Bryan W. 

### Shaw, Ph.D., 

### Chairman Buddy Garcia, 

### Commissioner Carlos Rubinstein, 

### Commissioner Mark R. Vickery, P.G., 

### ExecutiveDirector 

## 10 APR -2 PM 

# 12:**5~** 

## TEXAS COMMISSION ON ENVIRONMENTAL QUALITY Protecting Texas by

### ReducingandPreventfngPollution 

### March 25,2010

Dr. Alfredo Armendariz, Regional Administrator U.S. EnvironmentalProtectionAgency

- Region 6 1445 Ross Avenue Dallas, Texas 75202-2733
DearDr. Arm.endriz: Docket

### No. 2009-1186-RUL 

### Rule Project No. 2009-048-114-EN

OnFebruary 24, 2010, the Texas Commission onEnvironmental Quality 

### (Commission) adopted revisions to the state implementationplan(SIP).
The Commission adopted new §114.620 and §114.622 of30 TAC Chapter 114 and corresponding revisions to the SIP. The adoption implements House Bill 1796, 81st Legislature, 2009, Regular Session by adding a definition for stationary engines and clarifying requirements for projects involving non-road equipment used for 

### natural gas recoverypurposes. Enclosed are the proposed revisions to the SIP, a public hearing certification, a complete record ofthe public hearing, andthe accompanying order. I 

### lookforward to your expeditious approval ofthis SIP revision. Sincerely,

# ~~~ Chairman BS/br Enclosures

cc: TheHonorable Rick Perry, Governor ofTexas Mr. TobyBaker, Office ofBudget, Planning and Policy, Office ofthe Governor Mr. MarkR. 

### Vickery, P.G., Executive Director, Texas Commission onEnvironmental Quality

P.O. Box 13087 Austin, Texas 78711-3087 512-239-1000 Internet address: www.tceq.state.tx.us

### TEXAS CoMMISSION oN ENVIRONMENTAL QuALITY

DocketNo. 

### 2009-1186-RUL

1RE STATE OFTEXAS COUNTY OF TRAVIS

This is to certify that the attached are true and correct copies ofdocuments for revisions to the Texas
State ImplementationPlan, adopted onFebruary 24, 2010, pursuant to 40 Code ofFederal Regulations (C.F.R.) § 51.104. I am the records administrator for the Air 

### Quality Division of the Texas Commission on Environmental Quality (Commission).

# +D~~ Air 

### QualityDivision Texas Commission onEnvironmental QualityTexas Commission on Environmental Quality Public Hearing November 16, 2009 Conceming Revisions to 30 TAC Chapter 114

Control ofAir Pollution from MotorVehicles Emission Reduction Incentive Grants

Rule Project No. 2009-048-114-EN

### INTRODUCTION

The Texas Commission onEnvironmental Quality (commission)heldapublichearinginAustinonNovember 16, 2009, to receive testimony regarding new sections to 30 TAC Chapter 114, Subchapter K, 

### Division 5, Texas Clean FleetProgram. The amendments implt:ment Senate Bill1759, 81stLegislature, 2009, Regular Session, by adding a definition for stationacy engines and clarifying the requirements for projects involving non-road equipmentused for natural gas recovery purposes.

The comment period closed on November 23,2009. Alltestimony and comments have been reviewed and seriously considered. Thishearingrecordcontains a**~~omplete**

### recordofthepublichearing and is dividedinto the following four sections:

o Public Notification and Proposal

o Written and Oral 

### Testimony

o Evaluation ofTestimony

o StaffRecommendations/Order

Additional copies ofthis hearing record are maintained in the TCEQ central office at 12100 Park 3 5Circle, Austin, Texas 78753. For further information,**ple~;e** 

### contact Steve Dayton at (512) 239-6824.

# PUBLIC NOTIFICATION AND PROPOSAL

### PUBLIC NOTIFICATION

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

1. Publication of notice of public hearings in the following newspapers on the date listed: Austin American-Statesman: 

### October 9, 2009 Fort Worth Star-Telegram: 

### October 9, 2009 Houston Chronicle: 

### October 9, 2009 San Antonio Express-News: 

### October 9, 2009

2. Publication ofthe proposed rules in the October 23, 2009, issue ofthe Texas Register 

### (34 TexReg 7291).

3. Publication ofthe Notice of Public Hearing in the December 29, 2006, issue ofthe Texas Register

### (34 TexReg 7385).

4. Correspondence forwarding the notice of public hearings to the following officials and agencies: Speaker ofthe House Lieutenant Governor Alamo Area Council of Governments Capital Area Planning Council City ofAustin, Mayor's Office City of Dallas, Department of Environmental and Health Services City of Dallas, Department ofAviation City of El Paso, Environmental Services City of Fort Worth, Environmental Management Department City of Houston, Department of Health and Human Services

### East Texas Council of Governments El Paso Metropolitan Planning Organization Federal Highway Administration Galveston County Health District Harris County Public Health and Environmental Services North Central Texas Council of Governments Houston-Galveston Area Council South East Texas Regional Planning Commission Texas Department ofTransportation Travis County Judge Victoria Metropolitan Planning Organization Arkansas Department of Pollution Control and Ecology Louisiana Department of Environmental Quality New Mexico Environmental Department Oklahoma Department of Environmental Quality United States Environmental Protection Agency

### Example of Newspaper Classified Ad San Antonio Express-News, 

### October 9, 2009

' Perlons

- . ID 

### it- IBid tile 

## h:lu who**~** Sllldll ·cammuniCIIIIlll or atiW ICalftlmodatlan llllds lhoUkl

# ·.=~~**~512 ~0779.**  R.'".

. shouldbemade-as . r In advance as pat' ; slb&e.

. , ' .·':.-t.·

, Comments rillY be suit- ' mined .ID DeVon RYIRI ·. MC 205, Ofllcl c1 l.iall

. !l_ervices,**Ttl~~$** Comnit-

. SIDil on ErMronrnantal -. oQullllly, RO. 8ox 131187, ' IAustin, Tau

.7W·

### r

,3087, ar fulld ID (512) l'
·239·4808.**Electron!~** ·.

.·commenll lillY be sutt- 1 • mitted at http:/I, -ws.tt:eq.state.bt.us/ · ·ruies/ICOIIIrnents. RJe :· size restrictions lillY 1 '

.ply ID commiiiiS .:: m1tted through the

.. eComments systlrn. All ; comi!IIIIIS IIIOuld rtflr- 1 :**~** Rule PI'Qilc:t Num- !

. •bar 2009-048·114-EN•. The =mllllllt Plriod CIDHS November 23, ' 2009. To view ruiiL ; please visit http:/I www.tceq.state.tx.us/ nav/rulu/pro· PDA.Jidopt.h,tml. FarM- I l!ler mformelion or que-

.tiOI1S concemins this ; :prapGSIII, P!- i:attlc:t,

' ,SleJ!hln Dayton._ Air Q

..

JitY Division .unllle-

. cmenlalion Granll Sec-

. 'lion, It**512·23~4.**

# • • • Notice ofa Public Hearing on Proposed Revisions to 30 TAC Chapter 114 The Texas Commission on Environmental Quality (commission) will conduct a public hearing to receive testimony regarding proposed revisions to 30 Texas Administrative Code (TAC) Chapter 114, Control ofAir Pollution From Motor Vehicles, and to the state implementation plan (SIP). These revisions are proposed under the requirements ofTexas Health and Safety Code, §382.017; Texas Government Code, Subchapter B, Chapter 2001; and 40 Code ofFederal Regulations, §51.102, ofthe United StatesEnvironmental ProtectionAgency (EPA) regulations concerning SIPs. TheproposedrulemakingwouldimplementHouse Billl796, 81stLegislature, 2009, by adding a definition for stationary engines and clarifying requirements for projects involving non-road equipmentused for natural gas recovery purposes. Apublic hearing on this proposal will be held in Austin on November 16, 2009 at 10:00 a.m. in Building E, Room 201 at the commission's central office located at 12100 Park 35 Circle. The hearing will be structured for the receipt oforal or written comments. Registration begins 30 minutes prior to the hearing. Individuals may present oral statements when called upon in orderofregistration. Atime limitmay be established to assure enough time is allowed for every interested person to speak. There will be no open discussion during the hearing; however, commission staffmembers will be available for discussion 30 minutes prior to the hearing and will answer questions before and after the hearing. Persons planning to attend the hearing who have special communication orotheraccommodationneeds shouldcontactCharlotte Horn, Office ofLegal Services at (512) 239-0779. Requests should be made as far in advance as possible. · Comments may be submitted to Devon Ryan, MC 205, Office of Legal Services, Texas Commission on Environmental Quality, P.O. Box 13087, Austin, Texas 78711-3087, or faxed to (512) 239-4808. Electronic comments may be submitted at http://wwwS.tceq.state.tx.uslrules/ecomments. File size restrictions may apply to comments submittedthroughtheeComments system. All comments should reference Rule Project Number 2009-048-114-EN. The comment period closes November 23, 2009. To view rules, please visit http:l!www.tceq.state.tx.us!navlru/eslpropose

_adopt.html. For further information or questions concerning this proposal, please contact Steve Dayton, Air Quality Division, at (512) 239-6824. TRD-200904574 Robert Martinez Director, Environmental Law Division Texas Commission on Environmental Quality Filed: October 9, 2009 

# • • Notice ofa Public Hearing on roposed Revisions to 30 TAC Chapters 290 and 291 The Texas Commission onEnviro ental Quality (TCEQ or commission) will conductapublic hearing oreceive testimony regarding proposed revisions to 30 Texas A · 'strative Code (TAC) Chapter290, PublicDrinking Water, andChapte 291, UtilityRegulations. Theserevisions are proposedunderthe req ments ofTexasHealthand Safety Code, Chapter 372, Texas WaterC , §13.506(b), and Texas Government Code, Chapter2001, Subcha r B. The proposed rulemaking would · plement House Bill (HB) 2667, 81stLegislature, 2009, RegularSes on, concerningplumbingfixtures. The proposed rulemaking clarifies and establishes the performance, testing, and labeling requirements o the American Society ofMechanicalEngineers, the Canadian Stan ds Association, and the American NationalStandardsInstitute. HB 26 7establishesaphase-inofplumbing fixtures that meet the new perf1 ance requirements and are sold for use in the State ofTexas. The base-in will allow manufacturers time to change their production, w 'le also allowing retailers the opportunity to tum over their invento

. HB 2667 creates an exemption for those manufacturers that have certified by the United States ·Environmental Protection Agency' WaterSense Program. HB 2667 repeals the TCEQ's certificationp ss for plumbing fixtures and the fees associated with the listing sin the plumbing fixtures must meet national certification and testing p dures. The commission will hold a public earing on this proposal in Austin on November 17, 2009 at 10:00 a. . in Building E, Room 201S, at the commission's central office lo d at 12100 Park 35 Circle. The hearing is structured for the receipt foral or written comments by interested persons. Individuals may**~** sent oral statements when called upon in order ofregistration. Ope discussion will not be permitted during the hearing; however, co ion staffmembers will be available to discuss the proposal30 min tes prior to the hearing. Persons who have special comm 'cation or other accommodation needs who are planning to attend th hearing should contact Charlotte Horn, Office ofLegal Services at (5 2) 239-0779. Requests should be made as far in advance as possible. Written comments may be sub tied to Jessica Rawlings, MC 205, Office ofLegal Services, Te as Commission on Environmental Quality, P.O. Box 13087, Au in, Texas 78711-3087, or faxed to (512) 239-4808. Electronic mments may be submitted at: http://wwwS.tceq.state.tx.us/ru/esle mmentsl. File size restrictions may apply to comments be· g submitted via the eComments system. All comments should ference Rule Project Number 2009-038-290-PR. The comment period closes November 23, 2009. Copies ofthe proposed rule · can be obtained from the commission's Web site at http:/, .tceq.state.tx.uslnav!rules!propose_adopt.html. For further · ormation, please contact Scott Swanson, WaterRights Section, (51 ) 239-0703. TRD-200904551 Robert Martinez Director, Environmental Law Division Texas Commission on Environments Quality Filed: October 9, 2009 

# • • • Notice ofOpen Meeting Conce ing Boat Sewage Disposal SenateBill (SB) 2445, 81stLegisla ,2009, requiresthe Texas Commission on Environmental Quality CEQ) to change rules contained in 30 Texas Administrative Code ( C) Chapter 321 to address new definitions of"boat, boatpump-out 'on, shore side, mobile, orfloating installation, and surface water in e state" and achange in the frequency ofcertifications for pump-o t stations. TCEQ is proposing an open meeting to obtain input from e public on the changes required by SB 2445. TCEQ requests info ation on ways to implement the new rules. Staffis considering the peal and proposal ofa new 30 TAC Chapter 321, Control ofCe Activities by Rule, Subchapter A, Boat Sewage Disposal, by amen ing the fee structure. In addition, the rules would prohibit the disc e oftreated water from marine sanitationdevices into all enclosed shwaterlakes or bodies ofwater (including rivers that do not support interstate vessel traffic) in Texas,



### INADDITION October23, 2009 34 Tex.Reg 7385Bryan W. Shaw, Ph.D., 

### Chairman Buddy Garcia, 

### Commissioner Carlos Rubinstein, 

### Commissioner Mark R. Vickery, P.G., 

### Executive Director 

### TEXAS CoMMISSION ON ENVIRONMENTAL QuALITY Protecting Texas by

### Reducing andPreventingPollution**NOTICEOFAPUBUCHE~GON** 

### PROPOSED REVISIONS TO30 TAC CHAPTER 114

AND TOTHE STATE IMPLEMENTATIONPLAN

The Texas Commission on Environmental Quality (commission) will conduct a public hearing to receive testimony regarding proposed revisions to 30 Texas Administrative Code (TAC) Chapter 114, Control of 

### Air Pollution From Motor Vehicles, and to the state implementation plan (SIP). These revisions are proposed under the requirements ofTexas Health and Safety Code, §382.017; Texas Government Code, Subchapter B, Chapter 2001; and 40 Code of Federal Regulations, §51.102, of the United States Environmental ProtectionAgency (EPA) regulations concerning SIPs. The proposed rulemaking would implement House Bill 1796, 8lst Legislature, 2009, by adding a definition for stationary engines and clarifying requirements for projects involving non-road equipment used for natural gas 

### recoverypurposes. A public hearing on this proposal 

### will be held inAustin on November 16, 2009 

### at 10:00 a.m. in Building E, Room 201 at the commission's central office located at 12100 Park 35 Circle. The hearing will 

### be structured for the receipt of oral or 

### written comments. Registration begins 30 minutes prior to the hearing. Individuals may present oral statements when called upon in order ofregistration. A time limit may 

### be established to assure enough time is allowed for every interested person to speak. There will 

### be no open discussion during the hearing; however, commission staff 

### members will 

### be available for discussion 30 minutes priortothe hearing and will answer questions before and 

### afterthehearing

.

.Persons planning to attend the hearing who have special communication or other accommodation needs should contact Charlotte Horn, Office ofLegal Services at (512) 239-0779. Requests should 

### bemade as far in advance as possible. Comments may be submitted to Devon Ryan, MC 205, Office ofLegal Services, Texas CoiiliDiision on Environmental Quality, P.O. Box 13087, Austin, Texas 78711-3087, or faxed to (512) 239-4808. Electronic comments may be submitted 

### at http:llwww5.tceq.state.tx.uslrules/ecomments. File size restrictions may apply to comments submitted through the eComments system. All comments should reference Rule Project Number 2009-048-114-EN. The comment period closes November 23, 2009. To viewrules, please visit

### http:/lwww.tceq.state.tx.uslnav/ruleslpropose_adopt.html. For further information or questions concerning this proposal, please contact Stephen Dayton, Air Quality Division Implementation Grants Section, at 512-239-6824.

P.O. Box 13087 Austin, Texas 78711-3087 512-239-1000 Internet address: www.tceq.state.tx.us

### As required by Texas Government Code §2006.002(c), OIEC has determined that the proposal will not have an adverse economic effect on small or micro-business. This section is being proposed as required by Texas Government Code §§661.002

- 661.082. This rule will be for internal use ofOIEC staffonly. OIEC has determined that this proposal is not a "major environmental rule" as defined byTexas Government Code §2001.0225 and therefore a regulatory flexibility analysis is not required. OIEC has determined that no private real property interests are affected bythis proposal and thatthis proposal does not restrict or limit an owner's right to property that would otherwise exist in the absence of government action. Therefore, this proposal does not constitute a taking or require a takings impact assessment under Texas Government Code §2007.043. To be considered, written comments on the proposal must be submitted no later than 5:00 p.m. on November 22, 2009, to Brian White, Deputy Public Counsel, Office of Injured Employee Counsel, Mail Code 50, 7551 Metro Center Drive, Austin, Texas 78744. A request for a public hearing should be submitted separately to the Deputy Public Counsel. Section 276.4 is proposed pursuant to Texas Government Code §§661.001

- 661.008 and Texas Labor Code §404.106. Texas Government Code §661.001 provides for definitions for Subchapter A. Section 661.002 provides for the establishment and administration of the sick leave pool. Section 661.003 provides guidelines for contribution to the sick leave pool. Section 661.004 provides guidance on the use of time in the pool. Section 661.005 provides guidelinesforwithdrawal oftime from the pool. Section 661.006 provides for the limitation of withdrawal from the sick leave pool. Section 661.007 provides for equal treatment of leave used from the sick leave pool. Section 661.008 provides the estate of the deceased is not entitled to payment of unused time withdrawn by the deceased employee. Texas Labor Code §404.106 provides the Public Counsel rulemaking authority to adopt rules. The following sections are affected by this proposal: 28 TAC §276.4

- Texas Government Code §§661.002

- 661.082 and Texas Labor Code §404.006. §276.4. SickLeave Pool. A sick leave pool is established to alleviate hardship causedto an employee and employee's immediate family ifa catastrophic illness or injury forces the employee to exhaust all sick leave earnedby the employee and to lose compensation from the state. 

### ill The Deputy Public Counsel is designated as the pool administrator. 

### ill The pool administrator shall develop and administer a procedure for the administration ofthis section. 

### ill Operation ofthe pool shall be consistent with Chapter 661 ofthe Te11:as Government Code. This agency herebycertifiesthatthe proposal has been reviewed by legal counsel and found to bewithinthe agency's legal authority to adopt. Filed with the Office ofthe Secretary ofState on October7, 2009. TRD-200904511 Brian M. White Deputy Public Counsel Oflice of Injured Employee Counsel Earliest possible date ofadoption: November 22, 2009 For further information, please call: (512) 804-4182 

# • 

# • •• TITLE 30. ENVIRONMENTAL QUALITY 

## PART 1. TEXAS COMMISSION ON ENVIRONMENTAL QUALITY CHAPTER 114. CONTROL OF AIR POLLUTION FROM MOTOR VEHICLES SUBCHAPTER K. MOBILE SOURCE INCENTIVE PROGRAMS DIVISION 3. DIESEL EMISSIONS REDUCTION INCENTIVE PROGRAM FOR ON-ROAD AND NON-ROAD VEHICLES 30 TAC §114.620, §114.622 The Texas Commission on Environmental Quality (TCEQ, agency, or commission) proposes amendments to §114.620 and §114.622. · BACKGROUND AND SUMMARY OF THE FACTUAL BASIS FOR THE RULES The 77th Texas Legislature, 2001, enacted Senate Bill 5 establishing the Texas Emissions Reduction Plan (TERP), which provides financial incentives for reducing emissions ofon-road and non-road motor vehicles and equipment. House Bill (HB) 1796, 81st Texas Legislature, 2009, amended the Texas Health and Safety Code, Chapter 386, TERP Program to add a definition for stationary engine and to clarify requirements for projects involving non-road equipment used for natural gas recovery purposes. SECTION BY SECTION DISCUSSION §114.620, Definitions Section 114.620 is amended to add a definition for stationary engine as required by Texas Health and Safety Code, §386.001. Texas Health and Safety Code, §386.001 was amended by adding Texas Health and Safety Code, §386.001 (10-a), which states: stationary engine means a machine used in non-mobile applications that converts fuel into mechanical motion, including turbines and other internal combustion devices. §114.622, Incentive Program Requif9ments Section 114.622 is amended to clarify requirements for projects related to non-road equipment used for natural gas recovery purposes, as required by Texas Health and Safety Code, §386.104(c). FISCAL NOTE: COSTS TO STATE AND LOCAL GOVERNMENT Nina Chamness, Analyst, Strategic Planning and Assessment, has determined that, for the first five-year period the proposed rules are in effect, fiscal implications are anticipated for the agency, but not for other units of state or local government as a result of administration or enforcement ofthe proposed rules.



### PROPOSED RULES October23,2009 34 TexReg 7291The agency will utilize available funding appropriated out ofthe TERP Account 5071 

### to implement the proposed rules. The proposed rules amend Chapter 1·14 to implement certain provisions of HB 1796. The proposed rules add the definition of stationary engine as provided by HB 1796. This change will authorize the agency to fund projects involving stationary gas turbine engines under the TERP progmm. The proposed rules also provide that for projects involving n<m-road equipment used for natural gas recovery purposes, the Etquipment must be operated in a nonattainment area or affectEd county for a sufficient amount of use in order to meet the sta;:utory cost effectiveness requirements. This provision would exemptthis equipment from the requirement that the equipment oPE•rate at least 75% ofthe annual use in the nonattainment areas nnd affected counties for at least five years. The TERP incentive grant program is .applicable 

### to 41 eligible counties in the state. The addition ofeligible projects involving stationarygasturbine engineswill require the agency

### to consider and fund a wider variety of projects u:;ing appropriated funds from the TERP Account 5071. The addition of eligible projects will affectthe overall allocation ofgrantfunding in the TERP program and may reduce the amount of grant money available for some governmental entities. However, the new projects are expected to reduce nitrogen oxide (NO.), tt,us forwarding the TERP goal of reducing NO, emissions. It is anticipated that the addition ofeUgible projects involving stationary engines will mostly affect gas 'turbine engines on gas pipeline compressors. At this time it is not known if any units of state or local government own or OPEtrate these types of stationary engines. Owners oroperators ofaffected gas turbine engines may be eligible 

### to apply for grant ·funding ifthose engines meet grant requirements. The amount of grant funds will vary widely depending on the operating conditions ofeach grant applicant. TERP reimbursement for enginn replacement or retrofit cost is estimated to range from $30,000 to more than $150,000 depending upon the amount ofemission reductions achieved. PUBLIC BENEFITS AND COSTS Nina Chamness also determined that fur each year ofthe first five years the proposed rules are in effe,ct, the anticipated public benefit from the changes seen in the' proposed rules will be improvement in air quality in the 41 counties eligible to receive TERP incentive grant funding. The proposed rules are anticipated to affuctstationary engines in the 41 TERP eligible counties. Owners 1)r operators of affected gas turbine engines may be eligible to apply for grant funding if those engines meetgrant requirements. It is anticipated thatthis change will mostly affect stationary gas turbine engines on gas pipeline compressors. At this time, staff IS not able to determine how many businesses or individuals own stationary engines and therefore may beeligible forTERP grant funding. Those that are eligible for funding may apply for funds lo replace or retrofit the equipment if that equipment is determined to be eligible for a diesel emission incentive grant. The amount of the grant funds will vary widely depending on the operating conditions ofeach grant applicant. TERP reimbursement for engine replacement or retrofit cost is estimated 

### to range from $30,000 to more than $150,000 depending upon the amount ,:>f emission reductions achieved. No significant fiscal implications are anticipated for businesses with natural gas recovery interests due to the proposed change, which will allow the commission to set tte minimum project life



### 34 TexReg 7292 October23, 2()'09 Texas Register requirements for non-road equipment used for natural gas 

### recovery purposes. SMALL BUSINESS AND MICRO-BUSINESS ASSESSMENT No adverse fiscal implications are anticipated for small or microbusinesses as a resultofthe proposed rules. The proposed rules are expected to affect owners or operators ofstationary engines in the 41 TERP eligible counties. It is further anticipated that this change will mostly affect stationary gas turbine engines on gas pipeline compressors. Any small or micro-businesses that own or operate stationary engines on gas pipeline compressors may be eligible to apply for grant funding ifthose engines meet grant requirements. SMALL BUSINESS REGULATORY FLEXIBILITY ANALYSIS The commission has reviewed this proposed rulemaking and determined that a small business regulatory flexibility analysis is not required because the proposed rules are required by state law and do not adversely affect a small or micro-business in a material way for the first five years that the proposed rules are in effect. LOCAL EMPLOYMENT IMPACT STATEMENT The commission has reviewed this proposed rulemaking and determined that a local employment impact statement is not required because the proposed rules do not adversely affect a local economy in a material way for the first five years that the proposed rules are in effect. DRAFT REGULATORY IMPACT ANALYSIS The commission reviewed the rulemaking in light of the regulatory analysis requirements of Texas Government Code, §2001.0225, and determined that this rule action is not subject to §2001.0225 because it does not meet the definition of a "major environmental rule" as defined in that statute. A "major environmental rule" means a rule the specific intent of which is to protect the environment or reduce risks to human health from environmental exposure and that may adversely affect in a material way the economy, productivity, competition, jobs, the environment, or the public health and safety of the state or a sector of the state. The amended Chapter 114 rules are proposed in accordance with HB 1796, which amended Texas Health and Safety Code, Chapter 386. The proposed rules add a new definition for stationary engine and clarify requirements for projects involving non-road equipment used for natural gas recovery purposes. Because the proposed rules place no involuntary requirements on the regulated community, the proposed rules will not adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, or the public health and safety ofthe state or a sector ofthe state. In addition, none ofthese amendments place additional financial burdens on the regulated community. In addition, a regulatory impact analysis is not required because the proposed rules do not meet any ofthe four applicability criteria for requiring a regulatory analysis of a "major environmental rule" as defined in the Texas Government Code. Texas Government Code, §2001.0225, applies only to a major environmental rule the result ofwhich is to: 1) exceed a standard set by federal law, unless the rule is specifically required by state law; 2) exceed an express requirement of state law, unless the rule is specifically required by federal law; 3) exceed a requirement of a delegation agreement or contract between the state and anagency or representative ofthefederal governmentto implement a state and federal program; or 4) adopt a rule solely under the general powers of the agency instead of under a specific state law. This rulemaking does notexceed a standard set by federal law. In addition, this rulemaking does not exceed an express requirement of state law and is not proposed solely under the general powers ofthe agency, but is specifically authorized by the provisions cited in the STATUTORY AUTHORITY section of this preamble. Finally, this rulemaking does not exceed a 

### requirement ofa delegation agreementorcontractto implement a state or federal program. The commission invites public comment on the draft regulatory impact analysis determination. Written comments on the draft regulatory impact analysis determination may be submitted to the contact person at the address listed underthe SUBMITIAL OF COMMENTS section ofthis preamble. TAKINGS IMPACT ASSESSMENT The commission evaluated this rulemaking action and performed an analysis ofwhetherthe proposed rules are subjectto Texas Government Code, Chapter 2007. The primary purpose ofthe rulemaking is to amend Chapter 114 in accordance with HB 1796. The rules make revisions to a voluntary program and only affect motor vehicles and equipment that are not considered to be private real property. Therefore, promulgation and enforcement ofthe proposed rules is neithera statutory nor a constitutional taking because it does not affect private real property. Therefore, the rules do not constitute a taking under Texas Government Code, Chapter 2007. CONSISTENCY WITH THE COASTAL MANAGEMENT PROGRAM The commission reviewed the**propo~** rulemaking and found the proposal is a rulemaking identified in the Coastal Coordination Act Implementation Rules, 31 TAC §505.11(b)(2), concerning rules subject to the Texas Coastal Management Program (CMP), and will, therefore, require that goals and policies ofthe CMP be considered during the rulemaking process. The commission reviewed this action for consistency and determined the rulemaking for Chapter 114 does not impact any CMP goals or policies, because it revises a voluntary incentive grant program and does not govern air pollution emissions. Written comments on the consistency of this rulemaking may be submitted to the contact person atthe address listed under the SUBMITIAL OF COMMENTS section ofthis preamble. ANNOUNCEMENT OF HEARING The commission will hold a public hearing on this proposal in Austin on November 16, 2009at 10:00 a.m. in Building E, Room 201 at the commission's central office located at 12100 Park 35 Circle. The hearing is structured forthe receipt oforal orwritten comments by interested persons. Individuals may present oral statements when called upon in order of registration. Open discussion will not be permitted during the hearing; however, commission staff members will be available to discuss the proposal 30 minutes prior to the hearing. Persons who have special communication orotheraccommodation needswhoare planning to attend the hearing should contact Charlotte Hom, Office of Legal Services at (512) 239-0779. Requests should be made as far in advance as possible. SUBMITIAL OF COMMENTS Written comments may be submitted to Devon Ryan, MC 205, Office of Legal Services, Texas Commission on Environmental Quality, P.O. Box 13087, Austin, Texas 78711-3087, or faxed to (512) 239-4808. Electronic comments may be submitted at: http:llwww5.tceq.state.tx.uslrules/9comments/. File size restrictions may apply 

### to comments being submitted via the eComments system. All comments should reference Rule Project Number 2009-048-114-EN. The comment period closes on November 23, 2009. Copies of the proposed rulemaking can be obtained from the commission's Web site at http://www.tceq.state.tx.uslnavlru/eslpropose_adopt:html. For further information, please contact Steve Dayton, Air Quality Division, (512) 239-6824 or sdayton@tceq.state.tx.us. STATUTORY AUTHORITY These amendments are proposed under Texas Water Code, §5.1 02, which provides the commission with the general powers to carry out its duties underthe Texas Water Code; Texas Water Code, §5.1 03, which authorizes the commission to adopt any rules necessary to carry out the powers and duties under the provisions of the Texas Water Code and other laws of this state; and Texas Water Code, §5.105, which authorizes the commission by rule toestablish and approve all general policy of the commission. These amendments are also proposed under Texas Health and Safety Code, §382.017, which authorizes the commission 

### to adopt rules consistent with the policy and purposes of the Texas Health and Safety Code; §382.011, which authorizesthe commission to establish the level ofquality 

### to be maintained in the state's air and to control the quality of the state's air; §382.012, which authorizes the commission to prepare and develop a general, comprehensive plan for the control of the state's air; and Texas Health and Safety Code, Chapter 386, which establishes the Texas Emissions Reduction Plan. Finally, these amendments are proposed as part of the implementation of House Bill 1796. The proposed amendments implementTexas Health and Safety Code, Chapter 386. §114.620. Definitions. Unless specifically defined in the Texas Clean Air Act (TCAA) or in the rules ofthe commission, the terms used in this subchapter have the meanings commonly ascribed to them in the field ofair pollution control. In addition to the terms which are defined by the TCAA and §§3.2, 101.1, and 114.1 ofthistitle (relatingtoDefinitions), the followingwords andterms, whenused inthis division shallhavethe following meanings, unless the context clearly indicates otherwise. (1) Cost-effectiveness--The total dollar amount expended divided bythe total numberoftons ofnitrogenoxidesemissions reduction attributable to that expenditure. In calculating cost-effectiveness, one-time grants ofmoney atthe beginningofaproject shallbe annualized using atime value ofpublic funds ordiscountrate determinedfor eachprojectby the commission, taking into accountthe interestrate on bonds, interestearned by state funds, and otherfactors the commission considers appropriate. (2) Guidelines--Texas Emissions Reduction Plan: Guidelinesfor Emissions Reduction Incentive Grants Program (RG-388) adopted by the commission under Texas Health and Safety Code, §386.053, as amended. (3) Incremental cost-Thecostofanapplicant'sprojectless abaseline cost that would otherwise be incurredby an applicant in the normal course ofbusiness and may include added lease or fuel costs as well as additional capital costs.



### PROPOSEDRULES October23, 2009 34Tex.Reg 7293(4) Motor vehicle--A self-propelled device designed for transporting persons or property on a public highway that is required to be registered under Texas Transportation Code, Chapter 502. (5) Non-road diesel--A vehicle or piece ofequipment, excluding a motor vehicle or on-road diesel, that is powered by a nonroad engine, including: non-road non-recreational equipment and vehicles; constructionequipment; locomotives; marine vessels; andother high-emitting diesel engine categories. (6) Non-road engine--An internal combustion engine that is in or on a piece ofequipment that is self-propelled or that propels itselfand performs another function, excluding a vehicle that is used solely for competition, or a piece ofequipment that is intended to be propelled while performing its function, or a piece ofequipment designed to be and capable ofbeing carried ormoved from one location to another. (7) On-road diesel-An on-road diesel-powered motor vehicle that has a gross vehicle weight rating of8,500 pounds ormore. (8) QualifYing fuel--Any liquidorgaseous fuel oradditives registered or verified by the United States Environmental Protection Agency that is ultimately dispensed into amotor vehicle oron-road or non-road diesel that provides reductions ofnitrogen oxides emissions beyond reductions required by state or federal law. {9) Repower--To replace an old engine powering an onroad or non-road diesel with a new engine; a used engine; a remanufactured engine; or electric motors, drives, or fuel cells. (10) Retrofit--To equipanengine and fuel systemwithnew emissions-reducing parts or technology verified by the United States EnvironmentalProtectionAgency aftermanufacture ofthe original engine and fuel system. (11) Small business--A business ownedby a person who: (A) owns and operates notmore than two vehicles, one ofwhich is: (i) an on-road diesel with apre-1994 engine model; or (ii) a non-road diesel with an engine with uncontrolled emissions; and (B) has owned the on-road or non-road diesel for more than one year. ill)_ Stationary engine-Amachine used in non-mobile applicationsthatconverts fuel into mechanicalmotion, includingturbines and other internal combustion devices. §114.622. Incentive Program Requirements. {a) Eligible projects include: (I) purchase or lease ofon-road and non-road diesels; (2) emissions-reducingretrofitprojects for on-road ornonroad diesels; (3) emissions-reducing repower projects for on-road or non-road diesels; {4) purchase and use ofemissions-reducing add-on equipment for on-road or non-road diesels; (5) developmentand demonstrationofpractical, low-emissions retrofit technologies, repower options, and advanced technologies for on-road ornon-road diesels with lower nitrogen oxides (NO.) emissions; (6) use ofqualifYing fuel;



### 34 TexReg 7294 October 23, 

### 2009 Texas Register (7) implementation ofinfrastructure projects; (8) replacement of on-road and non-road diesels with newer on-road and non-road diesels; and (9) other projects that have the potential to reduce anticipated NO. emissions from diesel engines. (b) For a proposed project as listed in subsection (a) ofthis section, other than a project involving a marine vessel or engine .Q!: a project involving non-road equipment used for natural gas recovery purposes, not less than 75% ofvehicle miles traveled orhours ofoperation projected forthe five years immediately following the award ofa grantmustbeprojectedto takeplace in anonattainmentareaoraffected county ofthis state. The commission may also allow vehicle travel on highways and roadways, or portions ofa highway or roadway, designated by the commission and located outside anonattainment area or affected county to counttowards the percentage ofuse requirement. (c) For a proposed project that includes a replacement of equipmentor arepower, the oldequipmentorengine mustberecycled or scrapped provided, however, that the executive director may allow permanentremoval from the StateofTexas in specific grants where the applicant has provided sufficient assurances that the old locomotive will not be returned to the State ofTexas. (d) To be eligible for a grant, the cost-effectiveness ofa proposedprojectas listedin subsection (a)ofthis section, exceptfor infrastructureprojects and infrastructurepurchasesthatare partofabroader retrofit, repower, replacement, or add-on equipment project, must not exceed a cost-effectiveness of$15,000 per ton ofNO. emissions reduced. The commission may set lower cost-effectiveness limits as neededto ensure the best use ofavailable funds. The commission may also baseproject selection decisions on additionalmeasuresto evaluate the effectiveness ofprojects in reducing NO. emissions in relation to the funds to be awarded. (e) Projects funded with a grant from this program may not be used for creditunder any state orfederal emissions reduction credit averaging, banking, ortradingprogramexceptas providedunderTexas Health and Safety Code, §386.056. (t) Aproposedprojectas listedin subsection (a) ofthis section is not eligible ifit is required by any state or federal law, rule or regulation, memorandum ofagreement, orother legally binding document. This subsection does not apply to: (1) anotherwisequalifiedproject, regardlessofthe factthat the state implementation plan assumes that the change in equipment, vehicles, or operations will occur, ifon the date the grant is awarded the change isnotrequiredby any state orfederal law,ruleorregulation, memorandum ofagreement, or other legally binding document; or (2) the purchase ofanon-road dieselorequipmentrequired only by local law or regulation or by corporate or controlling board policy ofa public or private entity. (g) A proposed retrofit, repower, replacement, or add-on equipment project must achieve a reduction in NO. emissions to the level established in the commission's Texas Emissions Reduction Plan: Guidelines for Emissions ReductionIncentive GrantsProgram (RG-388) for that type ofproject compared with the baseline emissions adopted by the commission for the relevant engine year and application. (h) Ifagrantrecipientfails to meetthe terms ofaprojectgrant orthe conditionsofthis division,the executivedirectorcanrequirethat the grantrecipient return some or all ofthe grant funding to the extent that emission reductions are not achieved or cannot be demonstrated.(i) Criteria established in the guidelines, including revisions to the commission's Tuas Emissions &rblction Plan: Guitklinesfo,. Emissions &ductionIncentive G1'tlntsPmgram (RG-388), applytothe Texas Emissions Reduction Plan program. Notwithstanding the provisions ofthis chapter, as authorized under Texas Health and Safety Code §386.0S3(d), revisions to the guidelines may include, among other'changes, adding additional pollutants; adding stationary engines or engines used in stationary applications; adding vehicles and equipmentthat usc fuels otherthan diesel; oratljusting eligibleprogram cat· egories; as appropl'ia1e, toensurethatincentives establishedunderthis program achieve the maximum possible emission reductions. This agency herebycertifiesthatthe proposal has been reviewed by legal counsel and found

### to be within the agency's legal authorIty 

### to adopt Filed with the Office oftheSecretaryofState on October9, 2009. TRD-200904573 Robert Martinez Director, Environmental Law Division Texas Commlaalon on Environmental Quality Earliest poaalble date ofadoption: November 22, 2009 For further Information, please call: (512)**23~090** 

# • • • DMSION 5. 

## TEXAS CLEAN FLEET PROGRAM 30 TAC §§114.650 • 114.658 The Texas Commission on Environmental Quality (commission or agency) proposes new §§114.650- 114.658. The new sections are proposed to be submitlad to the United States Environmental Protection Agency (EPA) as a revision 

### to the 

### state implementation plan. BACKGROUND AND SUMMARY OF .THE FACTUAL BASIS FOR THE PROPOSED RULES Senate Bill 1759, 81st Legislature, 2009 amended the Texas Health and Safety Code by adding Chapter 391, Texas Clean Fleet Program. This program is designed to encourage eligible fleets 

### to replace diesel vehicles with alternative fuel or hybrid vehicles. Eligible entities that replace 25 or more on-road diesel vehicles with alternative fuel or hybrid vehicles may apply for a grant under the program to offsetthe cost of replacing those vehicles. SECTION BY SECTION DISCUSSION §114.650, Definitions Section 114.650 establishes the definitions specificto the Texas Clean Fleet Program, as required by Texas Health and Safety Code, §391.001. §114.651, Applicability Section 114.651 establishesthe applicability requirements as 

### required by Texas Health and Safety Code, §391.002. These 

### requirements outline entities that are eligible to apply for a grant under the program. §114.652, Qualifying Vehicles As required by Texas Health and Safety Code, §391.003, this section clarifies thetypes ofvehicles that are and are noteligible for participation in the program.**~'114.653,** GrantEligibility r:iection 114.653 establishes granteligibility requirements, as 

### reCIUired by Texas Health and Safety Code, §391.005. These 

### re-
. quirements establish use and ownership crltaria ofany vehicles being replaced, es well as the level of emissions that must be nchieved in order 

### to receive a grant under the program. Sub- !18ction (d) providesthatthe executivedirectormay establish additional criteria for purposes ofprioritizing projects for selection, which may Include, but are not limited 

### to: nonattainment status ufthe primary location In which the eligible vehicles are used; or c:ost perton benefits ofthe overall emissions being reduced. The c:ommission Is considering the establishment of prioritizing criteria that would limit the commission to initially considering only Glrant projects that Include vehicles with a primary location in a county that is located within an eight-hour ozone nonattaiment &1188 or a near nonattainment area that has submitted an early action compact plan. The commission seeks public comment on proposed rules regarding the grant eligibility requirements and whether to prioritize grant projects 

### to the initial consideration of only grant projects in counties within nonattainment or near nonattainment areas. §114.654, Usage andDisposition As required by Texas Health and Safety Code, §391.005, this saction outlines requirements regarding the use of newvehicles purchased through the program, as well as the disposal ofvehicles being replaced. §114.655, GrantRestrictions As required by Texas Health and Safety Code, §391.006, this &9Ction outlines the allowable use ofgrantfunds awarded under 

### tt1e program. §114.656, EHglble GrantAmounts As required by Texas Health and Safety Code, §391.007, this &9Ction outlinesthevarious eligible grant amounts allowed under the program based on the 

### age and type of each vehicle being mplaced. §114.657, Reporting Requirements Section 114.657 identifies the reporting requirements, as 

### required by Texas Health and Safety Code, §391.005. §114.658, Implementation Schedule Section 114.658 identifies the expiration date ofthe program, as stated in Texas Health and Safety Code, §391.008. FISCAL NOTE: COSTS TO STATE AND LOCAL GOVERNMENT l'llina Chamness, Analyst, Strategic Planning and Assessment, has determined that, for 

### the first five-year period the proposed nJies are in effect, fiscal implications are anticipated for the agency as a result of administration or enforcement of the proposed rules. The agency will utilize available funding appropriated out of the Texas Emissions Reduction Plan (TERP) Account 5071 to implement the proposed rules. Other state agencies and local governments may experience 

### cost savings as a result of the proposed rules if they are eligible 

### to use the Texas Clean Fleet Program grant funds to replace diesel powered vehicles in theirfleets with alternative fuel vehicles. Senate Bill1759 requires the agency to create the Texas Clean Fleet Program using aportion ofthe funds appropriated in TERP Jl.ccount 5071. The proposed rules would add a new division to



### PROPOSEDRULES October23, 2009 34 TexReg 7295

# WRITTEN AND ORAL TESTIMONY

### Reference Number
W-1
W-2 

### INDEXOF WRIITEN TESTIMONY



### Submitted by James N. Harger, Clean Energy Guy Donaldson, United StatesEnvironmental Protection Agency

# W-1

ll/23/2BB9 12:23 5624934532 PAGE Bl/86 

# C)

,

# ~ November23, 2009 

## CleanEqefgy VIA E-FtUNG:

# ~&.tcaq.state.tx.ua/ruleslecomments FAX TO: (512) 239-4808 Jessica Rawlings MC205 

### Office of Legal Services

. Texas Commission on Environmental Quality 

## P.0. Box 13087 Austin, Texas 78711-3087

· Re: Rule ProJect Number 20Q9..047-114-EN

. 

### Proposed New Sections 

## to 30 TAC Chapter 114, Implementing Senate Bill 1759, s1• Legislature, 2009. Regular Session 

## to implement**~** 

### Texas CI$B.n 

### Fleet Program Dear Ms. Rawlings:

.Olean Energy Is pleased 

## to ·offer comments to 

### the Texas Commission on Envfroomemal Quality ("TOEa') on 

### TCEQ's proposed rulemaklng 

## to Implement Senate Bill 1759, 

### 81• Legislature, 2009, Regular 

### Session, relating to Implementation of

### the Texas Clean Fleet 

### Program. 

## J. About Clean 

## Energy Clean Energy. Is the leading 

### provider of 

### nab.Jral gas, both 

### Compressed Natural Gas {•CNG) and Uquefiad Natural Gas ('I,.NG"),

.for transportation In North America. Clean Energy has a broad customer base In 

### the refuse, transit. ports, shuttle, 

### taxi, trucking, airPort and municipal fleet 

### .marketS, fueling more than 17,200 vehicles 

### dally at over 190 strategic 

### locations across the United States and Canada. The Olean 

### Energy model 

### Is to 

### design, 

### bulld, own, 

### operate and maintain 

### public as 

### well as 

### private fueling sites. The 

### goal 

### Is 

## to llllow our customers 

## to remain focused on operating 

### thetrfleet. For qualifying fleet clients, Clean Energy 

### may
·cover 100% 

### of 

## the cost 

## to 

## desrgn, build and construct the fuelrng station, In

exchange for an 

## affordable, long-1enn fueling 

## contract. Clean Energy's longterm fuel contracts 

### eliminate unpredictable 

### fueling costs, 

### allowing the customers to pay agreed 

### upon rates regardless of fluctuating market prices. Clean 

### Energy 

### Is currently working with fleet operators 

### across the State of Texason various, promJsfng 

### projects. We are demonstrating to our prospeotJve customers that CNG Is 

### an economical altemaHve to gasoline and diesel; especially given the rising pJ1ce of fuel, and the availability of vast quantities of

North Atrnmaa'alndltIn cla8n lral\cpCIItllkl I 

# I

# lr·"' 

# ·v 11/23/2809 12:23 5624934532 CLEAN ENERGY 

### PAGE B2/B6



### natural gas produced right fl6re in Texas. We believe CNG not only provides 

## an economic 

## attematlve, but 

## also moves Texas and the nation one 

## step closer 

## to being energy lndependent. 

### Texas Operatfona In Texas, Clean Energy's DallaS and Houston based offices support a fueling network 

### of na11Jra.l gas 

### stations throughout 

### the 

## state. Clean Energy 

### owns and operates nlne 

### CNG fueling stations inthe Dallas-Ft. Worth Metroplex, and three

. in Houston. These 

## stations provide 

### compet.ftlvely priced, public access fuel 

## 2.4-

. hours"a..clay, 7·days-a-week, In addition, Clean Energy recently collaborated wfth 

### the City of 

### San Antonio to build and 

### Install a CNG 

### refueling 

## facnfty dedicated 

## to refuel 

### dOzens of the City 

### of 

## San Antonio's refuse truckfleet. 

### Cfean Energy 

### also provides 

## fuel and support services to 

### the City of 

### Dallas, OFW airport, J.ove Field airport, AT&T 

### and UPS 

### vehicles which are currently In use In the State ofTexas. Clean Energy's sales force was 

## racentty expanded to 

### Include 

# a seasoned sales professional to 

### service the· growing trucking opportunities In the 

## State. Clean Energy also 

### owns and operates The Pickens Plant located In Willis, Texas. approximately 

### 60 miles north 

## of Houston, which can**produ~** 

### up to 

### 1



## oo,ooo gallons 

### of vehicle-grade LNG 

### per day, 

## and tncludas truck 

### loading faclnties 

## and a 800,00()-gaUon 

## ·storage 

## tank. The 

## LNG plant 

## receives natural gas from the pipeline, ohllls it

## to liquefied fonn and stores It 

### at low pressure for delivery· to a growing public and 

### private-sector 

## customer base. Among Clean Energy's customers are Dallas 

### Area Rapid Transit (DART) and Sun Metro 

### (EI 

## Paso), and the 

## Houston operations for

## Sysco Food, and 

## HEB. Clean· Energy, through Its 

### recent acquisition 

### of BAF Technologies, Inc., In October 2009 also**provtd~s** 

### natural 

### gas vehicle conversions for the light to heavy-duty fleet sectors.· BAF Technologies 

### Is the leading provider·

### of 

### natural gas vehicle systems and conversions In the United States and supports global clients 

## with alternative fuel 

### systems. 

### 11. Legislative History 

### In Developingthe**Cl~n** 

### Fleet Program Clean Energy 

### believes that the Texas 

### Emissions Reduction Plan program (•TERP") 

### has been a tremendous 

### success, atthough not many TERP 

### grants have been Issued for CNG 

## projects, or**oth~r** 

### alternatively fueled projects. The legislation which creates the Clean Fleet Program, however, 

## was intended to carve out

# ;artof the TERP program**~peolflcafly** 

### foraltema.tlvelyfueled projects. 

### In the 81 Regular**~gislative** 

### Session, Senate 

### Bilf 1425 

### by SenatorWilliams,

-2-

# ·l

[ 

# i()

! ' 

# 'U

1 

# D

·' 

### 11/23/2889 12:23 5624934532 PAGE 133/86



### House Bill 2978 by 

### Representative Anchia, and House Bill 

### 2978 by 

### Representative Otto 

### (oollecttvely the 

## •ctean Fleet Legtsiatlon') 

### were 

## all were
· flied 

### to create the Clean Fleet Program, but none passed. Ultimately, the Clean

Fleet Program was added onto Senate 8011759 to become 

## law. The Clean Fleet 

### Legislation received broad 

### support 

### from a 

### broad base of 

### entities supporting 

### natural gas and alternative fuels. 

### Support was stated on the 

### record by

### the Texas Gas Association, the Texas 

### Propane Gas AssocJatlon, the Texas Motor Transportation Association, UPS, HEB, AT&T, the Association 

## of Electric 

### Companies of Texas, EnergyTransfer Company, Crosstax Energy, Martin Midstream, EOG Resources, 

### Texas Pipeline 

### Association, Texas Gas 

### Service,**~ache** 

### Corporation, Clean Energy, and the Sierra Club

..

. Clean Energy believes that the 

## Clean Fleet Program will provide opportunities

for natural gas projects 

## that have not existed 

### prior to 

### the establishment 

## at the 

### program, and 

### hopes that the Clean Fleet Program will 

### establish a track record of successful natural gas 

### projects 

## that can 

## be 

## analyz9d and copied In TERP. Ultimately, Clean Energy hopes that the Clean Fleet Program wtll open TERP 

## to more natural 

## gas proJects. · IlL 

## Commente on the Propoaed RulM 

## A.. Preamble Commente. The preamble estimates 'the

.cost for 

### alternative fuel vehicles at a range between $20,000 and $150,000. ln Clean Energy's experience. the cost 

### of an alternatively 

### fueled vehicle ranges 

### from

.

.$6,000 

## for IIQht-duty vehicles such 

## as the Honda Clvlc, $.24,000 

### for medium"

duty .shuttles and up to $100,000 for 

### heavy-duty. Class 8, tractor trucks with 14.9L 

### engines. Clean Energy strongly agrees with 

### TCEQ's statement that the public benefit from 

### the**propose~** 

### rules will 

### be .Improved aJr quality statewide since there will be· additional opportunities 

## to apply for grant funds 

## to replace diesel vehicles 

### with 

### alternatiVe fuel options. that have fewer emissions. 

# a Sec.**114.650~** 

### DefinHfons. Clean**~ergy** 

### supports 

# the proposed 

### rule lanQuag& tracking the statutory definitions In Sec. 391.001, Health 

### and Safety Code. ·
c. 

## Sec. 114.651. .Applicability. Clean Energy supports 

### the 

### proposed rule language tracking the language In Sec.**~91.002** 

### and 391.004, Health and Safety Code regarding applicability 

### of the Clean Fleet Program. Olean Energy suggests also clartfylng local governments, suCh as regional transit agencies or 

### school districts may also applyfor a grant ·

-3-

.

# I ! 

### I [\



# v ll/23/2aB9 12:2a 5624934532 PAGE B4/B6



### D. Sao. 114.652. Qualifying Vehicles. Clean Energy supports the proposed rule language tracking the 

### statutory language Sec. 391.003 and 391.005(c), 

### Health 

## and Safety 

### Code. · E. 

### Sec. 

### 114.653. Gra.,t Eligibility. Clean Energy supports the proposed rule 

### language tracking 

### the statutory 

### language Sec. 391.005, 

### Health and Safety 

### Code. More specifically, Clean 

### Energy 

### supports the 

### flexibility granted·

## to the Executive 

### Director to: (t) 

### set the baseline level from 

### which the 

### reduction of nitrogen 

### oxide emissions will be measured, and {II) establish criteria 

### which the vehicle being replaced must 

### meet, Including minimum annual mileage or 

### fuel usage 

### requirements, minimum percentage of annual usage 

### requirements, and 

### criteria for determining that the vehicle 

## was In 

### operating

.

# I

conditJon with at least two years 

### Of remaining useful life. Ctean Energy also supports the 

### proposed rule 

### language which 

### allows the Executive Director 

## to award a 

### grant based 

### on a 25% reduction In pollutants other than nttrogen oxides. aenarally, Clean Energy supports the flexibility In the proposed rules, 

### which will allow 1he ExecuUve Director 

## to adapt 

### and modify Implementation of the Clean 

## Fleet Program quicklyand 

### respond 

## to changing 

### conditions.

. TCEQ Is specifically requesting comments on whether TCEQ 

### should prlorttlza or 

### limit grants 

## to projects 

### whlch are located In counties 

### within nonattalnment 

## or near nonattalnment areas·under the elght·hour ozone standard. Clean 

## Energy generally believes that 

### prioritized consideration should 

## be given 

## to projects .In 

### nonattainment 

### areas or near nonattalnment areas. However, 

### there are prdjects 

### involving fleets that operate 

### for a substantial portion of 

### the 

### time travelling betWeen nonattainment areas and near nonattalnment areas•. These**~** 

### of projects should be given the 

### same consideration as a 

## proJect operating only In a nonattalnment area. 

## As TCEQ states In the 

### preamble, the air quality benefits fromthe Clean 

### Fleet Program will 

### be

### statewide. Lastly, 

### Claan 

### Energy supports**th~** 

### prioritizatiOn of projects based on cost per 

### ton benefits 

### of the overan 

### emissions being reduced, which allows ·for considaratlcn 

### ofthe reductlpns of pollutants otherthan nitrogen oxides.

. . 

### F. Sec. 

### 114.684. 

## ·usage •nd Disposition. Clean 

### Energy supports 

### the

· proposed rule 

### language tracking the statutory 

### language In Sec. 391.005(c) and



### (f), 

### Health ancl Safety Code. · 

### G. Sec. 114.665. · Grant Raatrlctiona. Clean 

### Energy supports the proposed rule language 

### tracking the statutory language In Sec. 

### 391.006, Health and Safety Code. We rec:ommand that 

### TCEQ clarify that a grant may also be 

### used for 

### labor 

## to Install emissions-reducing equipment, which Is consistent

## with thestaMe. · 

# I**~** . 

# . 

# 0



# 0**11/23/2~69** 12:23 5624934532 PAGE B5/B6



### H. 

## Sec. 114.656. Eligible Grant Amounts. 

### Clean Energy supports 

### the proposed rule 

### language tracking the statutory language In Seo. 391.007, Health and Safety Code. Clean 

### Energy also supports delegating to 

### the Executive 

### Director the authority to 

### revise the**standa~s** 

### for determining grant amounts In order to reflect changes to 

### federal emissions 

### standards and decisions on 

### pollutants of concern. 

## 1. Sec.114.667. Reporting 

## Requirements. Clean Energy supports the proposed rule language tracking the statutory language In 

## Sec. 391.005(d),**Hea~h** 

## and Safety Code. 

### J. .Sec.. 

### 114.658. lmpUwenta.tlon 

### Schedule. Clean Energy supports the 

### proposed rule 

### language tracking ttle 

### statutory la!1guage In Sec. 

### 391.008. Health and Safety Code. K. 

### Application Forme.. 

### Seotl:on 391.004(c), Health and Safety Code, provides that an 

### application must 

## lae made 

### on a form 

### provided by 

### the 

### Commission and 

### must contain lnfoJmEttlon 

### required by 

### the CommJssfon. Clean Energy supports the 

### development of new grant program procedures and new application 

### tonns for the Clean Fleet Program, whloh are 

### different from TERP application forms. 

## The pi"'cedures 

## Emd the application requirements for the Clean Fleet Program should be tailored to large fleets. 

### Many of the detans currently 

### required In an application for a TERP 

### grant may r.aot be necessary for an application 

## for a Clean Fleet Program grant; The 

### Clean 

## Fleet Program Is 

### geared toward .large 

### fleets wtth 

### over**~$vehicles,** 

### while TERP Is a broad-based and almost 

### exclusively results In grants 

### to projects with 

### only a few vehicles. The needs ofthe different classes of applicants for TERP and the Clean 

### Fleet Program are 

### very dtfferent. and the application process 

### should also be 

### different. 1... Pre-Review Process. 

### Under TERP, an 

### applicant Js 

### required to 

### expend the time and resources submIt a substantial amount of Information on eaoh vehicle Identified In 

## the application. This 

## may be 

### appropriate for an
. applicant wtth 

### one or two vehicles. However, 

### Clean Energy encourages TCEQ to 

### consider aJlowlng an 

### applicant for a Clean 

# fleet grant to 

### provide the basic Information, and letthe applicant know If It 

### appears that the applicant 

### will 

### qualify for the grant. An applicant In the Clean Fleet Program 

### will be providing Information on 25 or more 

### vehicles,· which can be. 

### a substantial investment 

### without 

## any Indication whether 

### the Investment In 

## compiling the application may



### . be 

### vvorthwhlle. Thus, a pre-review 

### of a 

### Clean Fleet Program application would



### be useful In attracting good projects from fleet operators who 

## may not otherwise



# _,- 

# I
j l 

### l 

# .

### •

....

. I ) 

### L -'**~ ll/23/2~89**  12:23 5624934532 CLEAN ENERGY · PAGE 1!16/1!16



### be willing to submit a grant appiJcatlon given the time and resources It takes to 

### submit an application. M. Supplemental Funding. The September 18, 2009 memo 

### to the Commissioners states that a limited number

## of applicants may qualify the grant funds ($6.8 

### million In FY 2010 and $5.2 

### million In FY 2011) since 

## each grant must be tor at least 2S vehicles. · Clean Energy encourages the TCEQ to 

### consider whether 

### TERP funding might· be used 

### to suppJement 

### a Clean Fleet 

### Program 

## grant application 

## which meets 

### the requirements of both programs, 

### but for which the 

### funding Is not 

### available. There may also 

### be other sources of 

### funding from 

### otherstate or local sources might also be 

### used in conJunction with 

### the Clean Fleet Program. IV. 

## ·Alternative Fuelling Infrastructure 

### In addition to establtshing the Clean Fleet Program, Senate Bill ·1759 also 

### requires TCEQ to study 

### the 

## amount of emissions reductions achieved 

### from alternative fuelling Infrastructure, and 

### request ·that U.S. 

### Environmental Protection 

### Agency consider whether emissions 

### reduction credit can 

### be attributed to refueling Infrastructure. Although this is not expressly part 

### ofthe proposed rulemaklng, Clean Energy supports TCEQ In 

## Its efforts. · 

### V. Closing Clean Energy appreciates the opportunity to 

### provide. oommems tD 

### TCEQ t;tn


### · TCEQ's proposed rules 

## to Implement the Texas Clean Fleet Program, 

### Please

let contact me 

## If you have any questions or 

### if you need any**cJa~catlon** 

### on the comments 

### we nave offered. 

### Sincerely,

es N. 

### Harger 

## nlorVIce President & 

### Chief Marketing Officer

-6-**~** -j .• 1**~** i :.j •J

·I 

### UNITED STATES ENVIRONMENTAL PROTEcnON AGENCY REGION8



### Ms. JessicaRawlings 1445 ROSS AVENUE, SUITE 1200 DALLAS, TX 75202-2733 

# NOV 1 7

# 2001

Office ofLegal Services, MC 205 Texas Commission on Environmental Quality P.O. Box 13087 Austin, TX 78711-3087 Re: Rule ProjectNumber 2009-047-114-EN Dear Ms. Rawlings: Thank you for the opportunityto comment on proposed changes to 

### 30 TAC 114 regarding Control ofAir

### Pollution 

## from MotorVehicles, specifically adding anewDivision to

. 

### Subchapter K 

### as Division 5: Texas Clean Fleet Program. Generally, we supportthe proposedrevisions to these rules because they strengthen the Texas Emission ReductionPlan (TERP) program by offering anotherincentiveto fleets wishing 

## to voluntarily reduce emissions. We believe 

## these newrules will contribute to

### the enhancement ofair

### quality inthe norurttainment areas where they are implemented. Emissionreductions claimed in

### the State ImplementationPlan from this new Divisionmustbe

### quantifiable, surplus, pennanent, and enforceable.

. We understandthattheTexas Legislature namedthis program the 

## Texas CleanFleet program 

## in Senate Bill1759, 81st

### Legislature, 2009. It is an unfortunate coincidence thatthis program has 

### the same name as theprogram adopted (and subsequentlyrepealed) by

## Texas as required 

### under section 182(c)(4) ofthe Clean Air

### Act (CAA) 

## as amended in 

### 1990. We recognize that

### theprogram being proposed is inno way related to

### this CAA clean fuel fleet requirement and hope this coincidence does not confuse the public. Specifica.lly, in §114.650, definitions, we question if

### there is 

## atypographical 

## error inthe 

### definition ofAlternative Fuel, where itrefers to "a

### mixture offuels containing at least 85%

. methanol." Shouldthis read 

### "ethanol?" Is the specifiedlist ofalternative fuels all inclusive or does this

### program allowfor the use

### ofotherunspecified alternative fuels? Section §114.653(c) would allow the executive directorto considerprojects that

### result in a 

### 25% reduction inotherpollutants. Since the TERPprogramprovides reductions in

### NOx and has 

### been used to 

### substitute for otherNOx reduction measures, how will the Statekeep separate the reductions achieved from aprojectthat 

### is funded underTERP, butgets, for example, only PM reductions? What

### ifan 

### "otherpollutant" reduction project also resulted in anincrease 

### in 

### NOx? 

# W-2

# :,,

.. I

'

''i

I 

## '"i 

## J ···! 

### ·-·j



### .. :

·:

. i 

### ·.!**-~** .**~**

..**~** ·.:j

"l 

# I

.I 

### .] 

# l

i i 

## j**·~** I I, . . . . . . '

.**~** . . . . . 

### Section §114.656, Eligible 

# GfantAmountS, describes how**muc~** 

### ofareplacementcost wouldbe coveredbytheprogmm; Clarification in 

### §14.656(a)(l) is needed. Under §14.656(a){1) (A), 

### itwouldbe helpful ifthe 

### year ofrilanufacture is specified for bothfederal and Californiaemission standards. Subpamgraph §

### 14.656(a)(l)(B) 

## may intendtocovervehicles

## tbB.t were manufactured inthe 

### U.S. beforethe 

# EPA setemission standards for them. However, the ·language also suggests vehicles that

### were notmanUfactured 

## in the 

### U.S. 

## at all but 

## afterU.S.

·standards were setand may be 

### in

### the country illegally. The Stateis not likely intending (nor would EPA support) to 

### spend

# state funds underthis**parti~utar**

### programto

### reward owners for

. turning inillegal engines orvehicles. See EPA's importregulations 

## to.confirril which highway. vehicleengines worild not

## Pe subjectto 

### U.S

..emission standards. Fromthe schedule attachedto 

### EPA Form 3520-21 (Rev.03-09), it appears thatengines manufacturedbefore January 

### 1, 1970,

# or

.those same engines mcoi"porated intQ 

### vehicles would

## be allowedto 

## be legally imported.

. BeginningJanuary 1, 1970, on-high\vayheavy-duty engine/vehicle standards were required. J'herefore, beginning January 

### 1, 1970, any on-highwayheavy-duty engine/vehicle imported

## into

· theU.S, would haveto meetU.S. engine/vehicle emission standards. · We·have similar

## oo~cems with regard to 

### §114.656(bXl)(A) and (B). 

### Providing

## ~ific

. mOdel years in (A)wouldbe helpful, and clarifying (B)

### is

### necessary. What is 

### meantby •

''voluntaryemission certification standards?"

. . . . . . 

### Region 6continues to 

### offerTexas our support9uring

### the rulemakingprocess.. ·Please let us know how·wemay be offurther assistance. · Sincerely yours, 

# ·.1-J

..

# ~· GUyDonaldson · · Chief · AirPlanning Section ·

• -·--·----·-----w-oo••-••••••••• • • '•>'•••-•••••••••-•--•-·••-•••••••••-••••••••••••·-•••••••••••••••••••• ••••••••··-•••••••••-••••-••••-•••••••••**••••••-••••••••'••••••~•-'"''••"'':,"''"'•••~•••-.••**__ ......:,
_________,,_,,,,, ••

### INDEX OF ORAL TESTIMONY

NO ORALTESTIMONYWAS RECEIVED PERTAINING TO THISRULEMAKING.

### HEARING OFF1CERREPORT

I 

## am the hearing officer assigned to conduct the public hearing regarding rule project number: 2009-048-114-EN, HB 1796: EmissionReduction Incentive Grants. A public hearing was scheduled for November 16, 2009 in 

### Austin at 10:00 a.m. in 

### BuildingE, Room 201 at

### the commission's central office located at 12100 Park 35 Circle. At 9:30 

### a.m., theroom was open, .TCEQ staff

### and a courtreporter were present and ready to openthe hearing for public comment. 

### Afterwaiting for 15 minutes no one had 

### arrived to make comments on the record. Therefore, the public hearing 

### was not formally opened for commentand a 

### transcript was 

### notprepared.

Hearing Officer

November 16, 2009

# EVALUATION OF TESTIMONY/ 

# Texas Commission on Environmental Quality INTEROmcEMEMORANDUM

To: Thrn:

From:

DocketNo.: Subject: Commissioners Date: February 5, 2010 LaDonnaCastafiuela, ChiefClerk Mark 

### R. Vickery, P.G., ExecutiveDirector 

### SusonaM.

### Hildebrand. P.E., 

### ChiefBngUreer

# ff

2009-1186-RUL CommissionApprovalfor RulemakingAdoption

·Chapter 114, Control ofAirPollution FromMotorVehicles HB 1796: EmissionReductionIncentive Grants Ru1es Rule ProjectNo. 2009-048-114-EN Background and reason(s) for the rulemaking:

. . Therules implementrevisions to TexasHealth and Safety, Chapter**38~,** as a result ofHouse Bill (HB) 1796, 81stLegislature,.2009. The changes were originallyproposedby Senator Averitt 

### in a senate bill. However, because of procedural delays, that bill did not go forward. The changes were then added to HB 1796, authoredbyRepresentative.Chisum. Scope ofthe proposed rulemaking: A) Summary ofwhat the ru}emaking will do: The revisions add a definition for stationary engine and exclude non-road equipmentused for

### natural gas recovery purposes 

## :fron:ithe requirementthatatleast 75% of theuse ofgrant-funded equipment occurinthe eligible counties. B) Scope required by federal regulations or state statutes: The revisions incorporate into the rules the changesmadeto Texas Health and Safety Code, Chapter 386, byHB 1796. · 

### C) Additional statT recommendations that are not required- 

### by federal rule or state statute: No additionalrevisions wereproposed beyondthosethatweremade as a result ofHB 1796. Statutory authority: • Texas Water Code, §5.102, which provides the commission with the general powers to 

### cany out its duties; ·· • Texas Water Code, §5.103, which authorizes the commission to adopt any rules necessary to carry outthepowers and duties underthe provisions oftheTexas WaterCode and otherlaws ofthis state; • Texas Water Code, §5.105, which authorizes the commission by rule to establish and approve 

### all generalpolicyofthe commission; • Texas Health and Safety Code, §382.017, which authorizes the commission to adopt rules consistent withthe policy andpurposes ofthe Texas Clean AirACt; • Texas Health and Safety Code, §382.011, which authorizes the commission to establish the level of quality to 

### be maintained 

### in the state's airandto controlthe quality ofthe state's air; • Texas Health and Safety Code, §382.012, which authorizes the commission to prepare and develop a general, comprehensiveplan forthe control ofthe state's air; • Texas Health and Safety Code, Chapter 386, which establishes the Texas Emissions Reduction Plan (TERP)program.' I. I 

### Commissioners Page 2 February 

### 5, 2010 Re: DocketNo. 2009-1186-RUL
Effectonthe: A) Regulated community: The changes expand the types ofstationary projects that may 

### be eligible for a grantto include gas turbine engines. Entities that own stationary gas turbine engines 

### will nowpotentially 

### be eligible to apply. Any additional stationary engine projects funded as a resuh ofthese changes may reduce the amount of funding available for mobile source projects, although this would not change the overall emissions reductions. 

### In addition, the changes exclude non-road equipment used for natural gas recovery purposes from the requirement that equipment 

### be operated at 

### least 75% ofits use in the eligible counties. The projects 

### will still be required to meet the cost-effectiveness requirements based on the emissions reductions inthe eligible counties overthe life ofthe project. Entities that own non-r;oad equipmentused for natural gas recovery purposeswillbenefitfrom havingmore ofthat equipment eligible for grantfunds. B)

### Public: Same as fortheregulatedcommunity. · . C) 

### Agency programs: The revisions.

### will expand the t:YPes ofequipment that may be eligible for a grant. The changes will need to be included 

### in the 

### TERP grant 

### program materials and application forms. The changes will nothave a major impact 

### on administrationofthe program. Stakeholder meetings: No stakeholdermeetings were heldfor this rulemaking. Publiccomment: A public hearing was scheduled for November 16, 2009, in Austin. The comment period closed 

### on November 23, 2009. No oral or 

### written**co~ents** 

### were received**a~** 

### the hearing or during the comment period. · Significantchanges from proposal: No changes were made :fromthe proposal. Potentialcontrovenialconcerns and legislative interestremaining afterproposal and public comment: None.
Does this rulemaking affect anycurrentpolicies orrequiredevelopment ofnew policies? The

### TERP Guidelines forEmissions Redui:tionIncentive Grants (RG-388)·mustbe revised to 

### incorporatethe changes made by this rulemaking. Grant program materials and forms must also be revised to iriclude the changes to 

### the grant eligibility criteria. What are the consequences if 

### this rulemaking does not go forward? Are there alternatives to 

### rulemaking? This rulemaking is required to implement the statutory changes to the grant criteria under 

### HB 1796. 

### Ifthe rulemaking does not go forward, the new grant eligibility criteria could not be implemented. Possible alternatives 

### are riot adopting the rules and being inconsistent with the statute or adopting the rules at a later date. Keypoints in adoption rulemakingschedule: Tf!XIlS Register

### proposal publication date: Anticipated Tf!XIlS Register

### publication date: Anticipated effective date: Six-month Texas Register

### filing deadline: October23, 2009 March 12, 2010 March 18, 2010 April23, 2010

# ' Commissioners Page3 February 5, 2010 Re: 

### DocketNo. 2009-1186-RUL Agency contacts: 

### SteveDayton, Rule ProjectManager, 239-6824, 

### ChiefEngineer's Office Ben Rbem, StaffAttorney, 239-6501 

### Devon Ryan, 

### Texas RegisterCoordinator, 239-6090 

### Attachments

cc: ChiefClerk, 5 

### copies

. ExecutiveDirector's Office SusanaM. Hildebrand, P.E. Kevin

### Patteson Curtis 

### Seaton Daniel Womack Office ofGeneral Counsel Steve Dayton DevonRyan ·

.•.

## EVALUATION OF TESTIMONY

The Texas Commission onEnvironmental Quality (commission) adopts the amendments to §114.620 and§114.622, 

### withoutchanges to the proposed text as published inthe October 23, 2009, issue ofthe 

### Texas Register (34 TexReg 7291).

Sections 114.620 and 114.622 will be submitted

### to the United States Environmental Protection Agency as revisions to the state implementation plan.

BACKGROUND AND SUMMARY OF THE FACTUAL BASIS FORTHE ADOPTED
RULES
The 77th Texas Legislature, 2001, enacted SenateBillS establishingthe Texas Emissions Reduction Plan (TERP), which provides financial incentives forreducing emissions ofon-road
and non-road motorvehicles and equipment. House Bill (HB) 

### 1796, 8lstTexas Legislature, 2009, amended Texas Health and Safety Code, Chapter 386, TERP Program to add a definition
for stationary engine andto clarifyrequirements for projects involving non-road equipment used for natural gas recovery purposes.

SECTION BY SECTION DISCUSSION 

### §

### 114.620, Definitions
Section 114.620 is amended to add a definition for stationary engine as required by Texas Health and Safety Code, §386.001. Texas Health and Safety Code, §386.001 was amended by adding TexasHealth and Safety Code, §386.001(10-a), which states: stationary engine means a machine used innon-mobile applicationsthat converts fuel into mechanical motion, including turbines and other internal combustion devices.



### 1

### §

## 114.622, Incentive Program Requirements Section 114.622 is amcmded to clarify requirements for projects related to non-road equipment used for natural gas re:overy purposes, as required by Texas Health and Safety Code, §386.104(c).

FINAL REGULATORY IMPACT ANALYSIS DETERMINATION The commission reviewed the rulemaking in light ofthe regulatory analysis requirements of Texas Government Code, §2001.0225, and determined thatthis rule action is not subjectto §2001.0225 because it does not meetthe definition ofa "majorenvironmental rule" as defined in that statute. A "majorenvironmental rule" means a rule the specific intent ofwhich is to protectthe environment orreduce risks to human health from environmental exposure that may adversely affect in a material way the economy, productivity, competition,jobs, the environment, orthe public health and safety ofthe state or a sector ofthe state.

The amended Chapter 114 rules are adopted in accordance with HB 1796, which amended Texas Health and Safe1y Code, Chapter 386. The adoptedrules add a new definition for stationary engine and clarifyrequirements for projects involving non-road equipment used for natural gas recovery purposes. Because the adopted rules place no involuntary requirements on the regulated communi-ty, the adopted rules will not adversely affect in a material way the
economy, a sector oftheeconomy, productivity, competition,jobs, the environment, orthe public health and safety ofthe state ora sector ofthe state. In addition, none ofthese amendments place additional fmancial burdens onthe regulated community.

2

### In 

### addition, aregulatory impact analysis is not required because the adopted rules do not meet
any ofthe four applicability criteria for requiring aregulatory analysis ofa "major environmental rule" as defmed in the Texas Government Code. Texas Government Code, §2001.0225, applies onlyto a major environmental rule the result ofwhich is to: 1) exceed a standard setby federal law, unless the rule is specifically required by state law; 2) exceed an express requirement ofstate law, unless the rule is specifically required by federal law; 3) exceed arequirement ofa delegation agreement or contract between the state and an agency or representative ofthe federal government to implement a state and federal program; or4) adopt a rule solely underthe general powers ofthe agency instead ofunder a specific state law. This rulemaking does notexceed a standard setby federal law. In 

### addition, this rulemaking does not exceed an express requirement ofstate law and is not proposed solely underthe general powers ofthe agency, but is specifically authorized by the provisions cited in the STATUTORY AUTHORITY section ofthis preamble. Finally, this rulemaking does not exceed arequirement ofa delegation agreement or contractto implement a state and federal program.

The commission invited public comment regarding the draftregulatory impact analysis determination during the public commentperiod. No comments were received on the draft regulatory impact analysis determination.

TAKINGS IMPACT ASSESSMENT The commission evaluatedthis rulemaking action and performed an analysis ofwhetherthe adopted rules are subjectto Texas Government Code, Chapter 2007. The primary purpose ofthe rulemaking is to amend Chapter 114 in accordance with HB 1796. The rules make revisions to a voluntary program and only affect motor vehicles and equipmentthat are not consideredto be private real property. Therefore, promulgation and enforcement ofthe adopted rules is neither a

3

### statutory nor a constitutional taking because it does not affect private real property. Therefore,
the rules donot constitute a taking under Texas Government Code, Chapter 2007.

CONSISTENCY WITH THE COASTAL MANAGEMENT PROGRAM The commissionreviewedthe adopted rulemaking and found the adoption is a rulemaking identified in the Coastal Coordination ActImplementation Rules, 31 TAC §505.1l(bX2}, concerning rules subjectto the Texas Coastal Management Program (CMP), and will, therefore, require that goals and policies ofthe CMP beconsidered duringthe rulemaking process. The commission reviewedthis action for consistency and determined the rulemaking for Chapter
114 does not impact any CMP goals orpolicies, because it revises a voluntary incentive grant
program and does not govern 

### airpollution emissions.

The commission invited public commentregarding the consistency with the CMP duringthe public commentperiod. No comments were received regardingthe consistency ofthe rules with theCMP.

PUBLIC COMMENT
A public hearing was scheduled for November 16, 2009, in Austin. The comment period closed

on November 23, 2009. No oral orwritten comments were received at the hearing or duringthe
commentperiod.

STATUTORYAUTHORITY These amendments are adopted under Texas Water Code, §5.102, which provides the commission with the general powers to carry out its duties under the TexasWaterCode; Texas
Water Code, §5.103, which authorizes the commissionto adopt any rules necessaryto carry out the powers and duties under the provisions ofthe Texas Water Code and other laws ofthis state;



### 4

### and Texas Water Code, §5.105, which authorizes the commission by rule to establish and
approve all general policy ofthe commission. These amendments are also adopted under Texas Health and Safety Code, §382.017, which authorizes the commission to adopt rules consistent with the policy and purposes ofthe Texas Health and Safety Code; Texas Health and Safety Code, §382.011, which authorizes the commission to establish the level ofquality to be 

### maintained in the state's air andto control the quality ofthe state's air; Texas Health and Safety Cod,;:, §382.012, which authorizes the commission to prepare and develop a general, comprehensive plan for the control ofthe state's air; and Texas Health and Safety Code, Chapter 386, which establishes the Texas Emissions Reduction Plan. Finally, these amendments are adopted as partofthe implementation ofHouse Bi111796.

The adopted amendments implement Texas Health and Safety Code, Chapter386.

5

# STAFF RECOMMENDATIONS

### SUBCHAPTERK: MOBILE SOURCE INCENTIVE PROGRAMS DIVISION 3: DIESELEMISSIONS REDUCTIONINCENTIVEPROGRAMFOR ON-ROAD AND NON-ROAD VEIDCLES 

### §114.620, §114.622

§114.620. Definitions.

Unless specifically defined in the Texas Clean AirAct (TCAA) or in the rules ofthe commission, the tenns used in this subchapterhave the meanings commonly ascribedto them in the field ofair 

### pollution control. In

### addition tothe tenns which are defined by the TCAA and §§3.2, 101.1, and 114.1 of this title (relating to Defmitions), the following words and tenns, when used in this division shall have the following meanings, unless the context clearly indicates otherwise.

(1) Cost-effectiveness--The total dollar amount expended divided by the total number of
tons ofnitrogen oxides emissions reduction attributable to that expenditure. 

### In calculating costeffectiveness, one-time grants ofmoney at the beginning ofaproject shall be annualized using a time value ofpublic funds or discountrate determined for each projectby the commission, taking into account the interestrate on bonds, interest earned by state funds, and other factors the commission considers appropriate.

(2) Guidelines--Texas Emissions Reduction Plan: Guidelines for Emissions Reduction
Incentive GrantsProgram 

### (RG-388) adopted by the commission underTexas Health and Safety Code, §386.053, as amended.

1

### (3) Incremental cost--The cost ofanapplicant's project less a baseline costthatwould
otherwise be incurred 

### by an applicant in the nonnal course ofbusiness and may include added lease or fuel <:osts as well as additional capital costs.

(4)Motorvehicle--A self-propelled device designed for transporting persons orproperty

on a public highway that is required tobe registered under Texas Transportation Code, Chapter 502.

(5)Non-road diesel--A vehicle orpiece ofequipment, excluding a motor vehicle oronroad diesel, that is poweredby a non-road engine, including: non-road non-recreational equipment and vehicles; construction equipment; locomotives; marine vessels; and otherhigh-emitting diesel engine categories.

(6) Non-road engine--An internal combustion engine that is in oron a piece ofequipment
that i:; 

### self-propelled orthatpropels itselfand perfonns another function, excluding a vehicle that is used solelyfor competition, ora piece ofequipmentthat is intended tobepropelled while perfonning its funct:lon, ora piece ofequipment designed to be and capable ofbeing carried ormoved from one location

to another.

(7) On-road diesel--An on-road diesel-powered motorvehicle that has a gross vehicle weightrating of8,500 pounds ormore,

(8) Qualifying fuel--Any liquid orgaseous fuel or additives registered orverified bythe United States Environmental Protection Agency that is ultimately dispensed into a motorvehicle oronroad or non-road diesel thatprovidesreductions ofnitrogen oxides emissions beyondreductions required by state orfederal law. 

### 2

### (9) Repower--To replace an old engine powering an on-road or non-road diesel with a

new engine; aused engine; aremanufactured engine; or electric motors, drives, orfuel cells.

( 1

0) Retrofit--To equip an engine and fuel system with new emissions-reducing parts or technology verified by the United States Environmental Protection Agency after manufacture ofthe original engine and fuel system.

(11) Small business--A business owned by aperson who:

(A) owns and operates not more than two vehicles, one ofwhich is:

(i) an on-road diesel with apre-1994 engine model; or

(ii) anon-road diesel with an engine with uncontrolled emissions; and

(B) has owned the on-road or non-road diesel for more than one year.

(12) Stationary engine--A machine used in non-mobile applications that converts fuel into mechanical motion, including turbines and other internal combustion devices.

§114.622. IncentiveProgram Requirements.



### (a) Eligible projects include:

3

### (1) purchase orlease ofon-road and non-road diesels;

(2) emissions-reducingretrofit projects for on-road ornon-road diesels;

(3) emissions-reducingrepower projects for on-road ornon-road diesels;

(4) purchase and use ofemissions-reducing add-on equipment for on-road ornon-road diesels;

(5) development anddemonstration ofpractical, low-emissions retrofittechnologies,
repower options, and advanced technologies for on-road ornon-road diesels with lower nitrogen oxides (NOx) 

### emissions;

(6) use ofqualifying fuel;

(7) implementation ofinfrastructure projects;

(8)replacement ofon-road and non-road diesels with neweron-road and non-road diesels; and

(9) otherprojects thathave thepotentialtoreduce anticipated NOx emissions from diesel engines.

(b) Fora proposed project as listed in subsection (a) ofthis section, otherthan a project involving

a marine vessel or engine or a project involving non-road equipment used for natural gas recovery 4

### purposes, not less than 75% ofvehicle miles traveled orhours ofoperationprojected for the five years immediately following the award ofa grant mustbe projectedtotake place in a nonattainment area or affected county ofthis state. The commission may also allow vehicle travel on highways and roadways,

orportions ofa highway orroadway, designated bythecommission and located outside a nonattainment

area orafrected countyto counttowards the percentage ofuse requirement.

(c) Fora proposedprojectthat includes a replacement ofequipmentora repower, the old equipment or enginemustbe recycled or scrapped provided, however, thatthe executive director may allowpennanentremoval from the State ofTexas in specific grants where the applicant has provided
sufficient assurances thatthe old locomotive will notbe returnedto the State ofTexas.

(d) Tobe eligible for a grant, the cost-effectiveness ofa proposedproject as listed in subsection (a} ofthis section, exceptfor infrastructure projects and infrastructure purchases that are part 

### ofa broader retrofit, repower, replacement, oradd-on equipment project, must not exceed a cost-effectiveness of $15,000 perton ofNOx emissions reduced. The commission may set lower cost-effectiveness limits as neededto ensure the best use ofavailable funds. The commission may also base project selection
decisions on additional measures to evaluatethe effectiveness ofprojects in reducingNOxemissions in
relation tothe funds to be awarded.

(e) Projects funded with a grantfrom thisprogram may notbe used for creditunder any state or federal emissions reduction credit averaging, banking, ortrading program except as provided underTexas Health and Safety Code, §386.056.



### 5

### (f) A proposedproject as listed in subsection (a) ofthis section is not eligible ifit is required by
any state orfederal law, rule orregulation, memorandum ofagreement, orother legally binding
document. This subsection does not apply to:

(1) an otherwise qualified project, regardless ofthe fact that the state implementation plan

assumes thatthe change in equipment, vehicles, oroperations will occur, 

### ifon the date the grant is
awarded the change is notrequired by any state orfederal law, rule orregulation, memorandum of agreement, orother legally binding document; or

(2) the purchase ofan on-road diesel orequipment required only by local law or regulation orby corporate or controllingboardpolicy ofa public orprivate entity.

(g) A proposed retrofit, repower, replacement, oradd-on equipmentproject must achieve a reduction in NOx emissions tothe level established inthe commission's 

### Texas Emissions Reduction Plan: Guidelines for Emissions Reduction Incentive Grants Program (RG-388) for thattype ofproject compared with the baseline emissions adopted bythe commission for the relevant engineyear and application.

(h) 

### Ifa grant recipient fails to meetthe terms ofa project grant orthe conditions ofthis division,
the executive director can requirethatthe grantrecipientreturn some or all ofthe grant funding tothe
extentthat emission reductions are not achieved orcannotbedemonstrated.

(i) Criteria established in the guidelines, includingrevisionstothe commission's 

### Texas Emissions Reduction Plan: Guidelines for Emissions Reduction Incentive Grants Program (RG-388), applyto the
Texas Emissions Reduction Plan program. Notwithstandingthe provisions ofthis chapter, as authorized 

### 6

### under Texas Health and Safety Code, §386.053(d), revisions to the guidelines may include, among other changes, adding additional pollutants; adding stationary engines or engines used in stationary applications; adding vehicles and equipmentthat use fuels otherthan diesel; or adjusting eligible program categories; as appropriate, to ensure that incentives established underthis program achieve the maximum possible emission reductions.

7Filed with the Office of the S etary of State on February 24, 2010. TRD-201000949 Brian White Deputy Public Counsel Office of Injured Employee Counse Effective date: March 22, 2010 Proposal publication date: January , 2010 Forfurther information, please call: (512) 804-4182 

# • • TITLE 30. ENVIRON NTAL QUALITY 

## PART 1. TEXAS COMMISSION ON ENVIRONMENTAL QUALITY CHAPTER 114. CONTROL OF AIR POLLUTION FROM MOTOR VEHICLES SUBCHAPTER K. MOBILE SOURCE INCENTIVE PROGRAMS DIVISION 3. DIESEL EMISSIONS REDUCTION INCENTIVE PROGRAM FORON-ROAD AND NON-ROAD VEHICLES 30 TAC §114.620, §114.622 The Texas Commission on Environmental Quality (commission) adopts the amendments to §114.620 and §114.622, without changes to the proposed text as published in the October 23, 2009, issue ofthe Texas Register(34 TexReg 7291). Section 114.620 and §114.622 will be submitted to the United States Environmental Protection Agency as revisions tothe state implementation plan. BACKGROUND AND SUMMARY OF THE FACTUAL BASIS FOR THE ADOPTED RULES The 77th Texas Legislature, 2001, enacted Senate Bill 5 establishing the Texas Emissions Reduction Plan (TERP), which provides financial incentives for reducing emissions ofon-road and non-road motor vehicles and equipment. House Bill (HB) 1796, 81stTexas Legislature, 2009, amended Texas Health and Safety Code, Chapter 386, TERP Program to add a definition for stationary engine and to clarify requirements for projects involving non-road equipment used for natural gas recovery purposes. SECTION BY SECTION DISCUSSION §114.620, Deffnitions Section 114.620 is amended to add a definition for stationary engine as required by Texas Health and Safety Code, §386.001. Texas Health and Safety Code, §386.001 was amended by adding Texas Health and Safety Code, §386.001(10-a), which states: stationary engine means a machine used in non-mobile applications that converts fuel into mechanical motion, including turbines and other internal combustion devices. §114.622, Incentive Program Requirements Section 114.622 is amended to clarify requirements for projects related to non-road equipment used for natural gas recovery



### 35 TexReg 2194 March 12, 2010 Texas Register purposes, as required by Texas Health and Safety Code, §386.104(c). FINAL REGULATORY IMPACT ANALYSIS DETERMINATION The commission reviewed the rulemaking in light of the regulatory analysis requirements of Texas Government Code, §2001.0225, and determined that this rule action is not subject to §2001.0225 because it does not meet the definition of 1:1 "major environmental rule" as defined in that statute. A "major environmental rule" means a rule the specific intent of which is to protect the environment or reduce risks to human healtl1 from environmental exposure that may adversely affect in ;a material way the economy, productivity, competition, jobs, th•:t environment, or the public health and safety of the state or a sector of the state. The amended Chapter 114 rules are adopted in accordance with HB 1796, which amended Texas Health and Safety Code, Chapter 386. The adopted rules add a new definition for stationary engine and clarify requirements for projects involving non-road equipment used for natural gas recovery purposes. Because the adopted rules place no involuntary requirements on the renulated community, the adopted rules will not adversely affect in a material way the economy, asectorofthe economy, productivity, competition, jobs, the environment, or the public health and safety of the state or a sector of the state. In addition, none of these amendments place additional financial burdens on tt1e regulated community. In addition, a regulatory impact analysis is not required becauf;e the adopted rules do not meet any ofthe four applicability criteria for requiring a regulatory analysis ofa"majorenvironmental**ru~:~"** as defined in the Texas Government Code. Texas Government Code, §2001.0225, applies only to a major environmental rule the result ofwhich is to: 1) exceed a standard set by federal law, unless the rule is specifically required by state law; 2) exceed un express requirement of state law, unless the rule is specifically required by federal law; 3) exceed a requirement of a delegation agreement or contract between the state and an agency or representative of the federal government to implement a state and federal program; or4) adopt a rule solely underthe gene1al powers ofthe agency instead of under a specific state law. This rulemaking does notexceed astandard set byfederal law. In addition, this rulemaking does not exceed an express requirement of state law and is not adopted solely under the general poNers ofthe agency, but is specifically authorized bythe provisio 'IS cited in the STATUTORY AUTHORITY section ofthis preamble. Finally, this rulemaking does not exceed a requirement of a d:tlegation agreement or centrad to implement a state and federal program. The commission invited public comment regarding the draft regulatory impadanalysis determination during the public commEtnt period. No comments were received on the draft regulatory impact analysis determination. TAKINGS IMPACT ASSESSMENT The commission evaluated this rulemaking adion and purformed an analysis ofwhether the adopted rules are subject to Texas Government Code, Chapter 2007. The primary**purpo:~e** of the rulemaking is to amend Chapter 114 in accordance with HB 1796. The rules make revisions to a voluntary program and only affect motor vehicles and equipment that are not considered to be private real property. Therefore, promulgation and enforcement ofthe adopted rules is neither a statutory nor a constitutional taking because it does not affed private re,alproperty. Therefore, the rules do not constitute a taking under Texas Government Code, Chapter 2007. CONSISTENCY WITH THE COASTAL MANAGEMENT PROGRAM Thecommission reviewedthe adopted rulemaking andfound the adoption is a rulemaking identified in the Coastal Coordination Act Implementation Rules, 31 TAC §505.11(b)(2), concerning rules subjecttothe Texas Coastal Management Program (CMP), andwill, therefore, require that goals and policies ofthe CMP be considered during the rulemaking process. The commission reviewed this action for consistency and determined the rulemaking for Chapter 114 does not impact any CMP goals or policies, because it revises a voluntary incentive grantprogram and does not govern air pollution emissions. The commission invited public comment regarding the consistencywith the CMP during the public comment period. No comments were received regarding the consistency ofthe rules with the CMP. PUBLIC COMMENT A public hearing was scheduled for November 16, 2009, in Austin. The comment period closed on November 23, 2009. No oral orwritten comments were received at the hearing or during the comment period. STATUTORY AUTHORITY These amendments are adopted under Texas water Code, §5.102, which provides the commission with the general powers to carry out its duties underthe Texas water Code; Texas water Code, §5.103, which authorizes the commission to adopt any rules necessary to carry out the powers and duties under the provisions of the Texas water Code and other laws of this state; and Texas water Code, §5.105, which authorizes the commission by rule to establish and approve all general policy ofthe commission. These amendments are also adopted under Texas Health and Safety Code, §382.017, which authorizes the commission to adopt rules consistent with the policy and purposes of the Texas Health and Safety Code; Texas Health and Safety Code, §382.011, which authorizes the commission to establish the level of quality to be maintained in the state's air and to control the quality of the state's air; Texas Health and Safety Code, §382.012, which authorizes the commission to prepare and develop a general, comprehensive plan for the control of the state's air; and Texas Health and Safety Code, Chapter 386, which establishes theTexas Emissions Reduction Plan. Finally, these amendments are adopted as part of the implementation of House Bill 1796. The adopted amendments implement Texas Health and Safety Code, Chapter 386. This agency herebycertifiesthattheadoption hasbeen reviewed by legal counsel and found to be a valid exercise ofthe agency's legal authority. Filed with the Office of the Secretary of State on February 26, 2010. TRD-201 000991 Robert Martinez Diredor, Environmental Law Division Texas Commission on Environmental Quality Effective date: March 18, 2010 Proposal publication date: October 23, 2009 Forfurther information, please call: (512) 239-6C90 

# .**~·** DIVISION 5. TEXAS LEAN FLEET PROGRAM 30 TAC §§ll4.650

- 114.658 The Texas Commission on Envi onmental Cluality (commission) adopts new §§114.650- 114.65 . Sections 114.650 and 114.656 readopted with changes to the proposed text as published in th October23, 2009, issue ofthe Texas Register(34 TexReg 729 ). Sectiom1 114.651
- 114.655, 114.657, and 114.658 are adop ed without changes to the proposed text and the text will not republished. The new sections will be subm ed to the United States Environmental Protection Agency ( PA) as a revision to the state implementation plan (SIP). BACKGROUND AND SUMMA Y OF THI: FACTUAL BASIS FOR THE ADOPTED RULES Senate Bill (SB) 1759, 81st L islature, :!009, amended the Texas Health and Safety Code y adding Ghapter 391, Texas Clean Fleet Program. This pf ram is designed to encourage eligible fleets to replace diesel ehicles with alternative fuel or hybrid vehicles. Eligible entities at replace 25 or more on-road diesel vehicleswith alternative el or hybricl vehicles may apply for a grant under the program o offset tt1e cost of replacing those vehicles. SECTION BY SECTION DISC §114.650, Definitions Section 114.650 establishes the efinitions specific to the Texas Clean Fleet Program, as requi by**Texa:~** Health and Safety Code, §391.001. Since propo I, the commission revised the language in §114.650(1) to mak itclearthat onlythefuels listed in this section are considered atemative**~Jels** for purposes of this program. §114.651, Applicability Section 114.651 establishesthe pplicabiliflr requirements as required by Texas Health and Sa ty Code, §391.002. These requirements outline entities that re eligible to apply for a grant under the program. §114.652, Qualifying Vehicles This section clarifies the types f vehicles that are and are not eligible for participation in the rogram, a:s required by Texas Health and Safety Code, §391. 3. §114.653, Grant Eligibility Section 114.653 establishes gra t eligibility requirements, as required by Texas Health and Sa ty Code, §391.005. These requirements establish use and o nership criteria ofany vehicles being replaced, as well as the I vel of emissions that must be achieved in order to receive a ant under the program. Subsection (d) providesthatthe exe tive director mayestablish ad

### ADOPTEDRULES March 12, 2010 35 TexReg 2195

## TEXAS COMMISSION ON ENVIRONMENTAL QUALITY

ORDERADOPTINGAMENDED RULES AND REVISIONS TO THE STATE IMPLEMENTATIONPLAN

Docket No. 2009-1186-RUL

On February 24, 2010, the Texas Commission on Environmental Quality (Commission), during a public meeting, considered the adoption of §114.620 and §114.622 of 30 Texas Administrative Code Chapter 114, Control of Air Pollution from Motor Vehicles and corresponding revisions to the state implementation plan (SIP). The adoption will implement House Bill 1796, 81st Legislature, 2009, Regular Session by adding a definition for stationary engines and clarifying requirements for projects involving non-road equipment used for natural gas recovery purposes. Under Tex. Health & Safety Code 

### Ann. §§ 382.011, 382.o12, and 382.023 (Vernon 2001), the Commission has the authority to control the quality of the state's air 

### and to issue orders consistent with the policies and purposes ofthe Texas Clean Air Act, Chapter 382 ofthe Tex. Health & Safety Code. The proposed rules were published in the October 23, 2009, issue of the 

### Texas Register (34 TexReg 7291).
Pursuant to Tex. Health & Safety Code Ann.§ 382.017 (Vernon 2001), Tex. Gov't Code Chapter 2001 (Vernon 2008), and 40 Code of Fe4eral Regulations 

### § 51.102, and after proper notice, the Commission conducted a public hearing to consider the new rules and revisions to the SIP. Propernotice included prominent advertisement inthe areas affected at least 30 days priorto the date ofthe hearing. A public hearing was heldin Austin on November 16,2009. The Commission circulated hearing notices of its intended action to the public, including interested persons, the Regional Administrator ofthe EPA, and all applicable local air pollution control agencies. The public was invited to submit data, views, and recommendations on the proposed new rules and SIP revisions, either orally or in writing, at the hearings or during the comment period. Prior to the scheduled hearing, copies ·ofthe proposed new rules and SIP revisions were available for public inspection at the Commission's central office and onthe Commission's Web site.
No comments were receivedregarding the proposedrules and SIP revisions.
IT IS THEREFORE ORDERED BY THE COMMISSION that the amended rules and revision to the SIP incorporated by reference to this Order are hereby adopted. The Commission further authorizes staff to make any non-substantive revisions to the rules necessary to comply with 

### Texas Register requirements. The adopted rules and the preamble to the adopted rules and the revisions to the SIP are incorporated byreference in this Order as ifset forth at length verbatim in this Order.
IT IS FURTHER ORDERED BY THE COMMISSION that on behalf of the Commission, the Chairman should transmit a copy ofthis Order, together with the adopted rules and revision to the SIP, to the Regional Administrator ofEPA as a proposed revision to the Texas SIP pursuant to the Federal Clean Air Act, codified at 42 U.S. Code Ann. 

### §§ 7401 -7671q, as amended.

### Tills Order constitutes the Order ofthe Commission required by the Administrative Procedure Act, Tex. Gov't Code, § 2001.033 (Vernon2008).
Ifany portion ofthis Orderis for any reason held to beinvalid by a court ofcompetentjurisdiction, the 

### invalidity ofany portion shall not affect the validity oftheremaining portions.

Date issued: 

# HAR.Q 1

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# 1.0 TEXAS COMMISSION ON ENVIRONMENTAL QUALITY