[Federal Register Volume 65, Number 11 (Tuesday, January 18, 2000)]
[Proposed Rules]
[Pages 2560-2573]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-1081]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[TX-100-7390; FRL-6524-4]


Approval and Promulgation of Implementation Plans; Texas; 
Permitting of New and Modified Sources in Nonattainment Areas

AGENCY:  Environmental Protection Agency (EPA).

ACTION:  Proposed rule.

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SUMMARY:  The EPA proposes to approve revisions to the Texas State 
Implementation Plan (SIP). The revisions concern the permitting of new 
major sources and major modifications in areas which do not meet the 
national ambient air quality standards (NAAQS) promulgated by EPA 
(nonattainment areas). The EPA proposes to approve these revisions to 
satisfy the provisions of the Clean Air Act (Act) which relate to the 
permitting of new and modified sources which are located in 
nonattainment areas.

DATES:  Comments must be received on or before February 17, 2000.

ADDRESSES:  Written comments should be addressed to Ms. Jole C. Luehrs, 
Chief, Air Permits Section, at the EPA Region 6 Office listed below. 
Copies of documents relevant to this action are available for public 
inspection during normal business hours at the following locations. 
Anyone wanting to examine these documents should make an appointment 
with the appropriate office at least two working days in advance.

    Environmental Protection Agency, Region 6, Air Planning Section 
(6PD-L), 1445 Ross Avenue, Dallas, Texas 75202-2733.
    Texas Natural Resource Conservation Commission, Office of Air 
Quality, 12124 Park 35 Circle, Austin, Texas 78753.

FOR FURTHER INFORMATION CONTACT:  Stanley M. Spruiell of EPA Region 6 
Air Permits Section at (214) 665-7212 at the address above, or at 
<a href="/cdn-cgi/l/email-protection#54272426213d3138387a2720353a38312d143124357a333b22"><span class="__cf_email__" data-cfemail="b7c4c7c5c2ded2dbdb99c4c3d6d9dbd2cef7d2c7d699d0d8c1">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION:  Throughout this document, wherever we, us, 
or our are used, we mean EPA.

Table of Contents

I. General Overview of Texas Nonattainment Permitting Regulations
    A. What are we proposing to approve in this action?
    B. Who is affected by this action?
    C. What are the major source thresholds for nonattainment 
pollutants?
    D. What is a major modification?
    E. What are the requirements for permitting new and modified 
sources in nonattainment areas?
II. Review of Texas' Regulations for Permitting Major Sources and 
Major Modifications in Ozone Nonattainment Areas
    A. What does the current Texas SIP require?
    B. What SIP revisions did Texas submit?
    C. Summary of Texas 182(f) NO<INF>X</INF> Waivers
    1. What does section 182(f) of the Act require?
    2. Did we approve NOX waivers in Texas?
    3. What is the current status of Texas NO<INF>X</INF> waivers?
    4. Texas Rule Changes to Accommodate Section 182(f) 
NO<INF>X</INF> Waivers
    D. Texas' NSR Provisions for Implementing Special Provisions for 
Ozone Nonattainment Area Permitting under Sections 182(c)(6), (7), 
and (8)
    1. The De Minimis Rule in Section 182(c)(6) of the Act
    2. Texas Five TPY Netting Trigger
    3. Texas Definition of ``Contemporaneous Period'' under Section 
182(f) of the Act
    4. Special Modification Rules in Sections 182(c)(7) and (8) of 
the Act
    E. Other Revisions Affecting NSR Permitting in Nonattainment 
Areas
    1. Definition of ``De Minimis threshold test''
    2. Definition of ``major modification''
    3. Definition of ``net emission increase''
    4. Definition of ``offset ratio''
    5. Definition of ``potential to emit''
    6. Definition of ``stationary source''
III. Individual SIP Submittals Acted Upon in This Document
IV. Request for Public Comments
V. Administrative Requirements

I. General Overview of The Texas Nonattainment Permitting 
Regulations

    We propose to approve the recodification of and revisions to the 
Texas SIP relating to revisions to Title 30, Texas Administrative Code 
(TAC) Chapter 116, ``Control of Air Pollution by Permits for New 
Construction or Modification,'' as indicated in Table 1 below:

           Table 1.--SIP Regulations Submitted by Texas to EPA
------------------------------------------------------------------------
Section in 30 TAC chapter 116               Title/(Subject)
------------------------------------------------------------------------
116.12.......................  Nonattainment Review Definitions.
116.150......................  New Major Source or Major Modification in
                                Ozone Nonattainment Area.
116.151......................  New Major Source or Major Modification in
                                Nonattainment Area Other than Ozone.
116.170......................  Applicability for Reduction Credits.
116.170(1)...................  (Emission reductions not required by
                                State Implementation Plan or other
                                Federal requirements).

[[Page 2561]]

 
116.170(3)...................  (Offset provisions for emission increases
                                from rocket engine or motor firing).
------------------------------------------------------------------------

    This proposal includes portions of revisions submitted by the 
Governor of Texas to EPA on the following dates:
    <bullet> August 31, 1993
    <bullet> November 1, 1995
    <bullet> July 18, 1996
    <bullet> April 13, 1998
    <bullet> March 16, 1999
    We are taking this rulemaking action under sections 110, 301 and 
part D of the Act. As explained in the following section, we are acting 
only on those parts of these submittals which relate to permitting 
sources in nonattainment areas.

A. What Are We Proposing To Approve in This Action?

    We propose to approve regulations submitted by Texas that satisfy 
provisions of the Act that pertain to permitting major sources and 
major modifications in areas in Texas that do not meet the ambient air 
quality standards adopted by EPA.
    Table 2 below identifies the regulations that we propose to 
approve:

                               Table 2.--Regulations That EPA Proposes to Approve
----------------------------------------------------------------------------------------------------------------
Recodified 30 TAC chapter   Submittal dates of  recodified
           116                         section                 Title or description           Former rule
----------------------------------------------------------------------------------------------------------------
116.12...................  August 31, 1993................  Nonattainment Review       101.1.
                           July 18, 1996..................   Definitions.
                           April 13, 1998.................
                           March 16, 1999.................
116.150..................  August 31, 1993................  New Major Source or Major  116.3(a)(7) and (8).
                           November 1, 1995...............   Modification in Ozone
                           April 13, 1998.................   Nonattainment Areas.
                           March 16, 1999.................
116.151..................  August 31, 1993................  New Major Source or Major  116.3(a)(10).
                           April 13, 1998.................   Modification in
                                                             Nonattainment Area Other
                                                             than Ozone.
116.170..................  August 31, 1993................  Applicability for          116.3(c).
                                                             Reduction Credits.
----------------------------------------------------------------------------------------------------------------

    We propose to approve only those provisions of the individual SIP 
submittals which relate to the permitting sources in nonattainment 
areas. We will act on the remaining provisions in a separate action.

B. Who Is Affected by This Action?

    These State regulations apply to each owner and/or operator who 
constructs or modifies a stationary source in a nonattainment area in 
Texas if the stationary source is major for the air pollutant for which 
the area is nonattainment. A stationary source is major if it emits, or 
has the potential to emit, the nonattaining pollutant, or precursor 
thereto, in amounts greater than the major source threshold for the 
nonattaining pollutant.

C. What Are the Major Source Thresholds for Nonattainment Pollutants?

    The major source threshold varies, depending on the pollutant and 
the classification of the nonattainment area. Any owner or operator who 
proposes to construct a major stationary source must obtain a permit 
which complies with the regulations that we are proposing to approve 
herein. Table 3 below lists the major source threshold for each 
pollutant.

                    Table 3.--Major Source Thresholds
------------------------------------------------------------------------
                                     Major source     Where specified in
    Pollutant: Classification          threshold            the Act
------------------------------------------------------------------------
Ozone:
    marginal....................  100 TPY...........  Section 302(j)
    moderate....................  100 TPY...........  Section 302(j)
    serious.....................  50 TPY............  Section 182(c)
    severe......................  25 TPY............  Section 182(d)
CO:
    Moderate....................  100 TPY...........  Section 302(j)
    Serious.....................  50 TPY............  Section 187(c)(1)
PM-10:
    Moderate....................  100 TPY...........  Section 302(j)
    Serious.....................  70 TPY............  Section 189(b)(3)
    SO<INF>2</INF>.........................  100 TPY...........  Section 302(j)
    NO<INF>X</INF>.........................  100 TPY...........  Section 302(j)
    Lead........................  100 TPY...........  Section 302(j)
------------------------------------------------------------------------


[[Page 2562]]

    Table 3 refers to classifications for areas designated 
nonattainment for ozone, carbon monoxide (CO), and particulate matter 
less than 10 micrometers (PM-10). These nonattainment classifications 
are defined in the Act as follows:
    <bullet> Section 181(a) defines five area classifications for 
ozone. These five classifications are marginal, moderate, serious, 
severe, and extreme. Texas has no extreme ozone nonattainment areas and 
does not address such areas in its regulations.
    <bullet> Section 186(a) defines two area classifications for CO. 
These two classifications are moderate and serious.
    <bullet> Section 188 defines two area classifications for PM-10. 
These two classifications are moderate and serious.
    A detailed description of the individual area classifications for 
ozone, CO, and PM-10 nonattainment areas is contained in EPA's General 
Preamble for the Implementation of Title I of the 1990 Amendments, 57 
FR 13498 (April 16, 1992).

D. What is a Major Modification?

    A major modification is any physical change, or change in the 
method of operating a major stationary source which significantly 
increases net emissions of the air pollutant, or precursor, for which 
the area is nonattainment and which the source is a major source before 
the modification.
    Any owner or operator who proposes a major modification must obtain 
a permit that complies with the regulations that we are proposing to 
approve. Table 4 below lists the significance level for each pollutant 
which is used in determining whether a net emissions increase is a 
major modification.

          Table 4.--Significance Levels for Major Modifications
------------------------------------------------------------------------
                                                      Where specified in
    Pollutant: Classification     Significance level      the Act or
                                                          Regulations
------------------------------------------------------------------------
Ozone:
    Marginal....................  40 tons per year    40 CFR
                                   (TPY).              51.165(a)(x)
    Moderate....................  40 TPY............  40 CFR
                                                       51.165(a)(x)
    Serious.....................  25 TPY............  Section 182(c)(6)
                                                       of the Act
    Severe......................  25 TPY............  Section 182(c)(6)
                                                       of the Act
CO:
    Moderate....................  100 TPY...........  40 CFR
                                                       51.165(a)(x)
    Serious.....................  50 TPY............  ( \a\)
PM-10:
    Moderate....................  15 TPY............  ( \a\)
    Serious.....................  15 TPY............  ( \a\)
SO<INF>2</INF>.............................  40 TPY............  40 CFR
                                                       51.165(a)(x)
NO<INF>X</INF>.............................  40 TPY............  40 CFR
                                                       51.165(a)(x)
Lead............................  0.6 TPY...........  40 CFR
                                                       51.165(a)(x)
------------------------------------------------------------------------
\a\ No significance level is specified in the Act nor in the
  regulations. The significance levels specified in Table 3 are the
  significance levels the we approved for Texas on September 27, 1995
  (60 FR 49781).

E. What Are the Requirements for Permitting New and Modified Sources in 
Nonattainment Areas?

    The Act sets out the air quality planning requirements for 
nonattainment NSR in part D of title I. We have issued a ``General 
Preamble'' which describes our preliminary views for reviewing SIPs and 
SIP revisions submitted under part D.\1\ This includes SIP submittals 
with nonattainment area permitting requirements in section 173 of the 
Act. Table 5 below identifies these requirements and how Texas 
addresses the requirements in its revised regulations.
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    \1\1 See 57 FR 13498 (April 16, 1992) and 57 FR 18070 (April 28, 
1992).

  Table 5.--Summary of Requirements for Permitting Major Sources and Major Modifications in Nonattainment Areas
----------------------------------------------------------------------------------------------------------------
                                                            Where addressed in         Former State regulation
   The Act Citation and description of requirement      recodified State Regulation     before recodification<SUP>a</SUP>
----------------------------------------------------------------------------------------------------------------
Sec.  173(a)(1)(A). Base emissions offsets on the      Sec.  116.150(a)(4); Sec.     Sec.  116.3(a)(7)(C); Sec.
 same emissions baseline used in the demonstration of   116.151(3).                   116.3(a)(10)(D)
 reasonable further progress.
Sec.  173(a)(2). Apply Lowest Achievable Emission      Sec.  116.150(a)(1); Sec.     Sec.  116.3(a)(7)(A); Sec.
 Rate (LAER).                                           116.151(1).                   116.3(a)(10)(A)
Sec.  173(a)(3). Demonstrate that all other major      Sec.  116.150(a)(2); Sec.     Sec.  116.3(a)(7)(B); Sec.
 stationary sources under the same ownership or         116.151(2).                   116.3(a)(10)(B)
 operation in the State are complying with the Act.
Sec.  173(a)(4). State cannot issue a permit if the     The EPA has made no such determination for Texas. If EPA
 EPA Administrator finds that the State is not          makes this determination in the future, EPA will address
 adequately enforcing the provisions of the                       this matter with Texas at that time.
 applicable implementation plan for the nonattainment
 area in which the source proposes to construct or
 modify.
Sec.  173(a)(5):

[[Page 2563]]

 
    <bullet> Analyze alternative sites, sizes,         Sec.  116.150(a)(4); Sec.     Sec.  116.3(a)(7)(D); Sec.
     production processes, and environmental control    116.151(4).                   116.3(a)(10)(E)
     techniques for proposed sources
    <bullet> Demonstrate that the benefits of the
     proposed source significantly outweigh the
     environmental and social costs associated with
     its location, construction, or modification
Sec.  173(b) Prohibits use of growth allowance         Not Applicable..............  Not Applicable
 included in a SIP prior to the Act Amendments of
 1990 in an area which receives notice that such plan
 is substantially inadequate.
Sec.  173(c)(1). A sources may obtain offsets in
 another nonattainment area under the following
 conditions:
    <bullet> The area in which the offsetting          Sec.  116.150(a)(3); Sec.     Sec.  116.3(a)(7)(C); Sec.
     reductions originate has an equal or higher        116.151(3).                   116.3(a)(10)(D)
     nonattainment classification, and
    <bullet> The emissions from the nonattainment
     area where the offsetting reductions originate
     will contribute to a National Ambient Air
     Quality Standards (NAAQS) violation in the area
     in which the source would construct.
Sec.  173(c)(1). A new or modified major stationary    Sec.  116.150(a)(3); Sec.     Sec.  116.3(a)(7)(C); Sec.
 source must offset a proposed emissions increase       116.151(3); Sec.              116.3(a)(10)(D)
 with real reductions in actual emissions.              116.12(14)--Definition of
                                                        ``Offset ratio''.
Sec.  173(c)(2). Must not use emission reductions      Sec.  116.170(1)............  Sec.  116.3(c)(1)
 otherwise required by the Act.
Sec.  173(e). A State may allow any existing or        Sec.  116.170(3)............  Sec.  116.3(c)(3)
 modified source that tests rocket engines or motors
 to use alternative or innovative means to offset
 emissions increases from firing and related
 cleaning.<SUP>b</SUP>.
----------------------------------------------------------------------------------------------------------------
<SUP>a</SUP> All Sections cited in this column are Sections that EPA approved on September 27, 1995 (60 FR 49781).
<SUP>b</SUP> This type of source may use alternative or innovative offsetting if it satisfies the following conditions:
(a) the proposed modification is for expansion of a facility already permitted for such purposes as of November
  15, 1990;
(b) the source has used all available offsets and all reasonable means to obtain offsets and sufficient offsets
  are not available;
(c) the source has obtained a written finding by the appropriate, sponsoring Federal agency that the testing is
  essential to national security; and
(d) the source will comply with an alternative measure designed to offset any emissions increases not directly
  offset by the source.
The Act further provides an alternative to the above. The permitting authority may require an emission fee
  amounting to no more than 1.5 times the average cost of stationary control measures adopted in that area
  during the previous three years.

II. Review of Texas' Regulations for Permitting Major Sources and 
Major Modifications in Ozone Nonattainment Areas

A. What Does the Current Texas SIP Require?

    We approved the Texas SIP for permitting major sources and major 
modifications in ozone nonattainment areas on September 27, 1995 (60 FR 
49781). We approved the regulations after we determined that they meet 
the requirements of title I, part D, subpart 2 of the Act.
    The current SIP addresses ozone nonattainment area permitting in 
section 116.3(a)(7). This section includes the provisions described in 
Table 5 of this preamble and meets the requirements of sections 173 and 
182 of the Act.
    Section 182 of the Act provides special provisions for ozone 
nonattainment areas. This section specifies individual major source 
thresholds for marginal, moderate, serious, severe and extreme ozone 
nonattainment areas. See Table 3 in section I.C of this preamble for a 
list of the individual major source thresholds.
    Section 182 also specifies the offset ratios that are required for 
marginal, moderate, serious, severe and extreme ozone nonattainment 
areas. Table 6 below lists the applicable offset ratio for each type of 
ozone nonattainment area.

    Table 6.--Offset Ratios for Each Type of Ozone Nonattainment Area
------------------------------------------------------------------------
                                                         Clean Air Act
       Ozone nonattainment           Offset ratio        citation for
         classification                                  offset ratio
------------------------------------------------------------------------
marginal........................  1.10 to 1.........  Section 182(a)(4).
moderate........................  1.15 to 1.........  Section 182(b)(5).
serious.........................  1.20 to 1.........  Section
                                                       182(c)(10).
severe..........................  1.30 to 1.........  Section 182(d)(2).
Extreme.........................  1.50 to 1.........  Section 182(e)(1).
------------------------------------------------------------------------

    The current SIP includes major source thresholds and the offset 
ratios in Table I of Section 116.12. In Table I, the applicable offset 
ratio of volatile organic compounds (VOC) or NO<INF>X</INF> is the same 
as required by the above stated sections of the Act.
    Finally, the current SIP includes provisions pertaining to the use 
of emission reduction credits as offsets and special provisions for 
offsetting emissions increases at facilities which test rocket engines 
and motors in section 116.3(c)(1) and (3).

B. What SIP revisions did Texas submit?

    Texas recodified Chapter 116 and submitted the recodified 
regulation to EPA in August 31, 1993. The recodified regulation also 
revised Texas' provisions for implementing section 182(c)(6) of the 
Act.

[[Page 2564]]

    Subsequent to the recodification, Texas submitted revisions to 
waive the requirement to address NOX as a precursor to ozone on 
November 1, 1995; July 18, 1996; and April 13, 1998. On April 13, 1998, 
Texas submitted a revision to further modify its provisions for 
implementing section 182(c)(6) and to incorporate the provisions of 
sections 182(c)(7) and (8) of the Act.
    Texas also submitted revised definitions of

``major modification,''
``net emissions increase,'' and
``potential to emit'';

and submitted new definitions for

``de minimis threshold test,''
``offset ratio,''
``project net,'' and
``stationary source''

    We will discuss the Texas nonattainment permitting provisions as 
outlined below:
    <bullet> Section C discusses Texas' plan to implement the NOX 
waivers approved by EPA under section 182(f) of the Act,
    <bullet> Section D discusses Texas' regulation for implementing 
section 182(c)(6), (7) and (8) of the Act, and
    <bullet> Section E discusses the new and revised nonattainment 
permitting definitions.

C. Summary of Texas 182(f) NOX Waivers

1. What Does Section 182(f) of the Act Require?
    Section 182(f) sets forth the presumption that NOX is an ozone 
precursor unless the Administrator makes a finding of nonapplicability 
or grants a waiver pursuant to criteria contained therein. 
Specifically, section 182(f) provides that requirements applicable for 
major stationary sources of VOC shall apply to major stationary sources 
of NOX, unless otherwise determined by the Administrator, based upon 
certain determinations related to the benefits or contribution of NOX 
control to air quality, ozone attainment, or ozone air quality.
2. Did We Approve NOX waivers in Texas?
    We approved petitions submitted by Texas under section 182(f) to 
waive NOX provisions in Texas, as follows:
    <bullet> On November 28, 1994, we conditionally approved two 
petitions from Texas, each dated June 17, 1994. This action exempted 
Dallas-Fort Worth (DFW) \2\ and El Paso (ELP) \3\ ozone nonattainment 
areas from NOX control requirements of section 182(f) of the Act. See 
59 FR 60709.
---------------------------------------------------------------------------

    \2\ Includes the following Texas counties: Collin, Dallas, 
Denton, and Tarrant Counties in Texas
    \3\ Includes El Paso County in Texas.
---------------------------------------------------------------------------

    <bullet> On April 19, 1995, we approved a petition from Texas dated 
August 17, 1994. This action temporarily exempted the Houston-Galveston 
(HGA) \4\ and Beaumont-Port Arthur (BPA) \5\ ozone nonattainment areas 
from the NOX control requirements of section 182(f) of the Act. These 
temporary exemptions expired December 31, 1996. See 60 FR 19515.
---------------------------------------------------------------------------

    \4\ Includes the following Texas counties: Brazoria, Chambers, 
Fort Bend, Galveston, Harris, Liberty, Montgomery, and Waller.
    \5\ Includes the following Texas counties: Hardin, Jefferson, 
and Orange Counties.
---------------------------------------------------------------------------

    <bullet> On May 23, 1997, we approved a petition from Texas dated 
March 8, 1996, to extend the NOX waiver in HGA and BPA until December 
31, 1997. See 62 FR 28344.
    <bullet> On April 20, 1999, we approved a petition from Texas dated 
November 13, 1998, to rescind the conditional NOX exemption for the DFW 
ozone nonattainment area. Texas petitioned for rescission of the 
exemption after EPA reclassified DFW from a moderate ozone 
nonattainment area to a serious ozone nonattainment area. The modeling 
for this serious ozone nonattainment area SIP shows that control of NOX 
sources will help the area to attain the air quality standard for 
ozone. See 64 FR 19283.
3. What Is the Current Status of Texas NOX Waivers?
    On December 31, 1997, the NOX waiver in HGA and BPA expired. On 
February 12, 1998, we published a document in the Federal Register 
concerning Texas' decision not to petition for further extension of the 
NOX exemption in the HGA and BPA areas. See 63 FR 7071. Since the 
extension of the temporary exemption expired on December 31, 1997, the 
State must implement the numerous requirements relating to NOX in the 
HGA and BPA areas. Accordingly, any NSR permits that Texas had not 
deemed to be complete prior to January 1, 1998, must comply with the 
NOX NSR requirements, consistent with the policy set forth in the EPA's 
NSR Supplemental Guidance memorandum dated September 3, 1992, from John 
Seitz, Director, EPA's Office of Air Quality Planning and Standards.
    On February 18, 1998, we published our finding that the DFW 
nonattainment area has not attained the 1-hour ozone NAAQS by the 
applicable attainment date in the Act for moderate ozone nonattainment 
areas, November 15, 1996. We based the finding on the review of 
monitored air quality data from 1994 through 1996 for compliance with 
the 1-hour ozone NAAQS. As a result of this finding, the DFW ozone 
nonattainment area was reclassified by operation of law as a serious 
ozone nonattainment area, effective March 20, 1998. Texas was required 
to submit a new SIP, no later that March 20, 1999, addressing 
attainment of that standard by November 15, 1999. Texas submitted a 
revised plan on March 16, 1999, in satisfaction of this requirement.
    In its revised plan, Texas again recognizes NOX as an ozone 
precursor in the DFW nonattainment area. Texas also forwarded a 
petition to us on November 13, 1998, requesting that we withdraw the 
waiver for NOX that we had approved on November 28, 1994, for the DFW 
nonattainment area. On April 20, 1999, we approved this petition and 
reinstated NOX as an ozone precursor in the DFW nonattainment area.
4. Texas Rule Changes To Accommodate Section 182(f) NO<INF>X</INF> 
Waivers
    Texas submitted the following SIP revisions to incorporate the 
section 182(f) NO<INF>X</INF> waivers and subsequent reinstatement for 
NO<INF>X</INF> as an ozone precursor:
    <bullet> On November 1, 1995, Texas submitted revisions to section 
116.150 to implement the NO<INF>X</INF> waivers approved for the DAL, 
ELP, HGA, and BPA ozone nonattainment areas. On July 18, 1996, Texas, 
submitted revisions to Table I in section 116.12 \6\ to remove 
NO<INF>X</INF> as an ozone precursor, consistent with EPA's approval of 
the NO<INF>X</INF> waivers.
---------------------------------------------------------------------------

    \6\ Table I of section 116.12 specifies the various 
classifications of nonattainment along with the associated emission 
levels which designate a major modification for those areas. A 
detailed discussion of the changes to Table I is included in section 
of the preamble describing the submitted definition of ``major 
modification.''
---------------------------------------------------------------------------

    <bullet> On April 13, 1998, Texas submitted revisions to sections 
116.12 (Table I)and 116.150(c), to reinstate NO<INF>X</INF> as an ozone 
precursor in the HGA and BPA areas following the expiration of the 
temporary waivers for those areas on December 31, 1997.
    <bullet> On March 16, 1999, Texas submitted revisions to sections 
116.12 (definition of ``major modification'' and Table I) and 
116.150(b), to reinstate NO<INF>X</INF> as an ozone precursor in the 
DFW area.
    The above described revisions to section 116.150 are discussed in 
the following paragraphs.
    a. What are Texas' provisions for addressing NO<INF>X</INF> Waivers 
in DFW and ELP? Texas addresses the NO<INF>X</INF> waivers for DFW and 
ELP in section 116.150(b) submitted November 1, 1995. Section 
116.150(b) is consistent with the NO<INF>X</INF>

[[Page 2565]]

waiver approved by EPA on November 28, 1994. Following the 
redesignation of DFW to a serious ozone nonattainment area, Texas 
revised section 116.150(b) to revoke applicability of the 
NO<INF>X</INF> waiver in DFW. As revised, section 116.150(b) now only 
identifies ELP as the only area in Texas where a section 182(f) waiver 
continues to apply. Texas submitted these revisions to section 
116.150(b) on March 16, 1999.
    b. What are Texas' provisions for addressing NO<INF>X</INF> Waivers 
in HGA and BPA? Texas addresses the NO<INF>X</INF> waivers for HGA and 
BPA in section 116.150(c) submitted November 1, 1995. This Section 
temporarily removes the requirements relating to NO<INF>X</INF> 
emissions (as an ozone precursor) in these areas.
    Section 116.150(c) exempts NO<INF>X</INF> from otherwise applicable 
nonattainment area permitting requirements \7\ (except for 
NO<INF>X</INF> offsets). The requirements for obtaining NO<INF>X</INF> 
offsets continue to apply, and will be included in the source's permit. 
However, the requirement to obtain such offsets is held in abeyance 
until January 1, 1998.
---------------------------------------------------------------------------

    \7\ Section 116.150(c) exempts NO<INF>X</INF> from the 
application of lowest achievable emission rate, statewide compliance 
by all sources under common control with the applicant, and 
alternate site analysis, which are otherwise required by section 
116.150(a)(1), (2), and (4), respectively.
---------------------------------------------------------------------------

    Section 116.150(c) further requires a source to document any 
proposed increase of NO<INF>X</INF> equal to or greater than 40 TPY and 
submit documentation of netting calculations associated with the 
proposed increase, and the source must otherwise comply with the 
requirements of sections 116.150(a)(1)-(4). The requirements of 
sections 116.150(a)(1)-(4) are discussed in sections I.C and II.D of 
this preamble.
    Texas submitted further revisions to section 116.150(c) on April 
13, 1998. This submittal reinstates the NSR requirements for 
NO<INF>X</INF> in HGA and BPA, effective January 1, 1998. The submittal 
further provides that sources with NO<INF>X</INF> offsets in the HGA 
and BPA areas held in abeyance shall obtain the required NO<INF>X</INF> 
offsets no later than January 1, 2000.
    The provisions of section 116.150(b) and (c), submitted November 1, 
1995; and revisions submitted April 13, 1998, and March 16, 1999; are 
consistent with the NO<INF>X</INF> waivers approved by EPA for DFW, 
ELP, HGA, and BPA on November 28, 1994; April 19, 1995; and May 23, 
1997; pursuant to section 182(f) of the Act. The revisions submitted 
April 13, 1998, reinstate the NO<INF>X</INF> requirements in HGA and 
BPA consistent with the December 31, 1997, expiration of the 
NO<INF>X</INF> waiver in those areas. The revisions submitted March 16, 
1999, reinstate the NO<INF>X</INF> requirements in DFW.

D. Texas' NSR Provisions for Implementing Special Provisions for Ozone 
Nonattainment Area Permitting Under Sections 182(c)(6), (7), and (8).

    Sections 182(c)(6), (7), and (8) of the Act apply in serious and 
severe ozone nonattainment areas. \8\ \9\ Section 182(c)(6) sets forth 
procedures for determining whether a physical or operational change at 
an existing major stationary source would be subject to the 
nonattainment area permit requirements. Section 182(c)(7) and (8) 
establish special provisions for permitting sources if the source 
internally offsets its proposed increase resulting from a major 
modification. Following is a discussion of how Texas' regulations meet 
the provisions of sections 182(c)(6), (7), and (8) of the Act.
---------------------------------------------------------------------------

    \8\ Section 181(a) defines five area classifications for ozone 
based on ambient ozone concentrations (ozone design values). These 
five classifications (in ascending order of severity) are marginal, 
moderate, serious, severe, and extreme.
    A detailed description of the individual area classifications 
for ozone nonattainment areas is contained in the EPA's General 
Preamble for the Implementation of Title I of the 1990 Amendments.
    \9\ Subsection 182(c) of the Act, including paragraphs (6), (7), 
and (8) therein, sets forth special provisions applicable in serious 
ozone nonattainment areas. Subsection 182(d) of the Act incorporates 
the provisions of subsection 182(c) as applicable requirements for 
severe ozone nonattainment areas.
---------------------------------------------------------------------------

    Section 1 below addresses the de minimis rule in section 182(c)(6) 
of the Act. Section 2 addresses the special provisions in sections 
182(c)(7) and (8) of the Act.
1. The De Minimis Rule in Section 182(c)(6) of the Act
    a. What is the de minimis rule? Section 182(c)(6) of the Act 
applies in serious and severe ozone nonattainment areas. It specifies 
an approach for determining whether a proposed modification is subject 
to nonattainment NSR. \10\ It states that increased emissions of VOC 
(and presumably NO<INF>x</INF>) resulting from any modification of a 
major stationary source:
---------------------------------------------------------------------------

    \10\ A thorough analysis of the de minimis rule in section 
182(c)(6) and EPA's interpretations of this section is contained in 
the proposed NSR reform rulemaking published July 23, 1996 (61 FR 
38298).

``. . . shall not be considered de minimis for purposes of 
determining the applicability of the permit requirements established 
by this chapter unless the increase in net emissions of such air 
pollutant from such source does not exceed 25 tons when aggregated 
with all other net increases in emissions from the source over any 
period of 5 consecutive calendar years which includes the calendar 
---------------------------------------------------------------------------
year in which such increase occurred . . .''

    This provision changes the process for determining applicability at 
existing major sources as follows:
    <bullet> It changes the significance level for VOC emissions from 
40 TPY to ``greater than 25 TPY,'' i.e., 25 TPY or less is de minimis.
    <bullet> It specifies a slightly different ``contemporaneous'' 
period, and
    <bullet> It departs from the ``non-aggregation'' policy \11\ to 
require netting over the contemporaneous period in all instances where 
there is a net increase in emissions from the proposed modification 
standing alone.
---------------------------------------------------------------------------

    \11\ EPA's nonaggregation policy provides that a proposed 
modification resulting in a de minimis increase is not major. This 
applies when the proposed increase in emissions standing alone 
without considering any decreases associated with the proposed 
modification is less than the applicable significance threshold. See 
Table 4 for a list of the significance thresholds. In such case, a 
source does not consider previous contemporaneous emission increases 
and decreases to determine if its proposed project is major. This 
policy is discussed in detail in an EPA memorandum dated June 3, 
1983 entitled ``Net Emission Increase Under PSD'' from Sheldon 
Myers, Director, Office of Air Quality Planning and Standards. 
Section 182(c)(6) of the Act is a departure from this 
interpretation.
---------------------------------------------------------------------------

    Neither the Act itself nor the current Federal regulation defines 
what constitutes a ``net increase'' as provided in the de minimis rule. 
However, in the proposed NSR reform rulemaking (see footnote 10), we 
proposed a procedure for determining the net increase in emissions 
under section 182(c)(6) and applicability of the de minimis rule. Under 
this proposal, a source determines applicability of nonattainment new 
source review (NNSR) as follows:
    (1) It determines the ``increase in net emissions'' from the 
proposed modification. The net emissions from the proposed modification 
(referred to here as the ``project net'') is the sum of all proposed 
creditable emissions increases and decreases proposed at the source 
between: (A) the date of application for the modification and (B) the 
date the modification begins emitting. An increase or decrease is 
creditable if it meets the criteria described in 40 CFR 
51.165(a)(1)(vi).
    (2) If the project net is an emissions increase, then the source 
aggregates the project net emissions increase with all other ``net 
increases in emissions from the source'' over a period of five 
consecutive calendar years which includes the year in which the source 
increase occurs. We refer to this aggregation as the contemporaneous 
net. If the contemporaneous net increase is greater than 25 TPY, then 
the proposed modification is subject to NNSR. (The

[[Page 2566]]

``contemporaneous period'' is discussed in greater detail in section 
II.D.3.)
    b. How does the current Texas SIP address the de minimis rule? On 
September 27, 1995 (60 FR 49781), we approved revisions to Texas 
Chapter 116--``Control of Air Pollution by Permits for New Construction 
or Modification'' which included provisions pertaining to permitting 
major sources and major modifications in nonattainment areas. We 
approved these revisions based upon our determination that they satisfy 
the provisions of title I, part D of the Act.
    The Texas SIP currently incorporates the de minimis rule as 
codified in the Act. As approved, the de minimis rule applies in 
moderate, serious, and severe ozone nonattainment areas in Texas. Under 
the current SIP-approved rule when a source proposes a physical or 
operational change at an existing major source it must determine the 
contemporaneous net emissions increase. The source makes this 
determination by aggregating the proposed increase with all other 
creditable increases and decreases during the previous five calendar 
years, including the calendar year of the proposed change.
    A source must currently undergo NNSR if the contemporaneous net 
increase in VOC or NO<INF>X</INF> equals or exceeds 40 TPY in moderate 
ozone nonattainment areas or 25 TPY of VOC or NO<INF>X</INF> in serious 
and severe ozone nonattainment areas. See 30 TAC section 101.1 
(definition of ``de minimis threshold''), section 116.3(a)(7), and 
Table I in section 116.12.
    c. What changes did Texas make to its de minimis rule? On August 
31, 1993, Texas submitted a recodification of and revisions to Chapter 
116 to EPA. The recodification and revisions submitted April 13, 1998, 
include provisions which implement the de minimis rule.
    As submitted, Texas made two changes to section 116.150 (formerly 
section 116.3a(7)) which relate to the de minimis rule in section 
182(c)(6) of the Act. These changes are:
    (1) The proposed project triggers contemporaneous netting (the 
``netting trigger'') unless at least one of the following conditions 
are met:

--the proposed increase is less than five TPY without consideration of 
other decreases at the source, or
--the ``project net'' \12\ is zero or less.

    \12\ Texas submitted a revision on April 13, 1998, to include a 
provision to trigger contemporaneous netting on the basis of any 
increase in ``project net.''
---------------------------------------------------------------------------

    (2) Texas specifies a different contemporaneous time period over 
which a source may aggregate creditable increases and decreases to 
determine its contemporaneous net emission increase.
    On the basis of information gathered in 1995, we believe that the 
submitted regulation meets the de minimis requirements of section 
182(c)(6) of the Act, even with provisions that are not verbatim to the 
Act. The basis for this conclusion is discussed in the following 
sections of this preamble. Section 2 addresses the five TPY netting 
trigger and section 3 addresses the contemporaneous period.
2. Texas Five TPY Netting Trigger
    a. How does a source trigger contemporaneous netting under Texas' 
regulations? As submitted August 31, 1993, section 116.150(a) requires 
the de minimis threshold test (which includes contemporaneous netting) 
for all proposed VOC and NO<INF>x</INF> emission increases that equal 
or exceed five TPY in moderate, serious, and severe ozone nonattainment 
areas. On April 13, 1998, Texas submitted revisions to sections 116.12 
and 116.150 to include a second netting trigger based upon the 
``project net.'' The April 13, 1998, submittal also revised section 
116.12 to add a new definition of ``project net'' (section 116.12(16) 
consistent with EPA's policy as described in the NSR reform proposal. 
This revision provides a second netting trigger. A source may trigger 
contemporaneous netting on the basis of any increase in the ``project 
net.'' Texas defines the project net as the total increase in emissions 
resulting from a proposed physical or operational change at a 
stationary source minus any creditable source wide decreases proposed 
at the source between the date of application for the modification and 
the date the resultant modification begins emitting. If the project net 
is an increase, then the source aggregates the project net with all 
other creditable increases and decreases in emissions from the source 
over the contemporaneous period to determine the ``contemporaneous 
net.'' As revised, section 116.150 now provides that a proposed project 
triggers contemporaneous netting unless the project results in either: 
(1) less than five TPY increase from the proposed project or (2) no 
increase in project net.
    b. Does the five TPY netting trigger meet the Act? As adopted by 
Texas, the five TPY netting trigger is the sum of all increases which 
occur as the result of the proposed project without consideration 
(unlike the Federal counterpart) of any decreases. If these project 
increases equal or exceed five TPY, the source must perform 
contemporaneous netting, unless the project net is zero or less. For 
reasons below, we conclude that the Texas five TPY netting trigger 
meets the Act.
    Under Alabama Power Company v. Costle, 636 F.2d 323 (D.C. Cir. 
1979), the court held that we have the authority to recognize and 
exempt inconsequential or trivial increases except where Congress has 
unambiguously expressed an intention to preclude them. As discussed in 
the proposed NSR reform rulemaking, we have determined that the term 
``net increase'' in this context is ambiguous. We believe that Texas 
has met its burden of demonstrating that the netting trigger of a five 
TPY increase irrespective of decreases would ``yield a gain on trivial 
or no value,'' id. at 357 and is appropriate to exempt as de minimis. 
As explained below, the particular circumstances of this case 
demonstrate why this increase meets the Act's de minimis rule.
    In June 1995, we reviewed several permits issued by Texas in the 
Houston/Galveston area (a severe ozone nonattainment area) to assess 
Texas' five TPY netting trigger comparing it to the project net which 
triggers the requirement to perform contemporaneous netting. In this 
study, we evaluated which projects triggered contemporaneous netting 
under Texas' five TPY trigger to those which triggered contemporaneous 
netting based upon the project net increase. The study revealed that 
all projects which triggered contemporaneous netting under the project 
net would have triggered contemporaneous netting under the five TPY 
increase.
    The data reviewed in 1995 indicate that the five TPY netting 
trigger meets the Alabama Power test and thus the statutory project 
net. Facts which indicate this conclusion are discussed below.
    <bullet> The data show that it is unlikely that a source will be 
able to indefinitely schedule projects with less than five TPY 
increases. A project with a five TPY increase is an extremely small 
project. It would be impractical for a source to indefinitely avoid 
nonattainment NSR by constructing a series of projects less than five 
TPY.
    <bullet> If a source triggers the requirement to perform 
contemporaneous netting, it must include all creditable increases and 
decreases in the calculation of the contemporaneous net emissions 
increase. This includes any emission increases less than five TPY which 
did not undergo nonattainment NSR.
    <bullet> The increases are inherently conservative. This is evident 
when one examines the procedure for calculating the creditable 
increases of a particular change. This creditable increase is the 
change:


[[Page 2567]]


--From the old level of actual emissions
--To the new potential to emit (PTE) or the new allowable emission 
rate, whichever is lower.

This is known as the ``actual to potential'' method for determining the 
creditable increase. Typically, an emissions unit's actual emissions is 
less than its PTE because the unit does not actually operate at maximum 
production rate for an entire year. Thus the actual increase is less 
than the creditable increase. The creditable increase consequently 
represents a ``worst case'' scenario which the source cannot exceed 
without violating its permit.
    No matter how insignificant, the structure of the Texas program 
necessarily requires the State to quantify and track these increases 
for they remain perpetually within the contemporaneous window. Thus the 
State assures compliance with the NAAQS. Further, these increases are 
counted as minor source growth under section 173(a)(1)(A) of the Act.
    <bullet> Finally, we have approved a similar five TPY netting 
trigger in Louisiana's nonattainment SIP. Louisiana's nonattainment 
regulations apply in the Baton Rouge Area, a serious ozone 
nonattainment area. The de minimis provisions of section 182(c)(6) of 
the Act apply to this area. Louisiana's regulations likewise trigger 
contemporaneous netting whenever a major source of VOC equals or 
exceeds five TPY. We approved this regulation after careful 
consideration of all aspects of its regulations, including the five TPY 
netting trigger. See 62 FR 52948, published October 10, 1997.
    These facts form the basis for the conclusion that the five TPY 
netting trigger adopted by Texas is equivalent to and satisfies the 
requirement of section 182(c)(6) of the Act and therefore meets the 
Act.
3. Texas Definition of ``Contemporaneous Period'' under Section 
182(c)(6) of the Act
    a. What is the contemporaneous period in section 182(c)(6) of the 
Act? Section 182(c)(6) of the Act provides that a particular physical 
change or change in the method of operation is de minimis only if the 
increase in net emissions of VOC or NO<INF>X</INF> resulting from such 
project does not exceed 25 TPY when aggregated with all other net 
increases in emissions of VOC or NO<INF>X</INF> from the source over 
any period of five consecutive calendar years which includes the 
calendar year in which such increase occurred.
    b. What is the contemporaneous period in the current Texas SIP? The 
currently approved SIP addresses the applicable contemporaneous period 
in the definition of ``de minimis threshold'' in section 101.1 of the 
General Rules, Table I of section 116.12, and in section 116.3(a)(7) of 
Chapter 116. The SIP requires the following:
    --Section 101.1 defines the term ``de minimis threshold'' as an 
emission level determined by aggregating the proposed increase with all 
other creditable increases and decreases during the previous five 
calendar years, including the calendar year of the proposed change. The 
total of this aggregation is de minimis if it is less than the 
applicable major modification level (in TPY) for the specific 
nonattainment area.
    --Section 116.3(a)(7) requires

--a source to apply the de minimis threshold test to any proposed 
increase of VOC or NO<INF>X</INF> in moderate, serious, and severe 
ozone nonattainment areas.
--The de minimis test thresholds are the same as the major modification 
levels stated in Table I, but aggregated over the applicable five-year 
netting period.
--The source must evaluate past net increases even when the proposed 
increase is below the major modification level.

    --Table I of section 116.12 specifies the various classifications 
of nonattainment along with the associated emission levels which 
designate a major modification for those areas. Table I specifies the 
de minimis thresholds as 40 TPY of VOC in marginal and moderate ozone 
nonattainment areas and 25 TPY of VOC in serious and severe ozone 
nonattainment areas. We approved these provisions on September 27, 
1995.
    c. What changes did Texas make to its contemporaneous period? As 
submitted August 31, 1993, Texas defined the term ``contemporaneous 
period'' as described in the Table 7 below:

         Table 7. Description of Texas' Contemporaneous Periods
------------------------------------------------------------------------
                                Contemporaneous period   Contemporaneous
           Pollutant                    begins             period ends
------------------------------------------------------------------------
                   If source has PTE less than 250 TPY
------------------------------------------------------------------------
VOC...........................  Five years before       Date that new or
                                 commencement of         modified source
                                 construction.           begins
                                                         operation.
------------------------------------------------------------------------
NO<INF>X</INF>...........................  Latter of.............  Date that new or
                                --November 15, 1992,     modified source
                                 or.                     begins
                                --Five years before      operation.
                                 commencement of
                                 construction.
           If source has PTE equal to or greater than 250 TPY
------------------------------------------------------------------------
VOC...........................  The earlier of........  Date that new or
                                --Five years before      modified source
                                 commencement of         begins
                                 construction.           operation.
                                --November 15, 1992...
NO<INF>X</INF>...........................  November 15, 1992.....  Date that new or
                                                         modified source
                                                         begins
                                                         operation.
------------------------------------------------------------------------

    On April 13, 1998, Texas submitted a revision to definition of 
``contemporaneous period.'' Texas revised the definition to delete the 
start of the contemporaneous period at five years prior to commencement 
of construction for a source with a PTE of 250 TPY or greater. This 
change is administrative in that it recognizes that as of the date of 
the adoption of the revision (March 18, 1998), all permit applications 
would be submitted after November 15, 1997, and the applicable 
contemporaneous period would begin on November 15, 1992. This change 
does not affect applications which were submitted prior to November 15, 
1997, which must consider all creditable increases and decreases which 
occur five years prior to the commencement of construction.
    d. Does Texas' contemporaneous period meet the requirements of the 
Act? The Texas definition of

[[Page 2568]]

``contemporaneous period'' does not track but meets the Act. To 
determine whether Texas' definition ``contemporaneous period'' meets 
the Act, we reviewed several permit files for sources permitted with 
increases of VOC in Harris County, Texas (within the Houston/Galveston 
region, a severe ozone nonattainment area). Following a thorough review 
of the data, we have concluded that Texas' definition of 
``contemporaneous period'' requires the same netting period established 
in section 182(c)(6) of the Act and more.
    A source with a PTE greater than or equal to 250 TPY performs 
contemporaneous netting over a period which begins on the earlier of 
the date five years prior to commencement of construction or November 
15, 1992. The contemporaneous period ends when the proposed increase in 
emission actually occurs. After November 15, 1997, the beginning date 
of the contemporaneous period is ``tagged'' at November 15, 1992, for 
all complete permit applications submitted after November 15, 1997. 
Thus, after November 15, 1997, a proposed modification considers all 
creditable increases and decreases which occur between November 15, 
1992, and the date that the proposed increase in emissions occurs. This 
will result in a longer contemporaneous period than specified in 
section 182(c)(6) of the Act. This means that sources must demonstrate 
that the contemporaneous net is satisfied over an even longer period 
than that required by the Act.
    For sources greater than 250 TPY, the tagged netting window 
simplifies the netting process and facilitates a source's ability to 
plan for the future by providing stability in the increases and 
decreases that are creditable for netting. Such sources have numerous 
options available for expansion by shutting down older, inefficient, 
units or adding emission controls to the units. Furthermore, these 
sources undertake numerous modifications each year. These numerous 
modifications, combined with a ``moving'' five year contemporaneous 
period would make the netting exercise difficult because increases and 
decreases are continually moving in and out of the netting window.
    The 1995 evaluation indicated a trend towards reductions in net 
emissions as time passes. The data further indicate that all physical 
and operational changes which we reviewed would have netted out of 
review under both Texas' tagged contemporaneous period and under the 
five year contemporaneous period specified in section 182(c)(6) of the 
Act.
    This trend towards achieving lower net emissions indicates that the 
netting mechanism used by Texas is achieving beneficial results 
inherent in reducing emissions. The reductions occur as a result of 
lowering the significance threshold from 40 TPY to 25 TPY \13\ and from 
lowering the netting trigger (which triggers the requirement for a 
source to perform contemporaneous netting), from 40 TPY to five TPY.
---------------------------------------------------------------------------

    \13\ Prior to November 15, 1992, the applicable significance 
threshold for VOC was 40 TPY. See 40 CFR 51.165(a)(1)(x). The 
requirement to perform contemporaneous netting was triggered 
whenever a particular physical of operational change equaled or 
exceeded 40 TPY. The source would then add the proposed increase to 
all other contemporaneous increases and decreases to determine the 
net emissions increase. If the resulting net emissions increase was 
40 TPY or more, the proposed increase was subject to permitting 
requirements applicable in ozone nonattainment areas.
---------------------------------------------------------------------------

    In addition, the tagged contemporaneous period used by Texas is 
more conservative than the five year period in the Act. The following 
information illustrates the conservative nature of the tagged 
contemporaneous period:
    <bullet> The tagged contemporaneous period benefits the environment 
by encouraging emission reductions that would not otherwise occur. 
Whenever a source proposes a physical or operational change, it must 
demonstrate that its net emissions increase in emissions of VOC on 
NO<INF>X</INF> are below the applicable modification level in Table I 
of section 116.12. Otherwise it must undergo nonattainment review. A 
major source which undergoes several projects whose contemporaneous net 
emissions increase is less than 25 TPY does not undergo nonattainment 
review. Over time such source must demonstrate, with each physical or 
operational change, that the net emissions increase is less than the 
applicable modification level (Table I of section 116.12) over an 
expanding contemporaneous period which begins November 15, 1992. By 
retaining increases in the tagged contemporaneous period (which would 
otherwise drop out after five years) a source must continue to account 
for increases that did not undergo nonattainment review and were not 
offset through the nonattainment review permitting process. This 
growing data base of increases will necessarily provide incentive for a 
source to achieve additional reductions to net against these increases. 
This results in greater environmental benefits than would otherwise 
occur in the five year moving contemporaneous period required by the 
Act.
    <bullet> Decreases are more likely to be removed from the 
contemporaneous period than increases. There are many ways that 
decreases may be removed from creditability for netting. Examples of 
decreases which will drop out of the contemporaneous period, because 
they are no longer ``creditable'' are:

--A decrease that is subsequently used as reasonably available control 
technology.
--decreases used to offset increases which undergo NNSR
--decreases used in the demonstration of attainment of the national 
ambient air quality standard or in the demonstration of reasonable 
further progress. See 30 TAC 116.12(13) in Texas' rules and 40 CFR 
51.165(a)(1)(vi)(C)(3).

    Increases, however, may only be removed from consideration in 
subsequent netting if: (1) they undergo nonattainment permitting and 
(2) are offset at the appropriate ratio specified in Table I of section 
116.12.
    Consistent with the above discussion, we believe that the tagged 
contemporaneous period adopted by Texas meets the requirements of the 
Act. We request comments on this proposal to approve Texas tagged 
contemporaneous period for major sources with a PTE greater than 250 
TPY of VOC.
    For sources with a PTE less than 250 TPY, Texas adopted a 
contemporaneous period which begins five years prior to commencement of 
construction and ends when the proposed emission increase occurs. Texas 
adopted a ``moving'' contemporaneous period rather than the tagged 
contemporaneous period because these smaller sources do not have as 
many netting opportunities as the larger sources. The moving window 
provides smaller sources with greater flexibility for growth. The 
contemporaneous period is identical to the contemporaneous period 
specified in 40 CFR 52.21(b)(3)(ii) for determining applicability under 
the Federal regulations for prevention of significant deterioration of 
air quality. This contemporaneous period more closely approximates the 
contemporaneous period in section 182(c)(6) of the Act, which requires 
contemporaneous netting over a period of five consecutive calendar 
years.
    Our evaluation of data for several Texas sources indicated that all 
projects which netted out of nonattainment review using Texas' 
definition of ``contemporaneous period,'' would have netted out of 
review using the netting period in the Act. The Technical Support 
Document for today's proposal contains the data gathered by us and our 
evaluation thereof. We conclude that the

[[Page 2569]]

contemporaneous period adopted by Texas meets the Act.
    Texas further provides that for major sources of NO<INF>X</INF> in 
ozone nonattainment areas in which NO<INF>X</INF> is an ozone 
precursor, the contemporaneous period for NO<INF>X</INF> shall begin no 
earlier than November 15, 1992. In serious and severe ozone 
nonattainment areas, the contemporaneous period is different from the 
netting period in section 182(c)(6) of the Act. Prior to November 15, 
1997, Texas' definition will provide for a shorter contemporaneous 
period than the five consecutive calendar years specified in the Act. 
However, Texas recognized the need to incorporate a transition period 
because the Act does not require NO<INF>X</INF> to be regulated as an 
ozone precursor until after November 15, 1992.
    We believe that the conclusions made for VOC will hold equally well 
for the emissions of NO<INF>X</INF>. Earlier discussions herein 
illustrate that since November 15, 1992, a declining trend in the net 
increases of VOC emissions in ozone nonattainment areas. Factors which 
contribute to this trend are the lower significance threshold of 25 TPY 
and the five TPY netting trigger. We believe that this trend will hold 
true for net increases of NO<INF>X</INF> and well as for VOC. After 
November 15, 1997, NO<INF>X</INF> increases will be treated the same as 
VOC increases. At that time, the reasoning for proposing approval of 
the contemporaneous period for VOC will hold true for proposing to 
approve the contemporaneous period for NO<INF>X</INF>. For sources with 
a PTE of 250 TPY or more of NO<INF>X</INF>, the tagged contemporaneous 
period will continue to apply after November 15, 1997. As discussed 
earlier in this preamble, the tagged contemporaneous period will result 
in additional incentives for sources to reduce emissions of 
NO<INF>X</INF> than would otherwise occur in a moving five-year window. 
The trend towards lower emissions in an ozone nonattainment area should 
mitigate any affects caused by not including increases and decreases of 
NO<INF>X</INF> which occurred prior to November 15, 1992.
    For the reasons described above, we consider the definition of 
``contemporaneous period'' to be consistent with the Act and proposes 
to approve this definition as submitted. We request comments concerning 
Texas' definition of ``contemporaneous period.''
4. Special Modification Rules in Sections 182(c) (7) and (8) of the Act
    a. What does the Act require in sections 182(c)(7) and (8)? These 
sections establish special rules for a major stationary source located 
in a serious or severe ozone nonattainment area. These sections apply 
to a major source which undergoes a physical or operational change that 
is not considered de minimis under section 182(c)(6). These subsections 
offer sources options that may be more desirable than would otherwise 
apply. Specifically, sections 182(c)(7) and (8) allow a major source to 
internally offset its proposed increase of VOC or NO<INF>X</INF>\14\ at 
a ratio of 1.3 to 1. Obtaining this internal offset allows a source to:
---------------------------------------------------------------------------

    \14\ Section 182(f)(1) of the Act provides that requirements 
(which include the requirements of sections 182(c)(6), (7), and (8)) 
applicable for major stationary sources of VOC shall apply to major 
stationary sources of NO<INF>X</INF>, unless otherwise determined by 
the Administrator, based upon certain determinations related to the 
benefits or contribution of NO<INF>X</INF> control to air quality, 
ozone attainment, or ozone air quality. See section II.C.I of this 
preamble for further discussion of the requirements of section 
182(f)(1).
---------------------------------------------------------------------------

    <bullet> Avoid NSR entirely if the source emits, or has the 
potential to emit, less than 100 tpy of the offset pollutant under 
section 182(c)(7), or
    <bullet> Avoid application of Lowest Achievable Emission Rate if 
the source emits, or has the potential to emit, 100 tpy or more of the 
offset pollutant under section 182(c)(8).
    A summary of the provisions of sections 182(c)(7) and (8) is in 
Table 8 located in paragraph b below. Table 8 also compares Texas 
regulations with the Act. \15\
---------------------------------------------------------------------------

    \15\ A thorough analysis of the special rules in section 
182(c)(7) and(8) and EPA's interpretations of this section is 
contained in the proposed NSR reform rulemaking.
---------------------------------------------------------------------------

    b. What SIP revisions did Texas make to address Sections 182(c)(7) 
and (8)? On April 13, 1998, Texas submitted revisions to Section 
116.150 which implement the special rules in sections 182(c)(7) and (8) 
of the Act. Section 116.150 provides the following as shown in Table 8 
below:

               Table 8.--Description of Special Requirements for Permitting Modifications in Serious and Severe Ozone Nonattainment Areas
--------------------------------------------------------------------------------------------------------------------------------------------------------
        Potential to emit                   Section of Act                  State regulation              Provision of Act      Provisions of state rule
--------------------------------------------------------------------------------------------------------------------------------------------------------
Less than 100 TPY of VOC or NOX..  Sec.  182(c)(7)................  Sec.  116.150(a)(3)(A).........  Project is not a           NNSR is not required if
                                                                                                      modification subject to    the project increases
                                                                                                      NNSR if source elects to   are offset with
                                                                                                      internally offset the      internal offsets the
                                                                                                      same pollutant at an       same pollutant at a
                                                                                                      offset ratio of at least   ratio of at least 1.3
                                                                                                      1.3 to 1 the proposed      to 1.
                                                                                                      increase of VOC or NOX.
                                                                    Sec.  116.150(a)(1)............  Best available control     If a source elects to
                                                                                                      technology (BACT) is       use internal offsets,
                                                                                                      substituted for LAER, if   it can substitute BACT
                                                                                                      a source elects not to     for LAER, which is more
                                                                                                      use internal offsets.      stringent than required
                                                                                                                                 by the Act.
Greater than or equal to 100 TPY   Sec.  182(c)(8)................  Sec.  116.150(a)(3)(B).........  The requirements of LAER   Source can substitute
 of VOC or NOX.                                                                                       otherwise required by      BACT for LAER, if the
                                                                                                      section 173(a)(2) of the   project increases are
                                                                                                      Act do not apply, if the   offsetwith internal
                                                                                                      source elects to           offsets of the same
                                                                                                      internally offset the      pollutant at a ratio of
                                                                                                      same pollutant at 1.3 to   at least 1.3 to 1.
                                                                                                      1 such proposed increase
                                                                                                      of VOC or NOX<SUP>a</SUP>.
                                                                    Sec.  116.150(a)(3)(B).........  A source which elects to   Internal offsets used as
                                                                                                      avoid LAER by satisfying   described above can
                                                                                                      the provisions of          also be applied to
                                                                                                      section 182(c)(8) may      satisfy the offset
                                                                                                      use the 1.3 to 1           requirement.
                                                                                                      internal offset ratio in
                                                                                                      lieu of the general
                                                                                                      offset ratio.
--------------------------------------------------------------------------------------------------------------------------------------------------------
<SUP>a</SUP> Applies to a proposed increase of VOC or NOX from a any discrete operation, unit, or other pollutant emitting activity at the source.


[[Page 2570]]

    c. Does Texas' regulation satisfy sections 182(c)(7) and (8) of the 
Act? We have evaluated the provisions of sections 116.150(a)(1) and 
(3)(A) and (B) which Texas adopted to implement the requirements of 
section 182(c)(7) and (8) of the Act. We have determined that these 
provisions of the State's regulations implement the special provisions 
of the Act only for project increases which are offset internally at an 
offset ratio of 1.3 to 1. These provisions of section 116.150, 
described in paragraph b of this preamble above, apply to any major 
source which internally offsets its proposed project increase at a 
ratio of at least 1.3 to 1. The project increase includes any increase 
resulting from any discrete operation, unit, or other pollutant 
emitting activity at the source that is part of the proposed project. 
These provisions are consistent with the Federal interpretation of 
section 182(c)(7) and (8) as discussed in paragraph a, above.

E. Other Revisions Affecting NSR Permitting in Nonattainment Areas

    Texas submitted revisions to its definitions which apply to its 
permitting in nonattainment areas. Specifically Texas submitted 
definitions for:

``de minimis threshold test''--new definition
``major modification''--revised definition
``net emissions increase''--revised definition
``offset ratio''--new definition
``potential to emit''--revised definition
``stationary source''--new definition

    The evaluation of these definitions is discussed below.
1. Definition of ``de minimis threshold test''
    A new definition of ``de minimis threshold test'' in section 116.12 
replaces the former definition of ``de minimis threshold.'' The former 
definition of ``de minimis threshold'' defined the term as an emissions 
level, as determined by aggregating the proposed increase with all 
other creditable increases and decreases \16\ during the previous five 
calendar years, including the calendar year of the proposed change 
which equals the major modification level for the specific 
nonattainment area. Texas now defines ``de minimis threshold test'' 
consistent with the de minimis rule. Section II.D.1-2 of this preamble 
contains further discussion of the de minimis rule. To summarize, the 
definition requires a source to add the proposed increase with all 
other creditable emission increases and decreases during the 
contemporaneous period, and compare the sum with the major modification 
column in Table I (following the definition of ``major modification'') 
for the specific nonattainment area. A major source must undergo 
nonattainment review if the sum exceeds the major modification level in 
Table I.
---------------------------------------------------------------------------

    \16\ To be creditable, an increase or decrease must meet the 
criteria in the definition of ``net emissions increase'' in section 
116.12. The definition of ``net emissions increase'' is discussed in 
section II.E.3 of this preamble.
---------------------------------------------------------------------------

    The procedure described above is the same as the procedure for 
determining ``net emissions increase'' in 40 CFR 51.165(a)(vi). This 
section of the Federal rule provides that the net emissions increase is 
determined by adding the increase in actual emissions from a particular 
physical change or change in the method of operation at a stationary 
source with all other increases and decreases in actual emissions at 
the source that are contemporaneous with the particular change and are 
otherwise creditable. See 40 CFR 51.165(a)(vi)(A)(1) and (2).
    Texas submitted the definition of ``de minimis threshold test'' on 
August 31, 1993, and minor revisions thereto on April 13, 1998, to 
clarify that the definition only applies to contemporaneous netting in 
nonattainment areas. We determine that the definition of ``de minimis 
threshold test'' is consistent with section 182(c)(6) of the Act.
2. Definition of ``Major Modification''
    Texas recodified its definition of ``major modification'' from 
section 101.1 of its General Rules to section 116.12, and made several 
revisions thereto. The former rule defined the term as any physical 
change or change in the method of operation of a facility/stationary 
source which causes a net increase in its PTE, by the amounts in Table 
I, of VOC or any air contaminant for which a national ambient air 
quality standard has been established. The former definition was 
inconsistent with Texas' definition of ``net emissions increase'' in 
section 116.12 which requires such increase to be calculated on an 
actual emissions basis. It was also not consistent with the Federal 
definitions of ``major modification'' and ``net emissions increase'' in 
40 CFR 51.165(a)(1)(ii) and (vi), respectively. The Federal definition 
bases major modifications upon a net increase in actual emissions.
    Texas revised its definition of ``major modification'' to clarify 
that a major modification is based upon a net emissions increase in 
actual emissions, in order to be consistent with its definition of 
``net emission increase'' and to ensure consistency with the Federal 
definition of ``major modification.'' Texas also clarified that a 
physical change or change in the method of operation at a source not 
qualifying as an existing major stationary source is subject to 
nonattainment permitting only if the increase by itself equals or 
exceeds the emissions specified in the major source column in Table I.
    The definition of ``major modification'' also includes Table I, 
which specifies the various classifications of nonattainment along with 
the associated emission levels which designate a major modification for 
those areas. On September 27, 1995, we approved Table I, as submitted 
August 31, 1993. See 60 FR 49781. On July 18, 1996; April 13, 1998; and 
March 16, 1999; Texas submitted revisions to Table I to make it 
consistent with the section 182(f) NOx waivers that we approved.\17\ 
The July 18, 1996 submittal revised the Table as follows:
---------------------------------------------------------------------------

    \17\ See section II.C of this preamble for further discussion on 
the NO<INF>X</INF> waivers approve in Texas under section 182(f) of 
the Act.
---------------------------------------------------------------------------

    (1) Changed the pollutant designation for the line for ozone 
nonattainment areas from ``VOC/NO<INF>X</INF>'' to ``ozone,'' and added 
a new line for NO<INF>X</INF>, and specified a the major source 
threshold, major modification significance level, and offset ratio for 
NO<INF>X</INF> respectively at ``100 TPY'', ``40 TPY'', and ``1.00 to 
1.''
    (2) Clarified that the Table only applies to Texas nonattainment 
area designations specified in 40 CFR 81.344,
    (3) Clarified that the major modification threshold applies only to 
existing major sources and applicability of nonattainment area NSR is 
evaluated after netting, unless that source chooses to apply 
nonattainment NSR directly to the project,
    (4) Clarified that VOC and NO<INF>X</INF> are precursors to ozone 
and are quantified individually. In counties which have approved 
exemptions for NO<INF>X</INF> under section 182(f) of the Act, only VOC 
is precursor to ozone,
    (5) Removed a reference to Victoria County as county designated as 
nonattainment for ozone but not classified because of incomplete 
data.\18\
---------------------------------------------------------------------------

    \18\ On November 15, 1990, the CAA Amendments of 1990 were 
enacted (Public Law 101-549, 104 Stat. 2399, codified at 42 U.S.C. 
7401-7671q). The ozone nonattainment designation for Victoria County 
continued by operation of law according to section 107(d)(1)(C)(i) 
of the Act, as amended in 1990. See 56 FR 56694, November 6, 1991. 
Since the State had not yet collected the required three years of 
ambient air quality data necessary to petition for redesignation to 
attainment, the nonattainment area was further designated as 
nonclassifiable incomplete data for ozone. On July 27, 1994, Texas's 
submitted a maintenance plan for Victoria County and a request to 
redesignate Victoria County to attainment. On March 7, 1995, we 
approved the maintenance plan and redesignated Victoria County from 
ozone nonattainment to attainment. See 60 FR 12453.

---------------------------------------------------------------------------

[[Page 2571]]

    (6) Added a provision that NO<INF>X</INF> sources granted the 
temporary exemption and authorized under section 116.211 of this title 
(relating to Standard Exemption List) shall require registration for 
increases in NO<INF>X</INF> over the major source/major modification 
level in Table I.
    On April 13, 1998, Texas submitted a revision to Table 1 to remove 
the provision requiring the registration of NO<INF>X</INF> sources 
granted the temporary exemption and authorized under section 116.211 of 
this title (relating to Standard Exemption List). This provision is no 
longer necessary with the expiration of the temporary NO<INF>X</INF> 
waivers. On March 16, 1999, Texas submitted further revisions to Table 
I consistent with the reinstatement of NO<INF>X</INF> as an ozone 
precursor in the Dallas-Fort Worth ozone nonattainment area. The 
changes to Table I as submitted April 13, 1998, and March 16, 1999, are 
discussed in section II.C of this preamble.
    We have reviewed these changes and determine that these changes to 
the definition of ``major modification'' and to Table I are consistent 
with the Act.
3. Definition of ``Net Emissions Increase''
    Texas recodified the definition of ``net emissions increase'' to 
section 116.12 and formatted the definition consistent with the 
definition in 40 CFR 51.165(a)(1)(vi). Texas continues to define ``net 
emissions increase'' as the sum of the total increase in actual 
emissions from a particular physical change or change in the method of 
operation at a stationary source, plus any source wide creditable 
contemporaneous increases and decreases minus any source wide 
creditable contemporaneous decreases.
    In the former definition, Texas specified that an increase or 
decrease was creditable if it occurred within a reasonable time (to be 
specified by the permitting authority) before the date that the 
increase from a particular change occurs. In ozone nonattainment areas, 
Texas specified a period of five consecutive calendar years (including 
the calendar year of the proposed increase plus the four preceding 
calendar years) in former section 116.3(a)(7) to determine if a 
particular increase in emissions of VOCS or NO<INF>X</INF> is subject 
to nonattainment review. The provisions for permitting major sources 
and modifications in areas designated nonattainment for criteria 
pollutants other than ozone (former section 116.3(a)(10)) did not 
specify a specific time frame in which emissions increases and 
decreases would be considered to be contemporaneous with a particular 
change.
    In the revised definition, Texas specified that the increase or 
decrease must actually occur within the contemporaneous period, which 
Texas has defined separately.\19\ We consider the submitted definition 
of ``net emissions increase'' to be consistent with the requirements in 
40 CFR 51.165(1)(vi) and with the Act.
---------------------------------------------------------------------------

    \19\ Texas definition of ``contemporaneous period'' is in 
section 116.12(7). We discuss the definition of ``contemporaneous 
period'' in section II.D.3 of this preamble.
---------------------------------------------------------------------------

4. Definition of ``Offset Ratio''
    Texas adopted the definition of ``offset ratio'' to satisfy section 
173(a)(1)(A) of the Act. The provisions of this definition were 
previously included in sections 116.3(a)(7)(C) and 116.3(a)(10)(D). In 
the recodified regulations, the provisions of sections 116.3(a)(7)(C) 
and 116.3(a)(10)(D), were incorporated into a new sections 
116.150(a)(3) and 116.151(c), respectively. In the recodification, 
Texas removed specific language which defined ``offset ratio'' from 
sections 116.3(a)(7)(C) and 116.3(a)(10)(D) and referenced the offset 
ratios in Table I of section 116.12 (part of the definition of ``major 
modification''). Texas then added the new definition of ``offset 
ratio'' and defined it as ratio of total actual reductions of emissions 
to the total allowable emissions increases of such pollutant from the 
new source. The definition references the minimum offset ratios in 
Table I under the definition of major modification.
    On April 13, 1998, Texas submitted a revision to the definition of 
``offset ratio'' and added a sentence which clarifies that creditable 
offsets must be enforceable, permanent, quantifiable through a 
replicable methodology, real, and surplus. The revision further 
specified that the reduction must occur after January 1, 1990, must be 
represented in the 1990 and subsequent emissions inventory, and not 
relied upon in issuance of any previous nonattainment permit or permit 
issued under regulations for the prevention of significant 
deterioration. This definition is consistent with section 173(a)(1) of 
the Act.
5. Definition of ``Potential to Emit''
    Texas recodified the definition of ``potential to emit'' from 
section 101.1 of its General Rules into section 116.12, and revised the 
term to match the definition as presently defined in 40 CFR 
51.165(a)(1)(iii). The definition as revised does not conflict with the 
federal definition or with the Act.
6. Definition of ``Stationary Source''
    Texas adopted a new definition of ``stationary source'' consistent 
with the term as defined in 40 CFR 51.165(a)(1)(i). The submitted 
definition does not conflict with the Federal definition or with the 
Act.

III. Individual SIP Ssubmittals Acted Upon in This Document

A. General Discussion

    The Governor of Texas submitted revisions to the Texas SIP to us 
relating to the permitting of new and modified sources in nonattainment 
areas. We are proposing to approve revisions submitted August 31, 1993; 
November 1, 1995; July 18, 1996; April 13, 1998; and March 16, 1999. 
The basis for our proposed approval is discussed in section II of this 
preamble.

B. Summary of Each Individual SIP Submittal

    Table 9 below summarizes each individual SIP submittal that we are 
proposing to approve in today's action.

                               Table 9. Summary of Each Individual SIP Submittal
----------------------------------------------------------------------------------------------------------------
         Date adopted by state                   Date submitted to EPA            Description of SIP submittal
----------------------------------------------------------------------------------------------------------------
August 16, 1993.......................  August 31, 1993.......................  Provisions of submittal relating
                                                                                 to permitting under part D of
                                                                                 the Act. This includes:
                                                                                --Section 116.12,
                                                                                --Section 116.150, and
                                                                                --116.151, and
                                                                                --Section 116.170(1) and (3).

[[Page 2572]]

 
October 26, 1995......................  November 1, 1995......................  Revisions to Section 116.150 to
                                                                                 address nonattainment
                                                                                 permitting requirements for NO<INF>X</INF>
                                                                                 (as an ozone precursor) in the
                                                                                 Dallas-Fort Worth, El Paso,
                                                                                 Houston-Galveston, and Beaumont-
                                                                                 Port Arthur ozone nonattainment
                                                                                 areas consistent with waivers
                                                                                 approved by EPA pursuant to
                                                                                 section 182(f) of the Act.
May 15, 1996..........................  July 18, 1996.........................  Revisions to Table I of Section
                                                                                 116.12 to conform to NO<INF>X</INF>
                                                                                 waivers approved by EPA
                                                                                 pursuant to section 182(f) of
                                                                                 the Act.
March 18, 1998........................  April 13, 1998........................  Revisions to Sections 116.12,
                                                                                 Table I of Section 116.12, and
                                                                                 116.150, and 116.151. Texas
                                                                                 revised the SIP to reinstate
                                                                                 NO<INF>X</INF> as an ozone precursor in
                                                                                 the Houston-Galveston and
                                                                                 Beaumont-Port Arthur ozone
                                                                                 nonattainment areas.
February 24, 1999.....................  March 16, 1999........................  Revisions to Chapter 116, which
                                                                                 reinstate the requirement to
                                                                                 review NO<INF>X</INF> as an ozone
                                                                                 precursor in the Dallas-Fort
                                                                                 Worth ozone nonattainment area.
----------------------------------------------------------------------------------------------------------------

C. EPA Action

    For the reasons stated herein, we have determined that each of the 
above SIP submittals or revisions to 30 TAC Chapter 116 satisfies the 
requirements of Title I of the Act. Sections II and III of this 
preamble and the TSD for this proposed action contain detailed 
evaluations of each of the sections submitted by the State of Texas and 
the basis for EPA's proposal to approve of these sections.

IV. Request for Public Comments

    We are requesting comments on all aspects of the requested SIP 
revision and our proposed rulemaking action. Comments received by date 
indicated above will be considered in the development of EPA's final 
rule.

V. Administrative Requirements

A. Executive Order 12866

    The Office of Management and Budget (OMB) has exempted this 
regulatory action from Executive Order 12866, entitled ``Regulatory 
Planning and Review.''

B. Executive Order 13132

    Executive 13132, entitled ``Federalism'' (64 FR 43255, August 10, 
1999) revokes and replaces Executive Order 12612, ``Federalism,'' and 
Executive Order 12875, ``Enhancing the Intergovernmental Partnership.'' 
Executive Order 13132 requires EPA to develop an accountable process to 
ensure ``meaningful and timely input by State and local officials in 
the development of regulatory policies that have federalism 
implications.'' ``Policies that have federalism implications'' is 
defined in the Executive Order to include regulations that have 
``substantial direct effects on the States, on the relationship between 
the national government and the States, or on the distribution of power 
and responsibilities among the various levels of government.'' Under 
Executive Order 13132, EPA may not issue a regulation that has 
federalism implications, that imposes substantial direct compliance 
costs, and that is not required by statute, unless the Federal 
government provides the funds necessary to pay the direct compliance 
costs incurred by State and local governments, or EPA consults with 
State and local officials early in the process of developing the 
proposed regulation. The EPA also may not issue a regulation that has 
federalism implications and that preempts State law unless the Agency 
consults with State and local officials early in the process of 
developing the proposed regulation.
    This proposed rule will not have substantial direct effects on the 
States, on the relationship between the national government and the 
States, or on the distribution of power and responsibilities among the 
various levels of government, as specified in Executive Order 13132, 
because it merely approves a State rule implementing a Federal 
standard, and does not alter the relationship or the distribution of 
power and responsibilities established in the Act.

C. Executive Order 13045

    Executive Order 13045, entitled ``Protection of Children from 
Environmental Health Risks and Safety Risks'' (62 FR 19885, April 23, 
1997), applies to any rule that: (1) is determined to be ``economically 
significant'' as defined under Executive Order 12866, and (2) concerns 
an environmental health or safety risk that EPA has reason to believe 
may have a disproportionate effect on children. If the regulatory 
action meets both criteria, the Agency must evaluate the environmental 
health or safety effects of the planned rule on children, and explain 
why the planned regulation is preferable to other potentially effective 
and reasonably feasible alternatives considered by the Agency.
    The EPA interprets Executive Order 13045 as applying only to those 
regulatory actions that are based on health or safety risks, such that 
the analysis required under section 5-501 of the Order has the 
potential to influence the regulation. This proposed rule is not 
subject to Executive Order 13045 because it approves a State program.

D. Executive Order 13084

    Under Executive Order 13084, EPA may not issue a regulation that is 
not required by statute, that significantly or uniquely affects the 
communities of Indian tribal governments, and that imposes substantial 
direct compliance costs on those communities, unless the Federal 
government provides the funds necessary to pay the direct compliance 
costs incurred by the tribal governments, or EPA consults with those 
governments. If EPA complies by consulting, Executive Order 13084 
requires EPA to provide to the OMB, in a separately identified section 
of the preamble to the rule, a description of the extent of EPA's prior 
consultation with representatives of affected tribal governments, a 
summary of the nature of their concerns, and a statement supporting the 
need to issue the regulation. In addition, Executive Order 13084 
requires EPA to develop an effective process permitting elected 
officials and other representatives of Indian tribal governments ``to 
provide meaningful and timely input in the development of regulatory 
policies on matters that significantly or uniquely affect their 
communities.''
    Today's rule does not significantly or uniquely affect the 
communities of Indian tribal governments. This action does not involve 
or impose any requirements that affect Indian tribes. Accordingly, the 
requirements of section 3(b) of Executive Order 13084 do not apply to 
this rule.

[[Page 2573]]

E. Regulatory Flexibility Act

    The Regulatory Flexibility Act, 5 U.S.C. 600 et seq., generally 
requires an agency to conduct a regulatory flexibility analysis of any 
rule subject to notice and comment rulemaking requirements unless the 
agency certifies that the rule will not have a significant economic 
impact on a substantial number of small entities. Small entities 
include small businesses, small not-for-profit enterprises, and small 
governmental jurisdictions. This proposed rule will not have a 
significant impact on a substantial number of small entities because 
SIP approvals under section 110 and subchapter I, part D of the Act do 
not create any new requirements but simply approve requirements that 
the State is already imposing. Therefore, because the Federal SIP 
approval does not create any new requirements, I certify that this 
action will not have a significant economic impact on a substantial 
number of small entities. Moreover, due to the nature of the Federal-
State relationship under the Act, preparation of a flexibility analysis 
would constitute Federal inquiry into the economic reasonableness of 
state action. The Act forbids EPA to base its actions concerning SIPs 
on such grounds. See Union Electric Co. v. U.S. EPA, 427 U.S. 246, 255-
66 (1976); 42 U.S.C. 7410(a)(2).

F. Unfunded Mandates

    Under section 202 of the Unfunded Mandates Reform Act of 1995, 
signed into law on March 22, 1995, EPA must prepare a budgetary impact 
statement to accompany any proposed or final rule that includes a 
Federal mandate that may result in estimated annual costs to State, 
local, or tribal governments in the aggregate; or to private sector, of 
$100 million or more. Under section 205, EPA must select the most cost-
effective and least burdensome alternative that achieves the objectives 
of the rule and is consistent with statutory requirements. Section 203 
requires EPA to establish a plan for informing and advising any small 
governments that may be significantly or uniquely impacted by the rule.
    The EPA has determined that the approval action promulgated does 
not include a Federal mandate that may result in estimated annual costs 
of $100 million or more to either State, local, or tribal governments 
in the aggregate, or to the private sector. This Federal action 
approves pre-existing requirements under State or local law, and 
imposes no new requirements. Accordingly, no additional costs to State, 
local, or tribal governments, or to the private sector, result from 
this action.

List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, Carbon Monoxide, 
Hydrocarbons, Incorporation by reference, Lead, Nitrogen oxides, Ozone, 
Particulate matter, Sulfur oxides, Volatile organic compounds.

    Authority:  42 U.S.C. 7401 et seq.

    Dated: December 16, 1999.
Jerry Clifford,
Acting Regional Administrator, Region 6.
[FR Doc. 00-1081 Filed 1-14-00; 8:45 am]
BILLING CODE 6560-50-P


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