# Approval and Promulgation of Implementation Plans; Stat e of Texas; Control of Air

Pollution from Motor Vehicles

Technical Support Document

Introduction

This technical support document (TSD) eval uates four Texas State Implementation Plan

(SIP) revisions submitted on:

• May 15, 2006;

• October 10, 2006;

• January 17, 2008; and

• February 28, 2008

The May 15, 2006 submittal amends the Locally Enforced Motor Vehicle Idling Limits.

The October 10, 2006 subm ittal establishes the Te xas Clean School Bus Program, amends the

Texas Emissions Reduction Plan (TERP), and estab lishes a Rebate Grant Program as part of the

TERP. The January 17, 2008 submittal further amends the TERP and, in some subsections,

supersedes the amendments found in the October 10, 2006 submittal. The February 28, 2008

submittal further amends the Locally Enforced Motor Vehicle Idling Limitations and, in some

subsections, supersedes the revisions submitte d on May 15, 2006. We see no value in acting on

a revision that has been subseque ntly superseded and have clearl y marked these subsections in

the table below.

This TSD presents the legal and technical elem ents of these four submittals. It includes a

table of the revisions with numb ering and titles, legal and tech nical comments, and differences

between the current and proposed revisions.

Legal Authority

The Texas Commission on Environmental Quality (TCEQ) is a State environmental

agency. Under the Texas Health and Safety Code, §§382.011, 382.012 and 382.023, the TCEQ

has the au thority to control the qua lity of the State’s air and to i ssue orders consistent with the

policies and purposes of the Texas Clean Air Act, Chapter 382 of the Te xas Health and Safety

Code. Notice of a public hearing for the proposed revisions submitted on May 15, 2006, was

published in the December 16, 2005 issue of the Te xas Register (30 TexReg 8473). On April 26,

2006, TCEQ adopted these revisions to the SIP concerning Locally Enforced Motor Vehicle

Idling Limitations. Notice of a public hearing for the proposed SIP revisions submitted on

October 10, 2006, was published in the April 14, 2006 issue of the Texas Register (31 TexReg

3287). On September 20, 2006, TCEQ adopted these revisions to the SIP concerning the Texas

Clean School Bus Program, revisions to the TERP, and the Rebate Grant Program. Notice of

public hearings for the proposed SIP revisions submitted on January 17, 2008, were published in

the August 24, 2007 issue of the Texas Register (32 TexReg 5491). On December 5, 2007,

TCEQ adopted these revisions to the SIP con cerning amendments to the TERP. Notice of a

public hearing for the proposed SIP revisions submitted on February 28, 2008, was published in

the October 5, 2007 issue of the Texas Register (32 TexReg 7118). On January 30, 2008, TCEQ

adopted these revisions to the SIP concer ning Locally Enforced Motor Vehicle Idling

# 2

Limitations. The State has the necessary legal authority under State law to adopt and implement

these revisions.

Technical Review

The revisions contained within the four subm ittals perta in to Texas Administrative Code

(TAC) title 30, which applies to Environmental Qu ality. To evaluate these SIP submittals, the

following factors have been considered:

A). Differences between the current and revi sed sections were anal yzed, including legal

and technical comm ents, and numbering and titl e changes; these differences are presented

in the table below; and

B). EPA Guidance: Improving Air Quality with E conomic Incentive Programs was used

to evaluate the revisions to the TERP. In 2005, the TERP was approved into the SIP as

an Economic Incentive Program (EIP). Please see 70 FR 48647, August 19, 2005. With

the submitted revisions to the TERP, this program continues to adhere to EPA’s EIP

guidance. See review and analysis below.

The submitted revisions clarify the SIP requirements. Therefore, EPA recommends

approving th ose portions of the SIP revisi ons submitted on May 15, 2006 and October 10, 2006

that have not been superseded, as well as the SIP revisions submitted on January 17, 2008 and

February 28, 2008 as a Direct Final rule. EPA is approving these revisi ons pursuant to section

110 of the Clean Air Act (CAA).3Current SIP CitationTitle/SubjectNew or Revised CitationTitle/SubjectSource of TextComments on RevisionType of Difference betweenCurrent and Revised SIP/Evaluation ofRevisionTexas Administrative Code, Title 30 (TAC 30)Texas Commission on Environmental QualityChapter 114 (TAC 30:114) Control of Air Pollution from Motor VehiclesSubchapter J. Operational Controls for Motor VehiclesDivision 2. Locally Enforced Motor Vehicle Idling Limitations30:114.512Control Requirements forMotor Vehicle Idling30:114.512 (a)Control Requirements forMotor Vehicle IdlingN/AAdopted by TX, effective 5/17/2006.Submitted by TX to EPA on 5/15/2006.Names existing first paragraph as subsection(a).No substantive changeNew Citation30:114.512 (b)Control Requirements forMotor Vehicle IdlingHouse Bill 1540,79Legislature,2005thAdopted by TX, effective 5/17/2006.Submitted by TX to EPA on 5/15/2006.Establishes that no driver using the vehicle’ssleeper berth mayidle the vehicle in a schoolzone or within 1,000 feet of a public schoolduring its hours of operation, an offense ofwhich may be punishable by a fine not toexceed $500. This subsection expiresSeptember 1, 2007.Substantive changeThis revision is expected toreduce NOxemissions aroundschool children, enhancingair quality and protectingpublic health.*This subsection has beenfurther revised and theexpiration date superseded byrevisions submitted onFebruary 28, 2008. See theentry immediately below.4Current SIP CitationTitle/SubjectNew or Revised CitationTitle/SubjectSource of TextComments on RevisionType of Difference betweenCurrent and Revised SIP/Evaluation ofRevision30:114.512(b)Control Requirements forMotor Vehicle Idling30:114.512 (b)Control Requirements forMotor Vehicle IdlingSenate Bill 12,80thLegislature,2007Adopted by TX, effective 2/21/2008.Submitted by TX to EPA on 2/28/2008.Added: Prohibits idling by drivers using thevehicle’s sleeper berth in residential areas asdefined by Local Government Code,§244.001, or within 1,000 feet of a hospital.Revised: The expiration of this subsection isextended to September 1, 2009.Substantive changeEPA is not taking action onthe revisions to thissubsection because theexpiration date of September1, 2009, has already passed,and subsection (b) istherefore no longer in effect.30:114.517(1)Exemptions30:114.517(1)ExemptionsN/AAdopted by TX, effective 5/17/2006.Submitted by TX to EPA on 5/15/2006.Still provides an exemption from the controlrequirements for motor vehicle idling for amotor vehicle with a gross vehicle weight(GVW) rating of 14,000 pounds or less, butonly if before September 1, 2007, the motorvehicle does not have a sleeper berth.1Substantive changePreviously, all motor vehicleswith a GVWrating of 14,000pounds or less were exemptfrom the control requirementsfor motor vehicle idling.*This revision has beensuperseded by revisionssubmitted on February 28,2008. See the entryimmediately below.1In a comment letter to TCEQ, dated January 17, 2006, EPA expressed concerns with the May 15, 2006 submittal regarding revisions to the Locally EnforcedMotor Vehicle Idling Limits. The EPA considered the revision to 114.517(1) to be a weakening of the SIP that was approved by EPA on April 11, 2005 (70 FR18308). The EPA is not taking action on this revision because it has been superseded by a subsequent revision.5Current SIP CitationTitle/SubjectNew or Revised CitationTitle/SubjectSource of TextComments on RevisionType of Difference betweenCurrent and Revised SIP/Evaluation ofRevision30:114.517 (1)Exemptions30:114.517 (1)ExemptionsSenate Bill 12,80thLegislature,2007Adopted by TX, effective 2/21/2008.Submitted by TX to EPA on 2/28/2008.Removes the expiration date and clarifies thatmotor vehicles with a GVW rating of 14,000pounds or less, and that do not have a sleeperberth, are exempt from the controlrequirements for motor vehicle idling.Substantive changeThe exemption originallyfoundin paragraph (1), whichwas approved into the TexasSIP on April 11, 2005 (70 FR18308), is actually brokendown into two exemptions bythe addition of paragraph (2).See entry immediately below.New Citation30:114.517 (2)ExemptionsSenate Bill 12,80thLegislature,2007Adopted by TX, effective 2/21/2008.Submitted by TX to EPA on 2/28/2008.Clarifies that after September 1, 2009, allmotor vehicles with a GVW rating of 14,000pounds or less will be exempt from thecontrol requirements for motor vehicleidling.2Substantive changeSee footnote number (2)below for evaluation ofthisrevision.30:114.517 (2)-(11)Exemptions30:114.517 (3)-(12)ExemptionsN/AAdopted by TX, effective 2/21/2008.Submitted by TX to EPA on 2/28/2008.Paragraphs (2)-(11) of this section arerenumbered as paragraphs (3)-(12), forconsistency.No substantive change2The EPA first approved revisions to the Texas SIP that incorporated Locally Enforced Motor Vehicle Idling Limits on April 11, 2005 (70 FR 18308). In this2005 rulemaking, the idling restrictions applied only to heavy duty vehicles with a GVW rating greater than 14,000 pounds. Theidling rule was not originallyintended to apply to motor vehicles with a GVW rating of 14,000 pounds or less, and the revisions in today’s rulemaking make that clear by allowing forconsistency with the TX SIP revisions approved in 2005.6Current SIP CitationTitle/SubjectNew or Revised CitationTitle/SubjectSource of TextComments on RevisionType of Difference betweenCurrent and Revised SIP/Evaluation ofRevision30:114.517 (4)Exemptions30:114.517 (4)ExemptionsN/AAdopted by TX, effective 5/17/2006.Submitted by TX to EPA on 5/15/2006.The revised phrase now reads: the controlrequirements for motor vehicle idling do notapply to “the primary propulsion engine of amotor vehicle providing a power sourcenecessary for mechanical operation, otherthan propulsion, and/or passengercompartment heating, or air conditioning.”No substantive changeReplaces the phrase “notincluding” with “other than.”30:114.517 (7)Exemptions30:114.517 (7)ExemptionsN/AAdopted by TX, effective 5/17/2006.Submitted by TX to EPA on 5/15/2006.The revised phrase now reads: the controlrequirements for motor vehicle idling do notapply to “the primary propulsion engine of amotor vehicle that is being used to supplyheat or air conditioning necessary forpassenger comfort and safety in vehiclesintended for commercial or public passengertransportation, or passenger transit operations,in which case idling up to a maximum of 30minutes is allowed.”Substantive changeFor grammatical purposes,the phrase “comfort/safety” isreplaced with “comfort andsafety” and the word “those,”which referred to “vehicles,”is removed. Removes thephrase “school buses” andadds the phrase “or public” toindicate that the exemptionapplies to all motor vehiclesintended for commercial orpublic passengertransportation. Inserts theexemption that applies to thepropulsion engine of motorvehicles used for passengertransit operations intoparagraph (7), removing itfrom paragraph (8).These revisions clarify theidling restrictions for affectedvehicle owners and operators.7Current SIP CitationTitle/SubjectNew or Revised CitationTitle/SubjectSource of TextComments on RevisionType of Difference betweenCurrent and Revised SIP/Evaluation ofRevision30:114.517 (8)Exemptions30:114.517 (8)ExemptionsN/AAdopted by TX, effective 5/17/2006.Submitted by TX to EPA on 5/15/2006.Exempts from the control requirements formotor vehicle idling, the primary propulsionengine of a motor vehicle being used toprovide air conditioning or heating necessaryfor employee health or safety while theemployee is using the vehicle to perform anessential job function related to roadwayconstruction or maintenance. In addition, theexemption regarding the propulsion engine ofmotor vehicles used for passenger transitoperations is removedfrom this paragraphand inserted into paragraph (7).Substantive changeThis revision adds a newexemption to the controlrequirements for motorvehicle idling in order toprovide local jurisdictionswith clear enforcementresponsibilities that areconsistent with the TexasDepartment of Transportation(TxDOT) guidelines.30:114.517 (9)Exemptions30:114.517 (9)ExemptionsN/AAdopted by TX, effective 5/17/2006.Submitted by TX to EPA on 5/15/2006.Removes the word “or” at the end of theparagraph to indicate it is no longer the nextto last subsection.No substantive change8Current SIP CitationTitle/SubjectNew or Revised CitationTitle/SubjectSource of TextComments on RevisionType of Difference betweenCurrent and Revised SIP/Evaluation ofRevision30:114.517 (10)Exemptions30:114.517 (10)ExemptionsN/AAdopted by TX, effective 5/17/2006.Submitted by TX to EPA on 5/15/2006.Replaces the word “who” with the word“that” for grammatical purposes; replaces aperiod with a semi-colon; and adds the word“or” at the end of the paragraph to indicatethat a subsection has been added after thissubsection.No substantive changeNew Citation30:114.517 (11)ExemptionsHouse Bill 1540,79Legislature,2005thAdopted by TX, effective 5/17/2006.Submitted by TX to EPA on 5/15/2006.Exempts from the control requirements formotor vehicle idling, a motor vehicle whenidling is necessary to power a heater or airconditioner while a driver is using thevehicle’s sleeper berth for a governmentmandated rest period, and establishes that thissubsection expires September 1, 2007.3Substantive changeSee footnote below forevaluation ofthis revision.*This subsection has beenfurther revised and theexpiration date superseded byrevisions submitted onFebruary 28, 2008. See entryimmediately below.3In a comment letter to TCEQ, dated January 17, 2006, EPA expressed concerns with the May 15, 2006 submittal regarding revisions to the Locally EnforcedMotor Vehicle Idling Limits. EPA considered the addition of the exemption found in 114.517 (11) to be a weakening of the SIP that was approved by EPA onApril 11, 2005 (70 FR 18308). Since the expiration date of paragraph (11) was extended to September 1, 2009 by a superseding revision, EPA is not takingaction on the revisions to paragraph (11) because the expiration date of September 1, 2009 has already passed, and paragraph (11) is therefore no longer in effect.9Current SIP CitationTitle/SubjectNew or Revised CitationTitle/SubjectSource of TextComments on RevisionType of Difference betweenCurrent and Revised SIP/Evaluation ofRevision30:114.517 (11)Exemptions30:114.517 (12)ExemptionsSenate Bill 12,80thLegislature,2007Adopted by TX, effective 2/21/2008.Submitted by TX to EPA on 2/28/2008.Added: Continues to exempt motor vehicleswhen idlingis necessary to power a heater orair conditioner while a driver is using thevehicle’s sleeper berth for a governmentmandated rest period, but only when themotor vehicle is not within two miles of afacility offering external heating and airconditioning connections at a time whenthose connections are available.Revised: The expiration of this subsection isextended to September 1, 2009.Substantive changeEPA is not taking action onthe revisions to thissubsection because theexpiration date of September1, 2009 has already passed,and paragraph (11) istherefore no longer in effect.Chapter 114 (TAC 30:114) Control of Air Pollution from Motor VehiclesSubchapter K. Mobile Source Incentive ProgramsDivision 3. Diesel Emissions Reduction Incentive Program for On-Road and Non-Road Vehicles10Current SIP CitationTitle/SubjectNew or Revised CitationTitle/SubjectSource of TextComments on RevisionType of Difference betweenCurrent and Revised SIP/Evaluation ofRevision30:114.620 (1)Cost-effectiveness30:114.620 (1)Cost-effectivenessSenate Bill 5,77thLegislature,2001Adopted by TX, effective 10/12/2006.Submitted by TX to EPA on 10/10/2006.Establishes that in calculating costeffectiveness, one-time grants of money at thebeginning of a project shall be annualizedusing a time value of public funds or discountrate determined for each project by theTCEQ, taking into account the interest rate onbonds, interest earned by State funds, andother factors the TCEQ considers appropriate.Substantive changeThis revision expands on howcost-effectiveness iscalculated for TERP grants; itis expected to ensure that thecost-effectiveness of projectsunder the TERP is accuratelycalculated.30:114.620 (8)Qualifying fuel30:114.620 (8)Qualifying fuel30:114.620 (8)Adopted by TX, effective 10/12/2006.Submitted by TX to EPA on 10/10/2006.Changes “EPA” to “United StatesEnvironmental Protection Agency.”No substantive change30:114.620 (10)Retrofit30:114.620 (10)Retrofit30:114.620 (10)Adopted by TX, effective 10/12/2006.Submitted by TX to EPA on 10/10/2006.Changes “EPA” to “United StatesEnvironmental Protection Agency.”No substantive change11Current SIP CitationTitle/SubjectNew or Revised CitationTitle/SubjectSource of TextComments on RevisionType of Difference betweenCurrent and Revised SIP/Evaluation ofRevision30:114.622(b)Incentive ProgramRequirements30:114.622 (b)Incentive ProgramRequirementsSenate Bill 12,80thLegislature,2007Adopted by TX, effective 1/6/2008.Submitted by TX to EPA on 1/17/2008.Allows the TCEQ to designate highways androadways or portions of a highway orroadway on which travel by grant-fundedvehicles may count towards the requirementthat vehicles be operated at least 75 % of theannual miles in the nonattainment areas andaffected counties.Substantive changePreviously, not less than 75%of the vehicle miles traveledor hours of operationprojected for the five yearsimmediately following theaward of a grant wererequired to be projected totake place in a nonattainmentarea or affected county inTexas. Since these fleetsoften travel between Texasnonattainment areas, thisrevision is expected to resultin cleaner vehicles in andaround the nonattainmentareas. This revision gives theState additional flexibility toallocate TERP funds toachieve the air quality goalsof the State.12Current SIP CitationTitle/SubjectNew or Revised CitationTitle/SubjectSource of TextComments on RevisionType of Difference betweenCurrent and Revised SIP/Evaluation ofRevision30:114.622 (c)Incentive ProgramRequirements30:114.622 (c)Incentive ProgramRequirementsHouse Bill 2481,79thLegislature,2005Adopted by TX, effective 10/12/2006.Submitted by TX to EPA on 10/10/2006.Establishes that under the TERP grantprogram, for a proposed project that includesa replacement or repower, the old equipmentor engine must be recycled, scrapped, orotherwise permanently removed from theState, eliminating the requirement ofremoving the old equipment or engine onlyfrom the applicable counties listed in Section114.629.Substantive change*This revision has beensuperseded by a revisionsubmitted on January 17,2008. See the entryimmediately below.30:114.622 (c)Incentive ProgramRequirements30:114.622 (c)Incentive ProgramRequirementsSenate Bill 12,80thLegislature,2007Adopted by TX, effective 1/6/2008.Submitted by TX to EPA on 1/17/2008.Establishes that under the TERP grantprogram, for a proposed project that includesa replacement of equipment or a repower, theold equipment or engine must be eitherrecycled or scrapped, provided however, thatthe executive director may allow permanentremoval from the State in specific grantswhere the applicant has provided sufficientassurances that the old locomotive will not bereturned to the State.4Substantive changeThis revision will improveTERP program effectivenessby providing greater certaintythat older, higher emittingequipment will be removedfrom service.4In the proposed rules published in the August 24, 2007 issue ofthe Texas Register (32 TexReg 5324), the option to permanentlyremove the old equipment orengine from the State was completely eliminated. However, during the comment period, the State received written and oral testimony from EMMISTAR,Genesee & Wyoming Inc., BNSF Railway Company, Railpower Hybrid Technologies Corp., and Union Pacific Railroad Company, requesting that they beallowed to transfer or sell old equipment and engines to out-of-state users. This testimony can be found in the section titled“Written and Oral Testimony” of theState’s submittal, which is in the docket for this rulemaking. Based on the comments received, in the adopted rules published in the December 28, 2007 issue ofthe Texas Register (32 TexReg 10010), revisions to section 114.622 (c) were adopted with a change from proposal.13Current SIP CitationTitle/SubjectNew or Revised CitationTitle/SubjectSource of TextComments on RevisionType of Difference betweenCurrent and Revised SIP/Evaluation ofRevision30:114.622 (d)Incentive ProgramRequirements30:114.622 (d)Incentive ProgramRequirementsSenate Bill 5,77thLegislature,2001Adopted by TX, effective 10/12/2006.Submitted by TX to EPA on 10/10/2006.Establishes that eligible projects under TERPmust not exceed a cost-effectiveness of$13,000 per ton of NOxemissions reduced.However, the TCEQ is allowed to set lowercost-effectiveness standards, to ensure thebest use of available funds (this will allowspending a larger amount of money per ton ofNOxreduced). In addition to costeffectiveness, the TCEQ is also allowed tobase project selection decisions on othermeasures when evaluating the effectivenessof projects in reducing NOxemissions inrelation to the funds to be awarded.Substantive changeAlthough this revision willallow spending a largeramount of money per ton ofNOxreduced, it should benoted that while many of themost cost-effective projectshave already been completed,a lot of old, pollutingequipment remains in use innonattainment areas and thisrevision would increase theeligibility of a portion of thatequipment for TERP funding.This revision would allowTERP to fund less costeffective projects thatnevertheless would reduceNOxemissions innonattainment areas.*The portion of this revisionspecifying the costeffectiveness limit issuperseded by a revisionsubmitted on January 17,2008. See entry immediatelybelow.14Current SIP CitationTitle/SubjectNew or Revised CitationTitle/SubjectSource of TextComments on RevisionType of Difference betweenCurrent and Revised SIP/Evaluation ofRevision30:114.622 (d)Incentive ProgramRequirements30:114.622 (d)Incentive ProgramRequirementsSenate Bill 12,80thLegislature,2007Adopted by TX, effective 1/6/2008.Submitted by TX to EPA on 1/17/2008.Raises the cap of the cost-effectivenesscriteria for grant fundedprojects under theTERP from $13,000 per ton of NOxreducedto $15,000 per ton of NOxreduced.Substantive changeThe increase in cost per tonof NOxreduced decreases thecost-effectiveness ofproposed projects, but allowsadditional candidates to beconsidered for funding underTERP.New Citation30:114.624 (a)Rebate Grant ProcessHouse Bill 2481,79thLegislature,2005Adopted by TX, effective 10/12/2006.Submitted by TX to EPA on 10/10/2006.Establishes a streamlined process that awardsTERP fundsas rebate grants.Substantive changeThis revision establishes aneasier grant process forprojects that reduce NOxemissions.New Citation30:114.624 (b)Rebate Grant ProcessHouse Bill 2481,79thLegislature,2005Adopted by TX, effective 10/12/2006.Submitted by TX to EPA on 10/10/2006.Establishes that the Rebate Grant Processshall: designate certain types of projectseligible for rebates; project standardized NOxemissions reductions for each designatedproject type; assign a standardized rebateamount for each designated project type;allow for processing rebates on an ongoingfirst-come, first-served basis; and consolidate,simplify, and reduce the administrative workfor applicants and the TCEQ associated withgrant application, contracting, reimbursement,and reporting processes for designated projecttypes.Substantive changeBy allowing somestandardization, it is expectedthat more applicants will beavailable to achieve greaterparticipation in the program.15Current SIP CitationTitle/SubjectNew or Revised CitationTitle/SubjectSource of TextComments on RevisionType of Difference betweenCurrent and Revised SIP/Evaluation ofRevisionNew Citation30:114.624 (c)Rebate Grant ProcessHouse Bill 2481,79thLegislature,2005Adopted by TX, effective 10/12/2006.Submitted by TX to EPA on 10/10/2006.Establishes that the TCEQ may: award rebategrants as a pilot project fora specific regionor may award the grants statewide; limit orexpand the designated project types asnecessary to further the goals of the program;and administer the rebate grants or maydesignate another entity to administer thegrants.Substantive ChangeThis allows Texas flexibilityin administrating theprogram. In exercising thisflexibility, Texas is stillrequired to meet anycommitments it has made toachieve emissions reductionsin any ozone attainmentplans.Division 4. Texas Clean School Bus Program (New)New Citation30:114.640 (1)-(5)DefinitionsHouse Bill 3469,79thLegislature,2005Adopted by TX, effective 10/12/2006.Submitted by TX to EPA on 10/10/2006.Provides definitions for terms in the TexasClean School Bus Program: Diesel exhaust,Incremental Cost, Qualifying fuel, Repower,and Retrofit.Substantive changeNew Citation30:114.642 (a)ApplicabilityHouse Bill 3469,79thLegislature,2005Adopted by TX, effective 10/12/2006.Submitted by TX to EPA on 10/10/2006.Establishes that any school district andcharter school in the State,which operatesone or more diesel-fueled school bus or atransportation system provided by acountywide school district, may apply for andreceive a grant under the Texas Clean SchoolBus Program.Substantive change16Current SIP CitationTitle/SubjectNew or Revised CitationTitle/SubjectSource of TextComments on RevisionType of Difference betweenCurrent and Revised SIP/Evaluation ofRevisionNew Citation30:114.642 (b)ApplicabilityHouse Bill 3469,79thLegislature,2005Adopted by TX, effective 10/12/2006.Submitted by TX to EPA on 10/10/2006.Allows regional planning organizations,councils of governments, and privatenonprofit organizations to apply for andreceive grants under the Texas Clean SchoolBus Program.Substantive changeNew Citation30:114.644 (a)Clean School BusProgramRequirementsHouse Bill 3469,79thLegislature,2005Adopted by TX, effective 10/12/2006.Submitted by TX to EPA on 10/10/2006.Establishes that the types of projects eligiblefor a Clean School Bus Program grantinclude: diesel oxidation catalysts for schoolbuses built before 1994; diesel particulatefilters for school buses built from 1994 to1998; the purchase of and use of emissionreducing add-on equipment for school buses,including devices that reduce crankcaseemissions; the use of qualifying fuel; andother technologies that the TCEQ finds willbring about significant emissions reductions.Substantive change17Current SIP CitationTitle/SubjectNew or Revised CitationTitle/SubjectSource of TextComments on RevisionType of Difference betweenCurrent and Revised SIP/Evaluation ofRevisionNew Citation30:114.644 (b)Clean School BusProgramRequirementsHouse Bill 3469,79thLegislature,2005Adopted by TX, effective 10/12/2006.Submitted by TX to EPA on 10/10/2006.Establishes the ability of the TCEQ to limitfunding for a Clean School Bus Programgrant under a particular funding round tocertain areas of the State, types of applicants,and/or types of projects. In addition, theTCEQ is allowed to place a priority onfunding for projects conducted in areas thatdo not attain certain National Ambient AirQuality Standards.Substantive changeThis allows Texas flexibilityin administrating the CleanSchool Bus Program. Inexercising this flexibility,Texas is still required to meetany commitments it has madeto achieve emissionsreductions in any ozoneattainment plans.New Citation30:114.644 (c)Clean School BusProgramRequirementsHouse Bill 3469,79thLegislature,2005Adopted by TX, effective 10/12/2006.Submitted by TX to EPA on 10/10/2006.Establishes that prior to each funding periodfor the Texas Clean School Bus Program, theTCEQmay establish priorities and othercriteria for reductions in diesel exhaustemissions to be achieved by projects fundedduring that period; establishes that a proposedproject must achieve a reduction in emissionsof diesel exhaust compared with the baselineemissions according to the percentagereduction level and other priorities establishedby the TCEQ; and allows the TCEQ toestablish maximum levels for the fundingawarded in relation to the emission reductionsprojected to be achieved by a project, in orderto maximize the use of available funds.Substantive changeOnce again, this allows Texasflexibility in administratingthe Clean School BusProgram. In exercising thisflexibility, Texas is stillrequired to meet anycommitments it has made toachieve emissions reductionsin any ozone attainmentplans.18Current SIP CitationTitle/SubjectNew or Revised CitationTitle/SubjectSource of TextComments on RevisionType of Difference betweenCurrent and Revised SIP/Evaluation ofRevisionNew Citation30:114.644 (d)Clean School BusProgramRequirementsHouse Bill 3469,79thLegislature,2005Adopted by TX, effective 10/12/2006.Submitted by TX to EPA on 10/10/2006.Establishes that a school bus proposed forretrofit must be used on a regular, daily routeto and from a school and have at least fiveyears of useful life remaining unless theapplicant agrees to remove the retrofit deviceat the end of the life of the bus and reinstallthe device on another bus.Substantive changeNew Citation30:114.644 (e)Clean School BusProgramRequirementsHouse Bill 3469,79thLegislature,2005Adopted by TX, effective 10/12/2006.Submitted by TX to EPA on 10/10/2006.Establishes that for a proposed project thatincludes a replacement of equipment or arepower, the old equipment or engine must berecycled, scrapped, or otherwise permanentlyremoved from the State.Substantive changeNew Citation30:114.644 (f)Clean School BusProgramRequirementsHouse Bill 3469,79thLegislature,2005Adopted by TX, effective 10/12/2006.Submitted by TX to EPA on 10/10/2006.Establishes that an application for a grantunder this program is only eligible if it ismade on the form provided by the TCEQ andcontains the information required by theTCEQ.Substantive change19Current SIP CitationTitle/SubjectNew or Revised CitationTitle/SubjectSource of TextComments on RevisionType of Difference betweenCurrent and Revised SIP/Evaluation ofRevisionNew Citation30:114.644 (g)Clean School BusProgramRequirementsHouse Bill 3469,79thLegislature,2005Adopted by TX, effective 10/12/2006.Submitted by TX to EPA on 10/10/2006.Establishes that a recipient of a grant underthis division shall use the grant to payincremental costs of the project for which thegrant is made, which may include thereasonable and necessary expenses incurredfor the labor needed to install emissionsreducing equipment. However, the recipientmay not use the grant to pay the recipient’sadministrative expenses.Substantive changeNew Citation30:114.644 (h)Clean School BusProgramRequirementsHouse Bill 3469,79thLegislature,2005Adopted by TX, effective 10/12/2006.Submitted by TX to EPA on 10/10/2006.Clarifies that projects funded with a grantfromthis program may not be used for creditunder any state or federal emissions reductioncredit averaging, banking, or trading programexcept as provided under Texas Health andSafety Code, §386.056.Substantive change20Title/SubjectNew or Revised CitationTitle/SubjectSource of TextComments on RevisionType of Difference betweenCurrent and Revised SIP/Evaluation ofRevisionNew Citation30:114.644 (i)Clean School BusProgramRequirementsHouse Bill 3469,79thLegislature,2005Adopted by TX, effective 10/12/2006.Submitted by TX to EPA on 10/10/2006.Clarifies that a proposed project is not eligiblefor this grantif it is required by any state orfederal law, rule or regulation, memorandumof agreement, or other legally bindingdocument. This subsection does not apply toan otherwise qualified project, regardless ofthe fact that the SIP assumes that the changein equipment, vehicles, or operations willoccur, if on the date the grant is awarded thechange is not required by any state or federallaw, rule, or regulation, memorandum ofagreement, or other legally binding documentor the purchase of an on-road diesel orequipment required only by local law orregulation or by corporate or controllingboard policy of a public or private entity.Substantive changeCurrent SIP CitationNew Citation30:114.644 (j)Clean School BusProgramRequirementsHouse Bill 3469,79thLegislature,2005Adopted by TX, effective 10/12/2006.Submitted by TX to EPA on 10/10/2006.Clarifies that if a recipient of a Clean SchoolBus Programgrant fails to meet the terms of aproject grant or the conditions of thisdivision, the executive director can requirethat the grant recipient return some or all ofthe grant funding to the extent that emissionsreductions are not achieved or cannot bedemonstrated.Substantive change21Title/SubjectNew or Revised CitationTitle/SubjectSource of TextComments on RevisionType of Difference betweenCurrent and Revised SIP/Evaluation ofRevisionNew Citation30:114.646Monitoring,Recordkeeping, andReporting RequirementsHouse Bill 3469,79thLegislature,2005Adopted by TX, effective 10/12/2006.Submitted by TX to EPA on 10/10/2006.Establishes that recipients of Clean SchoolBus Programgrants must adhere to thereporting requirements of their grant, whichwill occur at least annually.Substantive changeSubstantive changeNew Citation30:114.648Implementation ScheduleHouse Bill 3469,79thLegislature,2005Adopted by TX, effective 10/12/2006.Establishes that the Texas Clean School BusProgramwill expireon August 31, 2013.Current SIP Citation

# 22

Review and Analysis Concerning Adherence to EIP Guidance

In this document, we are reviewing revisions to the TERP program . The revisions

include amendments to Division 3, which conc erns the Diesel Emissions Reduction Incentive

Program for On-Road and Non-Road Vehicles . The Diesel Emission Reduction Incentive

Program for On-Road and Non-Road Vehicles is found in Title 30 of the Texas Administrative

Code (denoted 30 TAC), Chapter 114, Subchapter K, Division 3. Revisions also consist of new

Division 4, which sets forth the framework fo r a Texas Clean School Bus Program under the

TERP. The Texas Clean School Bus Program is found in 30 TAC Chapter 114, Subchapter K,

Division 4. After determining that the TERP me t the requirements of EP A’s Economic Incentive

Program guidance, we approved incorporation of the TERP into the Texas SIP on August 15,

2005 (70 FR 48647). Specifically, the component of the TERP that we approved into the Texas

SIP in that rulemaking is the Diesel Emissi ons Reduction Incentive Program for On-Road and

Non-Road Vehicles. The Diesel Emissions Re duction Incentive Program for On-Road and NonRoad Vehicles and the new Texas Clean School Bus Program are only two of several different

components of the TERP. The components of the TERP that are before us as a SIP revision are

the Diesel Emissions Reduction Incentive Progra m for On-Road and Non-Road Vehicles and the

new Texas Clean School Bus Program.

The new Texas Clean School Bus Program (D ivision 4) and revisi ons to the Diesel

Em issions Reduction Incentive Program for On-Roa d and Non-Road Vehicles (Division 3) were

reviewed against EPA Guidance: Improving Air Quality with Economic Incentive Programs. In

EPA nomenclature, TERP is a Financial Mechanism EIP. An EIP is a regulatory program that

achieves an air quality object ive by providing market based in centives or information to

emission sources. Specifically, a Financial Mechanis m EIP is a type of EIP that includes fees,

taxes, or subsidies targeted at promoting po llution reducing ac tivities or products. There are

three fundamental principles that apply to all economi c incentive programs: integrity, equity, and

environmental benefit. With the submitted revisions to the TERP Division 3 rules and the new

Division 4 rules, the TERP program con tinues to meet each of the criteria.

Integrity :

There are four basic elements that make up integrity. The elem ents of integrity dictate

that the emission reductions create d by the plan must be surplus, quantifiable, enforceable, and

permanent.

Emissions are considered surplus if they are not otherwise requi red by any other local,

state, or federal regulations. Taking into ac count the revisions to TERP Division 3, reductions

from the Diesel Emissions Reduction Incentive Program for On-Road and Non-Road Vehicles

continue to not be allowed to be used for compliance with any state, local or Federal

requirement. TERP Division 4 reduc tions cannot be used for compliance with any State, Local

or Federal requirement. Section 114.644(h) of the Texas Clean School Bus Program

requirements specifically states th at proposed projects are not eligib le if they are required by any

state or federal law, rule or regulation, memorandum of agreem ent, or other legally binding

document.

# 23

The reductions are quantifiable. Regarding revisions to Division 3, emissions reductions

from the Diesel Emissions Reduction Incentive Program for On-Road and Non-Road Vehicles

continue to be quantifiable. Each grant applicant must quantify the emission reductions that will

be achieved. Retrofit technology must either be CARB or EPA verified. For those applicants

receiving a grant under the Rebate Grant Process, NO

x 

# emissions reductions are standardized

according to each designated project type. In the “Evaluation of Tes timony” section of the

State’s submittal, the TCEQ stated that emi ssions reductions achieved through the Texas Clean

School Bus Program will be quantified using a comparison of baseline NO

x 

# and particulate

matter emissions with reduced NO

x 

# and particulate matter emissions. Engine emission

certifications and retrofit system verifications by the EPA will be used to verify the emissions of

the reduced-emissions engines and retrofit system s. Baseline emission rates for uncontrolled

engines will be based on factors developed and used for SIP m odeling purposes by the TCEQ.

The Clean School Bus Program solicitation docum ents and grant instructions outline the

approach for determining emission reductions an d cost-effectiveness. The application forms

require the applicant to provide data on the vehicle or equipment usage patterns, and information

about the vehicle or equipment needed to dete rmine emission rates. Emission factors, load

factor, and usage pattern information is used by the TCEQ to calculate emission reductions

attributed to an activity. The solicitation documents and grant in structions contain information

on how to determine the level of NO

x 

# and particulate matter emissions for the baseline and the

new vehicle and equipment. Using this info rmation, the TCEQ determines the emissions

reductions and cost effectiveness of the project. For a project to be eligible for Clean School Bus

Program funding, the emission rate of engines or the emission reduction factor for retrofit

systems is required to be certified or verified under an applicable EPA or CARB certification or

verification program.

The reductions from the program are enforceable. The rules for both the Texas Clean

School Bus Program and the Dies el Emissions Reduction Incen tive Program for On-Road and

Non-Road Vehicles, include the re quirement that if a recipient of grant funds fails to meet the

terms of the grant contract then th e recipient is subject to return all or a portion of the funding.

To insure compliance, each grant recipient must meet the reporting requirements delineated in

their specific grant agre ement, which must occur at least annually. For projects funded under the

Texas Clean School Bus Program, emissions re ductions will be verified by TCEQ through

reports on use of the grant-funded buses and on-site monitoring and audit visits. The reports and

monitoring activities will be used by TCEQ to track compliance and effectiveness of the grant

recipients in fulfilling their obligations under the contract.

The reductions are permanent. The TCEQ established the minimum requirement for the

life of a project under the Texas Clean School Bus Progr am to be at least five years. The project

life will be the period in which the grant recipient is contractually obligated to monitor and report

on the use of the grant-funded vehicle, equipment, and/or fuel. Environmental benefits from

projects under the Clean School Bus Program w ill occur for at least this period. Emissions

reductions achieved through the Texas Clean Sc hool Bus Program and the Diesel Emissions

Reduction Incentive Program for On-Road and N on-Road Vehicles ar e contractually and

statutorily permanent for the project life establishe d in the grant contract and will be permanently

retired. The emission reductions gained by the f unded projects creates a permanent shift in the

emissions reported to the emissions inventory report ed to EPA. In the instance that the project

# 24

includes a replacement or repower of equipment, the old equipment must be recycled, scrapped,

or permanently removed from the State of Texas.

Equity :

The Texas Clean School Bus Program and th e Diesel Emissions Reduction Incentive

Program for On-Road and Non-Road Vehicles provi de grant money that will result in emission

reductions, so equity issues should not be a problem. Any school district or charte r school in the

State that operates at least one diesel-fueled school bus may apply for a grant under the Texas

Clean School Bus Program. Projects eligible fo r Texas Clean School Bus Program funding are

not restricted to nonattainment and near nonattainme nt areas of Texas. Nonattainment areas are

geographic areas that fail to meet the Nati onal Ambient Air Quality Standards. Near

nonattainment areas are counties which could pot entially become nonattainment in the near

future.

Any owner and operator in the nonattainment and near nonattainm ent areas of the State

may apply for grant opportunities under the Di esel Emissions Reduction Incentive Program for

On-Road and Non-Road Vehicles. Projects eligible for the Diesel Emissions Reduction

Incentive Program for On-Road and Non-Road Vehi cles are restricted to the nonattainment and

near nonattainment areas of the State, as well as certain highw ays and roadways designated by

the TCEQ and located outside a nonattainment ar ea. At least 75 percent of the vehicle miles

traveled or hours of operations for the project for the five year s immediately following the award

of the grant must take place in a nonattainment area or other affected county, or on highways and

roadways designated by TCEQ and located outside a nonattainment area. Th is percentage of use

requirement is a criterion used by TCEQ to dete rmine program eligibility, and usage outside of

the nonattainment areas or affected counties wi ll not count towards the emissions reductions

used to determine the cost-effectiveness of th e project. The emission reductions generated by

projects funded by the Diesel Emissions Reduc tion Incentive Program for On-Road and NonRoad Vehicles are in nonattainment and near non attainment areas of Texas, as well as certain

areas around the nonattainment areas.

The improvement to regional air quality and th e ability for any school district o r charter

school in the State to apply for grant opportunities under the Te xas Clean School Bus Program,

and any owner or operator in th e nonattainment and near nonattainment areas of the State, as

well as certain highways and roadways desi gnated by the TCEQ and located outside a

nonattainment area, to apply for grants under th e Diesel Emissions Reduction Incentive Program

for On-Road and Non-Road Vehicles, provides for equity.

Environmental Benefit :

The Texas Clean School Bus Program framew or k provides an environmental benefit by

encouraging the early introduction of use of lowe r emitting diesel technologi es in the state of

Texas. The emission reductions generated th rough the projects funded by the Texas Clean

School Bus Program and the Dies el Emissions Reduction Incen tive Program for On-Road and

Non-Road Vehicles, would have not otherwise occu rred at this time. Th e long operational life of

diesel equipment makes the in troduction of newer cleaner burni ng engines into a fleet a long

term process. With the aid of grants under the Texas Clean School Bus Program and the Diesel

Emissions Reduction Incentive Program for On -Road and Non-Road Vehicles, many of the

# 25

older, dirtier engines may be replaced, repowere d, or retrofitted with emission control devices

sooner than it would have otherwise occurred.

Program Tracking:

The TCEQ must submit a biennial report to the Texas Legis lature on the status of the

implementation of TERP no later than December 1 of each even numbered year. The TCEQ,

under the consultation of the TER P Advisory Board, must review annually and document in the

report the programs established by the plan. The bi ennial report includes a review and discussion

of each project funded under the plan, the amou nt granted for each project, the emission

reductions attributed to each proj ect, and the cost effectiveness of each project. If the project is

an infrastructure project, then the report also includes an evaluation of the degree to which the

project supports on-road and non-road diesel pr ojects and the amount of fuel or electricity

dispensed.

The plan must also account for monies receiv ed, d isbursed as grants, reserved for grants

based upon project approvals, and recommendations of transfer between a llocations. An estimate

of future demand must also be provided along with an evaluation of the plan’s effectiveness at

providing emission reductions which are creditable toward the SIP, solicitation and evaluation of

project applications, awards, and implementati on monitoring. If any chan ges occur in project

selection criteria, award criteria or administrative procedure, these would also be included in the

report. The benefits and possibilities of including other pollutants in TERP would also be

discussed. The TCEQ conducts a public heari ng and comment period on each draft of the

biennial report while cons tructing the final report.

Recommendation:

The revisions to the TERP program, outlined in the Table above, address the elements of

EPA’s EIP guidance. Therefore, revisi ons to the TERP should be approved.

Conclusion :

Based on the evaluation set forth in this TSD, we recomm end approval of revisions to 30

TAC Chapter 114, as submitted to us on May 15, 2006, October 10, 2006, January 17, 2008, and

February 28, 2008, into the Texas SIP.