniting combustion at very high compression. The pollution is &om the 

intake air not the liquid fuel. What that means is there are two standards, one for gasoline 

and a totally outrageous one for diesel in comparison to gasoline. The public has not been 

educated on how unmatched these standards are between gasoline engines with catalytic 

converters and diesel engines of today's technology applied to trucks. There are so many 

games that are being played by creating categories of heavy trucks with no requirement to be 
socially responsible or to love your fellow man. The TCEQ should-as a minimum should be 

a source for truth and this comes for the sunk cost of overhead. 

The TERP program if only allowed to be applied to diesel engines is seriously flawed as 

diesel engines need to be obsolete soon rather than have the state buying more of these things 

to run for decades. Even though a 2007 engine is cleaner than a 1987 engine it is not 

significantly cleaner. The energy and pollution that went into the production of that 1987 

engine is not insignificant and requiring the scrapping of the engine that is functional but 

needs a new top end control is not the best approach as it is wastehl on all fronts. There are 

gasoline/electric hybrids made by Ford that would replace the total function of a large bore 

polluting diesel power plant. The electric traction motor supplies the takeoff power and the 

gasoline engine with catalytic converter is easily able to provide the average power of 99% of 

applications. The diesel hybrid bus by GM is tremendously more polluting than the same bus - 

with a gasolinehybrid yet the million dollars wasted on the two buses that roam the capitol 

. are GM diesels. This purchase comes out of ignorance and the TCEQ should take a stand - - - - 

against such ignorance. Just a casual observation on the million dollars spent on two buses is 

the diameter and blackness of the pipe that comes out the top of these things. They are just as 

black as any other diesel bus and the pipe diameter is jist as large. You surely can't justify 

wasting a million dollars on fuel savings so all that is left is to justify the bus on pollution 

improvement yet these two buses will in no way solve Austin's pollution. CapMetro does 

account for 6% of Austin's NOx pollution from their operations. What is misleading is when 

CapMetro offers free bus rides on ozone action days when they are the straw that is breaking 

the camel's back with their exhaust pipe emissions. Well meaning advocates for riding the 

bus often speak of riding the bus as something that will clean up the air when in fact by using 

diesel they are many timesdirtier and with CapMetro ridership use more fuel. Diesels will not 

be required to be actually clean for another couple years by the EPA who is gutless in their 

enforcement of the law of the land. Once diesels are required to meet the same pollution 

standards as gasoline I will retract these assertions but we are not there yet and encouraging 

diesel manufacturers to build more of these devices sends the wrong message. 

We propose that TERP money be used for engineering and development of the replacement 

for diesel engines not buying more. Money spent developing the replacement in either 

electrified solutions or non-NOx emitting versions is multiplied across all new products 

where buying diesel engines one at a time and scrapping them does not have a multiplication 

effect but at best it is addition. Why should the taxpayers be held responsible for the 

irresponsibility of the company that bought a dzrty piece of equipment in the first place? If 

you give these guys more money in their pocket they will just go buy more and bigger trucks 

with the net result Texas will still have unhealthy air. Lfanything the TCEQ should ban 

diesel trucks that are driven as a car. There is no reason that a diesel pickup truck should be 

allowed on the street except for deals made with the EPA stalling the implementation of the ' 

law as passed. The SIP is what is being referred to and it is on the edge of criminal that the 

law is being spat on by the SIP concoction. Either we have clean air or we don't. Stalling for 

year after year is absurd. Although the TERP plan is intended to do a good thing the 

approach guarantees failure as a system as it will not provide the result that is desired. The 

measured air pollution in places where the TED money has gone does not measure any 

different than places where it has not gone. The TCEQ is responsible for results by their very 

name on the building. 
Our solution is to go after the tailpipe emissions of cars since there are more cars than diesel 

engines in the state by a large margin. Without going to the source of the pollution you will 

not achieve any appreciable measured improvement. If some TERP money were to be 

diverted to a more intelligent approach that has a multiplication effect like R&D then TERP 

can achieve its underlying goal of cleaner air at a price the taxpayers can afford that does not 

play favorites with those who are the very offenders. 

Sin?grely, . , 

L&f/;,. .: d&-... ?.-7-PDo7 

Jej doane, 101 S. Laurelwood Dr, Austin, Texas 78733 5 12-263-5344 
BAKER BOTTS 

RECEIVED 

SEP 1 2 2007 

September 12,2007 TEXAS REGISTER TEAM 

VIA HAND DELIVERY 

Ms. Patricia Duron 

Office of Legal Services (MC-205) 

Texas Commission on Environmental Quality 

12100 Park 35 Circle, Building A 

Austin, Texas 78753 

1500 S4N JACINTO CENTEP, AUSTIN 

98 SP.N !.*~Cll.iTO BLVG. BEUIIdG 

AUSTIN, TEYP.2 DALLAS 

7870 1-4078 DilBAl 

HONG KONG 

TEL +1 512.322.2500 HOUSTON 

FAX +1 512.222.2501 LONDON 

w. bokerbotis.com MOSCOW 

NEW YORK 

RIYADH 

WASHINGTON 

Matthew G. Paulson 

TEL +1 512.322.2582 

FAX +1 512.322.8329 

rnatthew.paulson@bakerbotts.com 

Re: Comments of Union Pacific Railroad Company on the Proposed Amendment to 

Texas Emissions -Reduction Plan ~ules' in 30 Texas Administrative Code 5 

1 14.622; Rule Project Number 2007-022-1 14-EN 

Dear Ms. Duron: 

Enclosed please find the comments of Union Pacific Railroad Company ("Union 

Pacific") on the above proposal. Union Pacific appreciates the opportunity to comment on the 

proposed rule. If you have any questions, please do not hesitate to contact me. 

Matthew G. Paulson 

Enclosure 

cc: L. Schmid 

G. Dickinson 

S. Echevarria 

D. Young 

P. Giblin 
Rulc Project No. 

2007-022-1 14-EN 

September 12, 2007 

Comments of Union Pacific Railroad Company 

On the Proposed Amendment to Texas Emissions Reduction Plan Rules 

In 30 Texas Administrative Code €j 114.622 

Rule Project Number 2007-022-114-EN 

1 1. Introduction 

Union Pacific Railroad Company ("Union Pacific") appreciates the opportunity to 

comment on the proposed revisions the to Texas Emissions Reduction Plan ("TERP") Diesel 

Emissioils Reduction Incentive Program ("Diesel Incentive Program") rules in 30 Texas 

Administrative Code Cnapter 114 (the "Proposal"). Union Pacific recognizes that the Proposal 

has been developed primarily to implement the 8lst Texas Legislature's revisions to the TERP 

statute through Senate Bill 12. However, an aspect of the proposal that is not dictated by Senate 

Bill 12--eliminating the option for a grant recipient to permanently remove old equipment from 

the state following replacement-will seriously hinder the ability of Union Pacific and other 

railroad companies operating in Texas to undertake new locomotive projects, result in the loss of 

already limited projects capable of capturing further available reductions in emissions of nitrogen 

oxides ("NO,"), and create a general disincentive for participation in the program. 

Union Pacific would like to emphasize its continuing efforts to reduce emissions 

resulting from its operations throughout Texas and especially in the state's ozone nonattainment 

areas. Over the last eight years, Union Pacific has invested over four billion dollars in fuel 

efficient locomotives and idle reduction technologies in Texas and across the nation. The 

company has taken a leading role in the development and use of Ultra Low Emitting Locomotive 

("ULEL") technology, commercialized as " Genset Switchers. " In addition, we would like to 

stress that railroad transportation is the most environmentally friendly way to move freight. 

11. Specific Comments: The Scrappage Requirement is Unnecessary and Will 

, Jeopardize Future Locomotive Replacement Projects 

A. Background 

The Proposal includes a revision to the TERP incentive program requirements 

that would eliminate the option for TERP grant recipients to peimanently remove old equipment 

or engines from the State following replacement under grant projects (the "Permanent Removal 

Option"). Under the Proposal, old equipment or engines must instead be recycled or scrapped. 

This revision is not required by Senate Bill 12. It is unnecessary, and it stands to jeopardize the 

financial viability of future locomotive replacement projects that have been among the most cost 

effective sources of NOx reduction to result from the TERP incentive program. Moreover, it is 

highly counter-productive to the stated program goal of reducing NO, emissions to create such a 

serious financial disincentive for program participants. 

Since 2004, Union Pacific has replaced 121 locomotives in Texas under five 

Diesel Incentive Program contracts. Nearly all of these locomotives have been "switch 

locomotives" servicing individual rail yards and terminals in the state's ozone nonattainment 
Rule Project No. 

2007-022-1 14-EN 

areas. These locomotives are well suited for replacement under the TERP incentive program 

because they are typically assigned to a single rail yard, and because Union Pacific is actively 

working with suppliers to develop low-emissions technologies for its switch locomotive fleet. 

Roughly half of the locomotives replaced under the Diesel Incentive Program since 2004 have 

been scrapped and their engines destroyed. The rest of the locomotives have been reassigned to 

other Union Pacific locations outside of Texas to take advantage of their remaining usefi~l life 

under the Permanent Removal Option. 

B. Switch Engine Replacement Projects are Well-Suited for Permanent 

Removal from Texas and Verification is not Difficult 

The Proposal provides that it is necessary to eliminate the Permanent Removal 

Option from the Diesel Incentive Program requirements because it is difficult to ensure that old 

equipment and engines are actually removed from the state and do not return in the future. 

Union Pacific recognizes that difficulties of this nature may exist when evaluating grant 

applications to replace certain types of equipment. However, with regard to switch locomotives, 

an established record of success clearly demonstrates that, in this area, these difficulties do not 

exist at a level that warrants altering the economic balance of the program by eliminating the 

Permanent Removal Option. 

Union Pacific has maintained ownership and control of old switch locomotives 

following past replacements conducted under the TERP incentive program utilizing the 

Permanent Removal Option. The company operates over 1500 switch locomotives across the 

United States, giving it ample opportunity to relocate old locomotives that have remaining useful 

life. The company has no incentive to return the switch locomotives to Texas. Switch 

locomotives are, by virtue of their design, unable to meet the requirements for line haul service 

and are assigned for use in and around local rail terminals. They do not move fieely about the 

country as do line haul locomotives. 

Moreover, Union Pacific's state-of-the-art locomotive management system 

provides a reliable means for ensuring that switch locomotives that have been the subject of 

TERP replacement under the Permanent Removal Option are not returned to the state. Union 

Pacific has demonstrated the effectiveness of this management system to TCEQ grant staff in 

support of past applications, and Union Pacific's replacement programs have been highly 

successful. The program has effected significant ]YO, reductions in Texas nonattainment areas in 

a highly cost-effective manner. Relocation, as verified by Union Pacific's management system, 

has prevented the outright waste of valuable locomotive assets without threatening the 

effectiveness of the program. 

C. Unnecessary Consequences of the Proposal 

Unnecessarily eliminating the permanent Removal Option as proposed would 

have serious consequences. Specifically, the Proposal would jeopardize available NOx 

reductions in the future. Units that have several years of remaining service life when they are 

replaced in Texas with lower-emitting locomotive technology have significant value to Union 

Pacific in other areas of the country. Because TERP's methods for calculating the cost 
Rule Pro-ject No. 

2007-022-1 14-ETu' 

September 12,2007 

effectiveness of a particular grant application account for NO, reductions over the activity life of 

the equipment in question, the Program creates incentives for replacing even relatively new 

equipment. Partially as a result of the past success of the Diesel Incentive Program, most of the 

oldest switch locomotives in Union Pacific's Texas fleet have already been replaced. In the 

future, locomotives removed from Texas by Union Pacific under the program can reasonably be 

expected to have a longer remaining activity life and more value than the locomotives replaced 

in the past. TJnder the terms of the Proposal, Union Pacific and other switch locomotive 

operators would lose the ability to relocate this equipment. Burdened with the outright sacrifice 

of working equipment, the economic viability of future replacement programs would become 

highly uncertain. 

D. Recommendations 

1. Retain Permanent Removal Option 

Because the proposed revision to eliminate the Permanent Removal Option is not 

required by Senate Bill 12 or any other statutory mandate, Union Pacific recommends that the 

Commission refrain from unnecessarily constraining its grant staff in evaluating grant 

applications against the incentive program's objectives and requirements. Rulemaking on this 

issue is counterproductive because staff's understandable concerns about verifying the relocation 

of old equipment following replacement can be addressed through guidance without 

unnecessarily limiting flexibility under the incentive program. Grant applicants should be 

allowed to address these concerns through an "alternate disposition plan" and dialogue during the 

application process. 

At a minimum, Union Pacific believes that, for the reasons stated above, the 

Proposal should be amended to allow the Permanent Removal Option in switch locomotive 

replacement projects. However, it is likely that the Permanent Removal Option is equally well 

suited to projects involving other equipment, especially where the replacement is conducted by a 

company with a large nationwide fleet of similar equipment. Thus, the better course is to retain 

the general Permanent Removal Option and address the issue on a case-by-case basis during the 

application evaluation process. 

2. Additional Recommendations 

Ln light of the Proposal's reference to TCEQ staffs recent evaluation of the 

implementation of replacement and repower grants and staffs resulting concerns about the 

effectiveness of some aspects of those grant programs, Union Pacific believes that additional 

suggestions about the effectiveness of the Diesel Incentive Program are appropriate. Union 

Pacific offers two additional suggestions. 

a. Job-Assignment Grant Structure 

The Commission should develop "job assignment" criteria for awarding grmts 

that can be directly assigned to specific jobs or tasks conducted by an applicant, rather than 

limiting grants to specific units or pieces of equipment. At a rail terminal, the terminal operator 
Rule Project KO. 

2007-022-1 14-EN 

September 12, 2007 

employs a fleet of switch locomotives to perform many discrete, well-defined jobs withn the 

terminal. When a locomotive on a job is removed from service for fueling, maintenance, or 

inspection, a similarly-sized replacement locomotive must be assigned to the job immediately. 

The replacement locomotive will typically be of the same make and model as the unit it replaces, 

and the two units will typically have similar or identical emission characteristics. As a result, a 

job assi,.;nment-based evaluation of mobile source emissions, rather than a unit-based evaluation, 

is best suited to rail operations. 

A job assignment grant for emissions reductions directly connected to rail 

terminal job assignments would have significant air quality benefits. The Diesel Incentive 

Program's potential is not fully realized in situations where some of the locomotives on a job are 

ineligible for the grant program but have emission characteristics that are identical to eligible 

locomotives assigned to the same job. Union Pacific believes that this situation is not unique to 

rail terminals, and developing a job assignment grant would expand the opportunity for 

achieving emissions reductions through the Diesel Incentive Program. 

b. Lump-Sum Contracting 

The Commission should simplify its process for awarding grants by contracting 

with grant recipients on a comprehensive "lump-sum" basis for a specified amount rather than by 

providing reimbursement on an expense-by-expense basis. The Diesel Incentive Program offers 

a straightforward application process and a logical method for awarding grant funds to obtain the 

most cost-effective emissions reductions. However, the Program's reimbursement process is 

complicated and adds unnecessarily to the administrative costs incurred by both TCEQ and grant 

recipients. Under the current program, reimbursement payments are issued on an expense-byexpense basis only after the grant recipient has documented acquisition of the specified 

equipment. The current program's complex, individualized reimbursement scheme hinders any 

administrative benefits that might flow from large, multi-unit replacement projects. 

A lump-sum contracting scheme would encourage efficiency and si,pificantly 

reduce the administrative costs of the Diesel Incentive Program to both the Commission and the 

grant recipients. Under such a contracting approach, TCEQ might offer the applicant a fixed, 

per-unit dollar amount to replace multiple units of existing equipment with specified lower 

emitting equipment. The added certainty to result from establishing a constant, fixed 

reimbursement amount will better equip grant applicants to plan for and implement large 

replacement programs. A lump-sum contracting method will also provide the Commission with 

an earlier indication of each project's actual cost effectiveness. Simplifying the reimbursement 

process will ultimately enhance the Diesel Incentive Program's cost effectiveness. The lurnpsum contracting method employed in the California Carl Moyer program is highly efficient and 

has proven to be quite successful for both the State of California and participating grant 

recipients. 
Rule Project No. 

2007-022-1 14-EN 

September 12,2007 

E. The Proposal Would Mow the Commission to Designate Railways to Count 

Toward Minimum Nonattainment Area Operating Requirements 

A proposed revision to 30 Tex. Admin. Code $ 114.622(b) repeats the precise 

language of Senate Bill 12 in allowing "vehicle travel on highways and roadways,. or portions of 

a highway or roadway, designated by the commission and located outside a nonattainment area 

or affected county to count toward the percentage of use requirement." The language of Senate 

Bill 12, proposed for incorporation into Commission rules, supports Commission designation of 

certain railways to count toward the percentage of use requirement in locomotive replacement 

projects. 

III. Conclusion 

Union Pacific appreciates the opportunity to comment on the Proposal. We 

recognize the effort TCEQ has committed to development of the Proposal and offer our 

assistance in the Commission's effort to continue to improve the Diesel Incentive Program. 
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY 

REGION 6 

1445 ROSS AVENUE, SUITE 1200 

DALLAS, TX 75202-2733 

. - 

September 12, 2007 

Ms. Patricia Duron 

Office of Legal Services, MC 205 

Texas Commission on Environmental Quality 

P.O. Box 13087 

Austin, TX 787 11-3087 

Re: Rule Project Number 2007-022-1 14-EN 

Dear Ms. Duron: 

Thank you-for the opportunity to comment on proposed changes to 30 TAC 114 

regarding Control of Air Pollution from Motor Vehicles, specifically 5 114.622, Incentive 

Frogram Requirements, in Subchapter K: Mobile Source Incentive Programs, Division 3: Diesel 

Ernissions Reduction Incentive Program for On-Road and Non-road Vehicles. 

The Texas Commission on Environmental Quality has proposed three revisions to this 

section. In 5 114.622(b) the commission is allowed to designate highways and roadways or 

portions thereof on which travel by grant-funded vehicles may count toward the requirement that 

vehicles be operated at least 75 percent of the annual miles in the nonattainment areas and 

affected counties. We support this revision because Texas local fleets travel between Texas 

nonattatnment areas, especially in the eastern part of the State where the State has previously 

reduced emissions from 110 counties via regional fuel programs like the Low-RVP gasoline 

program and the Texas Low Emission Diesel program. Whereas the purpose of the proposed 

change is not necessarily to reduce emissions in the attainment portion of the 110 county area, it 

is significant that more, cleaner vehicles can be traveling on these highways and depoting in the 

nonattainment areas because more fleets will qualify for the Texas Emission Reduction Plan 

(TERP) incentive program. 

In $ 114.622(c) it is proposed that grant recipients recycle or permanently scrap old 

equipment and engines. The revision aIso eliminates the option to remove the old engine or 

equipment from the State. The State's analysis of this option showed that it was difficult to 

determine the whereabouts of these olditems, and thus difficult to enforce this provision. By 

eliminating this option, the SIP is strengthened. We support this proposed revision. 

The proposed revision to 5 114.622(d) increases the cost-effectiveness for projects from 

the current $13,000 per ton of nitrogen oxides (NOx) emissions reduced to $15,000 per ton. By 

Internet Address (URL) http:llwww.epa.gov 

RecycledlRecyclable &Printed with Vegelable 011 Based Inks on Recycled Paper (Mlnlmurn 25% Poslconsumer) 
- 

decreasing thc cost-effectiveness of eligible projects, [he pool of potential applicants for these 

projects will be expanded. With more projects being eligible for funding under TERP, the more 

reductions of NOx can be achieved. This is a strengthening of the SIP. Therefore we support 

his revision. 

Region 6 continues to offer Texas our support during the rulemalung process. Please let 

us know how we may be of further assistance. 

Sincerely yours, 

Guy DonaIdson 

Chief 

Air Planning Section 
INDEX OF ORAL TESTIMONY 

Reference Number Submitted by 

Austin, Texas September 11, 2007 

0-1 Christine Wolfe, Emisstar 

Arlington, Texas September 11, 2007 

Chris Klaus, lVorth Central Texas Council of Governments 

Houston, Texas September 11,2007 

Cal Hodge, Neste Oil 
TRANSCRIPT OF PROCEEDINGS BEFORE THE 

TEXAS COMMISSION ON ENVIRONMENTAL QUALITY 

AUSTIN, TEXAS 

........................................................ 

NOTICE OF PUBLIC HEARING BY THE 

TEXAS COMMISSION ON ENVIRONMENTAL QUALITY 

ON PROPOSED REVISIONS TO 30 TAC CHAPTER 114 

CONTROL OF AIR POLLUTION FROM MOTOR VEHICLES 

TCEQ RULE PROJECT NO. 2207-022-141-EN; S.B. 12 TERP 

SEPTEMBER 11, 2007 

........................................................ 

BE IT REMEMBERED THAT at approximately 11:lO a.m. on 

Tuesday, the 11th day of SEPTEMBER, 2007, the 

above-entitled matter came on for hearing at the Texas 

Commission on Environmental Quality, 12100 Park 35 

Circle, Building F, Room 2210, Austin, Travis County, 

Texas, before an agency representative, Heather Parscal. 

The following proceedings were reported by MELISSA 

PARKHILL, Certified Shorthand Reporter, by machine 

shorthand method to wit: 

KX & Associates 

214-520-6868 
MS. DURON: Good morning. I'd like to 

welcome everyone to this public hearing being conducted 

by the Texas Commission on Environmental Quality. 

My name is Pat Duron, and I'm with the 

Texas Register team of the general law division. I would 

also like to introduce Heather Parscal with the air 

quality division. 

We're here this morning to receive oral 

and/or written comments on proposed revisions to 30 TAC 

Chapter 114, Control of Air Pollution to Motor Vehicles, 

(T.C.E.Q. Rule Project 2007-022-114-E.N; Senate Bill 12, 

TERP . ) 

If you intend to present oral testimony 

and haven't already signed in at our registration table, 

please do that now. If you're not familiar with the 

proposed changes, copies of the proposal from the issue 

of the Texas Register are available at the registration 

table. We also have copies of the hearing notice so that 

if anyone is planning on sending written comments, you 

can quickly find the information on where to fax or mail 

those in. We will continue to accept written comments on 

this proposal through September 12th. 

This hearing is structured strictly for 

the receipt of oral or written comments. Open discussion 

during the hearing is not allowed. However, if anyone 

KX & Associates 

214-520-6868 
has any additional questions or comments regarding the 

proposal, there will be another opportunity after the 

hearing to have your questions answered. 

We will now begin receiving testimony in 

the order in which you've registered. Once I call your 

name, if you will please come up to the podium and state 

your name and who you represent and then present your 

testimony. 

And we have Christine Wolfe. 

MS. WOLFE: Good morning. My name is 

Christina Wolfe, and I work for Emisstar, a consulting 

company here in Austin. We would like to thank the 

T.C.E.Q. commissioners for their support of the Texas 

emissions reduction.plan and the TERP staff for their 

diligence in overseeing and improving the TERP program. 

Emisstar believes TERP is an integral part of the effort 

to improve air quality in Texas, and we appreciate 

T.C.E.Q.'s support of the program and its participants. 

As the T.C.E.Q. is considering proposed 

changes to the TERP rules and guidelines, we would like 

to make the following comments regarding the proposed 

rule changes. I'm going to list the three proposed rule 

changes in order and then provide comments. 

The first one, to authorize travel on 

highways and roadways designated by the Commission to 

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214-520-6868 
count towards the requirement that granted-funded 

vehicles operate at least 75 percent of the annual miles 

in the eligible counties. Emisstar supports this rule 

change because the additional mileage allowance may 

encourage more participation in TERP by on road operators 

and businesses who might not otherwise meet the 75 

percent requirement for operation in TERP-eligible 

counties. 

The second proposed rule change, raise the 

cost effectiveness from $13,000 cost per ton of nitrogen 

oxide reduced to 15,000 per ton. Emisstar supports this 

rule change because the average cost per ton of NOx 

reduced would be expected to grow over time. The costs 

to replace engines and equipment are not likely to 

decrease at the same rate that the dirtiest engine and 

equipment, that is those admitting the most NOx, are 

being removed from operation. As a result, the cost per 

ton of NOx reduced will continue to increase. And for 

TERP to remain a successful program for improving air 

quality in Texas through 2013, it will need the 

flexibility to fund projects that have higher costs per 

ton. For comparison, the Carl Moya program in California 

has a legislative cost per ton cap of $14,300. 

The final proposed rule change, removing 

the option that vehicles, equipment and engines replaced 

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214-520-6868 
under the program may be removed from the state in lieu 

of being recycled or scrapped. Emisstar does not support 

this rule change. We have information that potential 

TERP participants have been unwilling to participate in 

the program for the past few grant rounds because the 

change in guidelines would not allow transfers or sales 

of equipment out of state and out of country. Emisstar 

understands the need for the state of Texas to ensure 

that equipment or engines being replaced or repowered 

through TERP no longer operate in the state to meet 

attainment standards specified by the federal Clean Air 

Act. However, this need is addressed by the stipulation 

in the TERP contract that the grant recipient ensure that 

the equipment remain out of state. 

In our opinion, this rule would eliminate 

projects that might otherwise significantly improve air 

quality, especially in key areas, such as at ports or in 

dense industrial areas. To illustrate, our understanding 

is that some of the stevedoring companies at Texas ports 

have elected not to participate in TERP since the rules 

were revised. They continue to operate older equipment, 

in other words, material handling equipment such as 

forklifts, and may actually be adding new equipment to 

their fleets effectively increasing emissions in those 

areas because old equipment is neither scrapped, nor 

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214-520-6868 
moved, out of state. 

In 2006, 11 stevedoring companies 

participated in TERP. A year later after T.C.E.Q. began 

a policy of not allowing sales or transfers out of state 

or out of country, only six stevedoring companies 

appeared to have participated. 

Emisstar suggests adopting the following 

strategy to increase TERP participation, which will 

ultimately lead to meeting emissions reduction goals 

specified by the program. Allow TERP participants the 

option of choosing whether to take a salvage value of 

$1,000 and scrap or recycle the engine or equipment or 

transfer or sell the engine or equipment out of state or 

out of country requiring that the TERP participant is 

contractually liable for ensuring the engine or equipment 

never returns to Texas. 

Thank you very much for taking the time to 

hear these comments. Emisstar looks forward to continued 

involvement with T.C.E.Q. and the TERP program. 

MS. DURON: Thank you, Ms. Wolfe. 

Is there anyone else who would like to 

present testimony that hasn't already slgned in or do you 

wish to change your mind? 

Once begin, the Commission will continue 

to accept written comments on this proposal through 

KX & Associates 

214-520-6868 
tomorrow, September 12th. We do appreciate your 

comments, and we thank you for coming. 

The hearing is now closed. Thank you. 

(Whereupon the hearing is adjourned. ) 

KX & Associates 

214-520-6868 
I REPORTER'S CERTIFICATE 

STATE OF TEXAS ) 

COUNTY OF TRAVIS ) 

I, Melissa Parkhill, a Certified Shorthand Reporter 

in and for the State of Texas, do hereby certify that the 

above and foregoing contains 7 pages, a full and true 

transcription of my shorthand notes taken upon the 

occasion set forth in the caption hereof, as reduced to 

written form by me and under my supervision. 

I further certify that this transcription of my 

notes truly and correctly reflects the exhibits offered 

into evidence, if any. 

I further certify that the total cost for the 

preparation of this proceeding is $ for 

the original and one copy and will be paid by the Texas 

Commission on ~nbironmental Quality. 

Cert ifi 

CRCB Firm Registration No. 478 

8500 N. Stemrnons Freeway, Suite 3015 

Dallas, Texas 75247 

214.520.6868 

214.630.9200 (Fax) 

KX & Associates 

214-520-6868 
- - 

Texas commission on ~nvironmental Quality 

Public Hearing Registration 

Date: September 11, 2007 

fine: 11:00 AM 

1 Rule Pl.ojeci No.: 2007-022-1 14-EN / Short Title: SB 12: Texas Emissions Reduction Plan Program Revisions 

Location: TCEQ Complex, 121 00 Park 35 Circle, Building F, Room 221 0, Austin, Texas 

1 Concerning: Proposed revisions to 30 TAC Chapter 11 4, Control of Air Pollutiori from Motor Vehicles I 

Name 

(Please Print) Representing Presenting OI-al Testi~~~ony'? (Circle One) ;i.-;5i.L;ir . . - , 1 mz v. -, i' . (, I it-- ., , ( , , ;, ,<_ (! (2 c.' ),gird (the -. 'IL, L,,~~~~~,L'~I 

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- --- -- 

I 

I Texas Commission on Environmental Quality 

I Public Hearing Registration 

Date: September 7 7, 2007 

Titne: 11:OO AM 

/ Rule Poject No.: 2007-022-1 14-EN 1 Short litle: SB 12: Texas Eliiissioli~ Reduction Plan Program Revisions i 1 Location: TCEQ Complex, 121 00 Park 35 Circle, Building F, Room 221 0, Austin, Texas 

I Cc?ncer~-iing: Proposed revisions to 30 TAC Chapter 11 4, Control of Air Pollutio~~ from Motor Vehicles 

Name 

(Please Print) Representing 1 Presenting Oral Teslil.nony? 

(Circle One) 

Yes 'i'G 

yes ILL. I j -_ -_ - ____- - -- --- -- - I 

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KX & Associates 

214-520-6868 
PROCEEDINGS 

MR. DAYTON: Well1 start the official 

public comment period. Good afternoon. I'd like to 

welcome everybody to the hearing conducted by the Texas 

Commission on Environmental Quality. My name is Steve 

Dayton. I'm with the Air Quality Division of the TCEQ, 

and I work with the Texas Emissions Reduction Plan 

Grants Program. 

I would also like to introduce Andrea 

Morrow with our Media Relations Group, and Santos 

Olivarez, who's with our Air Quality Division also. He 

- works with the Low Income Repair and Assistance Program. 

This hearing is to receive oral and written 

comments on proposed revisions to Title 30, Texas 

Administrative Code, Chapter 114, Control of Air 

Pollution From Motor Vehicles. The TCEQ Rule Project 

number is No. 2007-022-114-EN, Senate Bill 12, Texas 

Emissions Reduction Plan Program Revisions. 

If you intend to present oral testimony and 

you have not signed up yet, please mark on the sign-up 

sheet. If you're not familiar with the changes, we have 

copies of the rule package and the announcement. The 

hearing notice has information on how to submit written 

comments if you don't wish to submit oral comments. 

We will submit -- continue to accept 

KX & Associates 

214-520-6868 
written comments on the proposal until tomorrow, 

I Wednesday, September 12th, 2007. And, again, there's a 

/ phone number for submitting faxed comments at this 

point, since it's probably too late to get comments in 

by the mail. So if you do have anything you'd like to 

submit, please feel free to fax those in by tomorrow. 

This part of the hearing is just to accept 

I the oral/written comments. Open discussion is not 

allowed. And if you have any additional questions or 

comments, again, we'll be here after the hearing. And 

I'll be happy to answer anything you'd like to know 

about the TERP program. 

With that, we will begin receiving the 

testimony. Right now, it appears like we only have one 

( person that's signed up. If after Mr. Klaus talks, if 

anybody else would like to speak, feel free. Sign up 

afterwards so that we can get your name. 

So I would call Chris Klaus of the North 

Central Texas Council of Governments to present any 

comments he would like. 

MR. KLAUS: I think I got it working this 

time. Is that working? Can you hear? 

THE REPORTER: I think so. 

MR. KLAUS: My name is Chris Klaus with the 

North Central Texas Council of Governments. I have 

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214-520-6868 
comments with regards to Senate Bill 12, both LIMP and 

TERP. For this part cf the hearing, I'll just cover the 

TERP comments that we have. 

The Council of Governments concurs with 

proposed amendments to Chapter 114, Control of Air 

Pollution from Motor Vehicles, Section 114.622 resulting 

from Senate Bill 12 and would like to provide comment to 

the Commission regarding future implementation of TERP. 

I To further -- No. 1, to further encourage 

participation in TERP, COG supports increasing the 

cost-effectiveness threshold in future requests for 

I grant applications up to the $15,000 per ton of nitrogen 

oxides reduced as proposed in this rulemaking. 

I Number 2, in addition to allowing vehicle 

travel on highways and roadways or portions of a highway 

I or a roadway designated by the Commission and located 

I outside a nonattainment area or affected county to count 

towards the percentage of use requirement, COG urges the 

Commission to use all flexibility allowed in applying 

I this clause to determining project cost-effectiveness. 

I, Three, in order to ensure emission 

reductions and State Implementation Plan Credit, COG 

supports removing the option that vehicles, equipment, 

I and engines replaced under the program may be removed 

from the State in lieu of being recycled or scrapped. 

KX & Associates 

214-520-6868 
Three, in the past, TERP funding has been 

strategically allocated to assist Nonattainment and 

Early Action Compact Areas with achieving emissions 

reductions required for compliance with the federal 

ozone standard. As North Central Texas faces a very 

near ozone attainment year of 2009, COG requests the 

Commission's support and provision of grant allocations 

necessary to meet the region's air quality goals. 

Four, having previously partnered with TCEQ 

to achieve the goals of TERP, COG supports the award of 

third-party grants. Much value can be added through the 

local implementation of TERP projects. As a regional 

agency, COG has the proximity and relationships 

necessary to encourage participation, target specific 

sources for emissions reductions, and provide assistance 

to the application and recording -- or reporting 

processes. 

Five, as provided for in Senate Bill 12, 

COG encourages the development and support of a diesel 

testing center. New technology is vital to reducing 

emissions and complying with federal air quality 

standards. However, there's currently a lack of 

verified options for controlling NOx from mobile 

sources. A diesel testing center is an opportunity for 

the State to fulfill this need and provide increased 

KX & Associates 

214-520-6868 
1. control technology for mobile sources, COG also suggests 

1 

2 

I that the Commission consider expanding requirements for 

options for NOx controls in nonattainment areas. 

Six, due to the lack of available NOx 

I technology verified by the U.S. Environment Protection 

I Agency and the California Air Resources Board to include 

7 1 technology verified by testing programs outside the 

I programs. 

8 

9 

10 

Thank you for reviewing COG's comments 

country. Other states have determined the need for and 

permitted technology verified through similar processes 

in Europe and Asia to be included in their air quality 

concerning the proposed rule amendments to and future 

implementation of LIRAP and TERP. We appreciate your 

careful consideration and know that the Commission 

l6 1 shares our commitment to improving air quality in North 

17 

18 

19 

20 

Central Texas. By implementing COG'S proposed 

suggestions, we have an opportunity to fulfill this 

goal. 

If you have any questions or would like 

2 1 

22 

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further ciarification, please contact me at 

(817) 695-9286 or cklaus@nctcog.org. Sincerely, Chris 

23 

24 

25 

Klaus. 

MR. DAYTON: Okay. Is there anybody else 

that would like to present any comments? 
(No response. ) 

MR. DAYTON: Okay. Again, the Commission 

will accept written comments through tomorrow, 

Wednesday, September 12th. The notice includes the 

address and the fax number if you'd like to fax comments 

in. 

If there's no further comments, we will 

officially close the public hearing, and I'll be 

available for any questions however long you want. 

(End of proceedings.) 

KX & Associates 

214-520-6868 
REPORTER'S CERTIFICATION 

4 

5 

KX & ASSOCIATES 

foregoing proceedings are a true and correct 

transcription of the proceedings and were reported 

6 

7 

8 

Firm Registration #478 

8500 North Stemmons 

Suite 3015 

Dallas, Texas 75247 

214-520-6868 

214-630-9200 (fax) 

stenographically by me at the time and place indicated. 

Given under my hand on this day of 

September, 2007. 

KX & Associates 

214-520-6868 
-1- 

1 Texas Commission on Environmental Quality 1 

I 1 Public Hearing Registration 1 

Date: September I?, 2007 

Tirne: 3:30 PM 

I Rule Project No.: 2007-022-1 14-EN 

I Short Title: SB 12: Texas Emissions Reduction Plan Program Revisions 

1 Location: NCTCOG at 616 Six Flags Drive, Centerpoint 11, Metroplex Conference Room, Arlington, Texas I Concerning: Proposed revisions to 30 TAC Chapter 114, Control of Air Pollution from Motor Vehicles 

I 

I Name 

(Please Print) 

- .~ 

Representing Presenting Oral Testimony? 

(Circle One) 

Yes No 

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Yes NO I 
Texas Commission on Environmental Quality 

Public Hearing Registration 

Date: September 1 I, 2007 

Time: 3:30 PM 

Rule Project No.: 2007-022-1 14-EN 

Short Title: SB 12: Texas Emissions Reduction Plan Program Revisions 1 Location: NCTCOG at 616 Six Flags Drive, Centeipoint 11, Metroplex Conference Room. Arlington. Texas 

1 Concerning: Proposed revisions to 30 TAC Chapter 114, Control of Air Pollution from Motor Vehicles 

Name Presenting Oral Testimony? Representing (Please Print) 

I I I Yes NO *I 

Yes No 

Yes No 

-1 

Yes No 

MS. HUFF: Good afternoon. The 

question-and-answer period will start now and will last 

until the official hearing begins at 3:30. Please be 

aware that comments made before the hearing starts will 

not be part of the record. 

(Recess from 3:01 p.m. to 3:31 p.m.) 

MS. HUFF: Okay. We'll go ahead and get 

started. 

Good afternoon. I would like to welcome 

everyone to the public hearing being conducted by the 

Texas Commission on Environmental Quality. My name is 

Donna Huff, and I'm with the Air Quality Division. 

I would also like to introduce Chad Lenz. 

He's also with the Air Quality Division. And Lisa 

Wheeler is around here, and she's with our Agency 

Communications Division. 

We're here this afternoon to receive oral 

and written comments on the proposed revisions to 30 TAC 

Chapter 114, Control of Air Pollution from Motor 

Vehicles, TCEQ Rule Project No. 2007-022-114-EN, Senate 

Bill 12, Texas Emissions Reduction Plan Program 

Revisions. 

If you intend to present oral testimony 

and haven't signed up at the registration table, please 

do so now. If you're not familiar with the proposed 

KX & Associates 

214-520-6868 
changes, copies of the proposal from the issue of the 

Texas Register are available at the registration table. 

We also have copies of the hearing 

notice, so that if anyone is planning to submit written 

comments, you can quickly find the information on where 

to fax or mail those in. And you may also submit via 

ecomments. We will continue to accept written comments 

on this proposal until Wednesday, September 12, 2007. 

This hearing is structured strictly for 

the receipt of oral or written comments. Open 

discussion during the hearing is not allowed. However, 

if anyone has any additional questions or comments 

regarding the proposal, there will be another 

opportunity after the hearing to actually have your 

questions answered. 

We will now begin receiving testimony in 

the order in which you registered. Once I call your 

name, if you'll please come up to the podium and state 

your name and who you represent, then present your 

testimony. 

And we have just one person signed up, 

and that's Mr. Cal Hodge. 

MR. CAL HODGE: Donna, I hope you don't 

mind if I turn this thing up just a little bit. There's 

a little difference in your stature and my stature. I 

KX & Associates 

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KX & Associates 

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- 

have copies for the staff that I will give to you to 

make it easier to follow my comments. 

Good afternoon. My name is Cal Hodge. I 

am speaking on behalf of Neste Oil. Neste has two 

refineries in Finland. They employ about 4700 people 

total worldwide. And the Neste scientists have 

developed a renewable diesel technology that reduces 

Green House Gas emissions, increases the demand for 

agricultural products, and improves energy security 

while reducing NOx emissions when added to diesel fuel. 

This science is so impressive that I actually came out 

of retirement to help bring it to America. 

I thank you for the opportunity to 

comment on this proposed rulemaking. The $15,000 per 

ton of nitrogen oxide reduced seems like a pretty big 

number to me, and I just wanted to make sure that the 

Commission knew about Nesters technology that can 

produce some low hanging fruit that should be harvested 

along the way to $15,000 per ton. This technology ' 

produces renewable diesel fuel from either vegetable 

oils or animal fats by adding hydrogen to the bio 

feedstock to make renewable paraffinic hydrocarbons also 

known as alkanes. This technology is important to 

today's issue, NOx reduction costs, because adding 

alkanes to diesel fuel tends to reduce NOx emissions. 
It's low hanging NOx fruit because it's cost competitive 

with the Fatty Acid Methyl Ester or FAME technology that 

makes one form of biodiesel. 

Alkanes are not new. They have been in 

diesel fuel since diesel fuel was first distilled from 

crude oil. And as such, they fit the existing blending, 

distribution and consumption infrastructure. The 

standalone process developed by Neste scientists made 

this ultra high cetane, ultra low sulfur, essentially 

aromatic free diesel fuel. By controlling the operating 

conditions, essentially constant quality product can be 

made from a wide range of vegetable and animal sources. 

By further adjusting the operating conditions, a winter 

grade product with a Cloud Point in the minus-20 range 

can also be produced. Being saturated hydrogen, that 

means they contain as much hydrogen as possible. They 

tend to burn more cleanly than typical diesel fuels, and 

they're stable and, therefore, suitable for use in 

emergency standby and tactical applications. With the 

addition of the standard ultra low sulfur fuel -- diesel 

fuel lubricity additive, the product contains both the 

ASTM D 975 Standard Specification and the Texas Low 

Emission Diesel Standards. 

Neste has the only commercial standalone 

renewable production facility in the world. They are 

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KX & Associates 

214-520-6868 
building a second one and have a joint agreement to 

build a third in Europe. And Neste is seeking plant 

sites in the U.S. Texas has been identified as having 

great potential for such a plant. However, Texas needs 

to keep the door open. And, therefore, my purpose today 

is to make sure that TCEQ is fully aware of this process 

and its potential to reduce NOx emissions. 

Adding these renewable alkanes to diesel 

fuel tends to reduce the emissions of particulate 

matter, hydrocarbons, carbon monoxide, toxic air 

pollutants, and NOx, the focus of today's comments. 

On the second page of my comments, I have 

some charts that show hydrocarbon and CO emission 

reductions from truck engines. These were tested versus 

European diesel fuels, which are very comparable in 

quality to Texas low emission diesel fuel. 

The NOx reduction is interesting. It 

shows about an 18 percent NOx reduction, which is what 

we're talking about today. However, I've been in the 

business long enough to know that one set of tests does 

not make the world. Therefore, I also downloaded the 

unified model from TCEQ's Web site, and I exorcised it a 

little bit. I put the properties of the Neste product 

into that model and found that the model confirmed the 

NOx reductions that Neste observed in the laboratory. 

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214-520-6868 
Currently, NExBTL is undergoing EPA 

Section 211 Fuel and Fuel Additives registration 

process. Now, because alkanes have always been in 

petroleum diesel, the test results and the registration 

process are expected to proceed smoothly. 

However, given the Green House Gas 

benefits, the national security, and the agricultural 

benefits of diesel fuels made from biomass, there are 

political forces that work to create mandates and/or 

subsidies that reduce Green House Gases and America's 

dependence on imported oil. In the haste to accomplish 

these goals, definitions are being written that could 

exclude this new technology and prevent the commission 

from harvesting that low hanging NOx reduction fruit. 

Therefore, we wanted to make you aware of 

this technology and ask for any assistance that you can 

provide to maintain a level playing field so that this 

and other evolving technology can help you achieve your 

goals of energy security, Green House Gases, and lower 

NOx emissions. I'll be happy to answer any questions 

you have about this technology, and I will submit a copy 

of these electronically tomorrow. 

MS. HUFF: Is there anyone else who would 

like to present testimony at this time? 

Once again, the Commission will continue 

KX & Associates 

214-520-6868 
to accept written comments on the Proposed Revisions 

230, Texas Administrative Chapter 114 until Wednesday, 

September 12th. 

If there are no further comments, this 

hearing is now closed. And we do appreciate your 

comments, and thank you for coming. 

(Hearing concluded at 3:40 p.m.) 

KX & Associates 

214-520-6868 
STATE OF TEXAS * 

COUNTY OF HARRIS * 

I, the undersigned certified shorthand 

5 

correct. 

reporter in and for the State of Texas, certify that the 

6 

I further certify that I am neither attorney 

or counsel for, nor related to or employed by, any of 

facts stated in the foregoing pages are true and 

the parties to the action in which this hearing is 

taken, 

SUBSCRIBED AND SWORN TO under my hand and seal of office 

on this the 13th day of September, 2097 

! ,A., : 6 

: ~~,,~~~~~.~a~~,f/ri:~Z~,~~~C~722~ilc

- 37 yr 's; 

(I S~MANTHA DOWNING, CSR, RPR 

Certified Shorthand Reporter 

in and for the State of Texas 

Certificate No. 7512 

Expi ration date: 12-31 -2008 
Texas Commission on Environmental Quality 

Public Hearing Registration 

Dafe: September 11, 2007 

Time: 3:30 PM 

Rule Project No.: 2007-022-1 14-EN 

Short Title: SB 12: Texas Emissions Reduction Plan Program Revisions 

Location: Houston-Galveston Area Council located at 3555 Timmons Lane, Suite 120, Room A, Houston, Texas 

Concerning: Proposed revisions to 30 TAC Chapter 114, Control of Air Pollution from Motor Vehicles 

Name 

(Please Print) Representing / Presenting Oral Testimony? 

I (Circle One) 

Yes $4) },( 21' v i ( , xCllel6, (:I/( . LJ / / 1 

mltd)s )lq(, 

J 

Yes (';a '.C_-,..L 

/ ' 

.--,:\ 

R 14 Y 

yes (NO ) 3t>;7,Lp&5r / f3jU5 . ., 

A 2 0 i / rc*.' c>No ...,---...a 

I ,-I 7- -. 

ij ii(:k iQ (-T~~~~~ yes j \.- NO - ) 

yes {./fiGj' \. I 

4 
Texas Commission on Environmental Quality 

Public Hearing Registration 

Date: Sepfe~nOer 11, 2007 

Ti~ile: 3.30 PM 

Rule Project No.: 2007-022-1 14-EN 

1 Short Title: SB '1 2: Texas Ernissions Reduction Plan Program Revisions 

I 1 Location: Houston-Galveston Area Council located at 3555 Tirnrnons Lane, Suite 120, Room A, Houston, Texas 

1 Concerning: Proposed revisions to 30 TAC Chapter 114, Control of Air Pollution from Motor Vehicles I 

Name 

(Please Print) Representing Presenting Oral Testimony? (Circle One) 

Yes 

Yes @i~. 

_LAYes No 

Yes No 

Yes No 

Yes No 

Yes No 

Yes No 
EVALUATION OF

TESTIMONY
Texas Commission on Environmental Quality INTER~FFICE MEMORWIDUM 

To: Commissioners Date: November 16, 2007 

Thru: Ms. LaDonna Castaiiuela, Chief Clerk 

Mr. Glenn Shankle, Executive Director 

$'rorn:&)t,Mr David C Schanbacher P.E., Chief'Engineer 

Docket No.: 2007-0939-RLIL 

Subject: Commission Approval for Rulemaking Adoption 

Chapter 114, Control of Air Pollution From Motor Vehicles 

Senate Bill 12: Texas Emissions Reduction Plan (TERP) Program Revisions 

Rule Project No. 2007-022-1 14-EN 

Scope of the rulemaking: 

The rule amends sections of Title 30, Texas Administrative Code (TAC), Chapter 114, Control of 

Air Pollution from Motor Vehicles, to make changes to the criteria for grants under the Texas 

Emissions Reduction Plan (TERP). 

Reasons for the rule package: 

Senate Bill (SB) 12, sponsored by Senator Averitt and enacted by the 80th Texas Legislature, 

amended Texas Health and Safety Code (THSC), Chapter 386, to make changes to the TERP 

program. This rulemaking incorporates the changes established under SB 12 in the TERP rules. 

The rule changes to incorporate the revisions to the grant criteria made by SB 12 authorize the 

commission to: 

allow travel on highways and roadways designated by the coinmission to count towards the 

requirement that grant-funded vehicles operate at least 75 percent of the annual miles in the 

eligible counties; and 

raise the cost-effectiveness criteria froin $13,000 per ton of nitrogen oxides (NO,) emissions 

reduced to $1 5,000 per ton. 

Tn addition to the changes required under SB 12, changes are being made to 30 TAC 9 1 14.672 to 

remove the option that vehicles, equipment, and engines replaced under the program may be 

removed from the state in lieu of being recycled or scrapped. 

Statutory Authority: 

The amendment is adopted under Texas Water Code, 95.102, which provides the commission with 

the general powers to carry out its duties under the Texas Water Code; 55.103, which authorizes the 

coinmission to adopt any rules necessary to carry out the powers and duties under the provisions of 

the Texas Water Code and other laws of this state; and $5.105, which authorizes the commission by 

rule to establish and approve all general policy of the coinmission. The amendment is also adopted 

under THSC, Texas Clean Air Act, 9382.017. which autl~orizes the commission to adopt rules 

consistent with the policy and purposes of the Texas Clean Air Act; 5382.002, which establishes the 

commission's purpose to safeguard the state's air resources, consistent with the protection of public 
C:omniissio~~e~-s 

Page 2 

November 16, 2007 

Re: Docket No. 2007-0939-RUL 

health, general welfare, and physical property; $382.01 1, which authorizes the commission to 

establish the level of quality to be maintained in the state's air and to control the quality of the state's 

air; 5382.012, which authorizes the commission to prepare and develop a general, comprehensive 

plan for the control of the state's air; and THSC, Chapter 386, which establishes the TERP. Finally, 

the amendment is adopted as part of the implementation of SB 12, 80'~ Legislature, 2007,. The 

adopted amendment implements Texas Clean Air Act, $$382.002, 382.011, 382.0-f2, '3%2.017, 

THSC, Chapter 386, and SB 12, 80"' Legislature, 2007. 

Potentially controversial matters: 

Based on the comments received, the only controversial item is the change to 30 TAC 5 1 14.622 

removing the option that vehicles, equipment, and engines replaced under the program may be 

removed from the state in lieu of being recycled or scrapped. Several comments were received 

expressing concerns about this change to the rules. 

Public comment: 

Emisstar LLC (Emisstar), City of Dallas (Dallas), United States Environmental Protection Agency 

Region 6 (EPA), Fort Worth Chamber of Commerce (FWC), North Central Texas Council of 

Governments (NCTCOG), and Port of Houston Authority (PHA) submitted oral and/or written 

comments in support of all or part of the rulemaking. BNSF, Emisstar, Genessee & Wyoming Inc. - 

Motive Power (G&W), Railpower Hybrid Technologies Corp. (Railpower), and Union Pacific 

Railroad Company (UP) submitted oral and/or written comments expressing concerns and/or 

suggesting changes to part of the proposal. Dallas, FWC, Greater Dallas Chamber (GDC), 

NCTCOG, Neste Oil, PHA, UP, and one individual submitted oral and/or written comments not 

directly related to the TERP rulernaking. 

Significant changes from proposal: 

No changes from the originaI proposal are recommended. 

Key points in adoption rulemaking schedule: 

Texas Register proposal publication date: August 24,2007 

Six-month Texm Regi.vtcr filing deadline: February 25, 2008 

Anticipated Texas Register publication date: December 21,2007 

Anticipated effective date: December 27,2007 

Agency contacts: 

Mr. Steve Dayton, Rule Prc~ject Manager, 239-6824, Air CJuality Division 

Mr. Brad Patterson, Staff Attorney, Environmental Law Division, 239- 120 1 

Ms. Patricia Dur6n, Texas Register Coordinator, 239-6087 

Attachments 
Conimiss~oners 

Page 3 

November 16,2007 

Re: Docket No. 2007-0939-RUL 

cc: Chief Clerk, 5 copies 

Executive Director's Office 

Mr. David C. Schanbacher, P.E. 

Mr. Daniel Womack 

Ms. Ashley K. Wadick 

Office of General Counsel 

Mr. Steve Dayton 

Ms. Patricia Duron 

Mr. Brad Patterson 
The Texas Commission on Environmental Quality (commission) adopts an anlend~llento $1 14.622 

with clrr~rlges to tlle proposed text as published in the ALI~LIS~ 24, 2007, iss~~e of the Texas Register. (32 

TesRcg 5 324). 

Thc amended scction will be submitted to the United States Environmental I'rotection Agency (EPA) as a 

revision to the state implementatiol~ plan. 

BACICGROUND AND SUMMARY OF TI-IE FACTUAL BASIS FOR THE ADOPTED RULE 

Senate Bill 12 (SB 12), 80th Legislat~~re, 2007, amended Texas Health and Safety Code, Chapter 386, 

Texas Emissions Reduction T'lan (TERP) Program. h/\/lost of the new provisions add to existing project 

categories and do not require amendment of the r~~les for in~plementation. The TERP Guidelines will be 

revised to include the additional grant criteria established by SB 12. 

The aclopted rulemaking amends $1 14.622 to implement the cost-effectiveness increase from $13,000 

per ton of nitrogen oxides reduced to $15,000 per ton ~lnder Texas I-Iealth and Safety Code, $386.106(a), 

as required by SB 12. Senate Bill 12 also authorizes the commission to designate highways and 

road~vnys or 130rlioi1s of a highway or road\vay on which travel by grant-f~~nded vehicles may count 

towards the requirement that vehicles be operated at least 75 percent ofthe annual miles in the 

nonattainment areas and affected counties. 

hi addi~ion to the amendmenl aclopted to implement SB 12, the rule will be amended to rernove the 

op~ion for 21-ant ~'ecipic~its to permanently remove from the Stale of'rexas the old eq~lipillent or engines 

rel~lnccd LI~I~CI- a grant ~~roject. With this amendment, granl recipients will be required to recycle or 

scrap [he old equipment 01- engine, wit11 one exception. Based on comments I-eceived, the rule 
amendment is changed to authorize the executi\ie director to allow permanent removal from the State of 

Texas in specific grants where the applicant has provided sufficient assurances that the old locomolive 

will not be returned to the Stale of Texas. 

SEC'TION DISCUSSION 

The adopted amendmenl \vould incl-ease the cost-effecti\7eness of eligible projects and allow the 

commission to designale vehicle travel on highways and roaclways to count towards the percentage of 

use requirement. The adopled amendment will also 01ni ttlle option lo move I-eplaced equipment from 

the Slate of Texas. For 131-oposed projects that include the replacement or repower of equipment, the old 

equipnlent or engine inust be 1-ecycled 01. scrapped, with one exception. executive director may 

allow ~~ermanent removal ii-om the State of 'Texas in specific grants where the applicant has provided 

sufficient assurances that the old locoinotive will not be ret~~rlled to the Stale of Texas. 

SyIl 4.622. Incelrliile P~.ogi.ni~~ Xeq11ii.ei1lei7f.s. 

The adopted nmendment to $ i 14.622(b) allows the commission to designate highways and roadways or 

portions of a highway or roadway on which travel by grant-fi:nded vehicles ]nay count towards the 

requirement that vehicles be operated at leas1 75 percent of the annual miles in the nonatlainment areas 

and affected counties. Section 114.622(b) currently establishes a usage commitment of 75 percent for 

veiiicle miles traveled to occi~l- in a nonattainment area 01- affected county. 

The adopted amendment to 8 114.622(c) I-equires grant recipients to recycle or pe~manently scrap old 

equipnient and engines. Section 1 i4.622(c) currently includes an option for grant recipients to 

permanently l.emove horn the state equipment 01- engines replaced under the program, in lieu of 

recycling 01- scrapping. Beginning with grants issued in Iiscal year 2007, the con~iuission has not 

allo\ved grant recrpients to use the remo\/al option and has required that the old equipment or engine to 

be recycled or sci-apped. Afier e\7aluating the inlplenlenlation of the replacement and repower grants for 
several years, staff found that it \\/as difficult to ensure that old equipment and engines were actually 

renlovcd from the state and, if I-emoved, would not be returned to the state in the fi~ture. Staff 

determined that the best \yay to ensure that the reductions in emissions of nirrogen oxides are achieved 

is lo not allo\v this option 311d to reqL1ll.e that the old eclui~~ment and engines be recycled or scrapped, 

will1 one cxception. Based on comments received, $1 14.622(c) is being adopted with a change froill 

proposal to authorize Ihc executive director to allow penuanent removal SI-om the State of Texas in 

specific granls where the applicant has provided sufficient assurances that the old loco~notive will not be 

returned to the State of Texas. 

The ~clopted amendment to 1 14 622(d) I~CI-eases the cosl-eSSectivei~ess Sol- projects fi-om the cui~ent 

$13,000 per ton of nitrogen oxldes clnlsslons reduced lo $15,000 per ton of nltrogen oxides emissions 

reduced. 

FINAL REGLTLATORY IMPACT ANALYSIS DETERMINATION 

The commission reviewed the ru1emal;ing in light of the I-egulatory analysis recluirements of Texas 

Gavel-nmcnt Code, S2001.0225, and determined that lhis rille actioil is not subject to 92001.0025 

because it does not meet the definition of a "major en\lironmental rule" as defined in that statute. A 

!I ' major envil.onmenta1 rule" means a rule the specific intent of wl~ich is to protect the environment or 

reduce risl;s to human I~ealth from environmental exposure and that may adversely affect in a inaterial 

\\lay the economy. p~.oducli\,~ty. competition, jobs, thc en\~ironment, 01- the public health and safety of 

the state or a sector ol'lhe stare. 

The ndoptcd amendment to Cllapter 114 modifies the existing rules in accol-dance with SB 12, 80th 

Legislature, \vhich amended Texas Iiealth and Safety Code, Chapter 386. 7'he aclopted amendment is 

part of a olunlar!~ inccnti\lc program \\lit11 the goal ofreducing diesel emissions and as such, llle 

adopted 1-ule will not ad\rersely affect in a matel-ial way the economy, a sector of the economy, 
productivity, compelition, jobs, the en\~ironment, or the public health and saSety of the state or a sector 

of the slate. 

In addition, a regulatory impact analysis is not required because the adopted 1.~1le does not iiieet any of 

the loi~r applicabilily crilel.ia for recl~iiring a regi~latol-y analysis of a "major envil-onmental rule" as 

defined ill the Texas Go~~ernment Code. Texas Gavel-nment Code, $2001.0225, applies only to a major 

environmental r~~le th result of which is lo: 1) exceed a standard set by federal law, unless the rule is 

specifically required by slate law; 2) exceed ail express requirement of state law, i~nless the rule is 

spec~fically l-eq~iil-ea by federal law; 3) exceed a requirement of a delegation agreement or contract 

belween tile state and an agency or representative of the redera1 go~~e~-~iment to implement a slate and 

federal program; or 4) adopt a rule solely under the general powers of the agency instead of under a 

specific state law. This rulemaking does no1 exceed a standard set by federal law, and the technical 

requirei~~ents are consistent ~vitli applicable federal standards. In addition, this rulemaking does not 

exceed an exl~ress 1-eq~~irement of state law and is not adopted solely ~~nder thegeneral powers of the 

agency. but is specirically authorized by the provisions cited in the STATUTORY AUTI-EORITY 

sec~ion of this pi-eamble. Finally, 1.1iis rulemal<ing does not exceed a recluirement of a delegation 

agreement or contract to implement a state and federal program. 

TAI< INGS IMPACT ASSESS h4EIUT 

The commission evaluatecl this ruIemal<ing action and pcrlbrmed an analysis of whether the adopted 

rule is subject to Texas Government Code, Chapter 2007. The primary purpose of the rulemal<ing is to 

amenci Cliapter 114 in accoi-dance with SB 12, SOth Legislati~re. The amendment implements a 

voluntnl-y program and only affects motor vehicles and equipment which are not considered to be 

private real property. 7Tl~ercfore, promulgation and enforcement of this adopted r~ile is neither a 

stalutory nor n constilu~ional laking because it does not afTect private real property. Therefore, the rule 

does not COIISLI~LI~ a laking ~~ncler Texas Governi~~el~t Code, Chapler 2007. 
CONSlSTENCI' WI1'I-i 'I'I-IE COASTAL MANAGEMENT PROGIUM 

Thc commission re\/ie\vcd the adopted rulernal<ing ancl found the proposal is a rulemalting identified in 

tlic (.'oastal Coordination Implementation Rules, 3 1 TAC $505.1 l(b)(2). conceriling rules subject to 

the Te.\;as Coastal Management Program (CMP) and \\fill, therefore, require that goals and policies of 

the CMP be considered dul-iny the r~ilemalting process. The comn~ission reviewed this action for 

consislency and determi~~ed the rulemalting for Chapter 1 14 does not impact any CMP goals or policies 

because it adds ~itei-ia to a voluntary incentive grant program and does not govern air pollution 

emissions. 

I'UBLIC COMMENT 

The p~~blic hearings for this wlemaking \\/ere held on: September 11, 2007, 11 a.m., Texas Co~nmission 

on Envil-onmental Qualib, 13100 Park 35 Circle, Austin: September 1 1, 2007, 3.30 p.m., North Central 

Texas Co~uncil of Go\le~uments, 616 Six Flags Drive, Arlington; and September 11, 2007, 3:30 p.m., 

I-IOLIS~OII-Galvesto Area Council, 3555 l'in~mons Lane, I-iouston. 

Emisstar LLC (Emisstar), City of Dallas (Dallas), United States Environmental Protection Agency 

Region G (13PA), Fort Worth Chamber of' Commerce (FWC), North Central Texas Coi~llcil of 

Go\~ernments (NCTCOG), and Port of l-louston Authority (PI-IA) s~tbmitted oral andlor written 

commcnts in support o1'all 01. part of the I-ulemalting. BNSF, Emisstar, Genessee Br Wyo~ning h~c. - 

Motive I'uwer (GGiJY). Railpo\\lel- Hybrid Teclinologies Corp. (Railpower), and Uilion Pacific Railway 

Company (UP) submitted oral andlor \witten comments esl~ressing concerns andlor suggesting changes 

lo pal-1 of rhe proposal. Dallas, FM7C, Greater Dallas Chamber (GDC), NCTCOG, Neste Oil, PHA, UP 

and one indiv~clual submittecl 01-a1 ancllor written conlments not directly related to the TERP rulenlalting. 
Ch(iil.ge lo 51 /4.622(1,) i.egnrifing ~/.rlvel 017 clesig~~nteti I/ighl.~/r~y.~ nizclroac111~c~)~s. 

NCJ'COC;, Emisstar, and El'A expressed sLlpport for the change. NCTCOG also ~u-ged the conlmission 

to use all llexibility allowed in applying this cla~~se to determining the project cost-effectiveness. 

Thc com~nissiol~ ;rppl-eciatcs the sopport !'or tl~cl~al~ges to tlie role. Regal-ding the atlclitionnl 

~.econ~meetl:~tion n~atle b!~ NCTCOG, I'esas I-Icaltli allcl Safety Code, §386.105(cl), states that only 

the I-etloctions ir~ NO, en~issioas that are achieved ill tl~c nonattainmcl~t areas arid affected 

collntich lilay bc used to tlctel-lnir~e the cost-cff'cctivcness of'a project. Tl~erclore, thc cornrnissioli 

wo~ilcl r~ot bc able to con~iclcr the rcclactionh in NO, emissions occurri~~g on the tlesigllated 

high\\ ajrs aatl r.oneltt~;~!~s o~rtsitlc ol'lllc nol~nttain~~~er~t areas allel ;rffectetl coi~nties whcn 

calculating the cost-cfibecti\leeess of a III-oject. 

UP commented that this cha:-lge would s~rpport commission des~g~ation of certain railways to count 

to~vard the percentage of use requirement in loconlotj ve I-eplacement projects. 

The con~lnission docs tot agrce \vith UP"' interpretation of the rule chal~ge. The change only 

applies to \~cl~icles tl-a\~cling on clesignated higl~wajls ant1 roaclways, not rail lines. 

Chirnge to Jl/4.(52_7(cj lo 1.eil1ove ll~e opiio//,jbr erj~~ij,ir~.enl rtild engilles ~.c/~laceclo~~ repowered zrnder 

thc 7'I;'RPpl-ogi-ai/1 ro Dc pe/.i//ui7en1/)/ ~.eirlo\:ecl/i.u~~r [lie Slnte of l'e,xrts i17 lic~i oJDei1.1.g recycled 01. 

so-rpyed. 

NCTCOG, Dallas, EPA, PM'C, and I'l-IA expressed support for the change to the rule. 

The co~n~nissioll i~l)preci;~tcs the s11ppo1.t for thc cl~a~~ges lo the role. 
Emisstar, G&W. BNSI;, Railpower, and UP did not SLIP~OI.~ the change to ths I.LI~~. 

Emiss~al- stated that it has information that potential TEIU' participants have been ~lnwilling to 

parlicipate in TERP for the pas1 few grant rounds beca~lse the commission began not accepting the 

transfer or sale of the old equipment and engincs to ou~-of-state users. As an example, Einisstal- stated 

that se\~el.al slcvedo~-ing companies at Texas ports have elected to not participale in TERP because of 

this reiluil-em en^. Elmisstar referred to data indicating that in 2006, eleven stevedoriilg companies 

participated in TEN', but a year later when the con~mission began not accepting the transfer option, 

oilly six stevedoring companies participated in the proLgarn. 

Emisstar il~rtlier stated lhat the concerns abo~~t ensuring tliat the transfer occurs and that the equipment 

and engines are not relu~-ned to the state are addressed by the stipulation in the TERP contract that the 

eq~~ipment must remain out of the state. Emisstar suggested thal the commission allow two options: 1) 

allo\v TEI<P parlicipants llie option of choosing whether to take a salvage val~~e of $1,000 and scrap the 

engine or equipment; or 2) allow the transfer or sale of the engine or equipment out of state, with a 

recl~~irement that [he 'TERI' participant is contract~~allyiable for ensuring /.hat the engine or equipment 

never retLuns to Texas. 

G&W slated thal it operates 47 individual raill-oads, perfol-ms rail su/itching services in 12 U.S. port 

facilities and l~rovides rail switching services to dozens of industrial customers in 26 states, including 

Tcsns. G&M' staled [ha1 i~ is ~~nfort~~nate that it can not and will not participate in a program where it is 

forced to scrap an otliel-wise \,iable locomo~ive asset tlia~ could be redeployed to another region, state or 

rail opcl-ation. G&W ~LII-LIK~ stated that this change will likely remove all incentive for railroad 

locomoti\~e ope]-ators to participate in the TERP and [hat the program will not receive any Inore 

locomoti\ie submittals if this change becomes effective. 
BNSF staled tliat il understands thal it has been diffici~lt Sol- TCEQ staff to ensure that old equip~llent 

and engines are removed f'rom the state and would not be I-etumed to the slate. However, BNSF stated 

that the locomotives lilcely to be rel~laccd tinder the progl-am are not appropriate for use as cores to 

manufacti~re the new Cen Set loco~notives that would be purchased to replace the old locomotive. 

BKSF indicated that the locomotives that would be replaced in Texas are often more reliable than the 

loco~iioti\*es i~scd in other 13hrSF system locations and t1i:)t the value ofthose locolnotives is often 

gcater than the boolc value because of the limited mai-lcet. BNSF stated tliat the rule change would 

grcatly increase the cost oi'f~~ture locornolive replacements in Texas and will likely result in fewer grant 

applications ii-om BNSF. BNSI; referenced TERP grant data llx-ough January 2007 that indicated that 

locomot~\,es have made up only 2 percent ofthe n~unber of TERP projects but have resulted in 40 

percent of [he TEIU' NO, emissions reductions. 

BNSF suggested an allel-native approach to the scrapping oilly req~~irement where the co~nnlission could 

require that the grant recipient install global positioning systems on the locomotives being replaced. 

I'he TCEQ staff could then obsel-ve the location of the old locomotives on a real time basis. 

UP sta~ed that the change to [lie rule w~ll ser~ously l~inder the ability of UP and other railroad companies 

o~er'~ting 111Texas to undcstake new locomotive l~rojects, result in the loss ol'alseady limited projects 

capable orcapturlng f~~rtlier available NO, emissions reduclions, and create a general disincentive for 

pal-t~cipal~on 111 the program. 

UI' also slated that s\vitch engine replacement projects are well-suited foi- pel-manent removal froin 

Texas and that \~eriiicatioii is not iliffic~~lt. IJP explained tliat it has main~ained ownership and control of 

the old locomotives and that it has ample oppoi-tunity to [elocate old locomotives that have remaining 

useft11 life. UP stated that roughly half of the locoillotives replaced under the program have been 

scrappecl and their engines desll-oyed, with the rest of the locolllotives being reassigned to other UP 
locations outs~cle of'resas. UP references i~s locomot~\~c management system as a reliable means of 

ensuring lhat 111~ locomot~vcs are not reti~l-ned to the slate and pointed Lo the silccess of the replacement 

projects that have becn completed. 

UP expl:lined that as a 1.esi11t of the 111-ogram's success, most of the oldest s\\filch locomotives in UP'S 

Tesas Ilect have been i.eplaced and that locomoti\!es a\~ailable for fi~ture replacements have a longer 

remaining activity life and are of more value that the 1ocomoLive replaced in the past. 

Railpo\ver also siated its objection to this change to tlie rilles. Railpo\ver's comments reflected the same 

point of view as the statements made by the railroad companies, including concern that railroad 

com],anies would find it harcl to participate in the TER~P progl-am in the futul-e. Railpower also stated 

that thc Caliiol-nia Air Dislricts have aclaio\vledged that the l.ai11-oad companies have and will f~llfill the 

requirements to conlrol the Iocomoti\~es replaced under the Califo~nia Carl Moyer Program and will 

continue lo allo\\! the oplion of removing the ~ocomoti\~e li.0111 the stale. 

The coul~nission ~r~~tlc~-stantls the concern csprcssctl ~.cg;irtling tlic cff'ccl this clla~lgc will liave 011 

the pal-ticipation in tlic TERI' program by owners of' r~on-road equip~licnt ar~d locomoti\~es. As 

noted by Enlisstar, the con~mission begall not accepting tl~c option to transfer or sell tile old 

eqoil~n~erit a11t1 e~~gi~~es o~ttsitle the state beginning with tlie fiscal year (FY) 2007 grant rounds. 

This cl1:111gc to the rule will make pcrnlanelit the intcri~u tlecisior~ by tllc con~mission to not accept 

that ol)tion, ~vilh o~~c escel)tion, The rule ~II~~II~IIICII~ is ~Jia11gcc1 to al~tliorize tile executive 

director to allot! pcr~nanent rc~noval from the State of' Tesas in sl~ccilic grants nrlierc tile 

apl)lic;1111 1133 PI-ot,iclctl sullicie~~t asslll.anccs that tlie old locomotive nlill not be retor~~ed to tile 

State ol'l'csns. 
l'lbis cl~atigc to the 1.111~ is 11:1sctl 011 ii umber ot'facto~-s, i~lclutling a tlctailetl internal review of the 

prograni by the co~nnlission's audit staff ant1 an evali~ation of the risks associatecl wit11 the grant 

awartl tlccisions. I11 atlclition, guitlelines publishccl ill 2006 by the EPA, entitled Diesel Retrofits: 

Q~~fi~~fifii~~g 111111 USI'II~ 7'11ei1. Bellefits ill SIPS (rlirl Col!\i)rllrity - Gui(1t111ce ji,r Strife nlltl Loctil Air 

c111r1 T~.n~z.syo~.lc~tiol~ Agcllcies (El'A420-B-06-005, JIIII~ 2006), state that in ortler to use enlissions 

rctl~~ctio~~s i'l-0111 all!. ~-cj)Iaec~lie~lls in aSIP or ~II a co~~fbr~llity determination thc vehicle, engixle, 

or ccli~ip~~w~it bcing rcplacctl sl~oultl be scral~et! 01. the 1.e1)lacetl cnginc rcturned to the original 

nian~~t'aclurcr 1.01- rc~nanliS:ict~lri~~g to a cleaner sta~lclard. Untler the j)rovision proj~osetl in the 

rulc cllange, tlie co~iinlissio~~ \voultl consitlcr tlle rcnlanufact~~re 1)rocess as a torin of scrapping the 

oltl e~lgilic. 

Tl~co~nlnission has very liltlc control over tllc replacetl equipnlcnt once it leaves the state. The 

comnlission is also lin~itctl in its ability to ensure that tlie old eqnipolent or engines are actr~ally 

rcnio\,ctl fro~u tl~c statc. This change is pl.oposeti to atltlress tlxe risks associatctl with the 

replaccmcnt gri~nts as \vcll as tllc tlirection in the EI'A guidance to ensure that the oltl equipment 

ant1 engines are pcr~nane~itlj~ rc~noved fioln the emissions inventory ancl that the cnlissions 

re(l11ctio11s arc CI-ctlitable to the S11'. 

Ho~.cvcr, the conlnlissio~~ agrees that raill-oat1 con~pa~iies, in partic~~l:ir, mag be able to adequately 

enslrl-c Illat :I locor~~oti\.c that is rc~novetl I'ronl Tesas is ~iot rcturnctl to tl~c state. Basetl on tlie 

conlnle~~ts rcccivetl, tlic rt~lc anic~itlmcnt is cliallgctl to autllorizc tlle csccutive director to allow 

~~errnancnt ~.eliio\;al fro111 the State of Tesas in spccitic grants wllcrc thc applicant 11as provided 

sufficient ;isst~r;lnces tlliit the oltl locomotive lvill not be rcturnetl to tl~c Statc of Tesas. 
CIIOI~~L' 10 $1 14.622((1) iirci.crr.rirlg the ir~rsiii~~ciilost-~lji~clivcliessfl.olir $1 3,000 lo $15, OOOpelA ton of 

NU., eiilis.sioii,s i.cti~icetl. 

NCI'COG, Emisstar, Dallas, and EPA expressed supporl for the increase in the maxin~urn costeffectiveness limit. 

Tlic coln~nissio~i apl)~.eci;rtes the sul)po~-t I'ol- tlie cli;inges to the I-ulc. 

CGIW expressed concern thal the increase in the maximum cost-effectiveness in the rules would nlean 

very little in the end. GGIW expressed doubts that rail projecls would be allowed to use the maximum 

$15,000 cost-effectiveness limil, since past legislation required [hat the commission always maintain 

locomoti\:e and marine ~projccts at a lower cost-effectiveness than other projects. 

The commission agrees that past legislatioil requil-cs that locoinotive and marine vessel projects 

have a lo\ver cost-cfl'ccti\~cncss limit. Texas IIealtli and Safety Cotle, $386.102(e)(l), requires the 

coiiiinission to cstablisli cost-et'l'cctiveness liiiiits for gral~ts ~\\~ardcd 1111(lcr tlie program to an 

owllei or opcl-ator of a locon~otivc or iiiarinc vessel tliat arc lo\\er tl~iiii the cost-effective~~css 

limits ilpplietl to other emissions retlnctioli pro,jects. Ilowever, tlic comnlission cloes iiot agree that 

tlic rule chalige \\,ill Incan little to rail projects. Because tlie limit on all ~~rojects is being raised, 

tlie conilnission will be able to set a liiglicr liniit oli loco~llotive ant1 marine 111-ojccts as well. 

Dccisio~~s onCl~e cost-cl'fcctive~iess limits to use for cacli project catcgor!,, subject to tlie maximum 

li~iiit set I)!' this 1.~1~ clia~ige, \vill 1)c ~llatlc scl~arate t'roni this I-ulcmakilig a11c1 prior to tlie opening 

of cacli gl-ant a~)l)lication ])cb~.iotl. 

FWC and GDC also recommended that the commission set I:he lilllits for all project types at the 

maximum allowed of$15,000. GDC stated that increasing the previous limits of $5,000 for on-road and 
$10,000 for non-road so111 ces ~~ould encourage greater part~c~pation illTERI' by i~~dividuals in the 

North l'cxas 81-ca. 

The co~ii~nissior~ apj)l.Cciiltc~ the suppo~-t ofthe TERI' program by FMJC ant1 GDC and agrees that 

raising tlie cost-cffectivcncss limits for on-road ancl non-roacl projects ~vould encourage greater 

participatiori in the TEIZI' progranl. As explained in tlie rcsllonsc to the l~rcvious comment, a 

clecisio~i 011 the cost-cfi'ccti\~cness limits to sct fi~r c;~cl~ type of project, s~~bject to the maximum 

limit set I)!. this rl~lc cl~al~ge, nrill be ~~~ade b!l the co~n~nission separate 1'1.om this rulemaking and 

prior to opcl~il~g each g1-;111t aj)l)licatio~~ 1)criocI. Tl~c Co~ii~ncnts by FYVC a11c1 GDC will be 

co~~siclerctl M~II~II that clecisio~~ is beiiig rnacle. 

NCTCOG and Dallas expressed support for the establishn~ent of a diesel Lesting center as authorized 

under SB 12, 80th Texas Legislature. 

The cstablisllri~e~~t of'a clicsel testing center is outsicle the scope of this rulemaking. The 

com~nission agrees tlint the cstablisl~n~cnt of a tliescl lestiog center as autllorized unclel- SB 12 will 

p~.o\'itlc a valu:ible rcsollrce for tl~c state to e\ralostc ~.etrolit systcnls a~~tl ncva~lced teclinologies to 

cleterluiue their cffectivetiess in recluci~lg eruissions ol'N0, and other poll~ttaots. 

NCTCOG i.ecluestcd the comn-iiss~on's support and p~.o\l~siol-i of allocation oS grant f~~nds to the area 

necessar) to mect ~hc Jlallas-Fort Wol.th nonatia~nment area's air qual~ly goals. 

This conlment is outside of'tl~e scope of this r11le111nl;ing. 'The commission agrees that the TERP 

~~rogi-n~ii is an i~~iportallt tool ill I~elpillg tl~e Ilallas-Fort YVortli nonattaia~neot area to meet its air 
q~iilit!~ goals. Tlie coriin~ission \\'ill consitler tlle nectls of the area wlieii tlcterrnining how the 

fulids jvill be allocatetl iiutl used. 

NCTCOC; suggested that thc commission consider expanding the requirements that the einissions 

reductions that c:ln be atlributed to retrofit technology be vel-ified by the EPA and the California Air 

Resousces Boarti to inciudc teclinology verified under testing programs o~~lside of the country. 

NCTCOG stated [hat other states have detesmined tlie nced for and permirled teclinologies verified 

tliro~~gli similar 131-ocesses in l',usope and Asia to be included in their air q~~ality programs. 

This coliiment is olrtsitle of' tlie scope of this ruleniaking. The comniission will seek additional 

ilifbrnlation I-cgartling tlie I-eqilirements of' other states for accel~ting rct rolit technologies for 

eniissions retluctiol~ creclit. 

Neste Oil provided informalion regarding its teclii~ology to pl-oduce renewable diesel fuel from either 

vegetable oil or aniii~al fats by adding hydrogen to the bio-feedstoclc to make 1-enewable paraffinic 

hydrocarbons, also Icnown as alkanes. Neste Oil stated [hat adding alkanes lo diesel fuel tends to reduce 

IVO,. Neste Oil also stated that definitions are being written that could exclude this new technology and 

pre\fcn[ thc commission from hasvesting the low-hanging N0,reduction fl-uit. Neste Oil asked for any 

assislance that the commission can provide to maintain a level playing field so that this and other 

evol\,ing teclinology can help the commission to achieve the goals of energy security, reducing green 

house gases, and lowel.ing NO, emissions. 

This coniliic~it is outsitlc of'tlie scope of' this rulelnaltilig. Tlie statelncllt regartlilig tlefinitions 

bei~ig 1~1-ittc11 that rl~iglit csclutle thc nc\v technology appear to bc in ~.cf'cl.cnce to tlie rules 

~crt;iiliilig ~'CSRS I,o\v Eliiissioli Diesel (Ts1,ED) rccluil~cmeats sl~ccilictl in Cliapter 114, 

Subchul)tcr 11, Di\ isioo 2. 'I'hosc rules inclutle sta~itlal-tls for cetalic aritl aroinatic levels in diesel 
fuel soltl in the eastern part oftl~c state. 'The co~nniissio~~'~ TsT,EII plyyarn staff may be 

coi~ti~ctctl ['or 111o1.c i~~l'ol.rn:~tion ~-cgnrtIi~ig hoiv tl~c Ts1,ED ~.equi~-cmcnts 111ay possibly affect the 

sale a11c1 use of the S~lcl p~.otlocts that ma!, bccome ;~v:~il::ble from Neste Oil ifapprovccl by tlie 

EPA t'or 11sc in tlic U~~itctl States. 

UP recommended that tlie commission develop "job assignment" criteria for a\varding grants that can be 

dil.octly assigned to spccific jobs or taslcs conducted by an apl~licant, rather than limiting grants to 

speclfic units or- pieces o~equi1)ment. UP explained that \\/hen a locomotive is removed from service at 

a locat~on For fileling, maintenance, or inspection. a similarly-sized locomoti\~e nlust be assigned to the 

job. That replacenle~it loco~notive will have tlie sanle or simi!ar characleristics. UP stated that the grant 

program's potenlial is not lillly realized in siti~ations \\4iel.e some of the locomoti\~es on a job are 

ineligible Tor tlie grant l)rogram but 11a\le emission cha~.acteristics that are identical to eligible 

loco~iioti\?es assigned 10 the same job. 

This co~niilc~lt is outside of thc scope of this I-olem;~king ancl appears to be aimecl at the 

req~ircmenthat \rcl~icles a~~cl equipment replaced 11ntler the program ]nust Iiave beell owried and 

operntetl in Tcsas for the two years preccdirig the npplication sobmission. UP'S rccommelitlatioli 

\~~o~~ld rcclaire a major cha~rge to the methotlology Sol- verifying that a rctl~iction in NO, cmissiolls 

\\rill occur as a rcsr~lt of tllc rcl~laccment projcct. 

UP recommended that the commission simplify ~ts process for awarding grants by contracting with 

grant I-ecipients on a compl-elicnsi\~e "I~ui~p-su111" basis t'or a specified amount rather than by providing 

I-ei1iibu1-sement on an e.cpcnse-by-expense basis. [J' slatcd that the reimb~~rsernent process is 

complicnrcd and adds unnecess:i~.ily to the administrative costs inc~u-red by both the TCEQ and the grant 

recipients. 
This comment is outsicle ol'the scope of'tliis rulemaking. I~nl~lementation of a lump-sum approacli 

woulcl rccluil-e stat11tor.y cllangcs. 

One ~nd~\,~dual discussed a technology 11e was develo1,ing called the TI-iT1-aclc electrified guideway. He 

stated that the commission has specifically listed diesel engines as the only thing that will be considered 

under the TERP program. I-[e f~lrthel- stated that if the 'I'ERP program is only allo\ved to be applied to 

diesel engines i~ is sel-iously llawed, as diesel engines need to be obsolete soon rather than have the state 

buying more of 111em to continue to run for decades. I-le proposed that TERI' money be used for 

engineel-ing and de\!clopment of [he replacement ros diesel engines, not buying more. He explained that 

if TERP money were diverted to a more intelligent approach that has a multiplication effect lilte 

rcsearch and development thcn the TEIU' can achieve its underlying goal of cleaner air at a price the 

taxpayers can afford that does not play favorites with those who are the very offenders. 

This co~n~ucnt is outsiclc of' thc scope of'tl~is rulem:ilci~~g. Tlie conlmission tloes not agree with the 

statctilcllts that tlic '17ERP prograni only consicle~.~ tliescl engincs. Untler Texas Health a11d Safety 

Cotlc, S3S6.053(cl), tllc co~n~nission is a~rtliorizctl to cspancl thc progranl, through the criteria 

establisllccl in tl~c TEICP Guiclclincs, to irlclutle \leliiclcs allel cqoil)mel~tliat use fucls other tlian 

tlicscl. I3;isctl 011 tl1:it authority, the ~~rojcct critcria cslablisl~cel io thc Te.uc~sE~~ri.s.siorr.s Retlticiiorr 

Plrr11 GuiOcli~re.s,/or~ E~rri.ssio~rs Rerlrrctio/~ l~rcerrtive Gl*(~lrt.s (RG388 - h4 a!) 2004) allonls func1ing for 

velliclcs, cqnil)ment, ancl cngincs that usc l'ucls other tI1a11 cliesel, including clcctric eiigincs. To 

clatc, the TERI' I)rogranl has I'u~lclccl ~~rojccts that i11c11l clc alternative I'uel \~cliiclcs and equipment, 

clcctric cquip~nent a11t1 engi~~es, allel clcctrilicatioi~ a~tl altel-native fuel i~~l'rastructure. The 

conin~isr;io~l cllcourxgcs ~)~.o,jccts that nlect the grallt crilcl-ia ancl car1 be sho\vn to rcsult in 

sig~~ilica~~t rcd~rrtio~ls io NO, cnlissions, 1.cgarc1less ol'tllc typc of fuel usctl. 

Regartling thc conln~cnts 011 tl~c rlcccl for TERP nloney to be elivcrtetl to researcli and 

I5 
rle\~clopnient, f'c~ritlil~g I'roni thc TERP re\ cliue soi~rccs is u\lailablc tl~l.ollgli the Ncw Teclinology 

Rcscar-cl~ arlrl I)c\~elol)mcnt (NTIID) I'rograln cstal)lisllctl untler Tcsns lIcaltli ant1 Safety Code, 

Ch;lptc~. 387. This progt-;ln~ PI-ovitles I'untling f'or rcsc:ir~cl~, tlevelop~ncrlt, testing and certificatioli 

of nclv tccl~nologics that \vill rcslrlt in ~.ccluctions i~r e~iiissioris oSNO, ilntl other air pollutants. 

The TCEQ's flTJtI) pr.ogl.anl stafl'nlay bc co~itactctl f'or Inore il~forn~atioll about this program. 
STAFF

RECOMMENDATIONS
SUBCHAPTER K: MOBILE SOURCE INCENTIVE PROGRAMS 

DMSION 3: DIESEL EMISSIONS REDUCTION INCENTIVE PROGRAM FOR ON-ROAD 

AND NON-ROAD VEHICLES 

5114.622 

STATUTORY AUTHORITY 

The amendment is adopted under Texas Water Code, $5.102, which provides the commission with the 

general powers to cany out its duties under the Texas Water Code; $5.103, which authorizes the 

commission to adopt any rules necessary to carry out the powers and duties under the provisions of the 

Texas Water Code and other laws of this state; and 55.105, which authorizes the commission by rule to 

establish and approve all general policy of the commission. The amendment is also adopted under Texas 

Health and Safety Code, Texas Clean Air Act, $382.017, which authorizes the commission to adopt rules 

consistent with the policy and purposes of the Texas Clean Air Act; 5382.002, which establishes the 

commission's purpose to safeguard the state's air resources, consistent with the protection of public 

health, general welfare, and physical property: $382.01 1, which authorizes the commission to establish 

the level of quality to be maintained in the state's air and to control the quality of the state's air; $382.012, 

which authorizes the commission to prepare and develop a general, comprehensive plan for the control of 

the state's air; and Chapter 386, which establishes the TERP. Finally, the amendment is adopted as part of 

the implementation of SB 12, 80th Legislature, 2007. 

The adopted amendment implements Texas Clean Air Act, $$382.002,382.011, 382.01 2, and 382.01 7, 

Texas Health and Safety Code, Chapter 386, and SB 12, 80th Legislature, 2007. 
$114.622. Incentive Program Requirements. 

(a) Eligible projects include: 

(1) purchase or lease of on-road and non-road diesels; 

(2) emissions-reducing retrofit projects for on-road or non-road diesels; 

(3) emissions-reducing repower projects for on-road or non-road diesels; 

(4) purchase and use of emissions-reducing add-on equipment for on-road or non-road 

diesels; 

(5) development and demonstration of practical, low-emissions retrofit technologies, 

repower options, and advanced technologies for on-road or non-road diesels with lower nitrogen oxides 

(NO,) emissions; 

(6) use of qualifying fuel; 

(7) implementation of infrastructure projects; 

(8) replacement of on-road and non-road diesels with newer on-road and non-road 

diesels; and 
(9) other projects that have the potential to reduce anticipated NO, emissions from diesel 

engines. 

(b) For a proposed project as listed in subsection (a) of this section, other than a project involving 

a marine vessel or engine, not less than 75% of vehicle miles traveled or hours of operation projected for 

the five years immediately following the award of a grant must be projected to take place in a 

nonattainment area or affected county of this state. The commission may also allow vehicle travel on 

highways and roadways, or portions of a highway or roadway, designated by the commission and located 

outside a nonattainment area or affected county to count towards the percentage of use requirement. 

(c) For a proposed project that includes a replacement of equipment or a repower, the old 

equipment or engine must be recycled or scrapped provided, however, that the executive director may 

allow permanent removal from the State of Texas in specific grants where the applicant has provided 

sufficient assurances that the old locomotive will not be returned to the State of Texas. 

(d) To be eligible for a grant, the cost-effectiveness of a proposed project as listed in subsection 

(a) of this section, except for infrastructure projects and infrastructure purchases that are part of a broader 

retrofit, repower, replacement, or add-on equipment project, must not exceed a cost-effectiveness of 

$1 5,000 per ton of NO, emissions reduced. The commission may set lower cost-effectiveness limits as 

needed to ensure the best use of available funds. The commission may also base project selection 

decisions on additional measures to evaluate the effectiveness of projects in reducing NO, emissions in 

relation to the funds to be awarded. 
(e) Projects funded with a grant from this program may not be used for credit under any state or 

federal emissions reduction credit averaging, banking, or trading program except as provided under Texas 

Health and Safety Code, 8386.056. 

(f) A proposed project as listed in subsection (a) of this section is not eligible if it is required by 

any state or federal law, rule or regulation, memorandum of agreement, or other legally binding 

document. This subsection does not apply to: 

(1) an otherwise qualified project, regardless of the fact that the state implementation plan 

assumes that the change in equipment, vehicles, or operations will occur, if on the date the grant is 

awarded the change is not required by any state or federal law, rule or regulation, memorandum of 

agreement, or other legally binding document; or 

(2) the purchase of an on-road diesel or equipment required only by local law or 

regulation or by corporate or controlling board policy of a public or private entity. 

(g) A proposed retrofit, repower, replacement, or add-on equipment project must achieve a 

reduction in NO, emissions to the level established in the commission's Texas Emissions Reduction Plan: 

Guidelines for Emissions Reduction Incentive Grants Program (RG-388) for that type of project 

compared with the baseline emissions adopted by the commission for the relevant engine year and 

application. 

(h) If a grant recipient fails to meet the terms of a project grant or the conditions of this division, 

the executive director can require that the grant recipient return some or all of the grant funding to the 

extent that emission reductions are not achieved or cannot be demonstrated. 

4 
(i) Criteria established in the guidelines, including revisions to the commission's Texas Emissions 

Reduction Plan: Guidelines for Emissions Reduction Incentive Grants Program (RG-388), apply to the 

Texas Emissions Reduction Plan program. Notwithstanding the provisions of this chapter, as authorized 

under Texas Health and Safety Code, $386.053(d), revisions to the guidelines may include, among other 

changes, adding additional pollutants; adding stationary engines or engines used in stationary 

applications; adding vehicles and equipment that use hels other than diesel; or adjusting eligible program 

categories; as appropriate, to ensure that incentives established under this program achieve the maximum 

possible emission reductions. 
TEXAS COMD~SSION ON 

which is filed in the permanent reads of the Commisskn. 

the eeal of dim on 

~adonna.~r~ek. GhiiCj.e& 

ORDER ADOPTING AhlJ7NDJ7D RU~~~'SS"nm"vironmenta~Qdu~ 

IIE\'ISION TO TI-IE STATE IR'II'LER'IENTATION PLAN 

Docket No. 2007-0939-RUL 

On December 5, 2007, the Texas Comniission on Environmental Quality (Commission), during a public 

meeting, considered adoption of amended $ 114.622. The Commission adopts this amendment, in Clial~ter 114, 

Coi~trol or Ail. Pollution from Motor Vehicles, Subclial~ter K, Mobile Source I~icentive Programs, Division 3; 

and col.rcsl~onding revision to the state implementation plan (SIP). The adopted r~~lemalting anlends 5 114.622 

to authorize the Commission to designate highways and roadways or portions of a Iiigliway or roadway on 

\\/Ilicll travel by grant-filnded veliicles may count towards the require~nent that veliicles be operated at least 75 

percent of the annual miles in the nonattainment areas and affected counties. The atlopted 1.111emalting also 

amends 3 114.622 to increase the ~iiaxim~lni cost-effectiveness limits for a project from $13,000 per ton of 

nitrogen oxides reduced to $15,000 pel- ton. Finally, the adopted rulemalting aniends $ 114.622 to remove the 

option for grant recipients to permanently remove fi.011i tlle State of Texas the old equip~iie~it orengines replaced 

under a grant project. Under this amendment, the Executive Director may still allow a locomotive to be 

permanently removed from tlie state in lieu of recycling or scrapping, if the grant recipient has provided 

sufficient assLirances that tlie old locomotive will not be ~.eturned to tlie State of Texas. 

Under Tex. Health & Safety Code Ann. $5 382.01 1, 382.012, and 382.023 (Vernon 2001), the 

Co~~~mission has Jlie ~l~~tIiol.ity to co~ltrol the cluality of tlie s~ate's ail- and to issue or-ders consistent with the 

~)olicics ant1 I)uI-I)oses orthe Texas Clean Air. Act, Clial~ter. 382 of the Tex. Health & Sarety Code. 

The p~.oposeecl rule \,\)as p~~blisl~etl ror commcnt ill the August 24, 2007, issue of tile Tc.~-cls Xcgislo- (32 

TesReg 5324). Pursuant to Tex. tlealtll & Safety Code Ann. 382.017 (Vernon ZOO]), Tex. Gov't Code 

Cllal~ter 2001 (Vernon 2000 SL Ve1.11011 SU~II. 2005), and 40 Code of Federal Regulations $ 5 1.102, and arter 

11roper notice, thc Collimission conductcd 11ublic 11eal.ings to consider tlie amended rule and revision to the SIP. 

I'l.ol)u. 11otice i~lclutled 111.orninent advertisei~~ent inthe at-eas afrectecl at least 30 clays priol- to 1.he dates of the 

hearings. Public Ilearings were held Sel~te~libcl- 1 1, 2007, at the Texas Commission on E~~\~ironmental Quality 

in Austirl, at tlie NOI-111 Cent~.al Texas Council of Governments ill AI-lington, and at the Houston-Gal\/esto~~ Area 

C'oullcil in J-louston. 

71-l~e C'o~~~rnission cir-culnted heal-ing notices or its intc~lded action to the ~~ublic, includillg intclxsted 

IIU-XNI" 111e Rcgional Ad~~ii~~istr-ator- of the EPA, and all aly~licable local air ~~ollutio~~ cortr-ol agencies. Tile 

public was inviled to submit data, \:ie\\~s, and ~~ecomn~cndatio~~s or1 tlle p1.011osccl amendcd I-LII~ al1d SIP I-evision, 

eitller ol.ally 01' ill writing, a( the l~ea~-il~gs 01- during tile conlrne~lt periocl. Priol- to the schedi~led hea~.ings, copies 

or thc 111-oposed amended I-ule and SIP ~.e\jision ulere available ror public inspection at the Comnlission's central 

orlice and on tile Con~n~rssion's Wcb site. 

Data, vie\vs, and ~~ecommenciations of intel-ested persons r-egarding lie p~.oposed alliencled I-ule and SIP 

~ru\,ision \\.cl.e subi1;illed to tile Commissioi~ cIu~.illg the comment period, and were considered by the 
Commission as i.eflectrd in the analysis of testimony inco~po~~ntetl by reference to this 01-clcr. The Commission 

finds tlie analysis of testimony includes tlie names of all interested groups or associa~ions offering con?ilien[ on 

the ~~rol)osecl ame~ided rule and the SIP I-evision and [heir posi~ion concerning the same. 

IT IS THEREFORE ORDERED BY THE COh4MISSION the amcntled rule and re\,ision LO tlie SIP 

i~icorporatetl by refesence to this Osder are Iiereb)/ adoptecl. The Co~iimission Ti~r~lier authorizes staff to m;~l<e 

riny non-substantive re\,isions to tlie r.i~le necessary lo comply ~vitli TC.I-CIS R~gisi~i. ~.e~l~~ii.e~iie~its. The :lcloptetl 

~wle :~nd the p~-enrnble to [lie adopLed n~le and tlie ~.e\lision to tlie SIP are incol-posated by ~.eresence in tliis 01.tIer. 

as ifset fol-~h at leng~li \/erbati~:~ in tliis Osder. 

IT IS FURTI-IER ORDERED BY THE COMMISSION that on behalf of [lie Commission, Lhe 

Cliaisman should transmit a copy of this Order, Logetliel with tlie adopted rule and re\/ision to the SII', to the 

Regional Administrator of EPA as a proposed revision to the Texas SIP pursuant to the Federal Clean Air Act, 

1 10, cotIiIied at 42 U.S. Code Ann. 5s 7401 - 7671 q, as amended. 

This Order cons~itutes tlie Order oftlie Commission required by tlie Adminis~l.ative Procedure Act, Tex. 

Cov't Code, $ 2001.033 (Vesnon 2000 SL Ver1101i SLIPP. 2005). 

If any postion of tliis Order is FOI any reason held to be invalid by a court of competent ~LII-isdictio~i, the 

illvalidity of any por~ion shall not affect (lie validity of [he remaining portions. 

Date issncd: JAN 0 3 fflfl8 TEXAS COMMlSSlON ON 

ENVIRONMENTAL QUALITY 
RULES 

22 TAC g851.28 

No comments were receive regarding adoption of this amendment. 

This agency hereby certifies hat the adoption has been reviewed 

by legal counsel and found t be a valid exercise of the agency's 

Filed with 

legal authority. 

the Office of the S 

9 

cretary of State on December 14, k 

2007. 

TRD-200706377 

Vincent Houston 

Acting Executive Director 

+ + + 

22 TAC g851.31 I 

The Texas Board of Professi nal Geoscientists (TBPG or Board) 

adopts an amendment to §8 1.31 regarding temporary licenses. 

It is adopted without change to the proposed text as published 

in the August 3, 2007, issu of the Texas Register (32 TexReg 

4729). ? 

No comments were recei garding adoption of this amendment. 

This agency hereby certifies the adoption has been reviewed 

by legal counsel and found t a valid exercise of the agency's 

legal authority. 

Filed with the Office of the ecretary of State on 9' December 14, 

2007. 

TRD-200706378 

Vincent Houston 

Acting Executive Director 

TITLE 30. ENVIRONMENTAL QUALITY 

PART 1. TEXAS COMMISSION ON 

ENVIRONMENTAL QUALITY 

CHAPTER 114. CONTROL OF AIR 

POLLUTION FROM MOTOR VEHICLES 

SUBCHAPTER K. MOBILE SOURCE 

INCENTIVE PROGRAMS 

DIVISION 3. DIESEL EMISSIONS 

REDUCTION INCENTIVE PROGRAM 

FOR ON-ROAD AND NON-ROAD VEHICLES 

30 TAC g114.622 

The Texas Commission on Environmental Quality (commission) 

adopts an amendment to S114.622 with changes to the proposed 

text as published in the August 24, 2007, issue of the Texas 

Register (32 TexReg 5324). 

The amended section will be submitted to the United States Environmental Protection Agency (EPA) as a revision to the state 

implementation plan. 

BACKGROUND AND SUMMARY OF THE FACTUAL BASIS 

FOR THE ADOPTED RULE 

Senate Bill 12 (SB 12), 80th Legislature, 2007, amended Texas 

Health and Safety Code, Chapter 386, Texas Emissions Reduction Plan (TERP) Program. Most of the new provisions add to 

existing project categories and do not require amendment of the 

rules for implementation. The TERP Guidelines will be revised 

to include the additional grant criteria established by SB 12. 

The adopted rulemaking amends S114.622 to implement the 

cost-effectiveness increase from $13,000 per ton of nitrogen 

oxides reduced to $15,000 per ton under Texas Health and 

Safety Code, §386.106(a), as required by SB 12. Senate Bill 

12 also authorizes the commission to designate highways and 

roadways or portions of a highway or roadway on which travel 

by grant-funded vehicles may count towards the requirement 

that vehicles be operated at least 75 percent of the annual miles 

in the nonattainment areas and affected counties. 

In addition to the amendment adopted to implement SB 12, the 

rule will be amended to remove the option for grant recipients to 

permanently remove from the State of Texas the old equipment 

ADOPTED RULES December 28,2007 32 TexReg 10005 
or engines replaced under a grant project. With this amendment, 

grant recipients will be required to recycle or scrap the old equipment or engine, with one exception. Based on comments received, the rule amendment is changed to authorize the executive director to allow permanent removal from the State of Texas 

in specific grants where the applicant has provided sufficient assurances that the old locomotive will not be returned to the State 

of Texas. 

SECTION DISCUSSION 

The adopted amendment would increase the cost-effectiveness 

of eligible projects and allow the commission to designate vehicle 

travel on highways and roadways to count towards the percentage of use requirement. The adopted amendment will also omit 

the option to move replaced equipment from the State of Texas. 

For proposed projects that include the replacement or repower 

of equipment, the old equipment or engine must be recycled or 

scrapped, with one exception. The executive director may allow 

permanent removal from the State of Texas in specific grants 

where the applicant has provided sufficient assurances that the 

old locomotive will not be returned to the State of Texas. 

51 14.622. Incentive Program Requirements. 

The adopted amendment to 5114.622(b) allows the commission 

to designate highways and roadways or portions of a highway 

or roadway on which travel by grant-funded vehicles may count 

towards the requirement that vehicles be operated at least 75 

percent of the annual miles in the nonattainment areas and affected counties. Section 114.622(b) currently establishes a usage commitment of 75 percent for vehicle miles traveled to occur 

in a nonattainment area or affected county. 

The adopted amendment to §114.622(c) requires grant recipients to recycle or permanently scrap old equipment and engines. 

Section 114.622(c) currently includes an option for grant recipients to permanently remove from the state equipment or engines 

replaced under the program, in lieu of recycling or scrapping. 

Beginning with grants issued in fiscal year 2007, the commission has not allowed grant recipients to use the removal option 

and has required that the old equipment or engine to be recycled or scrapped. After evaluating the implementation of the replacement and repower grants fo;several years, staff found that 

it was difficult to ensure that old equipment and engines were 

actually removed from the state and, if removed, would not be 

returned to the state in the future. Staff determined that the best 

way to ensure that the reductions in emissions of nitrogen oxides are achieved is to not allow this option and to require that 

the old equipment and engines be recycled or scrapped, with one 

exception. Based on comments received, §114.622(c) is being 

adopted with a change from proposal to authorize the executive 

director to allow permanent removal from the State of Texas in 

specific grants where the applicant has provided sufficient assurances that the old locomotive will not be returned to the State 

of Texas. 

The adopted amendment to 5114.622(d) increases the cost-effectiveness for projects from the current $13,000 per ton of nitrogen oxides emissions reduced to $15,000 per ton of nitrogen 

oxides emissions reduced. 

FINAL REGULATORY IMPACT ANALYSIS DETERMINATION 

The commission reviewed the rulemaking in light of the regulatory analysis requirements of Texas Government Code, 

52001.0225, and determined that this rule action is not subject 

to 52001.0025 because it does not meet the definition of a 

"major environmental rule" as defined in that statute. A "major 

environmental rule" means a rule the specific intent of which 

is to protect the environment or reduce risks to human health 

from environmental exposure and that may adversely affect in a 

material way the economy, productivity, competition, jobs, the 

environment, or the public health and safety of the state or a 

sector of the state. 

The adopted amendment to Chapter 114 modifies the existing rules in accordance with SB 12, 80th Legislature, which 

amended Texas Health and Safety Code, Chapter 386. The 

adopted amendment is part of a voluntary incentive program 

with the goal of reducing diesel emissions and as such, the 

adopted rule will not adversely affect in a material way the 

economy, a sector of the economy, productivity, competition, 

jobs, the environment, or the public health and safety of the 

state or a sector of the state. 

In addition, a regulatory impact analysis is not required because 

the adopted rule does not meet any of the four applicability criteria for requiring a regulatory analysis of a "major environmental 

rule" as defined in the Texas Government Code. Texas Government Code, 52001.0225, applies only to a major environmental 

rule the result of which is to: 1) exceed a standard set by federal law, unless the rule is specifically required by state law; 2) 

exceed an express requirement of state law, unless the rule is 

specifically required by federal law; 3) exceed a requirement of 

a delegation agreement or contract between the state and an 

agency or representative of the federal government to implement 

a state and federal program; or 4) adopt a rule solely under the 

general powers of the agency instead of under a specific state 

law. This rulemaking does not exceed a standard set by federal 

law, and the technical requirements are consistent with applicable federal standards. In addition, this rulemaking does not 

exceed an exnress reauirement of state law and is not adopted 

solely under the general powers of the agency, but is specifically 

authorized bv the ~rovisions cited in the STATUTORY AUTHORITY section 6f this preamble. Finally, this rulemaking does not 

exceed a requirement of a delegation agreement or contract to 

implement a state and federal program. 

TAKINGS IMPACT ASSESSMENT 

The commission evaluated this rulemaking action and performed 

an analysis of whether the adopted rule is subject to Texas Government Code, Chapter 2007. The primary purpose of the rulemaking is to amend Chapter 114 in accordance with SB 12,80th 

Legislature. The amendment implements a voluntary program 

and only affects motor vehicles and equipment which are not 

considered to be private real property. Therefore, promulgation 

and enforcement of this adopted rule is neither a statutory nor a 

constitutional taking because it does not affect private real property. Therefore, the rule does not constitute a taking under Texas 

Government Code, Chapter 2007. 

CONSISTENCY WITH THE COASTAL MANAGEMENT PROGRAM 

The commission reviewed the adopted rulemaking and found the 

proposal is a rulemaking identified in the Coastal Coordination 

Act Implementation Rules, 31 TAC 5505.1 1 (b)(2), concerning 

rules subject to the Texas Coastal Management Program (CMP) 

and will, therefore, require that goals and policies of the CMP be 

considered during the rulemaking process. The commission reviewed this action for consistency and determined the rulemaking for Chapter 114 does not impact any CMP goals or policies 

32 TexReg 10006 December 28,2007 Texas Register 
because it adds criteria to a voluntary incentive grant program 

and does not govern air pollution emissions. 

PUBLIC COMMENT 

The public hearings for this rulemaking were held on: September 11, 2007, 11 a.m., Texas Commission on Environmental 

Quality, 12100 Park 35 Circle, Austin; September 11, 2007, 

3:30 p.m., North Central Texas Council of Governments, 616 

Six Flags Drive, Arlington; and September 11, 2007. 3:30 

p.m., Houston-Galveston Area Council, 3555 Timmons Lane, 

Houston. 

Emisstar LLC (Emisstar), City of Dallas (Dallas), United States 

Environmental Protection Agency Region 6 (EPA), Fort Worth 

Chamber of Commerce (FWC), North Central Texas Council of 

Governments (NCTCOG), and Port of Houston Authority (PHA) 

submitted oral andlor written comments in support of all or part 

of the rulemaking. BNSF, Emisstar, Genessee & Wyoming Inc.- 

Motive Power (G&W), Railpower Hybrid Technologies Corp. 

(Railpower), and Union Pacific Railway Company (UP) submitted oral and/or written comments expressing concerns andlor 

suggesting changes to part of the proposal. Dallas, FWC, 

Greater Dallas Chamber (GDC), NCTCOG, Neste Oil, PHA, UP 

Emisstar stated that it has information that potential TERP participants have been unwilling to participate in TERP for the past few 

grant rounds because the commission began not accepting the 

transfer or sale of the old equipment and engines to out-of-state 

users. As an example, Emisstar stated that several stevedoring companies at Texas ports have elected to not participate in 

TERP because of this requirement. Emisstar referred to data 

indicating that in 2006, eleven stevedoring companies participated in TERP, but a year later when the commission began not 

accepting the transfer option, only six stevedoring companies 

participated in the program. 

Emisstar further stated that the concerns about ensuring that the 

transfer occurs and that the equipment and engines are not returned to the state are addressed by the stipulation in the TERP 

contract that the equipment must remain out of the state. Emisstar suggested that the commission allow two options: 1) allow 

TERP participants the option of choosing whether to take a salvage value of $1,000 and scrap the engine or equipment; or 2) 

allow the transfer or sale of the engine or equipment out of state, 

with a requirement that the TERP participant is contractually liable for ensuring that the engine or equipment never returns to 

Texas. 

and one individual submitted 6ral andlor written comments not GgW that it operates 47 individual railroads, pelforms directly related to the TERP rulemaking. rail switchina services in 12 U.S. ~ort facilities and ~rovides rail 

RESPONSE TO COMMENTS switchina s&rvices to dozens of industrial customers'in 26 states. 

including~exas. G&W stated that it is unfortunate that it can not Change to §114.622(b) regarding designated and will not participate in a program where it is forced to scrap and roadways. an otherwise viable locomotive asset that could be rede~loved to 

NCTCOG, Emisstar, and EPA expressed support for the change. 

NCTCOG also urged the commission to use all flexibility allowed 

in applying this clause to determining the project cost-effectiveness. 

The commission appreciates the support for the changes to 

the rule. Regarding the additional recommendation made by 

NCTCOG, Texas Health and Safety Code, §386.105(d), states 

that only the reductions in NOx emissions that are achieved in 

the nonattainment areas and affected counties may be used to 

determine the cost-effectiveness of a project. Therefore, the 

commission would not be able to consider the reductions in NOx 

emissions occurring on the designated highways and roadways 

outside of the nonattainment areas and affected counties when 

calculating the cost-effectiveness of a project. 

UP commented that this change would support commission designation of certain railways to count toward the percentage of use 

requirement in locomotive replacement projects. 

The commission does not agree with UP'S interpretation of the 

rule change. The change only applies to vehicles traveling on 

designated highways and roadways, not rail lines. 

Change to §114.622(c) to remove the option for equipment and 

engines replaced or repowered under the TERP program to be 

permanently removed from the State of Texas in lieu of being 

recycled or scrapped. 

NCTCOG, Dallas, EPA, FWC, and PHA expressed support for 

the change to the rule. 

The commission appreciates the support for the changes to the 

rule. 

Emisstar, G&W, BNSF, Railpower, and UP did not support the 

change to the rule. 

another region, state or rail operation. G&W further siatid that 

this change will likely remove all incentive for railroad locomotive 

operators to participate in the TERP and that the program will not 

receive any more locomotive submittals if this change becomes 

effective. 

BNSF stated that it understands that it has been difficult for 

TCEQ staff to ensure that old equipment and engines are 

removed from the state and would not be returned to the 

state. However, BNSF stated that the locomotives likely to 

be replaced under the program are not appropriate for use as 

cores to manufacture the new Gen Set locomotives that would 

be purchased to replace the old locomotive. BNSF indicated 

that the locomotives that would be replaced in Texas are often 

more reliable than the locomotives used in other BNSF svstem 

locations and that the value of those locomotives is often g;eater 

than the book value because of the limited market. BNSF 

stated that the rule change would greatly increase the cost of 

future locomotive replacements in Texas and will likely result in 

fewer grant applications from BNSF. BNSF referenced TERP 

grant data through January 2007 that indicated that locomotives 

have made up only 2 percent of the number of TERP projects 

but have resulted in 40 percent of the TERP NOx emissions 

reductions. 

BNSF suggested an alternative approach to the scrapping only 

requirement where the commission could require that the grant 

recipient install global positioning systems on the locomotives 

being replaced. The TCEQ staff could then observe the location 

of the old locomotives on a real time basis. 

UP stated that the change to the rule will seriously hinder the 

ability of UP and other railroad companies operating in Texas to 

undertake new locomotive projects, result in the loss of already 

limited projects capable of capturing further available NO, emissions reductions, and create a general disincentive for participation in the program. 

ADOPTED RULES December 28,2007 32 TexReg 10007 
UP also stated that switch engine replacement projects are wellsuited for permanent removal from Texas and that verification 

is not difficult. UP explained that it has maintained ownership 

and control of the old locomotives and that it has ample opportunity to relocate old locomotives that have remaining useful life. 

UP stated that roughly half of the locomotives replaced under 

the program have been scrapped and their engines destroyed, 

with the rest of the locomotives being reassigned to other UP 

locations outside of Texas. UP references its locomotive management system as a reliable means of ensuring that the locomotives are not returned to the state and pointed to the success 

of the replacement projects that have been completed. 

UP explained that as a result of the program's success, most 

of the oldest switch locomotives in UP'S Texas fleet have been 

replaced and that locomotives available for future replacements 

have a longer remaining activity life and are of more value that 

the locomotive replaced in the past. 

Railpower also stated its objection to this change to the rules. 

Railpower's comments reflected the same point of view as the 

statements made by the railroad companies, including concern 

that railroad companies would find it hard to participate in the 

TERP program in the future. Railpower also stated that the California Air Districts have acknowledged that the railroad companies have and will fulfill the requirements to control the locomotives replaced under the California Carl Moyer Program and will 

continue to allow the option of removing the locomotive from the 

state. 

The commission understands the concern expressed regarding 

the effect this change will have on the participation in the TERP 

program by owners of non-road equipment and locomotives. As 

noted by Emisstar, the commission began not accepting the option to transfer or sell the old equipment and engines outside the 

state beginning with the fiscal year (FY) 2007 grant rounds. This 

change to the rule will make permanent the interim decision by 

the commission to not accept that option, with one exception. 

The rule amendment is changed to authorize the executive director to allow permanent removal from the State of Texas in 

specific grants where the applicant has provided sufficient assurances that the old locomotive will not be returned to the State 

of Texas. 

This change to the rule is based on a number of factors, including a detailed internal review of the program by the commission's audit staff and an evaluation of the risks associated with 

the grant award decisions. In addition, guidelines published in 

2006 by the EPA, entitled Diesel Retrofits: Quantiwng and Using Their Benefits in SIPS and Conformity- Guidance for State 

and Local Air and Transportation Agencies (EPA420-B-06-005, 

June 2006), state that in order to use emissions reductions from 

any replacements in a SIP or in a conformity determination the 

vehicle, engine, or equipment being replaced should be scraped 

or the replaced engine returned to the original manufacturer for 

remanufacturing to a cleaner standard. Under the provision proposed in the rule change, the commission would consider the 

remanufacture process as a form of scrapping the old engine. 

The commission has very little control over the replaced equipment once it leaves the state. The commission is also limited in 

its ability to ensure that the old equipment or engines are actually removed from the state. This change is proposed to address 

the risks associated with the replacement grants as well as the 

direction in the EPA guidance to ensure that the old equipment 

and engines are permanently removed from the emissions inventory and that the emissions reductions are creditable to the 

SIP. 

However, the commission agrees that railroad companies, in 

particular, may be able to adequately ensure that a locomotive 

that is removed from Texas is not returned to the state. Based on 

the comments received, the rule amendment is changed to authorize the executive director to allow permanent removal from 

the State of Texas in specific grants where the applicant has provided sufficient assurances that the old locomotive will not be returned to the State of Texas. 

Change to §114.622(d) increasing the maximum cost-effectiveness from $13,000 to $15,00Operton of NOx emissions reduced. 

NCTCOG, Emisstar, Dallas. and EPA expressed support for the 

increase in the maximum cost-effectiveness limit. 

The commission appreciates the support for the changes to the 

rule. 

G&W expressed concern that the increase in the maximum costeffectiveness in the rules would mean very little in the end. G&W 

expressed doubts that rail projects would be allowed to use the 

maximum $1 5,000 cost-effectiveness limit, since past legislation 

required that the commission always maintain locomotive and 

marine projects at a lower cost-effectiveness than other projects. 

The commission agrees that past legislation requires that locomotive and marine vessel projects have a lower cost-effectiveness limit. Texas Health and Safety Code, §386.102(e)(I), requires the commission to establish cost-effectiveness limits for 

grants awarded under the program to an owner or operator of 

a locomotive or marine vessel that are lower than the cost-effectiveness limits applied to other emissions reduction projects. 

However, the commission does not agree that the rule change 

will mean little to rail projects. Because the limit on all projects 

is being raised, the commission will be able to set a higher limit 

on locomotive and marine projects as well. Decisions on the 

cost-effectiveness limits to use for each project category, subject to the maximum limit set by this rule change, will be made 

separate from this rulemaking and prior to the opening of each 

grant application period. 

FWC and GDC also recommended that the commission set the 

limits for all project types at the maximum allowed of $15,000. 

GDC stated that increasing the previous limits of $5.000 for onroad and $1 0,000 for non-road sources would encourage greater 

participation in TERP by individuals in the North Texas area. 

The commission appreciates the support of the TERP program 

by FWC and GDC and agrees that raising the cost-effectiveness limits for on-road and non-road projects would encourage 

greater participation in the TERP program. As explained in the 

response to the previous comment, a decision on the cost-effectiveness limits to set for each type of project, subject to the 

maximum limit set by this rule change, will be made by the commission separate from this rulemaking and prior to opening each 

grant application period. The comments by FWC and GDC will 

be considered when that decision is being made. 

Other comments not directly related to this rulemaking. 

NCTCOG and Dallas expressed support for the establishment 

of a diesel testing center as authorized under SB 12,80th Texas 

Legislature. 

The establishment of a diesel testing center is outside the scope 

of this rulemaking. The commission agrees that the establishment of a diesel testing center as authorized under SB 12 will 

32 TexReg 10008 December 28, 2007 Texas Regis 
provide a valuable resource for the state to evaluate retrofit systems and advanced technologies to determine their effectiveness in reducing emissions of NOx and other pollutants. 

NCTCOG requested the commission's support and provision of 

allocation of grant funds to the area necessary to meet the Dallas-Fort Worth nonattainment area's air quality goals. 

This comment is outside of the scope of this rulemaking. The 

commission agrees that the TERP program is an important tool 

in helping the Dallas-Fort Worth nonattainment area to meet its 

air quality goals. The commission will consider the needs of the 

area when determining how the funds will be allocated and used. 

NCTCOG suggested that the commission consider expanding 

the requirements that the emissions reductions that can be attributed to retrofit technology be verified by the EPA and the California Air Resources Board to include technology verified under 

testing programs outside of the country. NCTCOG stated that 

other states have determined the need for and permitted technologies verified through similar processes in Europe and Asia 

to be included in their air quality programs. 

This comment is outside of the scope of this rulemaking. The 

commission will seek additional information regarding the requirements of other states for accepting retrofit technologies for 

emissions reduction credit. 

Neste Oil provided information regarding its technology to produce renewable diesel fuel from either vegetable oil or animal 

fats by adding hydrogen to the bio-feedstock to make renewable paraffinic hydrocarbons, also known as alkanes. Neste Oil 

stated that adding alkanes to diesel fuel tends to reduce NOx. 

Neste Oil also stated that definitions are being written that could 

exclude this new technology and prevent the commission from 

harvesting the low-hanging NOx reduction fruit. Neste Oil asked 

for any assistance that the commission can provide to maintain 

a level playing field so that this and other evolving technology 

can help the commission to achieve the goals of energy security, reducing green house gases, and lowering NO, emissions. 

This comment is outside of the scope of this rulemaking. The 

statement regarding definitions being written that might exclude 

the new technology appear to be in reference to the rules pertaining to Texas Low Emission Diesel (TxLED) requirements specified in Chapter 114, Subchapter H, Division 2. Those rules include standards for cetane and aromatic levels in diesel fuel sold 

in the eastern part of the state. The commission's TxLED program staff may be contacted for more information regarding how 

the TxLED requirements may possibly affect the sale and use 

of the fuel products that may become available from Neste Oil if 

approved by the EPA for use in the United States. 

UP recommended that the commission develop ''job assignment" criteria for awarding grants that can be directly assigned 

to specific jobs or tasks conducted by an applicant, rather than 

limiting grants to specific units or pieces of equipment. UP 

explained that when a locomotive is removed from service at a 

location for fueling, maintenance, or inspection, a similarly-sized 

locomotive must be assigned to the job. That replacement 

locomotive will have the same or similar characteristics. UP 

stated that the grant program's potential is not fully realized in 

situations where some of the locomotives on a job are ineligible 

for the grant program but have emission characteristics that are 

identical to eligible locomotives assigned to the same job. 

This comment is outside of the scope of this rulemaking and 

appears to be aimed at the requirement that vehicles and 

equipment replaced under the program must have been owned 

and operated in Texas for the two years preceding the application submission. UP'S recommendation would require a major 

change to the methodology for verifying that a reduction in NOx 

emissions will occur as a result of the replacement project. 

UP recommended that the commission simplify its process for 

awarding grants by contracting with grant recipients on a comprehensive "lump-sum" basis for a specified amount rather than 

by providing reimbursement on an expense-by-expense basis. 

UP stated that the reimbursement process is complicated and 

adds unnecessarily to the administrative costs incurred by both 

the TCEQ and the grant recipients. 

This comment is outside of the scope of this rulemaking. Implementation of a lump-sum approach would require statutory 

changes. 

One individual discussed a technology he was developing called 

the TriTrack electrified guideway. He stated that the commission 

has specifically listed diesel engines as the only thing that will 

be considered under the TERP program. He further stated that 

if the TERP program is only allowed to be applied to diesel engines it is seriously flawed, as diesel engines need to be obsolete 

soon rather than have the state buying more of them to continue 

to run for decades. He proposed that TERP money be used 

for engineering and development of the replacement for diesel 

engines, not buying more. He explained that if TERP money 

were diverted to a more intelligent approach that has a multiplication effect like research and development then the TERP can 

achieve its underlying goal of cleaner air at a price the taxpayers 

can afford that does not play favorites with those who are the 

very offenders. 

This comment is outside of the scope of this rulemaking. The 

commission does not agree with the statements that the TERP 

program only considers diesel engines. Under Texas Health and 

Safety Code, §386.053(d), the commission is authorized to expand the program, through the criteria established in the TERP 

Guidelines, to include vehicles and equipment that use fuels 

other than diesel. Based on that authority, the project criteria 

established in the Texas Emissions Reduction Plan Guidelines 

for Emissions Reduction Incentive Grants (RG388- May 2004) 

allows funding for vehicles, equipment, and engines that use fuels other than diesel, including electric engines. To date, the 

TERP program has funded projects that include alternative fuel 

vehicles and equipment, electric equipment and engines, and 

electrification and alternative fuel infrastructure. The commission encourages projects that meet the grant criteria and can be 

shown to result in significant reductions in NOx emissions, regardless of the type of fuel used. 

Regarding the comments on the need for TERP money to be 

diverted to research and development, funding from the TERP 

revenue sources is available through the New Technology Research and Development (NTRD) Program established under 

Texas Health and Safety Code, Chapter 387. This program provides funding for research, development, testing and certification 

of new technologies that will result in reductions in emissions of 

NOx and other air pollutants. The TCEQ's NTRD program staff 

may be contacted for more information about this program. 

STATUTORY AUTHORITY 

The amendment is adopted under Texas Water Code, s5.102, 

which provides the commission with the general powers to 

carry out its duties under the Texas Water Code; s5.103, which 

authorizes the commission to adopt any rules necessary to carry 

ADOPTED RULES December 28,2007 32 TexReg 10009 
out the powers and duties under the provisions of the Texas 

Water Code and other laws of this state; and 35.105, which 

authorizes the commission by rule to establish and approve 

all general policy of the commission. The amendment is also 

adopted under Texas Health and Safety Code, Texas Clean Air 

Act, 5382.017, which authorizes the commission to adopt rules 

consistent with the policy and purposes of the Texas Clean Air 

Act; 5382.002, which establishes the commission's purpose to 

safeguard the state's air resources, consistent with the protection of public health, general welfare, and physical property: 

§382.011, which authorizes the commission to establish the 

level of quality to be maintained in the state's air and to control 

the quality of the state's air; 5382.012, which authorizes the 

commission to prepare and develop a general, comprehensive 

plan for the control of the state's air; and Chapter 386, which 

establishes the TERP. Finally, the amendment is adopted as 

part of the implementation of SB 12, 80th Legislature, 2007. 

The adopted amendment implements Texas Clean Air Act, 

§§382.002, 382.011, 382.012, and 382.017, Texas Health and 

Safety Code, Chapter 386, and SB 12, 80th Legislature, 2007. 

$114.622. Incentive Program Requirements. 

(a) Eligible projects include: 

(1) purchase or lease of on-road and non-road diesels; 

(2) emissions-reducing retrofit projects for on-road or nonroad diesels; 

(3) emissions-reducing repower projects for on-road or 

non-road diesels; 

(4) purchase and use of emissions-reducing add-on equipment for on-road or non-road diesels; 

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

emissions; 

(6) use of qualifying fuel; 

(7) implementation of infrastructure projects; 

(8) replacement of on-road and non-road diesels with 

newer on-road and non-road diesels; and 

(9) other projects that have the potential to reduce anticipated NOx emissions from diesel engines. 

(b) For a proposedproject as listed in subsection (a) of this section, other than a project involving a marine vessel or engine, not less 

than 75% of vehicle miles traveled or hours of operation projected for 

the five years immediately following the award of a grant must be projected to take place in a nonattainment area or affected county of this 

state. The commission may also allow vehicle travel on highways and 

roadways, or portions of a highway or roadway, designated by the commission and located outside a nonattainment area or affected county to 

count towards the percentage of use requirement. 

(c) For a proposed project that includes a replacement of 

equipment or a repower, the old equipment or engine must be recycled 

or scrapped provided, however, that the executive director may allow 

permanent removal from the State of Texas in specific grants where the 

applicant has provided sufficient assurances that the old locomotive 

will not be returned to the State of Texas. 

(d) To be eligible for a grant, the cost-effectiveness of a proposed project as listed in subsection (a) of this section, except for infrastructure projects and infrastructure purchases that are part of a broader 

retrofit, repower, replacement, or add-on equipment project, must not 

exceed a cost-effectiveness of $15,000 per ton of NOx emissions reduced. The commission may set lower cost-effectiveness limits as 

needed to ensure the best use of available funds. The commission may 

also base project selection decisions on additional measures to evaluate 

the effectiveness of projects in reducing NOT emissions in relation to 

the funds to be awarded. 

(e) Projects funded with a grant from this program may not 

be used for credit under any state or federal emissions reduction credit 

averaging, banking, or trading program except as provided under Texas 

Health and Safety Code, 5386.056. 

(f) A proposed project as listed in subsection (a) of this section 

is not eligible if it is required by any state or federal law, rule or regulation, memorandum of agreement, or other legally binding document. 

This subsection does not apply to: 

(1) an otherwise qualified project, regardless of the fact that 

the state implementation plan assumes that the change in equipment, 

vehicles, or operations will occur, if on the date the grant is awarded 

the change is not required by any state or federal law, rule or regulation, 

memorandum of agreement, or other legally binding document; or 

(2) the purchase of an on-road diesel or equipment required 

only by local law or regulation or by corporate or controlling board 

policy of a public or private entity. 

(g) A proposed retrofit, repower, replacement, or add-on 

equipment project must achieve a reduction in NOx emissions to the 

level established in the commission's Texas Emissions Reduction 

Plan: Guidelines for Emissions Reduction Incentive Grants Program 

(RG-388) for that type of project compared with the baseline emissions adopted by the commission for the relevant engine year and 

application. 

(h) If a grant recipient fails to meet the terms of a project grant 

or the conditions of this division, the executive director can require that 

the grant recipient return some or all of the grant funding to the extent 

that emission reductions are not achieved or cannot be demonstrated. 

(i) Criteria established in the guidelines, including revisions 

to the commission's Texas Emissions Reduction Plan: Guidelines for 

Emissions Reduction Incentive Grants Program (RG-388), apply to the 

Texas Emissions Reduction Plan program. Notwithstanding the provisions of this chapter, as authorized under Texas Health and Safety 

Code, 5386.053(d), revisions to the guidelines may include, among 

other changes, adding additional pollutants; adding stationary engines 

or engines used in stationary applications; adding vehicles and equipment that use fuels other than diesel; or adjusting eligible program categories; as appropriate, to ensure that incentives established under this 

program achieve the maximum possible emission reductions. 

This agency hereby certifies that the adoption has been reviewed 

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

legal authority. 

Filed with the Office of the Secretary of State on December 17, 

TRD-200706393 

Robert Martinez 

Director 

Texas Commission on Environmental Quality 

Effective date: January 6, 2008 

Proposal publication date: August 24, 2007 

For further information, please call: (512) 239-6087 

32 TexReg 1001 0 December 28,2007 Texas Regis