UNITED STATES ENVIRONMENTAL PROTECTION AGENCY

REGION6

1445 ROSS AVENUE, SUITE 1200

DALLAS TX 75202-2733

JUN0 7 2010

Ms. Devon Ryan

Office of Lega l Services (MC 205)

Texas Commission on Environmental Quality

P.O. Box 13087

Austin, Texas 787 11-3087

RE: EPA Comments on Rule Project Number 2010-006-116-PR

Ms. Ryan:

Thank you for providing us the opportunity to review and comment on the

proposed revisions to the Qualified Facility Program at Texa s Admi nistrative Code

(TAC) Title 30, Chapter 116, Control of Air Pollution by Permit s for New Construction

or Modific ation, sections 11 6.10, 116.17, 116.111, 116.116, 116.117, and 116.118, and

the proposed associated revisions to the Texas State Implementation Plan (SIP). This

proposed rulemaking revises the existing Qualified Facility Program to address the

concerns identified in our April 14, 2010, disapproval ofthe Program (75 FR 19468).

We would also like to thank you for extending the comment period for this rulemakin g to

ensure adequate notice and comment was provided for the proposed associated revisions

to the Texas SIP,

Please note that these comments do not constitute final determinations concerning

approvability of the revisions to the Texas SIP. We are providing these comments to

assist TCEQ in the development of regulatory language. Additionally, comments 4, 5, 7,

11, 12, 14, 15,16, 17, 19, 24, 25, 26, and 27 must be addressed to OUT satisfaction before

EPA can proceed with a proposed action on these potential revisions to the Texas SIP,

We look forward to working with the TCEQ as you move forward in responding

to these comments and finalizing the revisions to the Texas SIP, If you have any

questions, please call Ms. Adina Wiley of my staff at (214) 665-211 5.

Sincerely yours,

~'"1J.~~

Thomas H. Diggs

Associate Director for Air Programs

Multimedia Planning and

Permitting Division

Enclosures

Internet Address (URL) _ hl tp:llwww,epa,govlregion6

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1

Enclosure

1. The "Background and reason(s) for the rulcmaking" section of the Executive

Summary states that the Qualified Facility Program authori zes increases in actua l

emissions at faciliti es. This statement is inconsistent with our understanding that

the Qualified Facility Program is designed to only allow increases in allowabl e

emissions to net out against decreases in allowable emissions. Please revise this

statement to accurately reflect the intent of the Qua lified Facility Program.

2. EPA agrees with the statement in the 30 TAC Chapter 11 6 preamble that the

revisions to 30 TAC sections 116.1O(5)(F), 116.111(a)(2)(K), 116.\ 16(b)(3), and

116 .117(a)(4)(8) will not be submitted as SIP revisions. These sections all refer

to section 112(g) of the CAA, which is not implemented through the SIP.

3. The 30 TAC Chapter 116 preamb le at page to, Notification of Change s at

Qualified Facilities, states that the submission of PI-E forms has resulted in

significant denials for changes under the Qualified Facility Program. The rule is

uncl ear how TCEQ has the authority to deny Qualified Facility changes when

the re is no approval process required for the PI-E form. Does TCEQ have a set

amount oftime to review and respond to the PI-E form? If TCEQ doe s not

respond within the appropriate time. does the facility have a de fault approval?

Where do the rules contain such provisions?

Also, the preamble statement referenced above is inconsistent with the rule

language requirements at 30 TAC sections 116.I 16(e)(2) and It6.117(b). New

30 TAC section 116.116{e){2) requires own ers or operators to submit Form PI·E

prior to making any changes to qualified facilities. However, 30 TAC section

116.I 17(b) requires the submittal of Form PI-E as part ofthe annual repo rt.

Further, the 30 TAC Chapter 11 6 preamble at page 8, Netting and Double

Counting, implies that pre-change notification is only required when the intraplant

trade moves emissions from the interior of a site to a point closer to the property

line. Please explain how the PI-E form is used; is this form submitted pre-change

or post-change? TCEQ should revise the regulatory language to be co nsistent

with the intent expressed in the preamble, by clearly identifying the requirements

for submittal ofthe PI·E form, requiring pre-change notification for all qualified

facil ities changes, and including an express procedure for TCEQ review and

respond.

4. TCEQ must prov ide explicit regulatory language to de fine the term "facility" as it

applies to the Qualified Facility Program. We recogni ze that TCEQ interprets

"facility." as it app lies to the Qualified Facility Program , to preclude inclusion of

more than one stationary source. However, the lack ofrule language clarifying

the meaning ofthe term "facility," as it app lies to this Program, makes this

defi nition overly vague ; and therefore, unenforceable. As we stated in our final

disapproval of the Qualified Facility Program, Texas's rules apply the term

"facil ity" in different ways without providing clarification in the rule language.
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75 FR 19468, at 19489 (April 14,2010). Texas's PSD non-PAL rules explicitly

limit the definition of "facility" to "emissions unit," but the Qualified Facility

rules fail to make such a limitation. Compare 30 TAC 116.10(6) to 30 TAC

116 .160(c)(3). The State clearly tho ught the prudent legal course was to limit

"facility" explicitly to "emissions unit" in its PSD SIP non-PALs revision.

However, TCEQ did notinclude sufficient information in its proposed revisions

to demonstrate that the lack ofthis explicit limitation in the submitted Qualified

Facility revisions is atleast as stringent as the revised definition in the PSD 0 00-

PALs definition. We recommend that TCEQ resolve this deficiency by adding a

specific definition of the tcnm"facility" to the Qualified Facility Definitions at 30

TAe 116.17or provide in its revisedQualified Facility Rul e a description of what

a "facility" is under the Qualified Facility Program.

5. The 30 TAC Chapter 116 preamble at page 6 clearl y indicates that the TCEQ uses

the term "account'tsynonymously withEPA's use of "source." While this

preamble statementis a step towards addressing our concerns identified in the

final disapproval of the Qualified Facility Program, the TCEQ must also revise

the Qualified Facility rule language to includethis statement to improve clarity

and transparency ofthe rule and to entirely address our concerns. See 75 FR

19468, at 19489- 19490.

6. The portion ofthe definition of "allowable emissions" at 30 TAC 116.1O(2)(C)

relating to "qualified grandfathered facility" is proposed for deletion under 30

TAC section 116.10. However, we note thatthere continue to be referencesto

actual emissionsthroughout the Qualified Facility rule language, see 30 TAC

sections 116.116(e)(4)(C), 116. 116(e)(9)(A), 116.116(e)(9)(C), 116.116(e)(9)(D).

It is ourunderstanding of theQualified Facility Program that actual emissions

were only used for qualified grandfathered facilities. Please confirm that this

interpretation is correct. If our understanding is correct and actual emissions were

only used for qualified grandfathered facilities, please remove all references to

actual emissions from the proposed language. However, if our understanding is

incorrect please explain how actual emissions areto be used in a program that is

designed for netting of allowable emissions.

7. The proposed definit ion of "Best Available Control Technology (BACT)" at 30

TAe section 11 6.10(1) must be revised to more clearly indicate this definition is

for any air contaminant or facility not subject to federal permitting requirements,

as indicated by the rule preamble on page 12. We recommend that TCEQ use the

following language to promote rule clarity:

State (or alternately, Texas) Best available control technology (BACT) -

An airpollution control method for a new or modified faci lity that through

experience and research, has proven to be operational, obtainable, and

capable of reducing or eliminating emissions from the facility, and is

considered technically practical and economically reasonable for the

facility. The emission reduction can be achieved through technology such
3

as the use of add-on control equipment or by enforceable changes in

producti on processes, systems, methods, or work practice . This definition

applies to any air contaminant or facility not subject to federal permitting

requirements under Title I, part C, ofthe Clean Air Act (CAAl. For air

contaminants or facilities subject to the Title I, part C. eM requirements,

the definition of BACT at section 116.111(a){2)(C), which requires BACT

as defined in 40 CFR 52,2 I(b)(12), \\; 11 apply.

8. Please explain why the definition of "qualified facility" has been retained in 30

TAC section 116,I0 ratherthan recodified into the new 30 TAC section 116,17,

Qualified Facility Definitions.

9. New 30 TAC section 116.17(2) provides that the allowable emissions for a

permitted facility at new 30 TAC section 116,17(2){A) would include the

emission limit established in the permit or maximum allowable emissions rate

table (MAERT) and any emission limit contained in representations in the permit

app lication that was relied upon in issuing the permit. This section may provide

an opportunity for double-counting and over inflation ofthe allowable emissions

for a permitted facility. Please verify that emissions limits are only cumulative if

the emission limits in the permit, MAERT, and permit application are separate,

entirely unrelated limits in order to prevent double-countin g.

10. Please explain what is meant by a "Special Exemption Facility" at 30 TAC

section 116.17(2)(D). Is a special exemption facility exempt from the

requirements to have an underlying 30 TAC Chapter 116 permit or authorization

under30 TAC Chapter 106 at 30 TAC section I 16.116(e)(1)(A)? If so, what is

the basis for the exemption?

II . New 30 TAC section 116.116(e)(1)(B) cross-references the major NSR netting

requirements at 30 TAC section 11 6.12(20). The SIP-approved major NSR

netting provisions are located at 30 TAC section 116.12(13). EPA is evaluating

pending revisions to 30 TAC section 116.12 that substantively revise and

renumbe r this section. 30 TAC section 116.12(20) must be approved before EPA

could proceed with a proposed action on the revised Qualified Facility Program.

Our comments on the proposed revisions to 30 TAC section 116.116(e) do not

reflect any intent or future action by the EPA to grant SIP approval to the

revisions to 30 TAC section 11 6.12.

12. New 30 TAC section 116.116(e)(2)(A) requires owners or operators to submit an

application for a permit alteration for each permit issued under 30 TAC section

116.111 involved in the qualified facility transaction. The SIP-approved

alteration provisions at 30 TAC section 116,116(c)(B)(iii) state that a permit

alteration is "any change from a representation in an application, general

condition, or special condition in a permit that does not cause an increase in the

emission rate of any air contaminant." Therefore, the SIP-approved alteration

process cannot be used to revise the permit for the facilities involved in the
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qualified facility transaction that has the increa se in allowables. To use pennit

alterations for the facilities with emission increases, the TCEQ must propose a

revision to the permit alterations provisions.

13. There appears to be a typographical error in new 30 TAC section

116.116(e)(2)(D). We believe the sentence should read:

No allowable emission rate ffi as defined in § 116.17 of this title (relating

to Qualified Facilities Definitions) shall be exceeded.

14. OUf final disapproval of the Qualified Facility Program determ ined that the

program was deficient as a mino r NSR program because it did not require

participating facilities to have an underlyi ng permit and an air quality impact

analysis. See 75 FR 19468, at 19486-19487. New 30 TAC section

116.116(e)(2)(E) includes the following language: "... regardless of whether the

facility has received a preconstruction permit or permit amendment. . .." This

section must be revised to accurately address this concern and to be consistent

with the stated intent of the TCEQ, which is that a facility must have an

authorization under 30 TAC Chapter 106 or 116 and air quality impact analysis in

order to be "qualified" under the Program. See new 30 TAC section

116 .116(e)(1)(A).

15. The interchange methodology at 30 TAC section 116.116(e)(5) is unapprovable

for the sulfur dioxides and PM NAAQS. The term " sulfur compounds" used in

the interchange methodology is broad eno ugh to include hydrogen sulfide, which

is a regulated NSR pollutant (sec 40 CFR 52.2 1(b)(23)(i) and 52.2 1(i)(5)(i»), and

requires a separate netting analysis from sulfur oxides. The interchange

methodology also allows PM2.5 to be interchanged with PMIO, which are two

separate pollutants. For additional information see our final disapproval ofthe

Qualified Facility Program at 75 FR 19468, at 19474 .

16. 30 TAC section 116.116(e)(5)(E) requ ires an owner or operator to demonstrate

that the change will not adversely affect ambient air quality, but 30 TAC section

116.117(a)(4) only requires an owner or operator to maintain sufficient

information to show that the project is not expecte d to adversely affect ambient

air quality. We interpret 30 TAC section 116.117(a)(4) as requi ring a lesser

degree of stringency in the analysis. Therefore, the TCEQ must revise 30 TAC

section 116.117(a)(4) to requ ire a demonstration consistent with 30 TAC section

I 16.116(e)(5)(E). Please also explain the replicable procedure that TCEQ will

employ to determine the change will not adversely impact ambient air quality.

17. 30 TAC section 116.116(e)(8)(A) provides that a facility may utilize control

me thods that are as effective as BACT required at the time the control methods

are implemented. It is our understanding ofthe Texas Clean Air Act that only

State BACT can app ly to a minor NSR program, including the Qualified Facility

Program . Please conflrm this understanding. Also , 30 TAC section
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116.1)6(e)(8)(A) must be revised to explicitly provide that State BACT at 30

TAe section 116.10(1) applies. Please explain the replicable procedure that

TCEQ will employ to determine the control method is as effective as State BACT.

18. The Chapter 116 preamble at pages 8-9 states that new 30 TAe section

I 16. 116(e)(I 0) contains anti-backsliding provisions such that the existing level of

control may not be lessened for a Qualified Facility. The preamble further

explains that this anti-backsliding provision will be implemented for intraplant

trades through revisions to the maximum allowable emission rate table (MAERT)

for the participating facilities. The rule language at 30 TAC section

116.116(e)(10) does not require a change to the MAERT, nor can we find this

provision elsewhere in the proposed rules. The TCEQ should revise the rule

language to require MAERT revisions as explained in the preamble.

19. The annual report under 30 TAC section 116.117(b)(I ) must be revised to address

our concerns about the time lag between when the change is made and the TCEQ

is notified. As noted in our final disapproval of the Qualified Facility Program, a

six month report will better enable the TCEQ to monitor compliance with

NAA QS, RFP or other control strategies. See 75 FR )9468, at 19482.

20. 30 TAC section 1)6.117(b)(1) should be revised to require reporting for changes

to Qualified Facilities with intraplant trading.

21. TCEQ has deleted the provision for post-change notification {former 30 TAC

section 11 6.117(b)(2» , but the revised regulations do not expressly require prechange notification in all instances. As discussed above in Comment 3. we find

that the proposed regulations governing notification requirements are vague. We

strongly encourage TCEQ to expressly state that pre-change notification is

required for all qualified changes. If TCEQ docs not intend to require pre-change

notification for all qualified changes, then we request that TCEQ further clarify

timing and requirements for notification for all qualified changes contemplated

under the Program.

22. New 30 TAC section 11 6.117(b)(2) requires pre-change notification if a physical

or operational change at a Qualified Facility will affect compliance with a permit

special condition. Please explain what constitutes a pennit special condition.

Does this mean that a facility can change and/or remove federally required

monitoring, reporting, and recordkeeping requirements without public notice? Is

it possible that a facility could modify special conditions established under federal

Consent Decrees or enforcement actions? We recommend that TCEQ revise this

provision to clarify its applicability.

23. We interpret 30 TAC section 11 6.118. Pre-change Qualification. as applying only

to facilities that do not have an existing permit, i.e., qualified grandfathered

facilities. Please explain the types of facilities that are covered under 30 TAC

section 116.118. If these facilities are indeed qual ified grandfathered facilities
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please consider removing 30 TAC section 11 6.118. Ifthese facilities are not

qua lified grandfathered facilities, we recommend clarifyi ng 30 TAe sections

116.118(a)(I ) and (a)(2) to improve clarity ofthe rule language.

24. The proposed supplement to the SIP titled "Concerning the Qualified Facility

Program as Authorized by Senate Bill 1126" identifies all of the Qualified

Facilities in Texas. The TCEQ has created this supplemental document in an

effort to show that these facilities will not adversely impact attainment or

maintenance of the NAAQS. RFP. or any other applicable requirement of the Act.

TCEQ makes the argument that Qualified Facilities net allowable emissions from

existing penn its that were issued under Slf'<approved permit programs consistent

with section 110(1) of the CAA. Therefore, the Qualified Facility Program by

extension must demonstrate consistency with section 110(1) of the eAA.

However, this analysis does not address the Qualified Grandfathered Facilities,

which did not have underlying SIP-approved Chapter 116 permits or Chapter 106

authorizations. The proposed SIP supplement must be revised to identify which

ofthese facilities were Qua lified Grandfathered Facilities so that we can assess

the impact ofsources without permits on this Program. The TCEQ must also

provide verification that each Qua lified Grandfathered Facility is now covered

under a SIP-approved Chapte r 116 permit or Chapter 106 authorization.

25. The "Program Summary" portion of the proposed supplement to the SIP titled

"Concerning the Qualified Facility Program as Authorized by Senate Bill 11 26"

must be revised to accurately reflect the requirements of new 30 TAC section

I 16.1 16(e){1)(A), that a facility must have an authorization under 30 TAC

Chapter 106 or 11 6 before it can become a qualified facility.

26. The "TCEQ Administration ofthe Qualified Facilitie s Program" portion of the

proposed supplement to the SIP titled "Concerning the Qualified Facility Program

as Authorized by Senate Bill 11 26" must be revised to clearly indicate that the

references to BACT are to State BACT. See comments numbers 7 and 17 above

for additional information.

27. Appendix 4 - Senate Bill 1126 Guidance - ofthe proposed supplement to the SIP

titled "Concerning the Qualified Facility Program as Authorized by Senate Bill

1)26". must be reviewed and updated consistent with each of the concerns

identified in our Qualified Facility disapproval notice and the proposed revisions

to 30 TAC Chapter 116. EPA is unable to determine whether the revised

Qualified Facility Program complies with section 110(1) ofthe CAA until TCEQ

updates this guidance to correlate wi th the revised rules and submits the updated

guidance to EPA.