ENVlRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R06-0AR-2005-TX-0025; FRL-__--'

Approval and Promulgation ofImplementation Plans; Texas; Revisions to the New

Source Review (NSR) State Implementation Plan (SIP); Modification of Existing

Qualified Facilities Program and General Definitions

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final Rule.

SUMMARY: EPA is taking final action to disapprove revisions to the SIP submitted by

the State ofTexas that relate to the Modification of Existing Qualified Facilities (the

Qualified Facilities Program or the Program). EPA is disapproving the Texas Qualified

Facilities Program because it does not meet the Minor NSR SIP requirements nor does it

meet the NSR SIP requirements for a substitute Major NSR SIP revision.

EPA is also approving three definitions that are severable from the Qualified

Facilities submittals. These three definitions we are approving are, "grandfathered

facility," "maximum allowable emission rate table (MAERT)," and "new facility."

Moreover, we are making an administrative correction to the SIP-approved definition of

"facility."

We are taking this action under section 110, part C, and part D ofthe Federal

Clean Air Act (the Act or CAA).

,
2

DATES: This rule is effective on [INSERT DATE 30 DAYS AFTER

PUBLICATION IN THE FEDERAL REGISTER].

ADDRESSES: EPA has established a docket for this action under Docket ID No. EPAR06-0AR-2005-TX-0025. All documents in the docket are listed on the

www.regulations.gov web site. Although listed in the index, some information is not

publicly available, e.g., confidential business information or other information whose

disclosure is restricted by statute. Certain other material, such as copyrighted 'material, is

not placed on the Internet and will be publicly available only in hard copy form. Publicly .

available docket materials are available either electronically through

www.regulations.gov or in hard copy at the Air Permits Section (6PD-R), Environmental

Protection Agency, 1445 Ross Avenue, Suite 700, Dallas, Texas 75202~2733. The file

will be made available by appointment for public inspection in the Region 6 FOIA

Review Room between the hours of 8:30am and 4:30pm weekdays except for legal

holidays. Contact the person listed in the FOR FURTHER INFORMATION

CONTACT paragraph below to make an appointment. Ifpossible, please make the

appointment at least two working days in advance of your visit. There will be a 15 cent

per page fee for making photocopies of documents. On the day ofthe visit, please check

in at the EPA Region 6 reception area at 1445 Ross Avenue, Suite 700, Dallas, Texas.
3

The State submittal, which is part ofthe EPA record, is also available for public

inspection at the State Air Agency listed below during official business hours by

appointment:

Texas Commission on Environmental Quality, Office ofAir Quality,

12124 Park 35 Circle, Austin, Texas 78753.

FOR FURTHER INFORMATION CONTACT: Mr. Stanley M. Spruiell, Air Permits

Section (6PD-R), Environmental Protection Agency, Region 6, 1445 Ross Avenue, Suite

700, Dallas, Texas 75202-2733, telephone (214) 665-7212; fax number 214-665-7263; email address spruiell.stanley@epa.gov.

SUPPLEMENTARY INFORMATION: Throughout this document, the following

terms have the meanings described below:

• "we," "us," and "our" refer to EPA.

• "Act" or "CAA" means Federal Clean Air Act.

• "40 CFR" means Title 40 ofthe Code of FederalRegulations - Protection of

Environment.

• "SIP" means State Implementation Plan as established under section 110 ofthe

Act.

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

and regulatory programs that regulate the construction and modification of
4

stationary sources as provided under CAA section llO(a)(2)(C), CAA Title I,

parts C and D, and 40 CFR 51.160 through 51.166..

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

51.160.

• "Major NSR" means any new or modified source that is subject to NNSR and/or

PSD.

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

part D ofthe Act and 40 CFR 51.165.

• . "PSD" means prevention ofsignificant deterioration of air quality established

under Title I, section 110 and part C ofthe Act and 40 CFR 51.166.

• "Program" means the SIP revision submittals from the TCEQ concerning the

Texas Qualified Facilities Program.

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

CFR part 50.

Table of Contents

1. What Action is EPA Taking?

II. What Submittals is EPA Taking No Action On?

A. Subparagraph (F) under the definition of "federally enforceable"

B. Definition of "best available control technology (BACT)"

C. Subparagraphs (A) and (B) ofthe submitted definition of "modification of

existing facility"
5

D. Subparagraph (G) ofthe submitted definition of "modification of existing

facility"

E. Trading Provision in 30 TAC 116.116(t)

III. What is the Background for this Action?

A. Summary of Our Proposed Action

B. Summary ofthe Submittals Addressed in this Final Action

C. Other Relevant Actions on the Texas Permitting SIP Revision Submittals

IV. What are the Grounds for this Disapproval Action ofthe Texas Qualified

Facilities Program?

A. Why the Qualified Facilities Program Submittal is Unclear Whether It Is for a

Major or Minor NSR SIP Revision

B. Why the Submitted Texas Qualified Facilities Program is Not Approvable as a

Substitute Major NSR SIP Revision

C. Why the Submitted Texas Qualified Facilities Program is Not Approvable as a

Minor NSR SIP Revision

D. Definition of "facility"

V. Response to Comments

A. General Comments

B. Comment that this Action is Inconsistent with the CAA

C. Comments Addressing Whether the Qualified Facilities Rules Allow

Sources to "Net Out" ofMajor and Minor NSR through Rules that Are

Not Adequate to Protect the NAAQS and State Control Strategies
6

D. Comments Addressing Whether the Qualified Facilities Rules are

Practically Enforceable

E. Comments Addressing Whether the Qualified Facilities Rules Meet

Federal Requirements for Major NSR

F. Comments Addressing Whether the Qualified Facilities Rules Meet

Federal Requirements for Minor NSR

O. Comments Addressing Whether Existing Qualified Facilities Have

Undergone an Air Quality Analysis

H. Comments on the Definitions of "Grandfathered Facility," "Maximum

Allowable Emission Rate Table," and "New Facility"

1. Comments on the Definitions of "Actual Emissions," "Allowable

Emissions," "Modification ofExisting Facility" at (E), and "Qualified

Facility"

J. Comments on the Definition of "Best Available Control Technology"

("BACT")

K. Comments on Severable Portions ofthe Definition of "Modification of

Existing Facility" at 30 TAC 116.10(l1)(A) and (B)

L. Comments on the Definition of Severable Subsection of "Modification of

Existing Facility" at 30 TAC 116.10(11)(0)

M. Comments on the Reinstatement ofthe Previously Approved Definition of

"Facility"
7

N. Comments on the Definition ofthe Term "Air Quality Account Number"

O. Comments on Whether the Qualified Facilities Rules Meet NSR Public

Participation Requirements

VI. Final Action

VII. Statutory and Executive Order Reviews

I. What Action is EPA Taking?

EPA is taking final action to disapprove the Texas Qualified Facilities Program,

as submitted by Texas on March 13, 1996, and July 22, 1998, in Title 30 ofthe Texas

. Administrative Code (30 TAC) at 30 TAC Chapter 116 - Control ofAir Pollution by

Permits for New Construction or Modification. This includes the following regulations

under Chapter 116: 30 TAC 116.116(e), 30 TAC 116.117,30 TAC 116.118, and the

following definitions under 30 TAC 116.10 -- General Definitions: 30 TAC 116.1O(1)-

definition of "actual emissions," 30 TAC 116.10(2) - definition of "allowable

emissions," 30 TAC 116.1O(11)(E) under the definition of "modification of existing

facility," and 30 TAC 116.10(16) - definition of "qualified facility." These regulations

and definitions do not meet the requirements ofthe Act and EPA's NSR regulations. It is

EPA's position that none ofthese identified elements for the submitted Qualified

Facilities Program is severable from each other.
8

Secondly, in an action separate from the above action on the submitted Texas

Qualified Facilities Program, we are approving the following severable definitions: 30

TAC 116.10(8) - definition of "grandfathered facility," 30 TAC 116.1O( 10) - definition

of "maximum allowable emission rate table (MAERT)," and 30 TAC 116.10(12)-

definition of "new facility." It is EPA's position that these definitions are severable from

those in the submitted Texas Qualified Facilities Program; moreover, each is severable

from each other.

EPA proposed the above actions on September 23,2009 (74 FR 48450). We

. accepted comments from the public on this proposal from September 23, 2009, until

November 23, 2009. A summary ofthe comments received and our evaluation thereof is

discussed in section V below. In the proposal and in the Technical Support Document

(TSD), we described our basis for the actions identified above. The reader should refer to

the proposal, the TSD, section IV ofthis preamble, and the Response to Comments in

section V ofthis preamble for additional information relating to our final action.

We are disapproving the submitted Texas Qualified Facilities Program as not

meeting the requirements for a substitute Major NSR SIP revision. Our grounds for

disapproval as a substitute Major NSR SIP revision include the following:

• it is not clearly limited to Minor NSR thereby allowing major modifications to

occur without a Major NSR permit;
9

• it has no regulatory provisions clearly prohibiting the use ofthis Program from

circumventing the Major NSR SIP requirements thereby allowing changes at existing

facilities to avoid the requirement to obtain preconstruction permit authorizations for

projects that would otherwise require a Major NSR preconstruction permit;

• it does not require that first an applicability determination be made whether the

modification is subject to Major NSR thereby exempting new major stationary sources

and major modifications from the EPA Major NSR SIP requirements;

• it does not include a demonstration from the TCEQ, as required by 40 CFR

51.166(a)(7)(iv), showing how the use of "modification" is at least as stringent as the

definition of "modification" in the EPA Major NSR SIP program

• it does not include the requirement to make Major NSR applicability

determinations based on actual emissions and on emissions increases and decreases

(netting) that occur within a major stationary source;

• it fails to meet the statutory and regulatory requirements for a SIP revision;

• it is not consistent with applicable statutory and regulatory requirements as

interpreted in EPA policy and guidance on SIP revisions; and

• EPA lacks sufficient a,:,ailable information to determine that the requested

relaxation to the Texas Major NSR SIP will not interfere with any applicable requirement

concerning attainment and reasonable further progress (RFP), or any other applicable

requirement ofthe Act.

In addition to the failures to protect Major NSR SIP requirements, EPA cannot

find that the submitted Program, as an exemption to the State's Minor NSR SIP program,
10

will ensure noninterference with NAAQS attainment, and there will not be a violation of

applicable portions ofa Texas SIP control strategy, as required by section 110(a)(2)(D)

and 40 CFR 51.160(a)-(b). EPA cannot approve the exempting of certain modifications

from obtaining a Minor NSR SIP permit as part ofthe Texas Minor NSR SIP because the

Act and EPA regulations are not met and the State has not shown that the sources will

have only a de minimis effect. The Program fails to include legally enforceable

procedures to ensure that the State will not permit a modification that will violate the

control strategies or interfere with NAAQS attainment. Our grounds for disapproval as a

Minor NSR SIP revision include the following:

• it is not clearly limited to Minor NSR thereby allowing major modifications to

occur without a Major NSR permit;

• it has no regulatory provisions clearly prohibiting the use ofthis Program from

circumventing the Major NSR SIP requirements thereby allowing sources to avoid the

requirement to obtain preconstruction permit authorizations for projects that would

otherwise require a Major NSR preconstruction permit;

• it does not require that first an applicability determination be made whether the

modification is subject to Major NSR thereby exempting new major stationary sources

and major modifications from the EPA Major NSR SIP requirements;

• it fails to meet the statutory and regulatory requirements for a SIP revision;

• it is not consistent with applicable statutory and regulatory requirements as

interpreted in EPA policy and guidance on SIP revisions;

• it is not an enforceable Minor NSR permitting program;
11

• it lacks legally enforceable safeguards to ensure that the exempted changes will

not violate a Texas control strategy and will not interfere with NAAQS attainment;

• EPA lacks sufficient available information to determine that the requested

relaxation to the Texas Minor NSR SIP will not interfere with any applicable requirement

concerning attainment and RFP, or any other applicable requirement ofthe Act.

The provisions in these submittals relating to the Texas Qualified Facilities State

Program that include the Chapter 116 regulatory provisions and the nonseverab1e

definitions in the General Definitions were not submitted to meet a mandatory

requirement ofthe Act. Therefore, this final action to disapprove the submitted Texas

Qualified Facilities State Program does not trigger a sanctions or Federal Implementation

Plan clock. See CM section l79(a).

II. What Submittals is EPA Taking No Action On?

A. Subparagraph (F) under the definition of "federally enforceable"

On September 18,2002 (67 FR 58697), EPA approved the definition of "federally

enforceable" in 30 TAC 116.10(7), introductory paragraph and subparagraphs (A)

through (E), as submitted July 22, 1998. We proposed to take no action on the submitted

severable new subparagraph (F) under the SIP-approved definition of "federally

enforceable," submitted September 11,2000, because it is outside the scope ofthe SIP.
12

See 74 FR 48450, at 48466. EPA is not finalizing action today on the proposal

concerning the submitted 30 TAC 116.10(7)(F). This subparagraph (F) is severable from

the final rulemaking on the Qualified Facilities Program

B. Definition of "best available control technology (BACT)"

On September 23,2009, EPA proposed to disapprove the definition "best

available control technology (BACT)" under 30 TAC 1161.10(3). 74 FR 48450, at

48463-48464. -EPA is still reviewing approvability ofthis definition; therefore, we are

not taking final action on the proposal today. This definition is severable from the final

rulemaking on the Qualified Facilities Program. We will take final action on the

definition ofBACT when we take action on Texas's submission concerning NSR Reform

(Rule Project Number 2005-010-116-PR), which also addresses BACT. See 74 FR

48450, at 48472. 1 Under the Consent Decree entered on January 21, 2010 in BCCA

Appeal Group v. EPA, Case No. 3:08-cv-0149l-N (N.D. Tex), EPA's final action

concerning NSR Reform will be finalized by August 31, 2010.

C. Subparagraphs (A) and (B) ofthe submitted definition of "modification ofexisting

facility"

I EPA made this determination in a separate proposed action published at 74 FR 48467, September 23,

2009. Th.is proposal relates to Prevention ofSignificant Deterioration (PSD), Nonattainment NSR (NNSR)

for the 1997 8-Hour Ozone Standard, NSR Reform, and a Standard Permit.
13

Also, on September 23; 2009, EPA proposed to disapprove 30 TAC 116.10(11)

subparagraphs (A) and (B) ofthe submitted definition of "modification of existing

facility," which are severable from the other submissions addressed in this notice but not

severable from each other. 74 FR 48450, at 48464-48465. EPA is not taking final action

today on the proposed disapproval ofthese submitted subparagraphs under the submitted

definition of "modification of existing facility" at 30 TAC 116.0(11)(A) and (B). We are

still reviewing the proposed disapproval ofthese subparagraphs 30 TAC 116.10(11)(A)

and (B) which relate to "insignificant increases." These subparagraphs are severable

from this final rulemaking on the Qualified Facilities Program. We will take final action

on 30 TAC 116.10(11)(A) and (B) when we act on Texas's submission concerning Air

Permits (SB 766) Phase II (Rule Project Number 99029B-116-A1). Under the Settlement

Agreement in BCCA Appeal Group v. EPA, Case No. 3:08-cv-01491-N (N.D. Tex), that

action will be finalized by December 31,2012. Additionally, we have received petitions

requesting EPA review ofthe State's implementation ofTexas Commission on

Environmental Quality's (TCEQ) permit by rule (PBR) program under Subchapter K (30

TAC Chapter 106).2 EPA int~nds to review TCEQ's PBR program and its

implementation in response to those petitions.

D. Subparagraph (G) ofthe submitted definition of "modification ofexistingfacility"

2 Petitions, August 28,2008, from the Environmental Integrity Project on behalf ofthe Galveston-Houston

Association for Smog Prevention, Environmental Integrity Project, Texas Campaign for the Environment,

Sierra Club, and Public Citizen; and January 5, 2009, supplementing the August 28, 2008, petition (the

supplemental petition added the Environmental Defense Fund as an additional petitioner).
14

On September 23,2009, EPA proposed to disapprove thesubparagraph (G) at 30

TAC 116.10(11) ofthe submitted definition of "modification of existing facility." See 74

FR 48450, at 48465. EPA is not taking final action today on the proposed disapproval of

the submitted subparagraph (G) ofthe definition of "modification of existing facility."

We are still reviewing the proposed disapproval ofthis definition. This subparagraph

states that changes to certain natural gas processing, treating, or compression facilities are

not modifications ifthe change does not result in an annual emissions rate of any air

contaminant in excess ofthe volume emitted at the maximum design capacity for

grandfathered facilities. This definition is severable from this rulemaking on the

Qualified Facilities Program. See 74 FR 48450, at 48452. We will take final action on

30 TAC 116.1O(l1)(G) when we act on Texas's submission concerning Air Permits (SB

766) Phase II (Rule Project Number 99029B-116-A1). Under the Settlement Agreement

in BCCA Appeal Group v. EPA, Case No. 3:08-cv-01491-N (N.D. Tex), that action will

be finalized by December 31, 2012.

E. Trading Provision in 30 TAe 116.116(f)

EPA proposed to take no action on the submitted portion of 30 TAC 116.116(f)

that includes, among other things, a trading provision containing a cross-reference that is

no longer in Texas's rules. See 74 FR 48450, at 48465-48466. EPA is not taking final

action today on this submitted portion because we are still reviewing approvability ofthe

provision. This portion ofthe provision is severable from this rulemaking on the

Qualified Facilities Program. We will take final action on 30 TAC 116.116(f) when we
15

'take action on Texas's submission concerning NSR Rules Revisions; l12(g) Revisions

(Rule Project No. 9800l-116-AI). Under the Settlement Agreement in BCCA Appeal

Group v, EPA, Case No. 3:08-cv-01491-N (N.D. Tex), that action will be finalized by

October 31, 2011.

III. What is the Background?

A. Summary ofOur Proposed Action

Also on September 23,2009 (74 FR 48450), EPA proposed to disapprove

revisions to the SIP submitted by the State ofTexas that relate to the Modification of

Qualified"Facilities. These affected provisions include regulatory provisions at 30 TAC

116.116(e) and definitions of "actual emissions," "allowable emissions," a nonseverable

portion ofthe defmition at subparagraph (E) of "modification of existing facility," and

"qualified facility" under Texas's General Definitions in Chapter 116, Control of Air

Pollution by Permits for New Construction or Modification. See 30 TAC 116.1O(1), (2),

(11)(E), and (16), respectively. EPA finds that these submitted provisions and definitions

in the submittals affecting the Texas Qualified Facilities Program are not severable from

each other.

In the September 23,2009, EPA also proposed to take action on revisions to the

SIP submitted by Texas that relate to the General Definitions in Chapter 116. EPA
16

proposed to approve three ofthese submitted definitions, "grandfathered facility,"

"maximum allowable emissions rate table (MAERT)," and "new facility" at 30 TAC

116.10(8), (l0), and (12), respectively. These definitions are severable from the

Qualified Facilities Program.

EPA proposed to make an administrative correction to the severable submittal for

the SIP-approved definition of "facility" under 30 TAC 116.10(6). Consistent with our

proposal, EPA is finalizing this administrative correction in today's action.. Specifically,

EPA corrects a typographical error at 72 FR 49198 (August 28, 2007), to clarify that the

definition of "facility," as codified at 30 TAC 116.10(6), was approved as part ofthe

Texas SIP in 2006 and remains part ofthe Texas SIP. 74 FR48450, at 48465.

See Sections I and IV for further information on EPA's final action on the above

submittals.

Further, EPA proposed to disapprove the following severable definitions: (1) the

submitted definition of "best available control technology (BACT)" and (2)

subparagraphs (A) and (B) ofthe submitted definition of "modification of existing

facility," which are severable from the other submissions but not severable from each

other, and (3) subparagraph (G) ofthe submitted definition of "modification of existing

facility." EPA proposed to take no action on the severable submitted subparagraph (F)

for the SIP-approved severable definition of "federally enforceable" under 30 TAC
17

116.10(7) because the submitted paragraph relates to a federal program that is

implemented separately from the SIP. In addition, EPA proposed to take no action on the

severable submitted portion of a provision at 30 TAC 116.116(f) that includes, among

other things, a trading provision containing a cross-reference that no longer is in Texas's

rules. See Section II for further information on why EPA is not taking final action today

on these submittals.

B. Summary a/the Submittals Addressed in this Final Action

Table 1 below summarizes the changes that are in the SIP revision submittals. A

summary of EPA's evaluation of each section and the basis for this action is discussed in

Sections IV through VI of this preamble. The Technical Support Document includes a

detailed evaluation ofthe submittals.

Table 1. Summary of each SIP submittal that is affected by this action.

Section Title Submittal Description of Change Proposed

dates Action

30 TAC 116.10 General Definitions

30 TAC 116.10(1) Definition of 3/l3/1996 Added new definition Disapproval.

"actual 7/22/l998 Repealed and a new definition

emissions" submitted as paragraph (1)

30 TAC 116.10(2) Definition of 3/l3/1996 Added new definition Disapproval.

"allowable 7/22/l998 Repealed and a new definition

emissions" submitted as paragraph (2)

9/ll/2000 Revised paragraphs (2)(A)

through (D)
18

30 TAC 116.10(6) Definition of 3/13/1996 Added new definition Administrative

"facility" 7/22/1998 Repealed and a new definition correction to

submitted as paragraph (4). clarify the

Approved 9/6/2006 (71 FR definition of

52698) "facility" is in

9/4/2002 Redesignated to paragraph (6). the SIP.

Inadvertently identified as nonSIP provision in 8/28/2007 SIP

revision.

30 TAC 116.10(8) Definition of 3/13/1996 Added new definition Approval.

"grandfathered 7/22/1998 Repealed and a new definition

facility" submitted as paragraph (6)

7/31/2002 Revised definition

9/4/2002 Redesignated to paragraph (8)

30TAC Definition of 3/13/1996 Added new definition Approval

116.10(10) "maximum 7/22/1998 Repealed and a new definition

allowable submitted as paragraph (8)

emission rate 9/4/2002 Redesignated to paragraph (10)

table"

30TAC Definition of 3/13/1996 Added new definition Disapproval of

116.10(11) "modification . 7/22/1998 Repealed and a new definition subparagraph

of existing submitted as paragraph (9) (E)

facility" 9/4/2002 Redesignated to paragraph (11)

30TAC Definition of 3/13/1996 Added new definition Approval.

116.10(12) "new facility" 7/22/1998 Repealed and a new definition

submitted as paragraph (10)

9/04/2002 Redesignated to paragraph (2)

30TAC Definition of 3/13/1996 Added new definition Disapproval.

116.10(16) "qualified 7/22/1998 Repealed and a new definition

facility" submitted as paragraph (14)

9/4/2002 Redesignated to paragraph (16)

30 TAC 116.116 Changes to 3/13/1996 Added subsection (e) Disapproval.

Facilities 7/22/1998 Repealed and a new 116.116(e) Disapproval.

submitted

30 TAC 116.117 Documentatio 3/13/1996 Added new section Disapproval.

nand 7/22/1998 Repealed and a new 116.117

Notification resubmitted

ofChanges to

Qualified

Facilities

30TAC 116.118 Pre-Change 3/13/1996 Added new section Disapproval.

Qualification 7/22/1998 Repealed and a new 116.118

submitted
19

C. Other Proposed Relevant Actions on the Texas Permitting SIPRevision Submittals

The Settlement Agreement in BCCA Appeal Group v. EPA, Case No. 3:08-cv01491-N (N.D. Tex), as amended, currently provides that EPA will take final action on

the State's Public Participation SIP revision submittal on October 29,2010. EPA intends

to take final action on the submitted Texas Flexible Permits State Program by June 30,

2010, and the NSR SIP by August 31, 2010, as provided in the Consent Decree entered

on January 21, 2010 in BCCA Appeal Group v. EPA, Case No. 3:08-cv-0149l-N (N.D.

Tex).

Additionally, EPA acknowledges and appreciates that TCEQ is developing a

proposed rulemaking package to address EPA's concerns with the current Qualified

Facilities rules. We will, of course, consider any rule changes if and when they are

submitted to EPA for review. However, the rules before us today are those ofthe current

Qualified Facilities program, and we have concluded that the current program is not

approvable for the reasons set out in this notice.

IV. What are the Grounds for this Disapproval Action of the Texas Qualified

Facilities Program?

EPA is disapproving revisions to the SIP submitted by the State ofTexas that

relate to the Modification of Qualified Facilities, identified in the above Table 1. Sources

are reminded that they remain subject to the requirements ofthe Federally- approved
20

Texas SIP and maybe subject to enforcement actions for violations ofthe SIP. See

EPA's Revised Guidance on Enforcement During Pending SIP Revisions, (March 1,

1991). However, because the Qualified Facilities Program is a permitting exemption, not

a permit amendment, this final disapproval action does not affect Federal enforceability

of Major and Minor NSR SIP permits.

The provisions affected by this disapproval action include regulatory provisions at

30 TAC 116.1l6(e), 116.117, and 116.118; and definitions at 30 TAC 116.10(1), (2),

(11)(E), and (16) under 30 TAC Chapter 116, Control ofAir Pollution by Permits for

New Construction or Modification. EPA finds that these submitted provisions and

definitions in the submittals affecting the Texas Qualified Facilities Program are not

severable from each other. Specifically, EPA is making the following findings and

taking the following actions as described below:

A. Why the Qualified Facilities Program Submittal is Unclear Whether It Is for a Major

or Minor NSR SIP Revision

While the TCEQ and other commenters asserted that the program was intended to

be limited to Minor NSR, we continue to be concerned that the program is not explicitly

limited to Minor NSR. Specifically, EPA finds that the submittals contain no

applicability statement or regulatory provision that limits applicability to minor

modifications. The Program is analogous to two other Minor NSR programs in Texas's
21

SIP because although they do not exempt facilities from NSR, as does the Qualified

Facilities Program, they do exempt facilities from obtaining source-specific (i.e., case-bycase) permits. However, both ofthe State's other Minor NSR programs include an

applicability statement and a regulatory provision that expressly limits applicability to

minor modifications.' Moreover, the Texas Clean Air Act clearly prohibits the use of

these two other Minor NSR programs for Major NSR. See Texas Health and Safety Code

382.05196 and .057. Therefore, the absence ofthese provisions in the Qualified

Facilities rules creates an unacceptable ambiguity in the SIP. Without a clear statement

of applicability ofthe Program, the Program as submitted is confusing to the public,

regulated sources, government agencies, or a court, because it can be interpreted as an

alternative to evaluating the new modification as a major modification under Major NSR

requirements: Because ofthe overbroad nature ofthe regulatory language in the State's

SIP revision submittal, we find that the State has failed to limit its submitted Program

only to Minor NSR. See 74 FR 48450, at 48456-48457 and Section V.E.l below for

further information.

Consequently, we evaluated this submitted Program as being a substitute for the

Texas Major NSR SIP. We also evaluated it for approvability as a Minor NSR SIP.

Accordingly, we evaluated whether the submitted Program meets the requirements for a

Major NSR SIP revision, the general requirements for regulating construction of any

stationary sources contained in Section 110(a)(2)(C) ofthe CAA, and the applicable

3 The Standard Permits rules require a Major NSR applicability determination at 30 lAC ll6.61O(b), and

prohibit circumvention of Major NSR at 30 TAC ll6.6l0(c). Likewise, the Permits by Rule provisions

require a Major NSR applicability determination at 30 TAC 106.4(a)(3), and prohibit circumvention of

Major NSR at 30 TAC l06.4(b).
22

statutory and regulatory requirements for an approvable SIP revision. See 74 FR 48450,

at 48457.

B. Why the Submitted Texas Qualified Facilities Program Is Not Approvable as a

Substitute Major NSR SIP Revision

EPA finds that the State failed to submit information sufficient to demonstrate

that the submitted Program's regulatory text explicitly prevents the circumvention of

Major NSR. Therefore, EPA is disapproving the Program as not meeting the Major NSR

SIP requirements to prevent circumvention ofMajor NSR. See 74 FR 48450, at 48458;

Sections V.Co2. and E. below for further information.

EPA finds that that the State failed to submit information sufficient to

demonstrate that the submitted Program's regulatory text requires an evaluation of Major

Source .NSR applicability before a change is exempted from permitting. Therefore, EPA

is disapproving the Program as not meeting the Major NSR SIP requirements that require

the Major NSR applicability requirements be met. See 74 FR 48450, at 48458; Section

V.C.2 below for further information.

We find that the Program is deficient for Major NSR netting for two main

reasons. First, the Program may allow an emission increase to net out by taking into

account emission decreases outside ofthe major stationary source and, in other
23

circumstances, allow an evaluation of emissions of a subset of units at a major stationary

source. Therefore, the Program does not meet the CAA's definition of "modification"

and the Major NSR SIP requirements and is inconsistent with Alabama Power v. Costle,

636 F.2d 323, 401-403 (D.C. Cir. 1980) and Asarco v. EPA, 578 F.2d 320 (D.C. Cir.

1978). 74 FR 48450, at 48458-48459; Section V.C.l below. Second, the Program

authorizes existing allowable emissions, rather than actual emissions, to be used as a

baseline to determine applicability. This use of allowables is inconsistent with the

requirements ofthe Act for Major NSR and is contrary to New York v. EPA, 413 F.3d 3,

38-40 (D.C. Cir. 2005) ("New York I"). 74 FR 48450, at 48459; Section V.C.l below.

EPA finds that it lacks sufficient available information to determine, pursuant to

section 110(1) that the requested relaxation to the Texas NSR SIP would not interfere

with any applicable requirement concerning attainment and RFP, or any other applicable

CAA requirement. See 74 FR 48450, at 48459 for further information.

c. Why the Submitted Texas Qualified Facilities Program Is Not Approvable as a Minor

NSR SIP Revision

EPA finds that the Program is not clearly limited to Minor NSR. The submitted

Program also does not prevent circumvention ofthe Major NSR SIP requirements. The

Program lacks requirements necessary for enforcement ofthe applicable emissions

limitations, including a permit application and issuance process. Overall, the Program
24

fails to include sufficient 'legally enforceable safeguards to ensure that the NAAQS and

control strategies are protected. Furthermore, the Program provides a de minimis

exemption from the Texas Minor NSR SIP, and therefore, it is a SIP relaxation, which

creates a risk ofinterference with NAAQS attainment, RFP, or any other requirement of

the Act. EPA lacks sufficient inforination to determine that this SIP relaxation would not

interfere with these requirements. 74 FR 48450, at 48463. Additionally, the legal test for

whether a de minimis threshold can be approved is whether it is consistent with the need

for a plan to include legally enforceable procedures to ensure that the State will not

permit a source that will violate the control strategy or interfere with NAAQS attainment,

as required by 40 CFR 51.160(a)-(b). 74 FR 48450, at 48460. The State failed to

demonstrate that this exemption will not permit changes that will violate the Texas

control strategies or interfere with NAAQS attainment. Therefore, we are disapproving

the submitted Qualified Facilities Program as a Minor NSR SIP revision because it does

not meet sections 110(a)(2)(C) and 110(1) ofthe Act and 40 CFR 51.160.

The Qualified Facilities Program does not ensure protection ofthe NAAQS and

prevent violations of any State control strategy. First, the Program fails to ensure that all

participating Qualified Facilities must have obtained a Texas NSR SIP permit. Without

the assurance that all Qualified Facilities have obtained a Texas NSR SIP permit, EPA

cannot determine that all Qualified Facilities must have Federally enforceable emission

limitations based on the chosen control technology, and that the Qualified Facility will

not interfere with attainment and maintenance ofthe NAAQS or violate any control

strategy. Therefore, EPA finds that the Qualified Facilities Program is inadequate to
25

ensure that all Qualified Facilities have an appropriate allowable limit to prevent

interference with attainment and maintenance ofthe NAAQS or violations of any State

control strategy that is required by the Texas NSR SIP. See Section V.G.l for further

information. In addition, the Program does not require the owner or operator to maintain

the information and analysis showing how it concluded that there will be no adverse

impact on ambient air quality before undertaking the change. Therefore, EPA finds that

the Qualified Facilities Program is inadequate to ensure that all changes under the

Program that are exempted from permitting will not prevent interference with attainment

and maintenance ofthe NAAQS or violations of any State control strategy that is

required by the Texas NSR SIP. 74 FR 48450, at 48462; Section V.F.!.

Regarding the State's use ofminor source netting in the Qualified Facilities

Program, EPA makes the following findings:

The Qualified Facilities Program is inadequate because it fails to provide clear

and enforceable requirements for a basic netting program. Therefore, this Program, as

submitted, does not meet the fundamental requirements for an approvable Minor NSR

netting program. To analyze the Program's Minor NSR netting for approvability, we

used the fundamental principles ofMajor NSR and NSR netting because these principles

are designed to ensure that there is no interference with the NAAQS and control

strategies." The Major NSR netting program requires the following: (1) An identified

4 However, our analysis ofthe netting provisions in the Qualified Facilities Program under Minor NSR is

not intended to create a binding Agency position on evaluating the approvability ofMinor NSR netting.
26

contemporaneous period, (2) the reductions must be contemporaneous and creditable, (3)

the reductions must be ofthe same pollutant as the change, (4) the reductions must be

real, (5) the reductions must be permanent, and (6) the reductions must be quantifiable.

See 40 CFR 51.165(a)(l)(vi) (the definition of "net emissions increase" ); 40 CFR

51.l66(b)(3). To be considered creditable, the reduction's old level of emissions must

exceed the new level of emissions, the reduction must be enforceable as a practical matter

at and after the time the actual change begins, and the reduction must have approximately

the same qualitative significance for public health and welfare as that attributed to the

increase from the particular change. See 74 FR 48450, at 48461.

As discussed below, the Program's netting provisions do not meet all ofthe

requirements; therefore, the Qualified Facilities netting is disapproved as a Minor NSR

netting program.

• The Program fails to define a contemporaneous or other period for the

netting and that the emission reductions must occur within that specified

period. 74 FR 48450, at 48461; Section V.C.l below.

• Emissions reductions under the Qualified Facilities program are not

enforceable as a practical matter at and after the time ofthe actual change

begins; and therefore, not sufficiently creditable. First, the Program fails

to ensure a separate netting analysis is performed for each proposed

change because the rules are not clear that reductions can only be relied

upon once. Therefore, we find that that the Program fails to prevent

double counting; and consequently these types ofreductions are not
27

creditable." Second, the Program does not require that each Qualified

Facility involved in the netting transaction must submit a permit

application and obtain a permit revision reflecting all ofthe changes made

to reduce emissions (relied upon in the netting analysis) as well as

reflecting the change itselfthat increased emissions. As a result,

emissions reductions are not enforceable; and therefore, not sufficiently

creditable. 74 FR 48450, at 48462; Section V.C.l.

• EPA proposed to find that the State's "interchange" methodology,

submitted 30 TAC 116.116(e)(3), is consistent with the Federal

requirement that reductions must be ofthe same pollutant as the change.i

74 FR 48450, at 48461. However, after evaluation ofreceived comments,

EPA finds that the term "sulfur compounds" in 30 TAC 116.116(e)(3)(F),

is broad enough to include hydrogen sulfide. Hydrogen sulfide is a

regulated NSR pollutant (see 40 CFR 52.21 (b)(23)(i) and 52.21(i)(5)(i))

and, in certain instances, may require separate analysis from sulfur oxides

in a netting analysis. Therefore, the interchange methodology may not

ensure the health impacts of all sulfur compounds will be equal. The

State failed to demonstrate that such use of hydrogen sulfide would

protect the sulfur dioxides NAAQS. Additionally, this provision allows

PM-2.5 to be interchanged with PM-lO. However, because PM-10 and

PM-2.5 are two separate pollutants and the State failed to demonstrate

that such use ofPM-10 would protect the PM-2.5 NAAQS, this

5 See 40 CFR 5 1.165(a)(1)(vi)(A) and 5 1.166(b)(3)(i), which define net emissions increase "with respect to

any regulatedNSRpollutant." Emphasis added.
28

interchange is inappropriate. Therefore, this provision is unapprovable

for the sulfur dioxides and PM NAAQS. Section V.C.l below.

• The Program also lacks any provisions that require the reductions to be

permanent. Specifically, the submitted Program does not include

provisions that either prohibit future increases at the Qualified Facility, or

ensure that any future increase at a Qualified Facility at which a previous

netting reduction occurred is analyzed in totality to assure that the

NAAQS remains protected from the original increase. 74 FR 48450, at

48461; Section V.C.l below.

Section 30 TAC l16.ll7(b) lacks any provisions that require a permit application

to be submitted to TCEQ for a change under the Program. There are no provisions in 30

TAC l16.ll7(b) that clearly indicate that TCEQ must issue a revised permit for the

changes made by all ofthe participating Qualified Facilities. Thus, EPA finds that the

Program is not approvable because it lacks this requirement and therefore is not

enforceable. See 74 FR 48450, at 48462, Section V.D.1 below.

The Qualified Facilities SIP submittal is a relaxation under CAA section 110(1)

because it provides an exemption from NSR permitting not previously available to

facilities. As such, this revision creates a risk ofinterference with NAAQS attainment,

RFP, or any other requirement ofthe Act. EPA lacks information sufficient to make a

determination that the requested SIP revision relaxation does not interfere with any
29

applicable requirements concerning attainment and RFP, or any other applicable

requirement ofthe Act, as required by section 110(1). See 74 FR 48450, at 48463.

For the reasons discussed above in this section and as further discussed below in

Section V (Response to Comments), EPA is disapproving the submitted Qualified

Facilities Program as not meeting section IIO(a)(2)(C) and 110(1) ofthat Act and 40 CFR

51.160: See 74 FR 48450, at 48462.

D. Definition of "facility"

EPA proposed to make an administrative correction to the severable submittal for

the SIP-approved definition of "facility" under 30 TAC 116.10(6). Consistent with our

proposal, EPA is finalizing this administrative correction in today's action. Specifically,

EPA corrects a typographical error at 72 FR 49198 to clarify that the definition of

"facility," as codified at 30 TAC 116.10(6), was approved as part ofthe Texas SIP in

2006 and remains part ofthe Texas SIP. 74 FR 48450, at 48465.

However, EPA wishes to note that each part ofthe Texas NSR program depends

greatly upon the definition of "facility" that is applicable to it and upon how that

definition is used in context within each part ofthe program. There are instances where a

specific part ofthe Texas NSR program does not meet the Act and EPA regulations due

to the definition of "facility" that applies to that part ofthe program. For example
30

Texas's PSD non-PAL rules explicitly limit the definition of "facility" to "emissions

unit," but the NNSR non-PAL rules fail to include such a limitation. 74 FR 48450, at

48475; compare 30 TAC 116.10(6) to 30 TAC 116.160(c)(3). TCEQ did not provide

information to demonstrate that the lack ofthis explicit limitation in the NNSR SIP nonPALs revisionis at least as stringent as the revised Major NSR SIP requirements. 74 FR

48450, at 48455; Section V.M. below.

V. Response to Comments

In response to our September 23,2009, proposal, we received comments from the

following: Sierra Club - Houston Regional Group; Sierra Club Membership Services

(including 2,062 individual comment letters); Harris County Public Health and

Environmental Services; Texas Commission on Environmental Quality; Members ofthe

Texas House ofRepresentatives; Office ofthe Mayor - City of Houston, Texas;

University ofTexas at Austin School of Law - Environmental Clinic; Baker Botts,

L.L.P., on behalf ofBCCA Appeal Group; Baker Botts, L.L.P., on behalf ofTexas

Industrial Project; Bracewell & Guiliani, L.L.P., on behalf ofthe Electric Reliability

Coordinating Council; Gulf Coast Lignite Coalition; Texas Chemical Council.

A. GeneralComments

1. Comments generally supporting proposal.
31

Comment: Harris County Public Health & Environmental Services (HCPHES)

acknowledges that EPA takes issue with the TCEQ regulations because ofthe lack of

specificity regarding definitions and general lack of checks and balances to ensure that

Federal requirements are met during the State's permitting processes, and because they

do not meet the Minor NSR SIP and Major NSR SIP, including the Major NSR

Nonattainment SIP requirements. Those concerns, currently unaddressed by the TCEQ,

have ultimately resulted in EPA's proposed disapproval of portions ofthe TCEQ's most

recent SIP submittal. HCPHES views a TCEQ program that meets the Federal

requirements as being critical to ensuring that air quality in the Houston Galveston

Brazoria (HGB) area returns to levels compliant with the NAAQS. HCPHES is very

concerned that the TCEQ programs fall short of Federal requirements and encourages

EPA to aggressively pursue the timely correction ofthese deficiencies to ensure the

health, safety, and well being ofthe citizens of Harris County. HCPHES supports EPA's

conclusion to disapprove portions ofthe SIP as proposed until such time as TCEQ

addresses all ofthe specifics noted in the Federal Register.

Comment: Several members ofthe Texas House ofRepresentatives support EPA's

proposed disapproval ofthe Qualified Facilities Program. While the Qualified Facilities

Program was a legislative creation, these members ofthe Texas House recognize that the

statutory language and associated regulations are inconsistent with current CAA

requirements regarding modifications and public participation. Particular concerns are:

• Inadequate TCEQ oversight. The rules authorize many changes at facilities

without any pre-approval by TCEQ or procedures for denial for cause. These off-
32

permit changes are difficult to track and enforce and may threaten ambient air

quality.

• The lack ofunderstandable and traceable permits. Texas industry, regulators,

and the public should be able to obtain a permit, read it, and know what quantity

of what pollutants the facility is authorized to emit. The off-permit changes

authorized through the Qualified Facilities rules prevent such transparency.

Comment: Houston Regional Group ofthe Sierra Club (Sierra Club) supports EPA's

analysis and agrees that all ofthe September 23,2009, proposals (including the Qualified

Facilities Program) should be disapproved. The commenter generally supported EPA's

proposed disapproval ofthe Qualified Facilities Program; Flexible Permits Program; and

Texas Major and Minor NSR SIP for 1997 8-hour and I-hour ozone NAAQS, Prevention

of Significant Deterioration (PSD) SIP, and Standard Permit for Pollution Control

Projects. The commenter provided additional comments on our proposed disapproval of

the Flexible Permits Program, which EPA will address in its separate action on the

Flexible Permits Program.

Response: Generally, these comments support EPA's analysis ofTexas's Qualified . ,

Facilities Program as discussed in detail at 74 FR 48450, at 48455-48463, and further

support EPA's action to disapprove the Qualified Facilities submission.
33

Comment: The Sierra Club Membership Services (SCMS) sent numerous similar

letters via e-mail that relate to this action. These comments include 1,789 identical letters

(sent via e-mail), which included the following comments:

• The TCEQ is broken and the commenters applaud EPA's proposed ruling that

major portions ofthe TCEQ air permitting program does not adhere to the CAA

and should be thrown out;

• While agreeing that the proposed disapprovals are a good first step, the

commenters state that EPA should take bold actions as follows:

Halting any new air pollution permits being issued by TCEQ utilizing

TCEQ's current illegal policy;

Creating a moratoriwn on the operations of any new coal fired power plants in

Texas until TCEQ cleans up its act by operating under the Federal CAA;

Requiring coal companies clean up their old, dirty plants - no exceptions, no

bailouts, and no special treatment - by reviewing all permits issued since

TCEQ adopted its illegal 'policies and requiring that these entities resubmit

their applications in accordance with the Federal CAA; and

Put stronger rules in place in order to reduce global-warming emissions and to

make sure new laws and rules do not allow existing coal plants to continue

polluting with global warming emissions.

• The commenters further state that Texas: (1) Has more proposed coal and pet

coke fired power plants than any other state in the nation; (2) Is number 1 in

carbon emissions; and (3) Is on the list for the largest increase in emissions over

the past five years.
34

• The commenters do not want coal to stand in the way of a clean energy future in

Texas. Strong rules are needed to make sure the coal industry is held responsible

for their mess and that no permits are issuedunder TCEQ's illegal permitting

process. Strong regulations are vital to cleaning up the energy industry and

putting Texas on a path to clean energy technology that boosts economic growth,

creates jobs in Texas, and protects the air quality, health, and communities.

In addition, SCMS sent 273 similar letters (sent via e-mail) that contained additional

comments. These additional comments include the following:

• Commenters suggest that Texas rely on wind power, solar energy, and natural gas

as clean alternatives to coal.

• Other comments expressed general concerns related to: impacts on global

warming, lack of commitment by TCEQ to protect air quality, the need for clean

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

impacts on creation of future jobs in Texas, plus numerous other similar concerns.

Response: To the extent the SCMS letters comment on the proposed disapproval of

the Qualified Facility program, they support EPA's action to disapprove the Qualified

Facilities submission. The remaining comments are outside the scope of our proposed

action relating to the Qualified Facilities Program.
35

Comment: The Environmental Clinic, the University of Texas at Austin School of

Law CUT Environmental Clinic) commented that EPA should disapprove several other

sections of30 TAC Chapter 116.

Response: This final rulemaking only addresses the Qualified Facilities Program.

Therefore, issues related to other portions ofTexas's regulations are outside the scope of

this rulemaking.

2. Comments generally opposing proposal.

Comment: TCEQ provided several general comments on the proposal. The

TCEQ commented that the Qualified Facilities Program was developed by the 74th Texas

Legislature through Senate Bill (SB) 1126, which became effective May 19, 1995. SB

1126 amended the Texas Clean Air Act by revising the definition of "modification of

existing facility," which changed the factors used to determine whether a modification for

State permitting (i.e. Minor NSR) has occurred. In 1996, 30 TAC Chapter 116 was

revised to incorporate this legislative directive. These changes provide that modifications

may be made to existing facilities without triggering the State's Minor NSR requirements

whenever: (1) the facility to be modified has received a permit, permit amendment, or

has been exempted from permitting requirements no earlier than 120 months from when

the change will occur; or (2) uses air pollution control methods that are at least as

effective as the Minor NSR SIP best available control technology (BACT) that the
36

Commission required 120 months before the change will occur. Such facilities are

designated as "qualified facilities."

TCEQ has always considered the Qualified Facilities Program to be applicable

only to Minor NSR and not applicable to Major NSR, although this is not specifically

stated in the rule. In summary, under the Qualified Facilities Program, TCEQ: (1)

determines Federal applicability as a first step in processing a Qualified Facilities request;

and uses actual emissions, not allowable emission rates; (2) applies Federal NSR

requirements when triggered; (3) does not circumvent Federal requirements applicable to

major stationary sources or major modifications; (4) considers the use of "modification"

to be separate and severable from the Federal definition of "modification" as reflected in

the SIP-approved Major NSR Program; and (5) does not violate the approved SIP with

regard to Major NSR or Minor NSR Program requirements.

Comment: The Texas Chemical Council (TCC) comments that it would be shortcited to analyze the three programs (Qualified Facilities, Flexible Permits, and NSR

Reform) apart from the dramatic improvements in the air quality in Texas in the past 15

years. TCC goes on to describe these improvements. TCC supports full approval of

Qualified Facilities. The Qualified Facilities Program is not intended to shield a source

from major NSR. The Program is a robust, Federally enforceable program. The

Qualified Facilities Program is authorized by the TCAA, promotes flexibility, and allows

sources to make certain changes without triggering NSR. IfMajor NSR is triggered, a

facility cannot be a Qualified Facility. The definition of a Qualified Facility makes it
37

clear that a Qualified Facility is an existing facility. A Qualified Facility may make a

physical change in or change the operation ofthat facility as long as the change does not

result in a net increase in allowable emissions of any air contaminant and does not result

in the emission of any air contaminant not previously emitted. Additionally, the facility

must be using equipment at least as effective as the BACT required by TCEQ. TCC

supports full approval ofthe three Texas air permitting program submittals. The SIP

revisions submitted to EPA by TCEQ over the last 15 years are critical components to

Texas air permitting program. Texas should not be punished for EPA's failure to act

within the statutory timeframe in the CAA. EPA offers little or no legal justification for

proposing disapproval ofthese programs. EPA's proposed action will have an enormous

impact on the country's largest industrial state. The SIP revision submittals for these

programs are at least as stringent as the applicable Federal requirements and should be

fully approved.

Comment: Bracewell & Giuliani LLP, counsel to the Electric Reliability

Coordinating Council (ERCC), commented that Qualified Facilities provides incentives

to implement pollution reduction measures at existing facilities. EPA's proposed

disapproval does not provide any evidence that this authorization is actually used for

major modifications or in fact interferes with air quality improvements. Discontinuance

ofthis program could deter or delay many pollution reduction measures because the cost

and resources associated with a full notice and comment case-by-case permit would

outweigh the economic benefits ofthe additional controls. EPA should determine that the

Qualified Facilities Program satisfies the CAA requirements for a state minor source
38

program and retract the SIP disapproval and approve this SIP revision. EPA should

recognize the validity of permits issued under the Texas permitting program and refrain

from taking enforcement actions to address EPA concerns.

Comment: Jackson Walker, LLP, counsel to Gulf Coast Lignite Coalition GCLC,

provided the following general comments on all three proposed disapprovals (Qualified

Facilities, Flexible Permits, and NSR Reform): (1) Commenters disagree with all the

proposed disapprovals because the SIP as implemented by TCEQ meets or exceeds CAA

requirements and has met the goals ofthe CAA; (2) EPA has a history offocusing on

results; so, EPA should look beyond immaterial differences in the rule provisions and

focus on the positive results that Texas has achieved under the TCAA and the State's

submittals; (3) Texas sources have relied on the submitted rules for as long as 15 years in

some cases. To disapprove the submittals after so long puts too much burden on the

regulated community, creates regulatory uncertainty, hurts the vulnerable economy by

potentially increasing compliance costs, and may discourage future business expansion;

and (4) GCLC requests that EPA work collaboratively, not combatively, with TCEQ to

resolve any issues under the CAA.

Comment: Baker Botts, LLP, counsel for Texas Industry Project (TIP) and

Business Coalition for Clean Air (BCCA) provided the following comments. TIP and

BCCA support full approval of Qualified Facilities because the submittal will strengthen

Texas's permitting program. EPA should work expeditiously with TCEQ to approve the

Qualified Facilities Program. Further, under Texas's integrated air permitting regime, air
39

quality in the state is demonstrating strong, sustained improvement. Cornmenters

describe the air quality improvements in Texas in the recent past. Finally, commenters

describe their understanding of how the Qualified Facilities Program operates. Qualified

Facilities is a Minor NSR applicability trigger that allows existing emissions facilities

that employ BACT to make changes without Minor NSR review as long as the changes

do not result in net emissions increases. The Qualified Facilities Program is authorized

by the TCAA and applies only to existing facilities. The term "facility" is analogous to

the Federal definition of "emissions unit," under Texas's Title V program. See 30 TAC

122.10(8). The Texas Legislature created the Qualified Facilities Program as an

incentive for sites to implement BACT. To be "qualified," the source must 1) have a

permit or permit amendment or exempt from pre-construction permit requirements no

earlier than 120 months before the change will occur, or 2) use air pollution control

methods that are at least as effective as the BACT that was required or would have been

required for the same class or type offacility by a permit issued 120 months before the

change will occur. See 30 TAC 116.116(e). A qualified facility may lose its status as

"qualified" ifits permit, exemption, or control method falls outside the 10-year window.

See TEXAS NAT'L REs. CONSERVAnON COMM'N, Modification ofExisting Facilities

under Senate Bill 1126: Guidance for Air Quality, (April 1996), 5 [hereinafter

Modification ofExisting Facilities Guidance].

Comment: Texas Oil & Gas Association (TxOGA) is encouraged that EPA is

taking action to provide certainty in the regulatory process for businesses. TxOGA

supports the ongoing goal ofimproved air quality; however, cornmenters do not believe
40

that the proposed disapproval does anything to improve air quality in Texas. Further, the

proposal may discourage future business expansion in Texas.

Response: EPA understands TCEQ's explanation ofthe origination ofthe

Program in SB 1126. Nonetheless, the Qualified Facilities Program must meet all

Federal requirements under the CAA in order to be approvable. The fact that EPA failed

to act on the Qualified Facilities Program SIP revision within the statutory timeframe

does not dictate the action EPA must take on the Program at this time. We cannot

approve a program that fails to meet the requirements ofthe CAA. As discussed

throughout our proposal and this final notice, the current Qualified Facilities Program

fails to meet all requirements. We disagree with commenters that the Qualified Facilities

Program is exclusively a Minor NSR program, based upon the ambiguities in the

Program's rules. Furthermore, EPA need not prove that the Program is actually used for

major modifications. EPA is required to review a SIP revision submission for its

compliance with the Act and EPA regulations. CAA 110(k)(3); Natural Resources

Defense Council, Inc. v. Browner, 57 F.3d 1122, 1123 (D.C. Cir. 1995); American

Cyanamidv. EPA, 810 F.2d 493,495 (5th Cir. 1987). This includes an analysis ofthe

submitted regulations for their legal interpretation. The Program's rules are ambiguous

and therefore do not adequately prohibit use under Major NSR. We recognize that TCEQ

considers the Program to be a Minor NSR Program; however, the State admits that its

rules are insufficient to limit the Program to Minor NSR. See 74 FR 48450, at 48456-

48457; Section V.F. below for further information.
41

EPA enforcement of Federal requirements in Texas is outside the scope ofthis

rulemaking. Additionally, comments on the Flexible Permits Program and the NSR

Reform submittal are outside the scope ofthis notice. EPA will address the comments on

its proposed disapprovals of Flexible Permits and NSR Reform in separate actions on

these programs.

B. Comments that this Action is Inconsistent with the CAA

Comment: ERCC commented that EPA's proposed disapprovals are not

rationally supported by case law and are inconsistent with the CAA. Congress placed

primary responsibility for developing SIPs on the states, so permitting programs among

states can vary greatly. EPA determines whether the state SIP satisfies the minimum

requirements ofthe CAA. Union Electric Co. v. EPA, 427 U.S. 246 (1976), rehearing

denied 429 U.S. 873 (1976); Train v. NRDC, 421 U.S. 60 (1975); Florida Power and

Light Co. v. Costle, 650 F.2d 586 (5th Cir. 1979); 71 FR 48696,486700 (August 21,

2006) (Proposed rule to promulgate a FIP under the CAA for tribes in Indian country).

The Fifth Circuit Court of Appeals recently stated that "EPA has no authority to question

the wisdom of a State's choice of emission limitations ifthey are part of a SIP that

otherwise satisfies the standards set for in 42 U.S.C. 7410(a)(2)." Clean Coalition v.

TXUPower, 536 F.3d 469 Fn.3 (5th Cir. Tex. 2008). Texas's permitting programs are

based on the recognized Minor NSR flexibility and consistent with prior EPA approvals

of other state SIPs. EPA must review other approved state programs to ensure that

Texas's sources are not put at a competitive disadvantage. See Memorandum from John
42

Seitz, Director, OAQPS, SIP Consistency Process (April 4, 10 1996). EPA's proposed

disapprovals could have dramatic impact on industries in Texas. EPA should solicit

comments from all EPA regions on whether the proposed actions are inconsistent with

other state SIPs and compare the stringency ofthe Texas programs to those of other

states. ERCC is confident that EPA will realize that the Texas programs are consistent

and possibly more stringent than other permitting programs throughout the country.

Response: EPA continues to recognize that permitting programs among states

can vary greatly and provide some flexibility for Minor NSR SIP programs. However, in

order to be approved as part ofthe SIP, the Qualified Facilities Program must meet all

applicable Federal requirements. Here, the commenter's reliance on the Fifth Circuit's

dicta in Clean Coalition is misplaced because the Qualified Facilities Program does not .

meet the standard set in 42 U.S.C. 7410(a)(2)(C). Section 42 U.S.C. 741O(a)(2)(C)

requires the State to have a permitting program that complies with PSD and

Nonattainment New Source Review (NNSR) permit requirements (at 42 U.S.C. 7475 and

7503, respectively), as well as Minor NSR permit requirements. As part ofthe State's

permitting program, the Qualified Facilities Program fails to meet these requirements of

the Act. As discussed throughout our proposal and this final action, the submitted

Program fails to meet all requirements for an approvable permitting program, including

submitting information sufficient to demonstrate that the Program is restricted only to

Minor NSR. Commenters argue that the Qualified Facilities Program is consistent with

other SIP approved programs; however, they fail to cite any specific examples.
43

C. Comments Addressing Whether the Qualified Facilities Rules Allow Sources to "Net

Out" ofMajor and Minor NSR through Rules that Are Not Adequate to Protect the

NAAQS and State Control Strategies

1. Comments generally supporting proposal.

Comment: UT Environmental Clinic commented that the Qualified Facilities

Program fails to meet the netting requirements for several reasons. The commenter notes

that the Qualified Facilities Program netting calculations can be based on allowable

emissions. Allowables netting violates Major NSR because it is inconsistent with State of

New York v. EPA, 413 F.3d 3, 40 (D.C. Cir. 2005) and violates the CAA; it violates

Minor NSR because it fails to require an evaluation ofthe actual emissions impacts on

maintenance ofthe NAAQS.

Response: Generally, these comments support EPA's analysis ofTexas's

Qualified Facilities Program as a substitute for a Major NSR SIP program as discussed in

detail at 74 FR 48450, at 48459, and further support EPA's action to disapprove the

Qualified Facilities submission.

We find that the Program authorizes existing allowable, rather than actual

emissions, to be used as a baseline to determine applicability. This use of allowables

violates the Act for Major NSR SIP requirements and is contrary to New York v. EPA,

413 F.3d 3, 38-40 (D.C. Cir. 2005) ("New York I"). 74 FR 48450, at 48459. Under the
44

submitted Program, the project's increases in emissions are calculated based upon its

projected allowable emissions. The baseline uses the permitted allowable emission rate

(lowered by any applicable state or Federal requirement) ifthe facility "qualified" under

30 TAC 116.10(11)(E)(i). Ifthe facility "qualified" under 30 TAC 116.1O( 11)(E)(ii), the

baseline uses the actual emission rate (minus any applicable state or Federal

requirement). In the applicability netting analysis, the baseline for all the other

participating minor and major existing Qualified Facilities is calculated in the same way.

The emission reductions are calculated similarly, i.e., reductions beyond the permitted

allowable or actual emission rates (minus the applicable state and Federal requirements).

Thus, this submitted Program allows an evaluation using allowable, not actual emissions,

as the baseline to calculate the project's proposed emission increase and for many ofthe

netting emission reductions, thereby in many cases possibly circumventing the major

modification applicability requirements under the Major NSR rules. Therefore, the

Program fails to meet the CAA and Major NSR requirements to use baseline actual

emissions for major source netting as the starting point from which the amount of

creditable emission increases or decreases is determined. 74 FR 48450, at 48459.

EPA agrees that the reductions in the Program's netting are not based on actual

emissions. Such netting may be permissible for a Minor NSR Program; provided that the

netting provisions assure protection ofthe NAAQS and the SIP control strategies as

required by section 110(a)(2)(C) ofthe CAA. Allowables netting is acceptable because

CAA section 11O(a)(2)(c) does not explicitly prohibit the use of allowables netting for

Minor NSR programs. However, Texas failed to submit sufficient information to
45

demonstrate that the use of allowable emissions in a Minor NSR netting program

continues to protect the NAAQS and control strategies; therefore, EPA cannot determine

ifthis requirement is met. Today's rulemaking disapproves netting under the Qualified

Facilities Program as a Minor NSR program, in part because the Program fails to ensure

that ambient air is protected in consideration of all changes in the netting.

Comment: Dr Environmental Clinic commented that the definitions in section

116.10 do not adequately specify how to calculate emissions reductions for purposes of

the netting analysis. For example, the Texas defmition of actual emissions is the "highest

rate" actually achieved within the past 10 years. It is unclear whether this is the highest

emission rate achieved at a single point in time or averaged over some period.

Response: We disagree that the reductions are not quantifiable. The netting is

based on the most stringent ofthe permitted emissions rate (which includes the highest

achievable actual emission rate) or any applicable state or Federal rule. Nothing in the

State's definition of "actual emissions" implies at all that there is any averaging involved

in the calculations. The reduction is based upon the highest rate the facility achieved at a

single point in time, looking back the past 10 years.

While we proposed to find that the reductions were quantifiable, we requested

comments on two aspects ofthe Program as it relates to this principle. 74 FR 48450, at

48461-48462. First, we requested comment on whether the regulatory provisions at 30

TAC 116.10(1) and (2) provide clear direction on the appropriate calculation procedures
46

sufficient to ensure the reductions are quantifiable. As stated above, we disagree with the

commenter's argument that the definitions in section 116.10 do not adequately specify

how to calculate emissions reductions for purposes ofthe netting analysis.

Second, the submitted rules provide that a Qualified Facility nets its emissions

increase on the same basis as its allowable emissions limitation. 30 TAC

116.116(e)(3)(A). We requested comment on whether netting on such a basis is

sufficiently quantifiable, and whether any additional provisions are necessary to ensure

that the entire emissions increase is properly netted against reductions from the other

Qualified Facility. We did not receive any comments on this second aspect of

quantifiability under the Program. Because no comments were submitted showing the

basis was not sufficiently quantifiable, we continue to believe that netting for a Minor

NSR SIP program on the adequacy ofthe Program's netting of emissions increases on the

same basis as its allowable emissions limitation, is sufficiently quantifiable. . .

Comment: UT Environmental Clinic commented that the Qualified Facilities rules

allow all emission reductions at the same account number to be considered in the net

emission calculation. In fact, the rules could be read to allow the "offsetting" of

emissions above allowables by decreases in emissions at any "different facility." 30 TAC

116.110(3). Because an account number can include multiple sources, the Texas rules

allow consideration of emission decreases from outside the major stationary source in

violation of42 U.S.c. 7411(a).
47

Response: Generally, these comments support EPA's analysis of Texas's

Qualified Facilities Program as a substitute for a Major NSR SIP program as discussed in

detail at 74 FR 48450, at 48458-48459, and further support EPA's action to disapprove

the Qualified Facilities submission.

We find the Program is deficient for Major NSR netting because it may allow an

emission increase to net out by taking into account emission decreases outside ofthe

major stationary source" and, in other circumstances, allow an evaluation of emissions of

a subset of units at a major stationary source.i The State failed to submit information

sufficient to demonstrate that the Program includes the necessary replicability and

accountability to prevent such circumvention. Therefore, the Program does not meet the

CAA's definition of "modification" and the Major NSR SIP requirements and is

inconsistent withA/abama Power v. Cost/e, 636 F.2d 323, 401-403 (D.C. Cir. 1980) and

Asarco v. EPA, 578 F.2d 320 (D.C. Cir. 1978). 74 FR 48450, at 48458-48459.

Comment: VT Environmental Clinic commented that the Qualified Facilities

netting rules only allow consideration ofthe increase in allowable emissions from the

Qualified Facility undergoing a change, but consider the decreases from any other

Qualified Facilities at the same account number. There is no consideration of all the

emission increases so there is no adequate impacts analysis from the source.

6 The Texas SIP defines an "account" to include an entire company site, which could include more than

one plant and certainly more than one major stationary source. SIP rule 30 TAe 101.l(1), second sentence.

7 Under the submitted Program, not aUemission points, units, facilities, major stationary sources, or minor

modifications at the site or their increases in emissions are required to be evaluated in the applicability

netting analysis. So the Program fails to require the evaluation of emissions changes at the entire major

stationary source correctly as required by the Major NSR SIP regulations. 74 FR 48459.
48

Response: Generally, these comments support EPA's analysis ofTexas's

Qualified Facilities Program as a substitute for a Major NSR SIP program as discussed in

detail at 74 FR 48450, at 48458-48459, and further support EPA's action to disapprove

the Qualified Facilities submission.

Major NSR netting is based upon all contemporaneous increases and decreases at

the same major stationary source that occur within a reasonable period that the states

must define in their approved SIPs. The submitted Program's netting is not based upon

all contemporaneous increases at the same major stationary source and not all decreases

at the same major stationary source. However, the State contends that the Program is not

intended to apply for Major NSR netting but only for Minor NSR netting. Moreover, the

Program is not intended to allow contemporaneous netting. Instead, one looks to the

increases from the proposed change and to decreases made at the same time as the

proposed change. Such an approach, iffully delineated in the State's Program rules,

would satisfy the minimum requirements for an approvable Minor NSR netting program

provided that the ambient air is protected in consideration of all changes in the netting.

Today's rulemaking disapproves netting under the Qualified Facilities Program as a

Minor NSR program, in part because the Program fails to ensure that ambient air is

protected.

Comment: UT Environmental Clinic commented that the Qualified Facilities

rules do not define a contemporaneous period nor require that emission reductions occur
49

within a specified period. EPA notes in the Federal Registerthat Texas intended that any

relied-upon reductions occur simultaneously with the increase. However, the commenter

argues that nothing in the rule requires this.

Response: We agree with the comment insofar as it asserts that the Program fails

to define a contemporaneous period or require that emission reductions occur within a

specified period. EPA finds that, while Texas intended that any relied-upon reductions

occur simultaneously at the time ofthe increase," the Program is deficient because it does

not expressly define the applicable period in which the reductions must occur. See our

response to the previous comment. 74 FR 48450, at 48461.

Comment: UT Environmental Clinic commented that because the Qualified

Facilities rules allow reductions to be based upon allowable emissions, they do not ensure

that reductions are real.

Response: We disagree that just because the reductions are based upon allowable

emissions, these reductions are not real. For example, reviewing authority may presume

that source-specific allowable emissions may be equivalent to the actual emissions. See

40 CFR 51.165(a)(l)(xii)(C) and 51.166(b)(2l)(iii). The cortnnenter fails to discuss why

the use of allowable emissions makes the reductions not real.

Comment: The UT Environmental Clinic commented that the rules fail to ensure

that netted reductions are permanent.

s See 21 Tex. Reg. 1573 (February 27, 1996).
50

Response: We agree with thecommenter that the Program lacks any provisions

that require that the reductions are permanent. For reductions to meet the netting

requirement to be permanent, the rules must include a prohibition against future increases

at the Qualified Facility, or include regulatory language that assures that any future

increase at a Qualified Facility at which a previous netting reduction occurred is analyzed

in totality to assure that the NAAQS remains protected from the original increase.

However, the submitted Program does not include such provisions. Consequently, the

Qualified Facilities rules are inadequate because they fail to ensure that the reductions are

permanent.

Comment: UT Environmental Clinic commented that the rules do not prevent

double counting of emission reductions.

Response: For an additional separate project, it appears that the state intended

that the reductions must occur at the time ofthat additional project that will need to

obtain additional reductions to net out. Ifthe regulatory text was consistent with this

approach, this limitation would prevent double counting ofthe netting reductions. The

State's intent is that the holder ofthe permit is required to perform a new, separate

netting analysis and rely upon reductions not relied upon in the first netting analysis. See

74 FR 48450, at 48461 (citing 21 Tex. Reg. 1573 (February 27, 1996); page 154 ofthe

1996 SIP revision submittal). We agree that the rules are not clear that a subsequent

change at a Qualified Facility that previously relied upon netting must conduct a separate
51

netting analysis that relies upon reductions that were not relied upon in the first netting

analysis. EPA cannot find any provisions in the Program to ensure a separate netting

analysis performed for each proposed change. Therefore, the Program fails to prevent

double counting; and consequently these types of netting reductions are not enforceable

as a practical matter at and after the time ofthe actual change begins; and therefore, not

sufficiently creditable. 74 FR 48450, at 48461.

Comment: UT Environmental Clinic commented that the Qualified Facilities

rules fail to ensure that the emission reductions are enforceable. Facilities provide notice

of changes to Qualified Facilities on Form PI-E, which is not enforceable, and Qualified

Facility changes that affect permitted facilities are not required to be incorporated into a

permit until renewal or amendment. TCEQ noted in its Qualified Facility guidance that

the form is not Federally enforceable "but is simply a form to provide information to

demonstrate that the change meets qualified facility flexibility." Consequently, Qualified

Facility reductions are allowed to remain unenforceable for years. Further, Texas rules

make it unclear whether emission reductions are ever made enforceable because a portion

ofthe definition of "allowable emissions" states that "[t]he allowable emissions for a

qualified facility shall not be adjusted by the voluntary installation of controls." 30 TAC

116.10(2)(F). This portion ofthe definition of "allowable emissions" states that "[t]he

allowable emissions for a qualified facility shall not be adjusted by the voluntary

installation of controls." Additionally, there are no monitoring requirements in the

Qualified Facilities rules to track compliance with commitments to reduce emissions of

limitations on emissions increases.

,
52

Response: We agree that the Qualified Facilities rules fail to ensure that the

emission reductions relied upon in a netting analysis are enforceable. We noted at 74 FR

48450, at 48462 that the rules do not require permits for these relied-upon reductions.

We also agree that the Program does notrequire monitoring because no permit is required

for each change. See Section V.D.l below.

We disagree that 30 TAC l16.l0(2)(F) makes the rules vague as to enforceability.

This provision ofthe rule is defining how to calculate the baseline from which reductions

occur. When calculating the allowable emissions for a Qualified Facility participating in

the Program, one cannot count any reductions occurring as a result ofthe voluntary

installation of controls. However, a facility can become "qualified" to use the Program

by voluntarily installing controls. The reductions achieved by this voluntary installation

of controls are not counted in the Qualified Facility's allowable emissions.

Comment: UT Environmental Clinic states that the Qualified Facilities rules do

not ensure that emission reductions have the same health and welfare effects as the

emission increase. Because the program allows the emission increase to be offset inside

and outside the facility, it allows for emission increases close to the fence line, potentially

affecting health and welfare ofthe surrounding community.

Moreover, the Qualified Facilities Program allows Qualified Facilities to offset

emissions increases of one pollutant with emission decreases of another pollutant, as long
53

as the pollutants are in the same "air contaminant category." The interchange

methodology established by TCEQ9 to ensure that compounds within the VOCs air

contaminant category, as interchanged, will have an equivalent impact on air quality, is

not included in the Texas rules or statute. The rule merely defines an "air contaminant

category" as a group ofrelated compounds, such as volatile organic compounds,

particulate matter, nitrogen oxides, and sulfur compounds. 30 TAC 116.116(e)(3)(F).

Clearly emissions of all sulfur compounds, say sulfur dioxide and hydrogen sulfide, are

not equal in terms of health impacts. Likewise, the health impacts offine PM emissions .

are ofsignificantly greater concern than the impacts oflarger particles.

Response: With regard to VOCs and nitrogen oxides, EPA disagrees with the

comment above that the Program is deficient because the State's rules allow an offset of

an emission increase pollutant with emission decrease of another pollutant, as long as the

pollutants are in the same "air contaminant category." The State's interchange

methodology goes beyond the fundamental principle to determine whether the

interchange of different compounds within the same air contaminant category will result

in an equivalent decrease in emissions; e.g., one VOC for another VOC; for VOCs and

nitrogen oxides. See 74 FR 48450, at 48461.

On the other hand, the term "sulfur compounds" in 30 TAC 116.l16(e)(3)(F), is

broad enough to include hydrogen sulfide. The State failed to demonstrate that use of

hydrogen sulfide would protect the sulfur dioxides NAAQS. Therefore, we agree with

the commenter that the interchange methodology does not ensure the health impacts of all

9 See 74 FR48455, nJ.
54

sulfur compounds will be equal. With regard to the comment concerning particulate

matter, the definition of "air contaminant category" allows PM-2.5 to be interchanged

with PM-lO. However, because PM-I0 and PM-2.5 are two separate pollutants and the

State failed to demonstrate that such use ofPM-lO would protect the PM-2.5 NAAQS,

this interchange is inappropriate. Therefore, we agree that the interchange methodology

does not ensure the health impacts of all particulate matter will be equal.

We, however, disagree with the comment above that the Program fails to ensure

that emission reductions have the same health and welfare effects as the emission

increases. The State has established a methodology to use whenever there is a different

location of emissions because ofthe intraplant trading. For example, where the netting

has the effect ofmoving emissions closer to the plant property line than the Qualified

Facility to be changed, the State uses this methodology to analyze whether there could be .

an increase in off-site impacts. See 30 TAC 116.117(b)(5). We continue to believe that

this will ensure the reductions have approximately the same qualitative significance for

public health and welfare, which is required to ensure the reductions are creditable.

Nevertheless, as stated above, we are disapproving the Qualified Facilities netting

program as a substitute for a Major NSR SIP program and as a Minor NSR SIP program

because the Program is inadequate to protect ambient air quality.

Comment: The UT Environmental Clinic commented that the Qualified Facilities

netting Program does not adequately protect air quality under Minor NSR. Specifically,

the Qualified Facilities netting provisions do not meet Federal netting standards, which
55

are in place precisely to ensure that air quality is protected. The Program's failure to

meet almost all ofthose basic netting requirements renders the rules inadequate.

Response: Generally, these comments support EPA's analysis ofTexas's

Qualified Facilities Program as a Minor NSR SIP program as discussed in detail at 74 FR

48450, at 48460-48462, and further support EPA's action to disapprove the Qualified

Facilities submission.

Comment: The UT Environmental Clinic commented that the Program is clearly

inadequate to ensure protection ofthe NAAQS and to prevent violations of control

strategies. The rules cannot be approved as an exemption from Minor NSR permitting

because they in no way ensure that the emission increases authorized pursuant to the rules

will have a de minimis impact on air quality.

Response: We agree with the commenter that the Program is inadequate to ensure

protection ofthe NAAQS for several reasons. As discussed below in Section V.G.1, we

find that the Qualified Facilities rules are not clear that all Qualified Facilities must have

obtained a Texas NSR SIP permit. Without the assurance that all Qualified Facilities

have obtained a Texas NSR SIP permit, EPA cannot make the finding that each permit

for a Qualified Facility includes an emission limitation based on the chosen control

technology, with a determination that the Qualified Facility will not interfere with

attainment and maintenance ofthe NAAQS or violate any control strategy .. Therefore,

the Program fails to ensure that all Qualified Facilities can operate up to a permitted
56

allowable limit such that they do not interfere with attainmentand maintenance of the

NAAQS and do not violate any State control strategy,as requiredby the Texas NSR SIP.

Additionally, the Program fails to ensure that the NAAQS are protectedbecause

30 TAC 116.117 lacks language requiring the owner or operatorto maintain the

information and analysis showing how it concluded that there will be no adverse impact

on ambient air quality before undertaking the change.

-Weagree with the commenterthat the Program does not qualify as a de minimis

exemption from MinorNSR. The State has not provided sufficient informationto

demonstrate that the exempted changes from the Minor NSR requirements will have only

a de minimis effect. See Section V.D.1 below for more information.

2. Comments generallyopposing proposal.

Comment: TCEQ commented that the Qualified Facilities Program can only be

used if a physical or operational change complies with FederalNSR requirements. In

order to make a physical or operationalchange to a Qualified Facility, an owner or

operator must demonstratethat the change does not result in a net increase in allowable

emissions of any air contaminantpreviously authorized under state minor source review.

30 TAC 116.1 16(e)(1). Keeping in mind the State definition of "facility," 30 TAC

116.116(e)(2) and (3) allow a Qualified Facility to demonstratethat a state modification

has not occurred by comparing allowable emissions to allowable emissions beforeand
57

after a proposed change. Allowable emissions (both hourly and annual rates) are one of

the criteria to provide "state qualified" flexibility because the facilities must exist and be

authorized, and thereby have undergone appropriate permit review. In addition, no

existing level of control can be reduced. 30 TAC 116.116(e)(8). The commenter states

that for major sources, in addition to State requirements, the evaluation of emissions

related to physical and/or operational changes is conducted on a baseline actual to either a

projected actual or potential to emit base if applicable. 30 TAC 116.116(e)(4). This

comparison is used to determine if an emission increase above the appropriate

significance threshold for a particular Federal permitting program has occurred. From

the Federal NSR standpoint, if a proposed physical or operational change would result in

an emissions increase that exceeds a significance threshold, the appropriate analysis

(netting) is triggered. Ifthe results ofthe netting analysis indicate that a major

modification has occurred, the appropriate Federal program(s) is triggered and Federal

authorization must be obtained. In such a case, the Qualified Facilities Program would

not be an applicable authorization pathway, and a State Minor NSR amendment must be

obtained, along with the appropriate Federal NSR authorization. The exemption from the

definition of "modification of an existing facility" under the Qualified Facilities Program

does not relieve an owner or operator from conducting an evaluation to determine if a

Federal major modification has occurred. TCEQ states that from the Federal standpoint,

only the project's emission increases are evaluated (without consideration of emission

decreases) to determine if a Federal applicability analysis (netting) has been triggered. If

the project increases equal or exceed the netting threshold for the pollutant and this

program, then a full contemporaneous netting exercise is conducted in an effort to
58

determine ifthe modification is a major modification. lithe project is a major

modification, then the appropriate Federal NSR program, either PSD or nonattainment

review, is triggered. Apermit holder cannot use the "no net emissions increase" concept

that is described in the Qualified Facilities Program rules as a mechanism to avoid a

Federal NSR applicability analysis (netting).

Comment: TxOGA commented that the Qualified Facilities Program establishes

an allowables-based trigger and has no effect on a permit holder's compliance obligations

under Federal requirements, Texas rules clearly require compliance with Federal

requirements. 30 TAC 116.117(a)(4) and (d). This interpretation is also supported by

TCEQ guidance.

Comment: The TCC commented in response to EPA's assertion that a Major

NSR applicability determination must be based on actual emissions, not allowables. TCC

argues that the Qualified Facilities rules do not circumvent any Federal requirements for

major stationary sources. TCC reiterates that a qualified facility must demonstrate that

the change does not result in a net increase in allowables, the source must follow

notification requirements, and the source cannot relax controls at the qualified facility.

Response: We acknowledge TCEQ's description of how the State intends to

implement the Qualified Facilities Program; however, we have determined that TCEQ's

current rules are insufficient to prevent circumvention ofMajor NSR. EPA disagrees

with the comments from TxOGA and TCC. The submitted Program lacks specific
59

requirements that would require an owner or operator who proposes a change under the

Qualified Facilities program to first conduct a Major NSR applicability analysis (netting)

prior to receiving (or asserting) authorization under the Qualified Facilities Program.

Comment: TCEQ commented that for facilities undergoing an intraplant trade,

where the allowable emissions at one facility are increased while allowable emissions at

another facility are reduced an allowable-to-allowable comparison is used only to

determine if a new emissions increase has occurred for State purposes. The emissions are

reviewed simultaneously, which is more stringent than the Federal requirement that only

requires contemporaneous emissions. If a net emissions increase has occurred, an owner

or operator cannot use the Qualified Facilities Program to authorize the proposed project,

and must find another State mechanism to obtain proper authorization. In addition, the

commenter states that the owner or operator must submit pre-change notification ifthe

intraplant trade moves emissions from the interior of a plant site closer to a property line.

This gives TCEQ staffthe ability to evaluate public protectiveness and evaluate any

potential changes in off property impacts as they relate to all contaminants and pollutants

with national standards, i.e. the NAAQS. This intraplant trade capability only exists to

the extent that the project is a Minor NSR action, and does not apply if a major

modification has been triggered under Federal NSR requirements.

Response: EPA disagrees with the commenter that under the Texas rules the

Program's intraplant trading does not apply if a major modification has been triggered.

As stated above, the program fails to require a Major NSR applicability analysis and is
60

insufficient to prevent circumvention ofMajor NSR. Intraplant trading based on

allowables to allowables netting is prohibited under Major NSR. See State ofNew York

et ai., v. EPA, 413 F.3d 3, 40 (D.C. Cir. 2005). However, such netting may be

permissible for a Minor NSR program, provided that the netting provisions assure

protection ofthe NAAQS. See 74 FR 48450, at 48462. As discussed above, Texas's

Qualified Facilities Program does not meet this requirement. EPA also finds that the

Program does not adequately define a contemporaneous (or simultaneous) period or

require that emission reductions occur within a specified period. As discussed above, we

find that the Program fails to meet the Minor NSR netting requirement for a defined

period in which the reductions must occur.

Comment: TIP and BCCA commented that the Qualified Facilities program

exceeds Federal benchmarks for allowable-based Minor NSR triggers. This program is

one ofthe mechanisms that EPA encouraged in its Flexible Air Permitting Rule (FAP)

(74 FR 51418, 15423). Further, the program is more stringent than the Federal FAP

Program because it requires up-to-date BACT. The Qualified Facilities Program is also

comparable to the proposed allowables-based minor NSR trigger in EPA's proposed

Indian Country rule, in which EPA allows the use of allowables to allowables netting. To

justify the use of an allowables test, EPA distinguished the definition of "modification"

under Minor NSR from that used for Major NSR. 71 FR 48696,48701 (citing State of

New York, et al., v. EPA (D.C. Cir. Jun. 24, 2005)). The Qualified Facilities rules meet

these criteria and are more stringent than the Federal model because it only extends this

flexibility to well-controlled facilities.
61

The commenter reiterates that the Qualified Facilities Program does not effect a

permit holder's obligation to comply with Federal requirements. An allowables-based

trigger is permissible because the CAA and Federal regulations do not mandate a method

for determining minor NSR. The Environmental Appeals Board confirmed that there is

no mandated methodology for the emissions test used for minor NSR. In re Tennessee

Valley Authority, 9 EAD 357, 461 (EAB September 15,2000). Again, EPA employed an

allowables-to-allowables test in its proposed Indian Country rule. States have great

flexibility to determine applicability for Minor NSR and that includes the authority to use

an allowables-based trigger. TCEQ rules articulate an overriding obligation to comply

with Federal requirements. 30 TAC 116.117(a)(4) and (d). Therefore, the current

Qualified Facilities rules prevent circumvention of Major NSR.

Response: EPA disagrees with the commenter. This rulemaking disapproves

netting under the Qualified Facilities Program for Major NSR, in part because the

Program fails to first require a Major NSR applicability demonstration to show that a

proposed change does not trigger Major NSR before the source can take advantage ofthe

Program. In contrast to the Qualified Facilities Program, under the proposed Indian

Country rule, 40 CFR49.153 would explicitly require the proposed new source or

modification to determine applicability to Major NSR before taking advantage ofthe

program. The source could only use allowables netting under the proposed Indian

County rule after a Major NSR applicability determination. See 71 FR 48696, at 48705,

48728-48729. The Qualified Facilities rules are deficient because they lack such a
62

requirement. Further, as described' above, the Program fails to meet several other netting

requirements for an approvable Minor NSR netting program.

EPA's FAP rule is an Operating permit under Title V, not Title 1. 74 FR 51418,

51419. While the FAP rule recognizes the use of advance approval programs under

Minor NSR, the use ofsuch programs must ensure environmental protection and

compliance with applicable laws. "[FAPs] cannot circumvent, modify, or contravene any

applicable requirement and, instead, by their design must assure compliance with each

one as it would become applicable to any authorized changes." See 74 FR 51418,51422.

Further, advance approval under the FAP must be made at the time of permit issuance, .

and consider the alternate operating scenarios for air quality impacts, control technology,

compliances with applicable requirements, etc. Under Major and Minor NSR, advance

approval must ensure compliance with control strategy and non-interference with

attainment and maintenance ofNAAQS for each operating scenario as required by 40

CFR 51.160. We do not see how the Texas Qualified Facility Rule meets these

requirements.

D. Comments Addressing Whether the Qualified Facilities Rules are Practically

Enforceable

1. Comments generally supporting proposal.
63

Comment: The UT Environmental Clinic commented that the rules fail to ensure

that netted reductions are enforceable.

Response: We agree with the commenter that the Program is unenforceable

because it fails to explicitly require that a permit application must be submitted for the

change and for any relied-upon emissions reductions in the netting analysis. Because the

Program is an exemption from a preconstruction permit, and does not require a permit,

the Program must qualify as a de minimis exemption to be approvable. We find that the

Program does not qualify as a de minimis exemption from Minor NSR. The legal test for

whether a de minimis threshold can be approved is whether it is consistent with the need

for a plan to include legally enforceable procedures to ensure that the State will not

permit a source that will violate the control strategy or interfere with NAAQS attainment,

as required by 40 CFR 51.160(a)-(b). 74 FR 48450, at 48460. The State failed to

demonstrate that this exemption will not permit changes that will violate the Texas

control strategies or interfere with NAAQS attainment. Therefore all ofthe requirements

under 40 CFR 51.160(a)-(b) apply to the Program.

Additionally, the Program allows too long of a lag time before a revised permit is

issued in certain circumstances that can lead to a violation of a NAAQS, RFP, or control

strategy without the TCEQ becoming aware ofit in a timely manner. We proposed that

the lag time for reporting a change under the Program should be no longer than six

months, rather than a year, but we requested comment on whether six months is an

acceptable lapse oftime to ensure noninterference with the NAAQS and control
64

strategies. 74 FR 48450, at 48462. We received no comments on this issue except that

TCEQ stated they will consider this change during rulemaking. Therefore, we find that

the Program allows too long of a lag time before reporting "qualified" changes.

Comment: The UT Environmental Clinic commented that the Program is clearly

inadequate to ensure protection ofthe NAAQS and PSD increments and to prevent

violations of control strategies.

Response: EPA agrees a Minor NSR SIP must include legally enforceable

procedures enabling the State to determine whether construction. or modification would

violate a control strategy or interfere with attainment or maintenance ofthe NAAQS. 40

CFR 51.160(a)-(b). Furthermore, any Minor NSR SIP revision submittal that is a SIP

relaxation, such as this Qualified Facilities Program, must meet section 110(1). The

Qualified Facilities SIP submittal is a relaxation under CAA section 110(1) because it

provides an exemption from NSR permitting not previously available to sources. This

SIP relaxation creates a risk ofinterference with NAAQS attainment, RFP, or any other

requirement ofthe Act. EPA lacks sufficient available information to determine that this

SIP relaxation would not interfere with any applicable requirement concerning attainment

and RFP, or any other requirement ofthe Act. See 74 FR 48450, at 48463.

2. Comments generally opposing proposal.
65

Comment: ERCC commented that the Qualified Facilities Program is enforceable

for several reasons. The program's regulations include enforceable registration and

recordkeeping requirements. Documentation must be maintained for all Qualified Facility

changes that describes the change and demonstrates compliance with the Qualified

Facility Program as well as state and Federal law. See 30 TAC 116.117(a). TCEQ

regulations also require that, at a minimum, an annual submission is made to the agency

documenting any qualified facility changes not incorporated into a facility permit. See 30

TAC 116.117(b). Pre-change qualification and approval are required for certain changes

including: changes that affect BACT or where MAERT is not available (30 TAC

116.118); certain intraplant trading (30 TAC 116.117(4)); or ifthe change will affect

compliance with a permit condition (30 TAC 116.117(3)). EPA's general comments

questioning the proper permit application or registration for qualified facility

authorization are unclear given the minor source nature ofthe program and its function as

an exemption from a preconstruction permit. See 74 FR 48450, at 48462. The Program

adequately imposes recordkeeping, reporting, notification and approval regulations to

satisfy the minor NSR enforceability requirements.

Comment: TIP and BCCA also commented in response to EPA's argument that

the Qualified Facilities Program is not enforceable because changes are not reflected in a

permit. The program is a minor NSR triggering program. Instead of permit revision, a

facility qualified to invoke the program must notifyTCEQ of changes under the

Qualified Facilities rules. 30 TAC 116.118. The commenters explain the scenarios when

notification is required and the requirements for effective notification under the rules.
66

Commenters also state that if a change implicates a permit special condition, the permit

holder must revise its permit special condition using the procedures specified in Chapter

116, New Source Review. 30 TAC 116.116(b)(3).

Comment: The TxOGA commented that the Qualified Facilities Program is a

minor NSR triggering provision that requires facilities to retain documentation and notify

.TCEQ of changes under the program. A facility must be qualified at the time the change

is to occur. The program is enforceable because the rules contain notification and

recordkeeping requirements.

Response: EPA disagrees with the commenters. The Program does not meet the

Federal requirements for practical enforceability. To be approvable, a Minor NSR

program must include enforceable emissions limits. See 74 FR 48450, at 48462. The

Program is not clear that each Qualified Facility involved in the netting transaction must

submit a permit application and obtain a permit revision reflecting all ofthe changes

made to reduce emissions (relied upon in the netting analysis) as well as reflecting the

change itselfthat increased emissions. See 74 FR 48450, at 48462. Therefore, the

Program is unenforceable. Additionally, the Program allows too long of a lag time before

a revised permit is issued in certain circumstances that can lead to a violation of a

NAAQS, RFP, or control strategy without the TCEQ becoming aware ofit in a timely

manner. Because the Program is an exemption from a preconstruction permit, and does

not require a permit, the Program must qualify as a de minimis exemption to be

approvable. We find that the Program does not qualify as an approvable de minimis
67

exemption from Minor NSR. See 74 FR 48450, at 48462; Section V.D.l. above.

Therefore all ofthe requirements under 40 CFR 51.l60(a)-(b) apply to the Program. As

described throughout this notice, the Qualified Facilities Program fails to meet all of

these requirements. See 74 FR 48450, at 48460. As stated above, the Program fails to

require a permit that reflects all ofthe changes that occurred in the netting process and

provides enforceable emissions limits. The notification and recordkeeping requirements,

while beneficial, are not sufficient under Federal requirements to ensure enforceability.

E. Comments Addressing Whether the. Qualified Facilities Rules Meet Federal

Requirementsfor Major New Source Review

1. Comments generally supporting proposal.

Comment: The UT Environmental Clinic comments that nothing in the Qualified

Facility statute or rules limits applicability to minor modifications. The rules require

documentation at the plant site sufficient to comply with Nonattainment NSR and PSD,

but do not clarify that changes that constitute a major modification c~ot be made

through a Qualified Facility change.

The commenter further.stated that because the Qualified Facilities rules can be

used to authorize major modifications, the rules fail to meet the substantive requirements

ofNonattainment NSR and PSD. For emission increases associated with PSD, the

Qualified Facilities rules fail to require: (1) Best Available Control Technology; (2) an
68

air quality analysis ofimpacts on the NAAQS and PSD increments; and (3) additional

impact analysis associated with the implementation ofthe new source or modification.

For emission increases associated with Nonattainment NSR, the Qualified Facilities rules

fail to require: (l) Lowest Achievable Emission Rate; (2) emission offsets; and (3)

demonstration of compliance by other facilities in the State.

Response: These comments are consistent with EPA's analysis concluding that

Texas's Qualified Facilities Program does not meet Major NSR Substantive requirements

as discussed at 74 FR 48450, at 48458-48459.

EPA agrees that the Program is deficient because it lacks provisions that

require a Major NSR applicability determination for a change at a QualifiedFacility

before it is exempted from the permitting requirements. The Program's regulations do

not contain any emission limitations, applicability statement, or regulatory provision

restricting the change to Minor NSR. This lack ofsuch express provisions distinguishes

the Qualified Facilities Program from the Texas Minor NSR SIP rules for Permits by

Rule in Chapter 106 and Standard Permits in Chapter 116, Subchapter F. The Standard

Permits rules require a Major NSR applicability determination at 30 TAC 116.61O(b),

and prohibit circumvention of Major NSR at 30 TAC 116.61O(c). Likewise, the Permits

by Rule provisions require a Major NSR applicability determination at 30 TAC

106.4(a)(3), and prohibit circumvention of Major NSR at 30 TAC 106.4(b). The absence

ofthese provisions in the Qualified Facilities rules creates an unacceptable ambiguity in
69

the SIP. Therefore, the Program could allow circumvention ofMajor NSR. See 74 FR

48450, at 48456-48458.

EPA also agrees that the Program fails to address the required air quality impacts

analysis. The comments concerning BACT, LAER, emissions offsets and a

demonstration of compliance by other facilities in the State go beyond EPA's analysis in

the proposal and are outside the scope ofthis rulemaking.

Additionally, section 110(1) ofthe Act prohibits EPA from approving any revision

of a SIP ifthe revision would interfere with any requirement concerning attainment and

RFP, or any other requirement ofthe Act. There is not sufficient available information to

enable EPA to determine that the submitted Program would not interfere with any

requirement concerning attainment and RFP, or any other requirement ofthe Act. See 74

FR 48450, at 48459; and response above.

Comment: The Office ofthe Mayor, City of Houston, Texas, recognizes that the

Qualified Facilities Program has no regulatory provisions that clearly prevent the

Program from circumventing Major NSR SIP requirements thereby allowing changes at

existing facilities to avoid the requirement to obtain preconstruction authorizations.

Therefore, major sources of emissions are making major modifications to their facilities

without going through the permitting process. The commenter states that this is a fatal

flaw in the program, it is inconsistent with the CAA and should not be included in the

SIP.
70

Response: The comments by the Office ofthe Mayor, City ofHouston, Texas, are

consistent with EPA's conclusions as discussed at 74 FR 48450, at 48456-48457 and

response above.

2. Comments generally opposing proposal.

Comment: The TCC comments that Qualified Facilities is a Minor NSR Program

because TCEQ's rules clearly require sources making changes under the Program to

submit specific documentation, including "sufficient information as necessary to show

that the project will comply with 40 CFR 116.150 and l l S.l Slofthis title (relating to

Nonattainment Review) and 40 CFR 116.160-116.163 ofthis title (relating to Prevention

of Significant Deterioration Review) and with Subchapter C ofthis Chapter 116 (relating

to Hazardous Air Pollutants: Regulations Governing Constructed or Reconstructed Major

Sources (CAA 112(g), 40 CFRPart 63))." 30 TAC 116.117(a)(4).10

Response: As stated in the above, TCEQ's rules for Qualified Facilities are

insufficient to prevent circumvention of major NSR. See 74 FR 48450, at 48456-48458.

Comment: ERCC commented that the Qualified Facilities Program is limited to

Minor NSR. Qualified Facilities mandates compliance with 40 CFR 51.165 and 51.166,

by clearly stating that any change authorized by Qualified Facilities shall not "limit the

10 In a separate SIP submittal dated February 1,2006, Texas recodified the provisions of Subchapter C into

Subchapter E. TCEQ's rules also state that nothing in the rules governing the Program shall limit the

applicability of any Federal requirement. 30 TAC 116.117(d).
71

application ofotherwise applicable state or Federal requirements." TCAA 382.0512(c).

TCEQ regulations require that Qualified Facilities changes must be documented minor

source modifications. See 30 TAC 116.117(a)(4); 30 TAC 116.117(d). EPA's dismissal

of Section 116.117(a)(4) as a recordkeeping provision is unjustified. 74 FR 48450, at

48457. This Qualified Facilities regulatory reference to the PSD and NNSR programs

requires the regulated entity to document that the change is in compliance with the

Federal major source permitting programs and in compliance with state and Federal law.

Response: As stated above, the Qualified Facilities rules are insufficient to

prevent circumvention of Major NSR. 74 FR 48450, at 48456-48458.

Although there are recordkeeping requirements in the Program at submitted 40

TAC 116.117(a)(4) requiring owners and operators to maintain documentation containing

sufficient information as may be necessary to demonstrate that the project will comply

with the Federal CAA, Title I, parts C and D, these are the same general provisions as

those in the SIP at 30 TAC 116.111(a)(2)(H) and (I) for Minor and Major NSR SIP

permits. These recordkeeping requirements, although necessary for NSR SIP

approvabi1ity, cannot substitute for clear and enforceable provisions, consistent with

Texas's other Minor NSR programs, that limit applicability in the submitted Program to

Mi~or NSR only. 74 FR 48450, at 48456-48457.

Comment: TIP and BCCA comment that sources cannot use the Qualified Facilities

Program to circumvent Major NSR. 30 TAC 116.117(a)(4) and (d); Modification of
72

Existing Facilities Guidance, at 2. Senate Bill 1126, which authorized the Qualified

Facilities program, does not supersede any Federal requirements. Further, "[i]f a change

made under the qualified facility flexibility would result in the violation of a permit

special condition, the permit holder must revise the permit special conditions to stay in

compliance with the permit," through either the permit alteration process under 30 TAC

l16.1l6(c) or the notification process of30 TAC 116.117(d). Modification ofExisting

Facilities Guidance, at 9. Therefore, any changes to a facility must comply with Federal

NSR and PSD rules. To further show that the current Qualified Facilities rules are

sufficient to prevent circumvention, cornrnenter cites to EPA's proposed Indian Country

rule and recently approved state SIPs that do not contain explicit language calling for a

major NSR applicability determination before use ofthe minor NSR tools. ALASKA

ADMIN. CODE tit. 18, § 50.502, approved 72 FR 45378 (August 14,2007); 7 DEL. CODE

REGS. § 1102,65 FR 2048 (January 13,2000) (granting limited approval based on EPA's

concerns about public participation provisions). Further, no Federal requirement

mandates such language. Therefore, it is arbitrary for EPA to require Texas to include

additional language. CleanCoalition v. TXU Power, 536 F.3d 469, 472 (5th Cir. 2008).

Response: As stated above, EPA finds that the Qualified Facilities regulatory

provisions are inadequate to prevent circumvention of Major NSR and limit the Program

to minor modifications. TCEQ's rules and guidance are not clear on their face that

circumvention of Major NSR requirements is prohibited. EPA does not understand how

the permit alteration and notification requirements are relevant to the issue of

circumvention ofMajor NSR. EPA disagrees with the cornrnenter's analogy to the
73

proposed Indian Country Minor NSR rule. Today's rulemaking disapproves the

Qualified Facility Program for Major NSR, in part because the Program fails to first

require a Major NSR applicability demonstration to show that a proposed change does

not trigger Major NSR before the source can take advantage ofthe Program. In contrast,

under the proposed Indian Country rule, 40 CFR 49.153 would explicitly require the

proposed new source or modification to determine applicability to Major NSR before

taking advantage ofthe program. 71 FR 48696, at 48705,48728-48729. The source

could only use allowables netting under the proposed Indian Country rule after it

determined that Major NSR does not apply to the project. The Qualified Facilities rules

are deficient because they lack such a requirement, i.e., that Major NSR does not apply to

the change.

Comment: The ERCC commented that EPA sent a comment letter on the

Qualified Facilities proposed rule and agreed that it "adequately addresses the

applicability ofmajor sources and major modifications with respect to PSD and NA

permitting requirements." 21 Tex. Reg. 1569 (February 27, 1996).

Response: We acknowledge our 1995 comment letter stating that Texas

adequately satisfied our concern that the Qualified Facilities Program, as proposed,

would not circumvent or supersede any Major NSR SIP requirements. Since we sent that

letter, however, the Texas Legislature has revised the Texas Clean Air Act significantly.

Specifically, in 1999, the Texas legislature added an explicit statutory prohibition against

the use of an Exemption or Permit by Rule or a Standard Permit for major modifications.
74

See Texas Health and Safety Code 382.05196 and .057. These 1999 legislative actions

required a new legal review ofthe statutory definition for "modification of existing

facility" to see ifit was still limited to minor modifications. It is EPA's interpretation

that the 1999 legislative changes made this statutory definition ambiguous. 74 FR 48450,

at 48456-48457.

F. Comments Addressing Whether the Qualified Facilities Rules Meet Federal

Requirementsfor Minor New Source Review

1. Comments generally supporting proposal.

Comment: The UT Environmental Clinic commented that the CAA requires SIPs to

include a program for "regulation ofthe modification and construction of any stationary

source." 42 U.S.C. 11O(a)(2)(C). The program must prohibit any sources, including

minor sources, from emitting pollution in amounts that contribute significantly to

nonattainrnent and maintenance ofthe NAAQS or interfere with measures included in the

SIP. 42 U.S.C. 110(a)(2)(D)(i)(I)-(II). EPA has recognized the valuable role that Minor

NSR programs play in ensuring that air quality is protected from emissions that are not

subject to Major NSR. Technical Support Document for the Prevention of Significant

Deterioration and Nonattainrnent Area New Source Review Regulations, U.S. EPA, Nov.

2002, at 1-5-1-12. The Qualified Facilities Program is deficient as a Minor NSR program

because:
75

• The Qualified Facility rules do not require enforceable limits. Qualified Facilities

provide notification of "qualified" changes on form PI-E, II which TCEQ

acknowledges is not enforceable. TEXAS COMMISSION ON ENVIRONMENTAL

QUALITY Guidance for Air Quality, Qualified Changes Under Senate Bill 1126

(Dec. 2000), 27 [hereinafter Qualified Facilities GUidance]. Without enforceable

limits, facilities can use emission reductions as part of a netting analysis and

subsequently increase those emissions or rely on these reductions to offset other

increases. Some Qualified Facility representations are consolidated into a

preexisting permit upon revision or renewal at the discretion ofthe source. Even

if representations in the PI-E were enforceable, there are no monitoring or

reporting requirements to demonstrate compliance. 30 TAC 116.117(a). See 74

FR 48450 (Sept. 23, 2009), Docket, Technical Support Document, pg. 22.

• The Qualified Facility Rules do not include a pre-approval mechanism for all

authorized emission increases. The rules have no mechanism that prevents

implementation of Qualified Facility changes that may violate a control strategy

or interfere with attainment or maintenance ofthe.NAAQS. The Program only

requires Qualified Facilities to obtain pre-approval of a Qualified Facility change

ifit involves interplant'f trading above a "reportable limit." 30 TAC'

116.l17(b)(4). Facilities that do not rely on interplant trading are only required to

report their changes on an annual basis. 30 TAC 116.l17(b)(I).

11 30 TAC §ll6.ll7(b). See regulation text on pages 23-24 ofthe TSD for this action, which refer to 30

TAC I 16.117(b)(2) and (4).

12 Although the commenter refers to "interplant" trading, the Texas rules referred to by the commenter

relates to "intraplant" trading.
76

Response: As stated above at Section V.D.l, EPA agrees with the first point that

the submitted rules are practically unenforceable because the reductions are not

incorporated into a permit. 74 FR 48450, at 48462.

EPA agrees with the commenter that the Program does not include a pre-approval

mechanism for all authorized emission increases. Under section 11O(a)(2)(A) and (C) of

the Act a Minor NSR SIP must require enforceable emission limits for all minor

modifications. The Texas Program is not clear that for each Qualified Facility involved

in the netting transaction, the owner or operator must submit a permit application and

obtain a permit revision reflecting all ofthe changes made to reduce emissions (relied

upon in the netting analysis) as well as reflecting the change itselfthat increased

emissions. Furthermore, the Program's rules at 30 TAC 116.116(e)(4) and

116.117(b)(1)-(4) are not clear that the PI-E form is a permit application or registration

that must be submitted and that a revised permit must be issued by TCEQ to reflect the

changes made by all ofthe participating Qualified Facilities. There is no discussion of

when TCEQ issues the revised permit. See the submittals at 30 TAC 116.117(b); 74 FR

48450, at 48462.

2. Comments generally opposing proposal.

Comment: The TCEQ commented that it has always considered the Qualified

Facilities Program to be a Minor NSR Program although it is not stated in the rule. The

rule requires the person making a change to maintain sufficient documentation to
77

demonstrate that the project will comply with 30 TAC 116.150 and 116.161

(Nonattainment NSR), 116.160-116.163 (Prevention of Significant Deterioration

Review), and Chapter 116, Subchapter C (relating to implementing section 112(g) ofthe

Act. 30 TAC 116.117(a)(4). A major modification may not occur without going through

nonattainment or PSD review. If a project is determined to be a major modification,

under PSD and/or nonattainment rules,13 the owner/operator must obtain a Federal NSR

permit/major modification. Then Qualified Facilities Program does not impair TCEQ's

authority to control air pollution and take action to control a condition of air pollution if

TCEQ finds that such a condition exists. Texas Water Code section 5.514. TCEQ

commits to work with EPA to improve and clarify the rule language to ensure that the

Qualified Facilities Program is specifically limited to Minor NSR changes. Texas

comments that it does not apply the Qualified Facilities program to projects that are

subject to Major NSR or subject to section 112(g) ofthe Act.

Response: We appreciate TCEQ's willingness to work with EPA to improve and

clarify its rules to ensure that the Qualified Facilities Program does not apply to projects

that are subject to Major NSR or subject to section 112(g). However, the Program is

deficient because it fails to include specific provisions in its rules that assure that the

Qualified Facilities Program does not apply to projects that are subject to Major NSR or

subject to section 112(g). See 74 FR 48450, at 48456-48457.

Comment: ERCC commented that EPA has failed to demonstrate the proposed

revisions interfere with Texas's ability to achieve the NAAQS. Specifically:

13 40 CFR 51.165(a)(1)(v).
78

• Texas requires all air emissions from stationary sources (including minor sources)

receive authorization from the State. Texas has developed an extensive program

to meet the permitting and resource challenges ofthis requirement and the State's

numerous and varied emission sources. States have discretion under the CAA to

implement the state minor source program as long as it does not "interfere with

attainment ofthe NAAQS. Aside from this requirement, which is stated in broad

terms, the Act includes no specifics regarding the structure or functioning of

minor NSR programs ... as a result, SIP-approved minor NSR programs can vary

quite widely from State to State." Operating Permit Programs; Flexible Air

Permitting Rule; Final Rule, 74 Fed. Reg. 51,418 at 51,421 (Oct. 6, 2009).

Therefore, ERCC requests that EPA re-evaluate and withdraw the proposed

disapprovals. Texas air quality has shown dramatic improvement because ofthe

three submitted programs. EPA fails to recognize that these programs are similar

.to other approved state minor NSR programs.

• EPA's proposed disapprovals do not meet Congress' or the Courts' documented

standards for SIP disapproval. The CAA grants EPA authority to disapprove a

SIP revision ifsuch revision would interfere with the state's SIP. A revision

interferes with the SIP ifitimpedes the state's ability to achieve the NAAQS. 42

U.S.C. 7410(1); S. Rep. No. 101-228, at 9, 1990 u.S.C.C.A.N. 3385,3395; and

Train v. NRDC, 421 U.S. 60, 79 (1975). The commenter argues that EPA has the

burden to demonstrate that the submittals interfere with the NAAQS, but EPA's

proposals shift this burden to Texas. See Hall v. EPA, 273 F.3d 1146, 1161 (9th

Cir. Cal. 2001) (citing Train, 421 U.S. at 93 and Ober v. Whitman, 243 F.3d 1190,
79

1195 (9th Cir. 200 1)) (requiring EPA's analysis to "rationally connect" approval

of a revision to an area's likelihood ofmeeting the NAAQS).

• Since their submittal to EPA, the State's implementation ofthese rules has

significantly reduced statewide emissions. These improvements can be

demonstrated by reviewing both the records of emissions reductions and the

reductions measured by Texas ambient air quality monitors.

ERCC further commented that Qualified Facilities is protective of air quality by

limiting the use ofthis authorization under 30 TAC 116.116(e) and 30 TAC 116.10

(11)(E) and providing incentives to implement emission reductions. Like the Qualified

Facilities Program, EPA's proposed Indian Country Minor NSR program is based upon

an increase of allowable and not actual emissions. 71 FR 48696, at 48701. The EPAdeveloped Minor NSR program also utilizes emission rates in lieu of air quality impacts

to determine exemptions from the Minor NSR definition of modification because

"applicability determinations based on projected air quality impacts would be excessively

complex and resource intensive." Id. at 48701.

Response: We agree that states have great flexibility to create their own Minor

NSR SIP programs. However, at a minimum, those Minor NSR SIP programs must meet

all ofthe Federal requirements. Likewise, the Qualified Facilities Program must meet all

Federal requirements under the CAA in order to be approvable. Section V.C.I-2. As

discussed throughout our proposal and this final notice, the currentQualified Facilities

Program fails to meet all requirements. Moreover, the Qualified Facilities Program
80

would be an exemption from the Texas Minor NSR SIP. The Program does not provide

an alternative Minor NSRpermit authorization process but instead exempts facilities

from obtaining a NSR permit for changes. The State failed to demonstrate that this

exemption is de minimis and thus that the exempted changes will not violate the Texas

control strategies or interfere with NAAQS attainment, as required by section

110(a)(2)(c) and 40 CFR 51.160. 74 FR 48450, at 48460; see also Section V.C.1-2, D.1,

and G. ofthis Response to Comments. Additionally, EPA lacks sufficient available

information to determine that therequested SIP revision relaxation does not interfere with

any applicable requirements concerning attainment and RFP, or any other applicable

requirement ofthe Act, as required by section 110(1) ofthe Act. 74 FR 48450, at 48463;

see also Section V.D.l.

EPA disagrees with the commenter's analogy to the proposed Indian Country

Minor NSR rule. Today's rulemaking disapproves netting under the Qualified Facilities

Program for Minor NSR, in part because the Program fails to first require a Major NSR

applicability demonstration to show that a proposed change does not trigger Major NSR

before the Qualified Facility can take advantage ofthe Program. The proposed Indian

Country rule would explicitly require the proposed new source or modification first

determine applicability to Major NSR before taking advantage ofthe program. 71 FR

48696, at 48705,48728-48729. The source could only use allowables netting under the

proposed Indian Country rule after it determined that Major NSR does not apply to the

project. The Qualified Facilities rules are deficient because they lack the requirement for

a Major NSR applicability determination, not because the Program allows allowables
81

netting under Minor NSR. Further, while the commenter is correct that the proposed

Indian Country rule would allow the use of emissions rates in lieu of air quality impacts,

the use of emissions rates is only to establish applicability under Minor NSR. Such an

approach is acceptable as long as the program assures protection ofthe NAAQS. 71 FR

48696, at 48701.

Comment: TIP and BCCA commented that SIP revisions are approvable ifthey

do not interfere with the NAAQS. States have the primary responsibility for developing

plans for attainment and maintenance ofthe NAAQS. See CleanCOALition v. TXU

Power, 5~6 F.3d 469, 472 n.3 (5th Cir. 2008) (stating that "EPA has no authority to

question the wisdom of a State's choices of emissions limitations ifthey are part of a SIP

that otherwise satisfies the standards set forth in 42 U.S.c. 7401(a)(2)"). The last ten

years have seen unprecedented improvement in Texas air quality, and Texas has been

implementing the Qualified Facilities program during that time. The submittal does not

raise interference concerns because it strengthens the existing SIP; therefore the Qualified

Facilities program should be fully approvable. The proposal states that Qualified

Facilities lacks safeguards to prevent interference with attainment and maintenance ofthe

NAAQS. The commenters correlate this deficiency with EPA's comments on two facets

ofthe submittal that EPA proposed to find approvable as long as ambient air is protected

in the trading: 1) netting is not based on contemporaneous trading; and 2) the Program's

netting is not based totally on changes in actual emissions. TIP states that the existing

Qualified Facilities rules contain adequate safeguards ofthe NAAQS. Additionally,

changes are sufficiently documented and quantified to ensure that a decrease at a facility
82

will only be used in one netting analysis. The provision requires that sources must

document compliance with Federal requirements safeguards the NAAQS. Commenter

states that Qualified Facilities could be viewed as an exemption to Minor NSR

requirements; however, the rules prevent changes that will violate the Texas control

strategies or interfere with NAAQS attainment. Qualified Facilities flexibility is only

allowed where the change will not result in a net increase above existing BACT, and

BACT limits were set to protect the NAAQS. Qualified Facilities incorporates Texas's

control strategies, and therefore, safeguards the NAAQS.

Response: As stated above, in order to be approved as part ofthe SIP, the

Qualified Facilities Program must meet all applicable Federal requirements. Here, the

commenter's argument is not supported by the Fifth Circuit's language in

CleanCOALition, 536 F.3d at 472 n.3, because the Qualified Facilities Program does not

meet 42 U.S.C. 7410(a)(2)(C). EPA agrees with the commenter that the Qualified

Facilities Program is an exemption to the Texas Minor NSR SIP (and can be construed to

be an exemption to the Texas Major NSR SIP). A requirement for approval of an

exemption to a Minor NSR SIP is a demonstration that the exemption will not permit

changes that will violate a state's control strategies or interfere with NAAQS attainment.

Texas failed to submit such a demonstration. In addition, EPA lacks sufficient available

information to determine that this SIP relaxation would not interfere with NAAQS

attainment, RFP, or any other requirement ofthe Act. See Section V.D.1 above.

Furthermore, EPA cannot find any provisions in the Program that require a separate

netting analysis be performed for each such change. See 74 FR 48450, at 48461-48462.
83

We also find that the Program does not prohibit future increases at a Qualified Facility, or

include regulatory language that assures that any future increase at a Qualified Facility at

which a previous netting reduction occurred is analyzed in totality to assure that the

NAAQS are protected. The Qualified Facilities rules are deficient to protect the NAAQS

for the reasons stated above, not because the Program allows allowables netting under

Minor NSR. The commenter asserts that these safeguards exist in the Qualified Facilities

Program but provides no citation or other basis to support its assertion. Finally, EPA

finds that the Texas rules do not specifically require maintenance ofinformation and

analysis showing how a source concluded that there will be no adverse impact on air

quality. 74 FR 48450, at 48462. The commenter provides no citation or other basis to

show how the Qualified Facilities Program meets this requirement.

Comment: TxOGA commented that the documentation and notification

requirements of 30 TAC 116.117 provide safeguards to ensure that changes will not

violate the control strategy or interfere with attainment and maintenance ofthe NAAQS.

Also, Qualified Facilities flexibility is only available where the change will not result in a

net increase above BACT levels at well controlled facilities.

Response: As stated above, there is not sufficient available information to enable

EPA to make a determination pursuant to section 110(1) that the Qualified Facilities

Program, as a whole, would not interfere with any applicable requirement concerning

attainment and RFP or any other requirement ofthe Act. Additionally, as required by

section 11O(a)(2)(C) and 40 CFR 51.160, the State failed to submit information to
84

demonstrate that the Program, as an exemption from the Texas Minor NSR SIP, would

not permit a source that will violate the control strategy or interfere with NAAQS

attainment. See Section V.D.I above for more information.

G. Comments Addressing Whether Existing Qualified Facilities Have Undergone an Air

Quality Analysis

Comment: The UT Environmental Clinic disagrees with EPA's statement in the

proposal that any Qualified Facility will have a Major or Minor NSR SIP permit, will

have been subject to an air quality analysis, and will have demonstrated that its emissions

have no adverse air quality impact. 74 FR 48450, at 48560 (Sept. 23, 2009). A facility

can qualify as a Qualified Facility ifit uses technology at least as effective as 10-year old

BACT, "regardless of whether the facility has received a preconstruction permit or permit

amendment or has been exempted under the TCCA, 382.057." 30 TAC 116.11(E)(ii).

Likewise, the Qualified Facility rules specifically provide for preapproval of Qualified

Status ofthose facilities that do not have an allowable emissions limit in a permit, PI-8 or

PI-E form.

The commenter further states that, while Texas rules generally require emissions

to have some sort of authorization, the rules do exempt some increases from the

definition of "modification," thereby allowing these emissions to avoid any review. 30

TAC 116.10(11). For emissions that must be permitted, TCEQ's rules allow the use of
85

various permitting mechanism that do not assure protection ofthe NAAQS and control

strategy requirements. 30 TAC 116.110(a).

The commenter states that the rules additionally provide that unless one "facility"

at an account has been subject to public notice under the Chapter 116 permitting or

renewal provisions, total emissions from all facilities permitted by rules at an account

shall not exceed the limits referenced in 30 TAC 106(a)(4). Because it is rare that at least

one facility at an account has not been through public notice, companies are allowed to

use multiple permits-by-rule to authorize emissions at a source. See UT Environmental

Clinic Comment Letter, Attachment 5: Chart offacility PBR authorizations. TCEQ does

not analyze the cumulative air quality impact ofthese multiple authorizations. TCEQ

rules require permits-by-rule and standard permits to be "incorporated' into the facility's

permit after the permit is renewed or amended; and there are no rules regarding

procedures or modeling for such "incorporation."

Finally, the commenter stated that TCEQ has issued guidance that requires

standard permits and PBRs that "directly affect the emissions of permitted facilities" to

be "consolidated by reference" at renewal or amendment." TEXAS COMMISSION ON

ENVIRONMENTAL QUALITY, Permit by Rule and Standard Permit Consolidation Into

Permits, (Sept 1,2006),3. Any PBRsand standard permits that do not affect emissions

permitted facilities can be incorporated at the discretion ofthe permittee, Id at 4. The

TCEQ guidance requires such PBRs and standard permits that are consolidated by

incorporation to undergo an impacts review. Because these permits are renewed every
86

ten years, this review may not occur for many years. Furthermore, PBRs do not require

Texas BACT.

Response: We agree with the commenter's assertion that the submitted

regulations do not explicitly require an air quality impacts analysis whenever a facility

uses technology at least as effective as l O-year old Minor NSR BACT, "regardless of

whether the facility has received a preconstruction permit or permit amendment or has

been exempted under the TCCA 382.057." Further, facilities "qualified" using

technology at least as effective as 10-year old Minor NSR BACT, must use actual

emissions as a baseline. See 30 TAC 116.10(2) and 116.116(e)(2)(C). Presumably, this

provision exists because facilities "qualified" under 30 TAC 116.1O(II)(E)(ii), would not

have a permitted allowable emissions limit because they lack an underlying permit. If a

facility could be "qualified" without having a pre-construction permit, then the facility

could net-out of permit requirements without ever having an air quality analysis ofthe

baseline allowables limit. TCEQ's comments, which are summarized below, imply that

State law requires all sources in Texas to get an underlying permit, and therefore, receive

an air quality impact analysis. However, we view the State's comment to be vague as to

whether a permit is a pre-requisite under the Program itself. Therefore, the Qualified

Facilities rules are deficient because they fail to require an underlying Texas NSR SIP

permit and air quality impact analysisin order to be "qualified" under the Program.

Comments concerning the State's permit-by-rule and standard permit programs

are outside the scope ofthis rulemaking,
87

Comment: TCEQ commented that the Texas Legislature created the Qualified

Facilities Program to provide flexibility to permitted facilities and to provide a means by

which grandfathered facilities could apply control technology and become "qualified"

grandfathered facilities without triggering Federal NSR. Subsequently, in 2001, the

legislature required all grandfathered facilities to obtain authorization or shutdown. The

program remains in effect as emissions are controlled, no new emissions above existing

allowable limits are allowed, and Federal requirements are considered and met

In summary, the Program reinforced the TCEQ's duties under the Texas Clean

Air Act to protect air quality and control air contaminant emissions by practical and

economically feasible methods. Tex. Health & Safety Code 382.002, 382.003(9)(e).

Therefore, the environment has benefitted from the Program because emissions were

controlled prior to the Texas Legislature mandating shut down or obtaining authorization;

air quality benefitted as demonstrated by monitoring which measured continued

improvement; regulated entities benefitted because they were given flexibility; and the

State benefitted by reasonable regulation that encourages responsible economic

development

TCEQ also commented that allowable emissions (both hourly and annual rates)

are one ofthe criteria used to provide "state qualified" flexibility because the facilities

must exist and be authorized, and thereby undergone appropriate permit review.
88

Response: As stated above, we find that the Qualified Facilities rules fail to

explicitly require a permit before a facility can be "qualified" under the Program. While

TCEQ asserts that to become a Qualified Facility, a facility must undergo permit review

and be authorized, the State does not cite to any regulatory provision in the Program that

explicitly requires such permitting authorization. EPA recognizes that State legislation

subsequent to the Qualified Facilities Program required grandfathered facilities to obtain

permit authorizations or shut down. There is nothing sufficiently explicit, however, in

the Qualified Facilities Rules that ensures all Qualified Facilities received an air quality

impacts analysis through an initial permit application review process. It is commendable

that TCEQ intends to implement its Qualified Facilities Program in a manner that may

benefit the environment, but Texas failed to incorporate these procedures into its

regulations; therefore, these procedures are not Federally enforceable.

H Comments on the Definitions of "Grandfathered Facility," "Maximum Allowable

Emission Rate Table, " and "New Facility"

Comment: TCEQ and TCC agree with EPA's proposal to approve the definitions

of "grandfathered facility," "maximum allowable emission rate table," and "new

facility." The TCEQ urges EPA to.take final action to approve these definitions.

Response: These comments further support EPA's action to approve these

definitions.
89

1 Comments on the Definitions of "Actual Emissions, " "Allowable Emissions, "

"Modification ofExisting Facility" at (E), and "Qualified Facility"

Comment: TCEQ confirmed that Senate Bill 1126 amended the Texas Clean Air Act

by revising the definition of "modification of existing facility," which changed the factors

used to determine whether a modification for State permitting (i.e. Minor NSR) has

occurred. In 1996,30 TAC Chapter 116 was revised to incorporate this legislative

directive. These changes provide that modifications maybe made to existing facilities

without triggering the State's Minor NSR requirements whenever:

• Authorization for the facility to be modified was issued a permit, permit

amendment, or was exempted from permitting requirements within 120 months

from when the change will occur; or

• Uses air pollution control methods that are at least as effective as the BACT that

was required within 120 months from when the change will occur.

Such facilities are designated as "qualified facilities." TCEQ considers the use of

"modification" to be separate and severable from the Federal definition of "modification"

as reflected in the SIP-approved Major NSR Program.

TCEQ further asserts that the definitions of "actual emissions," "allowable

emissions," "modification of existing facility" at (E) "qualified facility," respectively at

30 TAC 116.10(1), (2), (11)(E), and (16), meet Federal requirements.
90

Response: We are disapproving these definitions because they are not severable

from the Qualified Facilities Program, and the State failed to submit information

sufficient to demonstrate how these definitions meet Federal requirements. The

definitions of "actual emissions" and "allowable emissions" include a statement that

limits these definitions only when determining whether there has been a net increase in

allowable emissions under 30 TAC 116.116(e), which implements the Qualified Facilities

Program, and thus makes these definitions not severable from the Program. Subsection

(E) ofthe definition of "modification of existing facility" only applies to changes that do

not result in a net increase in allowable emissions, which implements the Qualified

Facilities Program, and thus makes this subsection not severable from the Program. The

definition of "qualified facility" defines a term that is used in the Qualified Facilities

Program, which makes it not severable from the Qualified Facilities Program.

Furthermore, the State did not provide sufficient information to demonstrate how

these definitions meet Federal requirements. Additionally, State legislative actions in

1999 made the statutory definition of' 'modification of existing facility" ambiguous as to

whether the definition is still limited to minor modifications. The State did not submit

any legal support for TCEQ's assertion that the use of "modification" in the Texas Clean

Air Act is for Minor NSR only; and therefore separate and severable from the definition

of "modification" in the Texas Major NSR SIP. See 74 FR 48450, at 48456-48457 and

Section V.E.2 above for further information.
91

J Comments on the Definition of"Best Available Control Technology" ("BACT")

Comment: The UT Environmental Clinic, TCC, TIP, BCCA, TxOGA, GCLC,

and TCEQ provided comments on EPA's proposed disapproval ofTCEQ's definition of

BACT.

Response: We are not taking final action on the definition ofBACT in today's

rulemaking; therefore, these comments are outside the scope of our rulemaking. They

will be considered, however, in our final action on this definition.

K. Comments on Severable Portions ofthe Definition of "Modification ofExisting

Facility" at 30 TAC 116.10(l1)(A) & (B)

Comment: The UT Environmental Clinic, TxOGA, TIP, BCCA, and TCEQ

provided comments on EPA's proposed disapproval ofTCEQ's changes to the definition

of "modification of existing facility" at 30 TAC 116.10(11 )(A) and (B) regarding

insignificant increases.

Response: We are not taking final action on 30 TAC 116.l0(l1)(A) and (B) of

the definition of "modification of existing facility" in today's rulemaking; therefore, these

comments are outside the scope of our ru1emaking. They, however, will be considered in

our final agency action on these two definitions.
92

1. Comments on the Definition ofSeverable Subsection of "Modification ofExisting

Facility" at 30 TAC 116.10(11)(G)

Comment: The UT Environmental Clinic and TCEQ provided comments on the

proposed disapproval of 30 TAC 116.10(11)(G) ofthe definition of "modification of

existing facility.

Response: We are not taking final action on 30 TAC 116.10(11)(G) ofthe definition of

"modification of existing facility" in today's rulemaking; therefore, these comments are

outside the scope ofour rulemaking. They will be considered, however, in our final

agency action on this definition.

M Comments on the Reinstatement ofthe Previously Approved Definition of "Facility"

Comment: The TCEQ acknowledges that EPA proposes to correct a

typographical error in 72 FR 49198 to clarify that the definition of "facility," as codified

at 30 TAC 116.1O(6), was approved as part ofthe Texas SIP in 2006 and remains part of

the Texas SIP. 74 FR 48450, at 48455 at n.6.

Response: EPA thanks TCEQ for its acknowledgement that the definition of

"facility" at 30 TAC 116.10(6) was approved as part ofthe Texas SIP in 2006 and

remains part ofthe Texas SIP. We are making the administrative change to correct the

typographical error in the Code of Federal Regulations.
93

In our proposed rule notice, we requested comments on the State's legal meaning

ofthe term "facility." See 30 TAC 116.10(6). We stated that the interpretation ofthis

term is critical to our understanding ofthe Texas Permitting Program. We received the

following comments on this issue:

1. Comments generally supporting proposal.

Comment: The UT Environmental Clinic understands that EPA's proposal is only

to correct a typographical error that inadvertently removed the definition of "facility"

from the SIP. The commenter notes; however, that Texas's use ofthis term is

problematic because ofits dual definitions and broad meanings. The commenter

compares the Texas's definition of "facility" in 30 TAC 116.10 with the definition of

"stationary source" in 30 TAC 116.12 and the definition of "building, structure, facility,

or installation" in 30 TAC 116.12 and conclude that these definitions are quite similar.

The commenters acknowledge that this argument assumes that one can rely on the

Nonattainment NSR rules to interpret the general definitions. If one cannot use the

Nonattainment NSR definitions to interpret the general definition of "facility," then one

must resort to the definition of "source" in 30 TAC 116.10(17), which is defined as "a

point oforigin of air contaminants, whether privately or publicly owned or operated."

Pursuant to this reading, a facility is more like a Federal "emissions unit." 40 CFR

51.165(a)(I)(vii). '''Emissions unit' means any part of a stationary source that emits or

would have the potential to emit any regulated NSR pollutant ... " At least in the
94

QualifiedFacility rules, it appears that TCEQ use ofthe definition of "facility" is more

like a Federal . "emissions unit." The circular nature ofthese definitions, and the existence

oftwo different definitions of "facility" without clear description oftheir applicability,

makes Texas's rules, including the Qualified Facility rules, vague. Commenters urge

EPA to require Texas to clarify its definition of "facility" and to ensure that its use ofthe

term throughout the rules is consistent with that definition.

2. Comments generally opposing proposal.

Comment: TCEQ responded to EPA's request concerning its interpretation of

Texas law and the Texas SIP with respect to the term "facility." The definition of

"facility" is the cornerstone ofthe Texas Permitting Program under the Texas Clean Air

Act. In addition, to provide clarity and consistency, TCEQ also provides similar

comments in regard to Docket ID No. EPA-R06-0AR-2005-TX-0032 and EPA-R06-

OAR-2006-0133. EPA believes that the State uses a "dual definition" for the term

facility. Under the TCAA and TCEQ rule, "facility" is defined as "a discrete or

identifiable structure, device, item, equipment, or enclosure that constitutes or contains a

stationary source, including appurtenances other than emission control equipment. Tex.

Health & Safety Code 382.003(6); 30 TAC 116.10(6). A mine, quarry, well test, or road

is not considered to be a facility." A facility may contain a stationary source - point of

origin of a contaminant. Tex. Health & Safety Code 382.003(12). As a discrete point, a

facility can constitute but cannot contain a major stationary source as defined by Federal

law. A facility is subject to Major and Minor NSR requirements, depending on the facts
95

ofthe specific application. Under Major NSR, EPA uses the term "emissions unit"

(generally) when referring to a part of a "stationary source," TCEQ translates "emissions

unit" to mean "facility,"14 which is at least as stringent as Federal rule. TCEQ and its

predecessor agencies have consistently interpreted facility to preclude inclusion of more

than one stationary source, in contrast to EPA's stated understanding. Likewise, TCEQ

does not interpret facility to include "every emissions point on a company site, even if

limiting these emission points to only those belonging to the same industrial grouping

(SIC Code)." The Federal definition of "major stationary source" is not equivalent to the

state definition of "source." 40 CFR 51·.l66(b)(l)(a). A "major stationary source,,15 can

include more than one "facility" as defined under Texas law - which is consistent with

EPA's interpretation of a "major stationary source" including more than one emissions

unit. The above interpretation of "facility" has been consistently applied by TCEQ and

its predecessor agencies for more than 30 years. The TCEQ's interpretation ofTexas

statutes enacted by the Texas Legislature is addressed by the Texas Code Construction

Act. More specifically, words and phrases that have acquired a technical or particular

meaning, whether by legislative definition or otherwise, shall be construed accordingly.

Tex. Gov't Code 311.011(b). While Texas law does not directly refer to the two steps

allowing deference enunciated in Chevron USA., Inc. v. Natural Resources Defense

Council, Inc., Texas law and judicial interpretation recognize Chevron l 6 and follow

14 The term "facility" shall replace the words "emissions unit" in the referenced sections ofthe CFR." 30

TAC 116.160(c)(3)

IS Tex. Health & Safety Code § 382.003(12).

16 Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 387,842-43 (1984). "When a

court reviews an agency's construction ofthe statute which it administers, it is confronted with two

questions. First, always is the question whether Congress has directly spoken to the precise question at

issue. If the intent ofCongress is clear, that is the end ofthe matter, for the court, as well as the agency,

must give effect to the unambiguously express intent ofCongress. If, however, the court determines

Congress has not directly addressed the precise question at issue, the court does not simply impose its own
96

similar analysis as discussed below. The Texas Legislature intends an agency created to

centralize expertise in a certain regulatory area "be given a large degree of latitude in the

methods it uses to accomplish its regulatory function." Phillips Petroleum Co v. Comm'n

on Envti. Quality, 121 S.W.3d 502, 508 (Tex.App.v-Austin 2003, no pet.), which cites

Chevron to support the following: "Our task is to determine whether an agency's

decision is based upon a permissible interpretation ofits statutory scheme." Further,

Texas courts construe the test of an administrative rule under the same principles as ifit

were a statute. Texas Gen. lndem. Co. v. Finance Comm 'n, 36 S.W,3d 635,641

(Tex.App.v-Austin 2000, no pet.). Texas Administrative agencies have the power to

interpret their own rules, and their interpretation is entitled to great weight and deference.

ld. The agency's construction ofits rule is controlling unless it is plainly erroneous or

inconsistent. ld. "When the construction of an administrative regulation rather than a

statute is at issue, deference is even more clearly in order." Udall v. Tallman, 380 U.S. 1,

17 (1965). This is particularly true when the rule involves complex subject matter. See

Equitable Trust Co. v. Finance Comm 'n, 99 S.W.3d 384,387 (Tex.App.-Austin 2003,

no pet.). Texas courts recognize that the legislature intends an agency created to

centralize expertise in a certain regulatory area "be given a large degree oflatitude in the

methods is uses to accomplish its regulatory function." Reliant Energy, Inc. v. Public

Util. Comm 'n, 62 S.W.3d 833,838 (Tex.App.-Austin 2001, no pet.)(citing State v.

Public UtiI. Comm 'n, 883 S.W.2d 190, 197 (Tex. 1994). In summary, TCEQ translates

"emissions unit" to mean "facility." Just as an "emissions unit" under Federal law is

construed by EPA as part of a major stationary source, a "facility" under Texas law can

construction on the statute, as would be necessary in the absence of an administrative interpretation.

Rather, ifthe statute is silent or ambiguous with respect to the specific issue, the question for the court is

whether the agency's answer is based on a permissible construction ofthe statute."
97

be a part of a major stationary source. However, a facility cannot include more than one

stationary source as defined under Texas law.

Comment: TCC, BCCA, TIP, and TxOGA commented that Texas rules are clear

that "facility," as defmed in 30 TAC 116.10(6) i,s equivalent to the TCEQ term

"emissions unit.,,17 TCC also stated that the definition of "facility" is so broad that it

requires every possible source of air contaminants to obtain some type of approval from

TCEQ.

Response: We have determined that Texas's use ofthis term "facility," as it

applies to the State's Qualified Facilities Program is overly vague; and therefore,

unenforceable. TCEQ comments that it translates "emissions unit" to mean "facility."

Yet, Texas's PSD non-PAL rules explicitly limit the definition of "facility" to "emissions

unit," but the Qualified Facilities rules fail to make such a limitation. 74 FR 48450, at

48475; compare 30 TAC 116.10(6) to 30 TAC 116.160(c)(3). The State clearly thought

the prudent legal course was to limit "facility" explicitly to "emissions unit" in its PSD

SIP non-PALs revision. However, TCEQ did not submit information sufficient to

demonstrate that the lack ofthis explicit limitation in the submitted Qualified Facilities

revisions is at least as stringent as the revised definition in the PSDnon-PALs definition.

We recognize that TCEQ should be accorded a level of deference to interpret the

State's statutes and regulations; however, such interpretations must meet applicable

17 Additionally, the definition of "facility" is similar to the definition of "emission unit" in Texas's Title V

rules. 30 TAC 122.10(8).
98

requirements ofthe Act and implementing regulations under 40 CFR part 51 to be

approvable into the SIP as Federally enforceable requirements. The State has failed to

provide any case law or SIP citation that confirms TCEQ's interpretation for "facility"

under the Qualified Facilities Program that would ensure Federal enforceability.

Nevertheless, as stated above, the definition of "facility" at 30 TAC 116.10(6)

was approved as part ofthe Texas SIP in 2006 and remains part ofthe Texas SIP.

Therefore, EPA is obligated to correct the typographical error and reinstate the definition

of "facility" into the Code of Federal Regulations.

However, today's final disapproval ofthe Qualified Facilities Program is based in

part on the lack of clarity ofthe definition of "facility" as it applies specifically to this

Program. Additionally, EPA has proposed disapproval ofthe State's Flexible Permit

Program and NSR Reform SIP submittals partially based on the need for clarity ofthe

definition of "facility" as it applies to those programs.

N Comments on the Definition ofthe Term "Air Quality Account Number"

Comment: The TCEQ commented that it no longer uses the term "air quality

account number" and now uses the term "account," which is a SIP approved definition. L8

18 30 TAC 101.1(1) Account - For those sources required to be permitted under Chapter 122 ofthis title ... ,

all sources that are aggregated as a site. For all other sources, any combination ofsources under common

ownership or control and located on one or more contiguous properties, or properties contiguous except for

intervening roads, railways, rights-of-way, waterways, or similar divisions. Approved as part ofthe Texas

SIP at 70 FR 16129 (March 30, 2005).
99

Administrative changes to the Qualified Facilities Program are planned to reflect the

change in terms.

Response: EPA's evaluation of "account" and "air quality account number" were

based upon the SIP approved definition of "account." 74 FR 48450, at 48455, n.7. The

State's comment that it no longer uses "air quality account number" but uses "account"

does not change EPA's final decision to disapprove the Qualified Facilities Program SIP

revision submittal. In fact, the State's using a different definition that is not in the

Qualified Facilities Program's rules provides additional grounds for disapproval. The

Qualified Facilities Program's rules must be clear about which sources on a site can

participate in the netting process. This goes to the heart ofwhether the changes are made

outside a major stationary source. If TCEQ makes the planned changes noted in the

comment letter, the changes must be adopted and submitted to EPA for approval as a SIP

revision. Upon receipt, we would review the regulatory changes and evaluate whether

they meet the Act and EPA regulations.

The Texas SIP defines an "account" to include an entire company site, which

could include more than one plant and more than one major stationary source. SIP rule

30 TAC 101.1(1), second sentence. It does not limit the combination ofsources to a SIC

code. As stated above, EPA interprets the Program to allow an emission increase to net

out by taking into account emission decreases outside ofthe major stationary source.

Therefore, the Program does not meet the CAA's definition of "modification" and the
100

Major NSR SIP requirements and is inconsistent with Asarco v. EPA, 578 F.2d 320 (D.C.

Cir. 1978). 74 FR 48450, at 48458-48459; Section IV.B. above.

0. Comments on Whether the Qualified Facilities Rules Meet New Source Review Public

Participation Requirements

1. Comments generally supporting proposal.

Comment: HCPHES commented that the State's public participation rules are not

user friendly with regards to timeliness ofinitial notification and the time restrictions for

public comment. Specifically, it is not uncommon for a permit modification or

amendment notification to be delayed on occasion, which results in a shorter period for

citizens as well as HCPHES to respond. These situations have unduly limited the

opportunities for the public and affected agencies to be able to provide meaningful

reviews and submit appropriate comments. The commenter supports EPA's conclusion to

disapprove portions ofthe SIP as proposed until such time as TCEQ addresses all ofthe

specifics noted in the Federal Register. In addition, HCPHES strongly supports

strengthening public participation rules such that Texas citizens are able to participate

meaningfully in the process.

Comment: Several members ofthe Texas House commented that while the

Qualified Facilities Program was a legislative creation, these members ofthe Texas

House recognize that the statutory language and associated regulations are inconsistent
101

with current CAA requirements regarding modifications and public participation. A

particular concern is inadequate public participation.

Comment: HCPHES strongly supports strengthening public participation rules

such that Texas citizens are able to participate meaningfully in the process.

Response: General comments on Texas's public participation requirements are

outside the scope ofthis rulemaking. However, in a separate action, EPA has proposed a

limited approval/limited disapproval ofTexas's SIP submittal for public participation (73

F~ 72001 (Nov. 26,2008». In addition, TCEQ has proposed revisions to these rules and

EPA is working with TCEQ to strengthen its rules for public participation to ensure the

State's rules comply with all Federal requirements.

2. Comments generally opposing proposal.

Comment: The UT Environmental Clinic commented that the Qualified Facilities

Rules allow industrial plants to make changes that can affect neighboring residents with

absolutely no notice or opportunity for participation. These rules allow modifications

without meeting the Federal public participation requirements that are applicable to

Nonattainment NSR and PSD permits under the Act, 40 CFR 51.161, and 40 CFR

51.l66(q). TCEQ's Qualified Facilities guidance specifically states that the qualified

facility notification process may be used instead ofthe alteration process to change

permit special conditions. Qualified Facilities Guidance, at 14.
102

Response: EPA agrees with the commenter that the Qualified Facilities rules do

not meet the Federal public participation requirements for each individual change, either

for a Major or Minor NSR SIP revision. As discussed in more detail in Section V.D.l

above, the Program does not clearly require a permit for each change. Therefore, the

Program does not provide an opportunity for public review, which circumvents public

participation requirements in 40 CFR 51.161. See 74 FR 48450, at 48459-48460.

Comment: The UT Environmental Clinic comments that the Texas rules also

allow sources to amend terms and conditions of a Major NSR or Minor NSR permit

without public participation. EPA has already expressed concerns to Texas about using

methods other than permit amendment for making changes to individual NSR permits.

Letter to Dan Eden, TCEQ, Deputy Director, from Carl Edlund, EPA, Region 6, Director,

Multimedia Planning and Permitting Division (March 12,2008), p. 8. Letter to Richard

Hyde, TCEQ, Director Air Permits Division from JeffRobinson, EPA, Chief, Air Permits

Section (May 21, 2008), p.6.

Response: The comments that TCEQ's rules allow sources to amend terms and

conditions of a Major NSR or Minor NSR permit without public participation and the use

of methods other than permit amendments are outside the scope ofthis rulemaking.

Comment: GCLC provided comments on Texas's public participation program

because the public participation issues are implicated throughout the three Federal
103

Register notices (Qualified Facilities, Flexible Permits, and NSR Reform). GCLC

considers these comments timely and appropriate because EPA's proposal directs the

public to read the three pending notices and the November 2008 public participation

proposal "in conjunction" with each other.

Response: We recognize the need to read the notices in conjunction with each

other because the permits issued under these State programs are the vehicles for

regulating a significant universe ofthe air emissions from sources in Texas and thus

directly impact the ability ofthe State to achieve and maintain attainment ofthe NAAQS

and to protect the health ofthe communities where these sources are located. 74 FR

48450, at 48453. However, this final rulemaking only addresses the Qualified Facilities

Program. Therefore, specific issues related to the public participation submittal package

are outside the scope ofthis rulemaking.

Comment: The ERCC commented that public review requirements have been met

because the implementing regulations for Qualified Facilities were subject to notice and

comment. Proposed on 20 Tex. Reg. 8308 (October 10, 1995) finalized on 21 Tex. Reg.

1569 (February 27, 1996).

Response: EPA agrees with the commenter that the Qualified Facilities rules met

the public participation requirements for SIP revision submittals. EPA, however,

disagrees with the commenter that the permit application public participation

requirements ofthis submitted Qualified Facilities program meets the NSR public
104

participation requirements for individual permit applications. Where the adopted state

rules fail to provide for the minimum public participation required under Federal law for

individual permit applications, Federal public participation requirements cannot be

considered met just because the deficient state rules were adopted after public no.tice and

comment. Please see our comments above.

VI. Final Action

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

relate to the Modification of Qualified Facilities, identified in the Table in section lILB of

this action. These affected provisions include the following regulations under Chapter

116: 30 TAC 116.116(e), 30 TAC 116.117,30 TAC 116.118, and the following

definitions under 30 TAC 116.10 -- General Definitions: 30 TAC 116.10(1) - definition

of "actual emissions," 30 TAC 116.10(2) - definition of "allowable emissions," 30 TAC

116.10(11)(E) under the definition of "modification of existing facility," and 30 TAC

116.1O(16) - definition of "qualified facility. " EPA finds that these submitted provisions

and definitions in the submitted Texas Qualified Facilities Program are not severable

from each other.

EPA is disapproving the submitted Texas Qualified Facilities Program as a

substitute Major NSR SIP revision because it does not meet the Act and EPA's

regulations. We are also disapproving the submitted Qualified Facilities Program asa

Minor NSR SIP revision because it does not meet the Act and EPA's regulations.
105

The Qualified Facilities Program submittals do not "meet the requirements for a

substitute Major NSR SIP revisions because (1) the Program does not prevent

circumvention ofMajor NSR; (2) the State failed to submit information sufficient to

demonstrate that the Program's regulatory text requires an evaluation of Major NSR

applicability before a change is exempted from permitting; (3) the Program is deficient

for Major NSR netting because (a) it authorizes the use of allowable, rather than actual

emissions, to be used as a baseline to determine applicability. This use of allowables

violates the Act and Major NSR SIP requirements and is contrary to New York v. EPA,

413 F.3d 3, 38-40 (D.C. Cir. 2005) ("New York I") and (b) it could allow an emission

increase to net out by taking into account emission decreases outside ofthe major

stationary source and, in other circumstances, allow an evaluation of emissions of a

subset of units at a major stationary source; and (4) there is not sufficient available

information to enable EPA to make a determination that the requested SIP revision

relaxation would not interfere with any applicable requirements concerning attainment,

RFP, or any other applicable CAA requirement, as required by section 110(1).

The Qualified Facilities Program submittals do not meet the requirements for a

Minor NSR SIP revision. The submitted Program (1) fails to ensure that the Major NSR

SIP requirements continue to be met; (2) is not limited only to Minor NSR; (3) fails to

include sufficient legally enforceable safeguards to ensure that the NAAQS and control

strategies are protected; (4) the State failed to demonstrate that the Program's exemption

from the Texas Minor NSR SIP includes legally enforceable procedures to ensure that the
106

State will not permit a source that will violate the NAAQS or the State's control

strategies, (5) the submitted Program does not provide clear and enforceable requirements

for a.basic Minor NSR netting program; and (6) EPA lacks sufficient information to

make a determination that the requested SIP revision relaxation does not interfere with

any applicable requirements concerning attainment and RFP, or any other applicable

requirement ofthe Act, as required by section 110(1). Therefore, we are disapproving the

submitted Qualified Facilities Program as a Minor NSR SIP revision because it does not

meet sections 110(a)(2)(C) and 110(1)·of the Act and 40 CFR 51.160.

EPA is approving the submitted definitions for "grandfathered facility,"

"maximum allowable emissions rate table (MAERT)," and "new facility." Finally, EPA

is finalizing an administrative correction in today's action by specifically correcting a

typographical error at 72 FR 49198 to clarify that the definition of "facility" as codified

at 30 TAC 116.10(6) was approved as part ofthe Texas SIP in 2006 and remains part of

the Texas SIP.

VII. Statutory and Executive Order Reviews

A. Executive Order 12866, Regulatory Planning and Review

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

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

(58 FR 51735, October 4, 1993).
107

B. Paperwork Reduction Act

This action does not impose an information collection burden under the

provisions ofthe Paperwork Reduction Act, 44 U.S.C. 3501 et seq., because this SIP

disapproval under section 110 and subchapter I, part D ofthe Clean Air Act will not inand-ofitself create any new information collection burdens but simply disapproves

certain State requirements. for inclusion into the SIP. Burden is defined at 5 CFR

1320.3(b). Because this final action does not impose an information collection burden,

the Paperwork Reduction Act does not apply.

C. Regulatory Flexibility Act

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

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

requirements unless the agency certifies that the rule will not have a significant economic

impact on a substantial number ofsmall entities. Small entities include small businesses,

small not-for-profit enterprises, and small governmental jurisdictions. For purposes of

assessing the impacts oftoday's rule on small entities, small entity is defined as: (1) A

small business as defined by the Small Business Administration's (SBA) regulations at 13

CFR 121.201; (2) a small governmental jurisdiction that is a government of a city,

county, town, school district or special district with a population ofless than 50,000; and

(3) a small organization that is any not-for-profit enterprise which is independently
108

owned and operated and is not dominant in its field. This rule will not have a significant

impact on a substantial number ofsmall entities because SIP approvals and disapprovals

under section 110 and part D ofthe Clean Air Act do not create any new requirements

but simply approve or disapprove requirements that the States are already imposing.

Furthermore, as explained in this action, the submissions do not meet the

requirements ofthe Act and EPA cannot approve the submissions. The final disapproval

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

Texas. Federal disapproval of a State submittal does not affect its State enforceability.

After considering the economic impacts oftoday's rulemaking on small entities, and

because the Federal SIP disapproval does not create any new requirements or impact a

substantial number ofsmall entities, I certify that this action will not have a significant

economic impact on a substantial number ofsmall entities. Moreover, due to the nature

ofthe Federal-State relationship under the Clean Air Act, preparation offlexibility

analysis would constitute Federal inquiry into the economic reasonableness ofstate

action. The Clean Air Act forbids EPA to base its actions concerning SIPs on such

grounds. Union Electric Co., v. Us. EPA, 427 U.S. 246,255-66 (1976); 42 7410(a)(2).

D. Unfunded Mandates Reform Act

This action contains no Federal mandates under the provisions ofTitle II ofthe

Unfunded Mandates Reform Act of 1995 (UMRA), 2 U.S.C. 1531-1538 "for State, local,

or tribal governments or the private sector." EPA has determined that the disapproval
109

action does not include a Federal mandate that may result in estimated costs of$100

million or more to either State, local, or tribal governments in the aggregate, or to the

private sector. This Federal action determines that pre-existing requirements under State

or local law shouldnot be approved as part ofthe Federally approved SIP. It imposes no

new requirements. Accordingly, no additional costs to State, local, or tribal governments,

or to the private sector, result from this action.

E. Executive Order 13132, Federalism

Executive Order 13132, entitled "Federalism" (64 FR 43255, August 10, 1999),

requires EPA to develop an accountable process to ensure "meaningful and timely input

by State and local officials in the development ofregulatory policies that have Federalism

implications." "Policies that have Federalism implications" is defined in the Executive

Order to include regulations that have "substantial direct effects on the States, on the

relationship between the national government and the States, or on the distribution of

power and responsibilities among the various levels of government."

This action does not have Federalism implications. It will not have substantial

direct effects on the States, on the relationship between the national government and the

States, or on the distribution of power and responsibilities among the various levels of

government, as specified in Executive Order 13132, because it merely disapproves

certain State requirements for inclusion into the SIP and does not alter the relationship or
110

the distribution of power and responsibilities established in the Clean Air Act. Thus,

Executive Order 13132 does not apply to this action.

F Executive Order 13175, Coordination With Indian Tribal Governments

This action does not have tribal implications, as specified in Executive Order

13175 (59 FR 22951, November 9,2000), because the SIP EPA is disapproving would

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

substantial direct costs on tribal governments or preempt tribal law. This final rule does

not have tribal implications, as specified in Executive Order 13175. It will not have

substantial direct effects on tribal governments, on the relationship between the Federal

government and Indian tribes, or on the distribution ofpower and responsibilities

between the Federal government and Indian tribes. This action does not involve or

impose any requirements that affect Indian Tribes. Thus, Executive Order 13175 does

not apply to this action.

G. Executive Order 13045, Protection ofChildren From Environmental Health Risks

and Safety Risks

EPA interprets Executive Order 13045 (62 FR 19885, April 23, 1997) as applying

only to those regulatory actions that concern health or safety risks, such that the analysis

required under section 5-501 ofthe Executive Order has the potential to influence the

regulation. This action is not subject to Executive Order 13045 because it is
111

not an economically significant regulatory action based on health or safety risks subject

to Executive Order 13045 (62 FR 19885, April 23, 1997). This SIP disapproval under

section 110 and subchapter I, part D ofthe Clean Air Act will not in-and-ofitself create

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

the SIP.

H Executive Order 13211, Actions That Significantly Affect Energy Supply,

Distribution, or Use

This rule is not subject to Executive Order 13211 (66 FR 28355, May 22, 2001)

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

1 National Technology Transfer and Advancement Act

Section 12(d) ofthe National Technology Transfer and Advancement Act of 1995

("NTTAA"), Public Law No. 104-113, section 12(d) (15 U.S.c. 272 note) directs EPA to

use voluntary consensus standards in its regulatory activities unless to do so would be

. inconsistent with applicable law or otherwise impractical. Voluntary consensus standards

are technical standards (e.g., materials specifications, test methods, sampling procedures,

and business practices) that are developed or adopted by voluntary consensus standards

bodies. NITAA directs EPA to provide Congress, through the Office ofManagement and

Budget, explanations when the Agency decides not to use available and applicable

voluntary consensus standards.
112

The EPA.believes that this action is not subject to requirements of Section l2(d)

ofNTTAA because application ofthose requirements would be inconsistent with the

Clean Air Act. Today's action does not require the public to perform activities conducive

to the use ofVCS.

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

Minority Populations and Low-Income Populations

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

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

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

oftheir mission by identifying and addressing, as appropriate, disproportionately high

and adverse human health or environmental effects oftheir programs, policies, and

activities on minority populations and low-income populations in the United States.

EPA lacks the discretionary authority to address environmental justice in this

action. In reviewing SIP submissions, EPA's role is to approve or disapprove state

choices, based on the criteria ofthe Clean Air Act. Accordingly, this action merely

disapproves certain State requirements for inclusion into the SIP under section 110 and

subchapter I, part D ofthe Clean Air Act and will not in-and-of itself create any new

requirements. Accordingly, it does not provide EPA with the discretionary authority to
113

address, as appropriate, disproportionate human health or environmental effects, using

practicable and legally permissible methods, under Executive Order 12898.

K Congressional Review Act

The Congressional Review Act, 5 U.S.C. section 801 et seq., as added by the

Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that

before a rule may take effect, the agency promulgating the rule must submit a rule report,

which includes a copy ofthe rule, to each House ofthe Congress and to the Comptroller

General ofthe United States. EPA will submit a report containing this rule and other

required information to the U.S. Senate, the U.S. House ofRepresentatives, and the

Comptroller General ofthe United States prior to publication ofthe rule in the Federal

Register. A major rule cannot take effect until 60 days after it is published in the Federal

Register. This action is not a "major rule" as defined by 5 U.S.C. 804(2).

L. Petitions for Judicial Review

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

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

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

this document in the Federal Register]. Filing a petition for reconsideration by the

Administrator ofthis final rule does not affect the finality ofthis rule for the purposes of

judicial review nor does it extend the time within which a petition for judicial review may
114

be filed, and shall not postpone the effectiveness of such rule or action. This action may

not be challenged later in proceedings to enforce itsrequirements. See section 307(b)(2).

List of Subjects in 40 CFR Part 52

Environmentalprotection, Air pollution control, Carbon Monoxide,

Intergovernmental relations, Lead, Nitrogen dioxide, Ozone, Particulatematter,

Reporting and recordkeepingrequirements, Sulfur oxides, Volatile organic compounds.

AHtltat'ify! 42 U.S.C. 74Ql ef seq. P.J..

Date:
115

40 CFR part 52 is amended as follows:

PART 52-[AMENDED]

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

Authority: 42 U.S.c. 7410 et seq.

Subpart SS-Texas

2. The table in § 52.2270(c) entitled "EPA-Approved Regulations in the Texas SIP" is

amended by revising the entry for section 116.1Oto read as follows:

(c) * * *

EPA-Approved Regulations in the Texas SIP

State Title / Subject State EPA approval date Explanation

citation approval/

submittal

date

• • • • • • •

Chapter 116 (Re2 6}--Control of Air Pollution by Permits for New Construction or Modification

Subchapter A-Definitions

Section General Defmitions 8/2l/2002 [Insert date of FR The SIP does not include

116.10 publication] paragraphs (I), (2), (3),

[Insert FR page number (7)(F), (II), and (16).

where document begins]

• • • • • • •

3. Section 52.2273 is revised by designating the existing text as paragraph (a) and by

adding a new paragraph (b) to read as follows:

§ 52.2273 Approval status.

* * * * *

(b) EPA is disapproving the Texas SIP revision submittals as follows:

(1) The following definitions in 30 TAC 116.10 - General Definitions:

(A) Definition of "actual emissions" in 30 TAC 116.10(1), submitted March 13,

1996 and repealed and re-adopted June 17, 1998 and submitted July 22, 1998;
116

(B) Definition of "allowable emissions" in 30 TAC 116.10(2), submitted March

13, 1996; repealed and re-adopted June 17, 1998 and submitted July 22, 1998; and

submitted September 11, 2000;

(C) Portion ofthe definition of "modification of existing facility" in 30 TAC

116.10(11)(E), submitted March 13, 1996; repealed and re-adopted June 17, 1998 and

submitted July 22, 1998; and submitted September 4, 2002; and

(D) Definition of "qualified facility" in 30 TAC 116.10(16), submitted March 13,

1996; repealed and re-adopted June 17, 1998 and submitted July 22, 1998; and submitted

September 4, 2002;

(2) 30 TAC 116.116(e) - Changes at Qualified Facilities - submitted March 13,

1996 and repealed and re-adopted June 17, 1998 and submitted July 22, 1998;

(3) 30 TAC 116.117 - Documentation and Notification ofChanges to Qualified

Facilities - submitted March 13, 1996 and repealed and re-adopted June 17, 1998 and

submitted July 22, 1998;

(4) 30 TAC 116.118 - Pre-Change Qualification - submitted March 13, 1996 and

repealed and re-adopted June 17, 1998 and submitted July 22, 1998.