### Bryan W. Shaw, Ph.D., Chairman 

### Carlos Rubinstein, 

### Commissioner Toby Baker, 

### Commissioner Zak Covar, 

### Executive Director 

# RECEIVED- 6POL AIR PLANNING SEC. 

# 13 HAY 17 PH 5: 07

TEXAS COMMISSION ON ENVIRONMENrAL QUALI1Y Protecting Texas 

### by Reducing andPreventing Pollution 

## May 14, 2013

Ron Curry 

## Regional Administrator U.S. Environmental ProtectionAgency- Region 6 1445 

## Ross Avenue Dallas, Texas 75202-2733 

## Dear Mr. Curry: Docket No. 2012-o8g6-RUL Rule Project No. 2012-025-117-AI

On April 10, 2013, 

## the Texas Commission on Environmental Quality (Commission) adopted revisions to the State Implementation Plan (SIP). The Commission adopted amendments to §117.10 

## in 30 

## TAC Chapter 117, 

## Control ofAir Pollution from Nitrogen Compounds; and §101.379 

## in 30 

## TAC Chapter 101, 

## GeneralAir Quality Rules; and correspondingrevisions to the SIP. The adopted rulemakingwill amend §101.379 

## andthe definition of emergency situation in §117.10 

## to reference the version ofthe Electric Reliability Council ofTexas, Inc. (ERCOT) nodal protocols effective June 1, 2012. 

## The adopted rulemakingwill also amendthe definition ofemergency situation in §117.10 

## to reflect changes madebyERCOT to promote reliability during energy emergencies by allowing the operation ofgenerators for purpose ofselling powerback to the electric grid underlimited circumstances. Enclosed are theproposed revisions to the SIP, a public hearing certification, a complete record ofthe public hearing[s], andthe accompanying order. I lookforward to your expeditious approval ofthese SIP revisions. Sincerely,

# ~\~.r

# -;~.**~ha:** Ph.D. .x Chairman BWS/al Enclosures

cc: The Honorable Rick Perry, 

## Governor ofTexas Ms. Kelly Kennedy, Office ofBudget, Planning and Policy, Office ofthe Governor Mr. Zak Covar, Executive Director, Texas Commission on Environmental Quality

P.O. Box 13087 • Austin, Texas 78711-3087 • 512-239-1000 • tceq.texas.gov How is our customer service? tceq.texas.gov/custornersurvey

# TEXAS COMMISSION ON ENVIRONMENTAL QUALITY

THE STATE OF TEXAS COUNTY OF TRAVIS DocketNo. 2012-0896-RUL Rule ProjectNo. 2012-025-117-AI



## This is to certifythatthe attachedelectronic file is included andthatthe electronic file is a
true and correct copy ofdocuments for a revision tothe Texas State Implementation Plan, adopted onApriliO, 2013, pursuantto 40 Code ofFederal Regulations§ 51.104. I am the records administrator for theAir Quality Division ofthe Texas Commission on Environmental Quality (Commission).

# ¥~~ Air Quality Division Texas Commission on Environmental Quality

### Texas Commission on Environmental Quality Public Hearing November 28, 2012 Concerning Revisions to 30 TAC Chapters 101 and 117 and corresponding revisions to the State Implementation Plan
Rule Project No. 2012-025-117-AI

### INTRODUCTION

The Texas Commission on Environmental Quality (commission) scheduled a public hearing in
Austin on November 28, 2012 to receive testimony regarding 30 TAC Chapter 101, General Air Quality Rules, and Chapter 117, Control ofAir Pollution from Nitrogen Compounds and corresponding revisions to the state implementation plan.

The rulemaking revises Chapter 101 and Chapter 117 to update references to Electric Reliability Council of Texas, Incorporated (ERCOT) protocols and reflect the changes to ERGOT's new Emergency Response Service program. The rulemaking revises §1 01.379 and the definition of
emergency situation in §117.1 0 to reference the most recent version of the ERCOT protocols.
The rulemaking revises the definition of emergency situation in §117.1 0 to reflect changes made by ERCOT to promote reliability during energy emergencies by allowing the operation of generators for purposes of selling power to the electric grid under limited circumstances.

The comment period closed on December 5, 2012. All testimony and comments have been
reviewed and seriously considered. This hearing record contains a complete record of the public hearing and is divided into the following four sections:

o 

### Public Notification and Proposal

o Written and Oral Testimony

o 

### Evaluation of Testimony

o Staff Recommendations/Order

### Additional copies ofthis hearing record are maintained in the TCEQ central office at 12100 Park
35 Circle, Austin, Texas 78753. For further information, please contact Lindley Anderson at (512) 239-0003.



# •

# NOTICE 

# & 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 19, 2012 Fort Worth Star-Telegram: October 19, 2012 Houston Chronicle: October 19, 2012

2. Publication ofthe proposed rules in the November 2, 2012 issue ofthe Texas Register(37 TexReg 8718, 8722).

3. Publication of the Notice of Public Hearing in the November 2, 2012 issue of the Texas Register (37 TexReg 8880).

4. Correspondence forwarding the notice of public hearings to the following officials and agencies: Speaker of the House
Lieutenant Governor
Alamo Area Council of Governments Capital Area Planning Council City ofAustin, Mayor's Office City of Dallas, Department of Environmental Quality 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 Houston-Galveston Area Council
North Central Texas Council of Governments South East Texas Regional Planning Commission
Texas Department of Transportation
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
Austin American-Statesman, 

### October 19, 2012

NOTICE OF PUBLIC HEARING ON

. . . PROPOSED REVISIONS

.. T030TACCHAP!EIIS fo1 and 117and. TO THE STATE IMPLEMENTATION PIAN Thi! Texas CorrimlisiM oii £nvirorimen- tar·ouality (comrills;lon) will conduct a public .hearing to receive testimony re- garding proposed revisions to 30 TAC Cliapter·.t01, GeneraJ'Atr Q.uality Rules and Chapter '1'17; Ca[ltrcl of Air Pollu- tlolj'From Nitrogen Co'rrlpounds, and cor.respondlng rev.islons to the· state**lm~r~m</ntation** plan.(SIP) undenhe r<l:- qwrel)1ents of 1 exas**H~alth a~d**  Safety <ode;·§3B2.0l7; Texas Government Code, Cha.pter 200. T, Subchapter B; .and 40 Code of Federal Regulatloh> §51.102,**an~** the United States Environmental Protectfon Agency whGernlng SIPs. · · The proposea'):utemaking**w:oul~** revise Chapters:ro.1 and 117-to tipdat.e**ref~r­** eAce!>to Electric Rella bllltyCouncil of Texas,.lncorporated (ERCOT)**protocol~** and reflect changes to ERCOT's new Emergency Resporue Service program. The proposed**rulemakin~** would revise §1 01.379 and the definotion of emer- gency situation In §ll7.10 to reference ·the mosHecent version of tlt'e ERCQT

### eJ~~fJ~**t';or~:JI~~~~e~:fi~"i~~~~~l** emergency situation in §117'.10 tore- flect changes made b.y ERCOT to pro- mote rellatillity during energy emergen- cies by allowing the 0 peration of er.atq'ls.fl;>r purposes ofseJIIng power

.. .ectrjc.grld un,der limited meum-

·.· k\isian-;_;;ljl

### h~Yd a publk.hearJog on this propo'salln Austin on No- vembe'r 28, 2012 at 2:00 p.m. at tl)e Te;xa; Commission on Environmental Qoality, Building E; Roamio1·s, at the ··comm,.sion's central offici!Jcicated at ' 12100 Park 35 Circle. The.hearing fs structured for the recelpfoforaf,orwift- 'te,; comments by lnt'ete's\iid persorS: In,·

. dlvlduaJs. may·**presen~** .oral'statements**'•;:~hen.~~!l'e<iuponin,of<;ler** Of reglstr.a-·

·**·tion,dP,en.d)sCilssTo~** wm·not 

### qe permt- 'ted durt'ng·.the· freanng;**howev~ri** com- mission· staff members WiJfbe aV91iable I to discuS< the proposal30 minutes prior tO the hearing. · . Persons Who ha11fi sj:Jedal cbmmunica· tlo'n or otheraccommodation.**n~eds** who ar'e planning to attend the hearing should contact Sandy Wong, Offlc& of Legal Services at (512) 239-1802. Re- q"ests should be made as far inadvance as possible. Written coinmen'ts may be submitted to Bnice McAnally, MC 205, Office of Legal Services,**T~xas** Commission on Environ- mental Quality, P.O. Box 13087, Austin, 1exas·78711-3087, ar faxed to (512) 239-4808. Electronic.comnientsmay be s · u·. b. ni · i, ·t ,t, ·e .d. a t :httptlwww5.tr.eq.texas.gov/rules/ecomments/.**~ile** size restrktions may applyto comments being·submitted via the eComments**Sy~tem.** All comments should reference Rule Project Num bet 20H-02S,·t 17-AI. The comment period.·

· closes Decemoe.r 5, 2012. Copies <if the**prt;~posed** rti!erilaklng**c~n-.be** otitafhed f,om·.the

.. co·mml55lbn•>·webslte· at httpJ/votWw.tCetf.texas.gdv/navfriJlestprop**ose~adojit.html.** For further information, please contact**Ra~** Schubert, Air Quality Plan"ing Section, (512) 239-5615.

..TIFIER: RN102063757; LOCATI N: San Antonio, Bexar County; TYPE OF FACILITY: convenience store with retail sales ofgasoline; RULE VIOLATED: 30 TAC §334 49(a)(1) and TWC, §26.3475(d), by failing to provide proper corrosi n protection for the underground storage tank system; PENALTY: $ ,000; ENFORCEMENT COORDINATOR: Steve Villatoro, (512) 39-4930; REGIONAL OFFICE: 14250 Judson Road, San Antonio, xas 78233-4480, (21 0) 490-3096. (29) COMPANY: Yedneckache Worke dba Longview TD Mart; DOCKET NUMBER: 2 12-0920-PST-E; IDENTIFIER: RN102425816; LOCATION: Lon view, Gregg County; TYPE OF FACILITY: convenience store with etail sales ofgasoline; RULE VIOLATED: 30 TAC §334.50(b)(l)( ) and (2) and TWC, §26.3475(a) and (c)(1), by failing to monitor the nderground storage tanks (USTs) for releases at a frequency of at least once every month (not to exceed 35 days between each mon toring) and by failing to provide release detection for the piping sociated with the USTs; and 30 TAC §334.10(b), by failing to m intain UST records and making them immediately available for in pection upon request by agency personnel; PENALTY: $3,629; E ORCEMENT COORDINATOR: Judy Kluge, (817) 588-5825; RE IONAL OFFICE: 2916 Teague Drive, Tyler, Texas 75701-3734, (9 3) 535-5100. TRD-20 1205496 Kathleen C. Decker Director, Litigation Division Texas Commission on Environment I Quality Filed: October 23, 2012 

# • 

# • • Notice ofPublic Hearing on a P oposed Revision to the State Implementation Plan The Texas Commission on Enviro ental Quality (commission) will conduct a public hearing to receive estimony regarding the proposed Houston-Galveston-Brazoria (HGB 1997 Eight-Hour Ozone Standard Nonattainment Area Motor Vehicle Emissions Budgets (MVEB) Update State Implementation Plan (SIP Revision, underthe requirements ofTexas Health and Safety Code, §3 2.012 and §382.0 13; and 40 Code of Federal Regulations §51.102 of the United States Environmental Protection Agency (EPA) regulatio s concerning SIPs. The proposed HGB SIP revision ould update the HGB attainment demonstration and reasonable furt er progress SIP revisions for the 1997 eight-hour ozone standard tha were adopted by the commission on March 10, 2010, by revising on road mobile source emissions inventories for nitrogen oxides (NOx and volatile organic compounds (VOC) based on the EPA's latest m bile source emissions estimation model, Motor Vehicle Emission Si ulator (MOVES), which was released on March 2, 2010. The 2008 2011, 2014, 2017, and 2018 NO, and VOC MVEBs would also be pdated using the MOVES-based emissions inventories. The propose revision also includes a review of emissions inventory data, photoche ical modeling, and the quantitative and qualitative corroborative a alyses used as weight ofevidence supporting the March 2010 HGB a ainment demonstration SIP revision. The proposed SIP revision uld also address the outstanding contingency obligations for the HG area and Federal Clean Air Act requirements for transportation con ol measures in severe nonattainment areas. Apublic hearing on this proposal wi Ibe held in Houston onNovember 19, 2012, at 2:00p.m. in Conferen e Room B ofthe Houston-Galveston Area Council at 3555 Timmon Lane. The hearing will be structured for the receipt oforal or writte comments by interested persons. Registration will begin 30 minutes prior to the hearing. Individuals may present oral statements when c lied upon in order ofregistration.



## 37 TexReg 8880 November 2, 2012 Texas Register**~here** will be no open discussiond ring the hearing; however, commissiOn staffmembers will be availab e to discuss the proposal30 minutes before the hearing. Persons planning to attend the he ring who have special communication or other accommodation nee s should contact Lola Brown Air Quality Division, at (512) 239-03 8. Requests should be

### made~ far in advance as possible. Comments may be submitted to Lola Brown, MC 206, State Implementation Plan Team, Offic of Air, Texas Commission on Environmental Quality, P.O. Box 13087, Austin, Texas 78711-3087 or faxed to (512) 239-6188. Elec ronic comments may be submitted at http://www5.tceq.texas.gov/rule lecomments. File size restrictions may apply to comments being s bmitted electronically. All comments should reference the "H B MVEB Update SIP Revision" and Project Number 2012-002-SI -NR. The comment period closes November 26, 2012. Copies of e proposed SIP revision and associated appendices can be obtai d from the commission's website at http://www.tceq.texas.gov/airqu litylsiplhgblhgb-latest-ozone. For additional information regarding he proposed SIP revision, please contact Lola Brown, Air Quality "vision, at (512) 239-0348. TRD-201205495 Robert Martinez Director, Environmental Law Divisi Texas Commission on Environment I Quality Filed: October 23, 2012 

# • • Notice ofPublic Hearing on Proposed Revisions to 30 TAC Chapters 101 and 117 and to the State Implementation Plan The Texas Commission on Environmental Quality (commission) will c?nduct a public hearing to receive testimony regarding proposed reviSions to 30 TAC Chapter 101, General Air Quality Rules, and Chapter 117, Control ofAir Pollution from Nitrogen Compounds, and correspon_ding revisions to the state implementation plan (SIP) under the reqmrements ofTexas Health and Safety Code, §382.017; Texas Government Code, Chapter 2001, Subchapter B; and 40 Code ofFederal Regulations §51.102, and the United States Environmental Protection Agency concerning SIPs. The proposed rulemaking would revise Chapters 101 and 117 to update references to Electric Reliability Council ofTexas, Incorporated (ERCOT)**prot~cols** and reflect changes to ERCOT's new Emergency Response Serv1ce program. The proposed rulemaking would revise §101.379 and the definition ofemergency situation in §117.10 to reference the most recent version ofthe ERCOT protocols. The proposed rulemaking would also revise the definition ofemergency situation in**~117.10** to reflect changes made by ERCOT to promote reliability durmg energy e';llergencies by allowingthe operationofgenerators forpurposes ofselling power to the electric grid under limited circumstances. The commission will hold a public hearing on this proposal in Austin on November28,2012, at 2:00p.m., atthe Texas Commission on Environmental Quality, BuildingE, Room 201 S, atthe commission's central office located at 12100 Park 35 Circle. The hearing is structured for the receipt oforal or written comments by interested persons. Individuals may present oral statements when called upon in order ofregistration. Open**~is_cussion** will not be permitted during the hearing; however, comm1ss1on staffmembers will be available to discuss the proposal 30 minutes prior to the hearing. Persons who have special communication or other accommodation needs who are planning to attend the hearing should contact SandyWong, Office ofLegal Services, at (512) 239-1802. Requests should be made as far in advance as possible. Written comments may be submitted to Bruce McAnally, 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://www5.tceq.texas.govlrules/ecommentsl. File size restrictions may apply to comments being submitted via the eComments system. All comments should reference Rule Project Number 2012-025-117-AI. The comment period closes December 5, 2012. Copies of the proposed rulemaking can be obtained from the commission's website at http://www.tceq.texas.gov/navlrules/propose_adopt.html. For further information, please contact Ray Schubert, Air Quality Planning Section, (512) 239-6615. TRD-201205433 Robert Martinez Director, Environmental Law Division Texas Commission on Environmental Quality Filed: October 19, 2012 

# • • Notice ofPublic Hearing on Pr posed Revisions to 30 TAC Chapters 291 and 293 The Texas Commission on Enviro ental Quality (commission) will conduct apublic hearing to receive stimony regarding proposedrevisionsto 30 Texas Administrative Co e (TAC) Chapter291, Utility Regulations, §§291.22, 291.102,291.1 , and 291.113, and 30 TAC Chapter293, WaterDistricts, §§293.11, 2 3.32, 293.41, 293.51, and293.81, under the requirements ofTexas W ter Code, §5.103, and Texas Government Code, Chapter 2001, Subc apter B. The proposed rulemaking would im lement House Bill (HB) 679, HB 1901, Senate Bill (SB) 18, SB 51 SB 573, SB 914, and SB 1234, 82nd Legislature, 20 11. The propo ed amendments would: impact a district's ability to increase the allo ble change order amount; exempt bonds issued by a public utility a ency from executive director approval; alter eminent domain power ofa municipal utility district outside its boundary; modifY the elect' n qualifications for a fresh water supply district director; exempt bo ds issued by certain multi-county districts from executive director a proval; limit the time for certain municipalities to consent to certific tes ofpublic convenience and necessity (CCN) withinthe corporate Imits or extraterritorialjurisdiction (ETJ) ofthe municipality and set co ditions for granting the CCN without the consent; alter a city's abili to extend a CCN beyond its ETJ ifa landowner elects to exclude pro erty; add a provision that a CCN applicant or CCN holder that has Ia d removed by landowner election is not required to provide service to the removed land for any reason; change the requirements for a releas from a CCN; specifY that having federal loans is not a bar to release; nd add requirements for notice of utility rate changes. The commission will hold apublich aring onthisproposal in Austin on December4, 2012, at2:00 p.m., in B ildingE, Room201S, at the commission's central office located at 1 100 Park 35 Circle. The hearing is structured for the receipt oforal r written comments by interested persons. Individuals may present or I statements when called upon in order ofregistration. Open discussi n will not be permitted during the hearing; however, commission staf members will be available to discuss the proposal 30 minutes prior t the hearing. Persons who have special commu ication or other accommodation needs who are planning to attend e hearing should contact Sandy Wong, Office ofLegal Services, at 512) 239-1802. Requests should be made as far in advance as possib e. Written comments may be sub itted to Michael Parrish, MC 205, Office of Legal Services, Te as Commission on Environmental Quality, P.O. Box 13087, ustin, Texas 78711-3087 or faxed to (512) 239-4808. Electroni comments may be submitted at: http://www5.tceq.texas.gov/rules comments/. File size restrictions may apply to comments eing submitted via the eComments system. All comments shoul reference Rule Project Number 2011-055-293-0W. The com nt period closes December 10, 2012. Copies ofthe proposed lemaking can be obtained from the commission's Web site at http l/www.tceq.texas.gov/navlruleslpropose_adopt.html. For further information, please contact Kent Steelman, Utilities and Districts ection, (512) 239-5143. TRD-201205442 Robert Martinez Director, Environmental Law Divis n Texas Commission on Environme tal Quality Filed: October 19, 2012 

# • • Notice ofWater Quality Appli The following notices were issue on October 12,2012 through October 19, 2012. The following require the applica ts to publish notice in a newspaper. Public comments, requests for pu lie meetings, or requests for a contested case hearing may be submi ed to the Office ofthe ChiefClerk, Mail Code 105, P.O. Box 13087, ustin, Texas 78711-3087, WITHIN 30 DAYS OF THE DATE OFNE SPAPERPUBLICATION OF THE NOTICE. INFORMATION SECTION STAGECOACH PROPERTIES C has applied for a renewal of Texas Pollutant Discharge Elimin tion System (TPDES) Permit No. WQ0010884001, which authorize the discharge oftreated domestic wastewater at a daily average flo not to exceed 50,000 gallons per day. The facility is located at 40 South Stagecoach Road, Salado, 200 feet west ofFarm-to-Market ad 2268, 300 feet south ofSalado Creek, and 400 feet southeast oft e crossing of Salado Creek by the Interstate Highway 35 east frontag road, in the community ofSalado in Bell County, Texas. GEORGIA PACIFIC WOOD PR DUCTS SOUTH LLC which operates Camden Plywood Plant, a mber, chip, and plywood manufacturing plant, has applied for a**~or** amendment to TPDES Permit No. WQ0001598000 to authorize: a) the disposal ofkiln condensate, treated domestic wastewater, and s rmwater runoffat a daily average flow not to exceed 15,000 gallons p r day and at an application rate not to exceed 0.8 acre-feet per acre per ear within the proposed 24.7-acre and 26.1-acre tracts that are covere with pine trees, and (b) the construction ofproposed Pond No. 9 or the storage ofkiln condensate, treated domestic wastewater, and st rmwater runoffprior to irrigation. The existing permit authorizes the discharge of non-contact cooling water, boiler blowdown, boiler fee pre-treatment water, treated domestic wastewater (previously mon ored) wet deck runoff, fire deluge water, boiler scrubber water, log fl e water, vehicle wash water and stormwaterrunoffon an intermitten andflow variable basis via Outfall 001; stormwater overflow includin wet deck runoff, fire deluge water and wash water from the Rege rative Catalytic Oxidizer (RCO) and Regenerative Thermal Oxidize (RTO) Units on an intermittent and flow variable basis via Outfall 02; st01mwater overflow including non-contact cooling water, boil r blowdown, boiler scrubber water, log flume water, vehicle wash w ter, boiler feed pre-treatment water and treated domestic wastewater from the equalization pond on an intermittent and flow variable basis ia Outfall 004; stormwater runoff



## INADDITION November 2, 2012 37 TexReg 8881ment has determined that this p oposed repeal will not have an adverse economic effect on sm II or micro business carriers because it is simply a repeal of a ata collection and analysis requirement. In accord with the G vernment Code §2006.002, the department is not required to pr are a regulatory flexibility analysis. TAKINGS IMPACT ASSESSM NT. The department has determined that no private real pr perty interests are affected by this proposal and that this pro osal does not restrict or limit an owner's right to property th t would otherwise exist in the absence of government action nd does not constitute a taking or require a takings impact ass ssment under the Government Code §2007.043. REQUEST FOR PUBLIC COM ENT. To be considered, written comments on the proposal ust be submitted no later than 5:00 p.m. on December 3, 201 , to Sara Waitt, general counsel, by email at chiefclerk@td .state.tx.us or by mail at Mail Code 113-2A, Texas Departmen of Insurance, P.O. Box 149104, Austin, Texas 78714-9104. An dditional copy of the comment must be simultaneously submitt d to Doug Danzeiser, manager, by email at LHLcomments@t i.state.tx.us or by mail at Mail Code 107-2A, Texas Departmen of Insurance, P.O. Box 149104, Austin, Texas 78714-9104. A y request for a public hearing must be submitted separately t the Office of Chief Clerk, Mail Code 113-2A, Texas Departmen of Insurance, P.O. Box 149104, Austin, Texas 78714-9104 bef e the close of the public comment period. If a hearing is h ld, written and oral comments presented at the hearing will be considered. STATUTORY AUTHORITY. Th repeal of §3.3713 is proposed pursuant to Insurance Code §1 01.007 and §36.001. Section 1301.007 provides that the c missioner of insurance must adopt rules as necessary to im lement Chapter 1301. Section 36.001 provides that the commi sioner of insurance may adopt any rules necessary and appro riate to implement the powers and duties of the Texas Dep ment of Insurance under the Insurance Code and other laws of this state. CROSS REFERENCE TO S TUTE. The proposed repeal affects regulation pursuant to t e following statute: Insurance Code §36.001 and §1301.007 §3.3713. Submission of Plan; Co ection andAnalysisoflriformation Concerning the Effects ofUnderco pensated Care. This agency hereby certifies tha the proposal has been reviewed by legal counsel and found to be ithin the agency's legal authority to adopt. Filed with the Office of the Se retary of State on October 19, 2012. TRD-201205451 Sara Waitt General Counsel Texas Department of Insurance Earliest possible date of adoption: ecember 2, 2012 For further information, please call: (512) 463-6327 

# • • TITLE 30. ENVIRONMENTAL QUALITY 

# PART 1. TEXAS COMMISSION ON ENVIRONMENTAL QUALITY

37 TexReg 8718 November 2, 2012 Texas Register CHAPTER 101. GENERAL AIR QUALITY RULES SUBCHAPTER H. EMISSIONS BANKING AND TRADING DIVISION 4. DISCRETE EMISSION CREDIT BANKING AND TRADING 30 TAC §101.379 The Texas Commission on Environmental Quality (TCEQ, agency, or commission) proposes an amendment to §1 01.379. If adopted, amended §101.379 will be submitted to the United States Environmental Protection Agency (EPA) as a revision to the state implementation plan (SIP). Background and Summary ofthe Factual Basis forthe Proposed Rule The Electric Reliability Council of Texas, Inc. (ERCOT) manages the electrical grid within the ERCOT region of Texas, with oversight by the Public Utility Commission ofTexas (PUCT). On March 22, 2012, the PUCT repealed 16 TAC §25.507, to replace the Emergency Interruptible Load Service (ElLS) program with the Emergency Response Service (ERS) program (new 16 TAC §25.507). Like the ElLS program, the new ERS program is designed to help decreasethe likelihood of requiring firm load shedding (i.e., rolling black-outs) during an ERGOT-declared energy emergency by decreasing the power demand on the electrical grid. Subsequent changes to ERGOT's Nodal Protocols reflecting the new ERS program became effective on June 1, 2012. On December 10, 2008, the commission adopted the amendmentto §101.379 to restrict the use ofdiscrete emissions reduction credits (DERCs) in the Dallas-Fort Worth 1997 eight-hour ozone nonattainment area (DFW area) to a level consistent with the attainment and maintenance of the 1997 eight-hour ozone National Ambient Air Quality Standard (NAAQS). The rule requires an annual review of the DFW area DERC program to determine the flow control limit and apportion available DERCs for potential use. The rule also provides an exemption from the DFW flow control limit for DERCs used in response to an ERGOT-declared emergency situation and references the specific ERCOT protocols that detail the emergency notice. The existing rule references the previous version of the ERCOT protocols, which could potentially cause confusion for regulated entities and delay the processing of DERC usage requests. The proposed rulemaking would update §1 01.379 to reference the version ofthe ERCOT protocols effective on June 1, 2012. The amendment to §101.379 is proposed concurrently with the amendment to 30 TAC §117.10 that will be published in a separate rulemaking in this issue ofthe Texas Register. Section Discussion The commission proposes to revise §1 01.379(c)(2)(D) to reference the version of the ERCOT Protocols effective on June 1, 2012. Fiscal Note: Costs to State and Local Government Jeffrey Horvath, Strategic Planning and Assessment Section analyst, has determined that for the first five-year period the proposed rule is in effect, no fiscal implications are anticipated for the TCEQ or other units of state or local government. Theamendment to Chapter 101 is proposed concurrently with an amendment to Chapter 117. The new ERS program is designed to help decrease the likelihood of rolling black-outs during an ERGOT-declared ene.rgy emergency by decreasing the power demand on the electncal grid. The proposed amendment in Chapter 101**wo~ld** merely update a reference in agency rules to reflect the vers1on ofthe ERGOT Protocols effective on June 1, 2012. The proposed amendment to Chapter 101 does not add or delete administrative or regulatory requirements for the TCEQ or other units of state .or local government and, therefore, no fiscal implications are antiCipated due to the administration or enforcement ofthe proposed change. Public Benefits and Costs Mr. Horvath has also determined that for each year of the first five years the proposed rule is in effect, the public benefit anticipated from the changes seen in the proposed rules will be the facilitation of the new ERS program administered by ERGOT, which is designed to help decrease the likelihood of rolling black-outs during an ERGOT-declared energy emergency by decreasing the power demand on the electrical grid. The proposed rule is not expected to have a fiscal impact on individuals or businesses. The proposed amendment to Chapter 101 would merely update a reference in agency rules toreflect the version ofthe ERCOT Protocols effective June 1, 2012, which reflect changes to ERGOT's new ERS program. Small Business and Micro-Business Assessment No adverse fiscal implications are anticipated for small or micro-businesses as a result of the proposed rule. The amendment to §1 01.379 is proposed concurrently with the amendment to §117.1 0. Together. the proposed amendments are**intend~dto** facilitate the implementation of the new ERS program administered by ERCOT. The new ERS program is designed to help decrease the likelihood of rolling black-outs during an ERGOT-declared energy emergency by decreasing the power demand on the electrical grid. The proposed amendment to Chapter 101 would merely update a reference in agency rules to reflect**~he** version of the ERCOT Protocols effective June 1, 2012, wh1ch reflect changes to ERGOT's new ERS program. 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 rule does not**adv~rsely** affect a small or micro-business in a material way for the f1rst f1ve years that the proposed rule is 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 rule does**~ot ~dversely**  affect a local economy in a material way for the f1rst f1ve years that the proposed rule is in effect. Draft Regulatory Impact Analysis The commission reviewed the proposed rule in light of the regulatory analysis requirements of Texas**Governme~t** Code, §2001.0225 and determined that the proposed rulemak1ng does not meet the definition of a major environmental rule. Texas Government Code, §2001.0225 states that a major environmental rule is a rule for which the specific intent 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, a sector of the economy, productivity, competition, jobs, the environment, or the public health and safety of the state or a sector of the state. Furthermore, while the proposed rulemaking does not constitute a major environmental r.ule, even if it did, a regulatory impact analysis would not be requ1red because the proposed rulemaking does not meet any ofthe**fo~r** applicability criteria for requiring a regulatory impact analysis for a major environmental rule. Texas Government Code, §2001.0225 applies only to a major environmental rule that 1) exceeds a standard set by federal law, unless the rule is specifically required by state law; 2) exceeds an express requirement of state law, unless the rule is specifically required by federal law; 3) exceeds 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; or 4) adopts a rule solely under the general P?Wers**~f** the agency instead of under a specific state law. Spec1f1cally, 1t does not meet any ofthe four applicability criteria listed in Texas Government Code, §2001.0225 because: 1) the proposed rulemaking is part of the SIP, and as such is designed to meet, not exceed the relevant standard set by federal law; 2) parts of the proposed rulemaking are directly required by**s~ate** Ia":'; 3) no contract or delegation agreement covers the top1c that IS the subject of this proposed rulemaking; and 4) the proposed rulemaking is authorized by specific sections of Texas Health and Safety Code (THSC). Chapter 382 (also known .as the Texas Clean Air Act). and the Texas Water Code, wh1ch are cited in the Statutory Authority section of this preamble. The proposed rule implements requirements of the Federal Clean Air Act (FCAA). Under 42 United States Code (USC), §7410, each state is required to adopt and implement .a s.IP containing adequate provisions to implement. attain, ma1nta1n, and enforce the NAAQS within the state. While 42 USC, §7410 generally does not require specific programs,**meth~ds,** or reductions in order to meet the standard, SIPs must mclude enforceable emission limitations and other control measures, means, or techniques (including economic incentives such as fees, marketable permits, and auctions of emissions rights). as well as schedules and timetables for compliance as may be necessary or appropriate to meet the**applicab~e requi~ements**  of the FCAA (meaning 42 USC, Chapter 85, A1r Pollution P_revention and Control). The provisions of the FCAA recogmze that states are in the best position to determine what programs and controls are necessary or appropriate in order to meet the NAAQS. This flexibility allows states, affected industry, and the public to collaborate on the best methods for attaining the NAAQS for the specific regions in the state. Even though the FCAA allows states to develop their own programs, this flexibility does not relieve a state from developing a program that meets the requirements of 42 USC, §7410. States are not free to ignore the requirements of 42 USC, §7410, and must develop programs and control measures to assure that their SIPs provide for implementation, attainment,**maintenan~~·** and enforcement of the NAAQS within the state. The spec1f1c intent ofthe proposed rulemaking is to update references to the ERCOT protocols in §1 01.379 to be consistent with §117.10. While the proposed rulemaking protects the environment or reduces risks to human health from environmental exposure, it does not constitute a major environmental rule underTexas Government Code, §2001.0225(g)(3), because it does not adversely affect in a material way the economy, a sector of the economy,



## PROPOSED RULES 

## November 2, 2012 37 TexReg 8719productivity, competition, orjobs, nor would the rulemaking adversely affect in a material way the environment, or the public health and safety of the state or a sector of the state. The rulemaking as a result is not subject to a regulatory impact analysis underTexas Government Code, §2001.0225, because it is not a major environmental rule. The requirement to provide a fiscal analysis of regulations in the Texas Government Code was amended by Senate Bill (SB) 633, 75th Legislature, 1997. The intent of SB 633 was to require agencies to conduct a regulatory impact analysis of extraordinary rules. These rules are identified in the statutory language as major environmental rules that will have a material adverse impact and will exceed a requirement of state law, federal law, or a delegated federal program; or are adopted solely under the general powers ofthe TCEQ. With the understanding thatthis requirement would seldom apply, the commission provided a cost estimate for SB 633 that concluded: based on an assessment of rules adopted by the agency in the past, it is not anticipated that the bill will have significant fiscal implications for the agency due to its limited application. The commission also noted that the number of rules that would require assessment under the provisions of the bill was not large. This conclusion was based, in part, on the criteria set forth in the bill that exempted rules from the full analysis unless the rule was a major environmental rule that exceeded a federal law. The FCAA does not always require specific programs, methods, or reductions in order to meet the NAAQS; thus, states must develop programs for each nonattainment area to help ensure that those areas will meet the attainment deadlines. Because of the ongoing need to address nonattainment issues and to meet the requirements of 42 USC, §7410, the commission routinely proposes and adopts revisions to the SIP and rules. The legislature is presumed to understand this federal scheme. Ifeach rule proposed for inclusion in the SIP was considered to be a major environmental rule that exceeds federal law, then every revision to the SIP would require the full regulatory impact analysis contemplated by SB 633. This conclusion is inconsistent with the conclusions reached by the commission in its cost estimate and by the Legislative Budget Board (LBB) in its fiscal notes. Since the legislature is presumed to understand the fiscal impacts of the bills it passes, and that presumption is based on information provided by state agencies and the LBB, the commission believes that the intent of SB 633 was only to require the full regulatory impact analysis for rules that are extraordinary in nature. While the rules have a broad impact, that impact is no greater than is necessary or appropriate to meetthe requirements ofthe FCAA. For these reasons, rules adopted for inclusion in the SIP fall under the exception in Texas Government Code, §2001.0225(a), because they are required by federal law. The commission has consistently applied this construction to its rules since this statute was enacted in 1997. Since that time, the legislature has revised the Texas Government Code, but left this provision substantially unamended. It is presumed that, when an agency interpretation is in effect at the time the legislature amends the laws without making substantial change in the statute, the legislature is deemed to have accepted the agency's interpretation (Central Power & Light Co. 

### v. Sharp, 919 S.W.2d 485, 489 (Tex. App. Austin 1995), writ denied with per curiam opinion respecting anotherissue, 960 S.W.2d 617 (Tex. 1997); Bullock v. Marathon Oil Co., 798 S.W.2d 353, 357 (Tex. App. Austin 1990, no writ) superseded by statute on anotherpoint oflaw, Tax Code §112.108, Other Actions Prohibited, as recognizedin, First State Bank ofDumas v. Sharp, 863 S.W.2d 81, 83



## 37 TexReg 8720 November 2, 2012 Texas Register (Tex. App. Austin 1993, no writ); Cf. Humble Oil & Refining Co. 

### v. Calvert, 414 S.W.2d 172 (Tex. 1967); Dudney v. State Farm Mut. Auto Ins. Co., 9 S.W.3d 884, 893 (Tex. App. Austin 2000); Southwestern Life Ins. Co. v. Montemayor, 24 S.W.3d 581 (Tex. App. Austin 2000, pet. denied); and Coastallndust. WaterAuth. v. Trinity Portland Cement Div., 563 S.W.2d 916 (Tex. 1978)). The commission's interpretation of the regulatory impact analysis requirements is also supported by a change made to the Texas Administrative Procedure Act (APA) by the legislature in 1999. In an attempt to limit the number of rule challenges based upon APA requirements, the legislature clarified that state agencies are required to meet these sections of the APA against the standard of substantial compliance as required in Texas Government Code, §2001.035. The legislature specifically identified Texas Government Code, §2001.0225 as falling underthis standard. The commission has complied with the requirements of Texas Government Code, §2001.0225. Even if the proposed rulemaking constitutes a major environmental rule under Texas Government Code, §2001.0225(g)(3), a regulatory impact analysis is not required because this exemption is part of the commission's SIP for making progress toward the attainment and maintenance of the NAAQS. Therefore, the proposed rulemaking does not exceed a standard set by federal law or exceed an express requirement of state law, since they are part of an overall regulatory scheme designed to meet, not exceed the relevant standard set by federal law (NAAQS). The commission is charged with protecting air quality within the state and to design and submit a plan to achieve attainment and maintenance of the federally mandated NAAQS. The Third District Court of Appeals upheld this interpretation in Brazoria County v. Texas Comm'n on Envtl. Quality, 128 S.W. 3d 728 (Tex. App. -Austin 2004, no writ). The specific intent of the proposed rulemaking is to update references to the ERGOT protocols in §101.379 to be consistent with §117.10. This proposal, therefore, does not exceed an express requirement of federal law. The amendment is needed to implement state law but does exceed those new requirements. Finally, this rulemaking was not developed solely under the general powers of the agency, but is authorized by specific sections of THSC, Chapter 382, which are cited in the Statutory Authority section of this preamble, including THSC, §382.012 and §382.019. Because this proposed rulemaking does not meet any of the four applicability requirements, Texas Government Code, §2001.0225(b) does not apply and a regulatory impact analysis is not required. Written comments on the draft regulatory impact analysis determination may be submitted to the contact person at the address listed underthe Submittal ofComments section ofthis preamble. Takings Impact Assessment The commission evaluated the proposed rulemaking and performed an analysis ofwhether the proposed rulemaking constitutes a taking under Texas Government Code, Chapter 2007. The commission's preliminary assessment indicates Texas Government Code, Chapter 2007 does not apply. Under Texas Government Code, §2007.002(5), taking means: "(A) a governmental action that affects private real property, in whole or in part or temporarily or permanently, in a mannerthat requires the governmental entity to compensate the private real property owner as provided by the Fifth and Fourteenth Amendments to the United States Constitution or Section 17 or 19, Article I, Texas Constitution; or (B) a governmental action that (i) affects an owner's private real property that is the subject of thegovernmental action, in whole or in part or temporarily or permanently, in a manner that restricts or limits the owner's right to the property thatwould otherwise exist in the absence ofthe governmental action; and (ii) is the producing cause ofa reduction ofat least 25 percent in the market value of the affected private real property, determined by comparing the market value ofthe property as if the governmental action is not in effect and the market value of the property determined as if the governmental action is in effect." Promulgation and enforcement ofthe rulemaking would be neither a statutory nor a constitutional taking ofprivate real property. The primary purpose ofthe rulemaking is an update to Chapter 101, Subchapter H to ensure consistency with ERGOT's new ERS program. This rule is not burdensome, restrictive, or limiting of rights to private real property because the rulemaking regulates the use ofelectric generators in certain limited emergency situations. Furthermore, the rulemaking benefits the public by potentially decreasing the likelihood of requiring firm load shedding (i.e., rolling black-outs) when additional control measures are needed to achieve or maintain attainment of the federal air quality standards through the use of electric generators. The rulemaking does not affect a landowner's rights in private real property because this rulemaking does not burden, restrict, or limit the owner's right to property, nor does it reduce the value of any private real property by 25% or more beyond that which would otherwise exist in the absence ofthe regulations. Therefore, this rule does not constitute a taking under Texas Government Code, Chapter 2007. Consistency with the Coastal Management Program The commission reviewed the proposed rulemaking and found that the proposal is subject to the Texas Coastal Management Program (CMP) in accordance with the Coastal Coordination Act, Texas Natural Resources Code, §§33.201 et seq., and therefore must be consistent with all applicable CMP goals and policies. The commission conducted a consistency determination for the proposed rule in accordance with Coastal Coordination Act Implementation Rules, 31 TAG §505.22 and found the proposed rulemaking is consistent with the applicable CMP goals and policies. The CMP goal applicable to the proposed rulemaking is the goal to protect, preserve, and enhance the diversity, quality, quantity, functions, and values of coastal natural resource areas (31 TAG §501.12(1)). The CMP policy applicable to the proposed rulemaking is the policy that commission rules comply with federal regulations in 40 Code of Federal Regulations to protect and enhance air quality in the coastal areas (31 TAG §501.32). The proposed rulemaking would not increase emissions of air pollutants and is therefore consistent with the CMP goal in 31 TAG §501.12(1) and the CMP policy in 31 TAG §501.32. Promulgation and enforcement ofthis rule will not violate or exceed any standards identified in the applicable CMP goals and policies because the proposed rule is consistent with these CMP goals and policies and because this rule does not create or have a direct or significant adverse effect on any coastal natural resource areas. Therefore, in accordance with 31 TAG §505.22(e), the commission affirms that this rulemaking action is consistent with CMP goals and policies. Written comments on the consistency ofthis rulemaking may be submitted to the contact person at the address listed under the Submittal of Comments section ofthis preamble. Effect on Sites Subject to the Federal Operating Permits Program The proposed amendmentwill not require any changes to federal operating permits. Announcement of Hearing The commission will hold a public hearing on this proposal in Austin on November 28, 2012, at 2:00p.m. in Building E, Room 201S, at the commission's central office located at 12100 Park 35 Circle. The hearing is structured for the 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 or other accommodation needs who are planning to attend the hearing should contact Sandy Wong, Office of Legal Services, at (512) 239-1802. Requests should be made as far in advance as possible. Submittal of Comments Written comments may be submitted to Bruce McAnally, 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://www5. tceq. texas.govlruleslecomments!. File size restrictions may apply to comments being submitted via the eComments system. All comments should reference Rule Project Number 2012-025-117-AI. The comment period closes December 5, 2012. Copies of the proposed rulemaking can be obtained from the commission's website at http://www.tceq.texas.gov/navlruleslpropose_adopt.html. For further information, please contact Ray Schubert, Air Quality Planning Section, (512) 239-6615. Statutory Authority The amendment is proposed under the authority of the following: Texas Water Code (TWC), §5.1 02, General Powers, §5.1 03, Rules, and §5.1 05, General Policy (these provisions authorize the commission to adopt rules necessary to carry out its powers and duties as well as all general policies underthe TWC); Texas Health and Safety Code (THSC), §382.017, Rules, which authorizes the commission to adopt rules consistent with the policy and purposes ofthe Texas Clean Air Act; THSC, §382.002, Policy and Purpose, which establishes the commission's purpose to safeguard the state's air resources, consistent with the protection of public health, general welfare, and physical property; THSC, §382.011, General Powers and Duties, which authorizes the commission to control the quality of the state's air; THSC, §382.012, State Air Control Plan, which authorizes the commission to prepare and develop a general, comprehensive plan for the control ofthe state's air; and THSC, §382.051(d), Permitting Authority of Commission; Rules, which authorizes the commission to adopt rules as necessary to comply with changes in federal law or regulations applicable to permits under THSC, Chapter 382. Finally, the amendment is also proposed under Federal Clean AirAct (FCAA), 42 United States Code (USC), §§7401, et seq., which requires states to submit state implementation plan revisions that specify the manner in which the National Ambient Air Quality Standard will be achieved and maintained within each air quality control region of the state.



## PROPOSED RULES 

## November 2, 2012 37 TexReg 8721The proposed amended implements TWC, §§5.1 02, 5.1 03, and 5.105; THSC, §§382.002, 382.011, 382.012, 382.016, 382.017, and 382.021; and FCAA, 42 USC, §§7401 et seq. §101.379. Program Audits andReports. (a) No later thanthree years afterthe effective date ofthis section, and every three years thereafter, the executive director will audit this program. (1) The audit will evaluate the timing ofcredit generation and use, the impact ofthe program on the state's attainment demonstration and the emissions ofhazardous air pollutants, the availability and cost ofcredits, compliance by the participants, and any other elements the executive director may choose to include. (2) The executive director will recommend measures to remedy any problems identified in the audit. The trading of discrete emission credits may be discontinued by the executive director in part or in whole and in any manner, with commission approval, as a remedy for problems identified in the program audit. (3) The audit data and results will be completed and submittedto the United StatesEnvironmental Protection Agency andmade available for public inspection within six months afterthe audit begins. (b) No later than February I ofeach calendar year, the executive director shall develop and make available to the general public and the United States Environmental Protection Agency a report that includes the following information for the previous calendar year: (I) the amountofeachpollutantemissioncredits generated under this division; (2) the amount ofeach pollutant emission credits used under this division; (3) a summary ofall trades completed under this division; and (4) the amount of discrete emission reduction credits (DERC) approved for use under subsection (c) ofthis section. (c) No later than October I ofeach year, the executive director will complete, and make available to the general public and the United States Environmental Protection Agency, an annual review to determine the number ofDERCs available for potential use in the upcoming calendar year for the Dallas-Fort Worth (DFW) eight-hour ozone nonattainment area. The annual review will include the calculation of the flow control limit as specified in subsection ( c)(2)(A) ofthis section to ensure noninterference with attainment and maintenance ofthe ozone National Ambient Air Quality Standard (NAAQS) and the apportionment ofapproved DERCs. (1) For the 2009 control period, the flow control limit for DERCs available for use is the number prescribed in the DFW Eight-Hour Ozone Attainment Demonstration SIP Revision for the 1997 eight-hour ozone standard, in tons per day, not to be exceeded in any day, where a day is a 24-hour period from midnight to midnight. (2) For any control period after 2009, the annual review will establish a flow control limit for that year, in tons per day, not to be exceeded in any day, where a day is a 24-hourperiod from midnight to midnight. (A) The flow control limit for a particular year will be determined using the following equation: Figure: 30 TAC §101.379(c)(2)(A) (No change.) (B) If use of the entire DERC bank would not interfere with attainment and maintenance ofthe 1997 eight-hour ozone NAAQS in the DFW eight-hour ozone nonattainment area, then the



## 37 TexReg 8722 November 2, 2012 Texas Register number ofDERCs potentially available for use is the total number of DERCs in the bank. (C) Ifthe flow control limit, as calculated in the equation in subparagraph (A) ofthis paragraph, is greaterthanthetotal number ofDERCsrequested for use in accordance with §101.376(d) ofthis title (relating to Discrete Emission Credit Use) the executive director: (i) may approve all requestedNotice oflntentto Use Discrete Emission Credits (DEC-2 Form) submittals; and (ii) will consider any late DEC-2 Forms submitted as provided under §101.376(d)(3) ofthis title that is not an Electric Reliability Council ofTexas, Inc. (ERCOT)-declared emergency situation as defined in subparagraph (D) ofthis paragraph, but will not otherwise approve a late submittal that would exceed the flow control limit establishedbythe equationunder subsection (c)(2)(A) ofthis section. (D) Ifthe DEC-2 Forms are submitted in response to an ERCOT-declared emergency situation, the request will not be subject to the flow control limit and may be approved provided all other requirements are met. For the purposes ofthis subparagraph, an ERCOT-declared emergency situation is defined as the period oftime that an ERCOT-issued emergency notice (as defined in ERCOTProtocols. Section 2: Definitionsand Acronyms (June 1, 2012) and issued as specified inERCOTProtocols, Section 6: AdjustmentPeriodandReal-Time Operations (June 1, 20**12))[,-asdefu!edia~Preteee!s,** See#enb Dcji11iliem tmtiAerenyms

## Wfil U,.**~** 

### isstled

## ey**~as** speeffied ffi**~** Preteee!s, See#en 

### J-c Dispatch 

## Wfil U,**~]** is applicable to the serving electric power generating system. The emergency situation is considered to end upon expiration ofthe emergency notice issued by ERCOT. This agency hereby certifies thatthe proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt. Filed with the Office of the Secretary of State on October 19, 2012. TRD-20 1205435 Robert Martinez Director, Environmental Law Division Texas Commission on Environmental Quality Earliest possible date of adoption: December 2, 2012 For further information, please call: (512) 239-2141 

# • CHAPTER 117. POLLUTION FROM NI SUBCHAPTER A. 30 TAC §117.10 The Texas Commission on agency, or commission) propos If adopted, amended §117.10 States Environmental Protectio the state implementation plan ( 

# •

OGEN COMPOUNDS ITIONS

nvironmental Quality (TCEQ, san amendment to §117.10. ill be submitted to the United Agency (EPA) as a revision to IP). Background and Summary ofth Factual Basis forthe Proposed Rule The Electric Reliability Council f Texas, Inc. (ERCOT) manages the electrical grid within th ERCOT region of Texas, withThe proposed amended imple ents TWC, §§5.1 02, 5.1 03, and 5.105; THSC, §§382.002, 382. 11, 382.012, 382.016, 382.017, and 382.021; and FCAA, 42 U C, §§7401 

### etseq. §101.379. Program Audits and eports. (a) No laterthan three yea s after the effective date ofthis section, and every three years therea er, the executive director will audit this program. (1) The audit will eva! ate the timing ofcredit generation and use, the impact ofthe program n the state's attainment demonstration and the emissions ofhazardo air pollutants, the availability and cost ofcredits, compliance by the articipants, and any other elements the executive director may choose o include. (2) The executive dir tor will recommend measures to remedy any problems identified i the audit. The trading ofdiscrete emission credits may be disconti ued by the executive director in part or in whole and in any mann r, with commission approval, as a remedy for problems identified in he program audit. (3) The audit data and results will be completed and submittedto the United StatesEnviron ental ProtectionAgency andmade available for public inspection wit ·n six months after the audit begins. (b) No later than Februa utive director shall develop and and the United States Environme includes the following informatio 1 ofeach calendar year, the execke available to the general public a! Protection Agency a report that for the previous calendar year: (1) the amount ofeach ollutantemission credits generated under this division; (2) the amount ofeach pollutant emission credits used under this division; (3) a summary ofall tr des completed under this division; and (4) the amount of di crete emission reduction credits (DERC) approved for use under s section (c) ofthis section. (c) No laterthan October 1ofeach year, the executive director will complete, and make available o the general public and the United States Environmental Protection gency, an annual review to determine the number ofDERCs avail lefor potential use in the upcoming calendar year for the Dallas-F rt Worth (DFW) eight-hour ozone nonattainment area. The annual re iew will include the calculation of the flow control limit as specified n subsection ( c )(2)(A) ofthis section to ensure noninterference wi attainment and maintenance ofthe ozone National Ambient Air Qual Standard (NAAQS) and the apportionment ofapproved DERCs. (1) For the 2009 cont ol period, the flow control limit for DERCs available for use is e number prescribed in the DFW Eight-Hour Ozone Attainment D monstration SIP Revision for the 1997 eight-hour ozone standard, in tons per day, not to be exceeded in any day, where a day is a 24-hour eriod from midnight to midnight. (2) For any control pe iod after 2009, the annual review will establish a flow control limit r that year, in tons per day, not to be exceeded in any day, where ada is a 24-hour per.iod from midnight to midnight. (A) The flow contr I limit for a particular year will be determined using the following eq ation: Figure: 30 TAC §101.379(c)(2)(A (No change.) (B) If use of the e tire DERC bank would not interfere with attainment and mainten nee of the 1997 eight-hour ozone NAAQS in the DFW eight-hour one nonattainment area, then the



## 37 TexReg 8722 November 2, 2012 Texas Register number ofDERCs potentially a ailable for use is the total number of DERCs in the bank. (C) Ifthe flow c ntrollimit, as calculated in the equation in subparagraph (A) ofthis p ragraph, is greaterthanthetotal number ofDERCsrequested for use i accordance with§1 01.376(d) ofthis title (relating to Discrete Emissi n Credit Use) the executive director: (i) may appro e all requestedNotice oflntentto Use Discrete Emission Credits (DEC 2 Form) submittals; and (ii) will consi er any late DEC-2 Forms submitted as provided under §101.376(d)( ) ofthis title that is not an Electric Reliability Council ofTexas, In

. (ERCOT)-declared emergency situation as defined in subparagrap (D) ofthis paragraph, but will not otherwise approve a late submit! Ithat would exceed the flow control limit established by the equation nder subsection (c)(2)(A) of this section. (D) Ifthe DEC-2 orms are submitted in response to an ERCOT-declared emergency ituation, tl1e request will not be subject to the flow control limit and ay be approved provided all other requirements are met. For the p oses ofthis subparagraph, an ERCOT-declared emergency situatio is defined as the period oftime that an ERCOT-issued emergency not ce (as defined in ERCOTProtocols, Section2: De nitionsandAcron s June 1,2012 andissuedass ecified in ERCOTProtocols, Section :Ad"ustmentPeriodandReal-Time Operations (June 1, 2012))[,as ffi.ER(;.f}J:Pretecels, &e#en:J.:. Dejfflitiel'lS tmdAcronyms

### Wfi.l ,**~** 

### issHea by ERGG+as

### .speeffied ffi ER(;.f}J: Pretece!s, 

### J+ Dispetch 

### Wfi.l U,**~]** is applicable to the serving electric ower generating system. The emergency situation is considered toe d upon expiration ofthe emergency notice issued by ERCOT. This agency hereby certifies th the proposal has been reviewed by legal counsel and found to b within the agency's legal authority to adopt. Filed with the Office of the Se retary of State on October 19, 2012. TRD-201205435 Robert Martinez Director, Environmental Law Divisi Texas Commission on Environment I Quality Earliest possible date of adoption: ecember 2, 2012 For further information, please call: (512) 239-2141 

# • CHAPTER 117. 

# • • CONTROL OF AIR POLLUTION FROM NITROGEN COMPOUNDS SUBCHAPTER A. DEFINITIONS 30 TAC §117.10 The Texas Commission on Environmental Quality (TCEQ, agency, or commission) proposes an amendment to §117.10. If adopted, amended §117.10 will be submitted to the United States Environmental Protection Agency (EPA) as a revision to the state implementation plan (SIP). Background and Summary ofthe Factual Basis for the Proposed Rule The Electric Reliability Council of Texas, Inc. (ERGOT) manages the electrical grid within the ERGOT region of Texas, withoversight by the Public Utility Commission ofTexas (PUCT). On March 22, 2012, the PUCT repealed 16 TAC §25.507, to replace the Emergency Interruptible Load Service (EI LS) program with the Emergency Response Service (ERS) program (new 16 TAC §25.507). Like the ElLS program, the new ERS program is designed to help decrease the likelihood of requiring firm load shedding (i.e., rolling black-outs) during an ERGOT-declared energy emergency by decreasing the power demand on the electrical grid. Under the ERS program, participants commit to decrease their power consumption from the electrical grid during a declared energy emergency. ERS program participants might meet this commitment by decreasing overall power use, replacing power consumption from the grid with local generation by operating local emergency backup generators, or a combination of both. However, unlike the ElLS program, the new ERS program allows qualified participants to provide power back into the electrical grid for sale during an ERGOT-declared emergency under limited circumstances. Operating an emergency generator as part of ERGOT's former ElLS program meets the existing definition of an emergency situation in §117.10. The existing definition ofan emergency situation in §117.1 0 includes the period oftime that an emergency notice issued by ERGOT is applicable to the serving electric power generating system and references the specific ERGOT protocols that detail the emergency notice. However, the Chapter 117 definition ofan emergency situation also specifically excludes operation for purposes of supplying powerfor distribution to the electrical grid. Therefore, operation of an emergency generator that also provides power back to the electrical grid would not be considered an emergency situation under the current Chapter 117 definition even if the operation was at the directive of ERGOT under the ERS program. While Chapter 117 would not prohibit companies from participating in the new ERS program, the Chapter 117 rules that apply in the Dallas-Fort Worth and Houston-Galveston-Brazoria 1997 eight-hour ozone nonattainment areas have specific provisions that restrict the non-emergency operational hours ofemergency generators. For these sources to qualify for an exemption from the rule control requirements, participants in the ERS program would have to count hours ofoperation during an ERGOT emergency as non-emergency use if power is sold to the grid and might risk losing exemption status under Chapter 117 if the operational hours exceed the exemption criteria. The proposed rulemaking would update the definition of emergency situation in §117.10 to ensure consistency with ERGOT's new ERS program. The proposed rulemaking would reference the most recent version of the ERGOT protocols. The proposed rulemaking would also revise the definition of emergency situation to reflect changes made by ERGOT to promote reliability during energy emergencies by allowing the operation ofgenerators for purposes ofselling powerto the electricgrid under limited circumstances. The amendment to §117.10 is proposed concurrently with an amendmentto §101.379 thatwill be published in a separate rulemaking in this issue ofthe Texas Register. Demonstrating Nonintetference under Federal Clean Air Act, Section 11 0(1) The commission provides the following information to demonstrate why the proposed change to the definition of emergency situation in Chapter 117 will not negatively impact the status of the state's progress towards attainment with the 1997 eight-hour ozone National Ambient Air Quality Standard (NAAQS), will not interfere with control measures, and will not prevent reasonable further progress toward attainment ofthe ozone NAAQS. As mentioned elsewhere in this preamble, the Chapter 117 rules provide exemptions for certain sources in the Dallas-Fort Worth and Houston-Galveston-Brazoria 1997 eight-hour ozone nonattainment areas that operate exclusively during emergency situations or operate for a limited number of hours in non-emergency situations. Under the existing Chapter 117 rules, the period of time during an ERGOT-declared emergency is considered an emergency situation. The commission has interpreted this to mean thatwhen demonstrating compliance with the Chapter 117 exemption criteria, participants in ERGOT's former ElLS program were not required to include the hours of operation for generators operated during an ERGOT-declared emergency as non-emergency operation. ERGOT's new ERS program promotes reliability during energy emergencies by allowing qualified participants to provide power for distribution to the electrical grid during an ERGOT-declared emergency. Under the existing Chapter 117 rules, participants in ERGOT's new ERS program are not required to include the hours of operation for generators operated during an ERGOTdeclared emergency when demonstrating compliance with the Chapter 117 exemption criteria as long as these sources do not provide power for distribution to the electrical grid. Because the existing Chapter 117 definition ofan emergency situation specifically excludes operation for purposes ofsupplying power for distribution to the electrical grid, ERS program participants would have to count hours of operation during an ERGOT-declared emergency when demonstrating compliance with the Chapter 117 exemption criteria if power is provided back into the grid. This practice could result in ERS program participants losing exemption status under Chapter 117 if the non-emergency hours exceed the exemption criteria and potentially discourage ERS program participants from supplying excess generation back to the grid during an ERGOT-declared energy emergency. The proposed rulemaking would prevent ERS program participants from potentially losing exemption status under Chapter 117 if they provide power to the electrical grid during an ERGOT-declared emergency. The proposed rulemaking ensures thatthe changes made to ERGOT's new ERS program do not narrow the scope ofwhat the commission currently considers an emergency situation. The period of time during an ERGOT-declared emergency is currently considered an emergency situation under the existing Chapter 117 rules. The proposed revisions to the definition of emergency situation would limit the circumstances under which a generator could provide power for distribution to the electrical grid to only those operations that are part of an ERGOT emergency response program and in direct response to ar1 instruction by ERGOT during the period of an ERGOT emergency notice. Therefore, the proposed amendment would not increase the number ofsources that could qualify for exemption underthe Chapter 117 rules or increase the frequency orduration ofthe operation during an emergency situation. For these reasons, the commission determined that the proposed rulemaking will not negatively impact the status of the state's attainment with the 1997 eight-hour ozone NAAQS and should not be considered as backsliding under the Federal Clean Air Act. Section Discussion The commission proposes to amend the definition ofemergency situation in §117.10(15). The commission proposes to revise



## PROPOSED RULES 

## November 2, 2012 37 TexReg 8723§117.1 0(15)(A)(ii) to reference the version of the ERGOT Protocols effective on June 1, 2012. The commission proposes §117.10(15)(A)(vii) to include operation of an emergency generator as part of an ERGOT emergency response program when the operation is in direct response to an instruction by ERGOT during the period of an ERGOT emergency notice as specified in §117.10(15)(A)(ii). The commission is requesting comment on whether an ERGOT energy emergency alert level should be specified in proposed §117.10( 15)(A)(vii). The commission also proposes to reformat the existing §117.10(15)(8) description of the situations that are not considered emergency situations. Proposed clause (i) incorporates the existing portion ofthe definition indicating that an emergency situation does not include operation for training purposes or other foreseeable events. Existing §117.10(15)(B) indicates that an emergency situation does not include operation for purposes of supplying power for distribution to the electric grid. Proposed clause (ii) indicates that an emergency situation does not include operation for purposes of supplying power for distribution to the electric grid except as specified under proposed §117.1 0( 15)(A)(vii) regarding emergency generator operation that is part of an ERGOT emergency response program and is in direct response to an instruction by ERGOT during the period of an ERGOT emergency notice. Proposed clause (ii) is necessary to reflect changes made by ERGOT to promote reliability during energy emergencies by allowing the operation of generators for purposes of selling power to the electric grid under limited circumstances. Fiscal Note: Costs to State and Local Government Jeffrey Horvath, Strategic Planning and Assessment Section analyst, has determined that for the first five-year period the proposed rule is in effect, no significant fiscal implications are anticipated for the TCEQ. Other state agencies or units of local government that participate in the ERS program may benefit under the proposed rule in that they could more easily maintain their Chapter 117 exemption status while providing power to the electrical grid during an ERGOT-declared emergency. The proposed rulemaking would revise the Chapter 117 definition ofan emergency situation and is intended to facilitate the implementation ofthe new ERS program administered by ERGOT. The new ERS program is designed to help decrease the likelihood of rolling black-outs during an ERGOT-declared energy emergency by decreasing the power demand on the electrical grid. Program participants would commit to decrease their overall power consumption from the electrical grid during a declared energy emergency by decreasing overall power use, replacing power consumption by operating local emergency backup generators, or a combination of both. However, unlike the current emergency program, the new ERS program allows qualified participants to sell power back into the electrical grid during an ERGOT-declared emergency under limited circumstances. Because the existing Chapter 117 definition ofan emergency situation specifically excludes generator operation for purposes of supplying power for distribution to the electrical grid, ERS program participants would have to count generator hours ofoperation during an ERGOT-declared emergency when demonstrating compliance with the Chapter 117 exemption criteria. This practice could result in ERS program participants losing exemption status under Chapter 117 if the non-emergency hours exceed the exemption criteria. The proposed rulemaking would remedy this situation by allowing ERS program participants to not have to count these generator operational hours as non-emergency



## 37 TexReg 8724 November 2, 2012 Texas Register hours and to sell power back to the electrical grid during an ERGOT-declared emergency. The proposed rulemaking does not add additional administrative or regulatory requirements for the TCEQ and, therefore, no significant fiscal implications are anticipated for the TCEQ. Other state agencies or units of local government that participate in the ERS program may benefit under the proposed rule in that they could maintain their Chapter 117 exemption status while providing power to the electrical grid during an ERGOT-declared emergency. These participants may also benefit from the sale of electric power back to the grid during one ofthese emergencies, but those benefits do not result from this rulemaking. Public Benefits and Costs Mr. Horvath has also determined that for each year of the first five years the proposed rule is in effect, the public benefit anticipated from the changes seen in the proposed rules will be the facilitation of the new ERS program administered by ERGOT, which is designed to help decrease the likelihood of rolling black-outs during an ERGOT-declared energy emergency by decreasing the power demand on the electrical grid. The proposed rule is not expected to have a fiscal impact on individuals or businesses. Businesses who participate in the ERS program may benefit under the proposed rule in that they could maintain their Chapter 117 exemption status while providing power to the electrical grid during an ERGOT-declared emergency. These participants may also benefit from the sale ofelectric power back to the grid during one ofthese emergencies, but those benefits do not result from this rulemaking. Small Business and Micro-Business Assessment No adverse fiscal implications are anticipated for small or micro-businesses as a result of the proposed rule. The proposed rule would allow ERS program participants to sell power back into the power grid during an ERGOT-declared emergency without having to count those generator operational hours towards Chapter 117 compliance. 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 rule does not adversely affect a small or micro-business in a material way for the first five years that the proposed rule is 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 rule does not adversely affect a local economy in a material way for the first five years that the proposed rule is in effect. Draft Regulatory Impact Analysis Determination The commission reviewed the proposed rule in light of the regulatory analysis requirements of Texas Government Code, §2001.0225 and determined that the proposed rulemaking does not meet the definition of a major environmental rule. Texas Government Code, §2001.0225 states that a major environmental rule is a rule for which the specific intent 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, a sector of the economy, productivity, competition, jobs, the environment, or the public health and safety of thestate or a sector of the state. Furthermore, while the proposed rulemaking does not constitute a major environmental r.ule, even if it did, a regulatory impact analysis would not be reqwred because the proposed rulemaking does not**me~t** any ofthe four applicability criteria for requiring a regulatory Impact analysis for a major environmental rule. Texas Government Code, §2001.0225 applies only to a major environmental rule that 1) exceeds a standard set by federal law, unless the rule is specifically required by state law; 2) exceeds an express requirement of state law, unless the rule is specifically required by federal law; 3) exceeds 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; or 4) adopts a rule solely**~~der** the general P?Wers of the agency instead of under a spec1f1c state law. SpecJ.fJcally, Jt does not meet any ofthe four applicability criteria listed m Texas Government Code, §2001.0225 because: 1) the proposed rulemaking is part of the SIP, and as such is designed to meet, not exceed the relevant standard set by federal law; 2) parts of the proposed rulemaking are directly required by**s~ate Ia~;**  3) no contract or delegation agreement covers the top1c that IS the subject of this proposed rulemaking; and 4) the proposed rulemaking is authorized by specific sections of Texas Health and Safety Code (THSC), Chapter 382 (also known .as the Texas Clean Air Act), and the Texas Water Code, which are cited in the Statutory Authority section ofthis preamble. The proposed rule implements requirements of the Federal Clean Air Act (FCAA). Under 42 United States Code (USC), §7410, each state is required to adopt and**impl~ment ~**  s.IP containing adequate provisions to implement, atta1n, mamta1n, and enforce the NAAQS within the state. While 42 USC, §7410 generally does not require specific programs,**meth~ds,** or reductions in order to meet the standard, SIPs must Include enforceable emission limitations and other control measures, means or techniques (including economic incentives such as fees,

### ~arketable permits, and auctions of emissions rights), as well as schedules and timetables for compliance as may be necessary or appropriate to meet the**applicab~e requi~ements**  of the FCAA (meaning 42 USC, Chapter 85, Air Pollution**P~e** vention and Control). The provisions of the FCAA recogmze that states are in the best position to determine what programs and controls are necessary or appropriate in order to meet the NAAQS. This flexibility allows states, affected industry, and the public to collaborate on the best methods for attaining the NAAQS for the specific regions in the state. Even though the FCAA allows states to develop their own programs, this flexibility does not relieve a state from developing a program that meets the requirements of 42 USC, §7410. States are not free to ignore the requirements of 42 USC, §7410, and must develop programs and control measures to assure that their SIPs provide for implementation, attainment,**maintena.n.c~.** and enforcement of the NAAQS within the state. The specJfJc 1ntent ofthe proposed rulemaking is merely an**u~date** to**t~e** definiti?n of emergency situation in §117.1 0, ensunng cons1stency w1th ERGOT's new ERS program while also reflecting changes**m~de** by ERGOT to promote reliability during energy emergenc1es throughout the state under limited circumstances. While the proposed rulemaking**protect~** the environment or reduces risks to human health from enwonmental exposure, 1t does not constitute a majorenvironmental rule underTexas Government Code, §2001.0225(g)(3), because it does not adversely affect in a material way the economy, a sector of the economy, productivity, competition, orjobs, nor would the rulemaking adversely affect in a material way the environment, or the public health and safety ofthe state or a sector ofthe state. The**rul~­** making as a result is not subject to a regulatory 1mpact.**~nalys1s** underTexas Government Code, §2001.0225 because Jt JS not a major environmental rule. The requirement to provide a fiscal analysis of regulations in the Texas Government Code was amended by Senate Bill (SB) 633, 75th Legislature, 1997. The intent of SB 633 yvas to require agencies to conduct a regulatory impact analysis of extraordinary rules. These rules are identifie? in the statutory language as major environmental rules that Will have a matenal adverse impact and will exceed a requirement of state law, federal law, or a delegated federal program; or are adopted solely under the general powers ofthe TCEQ. With the**und~rs~anding ~hat**  this requirement would seldom apply, the commiSSion provided a cost estimate for SB 633 that concluded: based on an assessment of rules adopted by the agency in the past, it is not anticipated that the bill will have significant fiscal implications for the agency due to its limited application. The commission also noted that the number of rules that would require assessment under the provisions ofthe bill was not large. This conclusion was based, in part, on the criteria set forth in the bill that exempted rules from the full analysis unless the rule was a major environmental rule that exceeded a federal law. The FCAA does not always require specific programs, methods, or reductions in order to meet the NAAQS; thus, states must develop programs for each nonattainment area to help ensure that those areas will meet the attainment deadlines. Because ofthe ongoing need to address nonattainment**iss~e~** and to.meet the requirements of 42 USC, §7410, the commJssJon**rout1n~ly** proposes and adopts revisions to the SIP and rules. The legislature is presumed to understand this federal s.cheme. Ifeach ru!e proposed for inclusion in the SIP was considered to be a**m~J?r** environmental rule that exceeds federal law, then every revJsJon to the SIP would require the full regulatory impact analysis contemplated by SB 633. This conclusion is inconsistent with the conclusions reached by the commission in its cost estimate and by the Legislative Budget Board (LBB) in its fiscal notes. Since the legislature is presumed to understand the fiscal impacts of the bills it passes and that presumption is based on**i~fo~matio~** provided by state agencies and the LBB, the commiSSion believes that the intent of SB 633 was only to require the full regulatory impact analysis for rules that are extraordinary in nature

.. While the rule has a broad impact, that impact is no greaterthan IS necessary or appropriate to meetthe requirements ofthe FCAA. For these reasons, rules adopted for inclusion in the SIP fall under the exception in Texas Government Code, §2001.0225(a), because they are required by federal law. The commission has consistently applied this construction to its rules since this statute was enacted in 1997. Since that time, the legislature has revised the Texas Government Code, but left this provision substantially unamended. It is presumed that, when an agency interpretation is in effect at the t1me the legislature amends the laws without making substantial change 1n the statute, the legislature is deemed to have accepted the agency's interpretation (Central Power& Light Co. 

### v. Sharp, 919**S.~.2d** 485, 489 (Tex. App. Austin 1995), writ denied with per cunam opinion respecting anotherissue, 960 S.W.2d 617 (Tex. 1997); Bullock 

### v. Marathon Oil Co., 798 S.W.2d 353, 357 (Tex. App. Austin 1990, no writ) superseded by statute on another point oflaw, Tax Code §112.1 08, Other Actions Prohibited, as recognizedin, First State Bank ofDumas 

### v. Sharp, 863 S.W.2d 81, 83 (Tex. App. Austin 1993, no writ); Cf. Humble Oil 

### & Refining Co.



## PROPOSED RULES 

## November 2, 2012 37 TexReg 8725v. Calvert, 414 S.W.2d 172 (Tex. 1967); Dudney v. State Farm Mut. Auto Ins. Co., 9 S.W.3d 884, 893 (Tex. App. Austin 2000); Southwestern Life Ins. Co. v. Montemayor, 24 S.W.3d 581 (Tex. App. Austin 2000, pet. denied); and Coastallndust. WaterAuth. v. Trinity Portland Cement Div., 563 S.W.2d 916 (Tex. 1978)). The commission's interpretation of the regulatory impact analysis requirements is also supported by a change made to the Texas Administrative Procedure Act (APA) by the legislature in 1999. In an attempt to limit the number of rule challenges based upon APA requirements, the legislature clarified that state agencies are required to meet these sections ofthe APA against the standard of substantial compliance as required in Texas Government Code, §2001.035. The legislature specifically identified Texas Government Code, §2001.0225 as falling underthis standard. The commission has complied with the requirements of Texas Government Code, §2001.0225. Even if the proposed rulemaking constitutes a major environmental rule under Texas Government Code, §2001.0225(g)(3), a regulatory impact analysis is not required because this exemption is part ofthe commission's SIP for making progress toward the attainment and maintenance ofthe NMOS. Therefore, the proposed rulemaking does not exceed a standard set by federal law or exceed an express requirement of state law, since they are part of an overall regulatory scheme designed to meet, not exceed the relevant standard set by federal law (NMQS). The commission is charged with protecting air quality within the state and to design and submit a plan to achieve attainment and maintenance ofthe federally mandated NMQS. The Third District Court of Appeals upheld this interpretation in Brazoria County v. Texas Comm'n on Envtl. Quality, 128 S.W. 3d 728 (Tex. App. -Austin 2004, no writ). The specific intent ofthe proposed rulemaking is merely an update to the definition of emergency situation in §117.1 0, ensuring consistency with ERGOT's new ERS program while also reflecting changes made by ERGOT to promote reliability during energy emergencies throughout the state under limited circumstances. This proposal, therefore, does not exceed an express requirement of federal law. The amendment is needed to implement state law but does exceed those new requirements. Finally, this rulemaking was not developed solely under the general powers of the agency, but is authorized by specific sections ofTHSC, Chapter 382, which are cited in the Statutory Authority section ofthis preamble, including THSC, §382.012 and §382.019. Because this proposed rulemaking does not meet any of the four applicability requirements, Texas Government Code, §2001.0225(b) does not apply, and a regulatory impact analysis is not required. Written comments on the draft regulatory impact analysis determination may be submitted to the contact person at the address listed underthe Submittal ofComments section ofthis preamble. Takings Impact Assessment The commission evaluated the proposed rulemaking and performed an analysis of whether the proposed rulemaking constitutes a taking under Texas Government Code, Chapter 2007. The commission's preliminary assessment indicates Texas Government Code, Chapter 2007 does not apply. Under Texas Government Code, §2007.002(5), taking means: "(A) a governmental action that affects private real property, in whole or in part or temporarily or permanently, in a manner that requires the governmental entity to compensate the private real property owner as provided by the Fifth and Fourteenth Amend

## 37 TexReg 8726 November 2, 2012 Texas Register ments to the United States Constitution or Section 17 or 19, Article I, Texas Constitution; or (B) a governmental action that: (i) affects an owner's private real property that is the subject ofthe governmental action, in whole or in part or temporarily or permanently, in a manner that restricts or limits the owner's right to the property thatwould otherwise exist in the absence ofthe governmental action; and (ii) is the producing cause ofa reduction ofat least 25 percent in the market value of the affected private real property, determined by comparing the market value ofthe property as if the governmental action is not in effect and the market value of the property determined as if the governmental action is in effect." Promulgation and enforcement ofthe rulemaking would be neither a statutory nor a constitutional taking ofprivate real property. The primary purpose of the rule is an update to Chapter 117, Subchapter A to ensure consistency with ERGOT's new ERS program. This rule is not burdensome, restrictive, or limiting of rights to private real property because the rulemaking regulates the use of electric generators in certain limited emergency situations. Furthermore, the rulemaking benefits the public by potentially decreasing the likelihood of requiring firm load shedding (i.e., rolling black-outs) when additional control measures are needed to achieve or maintain attainment of the federal air quality standards through the use of electric generators. The rulemaking does not affect a landowner's rights in private real property because this rulemaking does not burden, restrict, or limit the owner's right to property, nor does it reduce the value of any private real property by 25% or more beyond that which would otherwise exist in the absence ofthe regulations. Therefore, this rule does not constitute a taking under Texas Government Code, Chapter 2007. Consistency with the Coastal Management Program The commission reviewed the proposed rulemaking and found that the proposal is subject to the Texas Coastal Management Program (CMP) in accordance with the Coastal Coordination Act, Texas Natural Resources Code, §§33.201 et seq., and therefore must be consistent with all applicable CMP goals and policies. The commission conducted a consistency determination for the proposed rules in accordance with Coastal Coordination Act Implementation Rules, 31 TAC §505.22 and found the proposed rulemaking is consistent with the applicable CMP goals and policies. The CMP goal applicable to the proposed rulemaking is the goal to protect, preserve, and enhance the diversity, quality, quantity, functions, and values ofcoastal natural resource areas (31 TAC §501.12(1)). The CMP policy applicable to the proposed rulemaking is the policy that commission rules comply with federal regulations in 40 Code of Federal Regulations to protect and enhance air quality in the coastal areas (31 TAC §501.32). The proposed rulemaking would not increase emissions of air pollutants and is, therefore, consistent with the CMP goal in 31 TAC §501.12(1) and the CMP policy in 31 TAC §501.32. Promulgation and enforcement ofthis rule will not violate or exceed any standards identified in the applicable CMP goals and policies because the proposed rule is consistent with these CMP goals and policies and because the rule does not create or have a direct or significant adverse effect on any coastal natural resource areas. Therefore, in accordance with 31 TAC §505.22(e), the commission affirms that this rulemaking action is consistent with CMP goals and policies.Written comments on the consistency ofthis rulemaking may be submitted to the contact person at the address listed under the Submittal of Comments section ofthis preamble. Effect on Sites Subject to the Federal Operating Permits Program The proposed amendmentwill not require any changes to federal operating permits. Announcement of Hearing The commission will hold a public hearing on this proposal in Austin on November 28, 2012, at 2:00p.m. in Building E, Room 201S, at the commission's central office located at 12100 Park 35 Circle. The hearing is structured for the receipt of oral 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 orother accommodation needs who are planning to attend the hearing should contact Sandy Wong, Office of Legal Services, at (512) 239-1802. Requests should be made as far in advance as possible. Submittal of Comments Written comments may be submitted to Bruce McAnally, 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.texas.govlruleslecomments! File size restrictions may apply to comments being submitted via the eComments system. All comments should reference Rule Project Number 2012-025-117-AI. The comment period closes December 5, 2012. Copies of the proposed rulemaking can be obtained from the commission's Web site at http:llwww.tceq.texas.gov/navlruleslpropose_adopt.html. For further information, please contact Ray Schubert, Air Quality Planning Section, (512) 239-6615. Statutory Authority The amendment is proposed under the authority of the following: Texas Water Code (TWC), §5.1 02, General Powers, §5.1 03, Rules, and §5.105, General Policy (these provisions authorize the commission to adopt rules necessary to carry out its powers and duties as well as all general policies under the TWC); Texas Health and Safety Code (THSC), Texas Clean Air Act (TCAA), §382.017, Rules, which authorizes the commission to adopt rules consistentwith the policy and purposes ofthe TCAA; THSC, §382.002, Policy and Purpose, which establishes the commission's purpose to safeguard the state's air resources, consistent with the protection of public health, general welfare, and physical property; THSC, §382.011, General Powers and Duties, which authorizes the commission to control the quality of the state's air; and THSC, §382.012, State Air Control Plan, which authorizes the commission to prepare and develop a general, comprehensive plan for the control of the state's air; and THSC, §382.051 (d), Permitting Authority of Commission; Rules, which authorizes the commission to adopt rules as necessary to comply with changes in federal law or regulations applicable to permits under THSC, Chapter 382. Finally, the amendment is also proposed under FCAA, 42 USC, §§7401, etseq., which requires states to submit SIP revisions that specify the manner in which the NAAQS will be achieved and maintained within each air quality control region of the state. The proposed amended implements TWC, §§5.1 02, 5.1 03, and 5.105; THSC, §§382.002, 382.011, 382.012, 382.016, 382.017, and 382.021; and FCAA, 42 USC, §§7401 et seq. §

### 117.10. Definitions. Unless specifically defined in the Texas Clean Air Act or Chapter 101 ofthis title (relating to General Air Quality Rules), the terms in this chapter have the meanings commonly used in the field ofair pollution control. Additionally, the following meanings apply, unless the context clearly indicates otherwise. Additional definitions for terms used in this chapter are found in §3.2 and §101.1 ofthis title (relating to Definitions). (1) Annual capacity factor--The total annual fuel consumed by a unit divided by the fuel that could be consumedby the unit ifoperated at its maximum rated capacity for 8,760 hours per year. (2) Applicable ozone nonattainment area--The following areas, as designated under the 1990 Federal Clean Air Act Amendments. (A) Beaumont-Port Arthur ozone nonattainment area- -An area consisting ofHardin, Jefferson, and Orange Counties. (B) Dallas-Fort Worth ozone nonattainment area--An area consisting ofCollin, Dallas, Denton, and Tarrant Counties. (C) Dallas-Fort Worth eight-hour ozone nonattairunent area--An area consisting of Collin, Dallas, Denton, Ellis, Johnson, Kaufman, Parker, Rockwall, and Tarrant Counties. (D) Houston-Galveston-Brazoria ozone nonattainment area--An area consisting ofBrazoria, Chambers, Fort Bend, Galveston, Harris, Liberty, Montgomery, and Waller Counties. (3) Auxiliary steam boiler--Any combustion equipment within an electric power generating system, as defined in this section, that is used to produce steam for purposes other than generating electricity. An auxiliary steam boiler produces steam as a replacement for steam produced by another piece ofequipment that is not operating due to planned or unplanned maintenance. (4) Average activity level for fuel oil firing--The product of an electric utility unit's maximum rated capacity for fuel oil firing and the average annual capacity factor for fuel oil firing for the period from January 1, 1990, to December 31, 1993. (5) Block one-hour average--An hourly average of data, collected starting at the beginning ofeach clock hour ofthe day and continuing until the start ofthe next clock hour. (6) Boiler--Any combustion equipment fired with solid, liquid, and/or gaseous fuel used to produce steam or to heat water. (7) Btu--British thermal unit. (8) Chemical processing gas turbine--A gas turbine that vents its exhaust gases into the operating stream ofa chemical process. (9) Continuous emissions monitoring system (CEMS)-- The total equipment necessary for the continuous determination and recordkeeping of process gas concentrations and emission rates in units ofthe applicable emission limitation. (10) Daily--A calendar day starting at midnight and continuing until midnight the following day. (11) Diesel engine--A compression-ignited two- or fourstroke engine that liquid fuel injected into the combustion chamber ignites when the air charge has been compressed to a temperature sufficiently high for auto-ignition.



## PROPOSED RULES 

## November 2, 2012 37 TexReg 8727(12) Duct burner--A unit that combusts fuel and that is placed in the exhaust duct from another unit (such as a stationary gas turbine, stationary internal combustion engine, kiln, etc.) to allow the firing ofadditional fuel to heat the exhaust gases. (13) Electric generating facility (EGF)--A unit that generates electric energy for compensation and is owned or operated by a person doing business in this state, including a municipal corporation, electric cooperative, or river authority. (14) Electric powergenerating system--One electric power generating system consists ofeither: (A) for the purposes of Subchapter C of this chapter (relating to Combustion Control at Major Utility Electric Generation Sources in Ozone Nonattainment Areas), all boilers, auxiliary steam boilers, and stationary gas turbines (including duct burners used in turbine exhaust ducts) at electric generating facility (EGF) accounts that generate electric energy for compensation; are owned or operated by an electric cooperative, municipality, river authority, public utility, ora Public Utility Commission ofTexas regulated utility, or any ofits successors; and are entirely located in one ofthe following ozone nonattainment areas: 

### (i) Beaumont-Port Arthur; 

### (ii) Dallas-Fort Worth; 

### (iii) Dallas-Fort Worth eight-hour; or (iv) Houston-Galveston-Brazoria; (B) for the purposes of Subchapter E, Division I of this chapter (relating to Utility Electric Generation in East and Central Texas), all boilers, auxiliary steam boilers, and stationary gas turbines at EGF accounts that generate electric energy for compensation; are owned or operated by an electric cooperative, independent power producer, municipality, river authority, or public utility, or any of its successors; and are located in Atascosa, Bastrop, Bexar, Brazos, Calhoun, Cherokee, Fannin, Fayette, Freestone, Goliad, Gregg, Grimes, Harrison, Henderson, Hood, Hunt, Lamar, Limestone, Marion, McLennan, Milam, Morris, Nueces, Parker, Red River, Robertson, Rusk, Titus, Travis, Victoria, or Wharton County; or (C) for the purposesofSubchapterB ofthis chapter (relating to Combustion Control at Major Industrial, Commercial, and Institutional Sources in Ozone Nonattainment Areas), all units in the Houston-Galveston-Brazoria ozone nonattainment area that generate electricity butdo not meetthe conditions specified in subparagraph (A) ofthis paragraph, including, but not limited to, cogeneration units and units owned by independent power producers. (15) Emergency situation--As follows. (A) An emergency situation is any ofthe following: 

### (i) an unforeseen electrical power failure from the serving electric power generating system; 

### (ii) the period of time that an Electric Reliability Council ofTexas, Inc. (ERCOT)-issued emergency notice (as defined in 

### ERCOT Protocols, Section 2: Definitions and Acronyms (Jw1e I, 2012) and issued as specified in 

### ERCOT Protocols, Section 6: 

### Adiustment Period and Real-Time Operations (June I, 2012))[, as 4ffi.Betl ffi**~** Proteeels, &etien .£7 Definitions 

### endAcronyms tAj3fil**~** -2006}, 

### -issHed 

## ey the EleetFie Reliability**~ ~** **~** 

### In&. (ERGOT)**as~** ffi**~**Proteeels, &etien J.;. Disj9flteh tAj3fil.U,-2006},] is applicable tothe serving electric powergenerating system. The emergency situation is considered to end upon expiration ofthe emergency notice issued by ERCOT;



## 37

## TexReg 8728 November 2, 2012 Texas Register (iii) an unforeseen failure ofon-site electrical transmission equipment (e.g., a transformer); (iv) an unforeseen failure ofnatural gas service; (v) an unforeseen flood or fire, or a life-threatening situation; [ff] 

### (vi) operation ofemergency generators for Federal Aviation Administration licensed airports, military airports, ormarwed space flight control centers for the purposes ofproviding power in anticipation ofa power failure due to severe storm activity_;_Q!H (vii) operation ofan emergency generator as part of an ERCOT emergency response program ifthe operation is in direct response to an instruction by ERCOT during the period ofan ERCOT emergency notice as specified in clause (ii) ofthis subparagraph. (B) An emergency situation does not include: [ eperatiea fur**~ ~**  SUjJj'llyiag pewer fur distributiea te 

# tae e-le€trie grid, eperatiea fur trailliag J'lUFflSSes, eF ffiher fereseeable**~]** (i) operation for training purposes or other foreseeable events; or {ii) operation for purposes of supplying power for distribution to the electric grid, except as specified in subparagraph (A)(vii) ofthis paragraph. (16) Functionally identical replacement--A unit that performs the same function as the existing unit that it replaces, with the conditionthattheunitreplacedmustbe physicallyremovedorrendered permanently inoperable before the unit replacing it is placed into service. ( 17) Heat input--The chemical heat released due to fuel combustion in a unit, using the higher heating value ofthe fuel. This does not include the sensible heat ofthe incoming combustion air. In the case ofcarbon monoxide (CO) boilers, the heat input includes the enthalpy ofall regenerator off-gases and the heat ofcombustion ofthe incoming CO and ofthe auxiliary fuel. The enthalpy change ofthe fluid catalytic cracking unitregenerator off-gasesrefers to the total heatcontent ofthe gas at the temperature it enters the CO boiler, referring to the heat content at 60 degrees Fahrenheit, as being zero. (18) Heattreatfurnace--A furnace thatis used in the manufacturing, casting, or forging ofmetal to heatthe metal so as to produce specific physical properties in that metal. (19) High heat release rate--A ratio ofboiler design heat input to firebox volume (as bounded by the front firebox wall where the burner is located, the firebox side waterwall, and extending to the leveljust below or in front ofthe first row ofconvection pass tubes) greaterthan or equal to 70,000 British thermal units per hourper cubic foot. (20) Horsepower rating--The engine manufacturer's maximum continuous loadrating at the lesser ofthe engine or driven equipment's maximum published continuous speed. (21) Incinerator--As follows. (A) For the purposes ofthis chapter, the term "incinerator" includes both ofthe following: 

### (i) a control device that combusts or oxidizes gases or vapors (e.g., thermal oxidizer, catalytic oxidizer, vapor combustor); and 

### (ii) an incinerator 

### as defined in §101.1 ofthis title (relating to Definitions).(B) The term "incinerator" does not apply to boilers or process heaters as defined in this section, or to flares as defined in §101.1 ofthis title. (22) Industrial boiler--Any combustion equipment, not including utility or auxiliary steam boilers as defined in this section, fired with liquid, solid, or gaseous fuel, that is used to produce steam or to heat water. (23) International Standards Organization (ISO) conditions--ISO standard conditions of 59 degrees Fahrenheit, 1.0 atmosphere, and 60% relative humidity. (24) Large utility system--All boilers, auxiliary steam boilers, and stationary gas turbinesthat are located in the Dallas-FortWorth or the Dallas-Fort Worth eight-hour ozone nonattainment area, and were part ofone electric power generating system on January 1, 2000, thathad acombinedelectric generating capacity equalto orgreaterthan 500 megawatts. (25) Lean-burn engine--A spark-ignited or compressionignited, Otto cycle, diesel cycle, or two-stroke engine that is not capable ofbeing operated with an exhaust stream oxygen concentration equal to or less than 0.5% by volume, as originally designed by the manufacturer. (26) Low annual capacity factor boiler, process heater, or gas turbine supplemental waste heat recovery unit--An industrial, commercial, or institutional boiler; process heater; or gas turbine supplemental waste heat recovery unit with maximum rated capacity: (A) greater than or equal to 40 million British thermal units perhour (.MMBtu/hr), but less than 100 .MMBtu/hr and an annual heat input less than or equal to 2.8 (10 11) British thermal units peryear (Btu/yr), based on a rolling 12-month average; or (B) greater than or equal to 100 MMBtu/hr and an annual heat input less than or equal to 2.2 (10 11 ) Btu/yr, based on a rolling 12-month average. (27) Low annual capacity factor stationary gas turbine or stationary internal combustion engine--A stationary gas turbine or stationary internal combustion engine that is demonstrated to operate less than 850 hours per year, based on a rolling 12-month average. (28) Low heat release rate--A ratio of boiler design heat input to firebox volume less than 70,000 British thermal units perhour per cubic foot. (29) Major source--Any stationary source or group of sources located within a contiguous area and under common control that emits or has the potential to emit: (A) at least 50 tons per year (tpy) of nitrogen oxides (NOx) and is located in the Beaumont-PortArthur ozone nonattainment area: (B) at least 50 tpy ofNOxand is located in the DallasFort Worth or Dallas-Fort Worth eight-hour ozone nonattainment area; (C) at least 25 tpy ofNOxand is located in the HoustonGalveston-Brazoria ozone nonattainment area; or (D) the amount specified in the major source definition contained in the Prevention ofSignificant Deterioration ofAir Quality regulations promulgated by the United States Environmental Protection Agency in 40 Code of Federal Regulations §52.21 as amended June 3, 1993 (effective June 3, 1994), and is located in Atascosa, Bastrop, Bexar, Brazos, Calhoun, Cherokee, Coma!, Fannin, Fayette, Freestone, Goliad, Gregg, Grimes, Harrison, Hays, Henderson, Hood, Hunt, Lamar, Limestone, Marion, McLennan, Milam, Morris, Nueces, Red River, Robertson, Rusk, Titus, Travis, Victoria, or Wharton County. (30) Maximum rated capacity--The maximum design heat input, expressed in million British thermal units per hour, unless: (A) the unit is a boiler, utility boiler, or process heater operated above the maximum design heat input (as averaged over any one-hour period), in which case the maximum operated hourly rate must be used as the maximum rated capacity; or (B) the unit is limited by operating restriction or permit condition to a lesser heat input, in which case the limiting condition must be used as the maximum rated capacity; or (C) the unit is a stationary gas turbine, in which case the manufacturer's rated heat consumption at the International Standards Organization (ISO) conditions must be used as the maximum rated capacity, unless limited by permit condition to a lesser heat input, in which case the limiting condition mustbe used as the maximum rated capacity; or (D) the unit is a stationary, internal combustion engine, in which case the manufacturer's rated heat consumption at Diesel EquipmentManufacturer's Association orISO conditions must be used as the maximum rated capacity, unless limited by permit condition to a lesser heat input, in which case the limiting condition must be used as the maximum rated capacity. (31) Megawatt (MW) rating--The continuous MW output rating or mechanical equivalent by a gas turbine manufacturer at International Standards Organization conditions, without consideration to the increase in gas turbine shaft output and/or the decrease in gas turbine fuel consumption by the addition ofenergy recovered from exhaust heat. (32) Nitric acid--Nitric acid that is 30% to 100% in strength. (33) Nitric acid production unit--Any source producing nitric acid by either the pressure or atmospheric pressure process. (34) Nitrogen oxides (NO)--The sum ofthe nitric oxide and nitrogen dioxide in the flue gas or emission point, collectively expressed as nitrogen dioxide. (35) Parts per million by volume (ppmv)--All ppmv emission specifications specified in this chapter are referenced on a dry basis. When required to adjust pollutant concentrations to a specified oxygen (0,) correction basis, the following equation must be used. Figure: 30 TAC §117.10(35) (No change.) (36) Peaking gas turbine or engine--A stationary gas turbine or engine used intermittently to produce energy on a demand basis. (37) Plant-wide emission rate--The ratio ofthe total actual nitrogen oxides mass emissions rate discharged into the atmosphere from affected units at a major source when firing at their maximum rated capacity to the total maximum rated capacities for those units. (38) Plant-wide emission specification--The ratio ofthe total allowable nitrogen oxides mass emissions rate dischargeable into the atmosphere from affected units at a major source when firing at their maximum rated capacity to the total maximum rated capacities for those units. (39) Predictive emissions monitoring system (PEMS)-- The total equipment necessary for the continuous determination and recordkeeping ofprocess gas concentrations and emission rates using process or control device operating parameter measurements and a



## PROPOSED RULES November 2, 2012 37 TexReg 8729conversion equation or computer program to produce results in units ofthe applicable emission limitation. (40) Process heater--Any combustionequipmentfired with liquid and/or gaseous fuel that is used to transfer heat from combustion gases to a process fluid, superheated steam, or water for the purpose ofheating the process fluid or causing a chemical reaction. The term "process heater" does not apply to any unfired waste heat recovery heaterthat is used to recover sensible heat from the exhaust ofany combustion equipment, or to boilers as defined in this section. (41) Pyrolysis reactor--A unit that produces hydrocarbon products from the endothermic cracking offeedstocks such as ethane, propane, butane, and naphtha using combustion to provide indirect heating for the cracking process. (42) Reheat furnace--A furnace that is used in the manufacturing, casting, or forging ofmetalto raise the temperature ofthatmetal in the course ofprocessing to a temperature suitable for hot working or shaping. (43) Rich-bum engine--A spark-ignited, Otto cycle, fourstroke, naturally aspirated or turbocharged engine that is capable of being operatedwith an exhaust stream oxygenconcentrationequalto or less than 0.5% by volume, as originally designed by the manufacturer. (44) Small utility system--All boilers, auxiliary steam boilers, and stationary gas turbines that are located in the Dallas-Fort Worth or the Dallas-Fort Worth eight-hour ozone nonattainment area, and were part ofone electric power generating system on January 1, 2000, that had a combined electric generating capacity less than 500 megawatts. (45) Stationary gasturbine--Any gas turbine systemthat is gas and/or liquid fuel fired with or without power augmentation. This unit is either attached to a foundation or is portable equipment operated at a specific minor or major source for more than 90 days in any 12-month period. Two or more gas turbines powering one shaft must be treated as one unit. (46) Stationary internal combustion engine--A reciprocating engine that remains or will remain at a location (a single site at a building, structure, facility, or installation) for more than 12 consecutive months. Included in this definition is any engine that, by itselfor in or on a piece ofequipment, is portable, meaning designed to be and capable ofbeing carried or moved from one location to another. Indicia ofportability include, but are not limitedto, wheels, skids, carrying handles, dolly, trailer, or platform. Any engine (or engines) that replaces an engine at a location and that is intended to perform the same or similar function as the engine being replaced is included in calculating the consecutive residence time period. An engine is considered stationary ifit is removed from one location for a period and then returned to the same location in an attempt to circumventthe consecutive residence time requirement. Nonroad engines, as defined in 40 Code ofFederalRegulations §89.2, are notconsidered stationary for the purposes ofthis chapter. ( 47) System-wide emission rate--The ratio ofthe total actual nitrogen oxides mass emissions rate discharged into the atmosphere from affected units in an electric power generating system or portion thereoflocated within a single ozone nonattainment area when firing at their maximum rated capacity to the total maximum rated capacities for those units. For fuel oil firing, average activity levels must be used in lieu ofmaximum rated capacities for the purpose ofcalculating the system-wide emission rate. (48) System-wide emission specification--The ratio ofthe total allowable nitrogen oxides mass emissions rate dischargeable into the atmosphere from affected units in anelectric powergenerating sys

## 37 TexReg 8730 November 2, 2012 Texas Register tern orportionthereoflocatedwithin a single ozonenonattainment area whenfiring attheirmaximumrated capacityto thetotal maximumrated capacities for those units. For fuel oil firing, average activity levels must be used in lieu ofmaximum rated capacities for the purpose of calculating the system-wide emission specification. (49) Thirty-day rolling average--An average, calculated for each day thatfuel is combusted in a unit, ofall the hourly emissions data for the preceding 30 days that fuel was combusted in the unit. (50) Twenty-fourhourrolling average--An average, calculated for each hour that fuel is combusted (or acid is produced, for a nitric or adipic acid production unit), ofall the hourly emissions data for the preceding 24 hours that fuel was combusted in the unit. (51) Unit--A unit consists ofeither: (A) for the purposes of§§ 117.105, 117.205, 117.305, 117.1005, 117.1105, and 117.1205 ofthis title (relating to Emission Specifications for Reasonably Available Control Technology (RACT)) and each requirement of this chapter associated with §§117.105, 117.205, 117.305, 117.1005, 117.1105, and 117.1205 ofthis title, any boiler, process heater, stationary gas turbine, or stationary internal combustion engine, as defined in this section; (B) for the purposes of §§117.110, 117.210, 117.310, 117.1010, 117.1110, and 117.1210 of this title (relating to Emission Specifications for Attainment Demonstration) andeach requirement of this chapter associated with §§117.110, 117.210, 117.310, 117.1010, 117.1110, and 117.1210 ofthis title, any boiler, process heater, stationary gas turbine, or stationary internal combustion engine, as defined in this section, or any other stationary source ofnitrogen oxides (NOJ at a major source, as defined in this section; (C) for the purposes of§ 117.2010 ofthis title (relating to Emission Specifications) and each requirement ofthis chapter associated with§ 117.2010 ofthis title, any boiler, processheater, stationary gas turbine (including any duct burner in the turbine exhaust duct), or stationary internal combustion engine, as defined in this section; (D) for the purposes of§ 117.2110 ofthis title (relating to Emission Specifications for Eight-Hour Attainment Demonstration) and each requirement ofthis chapter associated with §117.2110 ofthis title, any stationary internal combustion engine, as defined in this section; (E) for the purposes of§ 117.3310 ofthis title (relating to Emission Specifications for Eight-Hour Attainment Demonstration) and each requirement ofthis chapter associated with§ 117.3310 ofthis title, any stationary internal combustion engine, as defined in this section; or (F) for the purposes of§117.410 and §117.1310 ofthis title (relating to Emission Specifications for Eight-Hour Attainment Demonstration) and each requirement ofthis chapter associated with §117.410 and§ 117.1310 ofthis title, any boiler, processheater, stationary gas turbine, or stationary internal combustion engine, as defined in this section, or any other stationary source ofNOx at a major source, as defined in this section. (52) Utility boiler--Any combustion equipment owned or operated by an electric cooperative, municipality, river authority, public utility, orPublic Utility Commission ofTexas regulated utility, fired with solid, liquid, and/or gaseous fuel, used to produce steam for the purpose of generating electricity. Stationary gas turbines, including any associated ductburners and unfired waste heat boilers, are not considered to be utility boilers. (53) Wood--Wood, wood residue, bark, or any derivative fuel or residue thereofin any form, including, but not limited to, saw-dust, sander dust, wood chips, scraps, slabs, millings, shavings, and processed pellets made from wood or other forest residues. This agency hereby certifies thatthe proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt. Filed with the Office of the Secretary of State on October 19, 2012. TRD-201205434 Robert Martinez Director. Environmental Law Division Texas Commission on Environmental Quality Earliest possible date of adoption: December 2, 2012 For further information, please call: (512) 239-2141 

# • • CHAPTER 291. UTILI Y REGULATIONS The Texas Commission on nvironmental Quality (TCEQ, agency, or commission) propos s to amend §§291.22, 291.102, 291.105, and 291.113. Background and Summary oft Factual Basis for the Proposed Rules In 2011, the 82nd Legislature assed Senate Bill (SB) 573, relating to the granting of certifi ates of public convenience and necessity (CCNs). SB 573 am nded Texas Water Code (TWC), §§13.245, 13.2451, 13.246, a 13.254. TWC, §13.245(b) and (c-1)- (c-3) were amended to pecify that if a municipality has not consented to the inclusio of a CCN within its boundaries or extraterritorial jurisdiction ( TJ) before the 180th day after a landowner or retail public utilit has made a formal request for service then the TCEQ may rant the CCN to the retail public utility without the municipali y's consent under certain conditions. SB 573 also provided a ditional criteria which the TCEQ shall consider before it grants he CCN to the retail public utility. If the CCN is granted, the TC Q must include a condition that facilities will be designed and onstructed according to the municipality's standards. TWC, § 3.245(c-4) and (c-5) were added by SB 573 to specify the coun ies in which the provisions ofthe TWC, §13.254(c-1)- (c-3) do ot apply. TWC, §13.2451(b) was amen ed by SB 573 to specify that the TCEQ may not extend a mu icipality's CCN beyond its ET

### J if a landowner elects to opt-out as allowed by TWC, §13.246(h). TWC, §13.2451(b-1) and (b-2 were added to specify the counties in which the provision do s not apply. TWC, §13.246(h) was amen ed by SB 573 to stipulate that a CCN applicantthat has land re oved by landowner election may not be required to provide se ice to the removed land for any reason. TWC, §13.254 was amended by SB 573 to change the requirements for when the TCEQ m y revoke a CCN, modify the requirements for petitioning for the release of land from a CCN, and also shorten the TCEQ's review period for reviewing a release petition from 90 to 60 c lendar days. TWC, §13.254(a-5) and (a-6) created a process allowing a landowner of at least a 25-acre tract to request an expedited release from a CCN in counties meeting specific crit ria. TWC, §13.254(a-7) added requirements for notice of utility ate changes. TWC, §13.254(a-8) modified the criteria for revie ing a release petition filed under TWC, §13.254(a-1). TWC, § 3.254(a-9)- (a-11) were added to specify the counties in which t e modifications to the CCN release process made by TWC, § 3.254(a-8) do not apply. In a corresponding rulemaking published in this issue of the Texas Register, the commissio also proposes revisions to 30 TAC Chapter 293, Water Distri s. Section by Section Discussion In addition to implementation o the state law discussed previously, the commission propose administrative changes to conform with Texas Register requir ments. §291.22, Notice ofIntent to Ch nge Rates The commission proposes to mend §291.22(a)(4) to remove the word "and"; adding §291. 2(a)(5)

- (7); and renumbering existing subsection (a)(5). The roposed amendment specifies that a utility shall include with e statement of intent provided to each landowner or ratepayer a notice of a proceeding under §291.113, the reason or reason for the proposed rate change, and any bill payment assistan e program available to low-income ratepayers. The commi sion proposes this amendment to implement the changes ma e to TWC, §13.254, in SB 573 and for consistency with Texas egisterrequirements. §291.102, Criteria for Conside ng and Granting Certificates or Amendments The commission proposes to a end §291.1 02(h) to specify that an applicant for a CCN that has land removed from its proposed service area because of a land wner's election under this subsection may not be required to provide service to the removed land for any reason, including he violation of law or commission rules by the water and/o sewer system of another person. The commission propose this amendment to implement the changes made to TWC, §1 .246(h) in SB 573. §291.1 05, Contents ofCertifica ofConvenience andNecessity Applications The commission proposes to amend §291.1 05(b)(2) by removing the reference of "parag aph (3)" and replacing it with a reference to "paragraphs (3)- 7)." The proposed amendment specifies that, except as provi ed by paragraphs (3)

- (7), the commission may not grant a CC to a retail public utility for a service area within the boundaries or ET

### J of a municipality without the consent ofthe municipality. he municipality may not unreasonably withhold its consent. s a condition of the consent, a municipality may require that al water and/or sewer facilities be designed and constructed in a ordance with the municipality's standards for facilities. The co mission proposes this amendment to implement changes m de to TWC, §13.245(b) by SB 573. The commission propose to add §291.1 05(b)(4) and its subdivisions to implement cha ges made to TWC, §13.245(b) by SB 573. The commission reposes adding §291.105(b)(4) to denote that the commissio may grant a CCN to a retail public utility without a munic pality's consent under certain circumstances as outlined in p oposed §291.105(b)(4)(A)- (C) if the municipality has not cons nted under §291.105(b) before the 180th day after the date landowner or a retail public utility submits a formal reques for service to the municipality. Proposed §291.105(b)(4)(A) sp cifies that the commission may grant the CCN without the m nicipality's consent if the commission makes findings requir by §291.1 05(b)(3). Proposed §291.1 05(b)(4)(B) specifies tha the commission may grant the CCN without the municipality's consent if the municipality has not entered into a binding com itment to serve the requested area on or before the 180th day after the date the formal



## PROPOSED RULES 

## November 2, 2012 37 TexReg 8731

# TESTIMONY

### Reference Number
W-1

W-2
W-3
W-4



### W-5
W-6
W-7
W-8 

### INDEX OF WRITTEN TESTIMONY

Submittedby
John Fainter, Jr., Association ofElectric Companies of Texas
Donald C. DiCristofaro, CCM, Blue SkyEnvironmental LLC
Patrick Blanchard, Calpine Corporation
Nathan Bigbee for Chad V. Seely, Electric Reliability Council ofTexas, fuc.
Richard H. Counihan, EnerNOC, fuc.
William A. Scott, Exelon Corporation Craig R. Eckberg, NRG Companies Guy Donaldson, United States Environmental Protection Agency

# ···AECT

ASSOCIATION OF ELECTRIC COMPANIES OF TEXAS, INC 1005 Congress Ave. Suite 600 • Austin, Texas 78701 Phone 512.474.6725 • Fax 512.474.9670 www.aect.net • info@aect.net 

# W-1

Rick Bluntzer, Chair • Don Clevenger, Vice Chair •John W. Fainter, President &CEO •Walton L. 

### Baum, Executive Vice President •Christopher Miller, Corporate Secretary 

## December 5, 2012
VIA ELECTRONIC SUBMISSION & 

## U.S. MAIL
Bruce McAnally MC205 Office ofLegal Services Texas Commission on Environmental Quality P.O. Box 13087 Austin, Texas 78711-3087
Re: Comments of the Association of Electric Companies of Texas to proposed rules to revise definition of "emergency situation" in Section 117.10; Rule ProjectNumber 2012-025-117-AI; November 2, 2012 Texas Register (37 Tex. Reg. 8722)
Dear Mr. McAnally:
The Association of Electric Companies of Texas (AECT) appreciates the opportunity to submit these comments regarding the TCEQ's proposed revisions to the definition of"emergency situation" in Section 117.10.
AECT is an industry trade assoCiation representing electric companies in Texas. Organized in 1978, AECT provides a forum for member companies' representatives to exchange information on their industry, and to communicate with state and federal governmental officials. This letter is being submitted on behalf of the following AECT members: AEP Texas, CenterPoint Energy, El Paso Electric, Entergy, GDF SUEZ, Nextera Energy, Lone Star Transmission, Oncor, TXU Energy, Luminant, NRG, Reliant, TNMP, and Xcel Energy.
AECT supports the proposed revisions to the definition of"emergency situation" in Section 117.10. AECT believes such revisions are needed to help ensure that Chapter 117 requirements do not prevent the new Emergency Response Service (ERS) program from working the way it is designed to work, which is to decrease the likelihood of rolling black-outs during an ERCOT-declared energy emergency.
Because AECT has concerns about how the use of term "demand response" has been expanded to include non-emergency situations, AECT supports the proposed new language in the definition of "emergency situation" that states that the operation of an emergency generator is an "emergency situation" ifsuch operation is part ofan ERCOT 

# m .AMJRH:AN' • 

### CenterPoint.

## ~ . 

# 1M• -='

.

## ~ Green •

## ~ I!J.fCFRIC fnenru

- 

### Constellation. 

## Entergy.

- ExelonGenerat1on.**~** 

### Mounta.•n '-J•Intematlonal 

### Power POWIR •:Jr**r,~r.,....:-.c:r.""''** o,.
...**~** uu 'o"'u o' •u•n•
-- Enera:y**~~.;e** 

### L®NEStat:' 

# D

# ~~r~ra 

# nfig*'&G)R**relianf~~-** ·-

# ~)Tn-!J! (lxce/Energy·**~** 

### Luminant

......... " :.....;/ anNRGcompany

## ERS program and is in direct response to an instruction by ERCOT during the period ofan ERCOT emergency notice.
AECT appreciates the opportunity to submit these comments. Please contact me at 512 4 74-6725 ifyou have any questions.

2
AUSTIN_l\683710v2 46784-1 12/04/2012 

## John Fainter, Jr. President and CEO

# BLUE SKY ENVIRONMENTAL LLC

December4, 20 12

Mr. Bruce McAnally MC205 Office ofLegal Services Texas Commission on Environmental Quality P.O. Box 13087 Austin, TX 78711-3087
RE: Rule Project Number 20 12-025-117-Al
Dear Mr. McAnally: 

# W-2

Blue Sky Environmental LLC ("Blue Sky") is submitting these comments as noticed in the Texas Register dated November 2, 2012 regarding Texas Commission on Environmental Quality ("TCEQ") proposed changes to 30 TAC § 101.379 (Chapter 101. General Air Quality Rules; Subchapter H. Emissions Banking and Trading; Division 4. Discrete Emission Credit Banking and Trading) and 30 TAC §101 .117.10 (Chapter 117. Control ofAir Pollution from Nitrogen Compounds; Subchapter A. 

## Definitions). For many years, Blue Sky has worked with EnerNOC, Inc., a leading provider oftechnology-enabled demand response ("DR'') and demand-side management solutions, to ensure that engines in Texas are properly permitted under TCEQ air regulations for DR use. In 2008, I worked with the TCEQ to obtain the attached letter dated January 29, 2008 from Richard Hyde, confirming that

...ifan emergency generator is authorized and operating under Permit by Rule (PBR) 106.511, that PBR I06.5I I does not prohibit the participation ofan emergency generator in the ERCOT ElLS 1

## Program. Ifthe generator is run when directed by ERCOT as part of the ElLS declared emergency at Step 3 of their EECP2

, 

## they will not require additional authorization, as long as the generator continues to meet all requirements of PBR I06.51 I. including the restrictions for the number ofhours the generator will operate.

1

### Emergency Interruptible Load Service

2 

### Emergency Electric Curtailment Plan



### P.O. Box 6o3 • Hingham, 

### MA • 02043 Telephone 61r834-84o8 •

### Fax 857-22I-9464

## Mr. Bruce McAnally TCEQ December 4, 

## 20 12 Page2

Blue Sky strongly endorses the TCEQ proposal to (I) amend 30 TAC §

## t01.379 to update the reference in agency rules to reflect the versions ofthe ERCOT Protocols effective June I, 20 12J to be consistent with § 

## 117.I0 and (2) amend 30 TAC §

## t t7.10 to include in its definition of emergency operation ofengines for purposes ofsupplying powerfor distribution to the electric grid since under the Emergency Response Service ("ERS") program, qualified participants may provide power back into the electric grid for sale during an ERCOT-declared emergency under limited circumstances. The proposed rulemaking will update the definition ofemergency in §117.10 to ensure consistency with ERCOT's new ERS program. The proposed amendment will reference the most recent version ofthe ERCOT protocols. The proposed amendment will also reflect changes made by ERCOT to promote reliability during energy emergencies by allowing the operation ofgenerators for purposes ofselling power to the electric grid under limited circumstances. Emergency DR programs, such as the ERS program which has replaced the ElLS, have been implemented to prevent brownouts and blackouts. To date, emergency DR programs in Texas have been rarely called. Emergency DR programs are truly reserved for severe, emergency conditions. Emergency DR programs are more thanjust turning on emergency diesel generators. They also includes curtailment (e.g., companies reducing their HVAC and lighting loads, manufacturing facilities shutting offtheir machines, etc.) to demand from the electric power grid. In order to make curtailment attractive to potential customers, often the inclusion ofa backup generator is required since the curtailment piece alone can be too small. This curtailment results in a reduction ofair pollutants during emergency DR events.
Numerous states have formally changed their definition ofemergency or otherwise allow the use ofemergency engines in emergency DR programs under their existing regulations (e.g., to use the enginesjust before lights out rather than waiting for a blackout). In addition to Texas, these states include Connecticut, Massachusetts, Vermont, Rhode Island, New Hampshire, Maine, New York, Maryland, Pennsylvania, fllinois, Indiana, Ohio, West Virginia, Michigan, Virginia, and Florida.
The TCEQ has requested comment on whether an ERCOT energy emergency alert ("EEA'') level should be specitied in § 

## 117.10( l5)(A)(vii). In order to account for emergency DR programs that are called by Texas utilities when they are experiencing voltage reductions so they would not be classified as an "ERCOT-declared emergency" nor would an ERCOT EEA level be called, it is recommended that TCEQ: 1) Expand the term "ERCOT-declared emergency" to "ERCOT or Utility-declared emergency" in §I01.379(c)(2)(D) and add to the end of§ 117.10(15)(A)(vii)

..or for a utility declared emergency."

3 

### The reference in §

### 10 1.379(C)(2)(D) for an ERCOT-declared emergency notice was changed to "as defined in ERCOT Protocols Section 2: Definitions and Acronyms (June I, 2012) and issued as specified in ERCOT Protocols, Section 6: Adjustment Period and Real-Time Operations (June I, 20 12)."



### P.O. Box 6o3 • Hingham, 

### MA • 02043 Telephone 6r7-834-84o8 •Fax 857-221-9464

## Mr. Bruce McAnally 

# TCEQ December 4, 20

## 12

2) 

## Not specify an ERCOT EEA level in§ll7.10(15)(A)(vii). Page3

For the past three years, EnerNOC and Blue Sky have been working closely with the United States Environmental Protection Agency ("US EPA") regarding how engines participating in DR programs should be treated in the National Emission Standards for Hazardous Air Pollutants ("NESHAP") for Reciprocating Internal Combustion Engines ("RICE") under40 CFR 63 Subpart ZZZZ 

## and the New Source Performance Standards ("NSPS") under 40 CFR 60 Subpart Illl and 

## JJJJ. In June, EPA published a Notice ofProposed Rulemaking ("NOPR") in the Fedeml Register with proposed changes to both the NESHAP and NSPS regarding the use of engines in demand response programs. For emergency DR, EPA proposed the declaration of EEA Level 2 as per North American Electric Reliability Corpomtion ("NERC") Standard EOP002-3, Capacity and Energy Emergencies (see the proposed changes to 63.6640(t)(2)(ii) in the NOPR for the NESHAP and the similar changes to the NSPS). EPA also proposed voltage or frequency deviations of5 percent or greater below standard voltage or frequency (see the proposed changes to 63.6640(t)(2)(iii) in the NOPR for the NESHAP and the similar changes to the NSPS). Thus, since the owners and operators ofemergency engines will need to comply with the more conservative state orfederal regulations and EPA will expand the emergency DR trigger to include voltage or frequency reductions, it is recommended that TCEQ not reference an EEA Level and stay with "ERCOTor Utility-declared emergency."
It is understood that ifadopted, amended §101.379 and 

## § 117.10 will be submitted to the US EPA as a revision to the state implementation plan ("SIP"). 

## It is recommended that TCEQ provide guidance regarding the SIP process. It is presumed that proposed changes to 

## § 101.379 and § 117.10 will not be fully implemented until the EPA approves the SIP revision. Blue Sky assumes that engines participating in the ERS and other utility emergency DR programs without sending power to the electric grid can continue to operate under the definition of "emergency situation" until the references to the appropriate protocols are changed. However, these emergency engines could not send power to the electric grid under an emergency situation until the SIP revision is approved. In its response to comments, TCEQ should clarify that these assumptions are correcl
Blue Sky wishes to thank the TCEQ for allowing it to comment on the proposed regulations. Sincerely, Blue Sky Environmental LLC

# ~~Cd1- Donald C. DiCristofaro, CCM President
Attachment

P.O. Box 6o3 • 

### Hingham, MA • 02043 

### Telephone**6t7~834~84o8** 

### •Fax**857~221~9464**

### Buddy Garcia, 

### Chairman Larry R. 

### Soward, Commissioner Bryan W. Shaw, Ph.D., Commissioner Glenn SbankJe, ExecutiveDirector 

## TEXAS COMMISSION ON ENVIRONMENTAL 

## QUALITY Protecting Texas by

### Reducing andPreventingPollution



## Mr. Don DiCristofaro, CCM President Blue Sky Environmental LLC 105 Chestnut Street; Suite 37 Needham, MA

## 02492 January 29,2008

Subject: Use ofEmergency Engines in

## ERCOT's ElLS Program
DearMr. DiCristofaro: Thank you for your December 11, 2007 letter explaining the ERCOT Emergency Interruptible 

## Load Service (ElLS) Program. To ensure we fully understood the program, we discussed it with 

## Mr. Paul Wattles at ERCOT on January 17, 2008. He confirmed that ERCOT's ElLS was developed as an additional step (Step 3) in 

## their Emergency Electric Curtailment Plan (EECP) to help stabilize the gird and prevent them from directing rolling blackouts in Step 4. ElLS is directed only during a grid emergency. After discussing this new information with our legal and rule development staffs, I agree that if an emergency generator is authorized and operating under Permit by Rule (PBR) 106.511, that PBR 106.511 does not prohibit the participation ofan emergency generator in the ERCOT ElLS Program. If 

## the generator is run when directed by ERCOT as part of the ElLS declared emergency at Step 3 oftheir EECP, they will be in 

## compliance with the intent ofPBR 106.511 and the emergency generator will not require additional authorization, as long as the generator continues to meet all requirements ofPBR 106.511, including the restrictions for the number of hours the generator may operate. Participation in 

## the ElLS program (and direction from ERCOT) will not provide emergency generators an excuse to exceed the hours of operation requirement (or otherrequirements) in PBR 106.511. Please be advised that this letter in no way authorizes the operation of any specific emergency back-up generator engine operating under the authority ofPBR 106.511 and that any facility that proposes to construct and operate will be subject to all applicable requirements under Chapters 101, 106 and 117.

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

# ..,...,..led...,.......,..,,....., lot

## Mr. Don DiCristofaro, CCM Page2 January 29,2008 Re: Use ofEmergencyEngines in ERCOT's Ell..S Program

Thank you for your cooperation and interest in air 

## pollution control. If you need further information or have any questions, please contact 

## Mr. Jim Linville at 512 239-1261 or write to the Texas Commission on Environmental Quality, Office of Permitting, Remediation, and Registration, Air Permits Division (MC-163), P.O. Box 13087, Austin, Texas 78711-3087. Sincerely,

Richard 

## A Hyde, P.E., Director AirPermits Division Office ofPermitting, Remediation, and Registration Texas Commission on Environmental Quality RAH/JGI/bis

cc: Mr. Jay Tonne, ChiefEngineer's Office, MC 206 

## Mr. VincentMeiller, ChiefEngineer's Office, MC 206 Booker Harrison, Environmental Law Division, MC 173 Janis Hudson, Environmental Law Division, MC 173 Terry Salem, Environmental Law Division, MC 173 Jim Linville, Air Permits Division, MC 163 Steve Hagle, Air Permits Division, MC 163

# .... 0 CALPINE CORPORATION**~. ~** 



## December 5, 2012 Via Electronic Submittal Mr. 

## Ray Schubert Texas Commission on Environmental Quality, MC 164 P.O. Box 13087 Austin, TX 78711-3087
RE: Docket Number 2012-0896-RUL
Dear Mr. 

## Schubert, Patrick Blanchard Director EHS 717 Texas Avenue Suite 1000 Houston, TX 77002 713-830-8717



# W-3

Calpine appreciates the opportunity to provide comments regarding the exemption for emergency generation. Calpine is a major North American power company with a generation capacity of over 28,000 megawatts of clean, reliable and fuel-efficient generation serving customers and communities in twenty-one states. Calpine's Texas operations include twelve combined cycle gas-fired power generation facilities with a generation capacity of approximately 8,000 MW, representing approximately ten percent ofthe state's installed capacity. Reliability ofthe electric grid, which is governed by the Public Utility Commission (PUCT) rules and managed by the Electric Reliability Council ofTexas (ERCOT), is vital to public health and the Texas economy, and is one of the chief drivers of Calpine's operations. However, Calpine believes that the rule as proposed will have serious unintended consequences, and may be counterproductive for both air quality and electric reliability. This is due to the proposal's implicit shift in policy from allowing non-commercial backup generation to avoid additional control requirements to allowing facilities operated on a commercial basis to avoid installing controls required for NOx sources. As a result, the rule would offer a financial incentive to install lower-performing diesel engines or to run existing engines more frequently. The effect of these increases does not appear to have been calculated, but such increases are likely to make compliance with the new 75ppb ozone standard more difficult and costly for the nonattainment regions. Such a change is unnecessary, and will put clean generation at a cost disadvantage to this smaller, poorly controlled generation capacity. Calpine therefore recommends that the rule proposal be changed to remove the exemption afforded to ERS participants and require that all commercial generation be required to meet BACT and RACT.

## Mr. Ray Schubert Page2 December 5, 2012

The Proposed Change Will Have Significant Unintended Consequences for Air Quality


## The proposed rule change will have the effect ofproviding a substantial financial incentive for the installation or repurposing ofhigh-emitting diesel generation, and will expand the amount ofsuch generation capacity installed. The proposal would exempt participants in ERCOT's Emergency Response Service (ERS) from the requirement to install additional pollution controls. While this seems a harmless change needed to ensure reliability, it will have far-reaching effects due to the significant differences between the ERS and its predecessor program, the Emergency Interruptible Load Service (ElLS) program. Existing TCEQ rules provide an exemption to units participating in ElLS conditioned on a prohibition of electricity being exported to the grid. This prohibition ensures that participation does not result in commercial benefit and advantage from the exemption. Thus, the ElLS program in conjunction with TCEQ rules provided an incentive for large electricity consumers to reduce consumption from the grid during ERCOT declared emergencies. Entities selling power on a commercial basis required by rule to meet the terms oftheir permits (i.e., BACT or LAER), as well as RACT and the requirements ofChapter 117.
In 2012 the PUCT enacted rules significantly expanding the ElLS program and rebranded it as Emergency Response Service (ERS). Under the ERS program, engine owners and aggregators receive for-profit payments for electric generation capacity committed to be available for export to the grid during a reliability event. The ERS program differs from the predecessor ElLS program in three significant ways that will result in the expansion in use ofdiesel generation and resultant emissions. First, participants in ERS are not prohibited from exporting electricity. This means that entities installing or already having diesel generation are able to sell the electricity produced on the open market. This is most likely to occur on days when wholesale prices for energy at their highest permissible value. These days are most commonly hot, sunny summer days, typically the worst days from an air quality standpoint. As a result, participants would receive significant economic incentives to operate the highest-emitting equipment in the state on the days when air quality is the worst. These are the days when the best action would be to implement energy conservation measures as contemplated in the ElLS program. Second, the threshold for participation in the ERS program has been lowered to 0.1 megawatt from the 1.0 megawatt threshold required under ElLS. This creates a new financial incentive to repurpose existing generators as an ERS asset, particularly when repurposing doesn't require installation ofemissions controls. Finally, the ElLS program limited participation to 1,000 MW within the ERCOT system. This limit has been eliminated under the ERS program in an apparent effort to expand participation in

## Mr. Ray Schubert Page3 December 5, 2012

the program. The growth in the program will likely come from new or repurposed diesel generation.
In sum, the ERS program will result in a significant expansion ofthe use ofdiesel-fired engines for purposes ofelectric generation. The exemption from air quality requirements will therefore have more significant effects than are apparent at this time. With the 1,000 MW cap removed, and a significant financial incentive added, emissions from diesel fired generation units will increase well beyond current levels.
The likelihood ofexpanded use ofdiesel generation is not merely speculative. The experience of other jurisdictions that have adopted similar open programs is instructive. The commercial opportunities created by reduced environmental controls and financial incentives have created a new industry ofmarketers offering to install poorly controlled diesel generation at plants in return for a share ofthe revenues produced. (See Attachment 1 ). Thus, the proposed rule in conjunction with ERCOT's change to the ElLS program, will have the effect ofproviding a powerful incentive to run high-emitting diesel generation to the detriment of air quality.
Disincentive to investment in new low emitting generation By exempting diesel-fired generation capacity operating on a commercial basis from air quality standards, the proposed rule sets clean generating resources at a disadvantage. The cleaner sources are designed and operated so as to provide emission reductions throughout the year, not just when ERS resources are dispatched. In organized competitive markets, the market would simply procure other resources instead ofdiesel engines that have not had to internalize the costs of emissions controls. New combined cycle power plants will operate more reliably than the existing marginal resources they would displace and provide many reliability-related services that limited ERS resources do not. Accordingly, there is no reliability-related rationale for TCEQ to favor ofdiesel-based generation and exempt ERS participants from emissions controls, when the other sources of electricity supply against which they are competing must install emissions controls and price the associated costs into theirprojects.
This is consistent with the most recent Capacity Demand Reserve (CDR) report issued by ERCOT. ERCOT, perhaps in response to recently adopted rules, has modified the forecast for reserve margins to indicate that the agency does not anticipate a shortage in the near term. This means that the harm likely to accrue to air quality from the exemption is unlikely to be offset by the benefit ofadditional reliability.

## Mr. 

## Ray Schubert Page4 December 5, 2012

Unnecessary Subsidy:


## The ERS program, in which engine owners and aggregators receive capacity payments, is a forprofit activity. Diesel engines participation requires little capital investment

- especially compared with what it takes to build other forms ofnew generation.
ERCOTs procurement process compensates participants on an "as bid" basis. This means participants have the ability to recoup the costs of complying with existing the air quality rules now applicable to generators and still recognize a commercial profit through the ERCOTs procurement process. The Proposed Rule subsidizes the most polluting generating resources with no attendant benefits in terms of air quality or electricity reliability. Calpine's view is very simple: Ifa ERS unit is compensated for providing reliability and generation to ERCOT, it should be required to install emissions controls and no exemption should be provided by from the TCEQ
For the foregoing reasons, Calpine is requesting that the current definition of Emergency Condition not be modified to accommodate ERCOTs expanded ERS program. A blanket exemption will expand the number of high emitting diesel engines; will be a disincentive to investment in new low emitting generation; and is an unnecessary subsidy to high emitting sources. Calpine appreciates the Texas Commission on Environmental Quality's continued leadership in interagency coordination to ensure the public interest is served when conditions threating grid reliability arise. We look forward to continued work with the TCEQ on the development and implementation of measures that will improve our regional air quality while ensuring the reliability ofthe ERCOT system. Ifyou have any questions regarding these comments, please contact me directly at 713/830-8717. Sincerely, Calpine Corporation

Patrick Blanchard Director, Environmental Services Texas

Attachment

## Mr. Ray Schubert 

## Page 5 December 5, 2012



# Attachment 1

# (I) ENERNOC 

# I DemandS A T



# Generate New Payments for Vour Business ugh EnerN Cand e and span

Ifyour business has a generator set, you may qualify for a simple and lucrative opportunity to be paid to run your generator. Demand response programs pay businesses to switch to on-site generation when the electrical grid experiences spikes in demand or shortages of supply, typicallyforjustafew hours peryear. Demand response participants earn substantial payments, increase the reliability ofthe electrical grid, and get advanced notice of irregular conditions on the grid. By enrolling in demand response with EnerNOC, you will join the world's largest "virtual power plant," a network of more than 

# 10,000 energy users worldwide. You will also enjoy a range of benef1ts.

EMERGENCY PREPAREDNESS What would you do ifyou knew there would be a blackout in two hours7 Demand response participation gives you advance notice of any irregular conditions on the grid and helps ensure your readiness for a true grid emergency. By testing your generators regularly and under load, your business will be conf1dent that your backup system will perform during a real emergency

..

© 2011 EnerNOC, Inc. 

### FINANCIAL REWARDS FROM DAV ONE Unlike capital-intensive energy management programs that don't deliver results until years later, demand response starts creating a bottom-line impact immediately. Our demand response customers have earned millions ofdollars ofpayments -revenue they've reinvested into their operations to maintain equipment and pursue important upgrades oftransfer switches and other equipment. Participating in demand response will deliver dependable, regular payments that you can count on.


### EASV ENABLEMENT EnerNOC's engineers work directly with your facilities and engineering staff to determine your eligibility for a variety of

# ~ENERNOC 

# I DemandS 

# AR

demand response programs. There is absolutely no cost to enroll. EnerNOC provides no-cost site evaluations, free energy meters, and free installation. EnerNOC's staff members are also experts in relevant permitting and regulations governing generators. We handle any and all paperwork associated with permit compliance and take care ofthe details so you can stay focused on running your business.


### REIMBURSEMENT FOR GENERATOR TESTING Many businesses must periodically test their generators to meet local regulations and standards. By running your backup generators during demand response testing and dispatches, you can ensure that your generators are operating correctly under load while simultaneously complying with mandated testing. In effect, EnerNOC pays your business for what would otherwise be an unavoidable expense.


### IMPROVING EFFICIENCY THE OPTION OF EASY AUTOMATED CONTROL EnerNOC gives every customer access to real-time meter For increased ease of use, EnerNOC can also enable your data through our web-based energy management software. generators to start up automatically during a demand response For many of our customers, this becomes an invaluable tool dispatch. This step is entirely optional, but some customers for maximizing demand response payments and identifying appreciate the end-to-end ease of automation. Our engineers energy efficiency opportunities. Our customers have uncovered can install relays and controls that monitor your generators hundreds ofthousands of dollars in annual savings through our during start up. Once the generator is prepared, we transfer DemandSMART application. the load to your generator, right from our Network Operations

DemandSMART is the industry's most comprehensive demand response solution. DemandSMART's web-based tools present real-time energy usage data in intuitive dashboards that help customers maximize their demand response payments and uncover anomalies in energy use. EnerNOC's skilled engineers also help participants make the most oftheir participation during the enrollment and enablement process to ensure that they are capturing the maximum benefit from demand response.

© 2011 EnerNOC, Inc. Center. When the dispatch is complete, we transfer you back to street power without any interruption to your business.



### Want More Information?
To fmd out how your business can benef1t from demand response today, please visit www.enernoc.com/get-started.

# W-4

RULE PROJECT NO. 2012-025-117-AI
PROPOSED REVISIONS TO 30 TAC 

## § 117.10 AND 

## § § § TEXAS COMMISSION ON
30 TAC 

## § 110.379 ENVIRONMENTAL QUALITY
ELECTRIC RELIABILITY COUNCIL OF TEXAS, INC.'S INITIAL COMMENTS REGARDING PROPOSED REVISIONS TO SECTIONS 117.10 AND 101.379
The Electric Reliability Council of Texas, Inc. ("ERCOT") respectfully submits these

comments to the amendments to sections 117.10 and 101.379 proposed by the Texas
Commission on Environmental Quality (TCEQ) in the above-styled project. ERCOT appreciates
the TCEQ's efforts to address a potential obstacle to the participation of certain generators in
ERCOT's Emergency Response Service (ERS) program. The TCEQ has accurately recognized
the critical role ERS plays in ensuring the reliability ofthe ERCOT system, and the proposed
rule amendments provide helpful clarifications regarding the obligations of generators that participate in this service. While ERCOT generally supports the proposed rule amendments, it
offers two additional changes that mayhelp further clarify these obligations.
COMMENTS
I. The TCEQ should consider conditioning the proposed exceptions in sections 117.10(15)(A)(ii) and 101.379(c)(2)(D) on ERCOT's dispatch ofERS rather than on ERCOT's issuance ofan emergency notice, as proposed.
Both the current and proposed versions of sections 117.10 and 101.379 premise their exemptions from relevant operating restrictions on ERCOT's issuance of an emergency notice.
As contemplated by the ERCOT Protocols, an emergency notice is the fourth of four possible reliability-related warnings preceding the declaration of an energy emergency alert (EEA). See
ERCOT Nodal Protocols § 6.5.9.3.4. An 

## emergency notice declaration does not explicitly
authorize ERCOT's use of any particular reliability measure. Upon declaration of an EEA, however, ERCOT may initiate any of a number of special measures to ensure system reliability-including deployment ofERS-depending on the severity ofthe generation shortage 1

## or other system condition. See 

## ERCOT Nodal Protocols § 6.5.9.4.2. Given sufficient time,
ERCOT would always prefer to issue an emergency notice before declaring an EEA. In

## practice, however, ERCOT is not always able to issue an emergency notice (or other less serious warnings) because system conditions may deteriorate too rapidly. For example, during the cold
weather event of February 2, 2011, ERCOT issued a watch (the step preceding an emergency notice), but did not have time to issue an emergency notice before unexpected unit outages required the declaration ofan EEA and the subsequent deployment ofERS.
Because the issuance of an emergency notice may not always be possible before it
becomes necessary to deploy ERS, generators subject to TCEQ operation limitations would not necessarily be deemed to fall within the emergency situation exception when operating as part of
ERS during an ERCOT system emergency. ERCOT therefore suggests that the TCEQ consider amending the definition of "emergency situation" to refer to the deployment ofERS rather than
the issuance ofan emergency notice, as this would provide affected generators the assurance that operation for ERS purposes is always 

## permissible.
ERCOT does not believe that this change would expand the circumstances in which an ERS generator subject to TCEQ restrictions could operate. To the contrary, it would place an

even more restrictive-and reasonable-limitation on operation. In 

## particular, generators would

no longer be exempted from operating restrictions during any period following an emergency notice butpreceding an ERS deployment.
ERCOT understands that the TCEQ may have some concern about conditioning the
definition of"emergency situation" on ERCOT's deployment ofERS without requiring certainty

as to the circumstances in which ERS would be deployed. To address this concern, the TCEQ
could choose-as it has under both the current and proposed rule language-to refer to a particular version of the Protocols defining ERS and restricting the deployment ofthe service.

2

## But since the Protocols are constantly changing (they have been revised hundreds of times),
ERCOT is concerned that even immaterial changes to the indicated sections could create
confusion as to the ongoing applicability of the TCEQ's exemption. ERCOT therefore
recommends that the TCEQ consider referencing a more constant standard-namely, the Public Utility Commission's ERS rule. See 

## 16 Tex. Admin. Code § 25.507. That rule places time
limits and other constraints on ERCOT's deployment ofERS which the ERCOT Protocols must
observe. While the rule was recently amended to allow generation to participate in this service,
ERCOT does not expect this rule to be changed again anytime soon. Even ifthe Public Utility
Commission did opt to amend the rule on occasion, ERCOT expects that the TCEQ could more easily monitor those infrequent changes than track the numerous ongoing proposals to revise the
Protocols.


## II. The TCEQ should consider removing the proposed exception in 117.10(15)(A)(vii) and linking the operation exception explicitly stated in section 117.10(15)(B)(ii) to the ERS exception in section 117.10(15)(A)(ii).
As proposed, rule 117.10 would remove from the definition of"emergency situation" any hours within the duration ofan ERCOT-declared emergency notice. Irrespective ofthe whether
the TCEQ may accept ERCOT's first recommendation above, ERCOT understands that the
purpose of the exemption in section 117.10(15)(A)(ii) is to exempt any hours of generator operation attributable to compliance with a valid ERS dispatch instruction. Ifthat understanding
is correct, ERCOT submits that the operation ofa generator for ERS purposes would always fall
within the coverage of section 117.10(15)(A)(ii), and that creating an additional exemption for
the operation of ERS generators in section 117.10(15)(A)(vii) is therefore unnecessary. Ifthe TCEQ agrees with this reasoning, ERCOT would further suggest changing section 117.10(15)(B)(ii) to reference section 117.10(15)(A)(ii) instead ofsection 117.10(15)(A)(vii), as proposed.

3

## PROPOSED REVISIONS
Based on the preceding comments, ERCOT recommends the following revisions to the TCEQ's proposed rule amendments. For clarity, ERCOT's proposed additions and deletions are shown inredline.
30 TAC §117.10

(15)Emergency situation--As follows.

(A)An emergency situation is any ofthe following:

(i)an unforeseen electrical power failure from the serving electric power generating system; (ii)the-£!:!!Y.Period oftime during which that an the Electric Reliability Council ofTexas, Inc. (ERCOT) issued has dispatched emergency response service as authorized by Title 16, Section 25.507 ofthis codeemergency notice (as defined in

## ERGOTProtecols. Section 2: Dqfinitions t:md Acron}'ms (June 1, 2012) and issued as specified in 

## ERGOTProtocols, Section 6: Adjustment Period t:md Real Time Operations (June l, 

## 2012))[, as defined in 

## ERGOTProtocols, Section 2: Definitions andAcronyms (l

.... 

## pril 25, 2006), issued by the Electric Reliability Council ofTexas, Inc. (ERGOT) as specified in 

## ERGOT Protocols, Section 5: Dispatch (April 26, 2006),] IS 

## applicable to the serving electric power generating system. The emergency situation is considered to end upon expiration ofthe emergency notice issuedbyER{.;OT; (iii)an unforeseen failure ofon-site electrical transmission equipment (e.g., a transformer); (iv)an unforeseen failure ofnatural gas service; ( v)an unforeseen flood or fire, or a life-threatening situation; [ 

## eF] (vi)operation ofemergency generators for Federal Aviation Administration licensed airports, military airports, or manned space flight control centers for the purposes ofproviding power in anticipation ofa power failure due to severe storm activity; or[:] (vii)operation ofan emergency generator as part ofan ERGOT emergencyresponse program ifthe operation is in direct response to an instruction by ER{.;OT during the period ofan ER{.;OT emergency notice as specified in clause (ii) ofthis subparagraph. (B)An emergency situation does not**include~** 

## [ operation for purposes of supplying power for distribution to the electric grid, operation for training purposes, or other foreseeable events.] (i)operation for training purposes or other foreseeable events; or (ii)operation for purposes of supplying power for distribution to the electric grid, except as specified inauthorized by subparagraph (A)(:v:ii) ofthis paragraph.

30 TAC §101.379(c)(2)(D)
Ifthe DEC-2 Forms are submitted in response to an ERCOT-declared emergency situation, the request will not be subject to the flow control limit and may be approved provided all other requirements are met. For the purposes of this subparagraph, an ERCOT-declared emergency situation is defined as the--.f!!!Lperiod of time during which that an ERCOT has dispatched emergency response service as authorized by Title 16, Section 25.507 of this code issued emergency notice (as defined in ER{?OT Protocols, Section 2: Definitions and Acronyms (June 1, 2012) and issued as specified in ER{?OT Protocols, Section 6: Adjustment Period and Real Time Operations (June 1, 2012))[, as defined in ERGOT Protocols, Section 2: Definitions and 4

## Acronyms (April 25, 2006), issued by ER{;OT as specified in ERGOT Protocols, Section 5: Dispatch (i\:pril 26, 2006),] is applicable to the serving electric pmver generating system. The emergency situation is considered to end upon eJ<piration of the emergency notice issued by ERGOT.

CONCLUSION


## ERCOT appreciates the TCEQ's efforts to clarify these important rules and respectfully requests consideration ofthese comments. ERCOT would be pleased to provide any additional
information the TCEQ may find helpful in revising its rules.

Respectfully submitted,

By: 

## Is/Nathan Bigbee Chad V. 

## Seely Assistant General Counsel (512) 225-7035 (Phone) (512) 225-7079 (Fax) cseely@ercot.com
Nathan Bigbee Corporate Counsel (512) 225-7035 (Phone) (512) 225-7079 (Fax) nbigbee@ercot.com
ERCOT 7620 Metro Center Drive Austin, Texas 78744
ATTORNEY FOR ELECTRIC RELIABILITY COUNCIL OF TEXAS, INC.

5

# (j)ENERNOC

December 4, 2012

Mr. Bruce McAnally MC205 Office of Legal Services EnerNOC, Inc 

### 101 Federal Street Suite 1100 Boston, MA 02110



## Texas Commission on Environmental Quality P.O. Box 13087 Austin, TX 78711-3087
RE: Rule Project Number 2012-025-117-AI
Dear Mr. McAnally: 

# ITel: 617 224 9900 

# I Fax: 617 224 9910

www.enernoccom info@enernoc.com 

# W-5

EnerNOC, Inc. ("EnerNOC") is pleased to provide these comments regarding the Texas Commission on Environmental Quality ("TCEQ") proposed changes to 30 TAC §101.379 (Chapter 101. General Air Quality Rules; Subchapter H. Emissions Banking and Trading; Division 4. Discrete Emission Credit Banking and Trading) and 30 TAC §1 01.117.10 (Chapter 117. Control ofAir Pollution from Nitrogen Compounds; Subchapter 

## A Definitions) as noticed in the Texas Register on November 2, 2012. EnerNOC is a leading provider of technology-enabled demand response ("DR") and demand-side management solutions for the commercial, institutional, and industrial markets, with over 8,500 megawatts ("MW") of proven DR resources under management at approximately 13,500 sites. EnerNOC strongly supports the Proposed Amendments to 30 TAC §101.379 and §101.117.10
For many years, EnerNOC has been enrolling sites (either by use of emergency backup generators, curtailment, or both) in the Electric Reliability Council ofTexas, Inc. ("ERGOT") Emergency Interruptible Load Service ("ElLS") program. The ElLS was called just before the electric grid was about to fail. The ElLS was integrated into ERGOT's Electrical Emergency Curtailment Plan ("EECP") and was called during a Stage 3 emergency (e.g., when everything else has been tried and the next step was rolling blackouts). Thus, ElLS was used to prevent blackouts by using emergency generators to power facilities, lessening the need for power from the grid. The ElLS Program was designed for a maximum of six dispatches per year and a maximum of 24 hours per year. On March 22, 2012, the Public Utility Commission ofTexas ("PUCT") replaced the ElLS with the Emergency Response Service ("ERS") program. Like the ElLS program, the new ERS program is designed to help decrease the likelihood of requiring firm load shedding (e.g., rolling blackouts) during an ERGOT-declared energy emergency by decreasing the power demand on the electrical grid. The new ERS program became effective on June 1, 2012.

# (j)ENERNOC EnerNOC, Inc 101 

### Federal Street Suite 1100 Boston, MA 02110 Tel: 617 224 9900 

### Fax: 617 224 9910 www.enernoc.com info@enernoc.com



## EnerNOC strongly supports the TCEQ proposal to (1) amend 30 TAG §1 01.379 to update the reference in agency rules to reflect the versions ofthe ERGOT Protocols effective June 1, 2012 1 

## to be consistent with §117.10 and (2) amend 30 TAG §117.10 to include in its definition of emergency operation of engines for purposes of supplying power for distribution to the electric grid since under the ERS program, qualified participants may provide power back into the electric grid for sale during an ERGOT-declared emergency under limited circumstances. The proposed rulemaking will update the definition of emergency in §117.10 to ensure consistency with ERGOT's new ERS program. The proposed amendment will reference the most recent version of the ERGOT protocols. The proposed amendment will also reflect changes made by ERGOT to promote reliability during energy emergencies by allowing the operation of generators for purposes of selling power to the electric grid under limited circumstances. As noted in the proposed rule, "the rulemaking benefits the public by potentially decreasing the likelihood of requiring firm load shedding (i.e., rolling blackouts) when additional control measures are needed to achieve or maintain attainment of the federal air quality standards through the use of electric generators." Furthermore, "[t]he proposed rulemaking would not increase emissions of air pollutants

..."
Numerous states allow the use of backup emergency generators to participate in emergency demand response programs like the new ERS program (e.g., to use the engines just before lights out rather than waiting for a blackout). These states include Connecticut, Massachusetts, Vermont, Rhode Island, New Hampshire, Maine, New York, Maryland, Pennsylvania, Illinois, Texas, Michigan, West Virginia, Ohio, Virginia, Indiana, and Florida. Why is this so important? Allowing emergency engines to operate when there is an imminent threat of a power outage is important because these resources have the potential to prevent power failures, which are expensive, dangerous to health and safety, and detrimental to the environment. As detailed below, independent system operators call upon emergency DR as a last resort before implementing rotating outages ("black outs"). Black outs cost money to the economy through food spoilage, loss of manufacturing production, loss ofwages and sales. Blackouts can pose threats to health and safety through loss of heating or airconditioning, interruptions of medical equipment and loss oftraffic signals. These threats are relatively well known and acknowledged.
What is less well-known is that it can be better for the environment to use a selected set of generators to prevent blackouts than to let the blackouts occur. When.the grid fails or

1 

### The reference in §10L379(C)(2)(D) for an ERCOT-declared emergency notice was changed to "as defined in ERCOT Protocols Section 2: Definitions and Acronyms (June 1, 2012) and issued as specified in ERCOT Protocols, Section 6: Adjustment Period and Real-Time Operations (June 1, 2012)."

# (j)ENERNOC EnerNOC, Inc 101 Federal Street Suite 1100 Boston, MA 02110 

# ITel: 617 224 9900 Fax: 617 224 9910 

# Iwww.enernoc.com

info@enernoc.com 

## rotating blackouts are implemented, every emergency generator that has an automatic transfer switch fires up, and others that do not automatically start up are manually started by their owners/operators. It can take hours, sometimes days, to restore conditions to normal operating levels, so these emergency generators will likely run for extended periods oftime after a power failure. In addition, blackouts can cause failures at mission critical environmental facilities such as wastewater treatment plants. For instance, during the August 2003 

## blackout and more recently during Hurricane Sandy, many millions of gallons of untreated sewage were dumped into rivers in New York, Maryland, and New Jersey because ofthe power failure.
DR plays an important role in stabilizing the electric system in these worst-case scenarios. The alternative, requiring new, greenfield power plants to be built for operation a few hours every few years does not make economic or environmental sense. The following is a discussion of three emergency DR programs in the United States that EnerNOC participates in that shows that these programs are rarely dispatched and then only in truly emergency situations. Therefore the proposed changes in 30 

## TAC §1 01.379 

## and §101.117.1 0 

## will not result in significant additional operation of emergency generators. ElLS Program (now called ERS Program)
The ElLS Program was designed for a maximum of six dispatches per year and a maximum of 24 hours per year. There were only two emergency DR events under the ElLS Program since its inception in 2008. 

## On one event on February 2nd, 2011, 

## when there was a massive failure ofwholesale generators during an unexpected cold snap, the ElLS resources were dispatched for a continuous 28 

## hours.
PJM Emergency Load Response Program ("ELRP")
The entity that controls the electric grid in the mid Atlantic states from New Jersey south to Virginia and west to portions of Illinois, including portions of Ohio, is PJM Interconnection, LLC ("PJM"). PJM has implemented the ELRP as its last panic button to be used to prevent brownouts and blackouts.
The ELRP exists in order to prevent brownouts and blackouts. Numerous states in the PJM territory (listed above) now allow emergency engines to participate during such times, principally because studies prove that it is better to prevent a blackout by using a subset of emergency generators for a short period oftime as opposed to losing the grid, which would mean all emergency generators in the affected area operating for many hours or possibly days. The engines enrolled in the program are turned on when PJM declares an emergency under the PJM rules, thereby reducing the need for power on the grid.

# (j)ENERNOC EnerNOC, Inc 101 Federal Street Suite 1100 Boston, MA 02110 

# I I Tel: 617 224 9900

Fax: 617 224 9910 

# Iwww.enernoccom

info@enernoccom



## The ELRP is activated according to the procedures in the PJM Manual 13 Emergency Operations for a PJM Declared Emergency. A "PJM Declared Emergency" means a condition that exists when PJM notifies electric distributors that an emergency exists, or may occur, and it is necessary to implement the procedures in the Manual 13 Emergency Operations. The ELRP has rarely been declared

- it is truly reserved for emergency situations. This declaration should not be confused with other PJM programs that are dispatched for economic reasons such as economic demand response or "peak shaving."
A summary ofthe ELRP events and hours by year follows:
Year Events Duration (Hours) 2003 0 0 2004 0 0 2005 July 27 4 August 4 3 2006 August 2 4 August 3 5 2007 August 8 4-5 2008 0 0 2009 0 0 2010 May26 2.7 June 11 4.2 July 7 4-5.5 August 11 6 September 23 5.5-6 September 24 6 2011 May26 2 May31 2 July 22 5-6 2012 July 17 4 July 18 2

The ELRP is more than just turning on emergency diesel generators. It also includes curtailment (e.g., companies reducing their HVAC and lighting loads, manufacturing facilities shutting off their machines, etc.) to reduce demand from the electric power grid. This curtailment results in a reduction of air pollutants during DR events.

# (j)ENERNOC EnerNOC, Inc 101 Federal Street Suite 1100 Boston, MA 

### 02110 Tel: 617 224 9900 Fax: 617 224 9910 

### www.enernoc.com 1 info@enernoc.com


# ISO New England Emergency Demand Response Program

Since the DR Program was initiated by the New England Independent System Operator ("ISO-NE") in 2002, there have only been three days when emergency DR events with backup generators have been triggered and only one ofthose times included all of New England: 1) August 15, 2003; the day after the major Northeast blackout (Connecticut only); 2) July 27, 2005; record electric power demands in all of New England were set (Connecticut only); and 3) August 2, 2006; record electric power demands in all of New England were set. Emergency DR is the start of brownouts with the next step being involuntary interruptions of load. This declaration is taken very seriously by ISO-NE. This action is truly reserved for emergency situations.
A report prepared by Synapse Energy Economics, Inc. for the EPA entitled "Results of Demand Response Emissions Modeling" by Geoff Keith, Bruce Biewald, David White and Mike Drunsic dated August, 2003 and revised September 4, 2003, assesses the impacts of DR and energy efficiency programs in New England using an electric system dispatch model. 2 

## As the report states, "when the DR resource is used to meet reserve requirements, the result is more efficient unit commitment, reduced operation of oil- and gas-fired steam units and increased operation of combined-cycle units in New England." Even assuming all DR is from diesel-fired generators, the report showed a net benefit in air quality. As noted in the Synapse report, "New England has a small amount of quick-start capacity relative to the regional peak load compared to most other control areas. Many analysts have noted that this requires large power plants to operate more than they would otherwise have to in order to maintain sufficient operating reserves - capacity that can be provided quickly in response to unplanned losses of capacity. A key goal ofthis work for EPA was to verify that large units were indeed being

2 

### A hypothetical near-term year in New England using projected 2006 fuel prices and loads was modeled. The modeling included 500 MW of DR capability: 60 percent load response and 40 percent generation. The emissions impacts when DR is used for reserves results in significant decreases of criteria pollutant emissions, even when it is assumed that the DR used to meet reserves is all diesel (e.g., summer air impacts include: NOx decreases 23 tons, sulfur dioxide decreases 216 tons, carbon dioxide decreases 31 ,400 tons, particulate matter 2.5 microns or less decreases 12.5 tons, particulate matter decreases 21.2 tons and mercury decreases 0.29 tons).

# (f)ENERNOC EnerNOC, Inc 

### 101 Federal Street SuitellOO Boston, MA 02110 

### ' Tel: 617 224 9900 Fax: 617 224 9910 www.enernoccom 1 info@enernoccom 

## operated more than necessary in New England to meet reserve requirements, to gauge the probable emission impacts ofthis dynamic, and to estimate potential emission reductions that additional DR could provide if it were used to meet operating reserve requirements."
While this report does not cover Texas, it does show that demand response using diesel generators can provide environmental benefits.
Additional Comments
The TCEQ has requested comment on whether an ERGOT energy emergency alert ("EEA") level should be specified in §117.1 0( 15)(A)(vii). In order to account for emergency DR programs that are called by Texas utilities when they are experiencing voltage reductions so they would not be classified as an "ERGOTdeclared emergency" nor would an ERGOT EEA level be called, it is recommended that TCEQ: 1) Expand the term "ERGOT-declared emergency" to "ERGOT or Utility-declared emergency" in §1 01.379(c)(2)(D) and add to the end of §117.1 0(15)(A)(vii) "or for a utility declared emergency." 2) Not specify an ERGOT EEA level in §117.10( 15)(A)(vii).
For the past three years, EnerNOC has been working closely with the United States Environmental Protection Agency ("US EPA") regarding how engines participating in demand response programs should be treated in the National Emission Standards for Hazardous Air Pollutants ("NESHAP") for Reciprocating Internal Combustion Engines ("RICE") under 40 CFR 63 Subpart ZZZZ and the New Source Performance Standards ("NSPS") under 40 CFR 60 Subpart II II and 

## JJJJ. In June, EPA published a Notice of Proposed Rulemaking ("NOPR") in the Federal Register with proposed changes to both the NESHAP and NSPS regarding the use of engines in demand response programs. For emergency DR, EPA proposed the declaration of EEA Level 2 as per North American Electric Reliability Corporation ("NERC") Standard EOP-002-3, Capacity and Energy Emergencies. EPA also proposed voltage orfrequency deviations of 5 percent or greater below standard voltage or frequency. Thus, since the owners and operators of emergency engines will need to comply with the more conservative state or federal regulations, it is recommended that TCEQ not reference an EEA Level and stay with "ERGOT or Utility-declared emergency."
It is understood that if adopted, amended §101.379 and §117.10 will be submitted to the US EPA as a revision to the state implementation plan ("SIP"). It is recommended that TCEQ provide guidance regarding the SIP process. It is presumed that proposed changes to §1 01.379 and §117.1 0 will not be fully implemented until the EPA approves the SIP revision. EnerNOC assumes that engines participating in the ERS and other utility sponsored emergency DR

# (j)ENERNOC EnerNOC, Inc 101 Federal Street Suite 1100 Boston, MA 02110 

### Tel: 617 224 9900 Fax: 617 224 9910 www.enernoc.com info@enernoc.com


## programs without sending power to the electric grid can continue to operate under the definition of "emergency situation" until the references to the appropriate protocols are changed. However, these emergency engines could not send power to the electric grid under an emergency situation until the SIP revision is approved. In its response to comments, TCEQ should clarify that these assumptions are correct.
Thank you for providing EnerNOC with an opportunity to comment on the proposed modification to these very important regulations. If you have questions or require additional information please do not hesitate to contact me at 415-517-1861 or at rcounihan@enernoc.com. Sincerely,

Richard H. Counihan Vice-President Government Affairs

### Nit 

## r 

# -·

December 6, 2012

Via Electronic Submission Bruce McAnally Office ofLegal Services Texas Commission on Environmental Quality, MC 205 P.O. Box 13087 Austin, TX 78711-3087

RE: Rule Project Number 2012-025-117-AI
Dear Mr. McAnally: WHI!amA. 

### S<:ott**Vi~;o Pi'P~idcrnt**  GO'\l<t!rtllnPM Mf41t'f, '-.'A

....**~~t·o;)tld St:tltl~** **R~:.~fO.t1S.** h)O?**CQH-~f't.!$."J ~,\tiH**  tt..t:'**$tJii~S80** !\tM,ILTX7870! ?l239il9t•?.**!i;l!ephcn~** ;il;t4194Cili

## r:,:t**l'ii'IW.C<:<ef4Jncr:;;rp;c~rn \'li!li;'lrri.1.$C<1tt·t!;~x\~~ncC~Il.l:l.lm**  

# W-6

Exelon Corporation ("Exelon") respectfully submits these comments on the proposed amendments to 30 TAC Chapter 117, Control of Air Pollution from Nitrogen Compounds, Subchapter A, Definitions, Section 117.10; proposed amendments to Chapter 101, General Air Quality Rules, Subchapter H, Emissions Banking and Trading, Division 4, Discrete Emission Credit Banking and Trading, Section 101.379; and corresponding revisions to the state implementation plan ("ProposedAmendments").
Exelon is among the largest gas and electric utilities in the nation with operations and business activities in 47 states. Through its subsidiary, Exelon Generation, Inc., Exelon owns a diverse fleet of more than 35,000 megawatts of generation capacity comprising nuclear, fossil, hydroelectric and renewable generation resources. Exelon's Texas operations include 18 facilities with a generation capacity ofapproximately4,200 MW.
The current TCEQ rules exempt certain units participating in the Electric Reliability Council of Texas (ERCOT) Emergency Interruptible Load Service (ElLS) program from pollution control requirements as long as the participant does not provide power back to the electrical grid. This condition ensures that participants in the program do not commercially benefit from the exemption. In March 2012, the Public Utility Commission of Texas (PUCT) replaced the ElLS program with the Emergency Response Service (ERS) program. The new ERS program allows qualified participants to provide power back to the grid for sale during an ERCOT-declared emergency. The Proposed Amendments now seek to eliminate the prohibition on selling power back to the grid in order to qualify for the exemption under TCEQ's air rules.

## Page 2
The new ERS program will result in a significant expansion ofdiesel generation. Exempting these units from pollution control requirements will provide a financial incentive for uncontrolled generation. The Proposed Amendments would encourage backup, on-site emergency generators to participate in power markets purely for economic benefit. At its core, demand response ;is a reduction in the consumption of electric energy by customers in response to an increase in the price ofelectric energy or in response to incentive payments to induce that reduction. Customers that participate in demand response programs receive a financial incentive to generate these reductions in consumption at the request of the grid operator. These reductions can be achieved either by actually reducing use, or by replacing power supplied through the grid with power generated "behind the meter" by backup generators. In the latter case, the decision to participate in the demand response program is simply an economic one, based on a conclusion that the economic incentives for participation will exceed the cost ofoperating the backup generators. Backup generators receiving compensation for operating should be expected to control their harmful air emissions. The Proposed Amendments would, in effect, subsidize uncontrolled generation resources. All other things being equal, sources operating without pollution controls have lower costs than equivalent sources with emission controls, and therefore can underbid controlled sources in electricity markets. Expanding the conditions under which these units may operate without controls will distort energy markets and create an unlevel playing field. Further, subsidizing uncontrolled generation can lead to unnecessary and undesirable environmental impairment that would be avoided ifa cleaner source was called upon to meet energy demand. The exemption will also discourage upgrades in existing capacity or investment in new, cleaner generation that would encourage long-term reliability, reduce emissions, and modernize the generation fleet.
For these reasons, Exelon requests that TCEQ abandon its efforts to exempt from pollution controls units that sell power back to the electrical grid and recommends that the proposed rule require all commercial generation to satisfy TCEQ's pollution control requirements. We look forward to continued work with the TCEQ on efforts to improve regional air quality while ensuring the reliability of the ERCOT system. If you have any questions regarding these comments, please contact me directly at 512-391-1952.

William A. 

## Scott Vice President, State Government Affairs West and South Regions Exelon CorporationNRG Texas Power LLC 

### 1201 

### Fannin St. Houston, TX 77002



### December 5, 2012
Via Electronic Submission- http://wwwS.tceg.texas.gov/rules/ecomments/


### Bruce McAnally Office 

### of Legal Services, MC205 Texas Commission on Environmental Quality P.O. Box 13087 Austin, TX 78711-3087

Re: Comments on Proposed Rulemaking for Chapter 117, Control ofAir Pollution from Nitrogen Compounds Docket No. 2012-0896-RUL 

# W-7

The NRG Companies ("NRG") appreciate the opportunity to submit comments to the Texas Commission on Environmental Quality (''TCEQ") on its Proposed Rule revision to 30 Texas Administrative Code ("TAC") Chapter 117, Control ofAir Pollution from Nitrogen Compounds. NRG supports the Proposed Rule's clarification that emergency demand response ("DR") meets the Chapter 117 definition of emergencysituation. NRG has been actively involved in EPA's New Source Performance Standards ("NSPS'') and National Emissions Standards for Hazardous Air Pollutants ("HAP") rulemakings concerning Reciprocating Internal Combustion Engines ("RICE"), including submitting prior comments on the proposed demand response ("DR") provisions of the RICE NESHAP. NRG is submitting these comments on TCEQ's proposed rulemaking to ensure that the final Chapter 117 rule effectively regulates air emissions while facilitating the grid stability benefits of emergency DR programs.

A. The NRG Companies


### The NRG Companies own and operate 24,000 MW of generation throughout the United States, including both utility-scale and small-scale fossil and renewable facilities. NRG is developing utilityscale, small-scale, and behind the meter renewable and fossil generation facilities. Additionally, NRG owns and operates emergency engines that will be affected 

### by this regulation.

B. The Definition of Emergency Engine Should Allow for Emergency DR
1. Need for a Distinction between Economic and Emergency DR


### As utilities, generators, and regulators seek to expand clean capacity options, many have embraced DR programs as an option that can be implemented quickly with immediate grid and environmental benefits. However, as a result of this expanding usage, the term "demand response" has come to include a wide range of programs. For clarification, in this letter, NRG refers to DR programs as "emergency DR" and not "economic DR." NRG supports the continued use of emergency DR programs, as discussed in detail below, and advocates for the inclusion of emergency DRin the Chapter 117 definition of emergency situation.

### "Emergency DR/' for the purposes of these standards and comments 1 

### is limited to rare instances where grid stability is threatened after all other potential remedies have been exhausted. Therefore 1 

### while we support utility and consumer efforts to address peak capacity, NRG only recommends that units in emergency DR programs be considered emergency engines for the purposes ofthis rule.
It is NRG's belief that the current Chapter 117 definition of 

### emergency situation does not preclude an engine from operating as part of an emergency DR program. Similar to EPA's recent changes to their definition of 

### emergency engine, it is NRG's belief that the intent of 117.10{15){B) was to prevent those engines that supply power for distribution to the grid for economic gain unrelated to imminent emergency conditions from being classified as emergency engines, thus avoiding environmental controls. As such 1 

### NRG supports TCEQ's proposal to explicitly differentiate between these two operating scenarios.

2. ERCOT's Emergency DR Programs
When defined as the final step before Implementing rolling blackouts 1 

### emergency DR events have been rare. Since its inception in 2006 1 

### ERCOT has only deployed Emergency Interruptible Load Service ("EILS"), now called Emergency Response Service ("ERS")r during two Energy Emergency Alert ("EEA") events for thirty (30) cumulative hours, with 28 ofthose hours occurring during the February 2-3, 2011 extreme cold weather event. While the actual engine runtime as part of emergency DR programs is very limited, ERCOT requires guarantees of substantially higher minimum potential operating hours to ensure grid reliability in the most extreme conditions. ERCOT's deployment 

### of emergency DR depends on regional factors such as weather conditions/ generation fuel mix, and transmission constraints. As ERCOT's generation fuel mix continues to shift towards more renewable energy alternatives, their deployment of emergency DR programs will also likely continue to expand. As such, NRG supports TCEQ's proposal to align the Chapter 117 definition of 

### emergency situation with ERCOT's emergency DR program in lieu of establishing an annual limit on emergency DR operation. By aligning the rule with the appropriate regulator, TCEQ would not be limiting future emergency DR operations and would instead be allowing ERCOT to manage and optimize these operations.

3. NRG's Recommendation
As explained above, NRG agrees that there is a strong environmental and interrelated grid reliability rationale for emergency DR programs. NRG supports TCEQ's proposal to explicitly include emergency DR events under the definition of 

### emergencysituation. However, instead of adding this language as a new provision under 117.10(15)(A)(vii), NRG recommends modifying the existing language in 117.10{15)(A)(ii), as outlined below. NRG also recommends avoiding references to specific ERCOT protocols, as these protocols are likely to change periodically. For example, 117.10(15){A)(ii) could be revised as follows: (ii) the period of time that an engine is operating in response to an Electric Reliability Council of Texas. Inc. (ERCOTl-issued emergency notice, as defined in the ERGOT Protocols, Section 2: Definitions and Acronyms (April 25, 2006), issued by the Electric Reliability Council of Texas, Inc. (ERCOT) as specified in ERCOT PFotecols, SectioA 5: Dispatch (ApFil 26 1 

### 2006), of imminent emergency conditions. such as unusually low frequency. equipment overload. capacity or energy deficiency, or unacceptable voltage level is applicable to the serving electric power generating system. The emergency situation is considered to end upon expiration of the emergency noticed issued by ERCOT;

### Accordingly, 117.10(15)(8) would be amended as proposed by TCEQ.

NRG appreciates the opportunity to comment on TCEQ's proposed revisions to Chapter 117 and is available to discuss or provide additional information, 

### if necessary. 

# ::·T1r2:r:·

craig R. Eckberg 

# o--

NRG Energy Inc.



### Dated: December 5, 2012

### UNITED STATES ENVIRONMENTAL PROTECTION AGENCY 

## REGION6



## Mr. Bruce McAnally Office ofLegal Services, MC 205 1445 ROSS AVENUE, SUITE 1200 DALLAS, TX 75202-2733



## Texas Commission on Environmental Quality P.O. Box 13087 Austin, TX 78711-3087
Re: Rule Project Number 2012-025-117·AI
Dear Mr. McAnally: 

# W-8

Thank you for the opportunity to comment onproposed revisions to make certain sections ofthe Texas Administrative Code current when referencing the Electric Reliability Council ofTexas, Incorporated (ERCOT). The proposed revisions affect a subparagraph within 30 TAC Chapter 101, General Air Quality Rules, and Definitions found at 30 TAC Chapter 117. The Texas Commission on Environmental Quality (TCEQ) has proposed a revision to 

## §101:379 (Program Audits and Reports) to reference the version ofthe ERCOT protocols effective on June 1, 2012. The TCEQ has also proposed a revision to 

## §117.10 (Definitions) to update the definition of

## Emergency situation to ensure consistency with the ERCOT's revised protocols and**ne~~** 

## Emergency Response Service program and to reflect changes made by the ERCOT to promote reliability during energy emergencies by allowing the operation ofgenerators for purposes ofselling power to the electric grid under limited circumstances.
We support the TCEQ's efforts to update the references to the current ERCOT protocols. We note that the Discrete Emission Reduction Credit (DERC) rules at 30 TAC 101.379 establish the DERC flow control mechanism to support attainment ofthe 1997 8-hour ozone standard. The EPA promulgated a more stringent ozone standard on March 27, 2008, and on April 30, 2012, the EPA designated a new 1 0- county area as the 2008 Dallas-Fort Worth ozone nonattainment area. The TCEQ will need to review the technical basis for the DERC flow control at 30 TAC 101.379 and update as necessary to reflect the most current ozone standard as part ofits attainment planning. Region 6 continues to offer Texas our support during the rule revision process. Please let us know how we may be offurther assistance. Sincerely yours,
,-'"'] 

# )v) .,._ Guy Donaldson Chief, AirPlanning Section

cc: Jeffrey Robinson

Recycled/Recyclable • PrintsdWith Vegetable OilBased Inks on I00% Recyded Paper(40% Postconsumer)

## INDEX OF ORALTESTIMONY



## NO ORALTESTIMONYWAS RECEIVED PERTAININGTO THIS RULE REVISION.

# Texas Commission on Environmental Quality Public Hearing Registration Wednesday, November 28, 2012 

# 2:00PM
Rule Project No.: 2012-025-117-AI Short Title: Chapter 117 Definition Update and Revisions to Chapter 101 Location: Building E, Room 201 S, at the TCEQ Central Office, 12100 Park 35 Circle, Austin, Texas Concerning: The rulemaking would update Chapters 101 and 117 to update the references to ERGOT's Emergency Response Service Program.

Name Representing Presenting Oral Testimony? (Please Print) (Circle One) _,./"1 ., 

# fv\(_ 

# t ( ( \\1\· f\ 

# Cooo""'\ 

# c_ [\

# ~ SCil L "- ··-(:_'- 

# S Yes8

# ~v·t,_ c :::J

# 1.---_p.a

..**-~** Yes No

Yes No

Yes No

Yes No

Yes No

Yes No

## HEARINGOFFICER REPORT



## I am the hearing officer assignedto conduct thepublic hearing regarding Chapter 117 

## Definition Update and Revisions to Chapter 101, rule project number 2012- 025-117-AI. 

## A public hearing was scheduled in

## Austin on November 28, 2012, at 2:00p.m. in Building E, 

## Room 2018, at the commission's central office located at 12100 Park 35 

## Circle. TCEQ staffanda courtreporterwere presentfor the publichearing. At 1:30 

## p.m., the room was opened andTCEQ staffwas available tothepublicfor an informal question and answer period. At 2:10 p.m. it was determined that those that were present did not want to make comments on the record. Therefore, the public hearing was not formally opened for comment and a transcriptwas notprepared.

Hearing Officer

Date signed

# EVALUATION

# Texas Commission on Environmental Quality InterofficeMemorandum
To: Commissioners 

# Thru: Bridget C. Bohac, ChiefClerk Zak Covar, Executive Director 

# From: '.J.St:ve Hagle, P.E., DeputyDirector 

# ;r**~fflce** ofAir 

# DocketNo.: 2012-0896-RUL 

# Date: March 22, 2013



# Subject: CommissionApproval for RulemaldngAdoption Chapter 117, Control ofAir Pollution from Nitrogen Compounds Chapter 101, GeneralAir Quality Rules Chapter 117 Definition Update andRevisions to Chapter 101 Rule Project No. 2012-025-117-AI 

# Backgroundandreason(s)for therulemaking: The Electric Reliability Council ofTexas, Inc. (ERCOT) managesthe electrical gridwithin the ERCOT region ofTexas with oversightbythePublic Utility Commission ofTexas (PUCT). On March 22, 2012, the PUCT repealedTitle 16 TexasAdministrative Code (TAC) Chapter 25, Subchapter S, §25.507, toreplacethe EmergencyInterruptibleLoad Service (ElLS) programwiththe Emergency Response Service (ERS) program. Like the ElLS program, the new ERS programis designed to help decrease thelikelihood ofrequiring firm load shedding (i.e., rollingblack-outs) during an ERCOT-declared energyemergency bydecreasing thepower demandonthe electrical grid. Underthe ERS program, pa.rticipants committo decrease theirpower consumption from the electrical grid during a declaredenergyemergency. ERS programparticipants mightmeetthis commitmentby decreasing overall poweruse, replacing power consumptionfrom the gridwithlocal generationbyoperatinglocal emergencybackup generators, or a combination ofboth. However, unlike theElLS program, the newERS program allows qualifiedparticipantsto providepowerbackinto the electrical gridfor sale during an ERCOT-declared energy emergencyunderlimited circumstances. Operating anemergencygenerator as partofERCOT's former ElLS programmeetsthe existing definition ofan emergencysituationin 30TAC Chapter 117, SubchapterA, §117.10. The existing definition ofanemergency situationin §117.10 includes theperiodoftimethat an emergency notice issuedbyERCOT is applicableto the serving electric power generating system andreferences the specific ERCOT protocols that detail the emergency notice. However, the Chapter 117 definition ofan emergency situation also specifically excludes operationfor purposes ofsupplying powerfor distributionto the electrical grid. Therefore, operation ofan emergencygeneratorthat alsoprovides powerbacktothe electrical gridwould notbe considered an emergency situation under the current Chapter 117 definition even ifthe operationwere atthe directive ofERCOT underthe ERS program. While Chapter 117 would notprohibit companies from participatinginthe newERS program, the Chapter 117 rulesthat apply inthe Dallas-FortWorth (DFW) andHoustonGalveston-Brazoria (HGB) 1997 eight-hour ozone nonattainment areas have specific

## Commissioners Page2 March 22, 2013
Re: DocketNo.**2012~0896-RUL** 

## provisionsthatrestrictthe non-emergencyoperationalhours ofemergencygenerators. For these sourcesto qualify for anexemptionfrom therule controlrequirements, participants inthe ERS programwouldhave to counthours ofoperation during an ERCOT·emergency as non-emergencyuse ifpower is soldtothegrid andmight risklosing exemption status under Chapter 117 iftheoperationalhours exceedthe exemption criteria. · The revisedERCOT protocolsfor emergency notice referencedinChapter 117 are·aJso referencedin 30TAC Chapter 101. Currently, §101.379 provides an exemption from the discrete emissions reduction credit (DERC) flow controllimitfor DERCs usedin response to ERCOT-declaredemergencies. The exemptionwas putinplaceto ensure thatshould therebe an ERCOT-declared emergency, a regulated entitywouldnotbeputinto a situation ofeithernon-compliance with agency rules orcontributing to electrical grid instabilitybynotresponding to an ERCOT-declaredemergency notice. 

# Scopeofthe rulemaking: A.) Summaryofwhattherulemakingwilldo: The adoptedrulemaking amends Chapters 101 and 117 toupdatereferencesto ERCOT protocols andreflect changes toERCOT's new ERS program. The adoptedrulemaking amends §101.379 andthe definition ofemergencysituationin §117.10 to reference the version ofthe ERCOT nodal protocols effective June 1, 2012. The adoptedrulemaking also amendsthe definition ofemergency situationin §117.10 toreflect changes madebyERCOT topromote reliability during energyemergencies by allowing the operation ofgenerators for purposes ofselling powertothe elc;:Jctric gridunderlimited circumstances. The amendmentsto Chapters 101 and 117will be submittedtotheUnited States Environmental ProtectionAgency (EPA) as a revision tothe stateimplementationplan (SIP). 

# B.) Scoperequiredbyfederalregulations orstatestatutes: None 

# C.) Additionalstaffrecommendationsthatarenotrequiredbyfederal rule or statestatute: None 

# Statutoryauthority: The amendmentswill be adoptedunderTexas Water Code (TWC), §5.102, concerning General Powers, thatprovides the commission withthe generalpowers to carry outits duties undertheTWC; TWC, §5.103, concerning Rules, that authorizesthe commissionto adopt rules necessaryto carry outitspowers andduties under theTWC; TWC, §5.105, concerning General Policy, thatauthorizes the commissionbyruletoestablish and approve all general policy ofthe commission; andunderTexas Health and SafetyCode (THSC), §382.017, concerning Ru1es, that authorizes the commissionto adoptrules consistentwiththepolicy andpurposes oftheTexas CleanAirAct. The amendments will alsobe adoptedunderTHSC, §382.002, concerning Policy andPurpose, thatestablishes the commission's purposeto safeguardthestate's airresources consistentwiththe

## · Commissioners Page3 March 22, 2013
Re: DocketNo. 2012-0896-RUL
protection ofpublichealth, general welfare, andphysical property; §382.oil, concerning General Powers andDuties, that authorizesthe commissionto controlthe quality ofthe state's air; and §382.012, concerning StateAir Control Plan, that authorizesthe commissiontoprepare and develop a general, comprehensive planfor thepropercontrol ofthe state's air. The amendmentswill also beadoptedunderFederal CleanAirAct, 42 United States Code, §§7401, 

# etseq., which requires statesto submit SIP revisions that specifythe mannerin whichthe National,AmbientAir Quality Standards will be achieved andmaintainedwithin each air qualitycontrol region ofthe state. 

# Effectonthe: A.) Regulatedcommunity: The adoptedrulemaking will preventERS program participantsfrom potentiallylosing exemption statusunder Chapter 117 iftheyprovide powertothe electrical grid during an ERCOT-declared energy emergency. Eliminatingthis potential disincentive mayimprove reliabilityofelectric serviceintheERCOT region while also promotingparticipationinthe ERS program. 

# B.) Public: The adoptedrulemakingwill preventERS programparticipantsfrom losing exemption statusunder Chapter 117 iftheyprovidepower to the electrical grid during an ERCOT-declared emergency. Eliminating thispotentialdisincentive may help promote participationintheERS program andimprove reliability ofelectric service inthe ERCOT region. 

# C.) Agencyprograms: The adoptedrulemaking will have noimpact on agency programs. 

# Stakeholdermeetings: No stakeholder meetings were heldforthisrulemaking project. 

# Publiccomment: The commission scheduled a publichearing inAustin onNovember 28, 2012. However, the commissiondidnotofficially openthehearingbecause no one registeredtoprovide comments. The public commentperiodclosed December 5, 2012. The commission received commentsfrom theAssociation ofElectric Companies ofTexas (AECT), Blue Sky Environmental LLC (Blue Sky), Calpine Corporation (Calpine), EnerNOC, Inc. (EnerNOC), EPA, Electric Reliability Council ofTexas (ERCOT), Exelon Corporation (Exelon), and NRG Texas Power LLC, (NRG). AECT submitted comments onbehalfofAEP Texas, CenterPoint Energy, El Paso Electric, Entergy, GDF SUEZ, Nextera Energy, Lone Star Transmission, Oncor, TXU Energy, Luminant, NRG, Reliant, TNMP, andXcel Energy. AECT, Blue Sky, EnerNOC, EPA, ERCOT, andNRG expressed supportfor theproposed revisions; Calpine and Exelon objectedtotheproposedrevisions. Significantpublic comments are summarized asfollows.

• ERCOT recommendedthe commission amend §117.10(15)(A)(ii) and §101.379(c)(2)(D) toreferERCOT's dispatch ofERS ratherthan on ERCOT's

## Commissi<;mers Page4 March 22, 

## 2013
Re: DocketNo. 2012-0896-RUL

·issuance ofan emergencynotice. 

## To ensure that these rules continue to apply to sources thatare not participating inERGOTsERSprogram butare operating as a resultof an ERGOT-declared emergency, the commission 

# is retaining the reference to emergencynotice. However, in response to ERGOTs comments the commission is revising the definition ofemergencysituation to also include operations in response to anERGOTenergy emergency alert. The commission is making this changeto ensure the definition of emergencysituation includes situations when systemconditions deteriorate so rapidly thatitis notpossible forERCOTto issue an emergency noticeprior to declaring an energy emergency alertand subsequently deploying ERS.

• ERCOT and NRGrecommendedthe commission avoidreferencesto ERCOT's nodal protocols sincetheseprotocols arefrequentlyrevised. ERGOT recommendedthe commissionrevise §117.10(15)(A)(ii) and §101.379(c)(2)(D) to insteadreference the PUCT's ERS rule in 16 TAC §25.507. NRG suggestedlanguage describingthe circumstancesunderwhich ERCOT wouldissue an emergency notice.

## Although the commission is aware that theERGOT NodalProtocols are frequently revised, the commission needs to be certain of the specific circumstances underwhichERGOT 

# willdeployERSresources to help ensure thatthe rule amendmentscan be approved by theEPA aspartof theSIP. The commission respectfully declznes to make the suggestedchanges.

• AECTandNRG supportedrevising §117.10(15) to operationsthat are partof ERCOT's ERS program. To accountfor emergencydemandresponse programs

· initiatedbyTexasutilitiesthat are experiencingvoltage reductions, Blue Sky and

EnerNOC recommendedthe commission revise §117.10(15) and §101.379(c)(2)(D) to also include operationiriresponseto a utility-declared emergencyand recommendedthe commissionnotrevise §117.10(15)(A)(vii) to specifyanERCOT energyemergencyalert (EEA) level. 

## The commission agrees thatthe definition of emergencysituation shouldinclude operationsduring theperiodofanERGOTdeclared emergency butdoes notagree that §117.10(15) 

## and §101.379(c)(2)(D) 

## should include operations thatoccur in response to a utility-declared emergency. The commission makes no change in response to these comments.

• Blue Sky andEnerNOC recommendedthe commissionprovide guidanceregarding the SIPprocess andconfirmthatproposedchangesto §101.379 and §117.10 will not befully implementeduntilthe EPAapproves the SIPrevision

..

## The adopted rule becomes effective 20 

## calendar days after itis filed with the Secretary of State for publication in the Texas Registerand is 

# fully enforceable by the commission from thattimeon irrespective of EPA approval of the rule revision aspartof the SIP. The commission makes no change in response to these comments.

• Calpine andExelon requestedthe commissionnotrevise the definition of emergency situationin §117.10(15) to allowERS participantsto sell powerbackto

## . Commissioners Pages March 22, 2013
Re: Docket No. 2012-0896-RUL

the electrical gridandrecommendedthe commission insteadrequire all commercial generation tomeetthe commission's applicable air qualityregulations. 

## The amendments to §117.10(15) 

## ensure that the changes made to ERGOT's newERS program, which allowparticipants toprovidepower for distribution to the -electricalgrid, do notnarrow the scope of what the commission currently considers an emergency situation. The adoptedrulemaking does notrelieve affectedsources from the obligation to meetanyairquality regulation that currently applies. The commission makesno change in response to these comments.

• Calpine andExelon commentedthatexempting commercialbackup generation from air quality regulations wouldnegatively affect air qualityby expandingthe number ofhigh-emitting diesel engines; discouraging investmentin new, lowemitting generation; andproviding anunnecessary subsidytohigh-emitting sources. Calpine also commentedthattheproposedrule might notbenefit electric reliabi\ity. 

## Operation of emergency generators during anERGOT-declared emergency under thepreviousElLSprogramwas consideredan emergency situation under the existing Chapter 117

## rules. The adopted revisions to §117.10(15) 

## account thatthe changes made toERGOTs newERSprogram by allowing operation of an emergencygenerator for supplyingpower to the electricalgrid to be consideredan emergency situation 

# if the operation

# ispartof ERGOT's ERS program and in direct response to instruction byERGOTduring anEEA. The purpose of this rulemaking is to ensure that participants in the ERSprogrammay stillclaim operational hours during such energy emergencies as·an emergency situation under Chapter 117

## rules. Therefore, the commission does notconsider the rulemaking as expanding the numberof stationary diesel engines in operation or asproviding a subsidy for diesel engines.Additionally, to qualify for an exemption, ownersandoperators of emergency generators mustmeetall applicable exemption criteria, which include emission standards for specific exemptdiesel engines in the DFWandHGB areas. While the adopted revisions to §117.10(15) 

## do notdirectlypromote reliability, the rulemaking helps ensure that Chapter 117

## rules willnotbe a disincentive to theERSprogram by forcing participants to countemergency operation as non-emergency hours. The commission makesno changes in response to these comments.

• EPAcommentedthatthe commission

# will needto reviewthe technicalbasisfor the DERC flowcontrol in §101.379 andupdate as necessaryto reflect the most current ozone standardas partofits attainmentplanning. 

## The commission may consider the DERC flow control requirements aspartof its planning efforts for the 2008 

## ozone standard. The commission makes no change in response to this comment. 

# Significantchangesfromproposal: Inresponseto ERCOT's comments, the commission is revising §117.10(15) and §101.379(c)(2)(D) to also include operationsinresponseto an ERCOT energyemergency

## Commissioners Page6 March 22, 2013
Re: Docket No. 2012-0896-RUL

alert. The commissionis makingthis change to ensurethe definition ofemergency situationincludes situations when system conditions deteriorate so rapidlythatitis not possiblefor ERCOT toissue an emergencynoticepriorto declaring an energyemergency alert and subsequentlydeploying ERS.
In responseto ERCOT's comments onthis rulemaking, thecommission is revising the proposedlanguagein §117.10(15)(A)(vii) toreferto onlythose operations that occur during theperiodofanERCOT EEA

## insteadoftheperiodofan ERCOT emergency notice. The intentofthisrulemaking is tolimitthe circumstances underwhich an emergency generator can provide powerfor distributiontothe electrical gridto onlythose operations that arepartofERCOT'.s ERS program andin direct responseto ERCOT's dispatch instructionduringtheperiod of

# an ERCOT EEA. ERCOT onlydeploys ERS resources during anEEA, so

# itisunnecessaryfor thecommissiontorefertotheperiodduring an ERCOT emergencynotice. 

# Potentialcontroversialconcerns andlegislativeinterest: Thedefinition section ofChapter 117 

## andthe associated divisionsthatreferencethe definition ofemergencysituation are includedinthe SIP. Becausethe adoptedrevisionsto thedefinition ofemergency situationislimitedto ERCOT"-declared emergencies, the amendment

# Will not expandtheuse of

## emergencybackup generation and should notbe consideredasbackslidingundertheFederal Clean AirAct. However, the amended definition is still subjectto EPAreview andapproval as a SIPrevision. 

# Doesthisrrilem8.king affect anycurrentpolicies orrequiredevelopmentof newpolicies? No 

# What al."e theconsequencesifthisrulemakingdoesnotgoforward? Arethere alternativestorulemaldng? The commission could decide notto revise Chapters 101 and 117 

## toupdatereferences to ERCOT protocols andreflect changes to ERCOT's newERS program. Not amending Chapters 101 and 117 toreferencethe newERCOT protocols couldpotentiallycause confusion for regulated entities and delaythe processing ofDERC usage requests. Ifthe Chapter 

## 117 definition is not adopted, ERS program participants couldpotentiallylose exemption statusunder Chapter 117 iftheyprovidepowertothe electrical grid during an**ERCOT~declared** 

## emergency. Thepotentialloss ofexemption statusunder Chapter 117 may discourage participation inthe ERS program and negatively impactreliability ofelectric service intheERCOT region. · 

# Keypointsintheadoptionrulemakingschedule: 

# TexasRegisterproposalpublicationdate: November 2, 2012 

# Anticipated 

# TexasRegisterpublicationdate:April 26, 2013 

# Anticipatedeffectivedate: May 2, 2013 

# Six-month 

# TexasRegisterfiling deadline: May 2, 2013

## · Commissioners Page7 March 22, 2013
Re: Docket No. 2012-0896-RUL


# Agencycontacts: Ray Schubert, Rule Project Manager, 239-6615, Air Quality Division Alexis Lorick, StaffAttorney, 239-0649 Bruce McAnally, 

# Texas Register Coordinator, 239-2141

cc: ChiefClerk, 2 

## copies Executive Director's Office SusanaM. Hildebrand, P.E. Anneldsal Curtis Seaton Tucker Royall Office ofGeneral Counsel RaySchubert Bruce McAnally

## EVALUATION OF TESTIMONY



## The Texas Commission on Environmental Quality (TCEQ, agency, orcommission) adopts the amendmentto §101.379 

# with change to theproposedtext as published inthe November 2, 2012 

## issue ofthe 

# Texas Register (37

## TexReg 8718).



# Ifadopted, the amended §101.379 

## will be submittedtothe United States Environmental ProtectionAgency (EPA) as a revision to the state implementationplan (SIP).



## BackgroundandSummaryofthe Factual Basisfor theAdopted Rule The Electric Reliability Council ofTexas, Inc. (ERCOT) manages the electrical grid withinthe ERCOT region ofTexas, with oversightbythe Public Utility Commission of
Texas (PUCT). On March 22, 2012, 

## the PUCT repealed 16 

## TAC §25.507, 

## to replace the Emergency Interruptible Load Service (ElLS) program with the Emergency Response Service (ERS) program (new 16 

## TAC §25.507). 

## Like the ElLS program, the new ERS
program is designedto help decrease thelikelihood ofrequiring firm load shedding (i.e., rollingblack-outs) during an ERCOT-declared energy emergencybydecreasing the
power demand on the electrical grid. Subsequent changes to ERCOT's Nodal Protocols reflecting the new ERS programbecame effective onJune 1, 2012.



## On December 10, 2008, 

## the commission adoptedthe amendmentto §101.379 

## to restrict the use ofdiscrete emissions reduction credits (DERCs) inthe Dallas-FortWorth 1997 

## eight-hour ozone nonattainment area (DFW area) to a level consistentwiththe attainment andmaintenance ofthe 1997

## eight-hour ozone National AmbientAir Quality

1

## Standard (NAAQS). The rule requires an annual review ofthe DFW area DERC program
to determine theflow control limit and apportion available DERCs for potential use. The rule also provides an exemption from the DFWflow control limitfor DERCs usedin
response to an ERCOT-declared emergency situation andreferences the specific ERCOT protocols that detail the emergency notice. The existing rule references a previous version ofthe ERCOT protocols, which could potentially cause confusion for regulated entities and delay the processing ofDERC usage requests. The adoptedrulemaking updates §101.379 to reference theversion ofthe ERCOT protocols effective onJune 1,
2012.

The amendmentto §101.379 is adopted concurrentlywith the amendmentto 30 TAC §117.10 thatwill be publishedin a separate rulemaking inthis issue ofthe 

# Texas Register.

Section Discussion The commission revises §101.379(c)(2)(D) to reference the version ofthe ERCOT Protocols effective on June 1, 2012. Additionally, in response to ERCOT's comments on this rulemaking, the commission is revising §101.379(c)(2)(D) to also include operations
in response to an ERCOT energy emergency alert. The commission is makingthis changeto address situations when system conditions deteriorate so rapidlythatitis not possible for ERCOT to issue an emergency notice priorto declaring an energy
emergency alert.

2

## Final Regulatory ImpactAnalysis 

## The commission reviewedthe adoptedrule inlight ofthe regulatory analysis requirements ofTexas Government Code, §2001.0225 

## and determinedthatthe adopted rulemaking does not meetthe definition ofa major environmental rule. Texas Government Code, §2001.0225 

## statesthat a major environmental rule is a rule for which the specific intentis to protectthe environment or reduce risks to humanhealth from environmental exposure andthat may adversely affect in a material way the
economy, a sector ofthe economy, productivity, competition,jobs, the environment, or thepublichealth and safety ofthe state or a sector ofthe state. Furthermore, while the adopted rulemaking does not constitute a major environmental rule, even ifit did, a regulatory impact analysis would notbe requiredbecause the adopted rulemaking does
not meet any ofthefour applicability criteriafor requiring a regulatory impact analysis for a major environmental rule. Texas Government Code, §2001.0225 

## applies onlyto a major environmental rule that: 1) 

## exceeds a standard setbyfederal law, unless the rule is specifically requiredby statelaw; 2) 

## exceeds an express requirement ofstate law, unless the rule is specifically requiredbyfederal law; 3) exceeds a requirement ofa delegation agreement or contractbetween the state and an agency orrepresentative of the federal government to implement a state andfederal program; or4) adopts a rule solelyunderthe general powers ofthe agency instead ofunder a specific state law. Specifically, it does not meet any ofthefour applicability criterialisted in Texas Government Code, §2001.0225

## because: 1)

## the adopted rulemaking is partofthe SIP, and as such is designedto meet, not exceedthe relevant standard setbyfederal law; 2) 

## parts ofthe adopted rulemaking are directly requiredby statelaw; 3) no contract or delegation agreement covers thetopicthatis the subject ofthis adoptedrulemaking;
3

## and4) the adoptedrulemaking is authorizedby specific sections ofTexas Health and Safety Code (THSC), Chapter 382 

## (also known as theTexas Clean AirAct), andthe
Texas Water Code, which are cited in the StatutoryAuthority section ofthis preamble.

The adopted rule implements requirements ofthe Federal Clean Air Act (FCAA). Under
42 

## United States Code (USC), §7410, 

## each state is requiredto adopt andimplement a SIP containing adequate provisions to implement, attain, maintain, andenforce the NAAQS within the state. While 42 

## USC, §7410 

## generally does notrequire specific
programs, methods, orreductions in orderto meetthe standard, SIPs mustinclude enforceable emissionlimitations andother control measures, means, ortechniques (including economic incentives such as fees, marketable permits, and auctions of emissions rights), as well as schedules andtimetables for compliance as maybe
necessary or appropriate to meetthe applicable requirements ofthis chapter (meaning
42 

## USC, Chapter 85, Air Pollution Prevention and Control, otherwise known as the FCAA). The provisions ofthe FCAA recognize that states are inthebestpositionto determine whatprograms and controls are necessary or appropriate in orderto meetthe NAAQS. This flexibility allows states, affected industry, andthe publicto collaborate on the best methods for attainingthe NAAQS for the specific regions in the state. Even though the FCAA allows states to develop their own programs, this flexibility does not relieve a statefrom developing a program that meets the requirements of42 

## USC, §7410. 

## States are notfree to ignore the requirements of42 

## USC, §7410, 

## andmust develop programs and control measures to assure thattheir SIPs provide for implementation, attainment, maintenance, andenforcement ofthe NAAQS within the
state. The specific intent ofthe adopted rulemaking is toupdate references to the
4

## ERCOT protocols in §101.379 tobe consistentwith §117.10.

While the adoptedrulemaking protects the environment or reduces risks to human health from environmental exposure, it does not constitute a major environmental rule underTexas Government Code, §2001.0225(g)(3) because itdoes not adversely affect in

a material waythe economy, a sector ofthe economy, productivity, competition, orjobs,

norwould the rulemaking adversely affect in a material way the environment, orthe publichealth and safety ofthe state or a sector ofthe state. The rulemaking as a result is
not subjectto a regulatory impact analysis underTexas Government Code, §2001.0225 because itis not a major environmental rule.

The requirementtoprovide a fiscal analysis ofregulations in theTexas Government Code was amendedby Senate Bill (SB) 633, 75th Legislature, 1997. The intentofSB 633

was to require agencies to conduct a regulatoryimpact analysis ofextraordinaryrules. These are identified in the statutorylanguage as major environmental rules thatwill have a material adverse impact andwill exceed a requirement ofstate law, federal law,

or a delegatedfederal program; or are adopted solelyunderthe general powers ofthe TCEQ. With theunderstandingthatthis requirementwould seldom apply, the commission provided a cost estimate for SB 633 that concluded: based on an
assessment ofrules adoptedbythe agency inthe past, itis not anticipatedthatthebill will have significantfiscal implications for the agency due to its limited application. The commission also notedthatthe number ofrules thatwould require assessment under the provisions ofthebill was not large. This conclusion was based, in part, onthe criteria setforth inthebill that exemptedrules from thefull analysis unless the rule was
5

## a major environmental rule that exceeded a federal law.

The FCAA does not always require specific programs, methods, orreductions in orderto
meetthe NAAQS; thus, states must develop programs for each nonattainment areato help ensurethatthose areas will meetthe attainment deadlines. Because ofthe ongoing needto address nonattainmentissues andto meetthe requirements of42 USC, §7410, the commission routinely proposes and adopts revisions to the SIP andrules. The legislature is presumedto understandthis federal scheme. If

## each rule adoptedfor inclusion in the SIP were consideredtobe a major environmental rule that exceeds federal law, then every revision tothe SIP would require thefull regulatoryimpact analysis contemplatedby SB 633. This conclusion is inconsistentwith the conclusions reachedbythe commission in its cost estimate andbythe Legislative Budget Board (LBB) in its fiscal notes. Since thelegislature is presumedto understand thefiscal impacts ofthebills it passes andthatpresumption is based on informationprovidedby
state agencies andthe LBB, the commissionbelieves thatthe intent ofSB 633 was only
to require thefull regulatory impact analysis for rules that are extraordinaryin nature. While the rules have a broadimpact, thatimpact is no greaterthan is necessary or appropriate to meetthe requirements ofthe FCAA. Forthese reasons, rules adopted for inclusion in the SIP fall underthe exception inTexas Government Code, §2001.0225(a), because they are requiredbyfederal law.

The commission has consistently applied this construction toits rules sincethis statute

was enactedin 1997. Since thattime, the legislature has revised the Texas Government Code butleft this provision substantiallyunamended. It

## is presumedthat, when an
6

## agency interpretationis in effect atthetime the legislature amends thelaws without making substantial change inthe statute, thelegislature is deemedtohave acceptedthe agency's interpretation. 

# (Central Power & 

# Light Co. v. Sharp, 919 S.W.2d485,489 (Tex. App. Austin 1995), 

# writdenied withpercuriam opinion respecting another issue, 960 S.W.2d 617 (Tex. 1997); 

# Bullock v. Marathon Oil Co., 798 S.W.2d 353, 357 (Tex. App. Austin 1990, no writ) 

# superseded bystatute on anotherpointof law, Tax Code §112.108, OtherActions Prohibited, 

# as recognized in, First StateBank of Dumas v. Sharp, 863 S.W.2d 81, 83 (Tex. App. Austin 1993, no writ); 

# CfHumble Oil & 

# Refining Co. v. Calvert, 414 S.W.2d 172 (Tex. 1967); 

# Dudney v. State FarmMut.AutoIns. Co., 9 S.W.3d 884, 893 (Tex. App. Austin 2000); 

# SouthwesternLifeIns. Co. v. Montemayor,
24 S.W.3d 581 (Tex. App. Austin 2000,

# pet. denied); and 

# Coastal Indust. WaterAuth. v. Trinity Portland CementDiv., 563 S.W.2d 916 (Tex. 1978).)

The commission's interpretation ofthe regulatory impact analysis requirements is also supportedby a change madetothe Texas Administrative ProceduresAct (APA) bythe legislature in 1999. In an attempttolimit the number ofrule challengesbaseduponAPA requirements, thelegislature clarified that state agencies are requiredto meetthese sections oftheAPA againstthe standard ofsubstantial compliance as requiredinTexas Government Code, §2001.035. The legislature specifically identified Texas Government Code, §2001.0225 as falling underthis standard. The commission has complied with the requirements ofTexas Government Code, §2001.0225.

Even ifthe adopted rulemaking constitutes a major environmental rule underTexas
Government Code, §2001.0225(g)(3), a regulatory impact analysis is not required

7

## becausethis exemption is part ofthe commission's SIP for making progress towardthe attainment andmaintenance ofthe NAAQS. Therefore, the adoptedrulemaking does
not exceed a standard setbyfederal law orexceed an express requirement ofstatelaw, since they are part ofan overall regulatory scheme designedto meet, not exceedthe relevant standard setbyfederal law (NAAQS). The commission is chargedwith protecting air quality withinthe state andto design and submit a planto achieve attainment andmaintenance ofthe federally mandatedNAAQS. The Third District Court ofAppeals upheldthis interpretation in

# Brazoria County v. Texas Comm'n on Envtl. Quality, 128 S.W. 3d728 (Tex. App. -Austin 2004, no writ). The specific intent of the adopted rulemaking is to update references to the ERCOT protocols in §101.379 to be consistentwith §117.10. This adoption, therefore, does not exceed an express requirement offederal law. The amendmentis neededto implement state law, but does
not exceedthose newrequirements. Finally, this rulemaking was not developed solely underthe general powers ofthe agency butis authorizedby specific sections ofTHSC, Chapter 382, which are cited in the StatutoryAuthority section ofthis preamble, including THSC, §382.012 and §382.019. Because this adopted rulemaking does not
meet any ofthe four applicability requirements, Texas Government Code, §2001.0225(b) does not apply and a regulatory impact analysis is not required.

The commission invitedpublic comment regardingthe draft regulatory impact analysis determination duringthe public commentperiod. No comments were received on the regulatoryimpact analysis determination.



# 8

## Takings ImpactAssessment 

# The commission evaluatedthe adopted rulemaking andperformed an analysis of whetherthe adopted rulemaking constitutes a taking under Texas Government Code, Chapter 2007. 

# The commission's preliminary assessmentindicates Texas Government Code, Chapter 2007

# does not apply.

Under Texas Government Code, §2007.002(5),

# taking means: "(A) a governmental action that affects private real property, inwhole orin partortemporarily or permanently, in a mannerthatrequires the governmental entityto compensate the private real propertyowner as providedbythe Fifth and FourteenthAmendments to the United States Constitution or Section 17

# or 19,

# Article I, Texas Constitution; or (B) a governmental action that: (i) 

# affects an owner's private real propertythatis the subject ofthe governmental action, inwhole orin part ortemporarily orpermanently, in a

mannerthat restricts orlimits the owner's rightto the propertythatwould otherwise exist inthe absence ofthe governmental action; and (ii) 

# is theproducing cause ofa reduction ofatleast 25 

# percentin the marketvalue ofthe affected private real property, determinedby comparing the marketvalue ofthe property as ifthe governmental action is not in effect andthe marketvalue ofthe propertydetermined as ifthe governmental action is in effect."

Promulgation and enforcement ofthe rulemaking wouldbe neither a statutorynor a constitutional taking ofprivate real property. The primarypurpose ofthe rulemaking is

anupdate to Chapter 101, 

# Subchapter H to ensure consistencywith ERCOT's new ERS
program. This rule is notburdensome, restrictive, orlimiting ofrights to private real
9

## propertybecause the rulemaking regulates theuse ofelectric generators in certain limited emergency situations. Furthermore, therulemakingbenefits thepublicby potentiallydecreasing thelikelihood ofrequiring firm load shedding (i.e., rolling blackouts) when additional control measures are neededto achieve or maintain attainment of thefederal air quality standards throughtheuse ofelectric generators. The rulemaking does not affect a landowner's rights in private real propertybecause this rulemaking does notburden, restrict, orlimitthe owner's right to property, nor does it reduce the value ofany private real propertyby 25% 

## or morebeyondthatwhich would otherwise exist inthe absence ofthe regulations. Therefore, this rule does not constitute a taking underTexas Government Code, Chapter 2007.



## Consistencywiththe CoastalManagement Program 

## The commission reviewed the adoptedrulemaking andfound thatthe rule is subjectto theTexas Coastal Management Program (CMP) in accordance with the Coastal CoordinationAct, Texas Natural Resources Code, §§33.201 

# etseq., andtherefore must be consistentwith all applicable CMP goals andpolicies. The commission conducted a consistency determination for the adopted rule in accordance with Coastal Coordination Act Implementation Rules, 31 

## TAC §505.22, 

## andfound the adopted rulemaking is consistentwith the applicable CMP goals andpolicies.

The CMP goal applicable tothe adopted rulemaking is the goal to protect, preserve, and enhancethe diversity, quality, quantity, functions, andvalues ofcoastal natural resource

areas (§501.12(1)). 

## The CMP policy applicable to the adopted rulemaking is the policy that commission rules complywith federal regulations in 

## 40 Code ofFederal
10

## Regulations to protect andenhance air qualityinthe coastal areas (§501.32). The adopted rulemaking does not increase emissions ofair pollutants andis therefore, consistentwith the CMP goal in §501.12(1) andthe CMP policy in §501.32.

Promulgation andenforcement ofthis rule will notviolate or exceed any standards identified in the applicable CMP goals andpoliciesbecausethe adopted rule is consistentwith these CMP goals andpolicies andbecause this rule does not create or have a direct or significant adverse effect on any coastal natural resource areas. Therefore, in accordance with §505.22(e), the commission affirms thatthis rulemaking action is consistentwith CMP goals andpolicies.

The commission invited comment onthe consistency ofthis rulemaking during the public commentperiod. The commission received no comments onthe consistency of this rulemaking.

Effect on Sites Subjecttothe Federal Operating Permits Program 

## The adopted amendmentwill notrequire any changes to federal operating permits.

Public Comment 

## The commission scheduled a publichearing inAustin on November 28, 2012. However, the hearing was not officially openedbecause no one registeredto provide comments. The public commentperiod closed on December 5, 2012. The commission received
comments from Blue Sky Environmental LLC (Blue Sky), EnerNOC, Inc. (EnerNOC), EPA, and ERCOT.

11

## Response to Comments
Comment Blue Sky, EnerNOC, EPA, and ERCOT expressed supportfor the proposedrevisions to §101.379(c)(2)(D).

Response The commission appreciatesthe support.

Comment ERCOT commentedthatifsystem conditions deterioratetoo rapidly it might notbe possible to issue an emergencynotice priorto declaring an energy emergency alert and subsequentlydeploying ERS. ERCOT recommendedthe commission amend §101.379(c)(2)(D) to refer to ERCOT's dispatch ofERS ratherthanthe issuance ofan
emergency notice. ERCOT recommendedthatthe commission reference the PUCT's
ERS rule in 16 TAC §25.507 ratherthanthe ERCOT Nodal Protocols referenced inthe proposedrules. ERCOT expressed concernthatthefrequent revisions tothe ERCOT Nodal Protocols could create confusion as to the applicability of§117.10(15)(A)(ii) and §101.379(c)(2)(D). ERCOT suggestedthe commission could more easily monitorthe infrequent changestothe PUCT rules thanthe numerous ongoing proposals to revise the ERCOT Nodal Protocols referenced inthe proposedrules.

Response
The intent of§101.379(c)(2)(D) isto provide electricgeneratingfacilities
12

# that are subjecttothe DERCflow controllimit specifiedin §101.379(c)(2)(A), a temporaryexemptionfrom the DERCflow control limit. Limitingthe definition ofan ERCOT-declared emergencysolelyto deployment ofthe ERSwill exclude electricgeneratingfacilities frombeing temporarilyexemptfrom the DERCflow controllimitwhenrequiredto operatein an emergencysituationinwhichthe safetyorreliabilityofthe ERCOT systemis compromised orthreatened, as determinedbyERCOT. Sincetheprovisionin §101.379(c)(2)(D) affects sourcesthat arelikelynot participatingin ERCOT's ERSprogrambut are operating as a result ofan ERCOT-declaredemergency, itis necessaryfor the commissiontoretain thereferenceto emergencynotice. Additionally, inresponseto ERCOT's
commentsthe commissionis revising §101.379(c)(2)(D) to also include operationsinresponseto an ERCOT energyemergencyalert. The commissionis makingthis changeto ensurethe definition ofan ERCOTdeclared emergencyincludes situationswhen system conditions deteriorate

sorapidlythatitis notpossiblefor ERCOTto issue an emergencynotice priorto declaring an energyemergencyalert.

The commissionis awarethatthe ERCOT Nodal Protocols references in §101.379(c)(2)(D) are frequentlyrevised andhave evenbeen revised since the commissionproposedthis rulemakingin October 2012. Sincethe provisionin §101.379(c)(2)(D) affects sourcesthat are likelynot participatingin ERCOT's ERSprogrambut are operatingas a result ofan ERCOT-declaredemergency, itis not appropriatefor the commissionto
13

# reference the PUCT's ERSrule in 16

# TAC §25.507. 

# The commission respectfullydeclines to makethe suggestedchange.

Comment
To account for emergency demandresponse programs initiatedby Texas utilities that

are experiencingvoltage reductions, Blue Sky andEnerNOC recommended expanding theterm ERCOT-declared emergencyin §101.379(c)(2)(D) to also include utilitydeclared emergencies.



# Response Thepurpose ofthis rule makingis nottoredefine emergencysituationbut merelytoupdate §101.379 

# to reference theversion ofthe ERCOTprotocols effective onJune 1, 2012. 

# The commission does not agree that an emergency situation shouldinclude operationsthat occurinresponse to a utilitydeclared emergency. The suggestedchangewouldeffectivelydecrease the stringencyofthe existingrulesbyexpandingthe scope ofthe current definitiontoinclude additional situationsthatwouldnot currentlybe consideredemergencysituations. Becausethe EPAhas approvedthe existingrules aspart ofthe SIP, the suggestedexpansion ofthe definition couldbe consideredbacksliding andresultinthe EPA's disapproval ofthe rulemaking. As 

# discussedelsewhereinthe Response to Comments section ofthepreamble, the commissionis also revisingtheproposedrule language
toinclude operationsthat arein directresponse to aninstructionby ERCOT duringtheperiod ofan ERCOT energyemergency alert. The
14

# commissionmakes no change in responseto these comments.

Comment
EPA statedthatthe current DERC rules in §101.379 establishthe DERC flow-control mechanism to support attainment ofthe 1997eight-hour ozone standard. The EPA commented ithas since promulgated a more stringent ozone standard. On March 27, 2008 and onApril30, 2012, the EPA designated a newten-county area as the 2008 Dallas-FortWorth ozone nonattainment area. EPA also commentedthatthe commission will needto reviewthe technical basis for the DERC flow control in §101.379 andupdate as necessaryto reflect the most current ozone standard as part of its attainmentplanning.



# Response The scope ofthis rulemakingis limitedto updatingthe referenceto the ERCOT protocols andtherefore evaluatingthe technicalbasis ofthe DERC flow controlfor the 2008 

# ozone standardis beyondthe scope ofthis rulemaking. However, the commission mayconsiderthe DERC flow control requirement as part ofits planningeffortsfor the 2008 

# ozone standard. The commissionmakes no change in response tothis comment.

Comment Blue Sky and EnerNOC recommendedthe commission provide guidance regarding the SIP process. The commenters also requestedthe commission confirm thatthe following assumptions are correct: 1) the revisions in §117.379 will notbe fully implementeduntil
15

## the EPA approves the SIP revision; 2) 

## engines participatinginthe ERS and otherutilitysponsored emergency demandresponse programs without sending powerto the electric grid can continueto operateunderthe definition ofemergency situationuntil the
references to the appropriate protocols are changed; and 3) emergency engines could

not sendpowerto the electric gridunder an emergency situationuntil the SIP revision is approved.



# Response TheTexasWater Code authorizesthe commissiontopropose and adopt rules necessaryto carryoutitspowers andduties. Once adopted, the commissionfiles the rulewiththe SecretaryofStateforpublicationinthe 

# TexasRegister. This actionusuallyoccursthefirst Friday after adoption. Therulebecomes effective 20 

# calendar days afterfiling andisfully enforceablebythe commissionfrom thattime onirrespective ofEPA approval oftherule revision aspartofthe SIP. Therefore, beginningonthe effective date ofthe rule, the definition ofemergencysituationwillinclude operationsindirectresponse to aninstructionbyERCOT duringtheperiod ofan ERCOT-declaredemergencythat supplypowerto the electricgrid. As 

# discussed elsewhereinthe Responseto Comments section ofthepreamble, the definition ofemergency situationin §101.379 

# includes operations during an ERCOT-declaredemergencybut does notinclude otherutilitysponsoredemergencydemandresponseprograms. The commission makes

no changeinresponseto these comments.

16

## EVALUATION OFTESTIMONY



## The Texas Commission on Environmental Quality (TCEQ, agency, or commission) adopts the amendmentto §117.10 

# with changes tothe proposedtext as published inthe November 2, 2012 

## issue ofthe 

# Texas Register (37

## TexReg 8722).



## If

## adopted, the amended §117.10 

## will be submittedtothe United States Environmental ProtectionAgency as a revision tothe stateimplementation plan (SIP).



# Backgroundand Summaryofthe Factual BasisfortheAdopted Rule The Electric Reliability Council ofTexas, Inc. (ERCOT) manages the electrical grid within the ERCOT region ofTexas, with oversightbythe Public Utility Commission of
Texas (PUCT). On March 22, 2012, 

## the PUCT repealed 16 

## TAC §25.507, 

## to replace the Emergency Interruptible Load Service (ElLS) program withthe Emergency Response Service (ERS) program (16 

## TAC §25.507). 

## Like the ElLS program, the newERS program is designed to help decrease thelikelihood ofrequiring firm load shedding (i.e., rolling black-outs) during an ERCOT-declared energy emergencyby decreasing thepower demand onthe electrical grid. Underthe ERS program, participants committo decrease their power consumptionfrom the electrical grid during a declared energy emergency. ERS programparticipants might meetthis commitmentby decreasing overall power
use, replacing power consumptionfrom the gridwith local generationby operating local
emergencybackup generators, or a combination ofboth. However, unlike the ElLS
program, the newERS program allows qualified participantsto provide powerbackinto the electrical gridfor sale during an ERCOT-declared emergencyunderlimited

1

## circumstances.

Operating an emergency generator as part ofERCOT's former ElLS program meets the existing definition ofan emergency situation in §117.10. 

## The existing definition ofan
emergency situationin §117.10 

## includes the period oftime that an emergency notice issuedbyERCOT is applicable to the serving electric power generating system and references the specific ERCOT protocols thatdetail the emergency notice. However, the Chapter 117 

## definition ofan emergency situation also specifically excludes operationfor
purposes ofsupplying powerfor distribution tothe electrical grid. Therefore, operation ofan emergencygeneratorthat also provides powerbackto the electrical grid would not be considered an emergency situationunderthe current Chapter 117 

## definition even if the operationwere atthe directive ofERCOT underthe ERS program.

While Chapter 117 

## would notprohibit companies from participating inthe new ERS
program, the Chapter 117 

## rules that apply in the Dallas-FortWorth (DFW) and Houston-Galveston-Brazoria (HGB) 1997

## eight-hour ozone nonattainment areas have specific provisions thatrestrictthe non-emergency operationalhours ofemergency generators. Forthese sources to qualify for an exemption from the rule control requirements, participants in the ERS program would have to counthours ofoperation during an ERCOT emergency as non-emergencyuse ifpower is soldto the grid and might risklosing exemption statusunder Chapter 117 

## ifthe operational hours exceed the exemption criteria.

The adoptedrulemaking updates the definition ofemergency situation in §117.10 

## to

2

## ensure consistencywith ERCOT's new ERS program. The adopted rulemaking references theversion ofthe ERCOT protocols effective onJune 1, 2012. 

## The adopted rulemaking also revises the definition ofemergency situationto reflect changes madeby ERCOT to promote reliability during energy emergencies by allowing the operation of generators for purposes ofselling powerto the electric gridunderlimited circumstances.

The amendmentto §117.10 

## is adopted concurrentlywith an amendmentto 30

## TAC §101.379 

## thatwill be publishedin a separate rulemaking inthis issue ofthe 

# Texas Register.

DemonstratingNoninterference underFederal CleanAirAct, Section no(l) 

## The commission provides thefollowing information to demonstrate whythe adopted change tothe definition ofemergency situationin Chapter 117 

## will not negatively impact the status ofthe state'sprogress towards attainmentwith the 1997

## eight-hour ozone NationalAmbientAir Quality Standard (NAAQS), will notinterfere with control

measures, andwill not preventreasonable further progress toward attainment ofthe

ozone NAAQS.

As 

## mentioned elsewhere inthis preamble, the Chapter 117 

## rules exempt certain sources in the DFW and HGB 1997

## eight-hour ozone nonattainment areas that operate exclusively during emergency situations or operate for a limited number ofhours in
non-emergency situations. Underthe existing Chapter 117 

## rules, the period oftime during an ERCOT-declared emergencyis considered an emergency situation. The


# 3

## commissionhas interpretedthis to meanthatwhen demonstrating compliance with the Chapter 117 

## exemption criteria, participants in ERCOT's former ElLS program were not requiredto includethe hours ofoperation for generators operated during an ERCOTdeclared emergency as non-emergency operation.

ERCOT's new ERS program promotes reliability during energy emergenciesby allowing qualified participantsto provide powerfor distribution tothe electrical grid during an ERCOT-declared emergency. Under the existing Chapter 117 

## rules, participants in ERCOT's new ERS program are notrequiredto include the hours ofoperationfor generators operated during an ERCOT-declared emergencywhen demonstrating compliance withthe Chapter 117 

## exemption criteria as long as these sources do not provide powerfor distribution tothe electrical grid. Because the existing Chapter 117 

## definition ofan emergency situation specifically excludes operationfor purposes of supplying powerfor distributionto the electrical grid, ERS program participants would have to counthours ofoperation during an ERCOT-declared emergencywhen demonstrating compliance withthe Chapter 117 

## exemption criteria ifpower is provided backinto the grid. This practice could result in ERS program participants losing exemption statusunder Chapter 117 

## ifthe non-emergencyhours exceed the exemption criteria andpotentially discourage ERS program participantsfrom supplying excess generationbackto the grid during an ERCOT-declared energy emergency. The adopted rulemaking prevents ERS program participantsfrom potentiallylosing exemption status under Chapter 117 

## iftheyprovide power tothe electrical grid during an ERCOT-declared
emergency. The adoptedrulemaking ensures thatthe changes made to ERCOT's new ERS program do not narrowthe scope ofwhatthe commission currentlyconsiders an


## 4

## emergency situation.

The period oftime during an ERCOT-declared emergency is currentlyconsidered an
emergency situation underthe existing Chapter 117 rules. The adoptedrevisions to the definition ofemergency situationlimitthe circumstances underwhich a generator could provide powerfor distribution to the electrical gridto only those operations that are part ofERCOT's ERS program andin direct response to aninstructionbyERCOT duringthe period ofan ERCOT energyemergency alert (EEA). Therefore, the adopted amendment does notincrease the number ofsources that could qualify for exemption underthe Chapter 117 rules orincreasethefrequency or duration ofthe operation during an
emergency situation. Forthese reasons, the commission determinedthatthe adopted rulemaking will not negatively impactthe status ofthe state's attainmentwith the 1997 eight-hour ozone NAAQS and shouldnotbe considered asbacksliding underthe Federal CleanAir Act (FCAA).



# Section Discussion The commission adopts amendments tothe definition ofemergency situationin §117.10(15). The commission revises §117.10(15)(A)(ii) to reference the version ofthe
ERCOT Protocols effective June 1, 2012. Additionally, in responseto ERCOT's

comments onthis rulemaking, the commission is revising the definition ofemergency situation in §117.10(15)(A)(ii) to also include operationsin response to an ERCOT EEA. The commission is making this changeto ensurethe definition ofemergency situation includes situations when system conditions deteriorate so rapidlythatit is notpossible
for ERCOT to issue an emergency notice priorto declaring an EEA and subsequently


# 5

## deploying ERS.

The commission adopts §117.10(15)(A)(vii) to include operation ofan emergency generator as part ofERCOT's ERS program when the operationis in direct response to

an instructionby ERCOT during the period ofan ERCOT EEA as specified in §117.10(15)(A)(ii). In response to ERCOT's comments onthis rulemaking, the commission is revising the proposedlanguage in §117.10(15)(A)(vii) to refer to only those operationsthat occur duringthe period ofan ERCOT EEA instead ofthe period of

an ERCOT emergency notice. The intent ofthis rulemaking is tolimitthe circumstances underwhich an emergencygenerator canprovide power for distribution tothe electrical gridto onlythose operations that are partofERCOT's ERS program andin direct
response to ERCOT's dispatch instruction during the period ofan ERCOT EEA. ERCOT only deploys ERS resources during an EEA, so it is unnecessaryfor the commission to refer tothe period during an ERCOT emergency notice.

The commission also adopts the reformatting ofthe existing §117.10(15)(B) description ofthe situationsthat are not considered emergency situations. Adopted clause (i) incorporates the existing portion ofthe definition indicatingthat an emergency situation does not include operationfor training purposes or otherforeseeable events. Existing §117.10(15)(B) indicates that an emergency situation does not include operationfor
purposes ofsupplying powerfor distribution to the electric grid. Adopted clause (ii) indicates that an emergency situation does notinclude operation for purposes of supplying power for distributiontothe electric grid except as specified under §117.10(15)(A)(vii). The intent ofadopted §117.10(15)(B)(ii) is tolimitthe circumstances
6

## underwhich an emergency generator can provide power for distribution tothe electrical grid to onlythose operations that are part ofERCOT's ERS program andin direct
response to ERCOT's dispatch instruction duringtheperiod ofan ERCOT EEA. Adopted clause (ii) is necessaryto reflect changes madebyERCOT to promotereliability during
energy emergenciesby allowing the operation ofgenerators for purposes ofselling
power to the electric gridunderlimited circumstances.

Final Regulatory Impact Determination 

## The commission reviewed the adoptedrule in light ofthe regulatory analysis requirements ofTexas Government Code, §2001.0225 

## and determinedthatthe adopted rulemaking does notmeetthe definition ofa major environmental rule. Texas Government Code, §2001.0225 

## statesthat a major environmental rule is a rule for which the specific intent is to protectthe environment or reduce risks to humanhealth from environmental exposure andthat may adversely affect in a material way the
economy, a sector ofthe economy, productivity, competition,jobs, the environment, or the publichealth and safety ofthe state or a sector ofthe state. Furthermore, while the adopted rulemaking does not constitute a major environmental rule, even ifit did, a regulatory impact analysis would notberequiredbecause the adoptedrulemaking does
not meet any ofthe four applicability criteria for requiring a regulatoryimpact analysis for a major environmental rule. Texas Government Code, §2001.0225 

## applies onlyto a major environmental rule that: 1) 

## exceeds a standard setbyfederal law, unless the rule is specifically requiredby statelaw; 2) 

## exceeds an express requirement ofstatelaw, unless the rule is specifically requiredbyfederal law; 3) exceeds a requirement ofa delegation agreement or contractbetween the state and an agency orrepresentative of

7

## thefederal governmentto implement a state andfederal program; or4) adopts a rule solelyunderthe general powers ofthe agency instead ofunder a specific statelaw. Specifically, it does not meet any ofthefour applicability criterialistedinTexas Government Code, §2001.0225

## because: 1) 

## the adoptedrulemaking is part ofthe SIP, and as such is designedto meet, not exceedthe relevant standard setbyfederal law; 2) 

## parts ofthe adopted rulemaking are directly requiredby statelaw; 3) no contract or delegation agreement covers thetopic thatis the subject ofthis adopted rulemaking; and4) the adoptedrulemaking is authorizedby specific sections ofTexas Health and Safety Code (THSC), Chapter 382 

## (also known as the Texas CleanAir Act), andthe
Texas Water Code, which are cited inthe StatutoryAuthority section ofthis preamble.

The adopted rule implements requirements ofthe FCAA. Under 42 

## United States Code (USC), §7410, 

## each state is requiredto adopt andimplement a SIP containing adequate provisions to implement, attain, maintain, andenforce the NAAQS withinthe state. While 42 

## USC, §7410 

## generally does notrequire specific programs, methods, or reductions in orderto meetthe standard, SIPs mustinclude enforceable emission limitations and other control measures, means, ortechniques (including economic incentives such as fees, marketable permits, and auctions ofemissions rights), as well as schedules andtimetables for compliance as maybe necessary or appropriate to meetthe applicable requirements ofthis chapter (meaning 42 

## USC, Chapter 85, Air Pollution Prevention and Control, otherwise known as the FCAA). The provisions ofthe FCAA recognize that states are in thebestpositionto determine whatprograms and controls

are necessary or appropriate in orderto meet the NAAQS. This flexibility allows states, affected industry, andthe publicto collaborate on thebest methods for attainingthe


# 8

## NAAQS for the specific regions inthe state. Even thoughthe FCAA allows statesto develop their own programs, this flexibility does not relieve a statefrom developing a
program thatmeets the requirements of42 USC, §7410. States are notfree to ignore the requirements of42 USC, §7410, and must develop programs and control measures to

assure thattheir SIPs provide for implementation, attainment, maintenance, and enforcement ofthe NAAQS withinthe state. The specific intentofthe adopted rulemaking is merely anupdate tothe definition ofemergency situationin §117.10, ensuring consistencywith ERCOT's new ERS program while also reflecting changes madebyERCOT to promote reliability during energyemergencies throughout the state underlimited circumstances.

While the adoptedrulemaking protects the environment or reduces risks to human health from environmental exposure, it does not constitute a major environmental rule underTexas Government Code, §2001.0225(g)(3) because it does not adversely affect in

a material way the economy, a sector ofthe economy, productivity, competition, orjobs,

norwouldthe rulemaking adversely affect in a material way the environment, orthe publichealth and safety ofthe state or a sector ofthe state. The rulemaking as a result is
not subjectto a regulatory impact analysis underTexas Government Code, §2001.0225 because itis not a major environmental rule.

The requirementto provide a fiscal analysis ofregulations in the Texas Government Code was amendedby Senate Bill (SB) 633, 75th Legislature, 1997. The intent ofSB 633

was to require agencies to conduct a regulatory impact analysis ofextraordinaryrules. These are identified in the statutorylanguage as major environmental rules thatwill
9

## have a material adverse impact andwill exceed a requirement ofstatelaw, federal law,

or a delegatedfederal program; or are adopted solely underthe general powers ofthe TCEQ. With theunderstandingthatthis requirementwould seldom apply, the commission provided a cost estimate for SB 633 that concluded: basedon an
assessment ofrules adoptedbythe agency in the past, itis not anticipatedthatthebill will have significantfiscal implications for the agency due to itslimited application. The commission also notedthatthe number ofrules thatwould require assessmentunder the provisions ofthebill was notlarge. This conclusion was based, in part, onthe criteria setforth inthebill that exemptedrules from thefull analysis unless the rule was

a major environmental rule that exceeded a federal law.

The FCAA does not always require specific programs, methods, orreductions in orderto
meetthe NAAQS; thus, states must develop programs for each nonattainment areato help ensure thatthose areas will meetthe attainment deadlines. Because ofthe ongoing needto address nonattainmentissues andto meetthe requirements of42 

## USC, §7410, 

## the commission routinely proposes and adopts revisions tothe SIP and rules. The legislature is presumed to understandthis federal scheme. If

## each rule adoptedfor inclusion in the SIP were consideredtobe a major environmental rule that exceeds federal law, then every revision tothe SIP would require the full regulatoryimpact analysis contemplatedby SB 633. This conclusion is inconsistentwith the conclusions reachedbythe commission in its cost estimate andbythe Legislative Budget Board (LBB) in its fiscal notes. Since the legislature is presumedto understandthefiscal impacts ofthebills it passes andthatpresumptionis based oninformation providedby

state agencies andthe LBB, the commissionbelieves thatthe intent ofSB 633 was only
10

## to require thefull regulatory impact analysis for rules that are extraordinaryin nature. While the rules have a broadimpact, thatimpactis no greaterthan is necessary or appropriateto meetthe requirements ofthe FCAA. Forthese reasons, rules adoptedfor inclusion inthe SIP fall underthe exception inTexas Government Code, §2001.0225(a), becausethey are requiredbyfederal law.

The commission has consistently appliedthis constructionto its rules since this statute

was enactedin 1997. Since thattime, thelegislature has revisedthe Texas Government Code butleftthis provision substantiallyunamended. It

## is presumedthat, when an
agency interpretationis in effect atthe time thelegislature amendsthelaws without making substantial change inthe statute, thelegislature is deemedto have accepted the agency's interpretation. 

# CentralPower & 

# Light Co. v. Sharp, 919 S.W.2d 485, 489 (Tex. App. Austin 1995), 

# writdenied withper curiam opinion respecting another issue, 960 S.W.2d 617 (Tex. 1997); 

# Bullock v. Marathon Oil Co., 798 S.W.2d 353, 357 (Tex. App. Austin 1990, no writ) 

# superseded by statute on anotherpointof law, Tax Code §112.108, OtherActions Prohibited, 

# as recognized in, First StateBankof Dumas v. Sharp, 863 S.W.2d 81, 83 (Tex. App. Austin 1993, no writ) ; 

# CfHumble Oil & 

# Refining Co. v. Calvert, 414 S.W.2d 172 (Tex. 1967); 

# Dudney v. StateFarmMut.AutoIns. Co., 9 S.W.3d 884, 893 (Tex. App. Austin 2000); 

# Southwestern LifeIns. Co. v. Montemayor,
24 S.W.3d 581 (Tex. App. Austin 2000,

# pet. denied); and 

# Coastal Indust. WaterAuth. v. Trinity Portland CementDiv., 563 S.W.2d 916 (Tex. 1978).

The commission's interpretation ofthe regulatory impact analysis requirements is also supportedbya change made tothe Texas Administrative ProcedureAct (APA) bythe
11

## legislature in 1999. In an attemptto limitthe number ofrule challenges baseduponAPA requirements, thelegislature clarified that state agencies are requiredto meetthese sections oftheAPA againstthe standardofsubstantial compliance as required inTexas Government Code, §2001.035. The legislature specificallyidentifiedTexas Government Code, §2001.0225 as falling underthis standard. The commission has complied with the requirements ofTexas Government Code, §2001.0225.

Even ifthe adoptedrulemaking constitutes a major environmental rule underTexas Government Code, §2001.0225(g)(3), a regulatoryimpact analysis is notrequired because this exemptionis partofthe commission's SIP for making progress towardthe attainment and maintenance ofthe NAAQS. Therefore, the adoptedrulemaking does
not exceed a standard setbyfederal lawor exceed an express requirement ofstatelaw, since they are part ofanoverall regulatory scheme designedto meet, not exceedthe relevant standard setbyfederal law (NAAQS). The commission is charged with protecting air quality withinthe state andto design and submit a plan to achieve attainment and maintenance ofthe federally mandated NAAQS. The Third District Court ofAppeals upheldthis interpretation in

# Brazoria County v. Texas Comm'n on Envtl. Quality, 128 S.W. 3d728 (Tex. App. -Austin 2004, no writ). The specific intentof the adopted rulemaking is merely an update tothe definition ofemergency situation in §117.10, ensuring consistencywith ERCOT's new ERS program while also reflecting changes madeby ERCOT to promote reliability during energy emergencies throughout the stateunderlimited circumstances. This adoption, therefore, does not exceed an
express requirement offederal law. The amendmentis neededto implement statelaw but does not exceed those new requirements. Finally, this rulemaking was not developed
12

## solely underthe general powers ofthe agencybutis authorizedby specific sections of THSC, Chapter 382, 

## which are cited inthe StatutoryAuthority section ofthis preamble, including THSC, §382.012 

## and §382.019. 

## Because this adopted rulemaking does not
meet any ofthefour applicability requirements, Texas Government Code, §2001.0225(b) 

## does not apply and a regulatoryimpact analysis is notrequired.

The commission invitedpublic commentregarding the draft regulatory impact analysis determination during the public comment period. No comments were received on the regulatoryimpact analysis determination.

Takings ImpactAssessment The commission evaluatedthe adoptedrulemaking andperformed an analysis of whetherthe adopted rulemaking constitutes a taking underTexas Government Code, Chapter 2007. 

## The commission's preliminary assessment indicates Texas Government Code, Chapter 2007

## does not apply.

UnderTexas Government Code, §2007.002(5), 

## taking means: "(A) a governmental action that affects private real property, inwhole orinpart ortemporarily or permanently, in a mannerthat requires the governmental entityto compensatethe private real property owner as providedbythe Fifth andFourteenthAmendments tothe United States Constitution or Section 17 

## or 19, 

## Article I, Texas Constitution; or (B) a governmental action that: (i) 

## affects an owner's private real propertythatis the subject ofthe governmental action, in whole orinpart ortemporarily orpermanently, in a

mannerthatrestricts orlimits the owner's rightto the propertythatwould otherwise

13

## exist in the absence ofthe governmental action; and (ii) 

## is the producing cause ofa reduction ofatleast 25 

## percentinthe marketvalue ofthe affectedprivate real property, determinedby comparing the marketvalue oftheproperty as ifthe governmental action is notin effect andthe marketvalue ofthe propertydetermined as ifthe governmental action is in effect." Promulgation and enforcement ofthe rulemaking wouldbe neither a statutorynor a constitutional taking ofprivate real property. The primarypurpose ofthe rule is an update to Chapter 117, 

## SubchapterAto ensure consistencywith ERCOT's new ERS
program. This rule is notburdensome, restrictive, orlimiting ofrights to private real propertybecause the rulemaking regulates theuse ofelectric generators in certain limited emergency situations. Furthermore, the rulemakingbenefits thepublicby potentially decreasing thelikelihood ofrequiring firm load shedding (i.e., rolling blackouts) when additional control measures are neededto achieve ormaintain attainment of the federal air quality standards throughthe use ofelectric generators. The rulemaking does not affect a landowner's rights in private real propertybecause this rulemaking does notburden, restrict, orlimitthe owner's right toproperty, nor does it reduce the value ofany private real propertyby 25% 

## or morebeyondthat which would otherwise exist inthe absence ofthe regulations. Therefore, this rule does not constitute a taking underTexas Government Code, Chapter 2007.



## Consistencywiththe CoastalManagement Program The commission reviewed the adopted rulemaking andfound thatitis subjectto the
Texas Coastal Management Program (CMP) in accordance with the Coastal
CoordinationAct, Texas Natural Resources Code, §§33.201 

# etseq., andtherefore must
14

## be consistentwith all applicable CMP goals andpolicies. The commission conducted a consistency determination for the adopted rule in accordance with Coastal Coordination
Act Implementation Rules, 31 TAC §505.22 andfound the adoptedrulemaking is consistentwiththe applicable CMP goals andpolicies.

The CMP goal applicable tothe adopted rulemaking is the goal toprotect, preserve, and enhancethe diversity, quality, quantity, functions, andvalues ofcoastal natural resource

areas (31 TAC §501.12(1)). The CMP policy applicable to the adopted rulemaking is the policy that commission rules complywith federal regulations in 40 Code ofFederal Regulations to protect and enhance air qualityinthe coastal areas (31 TAC §501.32). The adoptedrulemaking will notincrease emissions ofair pollutants andis therefore, consistentwith the CMP goal in 31 TAC §501.12(1) andthe CMP policy in 31 TAC §501.32.

Promulgation and enforcement ofthis rule will notviolate or exceed any standards identified inthe applicable CMP goals andpoliciesbecause the adopted rule is consistentwiththese CMP goals andpolicies andbecause the rule does not create or have a direct or significant adverse effect on any coastal natural resource areas. Therefore, in accordance with §505.22(e), the commission affirms thatthis rulemaking action is consistentwith CMP goals andpolicies.

The commission invited public comment regarding the consistency with the CMP during the public commentperiod. The commission received no comments concerningthe consistency ofthis rulemaking withthe Texas CMP.
15

## Effect on Sites Subjecttothe Federal OperatingPermits Program
The adopted amendmentwill not require any changesto federal operating permits.



## Public Comment
The commission scheduled a publichearing inAustin on November 28, 2012. 

## However,
the commission didnot officially openthe hearingbecause no one registeredto provide

comments. The public commentperiodclosed on December 5, 2012. 

## The commission
received comments from theAssociation ofElectric Companies ofTexas (AECT), Blue Sky Environmental LLC (Blue Sky), Calpine Corporation (Calpine), EnerNOC, Inc. (EnerNOC), EPA, ERCOT, Exelon Corporation (Exelon), and NRG Texas Power LLC, (NRG). AECT submittedcomments onbehalfofAEP Texas, CenterPoint Energy, El
Paso Electric, Entergy, GDF SUEZ, Nextera Energy, Lone StarTransmission, Oncor,
TXU Energy, Luminant, NRG, Reliant, TNMP, andXcel Energy.



## Response to Comments
Comment AECT, Blue Sky, EnerNOC, ERCOT, and NRG expressed supportfor the proposed
revisions to the definition ofemergency situationin §117.10. 

## EPA expressed appreciationfor effortsto update the references to ERCOT's protocols in §117.10.



## Response The commission appreciates the support.

16

## Comment ERCOT commentedthatifsystem conditions deteriorate too rapidly itmight notbe possible to issue an emergency notice priorto declaring an EEA and subsequently deploying ERS. ERCOT recommendedthe commission amend §117.10(15)(A)(ii) to refer
to ERCOT's dispatch ofERS ratherthanthe issuance ofan emergencynoticeto provide affected generators assurance that operation for ERS is always permissible.

Blue Sky and EnerNOC recommendedthe commission not revise the definition of
emergency situationto specify an ERCOT EEA level to account for emergency demand
response programs initiatedbyTexas utilities that are experiencing voltage reductions.



# Response Theintent of§117.10(15)(A)(ii) 

# isto specifythat emergencysituations include operations during an ERCOT-declaredemergencynot operations during a utility-declaredemergency. The commission agreeswith ERCOT that operationsin response to ERCOT's dispatch ofERS are always consideredemergency situations. However, itispossiblethatthe existing provisionin §117.10(15)(A)(ii) 

# could affect sourcesthat are notparticipating in ERCOT's ERSprogrambut are operating as a result ofan ERCOTdeclared emergency. Therefore, the commissionis retainingthe reference
to emergencynotice in §117.10(15)(A)(ii) 

# to avoidunintendedconsequences that couldresultfrom limitingthisprovision solelyto ERS operations. In
response to ERCOT's comments, the commissionis revisingthe definition ofemergencysituationto also include operationsinresponse to an ERCOT
17

# EEA. The commissionis makingthis changeto ensurethe definition of
emergency situationincludes situationswhen system conditions deteriorate so rapidlythatitis notpossiblefor ERCOTto issue an emergencynoticepriorto declaring an EEAand subsequentlydeploying ERS. Inresponseto ERCOT's commentsthe commissionis revisingthe proposedlanguagein §117.10(15)(A)(vii) to referto onlythose operations that occur duringtheperiod ofan ERCOTEEAinstead oftheperiod ofan ERCOT emergencynotice. Thepurpose ofthis rulemakingisto ensurethat participantsinthe ERSprogram may still claim operationalhours during suchenergyemergencies as an emergencysituationunder Chapter 117 rules. However, the adoptedrule is also intendedto limitthe circumstances underwhich an emergencygenerator canprovidepowerfor distributionto the electricalgridto onlythose operationsthat arepartofERCOT's ERS
program andin directresponse to ERCOT's dispatchinstruction duringthe periodofan ERCOT EEA. Since ERCOT onlydeploys ERS resources during

an EEA, itisunnecessaryfor the commissiontoreferto the periodduring

an ERCOT emergencynotice.

Comment
To address concerns aboutthe certaintyofthe circumstances under which ERCOT will deploy ERS resources, ERCOT recommended thatthe commission reference the PUCT's
ERS rule in 16 TAC §25.507 ratherthanthe ERCOT Nodal Protocols referencedinthe proposedrules. ERCOT expressed concernthatthefrequent revisions to the Nodal
Protocols could create confusion as to the applicability of§117.10(15)(A)(ii) and
18

## §101.379(c)(2)(D). ERCOT suggestedthe commission could more easily monitorthe infrequent changes to the PUCT rules thanthe numerous ongoing proposals to revise the ERCOT Nodal Protocols referenced inthe proposedrules.

NRG also recommended avoiding references to specific ERCOT protocols that are likely
to change periodically. NRG recommended modifying §117.10(15)(A)(ii) to insteadrefer

tothe period oftimethat an engine is operating in responseto an ERCOT-issued
emergency notice ofimminentemergency conditions, such as unusuallylowfrequency, equipment overload, capacity orenergy deficiency, orunacceptable voltage level.



# Response The commissionis awarethatthe ERCOT Nodal Protocolsreferences in §117.10(15) 

# arefrequentlyrevised andhavebeenrevised sincethe commissionfirstproposedthis rulemaking. However, §117.10(15) 

# andthe Chapter 117

# rulesthatreferencethisterm are a partofthe SIP andthe revised §117.10(15) 

# is subjectto EPAreview and approval. Specificityis neededinthe rule regardingthe circumstancesunderwhich ERCOTwill deployERSresourcestohelp ensure EPAapproval ofthe revisedrule. Whilethe PUCT's ERS rule in 16

# TAC §25.507 

# speaksto theintent of deployingthe ERSprogramduring an EEAevent andauthorizes ERCOTto
createthe ERSprogram, 16

# TAC §25.507

# does notprovide specific restrictions onthe deployment ofthe ERSprogramto emergencies only. Thelevel ofdetailinthe current 16

# TAC §25.507

# is not sufficientto ensure thatthe definitionin §117.10(15) 

# does notincludethe dispatch ofERS
19

# outside ofERCOT's-declaredenergyemergencies. Likewise, the suggested description ofan ERCOT-issuedemergencynotice ofimminentemergency conditions does not sufficientlydetail the specific circumstancesunder which ERCOTwill deployERS resources. To ensurethatthe amendmentsto §117.10(15) 

# canbe approvedbythe EPA as part ofthe SIP, the commission respectfully declinesto make the suggestedchanges.

Comment AECT commentedthatbecause ithas concerns abouthowtheuse oftheterm "demand response" hasbeen expandedto include non-emergency situations, AECT supports limitingthe definition ofemergency situationto those operations that are part ofan ERCOT ERS program and are in direct response to aninstructionbyERCOT duringthe period ofan ERCOT emergency notice. NRG recommendedthatthis rule only applyto units in emergency demandresponse programsthat are limitedto rare instances where grid stability is threatened after all otherpotential remedies have been exhausted.

To accountfor emergency demand response programs initiatedbyTexas utilities that

are experiencing voltage reductions, Blue Sky andEnerNOC recommendedthe commission revise the definition ofemergency situation to also include operation in
response to a utility-declared emergency.



# Response The commission agreesthatthe definition ofemergency situation should include operationsin directresponse to an instructionbyERCOT during

20

# theperiodofan ERCOT-declaredemergency. As 

# discussed elsewhereinthe Responseto Comments section ofthepreamble, the commissionis also revisingthe proposedrule languageto include operationsthat arein direct
responseto aninstructionbyERCOT duringtheperiod ofan ERCOT EEA.

The commission does not agreethatthe definition ofemergencysituation shouldinclude operationsthat occurinresponseto a utility-declared
emergency. The suggestedchangewoulddecrease the stringencyofthe existingrulebyexpandingthe scope ofthe currentdefinitionto include additional situationsthatwouldnot currentlybe consideredemergency situations. Becausethe EPAhas approvedthe existingrule as part ofthe SIP, the suggestedexpansion ofthe definition couldbe considered backsliding andresultinthe EPA's disapproval ofthe rulemaking. The commission makes no changeinresponse to these comments.

Comment Blue Sky and EnerNOC recommendedthe commission provide guidance regarding the SIP process. The commenters also requestedthe commission confirm thatthe following assumptions are correct: 1) 

## the revisions to §117.10 

## will notbefully implementeduntil the EPA approves the SIP revision; 2) 

## engines participating in the ERS and otherutilitysponsored emergency demandresponse programs without sending power to the electric grid can continue to operate underthe definition ofemergency situation until the references tothe appropriate protocols are changed; and 3) emergency engines could
not sendpowerto the electric gridunder an emergency situationuntil the SIP revision is

21

## approved.



# Response TheTexasWater Code authorizes the commissionto propose and adopt rules necessaryto carryoutitspowers and duties. Once adopted, the commissionfiles therule withthe SecretaryofStateforpublicationinthe 

# TexasRegister. This action usuallyoccursthe first Fridayafter adoption. The rulebecomes effective 20 

# calendar days afterfiling andisfully enforceablebythe commissionfrom thattime onirrespective ofEPA approval ofthe rulerevision as part ofthe SIP. Therefore, beginning onthe effective date oftherule, the definition ofemergency situationwill include operationsin direct responseto an instructionbyERCOT duringthe period ofan ERCOT-declaredemergencythat supplypowerto the electricgrid. As 

# discussed elsewhereinthe Response to Comments section ofthepreamble, the definition ofemergencysituationin §117.10 

# includes operations during

an ERCOT-declaredemergencybutdoes notinclude otherutility-sponsored
emergencydemandresponseprograms.

Comment Calpine recommendedthe commission remove the exemption affordedto ERS participants andrequire that all commercial generation to meetbest available control technology andreasonably available control technology requirements. Exelon requested the commission abandon its efforts to exemptfrom pollution controls units that sell
powerbacktothe electrical grid and require all commercial generationto satisfythe

22

## commission's pollution control requirements.

Calpine and Exelon commentedthatexempting commercialbackup generationfrom air quality regulations would negatively affect air qualityby expanding the number ofhighemitting diesel engines; discouraging investmentin new, low-emitting generation; and providing anunnecessary subsidyto high-emitting sources. Calpine also commented thatthe proposedrule might notbenefit electric reliability.



# Response The commenters' suggestedchangestorevoke exemptionsfor emergency backup generators are outsidethe scope ofthis rulemaking. The Chapter
117

# rules exemptcertain sourcesinthe DFWand HGB 1997

# eight-hour

ozone nonattainment areas that operate exclusivelyduring emergency situations oroperatefor a limitednumber ofhours innon-emergency situations. The exemptionsthatreference the definition ofemergency situationfor thispurposewere notproposedfor revision withthis rule making.

Theintent ofthe existingChapter 117

# rules isto ensurethat operation during an ERCOT-declaredemergencyis not considerednon-emergency operationwhen demonstrating compliancewith the Chapter 117 

# exemption criteria. Under ERCOT's former ElLSprogram, affectedresourcesreduced electricconsumptionbyusing on-sitebackupgenerationbutdidnot supply
powertothe electricgrid. Therefore, therestriction on supplyingpowerfor


# 23

# distributiontothe electricgridin §117.10(15)(B) 

# didnot affect ElLS
programparticipants. The amendmentsto §117.10(15) 

# ensurethatthe changes madeto ERCOT's newERSprogram,which allowparticipantsto providepowerfor distributionto the electricalgrid, do notnarrowthe
scope ofwhatthe commission currentlyconsiders an emergencysituation. The adoptedrulemaking does notrelieve affected sourcesfrom the obligationto meet any air qualityregulationthat currentlyapplies.

Thecommission does not agreethattherevisions to §117.10(15) 

# will negativelyaffect air qualitybyexpandingthe number ofhigh-emitting diesel engines, discouraginginvestmentinlow-emittinggeneration, or subsidizinghigh-emitting sources. The dispatch ofERS resources islimited
torareinstanceswherethe reliabilityofthe ERCOT system isthreatened andall otherpotential solutionshavebeenexhausted. ERCOThas dispatchedemergencyresponse resources for a total of30

# hours since
2006. 

# Operation ofemergencygenerators during an ERCOT-declared
emergencyundertheprevious ElLSprogramwas considered an emergency situationunderthe existing Chapter 117

# rules. The adoptedrevisions to §117.10(15) 

# areintendedto clarifythe definitionwith regardto such emergencies and accountfor therevisions thatERCOThas madeinthe new ERSprogram.Adopted §117.10(15)(B)(ii) 

# onlyallows operation ofan emergencygeneratorfor supplyingpowerto the electricalgridtobe considered an emergencysituationifthe operationispart ofERCOT's ERS
program andindirectresponse to instructionbyERCOT during an EEA.
24

# Thepurpose ofthis rule makingisto ensurethatparticipants inthe ERS
programmaystill claim operationalhours during such energyemergencies

as an emergencysituationunder Chapter 117 rules. Therefore, the commission does not considertherulemaking as expandingthe number of stationarydiesel enginesin operation or as providing a subsidyfor diesel engines.Additionally, owners andoperators ofemergencygeneratorsthat seekexemptionfrom Chapter 117 rules must still meet all applicable criteria before qualifyingfor an exemption. The commissionhaspreviously incorporatedprovisionsinthe exemption criteriafor emergencystationary diesel enginestohelp ensurethat emissionsfrom exempt diesel engines are minimized. For example, aspart ofthe exemption criteria, stationarydiesel engines inthe DFWand HGB areasthat areinstalled, modified, reconstructed, orrelocated after specific dates inthe Chapter 117 rules are requiredto meetthe correspondingemission standardsfor non-road enginesin40 

# Code ofFederal Regulations §89.112(a), Table 1, 

# that arein effect atthetime the enginewas installed, modified, reconstructed, or relocated.

While the commission cannot quantifythe effects ofthis revision on electric reliability, the commission does not agreewiththe commenters' assertion thatthere is no reliability-relatedrationale for this rulemaking. ERCOT's

newERS programpromotes reliabilityduring energyemergenciesby allowing qualifiedparticipantstoprovidepowerfor distributiontothe electrical grid during an ERCOT-declaredemergency. As 

# discussed


# 25

## elsewhere inthe Response to Comments Section ofthispreamble, the
purpose ofthis rulemakingisto ensure thatparticipants inthe ERS
program continue tobeallowedto count operation in response to an ERCOT-declared emergencyas an emergencysituation.Whilethe adopted revisionsto §117.10(15) 

## do not directlypromote reliability, the rulemaking helps ensurethat Chapter 117 

## rules will notbe a disincentiveto the ERS
programbyforcing participants to count emergencyoperation as nonemergencyhours. The commission makes no changes in response to these
comments.

Comment
ERCOT commentedthat since the operation ofa generatorfor ERS purposes would always fall within the coverage of §117.10(15)(A)(ii), creating an additional exemption
for the operation ofERS generators in §117.10(15)(A)(vii) is unnecessary. ERCOT suggested deleting §117.10(15)(A)(vii) andrevising §117.10(15)(B)(ii) to reference §117.10(15)(A)(ii) instead of§117.10(15)(A)(vii).

NRG supportedexplicitly including emergency demandresponse events underthe definition ofemergency situation. However, instead ofadding this language as a new provision under §117.10(15)(A)(vii), NRG recommended modifying §117.10(15)(A)(ii) to the period oftimethat an engine is operating in response to an ERCOT-issued
emergencynotice ofimminentemergency conditions, such as unusuallylowfrequency, equipmentoverload, capacity or energy deficiency, orunacceptable voltage level.



# 26

# Response Theintent ofthis rule makingistolimitthe circumstancesunderwhich an emergencygenerator canprovidepowerfor distributionto the electrical gridto onlythose operationsthat arebothpart ofERCOT's ERSprogram andin directresponse to ERCOT's dispatch instruction duringtheperiod of

an ERCOT EEA. It

# ispossiblethatthe existingprovisionin §117.10(15)(A)(ii) couldaffect sourcesthat are notparticipatingin ERCOT's ERSprogrambut

are operatingas a result ofan ERCOT-declaredemergency. The commission is addingthe additional detail in §117.10(15)(A)(vii) and (B)(ii) to explicitly limitthe circumstancesunderwhich an emergencygenerator couldprovide
powerfor distributiontothe electrical gridto onlythose operationsthat are part ofERCOT's ERS program. The commissionmakes no changein
responseto these comments.

As 

# discussed elsewhereinthe Responseto Comments section ofthis preamble, inresponse to ERCOT's commentsthe commissionis revising the proposedlanguagein §117.10(15)(A)(vii) to referto onlythose operationsthat occur duringtheperiodofan ERCOT EEAinstead ofthe period ofan ERCOT emergencynotice. Theintent ofthis rulemakingis to limitthe circumstancesunderwhich an emergencygenerator canprovide
powerfor distributionto the electrical gridto onlythose operationsthat are part ofERCOT's ERS program andin directresponseto ERCOT's dispatch instruction duringtheperiod ofan ERCOT EEA. ERCOT onlydeploys ERS

resources during an EEA, so itis unnecessaryfor the commissiontoreferto 

# 27

# theperiod during an ERCOT emergencynotice.

Comment NRG stateditsbeliefthatthe current Chapter 117 

## definition ofemergency situation does
notpreclude an engine from operating as part ofan emergencydemandresponse program andthe intentof§117.10(15)(B) 

## was to preventthose engines that supplypower for distribution to the gridfor economic gain unrelatedto imminent emergency conditions from being classified as emergency engines, thus avoiding environmental controls. As 

## such, NRG supportedTCEQ's proposal to explicitly differentiatebetween these two operating scenarios andrecommended §117.10(15)(B) 

## be amended as proposedbythe commission.



# Response The commission appreciatesthe support and made no changestothe rulemakinginresponseto this comment.

Comment NRG supported aligningthe Chapter 117 

# definition ofemergencysituation with ERCOT's emergencydemandresponseprograminlieu ofestablishing

an annual limit on emergencydemandresponse operationto allowERCOT
to manage and optimize emergencydemandresponse operations.

Response The commission appreciatesthe support. 

# 28

# RECOMMENDATION

## SUBCHAPTERH: EMISSIONS BANKINGAND TRADING DIVISION 4: DISCRETE EMISSION CREDIT BANKINGAND TRADING
§101.379


## StatutoryAuthority The amendment is adoptedunderthe authorityofthe following: Texas Water Code (TWC), §5.102, General Powers, TWC, §5.103, Rules, andTWC, §5.105, General Policy (these provisions authorizethe commissionto adopt rules necessaryto carryoutits
powers and duties as well as all general policies undertheTWC); Texas Health and Safety Code (THSC), §382.017, Rules, which authorizes the commission to adopt rules consistentwith the policy andpurposes ofthe Texas CleanAir Act; THSC, §382.002, Policy andPurpose, which establishes the commission's purpose to safeguardthe state's air resources, consistentwith the protection ofpublichealth, general welfare, and physical property; THSC, §382.011, General Powers and Duties, which authorizes the commissionto control the quality ofthe state's air; THSC, §382.012, StateAir Control Plan, which authorizes the commission to prepare and develop a general, comprehensive plan for the control ofthe state's air; andTHSC, §382.051(d), Permitting Authority ofCommission; Rules, which authorizes the commissionto adopt rules as
necessaryto comply with changes in federal laworregulations applicable to permits underTHSC, Chapter 382. Finally, the amendmentis also adopted under Federal Clean
Air Act (FCAA), 42 United States Code (USC), §§7401, 

# etseq., which requires states to submit state implementationplan revisions that specifythe manner inwhich the

1

## NationalAmbientAir Quality Standardswill be achieved andmaintainedwithin each air quality control region ofthe state.

The adopted amendmentimplements TWC, §§5.102, 5.103, 

## and 5.105; 

## THSC, §§382.002, 382.011, 382.012, 382.016, 382.017, 

## and 382.021; 

## andFCAA, 42 

## USC, §§7401, 

# etseq.

§101.379. ProgramAudits and Reports.



## (a) No laterthanthree years after the effective date ofthis section, andevery threeyears thereafter, the executive director will auditthis program.

(1) 

## The auditwill evaluate thetiming ofcredit generation anduse, the impact ofthe program on the state's attainment demonstration andthe emissions of hazardous air pollutants, the availability and cost ofcredits, compliancebythe participants, and any otherelements the executive director may choose to include.

(2) 

## The executive director will recommend measures to remedy any problems identified in the audit. The trading ofdiscrete emission credits maybe discontinuedbythe executive director inpart orin whole and in any manner, with commission approval, as a remedyfor problems identified in the program audit.

2

## (3) The audit data and results will be completed and submittedtothe United States Environmental ProtectionAgency and made available for public inspectionwithin six months afterthe auditbegins.

(b) 

## No laterthan February 1 

## ofeach calendaryear, the executive director shall develop and make available to the general public andthe United States Environmental ProtectionAgency a reportthatincludes the following information for the previous calendaryear:

(1) 

## the amount ofeach pollutantemission credits generatedunderthis division;

(2) 

## the amount ofeach pollutant emission credits used underthis division;

(3) a summary ofall trades completedunder this division; and

(4) the amount ofdiscrete emission reduction credits (DERC) approved for use under subsection (c) ofthis section.

(c) No laterthan October 1 

## ofeachyear, the executive director will complete, and make available to the general public andthe United States Environmental Protection Agency, an annual reviewto determine the number ofDERCs available for potential use inthe upcoming calendaryear for the Dallas-FortWorth (DFW) eight-hour ozone 

# 3

## nonattainment area. The annual review will include the calculation oftheflow control limit as specified in subsection (c)(2)(A) ofthis section to ensure noninterference with attainment andmaintenance ofthe ozone National AmbientAir Quality Standard (NAAQS) andthe apportionment ofapproved DERCs.

(1) Forthe 2009 control period, the flow control limit for DERCs available for use is the numberprescribedinthe DFW Eight-Hour Ozone Attainment Demonstration SIP Revision for the 1997 eight-hour ozone standard, in tons perday,
nottobe exceeded in any day, where a dayis a 24-hourperiodfrom midnightto midnight.

(2) For any control period after 2009, the annual reviewwill establish a flow control limitfor thatyear, intons perday, nottobe exceededin any day, where a day is a 24-hourperiodfrom midnightto midnight.

(A) The flow control limit for a particularyear will be determined using thefollowing equation: Figure: 30 TAC §101.379(c)(2)(A) (No change to thefigure as it currently exists inTAC.)

(B) If

## use ofthe entire DERC bankwould notinterfere with attainment andmaintenance ofthe 1997 eight-hour ozone NAAQS in the DFW eighthour ozone nonattainment area, thenthe number ofDERCs potentially available for use is thetotal number ofDERCs in thebank. 

## 4

## (C) If

## theflow control limit, as calculatedin the equation in subparagraph (A) ofthis paragraph, is greaterthanthetotal number ofDERCs requestedfor use in accordance with §101.376(d) ofthis title (relatingto Discrete Emission Credit Use) the executive director:

(i) may approve all requested Notice ofIntentto Use Discrete Emission Credits (DEC-2 Form) submittals; and

(ii) will consider anylate DEC-2 Forms submitted as providedunder §101.376(d)(3) ofthis title thatis not an Electric Reliability Council of Texas, Inc. (ERCOT)-declared emergency situation as defined in subparagraph (D) of this paragraph, butwill not otherwise approve a late submittalthat would exceed the flow controllimit establishedbythe equation under subsection (c)(2)(A) ofthis section.

(D) If

## the DEC-2 Forms are submittedin response to an ERCOTdeclared emergency situation, the request will notbe subjecttotheflow control limit and maybe approved provided all other requirements are met. For the purposes ofthis subparagraph, an ERCOT-declared emergency situationis defined as the period oftime that an ERCOT-issued emergency notice or energy emergency alert (EEA) (as defined in
ERGOTNodalProtocols, Section 2: 

## Definitions andAcronyms 

## (June 1, 2012) and issued as specifiedinERGOTNodalProtocols, Section 6: AdjustmentPeriod andRealTime Operations 

## (June 1, 2012)) is applicable tothe serving electric power generating 5

## system. The emergency situation is consideredto endupon expiration ofthe emergency notice orEEA issuedbyERCOT.

6

## StatutoryAuthority 

## SUBCHAPTERA: DEFINITIONS
§117.10



## The amendmentis adoptedunderthe authorityofthe following: Texas Water Code (TWC), §5.102, 

## General Powers, TWC, §5.103, 

## Rules, andTWC, §5.105, 

## General Policy (these provisions authorize the commissionto adopt rules necessaryto carry outits
powers and duties as well as all general policies underthe TWC); Texas Health and Safety Code (THSC), Texas CleanAir Act (TCAA), §382.017, 

## Rules, which authorizes the commission to adoptrules consistentwith the policy andpurposes ofthe TCAA; THSC, §382.002, 

## Policy and Purpose, which establishes the commission's purpose to safeguard the state's air resources, consistentwith the protection ofpublic health, general welfare, andphysical property; THSC, §382.011, 

## General Powers and Duties, which authorizes the commission to control the quality ofthe state's air; andTHSC, §382.012, 

## StateAir Control Plan, which authorizes the commissionto prepare and develop a general, comprehensive plan for the control ofthe state's air; andTHSC, §382.051(

## d), Permitting Authority ofCommission; Rules, which authorizes the commission to adopt rules as
necessaryto complywith changes in federal law or regulations applicable to permits under THSC, Chapter 382. 

## Finally, the amendmentis also adopted under Federal Clean Air Act (FCAA), 42 

## United States Code (USC), §§7401, 

# etseq., which requires states to submit State Implementation Plan revisions that specifythe mannerin which the National AmbientAir Quality Standards will be achieved andmaintainedwithin each air quality control region ofthe state.
1

## The adopted amendmentimplements 1WC, §§5.102, 5.103, 

## and 5.105; 

## THSC, §§382.002, 382.011, 382.012, 382.016, 382.017, 

## and 382.021; 

## andFCAA, 42 

## USC, §§7401 

# etseq.

§117.10. 

## Definitions.



## Unless specifically defined inthe Texas Clean Air Act or Chapter 101 

## ofthis title (relatingto General Air Quality Rules), theterms inthis chapterhave the meanings commonlyusedinthe field ofairpollution control. Additionally, thefollowing meanings apply, unless the context clearly indicates otherwise. Additional definitions for terms used inthis chapter are found in §3.2 

## and §101.1 

## ofthis title (relatingto Definitions).

(1) 

## Annual capacityfactor--The total annual fuel consumedby a unit dividedbythe fuel that couldbe consumedbythe unitifoperated atits maximum rated capacityfor 8,760 

## hours peryear.

(2) 

## Applicable ozone nonattainment area--The following areas, as designatedunderthe 1990 

## Federal Clean Air Act Amendments.

(A) Beaumont-PortArthur ozone nonattainment area--An area consisting ofHardin, Jefferson, and Orange Counties.

2

## (B) Dallas-FortWorth ozone nonattainment area--An area consisting ofCollin, Dallas, Denton, andTarrant Counties.

(C) Dallas-FortWorth eight-hour ozone nonattainment area--An

area consisting ofCollin, Dallas, Denton, Ellis, Johnson, Kaufman, Parker, Rockwall,
andTarrant Counties.

(D) Houston-Galveston-Brazoria ozone nonattainment area--An

area consisting ofBrazoria, Chambers, Fort Bend, Galveston, Harris, Liberty, Montgomery, andWaller Counties.

(3) Auxiliary steamboiler--Any combustion equipmentwithin an electric
power generating system, as defined inthis section, thatis usedto produce steamfor
purposes otherthan generating electricity. An auxiliary steamboiler produces steam as

a replacementfor steam producedbyanotherpiece ofequipmentthatis not operating
due to planned orunplanned maintenance.

(4) Average activitylevel for fuel oil firing--The product ofan electric utilityunit's maximum rated capacityfor fuel oil firing andthe average annual capacity
factor for fuel oil firing for the periodfrom January 1, 1990, to December 31, 1993.



## 3

## (5) Block one-hour average--An hourly average ofdata, collected starting
atthebeginning ofeach clock hour ofthe day and continuing until the start ofthe next clock hour.

(6) Boiler--Any combustion equipmentfired with solid, liquid, and/or
gaseous fuel usedto produce steam orto heatwater.

(7) Btu--Britishthermalunit.

(8) Chemical processing gas turbine--A gas turbine thatvents its exhaust
gases intothe operating stream ofa chemical process.

(9) Continuous emissions monitoring system (CEMS)--The total equipment necessary for the continuous determination andrecordkeeping ofprocess
gas concentrations and emission rates inunits ofthe applicable emission limitation.

(10) 

## Daily--A calendar day starting atmidnight and continuing until midnightthefollowing day.

(n) 

## Diesel engine--A compression-ignitedtwo- orfour-stroke engine that liquidfuel injected intothe combustion chamberignites whenthe air charge has been compressedto a temperature sufficiently high for auto-ignition.



## 4

## (12) 

## Ductburner--Aunitthatcom bustsfuel andthatis placed in the exhaust ductfrom anotherunit (such as a stationarygas turbine, stationaryinternal combustion engine, kiln, etc.) to allowthe firing ofadditional fuel to heatthe exhaust
gases.

(13) 

## Electric generatingfacility (EGF)--Aunitthat generates electric
energyfor compensation andis owned oroperatedbya person doing business in this state, including a municipal corporation, electric cooperative, orriver authority.

(14) 

## Electric power generating system--One electric power generating system consists ofeither:

(A) for thepurposes ofSubchapter Cofthis chapter (relatingto Combustion Control atMajor Utility Electric Generation Sources in Ozone NonattainmentAreas), all boilers, auxiliary steamboilers, and stationarygas turbines (including ductburners used in turbine exhaust ducts) at electric generatingfacility (EGF) accounts that generate electric energy for compensation; are owned oroperated by an electric cooperative, municipality, river authority, public utility, or a Public Utility Commission ofTexas regulatedutility, or any ofits successors; and are entirelylocated in one ofthe following ozone nonattainment areas:

(i) 

## Beaumont-PortArthur;

5

## (ii) Dallas-Fort Worth;

(iii) Dallas-FortWorth eight-hour; or

(iv) Houston-Galveston-Brazoria;

(B) for the purposes ofSubchapter E, Division 1 

## ofthis chapter (relating to Utility Electric Generation in East and Central Texas), all boilers, auxiliary
steamboilers, and stationarygas turbines at EGF accounts that generate electric energy for compensation; are owned oroperatedby an electric cooperative, independent power producer, municipality, river authority, or public utility, or any ofits successors; and are located inAtascosa, Bastrop, Bexar, Brazos, Calhoun, Cherokee, Fannin, Fayette, Freestone, Goliad, Gregg, Grimes, Harrison, Henderson, Hood, Hunt, Lamar, Limestone, Marion, McLennan, Milam, Morris, Nueces, Parker, Red River, Robertson, Rusk, Titus, Travis, Victoria, orWharton County; or

(C) for thepurposes ofSubchapter Bofthis chapter (relating to Combustion Control at Major Industrial, Commercial, andInstitutional Sources in Ozone NonattainmentAreas), all units inthe Houston-Galveston-Brazoria ozone nonattainment areathat generate electricitybut do not meetthe conditions specifiedin subparagraph (A) ofthis paragraph, including, but notlimitedto, cogeneration units andunits ownedbyindependentpower producers.

6

## (15) 

## Emergency situation--As follows.

(A) An emergency situation is any ofthefollowing:

(i) anunforeseen electrical power failure from the serving electric power generating system;

(ii) theperiod oftime that an Electric Reliability Council of Texas, Inc. (ERCOT)-issued emergency notice or energy emergency alert (EEA) (as defined in

## ERCOTNodalProtocols, Section 2: 

## Definitions andAcronyms (June 1, 2012) 

## andissued as specified in

## ERCOTNodalProtocols, Section 6: AdjustmentPeriod and Real-Time Operations (June 1, 2012)) 

## is applicable tothe serving electric power generating system. The emergency situation is consideredto endupon expiration ofthe
emergencynotice or EEA issuedby ERCOT;

(iii) 

## anunforeseen failure ofon-site electrical transmission equipment (e.g., a transformer);

(iv) an unforeseen failure ofnatural gas service;

(v) anunforeseen flood orfire, or a life-threatening situation;

7

## (vi) operation ofemergency generatorsfor FederalAviation Administration licensed airports, military airports, ormanned space flight control
centers for thepurposes ofproviding power in anticipation ofa power failure due to

severe storm activity; or

(vii) operation ofan emergency generator as part ofERCOT's
emergency response service (as defined inERGOTNodalProtocols, Section 2: 

## Definitions andAcronyms 

## (June 1, 2012)) 

## ifthe operation is in direct response to an instructionby ERCOT during the period ofan ERCOT EEA as specified in clause (ii) of this subparagraph.

(B) An 

## emergency situation does not include:

(i) operation for training purposes or otherforeseeable events; or

(ii) operation for purposes ofsupplying powerfor distributiontothe electric grid, except as specified in subparagraph (A)(vii) ofthis paragraph.

(16) 

## Functionallyidentical replacement--Aunitthatperforms the same function as the existing unitthat it replaces, with the condition thatthe unit replaced

8

## mustbe physically removed orrenderedpermanentlyinoperablebeforethe unit replacing itis placedinto service.

(17) 

## Heat input--The chemical heat released due to fuel combustion in a unit, using thehigher heating value ofthefuel. This does not include the sensible heat of theincoming combustion air. Inthe case ofcarbon monoxide (CO) boilers, theheat inputincludes the enthalpy ofall regenerator off-gases andthe heat ofcombustion of the incoming CO and ofthe auxiliaryfuel. The enthalpy change ofthe fluid catalytic cracking unitregenerator off-gases refers tothetotal heatcontent ofthe gas atthe temperature itentersthe CO boiler, referring to theheatcontent at 60 

## degrees Fahrenheit, as being zero.

(18) 

## Heattreatfurnace--A furnace thatis usedin the manufacturing, casting, orforging ofmetal to heatthe metal so as to produce specific physical properties inthat metal.

(19) 

## High heatrelease rate--A ratio ofboiler design heatinputto firebox volume (asboundedbythefront firebox wall where theburneris located, the firebox side waterwall, andextendingto the leveljustbelow orinfront ofthefirst row of convection pass tubes) greaterthan orequal to 70,000 

## British thermal units perhour
per cubic foot.

9

## (20) 

## Horsepower rating--The engine manufacturer's maximum continuous load rating atthelesser ofthe engine ordriven equipment's maximum published continuous speed.

(21) 

## Incinerator--As follows.

(A) Forthepurposes ofthis chapter, theterm "incinerator" includes both ofthe following:

(i) a control device that combusts or oxidizes gases orvapors (e.g., thermal oxidizer, catalytic oxidizer, vapor combustor); and

(ii) 

## an incinerator as defined in §101.1 

## ofthis title (relatingto Definitions).

(B) The term "incinerator" does not applytoboilers orprocess heaters as defined inthis section, ortoflares as defined in §101.1 

## ofthis title.

(22) 

## Industrial boiler--Any combustion equipment, not including utility or auxiliary steamboilers as defined inthis section, fired with liquid, solid, orgaseous fuel, that is usedto produce steam orto heatwater.

10

# (23) International Standards Organization (ISO) conditions--ISO standard conditions of59 degrees Fahrenheit, 1.0 atmosphere, and 6o% relative humidity.

(24) Large utility system--All boilers, auxiliary steamboilers, and stationarygas turbines that are located in the Dallas-Fort Worth orthe Dallas-Fort Worth eight-hour ozone nonattainment area, andwere part ofone electricpower generating system onJanuary 1, 2000, thathad a combined electric generating capacity equal to or greaterthan soo megawatts.

(25) Lean-burn engine--A spark-ignited orcompression-ignited, Otto cycle, diesel cycle, ortwo-stroke engine thatis not capable ofbeing operatedwith an exhaust stream oxygen concentration equal to orless than o.s% byvolume, as originally designedbythe manufacturer.

(26) Low annual capacityfactor boiler, process heater, or gas turbine supplemental waste heat recovery unit--An industrial, commercial, orinstitutional boiler; process heater; orgas turbine supplemental waste heat recovery unit with maximum rated capacity:

(A) greater than or equal to 40 million British thermal units per hour (MMBtu/hr), butless than 100 MMBtujhr and an annual heatinputless than or equal to 2.8 (10 11) 

# British thermal units peryear (Btu/yr), based on a rolling 12-month
average; or
11

# (B) greaterthan or equal to 100 MMBtu/hr and an annual heat inputless than orequal to 2.2 (10 11) 

# Btu/yr, basedon a rolling 12-month average.

(27) Low annual capacity factor stationarygas turbine or stationary internal combustion engine--A stationarygas turbine or stationaryinternal combustion engine thatis demonstratedto operate less than 850hours peryear, based on a rolling 12-month average.

(28) Low heat release rate--A ratio ofboiler design heatinputto firebox volume less than 70,000 British thermal units perhourpercubic foot.

(29) Major source--Any stationary source orgroup ofsources located within a contiguous area andunder common control that emits orhas the potential to emit:

(A) atleast 50 tons peryear (tpy) ofnitrogen oxides (NOx) andis located in the Beaumont-PortArthur ozone nonattainment area;

(B) atleast 50 tpy ofNOxandis located in the Dallas-Fort Worth or Dallas-FortWorth eight-hour ozone nonattainment area;

12

## (C) atleast 25 

## tpy ofNOx andis locatedin the Houston-GalvestonBrazoria ozone nonattainment area; or

(D) the amount specifiedinthe major source definition contained in the Prevention ofSignificant Deterioration ofAir Quality regulations promulgatedby the United States Environmental ProtectionAgency in

## 40 Code ofFederal Regulations §52.21 

## as amendedJune 3, 1993 

## (effective June 3, 1994), 

## andis locatedinAtascosa, Bastrop, Bexar, Brazos, Calhoun, Cherokee, Comal, Fannin, Fayette, Freestone, Goliad, Gregg, Grimes, Harrison, Hays, Henderson, Hood, Hunt, Lamar, Limestone, Marion, McLennan, Milam, Morris, Nueces, Red River, Robertson, Rusk, Titus, Travis, Victoria,

orWharton County.

(30) 

## Maximum rated capacity--The maximum design heat input, expressed in million Britishthermalunits perhour, unless:

(A) theunitis a boiler, utilityboiler, orprocess heater operated above the maximum design heatinput (as averaged over any one-hourperiod), in which

case the maximum operatedhourlyrate mustbeused as the maximum rated capacity;

or (B) the unit is limitedbyoperating restriction orpermitcondition
to a lesser heatinput, inwhich case thelimiting condition mustbe used as the maximum rated capacity; or

13

## (C) theunitis a stationary gas turbine, in which case the
manufacturer's ratedheat consumption atthe International Standards Organization (ISO) conditions mustbe used as the maximum rated capacity, unless limitedbypermit
condition to a lesserheatinput, inwhich case thelimiting condition mustbeused as the
maximum rated capacity; or

(D) the unitis a stationary, internal combustion engine, in which

case the manufacturer's ratedheat consumption at Diesel Equipment Manufacturer's
Association or ISO conditions mustbe used as the maximum rated capacity, unless
limitedbypermitconditionto a lesserheatinput, inwhich case thelimiting condition

mustbeused as the maximum rated capacity.

(31) 

## Megawatt (MW) rating--The continuous MW output rating or mechanical equivalentby a gas turbine manufacturer at International Standards Organization conditions, without considerationto the increase in gas turbine shaft output and/orthe decrease in gas turbine fuel consumptionbythe addition ofenergy recovered from exhaustheat.

(32) 

## Nitric acid--Nitric acidthatis 30% 

## to 100% 

## in strength.

(33) 

## Nitric acid productionunit--Any source producing nitric acidby
eitherthepressure or atmospheric pressureprocess.

14

## (34) Nitrogen oxides (NOx)--The sum ofthe nitric oxide andnitrogen dioxide intheflue gas or emission point, collectively expressed as nitrogen dioxide.

(35) 

## Parts permillionbyvolume (ppmv)--All ppmvemission specifications specifiedin this chapter are referenced on a drybasis. When requiredto adjust pollutant concentrations to a specified oxygen C02) 

## correctionbasis, the following equation must be used.

Figure: 30

## TAC §117.10(35) 

## (No Change tothefigure as it currently exists inTAC)

(36) Peaking gas turbine or engine--A stationarygas turbine or engine usedintermittentlyto produce energy on a demandbasis.

(37) 

## Plant-wide emission rate--The ratio ofthetotal actual nitrogen oxides

mass emissions rate discharged intothe atmosphere from affected units at a major

source when firing attheir maximum rated capacitytothetotal maximum rated capacities for those units.

(38) Plant-wide emission specification--The ratio ofthetotal allowable nitrogen oxides mass emissions rate dischargeable intothe atmosphere from affected units at a major source when firing attheir maximum rated capacity to the total maximum rated capacities for those units.

15

## (39) Predictive emissions monitoring system (PEMS)--The total equipmentnecessaryfor the continuous determination and recordkeeping ofprocess
gas concentrations and emission rates using process or control device operating parameter measurements and a conversion equation or computerprogramto produce
results inunits ofthe applicable emissionlimitation.

(40) 

## Process heater--Any combustion equipmentfired withliquid and/or
gaseous fuel thatis usedto transfer heatfrom combustion gases to a process fluid, superheated steam, orwaterfor the purpose ofheating the process fluid or causing a chemical reaction. The term "process heater" does not applyto anyunfiredwasteheat
recoveryheaterthatis usedto recover sensible heatfrom the exhaust ofany combustion equipment, ortoboilers as defined inthis section.

(41) 

## Pyrolysis reactor--Aunitthatproduces hydrocarbon products from
the endothermiccracking offeedstocks such as ethane, propane, butane, and naphtha using combustionto provide indirectheating for the cracking process.

(42) 

## Reheat furnace--A furnace thatis used inthe manufacturing, casting,

orforging ofmetal to raise the temperature ofthat metal inthe course ofprocessing to a temperature suitable for hotworking or shaping.

(43) Rich-burn engine--A spark-ignited, Otto cycle, four-stroke, naturally aspirated orturbocharged enginethatis capable ofbeing operatedwith an exhaust 16

# stream oxygen concentration equal to orless than 0.5% byvolume, as originally designedbythe manufacturer.

(44) Small utility system--All boilers, auxiliary steamboilers, and stationarygas turbines that are located inthe Dallas-FortWorth orthe Dallas-Fort Worth eight-hour ozone nonattainment area, andwere part ofone electric power generating system on January 1, 2000, thathad a combined electric generating capacity less than 500 megawatts.

(45) Stationary gas turbine--Any gas turbine system thatis gas and/or liquidfuel fired with orwithout power augmentation. This unit is either attachedto a foundation oris portable equipment operated at a specific minor or major source for

more than 90 days in any 12-monthperiod. Two or more gas turbines powering one shaft mustbe treated as one unit.

(46) Stationaryinternal combustion engine--A reciprocating engine that remains orwill remain at a location (a single site at abuilding, structure, facility, or installation) for more than 12 consecutive months. Included inthis definition is any engine that, by itselforin or on a piece ofequipment, is portable, meaning designedto be and capable ofbeing carried or moved from one location to another. Indicia of portabilityinclude, butare notlimitedto, wheels, skids, carrying handles, dolly, trailer,

orplatform. Any engine (or engines) that replaces an engine at a location andthatis intendedto perform the same or similarfunction as the enginebeing replaced is 17

## included in calculating the consecutive residence time period. An engine is considered stationaryifitis removedfrom one location for a period andthen returnedto the same location in an attemptto circumventthe consecutive residence time requirement. Nonroad engines, as defined in 40 

## Code ofFederal Regulations §89.2, 

## are not considered stationaryfor the purposes ofthis chapter.

(47) System-wide emission rate--The ratio ofthetotal actual nitrogen oxides mass emissions rate discharged into the atmosphere from affected units in an electricpower generating system orportionthereoflocatedwithin a single ozone nonattainment area when firing attheir maximum rated capacitytothetotal maximum rated capacities for those units. For fuel oil firing, average activitylevels mustbeused in lieu ofmaximum rated capacities for the purpose ofcalculating the system-wide emission rate.

(48) System-wide emission specification--The ratio ofthetotal allowable nitrogen oxides mass emissions rate dischargeable intothe atmosphere from affected units in an electric power generating system orportionthereoflocatedwithin a single

ozone nonattainment areawhenfiring attheir maximum rated capacityto the total maximum rated capacities for those units. Forfuel oil firing, average activitylevels must be used inlieu ofmaximum rated capacities for the purpose ofcalculatingthe systemwide emission specification.

18

## (49) Thirty-day rolling average--An average, calculated for each daythat fuel is com bustedin a unit, ofall the hourly emissions datafor the preceding 30 

## days thatfuel was com bustedinthe unit.

(50) 

## Twenty-four hour rolling average--An average, calculatedfor each hourthatfuel is combusted (or acid is produced, for a nitric or adipic acid production unit), ofall the hourlyemissions datafor the preceding 24 hours thatfuel was

com bustedintheunit.

(51) 

## Unit--Aunit consists ofeither:

(A) for the purposes of §§117.105, 117.205, 117.305, 117.1005, 117.1105, 

## and 117.1205 

## ofthis title (relating to Emission Specifications for Reasonably Available Control Technology (RACT)) and each requirement ofthis chapter associated
with §§117.105, 117.205, 117.305, 117.1005, 117.1105, 

## and 117.1205 

## ofthis title, anyboiler,
process heater, stationarygas turbine, or stationaryinternal combustion engine, as defined inthis section;

(B) for the purposes of §§117.110, 117.210, 117.310, 117.1010, 117.1110, 

## and 117.1210 

## ofthis title (relating to Emission Specifications for Attainment Demonstration) and each requirement ofthis chapter associated with §§117.110, 117.210, 117.310, 117.1010, 117.1110, 

## and 117.1210 

## ofthis title, anyboiler, process heater, stationarygas turbine, or stationaryinternal combustion engine, as defined in this 19

# section, or any other stationary source ofnitrogen oxides (NOx) at a major source, as defined inthis section;

(C) for the purposes of §117.2010 

# ofthis title (relatingto Emission Specifications) and each requirement ofthis chapter associated with §117.2010 

# ofthis title, anyboiler, process heater, stationarygas turbine (including any ductburnerinthe turbine exhaust duct), or stationaryinternal combustion engine, as defined inthis section;

(D) for the purposes of§117.2110 

# ofthis title (relating to Emission Specifications for Eight-HourAttainment Demonstration) andeach requirement ofthis chapter associatedwith §117.2110 

# ofthis title, any stationaryinternal combustion engine, as defined in this section;

(E) for the purposes of §117.3310 

# ofthis title (relating to Emission Specifications for Eight-HourAttainment Demonstration) and each requirement ofthis chapter associated with §117.3310 

# ofthis title, any stationary internal combustion engine, as defined inthis section; or

(F) for the purposes of §117-410 

# and §117.1310 

# ofthis title (relating
to Emission Specifications for Eight-HourAttainment Demonstration) and each requirement ofthis chapter associated with §117-410 

# and §117.1310 

# ofthis title, any boiler, process heater, stationarygas turbine, or stationaryinternal combustion engine, 20

## as defined inthis section, or anyother stationary source ofNOx at a major source, as defined inthis section.

(52) 

## Utilityboiler--Any combustion equipment owned oroperatedby an electric cooperative, municipality, river authority, public utility, or Public Utility Commission ofTexas regulatedutility, fired with solid, liquid, and/orgaseous fuel, used
toproduce steam for the purpose ofgenerating electricity. Stationary gas turbines, including any associated ductburners andunfired waste heatboilers, are not considered
tobeutilityboilers.

(53) Wood--Wood, wood residue, bark, or any derivative fuel orresidue thereofin anyform, including, but notlimitedto, sawdust, sander dust, wood chips,
scraps, slabs, millings, shavings, andprocessedpellets made from wood orotherforest residues.

21

# ~;{~!~~~!~p;r::J~2~::ii\'~:~."~:~ ORDERADOPTINGAMENDED RULES AND

. · .**.,~~~** 

## REVISIONS TO THE STATE IMPLEMENTATid'&"pJ::AN···

......... -

Docket No. 2012-0896-RUL Rule ProjectNo. 2012-025-117-AI


## On April10, 2013, the Texas Commission on Environmental Quality (commission), during a public meeting, considered adoption ofamended 30 Texas Administrative Code§ 101.379 and§ 117.10. The Commission adopts these amendments in Chapter 101, General Air Quality Rules, Subchapter H, Emissions Banking andTrading, Didsion 4, Discrete Emission Credit Banking andTrading and Chapter 117, Control ofAir Pollution from Nitrogen Compounds, SubchapterA, Definitions; and corresponding revisions to the state implementation plan (SIP). The adopted rulemaking amends §101.379 andthe definition of emergencysituation in §117.10 to reference the version ofthe ERCOT nodal protocols effective June 1, 2012. The adoptedrulemaking also amends the definition ofemergency situationin §117.10 to reflect changes madebyERCOT to promote reliability during energy emergencies by allowing the operation ofgenerators for purposes ofselling powerto the electric grid under limitedcircumstances. Under Tex. Health &

## Safety Code Ann. §§ 382.011, 382.012, and 382.023 (Vernon 2011), the Commission has the authorityto controlthe quality ofthe state's air andto issue orders consistentvvith the policies andpurposes ofthe Texas Clean Air Act, Chapter 382 ofthe Tex. Health & 

## Safety Code. The proposedrules were published for comment intheNovember 2, 2012, issue ofthe 

## Texas Register (37 TexReg 8718 andTexReg 8722).

·**Pur~:uant** 

## to Tex. Health & 

## Safety Code Ann.§ 382.017 (Vernon 2001), Tex. Gov't Code Chapter 2001 (Vernon 2008), and40 Code ofFederal Regulations§ 51.102, and after proper**·noti.~e,** 

## the-Commission conducted a public hearing to considerthe amended rules and revisions to the SIP. Proper notice included prominent advertisement in the areas affected at least 30 d-ays priorto the date ofthe hearing. Apublic hearing was held in Austin at the Texas Coriiinissl'Gn ofEmironmental Qualityheadquarters November 28, 2012.**"~.-·** r:-



## . r-= 

# =**T~cj**Commission circulated hearing notices ofits intended action to the public, includinginterestedpersons, the Regional Administrator ofthe EPA, and all applicable local air pollution control agencies. The public was invitedto submit data, views, and recommendations onthe proposed amended rules and SIP revisions, either orally or in \vTiting, at the hearing or duringthe commentperiod. Prior to the scheduled hearing, copies ofthe proposed amended rules and SIP revisions were available for public inspection at the Commission's central office and on the Commission's Web site.

## period, andwere consideredbythe Commission as reflected inthe analysis oftestimony incorporatedbyreference to this Order. The Commission finds thatthe analysis oftestimony includes the names ofall interested groups or associations offering comment on the proposed amended rules andthe SIP revisions andtheir position concerning the same. IT IS THEREFORE ORDERED BY

## THE COMMISSION thatthe amended rules and revisions tothe SIP incorporatedbyreference tothis Order arehereby adopted. The Commission further authorizes staffto make any non-substantive revisions to the rules necessary to comply '"'ith 

## Texas Registerrequirements. The adopted rules andthepreamble to the adoptedrules andthe revisions to the SIP are incorporatedbyreference inthis Order as ifsetforth atlength verbatim inthis Order.
IT IS FURTHER ORDERED BY

## THE COMMISSION that onbehalfofthe Commission, the Chairman shouldtransmit a copy ofthis Order, together with the adopted rules andrevisions to the SIP, to the Regional Administrator ofEPA as a proposedrevision to the Texas SIP pursuantto the Federal Clean Air Act, codified at 42 U.S. CodeAnn. §§ 7401- 7671q, as amended. This Order constitutes the Order ofthe Commissionrequiredbythe Administrative ProcedureAct, Tex. Gov't Code,§ 2001.033 (Vernon 2008). If

## anyportion ofthis Order is for anyreasonheldtobe invalidby a court ofcompetent jurisdiction, the invalidity ofany portion shall not affect thevalidity ofthe remaining portions.

Issued date: 

# APR 

# 222013
TEXAS COMMISSION ON ENVIRONMENTAL QUALI1Y

# PART 1. 

# TEXAS COMMISSION ON ENVIRONMENTAL QUALITY CHAPTER 101. GENERAL AIR QUALITY RULES SUBCHAPTER H. EMISSIONS BANKING AND TRADING DIVISION 4. DISCRETE EMISSION CREDIT BANKING AND TRADING 30 TAC §101.379 The Texas Commission on Environmental Quality (TCEQ, agency, or commission) adopts the amendment to §101.379 with changes to the proposed text as published in the November 2, 2012, issue ofthe Texas Register(37 TexReg 8718). Ifadopted, the amended §1 01.379 will be submitted to the United States Environmental Protection Agency (EPA) as a revision to the state implementation plan (SIP). Background and Summary ofthe Factual Basis for the Adopted Rule The Electric Reliability Council of Texas, Inc. (ERGOT) manages the electrical grid within the ERGOT region of Texas, with oversight by the Public Utility Commission ofTexas (PUCT). On March 22, 2012, the PUCT repealed 16 TAC §25.507, to replace the Emergency Interruptible Load Service (ElLS) program with the Emergency Response Service (ERS) program (new 16 TAC §25.507). Like the ElLS program, the new ERS program is designed to help decreasethe likelihood of requiring firm load shedding (i.e., rolling black-outs) during an ERGOT-declared energy emergency by decreasing the power demand on the electrical grid. Subsequent changes to ERGOT's Nodal Protocols reflecting the new ERS program became effective on June 1, 2012. On December 10, 2008, the commission adopted the amendment to §101.379 to restrict the use ofdiscrete emissions reduction credits (DERCs) in the Dallas-Fort Worth 1997 eight-hour ozone nonattainment area (DFW area) to a level consistent with the attainment and maintenance of the 1997 eight-hour ozone National Ambient Air Quality Standard (NAAQS). The rule requires an annual review of the DFW area DERC program to determine the flow control limit and apportion available DERCs for potential use. The rule also provides an exemption from the DFW flow control limit for DERCs used in response to an ERGOT-declared emergency situation and references the specific ERGOT protocols that detail the emergency notice. The existing rule references a previous version ofthe ERGOT protocols, which could potentially cause confusion for regulated entities and delay the processing of DERC usage requests. The adopted rulemaking updates§101.379 to reference the version ofthe ERGOT protocols effective on June 1, 2012. The amendment to §101.379 is adopted concurrently with the amendment to 30 TAC §117.10 that will be published in a separate rulemaking in this issue of the Texas Register. Section Discussion The commission revises §1 01.379(c)(2)(D) to reference the version of the ERGOT Protocols effective on June 1, 2012. Additionally, in response to ERGOT's comments on this rulemaking, the commission is revising §101.379(c)(2)(D) to also include operations in response to an ERGOT energy emergency alert. The commission is making this change to address situations when system conditions deteriorate so rapidly that it is not possible for ERGOT to issue an emergency notice prior to declaring an energy emergency alert. Final Regulatory Impact Analysis The commission reviewed the adopted rule in light of the regulatory analysis requirements of Texas Government Code, §2001.0225 and determined that the adopted rulemaking does not meet the definition of a major environmental rule. Texas Government Code, §2001.0225 states that a major environmental rule is a rule for which the specific intent 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, a sector of the economy, productivity, competition, jobs, the environment, or the public health and safety of the state or a sector of the state. Furthermore, while the adopted rulemaking does not constitute a major environmental rule, even if it did, a regulatory impact analysis would not be required because the adopted rulemaking does not meet any ofthe four applicability criteria for requiring a regulatory impact analysis for a major environmental rule. Texas Government Code, §2001.0225 applies only to a major environmental rule that: 1) exceeds a standard set by federal law, unless the rule is specifically required by state law; 2) exceeds an express requirement of state law, unless the rule is specifically required by federal law; 3) exceeds 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; or 4) adopts a rule solely under the general powers of the agency instead of under a specific state law. Specifically, it does not meet any of the four applicability criteria listed in Texas Government Code, §2001.0225 because: 1) the adopted rulemaking is part of the SIP, and as such is designed to meet, not exceed the relevant standard set by federal law; 2) parts of the adopted rulemaking are directly required by state law; 3) no contract or delegation agreement covers the topic that is the subject of this adopted rulemaking; and 4) the adopted rulemaking is authorized by specific sections of Texas Health and Safety Code (THSC), Chapter 382 (also known as the Texas Clean Air Act), and the Texas Water Code, which are cited in the Statutory Authority section ofthis preamble. The adopted rule implements requirements ofthe Federal Clean Air Act (FCAA). Under 42 United States Code (USC), §7410, each state is required to adopt and implement a SIP containing adequate provisions to implement, attain, maintain, and enforce the NAAQS within the state. While 42 USC, §7410 generally does not require specific programs, methods, or reductions in order to meet the standard, SIPs must include enforceable emission limitations and other control measures, means, or techniques (including economic incentives such as fees, marketable permits, and auctions of emissions rights), as well as schedules and timetables for compliance as may be necessary or appropriate to meet the applicable requirements ofthis chapter (meaning 42 USC, Chapter 85, Air Pollution Prevention and Control, otherwise known as the FCAA). The provisions of the FCAA recognize that states are in the best position to determine what programs and controls are necessary or appropriate in order to meet the NAAQS. This flexibility allows states, affected industry, and the public to collaborate on the best methods for attaining the NAAQS for the specific regions in the state. Even though the FCAA allows states to develop their own programs, this flexibility does not relieve a state from developing a program that meets the requirements of 42 USC, §7410. States are not



## ADOPTED RULES April26, 2013 38 TexReg 2619free to ignore the requirements of42 USC, §7410, and must develop programs and control measures to assure that their SIPs provide for implementation, attainment,**maintenan~~·** and enforcement of the NAAQS within the state. The spec1f1c Intent of the adopted rulemaking is to update references to the ERGOT protocols in §101.379 to be consistent with §117.10. While the adopted rulemaking protects the environment or reduces risks to human health from environmental exposure, it does not constitute a major environmental rule underTexas Government Code, §2001.0225(g)(3) because it does not adversely affect in a material way the economy, a sector of the economy, productivity, competition, or jobs, nor would the rulemaking adversely affect in a material way the environment, or the public health and safety of the state or a sector ofthe state. The**rul~­** making as a result is not subject to a regulatory 1mpact analysis under Texas Government Code, §2001.0225 because it is not a major environmental rule. The requirement to provide a fiscal analysis of regulations in the Texas Government Code was amended by Senate Bill (SB) 633, 75th Legislature, 1997. The intent of SB 633 -:vas to require agencies to conduct a regulatory impact analys1s of extraordinary rules. These are identified in the statuto'!' language as major environmental rules that will have a matenal adverse 1mpact and will exceed a requirement of state law, federal law, or a delegated federal program; or are adopted solely under the general powers of the TCEQ. With the understanding that this requirement would seldom apply, the commission provided a cost estimate for SB 633 that concluded: based on an assessment of rules adopted by the agency in the past, it is not anticipated that the bill will have significant fiscal implications for the agency due to its limited application. The commission also noted that the number of rules that would require assessment under the provisions of the bill was not large. This conclusion was based, in part, on the criteria set forth in the bill that exempted rules from the full analysis unless the rule was a maJor enwonmental rule that exceeded a federal law. The FCAA does not always require specific programs, methods, or reductions in order to meet the NAAQS; thus, states must develop programs for each nonattainment area to help ensure that those areas will meet the attainment deadlines. Because of the ongoing need to address nonattainment**issu~s** .and to meet the requirements of 42 USC, §7410, the commiSSIOn**rout1n~ly** proposes and adopts revisions to the SIP and rules. The legislature is presumed to understand this federal scheme. If each rule adopted for inclusion in the SIP were considered to be a major environmental rule that exceeds federal law, then every revision to the SIP would require the full regulatory impact analysis contemplated by SB 633. This conclusion is inconsistent with the conclusions reached by the comm1ss1on 1n 1ts cost estimate and by the Legislative Budget Board (LBB) in its f!scal notes. Since the legislature is presumed to understand the f1scal impacts of the bills it passes and that presumption is based on information provided by state agencies and the LBB, the**co~­** mission believes that the intent of SB 633 was only to requ1re the full regulatory impact analysis for rules .that are extraordinary in nature. While the rules have a broad 1mpact, that 1mpact is no greater than is necessary or appropriate to meet the requirements of the FCAA. For these reasons, rules adopted for inclusion in the SIP fall underthe exception in Texas Government Code, §2001.0225(a), because they are required by federal law. The commission has consistently applied this construction to its rules since this statute was enacted in 1997. Since that



## 38 TexReg 2620 April26, 2013 Texas Register time, the legislature has revised the Texas Government Code but left this provision substantially unamended. It is presumed that, when an agency interpretation is in effect at the time the legislature amends the laws without making substantial change in the statute, the legislature is deemed to have accepted the agency's interpretation. (Central Power & Light Co. 

### v: Sharp, 919 S.W.2d 485, 489 (Tex. App. Austin 1995), writ denied with per curiam opinion respecting another issue, 960 S.W.2d 617 (Tex. 1997); Bullock v. Marathon Oil Co., 798 S.W.2d 353, 357 (Tex. App. Austin 1990, no writ) superseded by statute ?n anotherpoint oflaw, Tax Code §112.1 08, Other Act1ons Prohibited, as recognized in, First State Bank ofDuf!las v. Sharp,**86~** S.W.2d 81, 83 (Tex. App. Austin 1993, no wnt); Cf Humble Otl & Refining Co. 

### v: Calvert, 414 S.W.2d 172 (Tex. 1967); Dudney v. State Farm Mut. Auto Ins. Co., 9 S.W.3d 884, 893 (Tex. App. Austin 2000); Southwestern Life Ins. Co. v. Montemayor, 24 S.W.3d 581 (Tex. App. Austin 2000, pet. denied); and Coastal lndust. WaterAuth. 

### v: Trinity Portland CementDiv., 563 S.W.2d 916 (Tex. 1978).) The commission's interpretation of the regulatory impact analysis requirements is also supported by a change**m~de** to**t~e** Texas Administrative Procedure Act (APA) by the legislature 1n 1999. In an attempt to limit the number of rule challenges based upon APA requirements, the legislature clarified that state agencies are required to meet these sections ofthe APA against the standard of substantial compliance as required in Texas Government Code, §2001.035. The legislature specifically identified Texas Government Code, §2001.0225 as falling underthis standard. The commission has complied with the requirements of Texas Government Code, §2001.0225. Even ifthe adopted rulemaking constitutes a major environmental rule under Texas Government Code, §2001.0225(g)(3), a regulatory impact analysis is not required because this exemption is part ofthe commission's SIP for making progress toward the attainment and maintenance of the NAAQS. Therefore, the adopted rulemaking does not exceed a standard set by federal law or exceed an express requirement of state law, since they are part of an overall regulatory scheme designed to meet, not exceed, the relevant standard set by federal law (NAAQS). The commission is charged with protecting air quality within the state and to design and submit a plan to achieve attainment and maintenance ofthe federally mandated NAAQS. The Third District Court of Appeals upheld this interpretation in Brazoria County 

### v: Texas Commn on Envtl. Quality, 128 S.W. 3d 728 (Tex. App.

- Austin 2004, no writ). The specific intent of the adopted rulemaking is to update references to the ERGOT protocols in §1 01.379 to be consistent with §117.1 0. This adoption, therefore, does not exceed an express requirement of federal law. The amendment is needed to implement state law, but does not exceed those new requirements. Finally, this rulemaking was not developed solely under the general powers of the agency but is authorized by specific sections ofTHSC, Chapter 382, which are cited in the Statutory Authonty sect1on of th1s preamble, including THSC, §382.012 and §382.019. Because this adopted rulemaking does not meet any of the four applicability requirements, Texas Government Code, §2001.0225(b) does not apply and a regulatory impact analysis is not required. The commission invited public comment regarding the draft regulatory impact analysis determination during the public comment period. No comments were received on the regulatory impact analysis determination. Takings Impact AssessmentThe comm1ss1on evaluated the adopted rulemaking and performed an analysis of whether the adopted rulemaking constitutes a taking under Texas Government Code, Chapter 2007. The commission's preliminary assessment indicates Texas Government Code, Chapter 2007 does not apply. Under Texas Government Code, §2007.002(5), taking means: "(A) a governmental action that affects private real property, in whole or in part or temporarily or permanently, in a manner that requires the governmental entity to compensate the private real property owner as provided by the Fifth and Fourteenth Amendments to the United States Constitution or Section 17 or 19, Article I, Texas Constitution; or (B) a governmental action that: (i) affects an owner's private real property that is the subject ofthe governmental action, in whole or in part ortemporarily or permanently, in a manner that restricts or limits the owner's right to the property that would otherwise exist in the absence ofthe governmental action; and (ii) is the producing cause of a reduction of at least 25 percent in the market value ofthe affected private real property, determined by comparing the marketvalue ofthe property as if the governmental action is not in effect and the market value of the property determined as if the governmental action is in effect." Promulgation and enforcement ofthe rulemaking would be neither a statutory nor a constitutional taking ofprivate real property. The primary purpose ofthe rulemaking is an update to Chapter 101, Subchapter H to ensure consistency with ERGOT's new ERS program. This rule is not burdensome, restrictive, or limiting of rights to private real property because the rulemaking regulates the use ofelectric generators in certain limited emergency situations. Furthermore, the rulemaking benefits the public by potentially decreasing the likelihood of requiring firm load shedding (i.e., rolling black-outs) when additional control measures are needed to achieve or maintain attainment of the federal air quality standards through the use of electric generators. The rulemaking does not affect a landowner's rights in private real property because this rulemaking does not burden, restrict, or limit the owner's right to property, nor does it reduce the value of any private real property by 25% or more beyond that which would otherwise exist in the absence ofthe regulations. Therefore, this rule does not constitute a taking under Texas Government Code, Chapter 2007. Consistency with the Coastal Management Program The commission reviewed the adopted rulemaking and found that the rule is subject to the Texas Coastal Management Program (CMP) in accordance with the Coastal Coordination Act, Texas Natural Resources Code, §§33.201 

### etseq., and therefore must be consistent with all applicable CMP goals and policies. The commission conducted a consistency determination for the adopted rule in accordance with Coastal Coordination Act Implementation Rules, 31 TAC §505.22, and found the adopted rulemaking is consistent with the applicable CMP goals and policies. The CMP goal applicable to the adopted rulemaking is the goal to protect, preserve, and enhance the diversity, quality, quantity, functions, and values of coastal natural resource areas (§501.12(1)). The CMP policy applicable to the adopted rulemaking is the policy that commission rules comply with federal regulations in 40 Code of Federal Regulations to protect and enhance air quality in the coastal areas (§501.32). The adopted rulemaking does not increase emissions of air pollutants and is therefore consistent with the CMP goal in §501.12(1) and the CMP policy in §501.32. Promulgation and enforcement ofthis rule will not violate or exceed any standards identified in the applicable CMP goals and policies because the adopted rule is consistent with these CMP goals and policies and because this rule does not create or have a direct or significant adverse effect on any coastal natural resource areas. Therefore, in accordance with §505.22(e), the commission affirms that this rulemaking action is consistent with CMP goals and policies. The commission invited comment on the consistency ofthis rulemaking during the public comment period. The commission received no comments on the consistency ofthis rulemaking. Effect on Sites Subject to the Federal Operating Permits Program The adopted amendment will not require any changes to federal operating permits. Public Comment The commission scheduled a public hearing in Austin on November 28, 2012. However, the hearing was not officially opened because no one registered to provide comments. The public comment period closed on December 5, 2012. The commission received comments from Blue Sky Environmental LLC (Blue Sky), EnerNOC, Inc. (EnerNOC), EPA, and ERCOT. Response to Comments Comment Blue Sky, EnerNOC, EPA, and ERCOT expressed support for the proposed revisions to §101.379(c)(2)(D). Response The commission appreciates the support. Comment ERCOT commented that if system conditions deteriorate too rapidly it might not be possible to issue an emergency notice prior to declaring an energy emergency alert and subsequently deploying ERS. ERCOT recommended the commission amend §101.379(c)(2)(D) to refer to ERGOT's dispatch of ERS rather than the issuance of an emergency notice. ERCOT recommended that the commission reference the PUCT's ERS rule in 16 TAC §25.507 rather than the ERCOT Nodal Protocols referenced in the proposed rules. ERCOT expressed concern that the frequent revisions to the ERCOT Nodal Protocols could create confusion as to the applicability of §117.1 0(15)(A)(ii) and §101.379(c)(2)(D). ERCOT suggested the commission could more easily monitor the infrequent changes to the PUCT rules than the numerous ongoing proposals to revise the ERCOT Nodal Protocols referenced in the proposed rules. Response The intent of §101.379(c)(2)(D) is to provide electric generating facilities that are subject to the DERC flow control limit specified in §101.379(c)(2)(A) a temporary exemption from the DERC flow control limit. Limiting the definition of an ERGOT-declared emergency solely to deployment of the ERS will exclude electric generating facilities from being temporarily exempt from the DERC flow control limit when required to operate in an emergency situation in which the safety or reliability of the ERCOT system is compromised or threatened, as determined by ERGOT. Since the provision in §101.379(c)(2)(D) affects sources that are likely not participating in ERGOT's ERS program but are operating as a result of an ERGOT-declared emergency, it



## ADOPTED RULES April26, 2013 38 TexReg 2621is necessary for the commission to retain the reference to emergency notice. Additionally, in response to ERGOT's_comments the commission is revising §101.379(c)(2)(D) to also Include operations in response to an ERGOT energy emergenc_y**~.lert.** The commission is making this change to ensure the def1n1t1on of an ERGOT-declared emergency includes situations when system conditions deteriorate so rapidly that it is not possible for ERGOT to issue an emergency notice prior to declaring an energy emergency alert. The commission is aware thatthe ERGOT Nodal Protocols references in§1 01.379(c)(2)(D) are frequently revised and have_even been revised since the commission proposed th1s rulemak1ng 1n October 2012. Since the provision in §1 01.379(c)(2)(D) affects sources that are likely not participating in ERGOT's ERS program but are operating as a result ofan**ER~OT-declared** emergency, it is not appropriate for the commiSSIOn**t~ r~ference**  the PUCT's ERS rule in 16 TAC §25.507. The commiSSIOn respectfully declines to make the suggested change. Comment To account for emergency demand response programs initiated by Texas utilities that are experiencing voltage reductions, Blue Sky and EnerNOC recommended expanding the**~erm** ERC_C?Tdeclared emergency in §101.379(c)(2)(D) to also Include utilitydeclared emergencies. Response The purpose of this rulemaking is not to redefine emergency situation but merely to update §1 01.379 to reference the version of the ERGOT protocols effective on June 1, 2012. The commission does not agree that an emergency situation should include operations that occur in response to a utility-declared emergency. The suggested change would effectively decrease the stringency ofthe existing rules by expanding the scope ofthe current definition to include additional situations that would not currently be considered emergency situations. Because the EPA has approved the existing rules as part of_the SIP, the suggested expansion ofthe definition could be considered**backsl1~1ng** and result in the EPA's disapproval ofthe rulemak1ng. As discussed elsewhere in the Response to Comments section ofthe preamble the commission is also revising the proposed rule language to

### i~clude operations that are in direct response to an instruction by ERGOT during the period of an ERGO! energy emergency alert. The commission makes no change 1n response to these comments. Comment EPA stated that the current DERC rules in §1 01.379 establish the DERC flow-control mechanism to support attainment ofthe 1997 eight-hour ozone standard. The EPA commented it has since promulgated a more stringent ozone standard. On March 27, 2008, and on April 30, 2012, the EPA des1gnated a new ten-county area as the 2008 Dallas-Fort Worth ozone nonattainment area. EPA also commented that the commission will need to review the technical basis for the DERC flow control in §1 01.379 and update as**necess~ry** to reflect_the most current ozone standard as part of its attainment planmng. Response The scope ofthis rulemaking is limited to updating the reference to the ERGOT protocols and therefore evaluating the technical basis of the DERC flow control for the 2008 ozone standard is beyond the scope ofthis rulemaking.**How~ver,** the commissi?n may consider the DERC flow control requirement as part of 1ts



## 38 TexReg 2622 April26, 2013 Texas Register planning efforts for the 2008 ozone standard. The commission makes no change in response to this comment. Comment Blue Sky and EnerNOC recommended the commission provide guidance regarding the SIP process. The**com~enters als~**  requested the commission confirm that the follow1ng**assumpt1~ns** are correct: 1) the revisions in §117.379 will not be fully Implemented until the EPA approves the SIP revision; 2) engines participating in the ERS and other utility-sponsored emergency demand response programs without sending power to the electric grid can continue to operate under the definition of emergency situation until the references to the appropnate protocols are changed; and 3) emergency engines c_ould_ not send power to the electric grid under an emergency s1tuat1on unt1l the SIP revision is approved. Response The Texas Water Code authorizes the commission to propose and adopt rules necessary to carry out its powers and duties. Once adopted, the commission files the rule with the Secretary of State for publication in the Texas Register. This action usually occurs the first Friday after adoption. The rule becomes effective 20 calendar days after filing and is fully enforceable by the commission from that time on irrespective of EPA approval of the rule revision as part of the SIP. Therefore, beginning on the effective date of the rule, the definition of emergency situation will include operations in direct response to an instruction by ERGOT during the period ofan ERGOT-declared emergency that supply power to the electric grid. As discussed**elsewher~** 1n the Response to Comments section ofthe preamble,**t~e** definition ofemergency situation in §101.379 includes operat1ons during an ERGOT-declared emergency but does not include other utility-sponsored emergency demand response programs. The commission makes no change in response to these comments. Statutory Authority The amendment is adopted under the authority of the following: Texas Water Code (TWC), §5.1 02, General Powers, TWC, §5.1 03, Rules, and TWC, §5.1 05, General Policy (these provisions authorize the commission to adopt rules necessary to carry out its powers and duties as well as all general policies under the TWC); Texas Health and Safety Code (THSC), §382.01_7, Rules which authorizes the commission to adopt rules consistent ...;ith the policy and purposes of the Texas Clean Air Act; THSC, §382.002, Policy and Purpose, which establishes the commission's purpose to safeguard the state's air resources, consistent with the protection of public health, general welfare, and physical property; THSC, §382.011, General Powers and Duties which authorizes the commission to control the quality of the state's air; THSC, §382.012, State Air Control Plan, which authorizes the commission to prepare and develop a general, comprehensive plan for the control of the**st~te's** air; and THSC, §382.051 (d), Permitting Authority of Comm1ss1on; Rules, which authorizes the commission to adopt rules as necessary to comply with changes in federal law or regulations applicable to permits under THSC, Chapter 382. Finally, the amendment is also adopted under Federal Clean Air Act (FCAA), 42 United States Code (USC), §§7401, et seq., which requires states to submit state implementation plan revisions that specify the manner in which the National Ambient Air Quality Standards will be achieved and maintained within each air quality control region of the state.The adopted amendment implements TWC, §§5.1 02, 5.1 03, and 5.105; THSC, §§382.002, 382.011, 382.012, 382.016, 382.017, and 382.021; and FCAA, 42 USC, §§7401, etseq. §101.379. Program Audits andReports. (a) No laterthanthree years after the effective date ofthis section, and every three years thereafter, the executive director will audit this program. (1) The audit will evaluate the timing ofcredit generation and use, the impact ofthe program onthe state's attainment demonstration and the emissions ofhazardous air pollutants, the availability and cost ofcredits, compliance by the participants, and any other elements the executive director may choose to include. (2) The executive director will recommend measures to remedy any problems identified in the audit. The trading ofdiscrete emission credits may be discontinued by the executive director in part or in whole and in any manner, with commission approval, as a remedy for problems identified in the program audit. (3) The audit data and results will be completed and submittedto the United States Environmental ProtectionAgency and made available for public inspection within six months after the audit begins. (b) No later than February 1 ofeach calendar year, the executive director shall develop and make available to the general public and the United States Environmental Protection Agency a report that includes the following information for the previous calendar year: (1) the amount ofeach pollutantemission credits generated under this division; (2) the amount ofeach pollutant emission credits used under this division; (3) a summary ofall trades completed under this division; and (4) the amount of discrete emission reduction credits (DERC) approved for use under subsection (c) ofthis section. (c) No laterthan October 1ofeach year, the executive director will complete, and make available to the general public and the United States Environmental Protection Agency, an annual review to determine the number ofDERCs available for potential use in the upcoming calendar year for the Dallas-Fort Worth (DFW) eight-hour ozone nonattainment area. The annual review will include the calculation of the flow control limit as specified in subsection ( c)(2)(A) ofthis section to ensure noninterference with attainment and maintenance ofthe ozone National Ambient Air Quality Standard (NAAQS) and the apportionment ofapproved DERCs. (1) For the 2009 control period, the flow control limit for DERCs available for use is the number prescribed in the DFW Eight-Hour Ozone Attainment Demonstration SIP Revision for the 1997 eight-hour ozone standard, in tons per day, not to be exceeded in any day, where a day is a 24-hour period from midnight to midnight. (2) For any control period after 2009, the annual review will establish a flow control limit for that year, in tons per day, not to be exceeded in any day, where a day is a 24-hour period from midnight to midnight. (A) The flow control limit for a particular year will be determined using the following equation: Figure: 30 TAC §101.379(c)(2)(A) (No change.) (B) If use of the entire DERC bank would not interfere with attainment and maintenance of the 1997 eight-hour ozone NAAQS in the DFW eight-hour ozone nonattainment area, then the number ofDERCs potentially available for use is the total number of DERCs in the bank. (C) Ifthe flow control limit, as calculated in the equation in subparagraph(A) of this paragraph, is greaterthan the total number ofDERCsrequested for use in accordance with§101.376(d) ofthis title (relating to Discrete Emission Credit Use) the executive director: (i) may approve all requestedNotice oflntentto Use Discrete Emission Credits (DEC-2 Form) submittals; and (ii) will consider any late DEC-2 Forms submitted as provided under §101.376(d)(3) ofthis title that is not an Electric Reliability Council ofTexas, Inc. (ERCOT)-declared emergency situation as defined in subparagraph (D) ofthis paragraph, but will not otherwise approve a late submittal that would exceed the flow control limit establishedby the equation under subsection (c)(2)(A) ofthis section. (D) Ifthe DEC-2 Forms are submitted in response to an ERCOT-declared emergency situation, the request will not be subject to the flow control limit and may be approved provided all other requirements are met. For the purposes ofthis subparagraph, an ERCOT-declared emergency situation is defined as the period oftime that an ERCOT-issued emergency notice or energy emergency alert (EEA) (as defined in ERCOTNodal Protocols, Section 2: Definitions and Acronyms (June 1, 2012) and issued as specified in ERCOTNodalProtocols, Section 6: AdjustmentPeriodandReal-Time Operations (June 1, 20 12)) is applicable to the serving electric power generating system. The emergency situation is considered to end upon expiration ofthe emergency notice or EEA issued by ERCOT. This agency hereby certifies thatthe adoption has been reviewed by legal counsel and found to be a valid exercise ofthe agency's legal authority. Filed with the Office ofthe Secretary of State on April 12, 2013. TRD-201301490 Robert Martinez Director, Environmental Law Division Texas Commission on Environmental Quality Effective date: May 2, 2013 Proposal publication date: November 2, 2012 For further information, please call: (512) 239-2141 

# • CHAPTER 117. POLLUTION FROM NI SUBCHAPTER 

## A. 30 TAC §117.10 

# •

OGEN COMPOUNDS

The Texas Commission on nvironmental Quality (TCEQ, agency, or commission) adopts he amendment to §117.10 with changes to the proposed text a published in the November 2, 2012, issue ofthe Texas Regist r (37 TexReg 8722). Ifadopted, the amended §117.1 will be submitted to the United States Environmental Protectio Agency as a revision to the state implementation plan (SIP) Background and Summary of th Factual Basis for the Adopted Rule The Electric Reliability Council f Texas, Inc. (ERGOT) manages the electrical grid within th ERGOT region of Texas, with oversight by the Public Utility C mission of Texas (PUCT). On



## ADOPTED RULES April26, 2013 38 TexReg 2623The adopted amendment imp ments TWC, §§5.1 02, 5.1 03, and 5.105; THSC, §§382.002, 38 .011, 382.012, 382.016, 382.017, and 382.021; and FCAA, 42 SC, §§7401, et seq. 

### §101.379. ProgramAuditsan Reports. (a) No later than three y ars afterthe effective date ofthis section, and every three years there fter, the executive director will audit this program. (1) The audit will e luate the timing ofcredit generation and use, the impact ofthe progr on the state's attainment demonstration and the emissions ofhazard us air pollutants, the availability and cost ofcredits, compliance by th participants, and any other elements the executive director may choo e to include. (2) The executive d ector will recommend measures to remedy any problems identified in the audit. The trading ofdiscrete emission credits may be disco tinued by the executive director in part or in whole and in any rna er, with commission approval, as a remedy for problems identified i the program audit. (3) The audit data a d results will be completed and submittedto the United StatesEnvir nmental ProtectionAgency and made available for public inspection w hin six months after the audit begins. (b) No later than Febru 1 ofeach calendar year, the executive director shall develop and ake available to the general public and the United States Environm ntal Protection Agency a report that includes the following informati n for the previous calendar year: (1) the amount ofeac pollutantemission credits generated under this division; (2) the amount ofea h pollutant emission credits used under this division; (3) a summary ofall rades completed under this division; and ( 4) the amount of iscrete emission reduction credits (DERC) approved for use under ubsection (c) ofthis section. (c) No laterthan Octobe 1ofeach year, the executive director will complete, and make availabl to the general public and the United States Environmental Protection Agency, an annual review to determine the number ofDERCs ava able for potential use in the upcoming calendar year for the Dallas- ort Worth (DFW) eight-hour ozone nonattainment area. The annual eview will include the calculation of the flow control limit as specifie in subsection ( c )(2)(A) ofthis section to ensure noninterference wi attainment and maintenance ofthe ozone National Ambient Air Qu lity Standard (NAAQS) and the apportionment ofapproved DERC

. (1) For the 2009 co trol period, the flow control limit for DERCs available for use is he number prescribed in the DFW Eight-Hour Ozone Attainment emonstration SIP Revision for the 1997 eight-hour ozone standard, n tons per day, not to be exceeded in any day, where a day is a 24-hou period from midnight to midnight. (2) For any control eriod after 2009, the annual review will establish a flow controllimi for that year, in tons per day, not to be exceeded in any day, where a ay is a 24-hour period from midnight to midnight. (A) The flow con ol limit for a particular year will be determined using the following e uation: Figure: 30 TAC §101.379(c)(2)( ) (No change.) (B) If use of the ntire DERC bank would not interfere with attainment and mainte ance of the 1997 eight-hour ozone NAAQS in the DFW eight-hour ozone nonattainment area, then the number ofDERCs potentially a ailable for use is the total number of DERCs in the bank. (C) Ifthe flow c trollimit, as calculated in the equation in subparagraph (A) of thisp ragraph, is greater than the total number ofDERCs requested for use i accordance with §101.376(d) ofthis title (relating to Discrete Emissi n Credit Use) the executive director: (i) may appro e all requestedNotice oflntenttoUse Discrete Emission Credits (DEC 2 Form) submittals; and 

### (ii) will consi er any late DEC-2 Forms submitted as provided under §101.376(d)( ) ofthis title that is not an Electric Reliability Council ofTexas, In

. (ERCOT)-declared emergency situation as defined in subparagrap (D) ofthis paragraph, but will not otherwise approve a late submitt Ithat would exceed the flow control limit establishedby the equation nder subsection (c)(2)(A) ofthis section. (D) Ifthe DEC-2 Forms are submitted in response to an ERCOT-declared emergency ituation, the request will not be subject to the flow control limit and ay be approved provided all other requirements are met. For the p oses ofthis subparagraph, an ERCOT-declared emergency situatio is defined as the period oftime that an ERCOT-issued emergency not ce or energy emergency alert (EEA) (as defined in 

### ERCOTNodal Pr tocols, Section 2: Definitions and Acronyms (June I, 2012) and issu d as specified in 

### ERCOT NodalProtocols, Section 6: AdjustmentPer odandReal-Time Operations (June 1, 2012)) is applicable to the servi g electric power generating system. The emergency situation is consi ered to end upon expiration ofthe emergency notice or EEA issued y ERCOT. This agency hereby certifies th the adoption has been reviewed by legal counsel and found to b a valid exercise ofthe agency's legal authority. Filed with the Office ofthe Sec etary of State on April 12, 2013. TRD-201301490 Robert Martinez Director, Environmental Law Divisi n Texas Commission on Environmen al Quality Effective date: May 2, 2013 Proposal publication date: Novem r 2, 2012 For further information, please call: (512) 239-2141 

# • 

# • CHAPTER 117. CONTROL OF AIR POLLUTION FROM NITROGEN COMPOUNDS SUBCHAPTER A. DEFINITIONS 30 TAC §117.10 The Texas Commission on Environmental Quality (TCEQ, agency, or commission) adopts the amendment to §117.10 with changes to the proposed text as published in the November 2, 2012, issue ofthe Texas Register(37 TexReg 8722). Ifadopted, the amended §117.1 0 will be submitted to the United States Environmental Protection Agency as a revision to the state implementation plan (SIP). Background and Summary ofthe Factual Basis for the Adopted Rule The Electric Reliability Council of Texas, Inc. (ERCOT) manages the electrical grid within the ERCOT region of Texas, with oversight by the Public Utility Commission ofTexas (PUCT). On



## ADOPTEDRULES April26, 2013 38 TexReg 2623March 22, 2012, the PUCT repealed 16 TAC §25.507, to replace the Emergency Interruptible Load Service (ElLS) program with the Emergency Response Service (ERS) program (16 TAC §25.507). Like the ElLS program, the new ERS program is designed to help decrease the likelihood of requiring firm load shedding (i.e., rolling black-outs) during an ERGOT-declared energy emergency by decreasing the power demand on the electrical grid. Under the ERS program, participants commit to decrease their power consumption from the electrical grid during a declared energy emergency. ERS program participants might meet this commitment by decreasing 

### overall power use, replacing power consumption from the grid with local generation by operating local emergency backup generators, or a combination of both. However, unlike the ElLS program, the new ERS program allows qualified participants to provide power back into the electrical grid for sale during an ERGOT-declared emergency under limited circumstances. Operating an emergency generator as part of ERGOT's former ElLS program meets the existing definition of an emergency situation in §117.1 0. The existing definition of an emergency situation in §117.1 0 includes the period oftime that an emergency notice issued by ERCOT is applicable to the serving electric power generating system and references the specific ERCOT protocols that detail the emergency notice. However, the Chapter 117 definition ofan emergency situation also specifically excludes operation for purposes ofsupplying power for distribution to the electrical grid. Therefore, operation of an emergency generator that also provides power back to the electrical grid would not be considered an emergency situation under the current Chapter 117 definition 

### even if the operation were at the directive of ERCOT under the ERS program. While Chapter 117 would not prohibit companies from participating in the new ERS program, the Chapter 117 rules that apply in the Dallas-Fort Worth (DFW) and Houston-Galveston-Brazoria (HGB) 1997 eight-hourozone nonattainment areas have specific provisions that restrict the non-emergency operational hours of emergency generators. For these sources to qualify for an exemption from the rule control requirements, participants in the ERS program would have to count hours of operation during an ERCOT emergency as non-emergency use if power is sold to the grid and might risk losing exemption status under Chapter 117 ifthe operational hours exceed the exemption criteria. The adopted rulemaking updates the definition of emergency situation in §117.10 to ensure consistency with ERGOT's new ERS program. The adopted rulemaking references the version ofthe ERCOT protocols effective on June 1, 2012. The adopted rulemaking also revises the definition of emergency situation to reflect changes made by ERCOT to promote reliability during energy emergencies by allowing the operation of generators for purposes of selling power to the electric grid under limited circumstances. The amendment to §117.1 0 is adopted concurrently with an amendment to 30 TAC §1 01.379 that will be published in a separate rulemaking in this issue ofthe Texas Register. Demonstrating Noninterference under Federal Clean Air Act, §110(1) The commission provides the following information to demonstrate why the adopted change to the definition of emergency situation in Chapter 117 will not negatively impact the status of the state's progress towards attainment with the 1997 eight-hour ozone National Ambient Air Quality Standard (NAAQS), will not



## 38 TexReg 2624 Apri/26, 2013 Texas Register interfere with control measures, and will not prevent reasonable further progress toward attainment ofthe ozone NAAQS. As mentioned elsewhere in this preamble, the Chapter 117 rules exempt certain sources in the DFW and HGB 1997 eight-hour ozone nonattainment areas that operate exclusively during emergency situations or operate for a limited number of hours in non-emergency situations. Under the existing Chapter 117 rules, the period oftime during an ERGOT-declared emergency is considered an emergency situation. The commission has interpreted this to mean that when demonstrating compliance with the Chapter 117 exemption criteria, participants in ERGOT's former ElLS program were not required to include the hours of operation for generators operated during an ERGOT-declared emergency as non-emergency operation. ERGOT's new ERS program promotes reliability during energy emergencies by allowing qualified participants to provide power for distribution to the electrical grrd during an ERGOT-declared emergency. Under the existing Chapter 117 rules, participants in ERGOT's new ERS program are not required to include the hours of operation for generators operated during an ERGOT-declared emergency when demonstrating compliance with the Chapter 117 exemption criteria as long as these sources do not provide power for distribution to the electrical grid. Because the existing Chapter 117 definition of an emergency situation specifically excludes operation for purposes of supplying power for distribution to the electrical grid, ERS program participants would have to count hours of operation during an ERGOT-declared emergency when demonstrating compliance with the Chapter 117 exemption criteria if power is provided back into the grid. This practice could result in ERS program participants losing exemption status under Chapter 117 if the non-emergency hours exceed the exemption criteria and potentially discourage ERS program participants from supplying excess generation back to the grid during an ERGOT-declared energy emergency. The adopted rulemaking prevents ERS program participants from potentially losing exemption status under Chapter 117 ifthey provide power to the electrical grid during an ERGOT-declared emergency. The adopted rulemaking ensures that the changes made to ERGOT's new ERS program do not narrow the scope of what the commission currently considers an emergency situation. The period of time during an ERGOT-declared emergency is currently considered an emergency situation under the existing Chapter 117 rules. The adopted revisions to the definition of emergency situation limit the circumstances under which a generator could provide power for distribution to the electrical grid to only those operations that are part of ERGOT's ERS program and in direct response to an instruction by ERCOTduring the period ofan ERCOT energy emergency alert (EEA). Therefore, the adopted amendment does not increase the number of sources that could qualify for exemption under the Chapter 117 rules or increase the frequency or duration of the operation during an emergency situation. For these reasons, the commission determined that the adopted rulemaking will not negatively impact the status of the state's attainment with the 1997 eight-hour ozone NAAQS and should not be considered as backsliding under the Federal Clean Air Act (FCAA). Section Discussion The commission adopts amendments to the definition of emergency situation in §117.1 0(15). The commission revises §117.10(15)(A)(ii) to reference the version of the ERCOT Protocols effective June 1, 2012. Additionally, in response toERGOT's comments on this rulemaking, the commission is revising the definition of emergency situation in §117.10(15)(A)(ii) to also include operations in response to an ERGOT EEA. The commission is making this change to ensure the definition of emergency situation includes situations when system conditions deteriorate so rapidly that it is not possible for ERGOT to issue an emergency notice prior to declaring an EEA and subsequently deploying ERS. The commission adopts §117.10(15)(A)(vii) to include operation of an emergency generator as part of ERGOT's ERS program when the operation is in direct response to an instruction by ERGOT during the period of an ERGOT EEA as specified in §117.10(15)(A)(ii). In response to ERGOT's comments on this rulemaking, the commission is revising the proposed language in §117.10(15)(A)(vii) to refer to only those operations that occur during the period of an ERGOT EEA instead of the period of an ERGOT emergency notice. The intent of this rulemaking is to limit the circumstances underwhich an emergency generator can provide power for distribution to the electrical grid to only those operations that are part of ERGOT's ERS program and in direct response to ERGOT's dispatch instruction during the period of an ERGOT EEA. ERGOT only deploys ERS resources during an EEA, so it is unnecessary for the commission to refer to the period during an ERGOT emergency notice. The commission also adopts the reformatting of the existing §117.10(15)(8) description ofthe situations that are not considered emergency situations. Adopted clause (i) incorporates the existing portion of the definition indicating that an emergency situation does not include operation for training purposes or other foreseeable events. Existing §117.1 0(15)(8) indicates that an emergency situation does not include operation for purposes of supplying power for distribution to the electric grid. Adopted clause (ii) indicates that an emergency situation does not include operation for purposes of supplying power for distribution to the electric grid except as specified under §117.1 0( 15)(A)(vii). The intent of adopted §117.10(15)(B)(ii) is to limit the circumstances under which an emergency generator can provide power for distribution to the electrical grid to only those operations that are part of ERGOT's ERS program and in direct response to ERGOT's dispatch instruction during the period of an ERGOT EEA. Adopted clause (ii) is necessary to reflect changes made by ERGOT to promote reliability during energy emergencies by allowing the operation of generators for purposes of selling power to the electric grid under limited circumstances. Final Regulatory Impact Determination The commission reviewed the adopted rule in light of the regulatory analysis requirements of Texas Government Code, §2001.0225 and determined that the adopted rulemaking does not meet the definition of a major environmental rule. Texas Government Code, §2001.0225 states that a major environmental rule is a rule for which the specific intent 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, a sector of the economy, productivity, competition, jobs, the environment, or the public health and safety of the state or a sector of the state. Furthermore, while the adopted rulemaking does not constitute a major environmental rule, even if it did, a regulatory impact analysis would not be required because the adopted rulemaking does not meet any ofthe four applicability criteria for requiring a regulatory impact analysis for a major environmental rule. Texas Government Code, §2001.0225 applies only to a major environmental rule that: 1) exceeds a standard set by federal law, unless the rule is specifically required by state law; 2) exceeds an express requirement of state law, unless the rule is specifically required by federal law; 3) exceeds 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; or 4) adopts a rule solely under the general powers of the agency instead of under a specific state law. Specifically, it does not meet any of the four applicability criteria listed in Texas Government Code, §2001.0225 because: 1) the adopted rulemaking is part ofthe SIP, and as such is designed to meet, not exceed the relevant standard set by federal law; 2) parts of the adopted rulemaking are directly required by state law; 3) no contract or delegation agreement covers the topic that is the subject of this adopted rulemaking; and 4) the adopted rulemaking is authorized by specific sections of Texas Health and Safety Code (THSC), Chapter 382 (also known as the Texas Clean Air Act), and the Texas Water Code, which are cited in the Statutory Authority section ofthis preamble. The adopted rule implements requirements of the FCAA. Under 42 United States Code (USC), §7410, each state is required to adopt and implement a SIP containing adequate provisions to implement, attain, maintain, and enforce the NAAQS within the state. While 42 USC, §7410 generally does not require specific programs, methods, or reductions in order to meetthe standard, SIPs must include enforceable emission limitations and other control measures, means, or techniques (including economic incentives such as fees, marketable permits, and auctions of emissions rights), as well as schedules and timetables for compliance as may be necessary or appropriate to meet the applicable requirements ofthis chapter (meaning 42 USC, Chapter 85, Air Pollution Prevention and Control, otherwise known as the FCAA). The provisions ofthe FCAA recognize that states are in the best position to determine what programs and controls are necessary or appropriate in order to meetthe NAAQS. This flexibility allows states, affected industry, and the public to collaborate on the best methods for attaining the NAAQS for the specific regions in the state. Even though the FCAA allows states to develop their own programs, this flexibility does not relieve a state from developing a program that meets the requirements of 42 USC, §7410. States are not free to ignore the requirements of 42 USC, §7410, and must develop programs and control measures to assure that their SIPs provide for implementation, attainment, maintenance, and enforcement of the NAAQS within the state. The specific intent ofthe adopted rulemaking is merely an update to the definition ofemergency situation in §117.1 0, ensuring consistency with ERGOT's new ERS program while also reflecting changes made by ERGOT to promote reliability during energy emergencies throughout the state under limited circumstances. While the adopted rulemaking protects the environment or reduces risks to human health from environmental exposure, it does not constitute a major environmental rule underTexas Government Code, §2001.0225(g)(3) because it does not adversely affect in a material way the economy, a sector of the economy, productivity, competition, or jobs, nor would the rulemaking adversely affect in a material way the environment, or the public health and safety of the state or a sector ofthe state. The rulemaking as a result is not subject to a regulatory impact analysis under Texas Government Code, §2001.0225 because it is not a major environmental rule. The requirement to provide a fiscal analysis of regulations in the Texas Government Code was amended by Senate Bill (SB) 633,



## ADOPTED RULES April26, 2013 38 TexReg 262575th Legislature, 1997. The intent of SB 633 was to require agencies to conduct a regulatory impact analysis of extraordinary rules. These are identified in the statutory language as major environmental rules that will have a material adverse impact and will exceed a requirement of state law, federal law, or a delegated federal program; or are adopted solely under the general powers of the TCEQ. With the understanding that this requirement would seldom apply, the commission provided a cost estimate for SB 633 that concluded: based on an assessment of rules adopted by the agency in the past, it is not anticipated that the bill will have significant fiscal implications for the agency due to its limited application. The commission also noted that the number of rules that would require assessment under the provisions of the bill was not large. This conclusion was based, in part, on the criteria set forth in the bill that exempted rules from the full analysis unless the rule was a major environmental rule that exceeded a federal law. The FCAA does not always require specific programs, methods, or reductions in order to meet the NAAQS; thus, states must develop programs for each nonattainment area to help ensure that those areas will meet the attainment deadlines. Because of the ongoing need to address nonattainment issues and to meet the requirements of 42 USC, §7410, the commission routinely proposes and adopts revisions to the SIP and rules. The legislature is presumed to understand this federal scheme. If each rule adopted for inclusion in the SIP were considered to be a major environmental rule that exceeds federal law, then every revision to the SIP would require the full regulatory impact analysis contemplated by SB 633. This conclusion is inconsistent with the conclusions reached by the commission in its cost estimate and by the Legislative Budget Board (LBB) in its fiscal notes. Since the legislature is presumed to understand the fiscal impacts of the bills it passes and that presumption is based on information provided by state agencies and the LBB, the commission believes that the intent of SB 633 was only to require the full regulatory impact analysis for rules that are extraordinary in nature. While the rules have a broad impact, that impact is no greater than is necessary or appropriate to meet the requirements of the FCAA. For these reasons, rules adopted for inclusion in the SIP fall underthe exception in Texas Government Code, §2001.0225(a), because they are required by federal law. The commission has consistently applied this construction to its rules since this statute was enacted in 1997. Since that time, the legislature has revised the Texas Government Code but left this provision substantially unamended. It is presumed that, when an agency interpretation is in effect at the time the legislature amends the laws without making substantial change in the statute, the legislature is deemed to have accepted the agency's interpretation. Central Power 

### & Light Co. v. Sharp, 919 S.W.2d 485, 489 (Tex. App. Austin 1995), writ denied with per curiam opinion respecting another issue, 960 S.W.2d 617 (Tex. 1997); Bullock v. Marathon Oil Co., 798 S.W.2d 353, 357 (Tex. App. Austin 1990, no writ) superseded by statute on anotherpoint oflaw, Tax Code §112.1 08, Other Actions Prohibited, as recognized in, First State Bank ofDumas v. Sharp, 863 S.W.2d 81, 83 (Tex. App. Austin 1993, no writ); Cf Humble Oil & Refining Co. v. Calvert, 414 S.W.2d 172 (Tex. 1967); Dudney v. State Farm Mut. Auto Ins. Co., 9 S.W.3d 884, 893 (Tex. App. Austin 2000); Southwestern Life Ins. Co. v. Montemayor, 24 S.W.3d 581 (Tex. App. Austin 2000, pet. denied); and Coastal lndust. WaterAuth. v. Trinity Portland Cement Div., 563 S.W.2d 916 (Tex. 1978).



## 38 TexReg 2626 April26, 2013 Texas Register The commission's interpretation of the regulatory impact analysis requirements is also supported by a change made to the Texas Administrative Procedure Act (APA) by the legislature in 1999. In an attempt to limit the number of rule challenges based upon APA requirements, the legislature clarified that state agencies are required to meet these sections of the APA against the standard of substantial compliance as required in Texas Government Code, §2001.035. The legislature specifically identified Texas Government Code, §2001.0225 as falling underthis standard. The commission has complied with the requirements of Texas Government Code, §2001.0225. Even ifthe adopted rulemaking constitutes a major environmental rule under Texas Government Code, §2001.0225(g)(3), a regulatory impact analysis is not required because this exemption is part ofthe commission's SIP for making progress toward the attainment and maintenance of the NAAQS. Therefore, the adopted rulemaking does not exceed a standard set by federal law or exceed an express requirement of state law, since they are part of an overall regulatory scheme designed to meet, not exceed the relevant standard set by federal law (NAAQS). The commission is charged with protecting air quality within the state and to design and submit a plan to achieve attainment and maintenance of the federally mandated NAAQS. The Third District Court of Appeals upheld this interpretation in Brazoria County v. Texas Commn on Envtl. Quality, 128 S.W. 3d 728 (Tex. App.

- Austin 2004, no writ). The specific intent ofthe adopted rulemaking is merely an update to the definition of emergency situation in §117.1 0, ensuring consistency with ERGOT's new ERS program while also reflecting changes made by ERGOT to promote reliability during energy emergencies throughout the state under limited circumstances. This adoption, therefore, does not exceed an express requirement of federal law. The amendment is needed to implement state law but does not exceed those new requirements. Finally, this rulemaking was not developed solely under the general powers of the agency but is authorized by specific sections of THSC, Chapter 382, which are cited in the Statutory Authority section of this preamble, including THSC, §382.012 and §382.019. Because this adopted rulemaking does not meet any of the four applicability requirements, Texas Government Code, §2001.0225(b) does not apply and a regulatory impact analysis is not required. The commission invited public comment regarding the draft regulatory impact analysis determination during the public comment period. No comments were received on the regulatory impact analysis determination. Takings Impact Assessment The commission evaluated the adopted rulemaking and performed an analysis of whether the adopted rulemaking constitutes a taking under Texas Government Code, Chapter 2007. The commission's preliminary assessment indicates Texas Government Code, Chapter 2007 does not apply. Under Texas Government Code, §2007.002(5), taking means: "(A) a governmental action that affects private real property, in whole or in part or temporarily or permanently, in a manner that requires the governmental entity to compensate the private real property owner as provided by the Fifth and Fourteenth Amendments to the United States Constitution or Section 17 or 19, Article I, Texas Constitution; or (B) a governmental action that: (i) affects an owner's private real property that is the subject ofthe governmental action, in whole or in part ortemporarily or permanently, in a manner that restricts or limits the owner's right to the property that would otherwise exist in the absence ofthe govern-mental action; and (ii) is the producing cause ofa reduction of at least 25 percent in the market value of the affected private real property, determined by comparing the marketvalue ofthe property as if the governmental action is not in effect and the market value of the property determined as if the governmental action is in effect." Promulgation and enforcement of the rulemaking would be neither a statutory nor a constitutional taking of private real property. The primary purpose of the rule is an update to Chapter 117, Subchapter A to ensure consistency with ERGOT's new ERS program. This rule is not burdensome, restrictive, or limiting of rights to private real property because the rulemaking regulates the use of electric generators in certain limited emergency situations. Furthermore, the rulemaking benefits the public by potentially decreasing the likelihood of requiring firm load shedding (i.e., rolling black-outs) when additional control measures are needed to achieve or maintain attainment of the federal air quality standards through the use of electric generators. The rulemaking does not affect a landowner's rights in private real property because this rulemaking does not burden, restrict, or limit the owner's right to property, nor does it reduce the value of any private real property by 25% or more beyond that which would otherwise exist in the absence ofthe regulations. Therefore, this rule does not constitute a taking under Texas Government Code, Chapter 2007. Consistency with the Coastal Management Program The commission reviewed the adopted rulemaking and found that it is subject to the Texas Coastal Management Program (CMP) in accordance with the Coastal Coordination Act, Texas Natural Resources Code, §§33.201 

### et seq., and therefore must be consistent with all applicable CMP goals and policies. The commission conducted a consistency determination for the adopted rule in accordance with Coastal Coordination Act Implementation Rules, 31 TAC §505.22 and found the adopted rulemaking is consistent with the applicable CMP goals and policies. The CMP goal applicable to the adopted rulemaking is the goal to protect, preserve, and enhance the diversity, quality, quantity, functions, and values ofcoastal natural resource areas (31 TAC §501.12(1 )). The CMP policy applicable to the adopted rulemaking is the policy that commission rules comply with federal regulations in 40 Code of Federal Regulations to protect and enhance air quality in the coastal areas (31 TAC §501.32). The adopted rulemaking will not increase emissions of air pollutants and is therefore consistent with the CMP goal in 31 TAC §501.12(1) and the CMP policy in 31 TAC §501.32. Promulgation and enforcement of this rule will not violate or exceed any standards identified in the applicable CMP goals and policies because the adopted rule is consistent with these CMP goals and policies and because the rule does not create or have a direct or significant adverse effect on any coastal natural resource areas. Therefore, in accordance with §505.22(e), the commission affirms that this rulemaking action is consistent with CMP goals and policies. The commission invited public comment regarding the consistency with the CMP during the public comment period. The commission received no comments concerning the consistency of this rulemaking with the Texas CMP. Effect on Sites Subject to the Federal Operating Permits Program The adopted amendment will not require any changes to federal operating permits. Public Comment The commission scheduled a public hearing in Austin on November 28, 2012. However, the commission did not officially open the hearing because no one registered to provide comments. The public comment period closed on December 5, 2012. The commission received comments from the Association of Electric Companies of Texas (AECT), Blue Sky Environmental LLC (Blue Sky), Calpine Corporation (Calpine), EnerNOC, Inc. (EnerNOC), EPA, ERCOT, Exelon Corporation (Exelon), and NRG Texas Power LLC, (NRG). AECT submitted comments on behalf of AEP Texas, CenterPoint Energy, El Paso Electric, Entergy, GDF SUEZ, Nextera Energy, Lone Star Transmission, Oncor, TXU Energy, Luminant, NRG, Reliant, TNMP, and Xcel Energy. Response to Comments Comment AECT, Blue Sky, EnerNOC, ERCOT, and NRG expressed support for the proposed revisions to the definition of emergency situation in §117.10. EPA expressed appreciation for efforts to update the references to ERGOT's protocols in §117.10. Response The commission appreciates the support. Comment ERCOT commented that if system conditions deteriorate too rapidly it might not be possible to issue an emergency notice prior to declaring an EEA and subsequently deploying ERS. ERGOT recommended the commission amend §117.10(15)(A)(ii) to refer to ERGOT's dispatch of ERS rather than the issuance of an emergency notice to provide affected generators assurance that operation for ERS is always permissible. Blue Sky and EnerNOC recommended the commission not revise the definition of emergency situation to specify an ERCOT EEA level to account for emergency demand response programs initiated by Texas utilities that are experiencing voltage reductions. Response The intent of §117.10(15)(A)(ii) is to specify that emergency situations include operations during an ERGOT-declared emergency not operations during a utility-declared emergency. The commission agrees with ERCOT that operations in response to ERGOT's dispatch of ERS are always considered emergency situations. However, it is possible that the existing provision in §117.10(15)(A)(ii) could affect sources that are not participating in ERGOT's ERS program but are operating as a result of an ERGOT-declared emergency. Therefore, the commission is retaining the reference to emergency notice in §117.10(15)(A)(ii) to avoid unintended consequences that could result from limiting this provision solely to ERS operations. In response to ERGOT's comments, the commission is revising the definition of emergency situation to also include operations in response to an ERCOT EEA. The commission is making this change to ensure the definition of emergency situation includes situations when system conditions deteriorate so rapidly that it is not possible for ERCOT to issue an emergency notice prior to declaring an EEA and subsequently deploying ERS. In response to ERGOT's comments the commission is revising the proposed language in §117.10(15)(A)(vii) to refer to only



## ADOPTED RULES Apri/26, 2013 38 TexReg 2627those operations that occur during the period of an ERCOT EEA instead of the period of an ERCOT emergency notice. The purpose of this rulemaking is to ensure that participants in the ERS program may still claim operational hours during such energy emergencies as an emergency situation under Chapter 117 rules. However, the adopted rule is also intended to limit the circumstances under which an emergency generator can**provid~** power for distribution to the electrical grid to only those operations that are part of ERGOT's ERS program and in direct response to ERGOT's dispatch instruction during the period of an ERCOT EEA. Since ERCOT only deploys ERS resources during an EEA, it is unnecessary for the commission to refer to the period during an ERCOT emergency notice. Comment To address concerns about the certainty of the circumstances under which ERCOT will deploy ERS resources, ERCOT recommended that the commission reference the PUCT's ERS rule in 16 TAC §25.507 rather than the ERCOT Nodal Protocols referenced in the proposed rules. ERCOT expressed concern that the frequent revisions to the Nodal Protocols could create confusion as to the applicability of §117.10(15)(A)(ii) and §101.379(c)(2)(D). ERCOT suggested the commission could more easily monitor the infrequent changes to the PUCT rules than the numerous ongoing proposals to revise the ERCOT Nodal Protocols referenced in the proposed rules. NRG also recommended avoiding references to specific ERCOT protocols that are likely to change periodically. NRG recom-**~ended** modifying §117.10(15)(A)(ii) to instead refer to the penod of t1me that an engine is operating in response to an ER- <?OT-issued emergency notice of imminent emergency conditions, such as unusually low frequency, equipment overload, capacity or energy deficiency, or unacceptable voltage level. Response The commission is aware that the ERCOT Nodal Protocols references in §117.10(15) are frequently revised and have been revised since the commission first proposed this rulemaking. However, §117.10(15) and the Chapter 117 rules that reference this term are a part ofthe SIP and the revised §117.10(15) is subject to EPA rev1ew and approval. Specificity is needed in the rule regarding the circumstances underwhich ERCOTwill deploy ERS resources to help ensure EPA approval ofthe revised rule. While the PUCT's ERS rule in 16 TAC §25.507 speaks to the intent of deploying the ERS program during an EEA event and authorizes ERCOT to create the ERS program, 16 TAC §25.507 does not provide specific restrictions on the deployment of the ERS program to emergencies only. The level of detail in the current 16 TAC §25.507 is not sufficient to ensure that the definition in §117.1 0(15) does not include the dispatch of ERS outside of ERCOT's-declared energy emergencies. Likewise, the suggested description of an ERGOT-issued emergency notice of imminent emergency conditions does not sufficiently detail the specific circumstances underwhich ERCOT will deploy ERS resources. To ensure that the amendments to §117.10(15) can be approved by the EPA as part ofthe SIP, the commission respectfully declines to make the suggested changes. Comment AECT commented that because it has concerns about how the use of the term "demand response" has been expanded to include non-emergency situations, AECT supports limiting the def1n1t1on of emergency situation to those operations that are part of an ERCOT ERS program and are in direct response to an in

## 38 TexReg 2628 April26, 2013 Texas Register**str~ction** by ERCOT during the period of an ERCOT emergency not1ce. NRG recommended that this rule only apply to units in emergency demand response programs that are limited to rare instances where grid stability is threatened after all other potential remedies have been exhausted. To account for emergency demand response programs initiated by Texas utilities that are experiencing voltage reductions, Blue Sky and EnerNOC recommended the commission revise the definition of emergency situation to also include operation in response to a utility-declared emergency. Response**~he commi~sion**  agrees that the definition of emergency situation should Include operations in direct response to an instruction by**E~COT** during the per!od ofan ERGOT-declared emergency. As d1scussed elsewhere tn the Response to Comments section of the preamble

.. the commission is also revising the proposed**rul~ langu~ge**  to Include operations that are in direct response to an 1nstruct1on by ERCOT during the period of an ERCOT EEA. T_he**c~mmission** _does not agree that the definition ofemergency s1tuat1on should Include operations that occur in response to a utility-declared emergency. The suggested change would decrease the**stnnge~~Y** of**t~e** existing rule by expanding the scope ofthe current def1ntt1on to Include additional situations thatwould not currently be considered emergency situations. Because the EPA has approved the existing rule as part ofthe SIP, the suggested expans1on ofthe definition could be considered backsliding an? result in the EPA's disapproval of the rulemaking. The comm1ss1on makes no change in response to these comments. Comment Blue Sky and EnerNOC recommended the commission provide guidance regarding the SIP process. The commenters also requested the commission confirm that the following assumptions are correct:_ 1) the revisions to §117.1 0 will not be fully imple-**~~nt~d u~ttl**  the EPA approves the SIP revision; 2) engines part1c1pat1ng 1n the ERS and other utility-sponsored emergency demand response programs without sending power to the electric grid can continue to operate under the definition of emergency s1tuat1on unt1l the references to the appropriate protocols are changed;. and 3) emergency engines could not send power to the electnc gnd under an emergency situation until the SIP revision is approved. Response The Texas Water Code authorizes the commission to propose and adopt rules necessary to carry out its powers and duties. Once adopted,**~he** commission files the rule with the Secretary ofState for**publt~at1on** 1n the Texas Register. This action usually occurs the f1rst Fnday after adoption. The rule becomes effective**2~ c~lendar**  days after filing and is fully enforceable by the comm1ss1_on from thattime on irrespective of EPA approval ofthe rule rev1s1on as part ofthe SIP. Therefore, beginning on the effective date ofthe rule, the definition ofemergency situation will include operations in direct response to an instruction by ERCOT during the period**o~** an**~RCOT~declared** emergency that supply power to the electnc gnd. As d1scussed elsewhere in the Response to**Commen~s** sect1on**o~** the preamble, the definition of emergency s1tuat1on 1n §117.1 0 Includes operations during an ERGOT-declared emergency but does not include other utility-sponsored emergency demand response programs. CommentCalpine recommended the commission remove the exemption afforded to ERS participants and require that all commercial generation meet best available control technology and reasonably available control technology requirements. Exelon requested the commission abandon its efforts to exempt from pollution controls units that sell power back to the electrical grid and require all commercial generation to satisfy the commission's pollution control requirements. Calpine and Exelon commented that exempting commercial backup generation from air quality regulations would negatively affect air quality by expanding the number of high-emitting diesel engines; discouraging investment in new, low-emitting generation; and providing an unnecessary subsidy to high-emitting sources. Calpine also commented that the proposed rule might not benefit electric reliability. Response The commenters' suggested changes to revoke exemptions for emergency backup generators are outside the scope ofthis rulemaking. The Chapter 117 rules exempt certain sources in the DFWand HGB 1997 eight-hour ozone nonattainment areas that operate exclusively during emergency situations or operate for a limited number of hours in non-emergency situations. The exemptions that reference the definition of emergency situation for this purpose were not proposed for revision with this rulemaking. The intent of the existing Chapter 117 rules is to ensure that operation during an ERGOT-declared emergency is not considered non-emergency operation when demonstrating compliance with the Chapter 117 exemption criteria. Under ERGOT's former ElLS program, affected resources reduced electric consumption by using on-site backup generation but did not supply power to the electric grid. Therefore, the restriction on supplying power for distribution to the electric grid in §117.10(15)(8) did not affect ElLS program participants. The amendments to §117.1 0(15) ensure that the changes made to ERGOT's new ERS program, which allow participants to provide power for distribution to the electrical grid, do not narrow the scope ofwhat the commission currently considers an emergency situation. The adopted rulemaking does not relieve affected sources from the obligation to meet any air quality regulation that currently applies. The commission does not agreethatthe revisions to §117.10(15) will negatively affect air quality by expanding the number of highemitting diesel engines, discouraging investment in low-emitting generation, or subsidizing high-emitting sources. The dispatch of ERS resources is limited to rare instances where the reliability of the ERGOT system is threatened and all other potential solutions have been exhausted. ERGOT has dispatched emergency response resources for a total of 30 hours since 2006. Operation of emergency generators during an ERGOT-declared emergency underthe previous ElLS program was considered an emergency situation under the existing Chapter 117 rules. The adopted revisions to §117.1 0(15) are intended to clarify the definition with regard to such emergencies and account for the revisions that ERGOT has made in the new ERS program. Adopted §117.1 0(15)(B)(ii) only allows operation ofan emergency generator for supplying power to the electrical grid to be considered an emergency situation ifthe operation is part of ERGOT's ERS program and in direct response to instruction by ERGOT during an EEA. The purpose ofthis rulemaking is to ensure that participants in the ERS program may still claim operational hours during such energy emergencies as an emergency situation under Chapter 117 rules. Therefore, the commission does not consider the rulemaking as expanding the number ofstationary diesel engines in operation or as providing a subsidy for diesel engines. Additionally, owners and operators ofemergency generators that seek exemption from Chapter 117 rules must still meet all applicable criteria before qualifying for an exemption. The commission has previously incorporated provisions in the exemption criteria for emergency stationary diesel engines to help ensure that emissions from exempt diesel engines are minimized. For example, as part ofthe exemption criteria, stationary diesel engines in the DFW and HGB areas that are installed, modified, reconstructed, or relocated after specific dates in the Chapter 117 rules are required to meetthe corresponding emission standards for non-road engines in 40 Code of Federal Regulations §89.112(a), Table 1, that are in effect at the time the engine was installed, modified, reconstructed, or relocated. While the commission cannot quantify the effects ofthis revision on electric reliability, the commission does not agree with the commenters' assertion thatthere is no reliability-related rationale for this rulemaking. ERGOT's new ERS program promotes reliability during energy emergencies by allowing qualified participants to provide powerfor distribution to the electrical grid during an ERGOT-declared emergency. As discussed elsewhere in the Response to Comments Section ofthis preamble, the purpose of this rulemaking is to ensure that participants in the ERS program continue to be allowed to count operation in response to an ERGOT-declared emergency as an emergency situation. While the adopted revisions to §117.10(15) do not directly promote reliability, the rulemaking helps ensure that Chapter 117 rules will not be a disincentive to the ERS program by forcing participants to count emergency operation as non-emergency hours. The commission makes no changes in response to these comments. Comment ERGOT commented that since the operation of a generator for ERS purposes would always fall within the coverage of §117.1 0(15)(A)(ii), creating an additional exemption for the operation of ERS generators in §117.1 0(15)(A)(vii) is unnecessary. ERGOT suggested deleting §117.10(15)(A)(vii) and revising §117.1 0(15)(B)(ii) to reference §117.1 0(15)(A)(ii) instead of §117.1 0(15)(A)(vii). NRG supported explicitly including emergency demand response events under the definition of emergency situation. However, instead of adding this language as a new provision under §117.10(15)(A)(vii), NRG recommended modifying §117.10(15)(A)(ii) to the period of time that an engine is operating in response to an ERGOT-issued emergency notice of imminent emergency conditions, such as unusually low frequency, equipment overload, capacity or energy deficiency, or unacceptable voltage level. Response The intent ofthis rulemaking is to limit the circumstances under which an emergency generator can provide powerfor distribution to the electrical grid to only those operations that are both part of ERGOT's ERS program and in direct response to ERGOT's dispatch instruction during the period of an ERGOT EEA. It is possible that the existing provision in §117.10(15)(A)(ii) could affect sources that are not participating in ERGOT's ERS program but are operating as a result ofan ERGOT-declared emergency. The commission is adding the additional detail in §117.10(15)(A)(vii) and (B)(ii) to explicitly limit the circumstances under which an emergency generator could provide power for distribution to the electrical grid to only those operations that are part of ERGOT's



## ADOPTED RULES April

## 26, 2013 38 TexReg 2629ERS program. The commission makes no change in response to these comments. As discussed elsewhere in the Response to Comments section of this preamble, in response to ERGOT's comments the commission is revising the proposed language in §117.10(15)(A)(vii) to refer to only those operations that occur during the period of an ERCOT EEA instead ofthe period of an ERCOT emergency notice. The intent ofthis rulemaking is to limitthe circumstances underwhich an emergency generator can provide power for distribution to the electrical grid to only those operations that are part of ERGOT's ERS program and in direct response to ERGOT's dispatch instruction during the period of an ERCOT EEA. ERCOT only deploys ERS resources during an EEA, so it is unnecessary for the commission to refer to the period during an ERCOT emergency notice. Comment NRG stated its belief that the current Chapter 117 definition of emergency situation does not preclude an engine from operating as part of an emergency demand response program and the intent of §117.10(15)(8) was to prevent those engines that supply power for distribution to the grid for economic gain unrelated to imminent emergency conditions from being classified as emergency engines, thus avoiding environmental controls. As such, NRG supported TCEQ's proposal to explicitly differentiate between these two operating scenarios and recommended §117.10(15)(8) be amended as proposed by the commission. Response The commission appreciates the support and made no changes to the rulemaking in response to this comment. Comment NRG supported aligning the Chapter 117 definition ofemergency situation with ERGOT's emergency demand response program in lieu of establishing an annual limit on emergency demand response operation to allow ERCOT to manage and optimize emergency demand response operations. Response The commission appreciates the support. Statutory Authority The amendment is adopted under the authority of the following: Texas Water Code (TWC), §5.102, General Powers, TWC, §5.1 03, Rules, and TWC, §5.1 05, General Policy (these provisions authorize the commission to adopt rules necessaryto carry out its powers and duties as well as all general policies under the TWC); Texas Health and Safety Code (THSC), Texas Clean Air Act (TCAA), §382.017, Rules, which authorizes the commission to adopt rules consistentwith the policy and purposes ofthe TCAA; THSC, §382.002, Policy and Purpose, which establishes the commission's purpose to safeguard the state's air resources, consistent with the protection of public health, general welfare, and physical property; THSC, §382.011, General Powers and Duties, which authorizes the commission to control the quality of the state's air; and THSC, §382.012, State Air Control Plan, which authorizes the commission to prepare and develop a general, comprehensive plan for the control of the state's air; and THSC, §382.051 (d), Permitting Authority ofCommission; Rules, which authorizes the commission to adopt rules as necessary to comply with changes in federal law or regulations applicable to permits under THSC, Chapter 382. Finally, the amendment is also adopted under Federal Clean Air Act (FCAA), 42 United



## 38 TexReg 2630 April26, 2013 Texas Register States Code (USC), §§7401, et seq., which requires states to submit State Implementation Plan revisions that specify the manner in which the National Ambient Air Quality Standards will be achieved and maintained within each air quality control region of the state. The adopted amendment implements TWC, §§5.1 02, 5.1 03, and 5.105; THSC, §§382.002, 382.011, 382.012, 382.016, 382.017, and 382.021; and FCAA, 42 USC, §§7401 et seq. §

### 117.10. Definitions. Unless specifically defined in the Texas Clean Air Act or Chapter 101 ofthis title (relating to General Air Quality Rules), the terms in this chapter have the meanings commonly used in the field ofair pollution control. Additionally, the following meanings apply, unless the context clearly indicates otherwise. Additional definitions for terms used in this chapter are found in §3.2 and §101.1 ofthis title (relating to Definitions). (1) Annual capacity factor--The total annual fuel consumed by a unit divided by the fuel that could be consumed by the unit ifoperated at its maximum rated capacity for 8,760 hours per year. (2) Applicable ozone nonattainment area--The following areas, as designated under the 1990 Federal Clean Air Act Amendments. (A) Beaumont-Port Arthur ozone nonattainment area- -An area consisting ofHardin, Jefferson, and Orange Counties. (B) Dallas-Fort Worth ozone nonattainment area--An area consisting ofCollin, Dallas, Denton, and Tarrant Counties. (C) Dallas-Fort Worth eight-hour ozone nonattainment area--An area consisting of Collin, Dallas, Denton, Ellis, Johnson, Kaufman, Parker, Rockwall, and Tarrant Counties. (D) Houston-Galveston-Brazoria ozone nonattainment area--An area consisting ofBrazoria, Chambers, Fort Bend, Galveston, Harris, Liberty, Montgomery, and Waller Counties. (3) Auxiliary steam boiler--Any combustion equipment within an electric power generating system, as defined in this section, that is used to produce steam for purposes other than generating electricity. An auxiliary steam boiler produces steam as a replacement for steam produced by another piece ofequipment that is not operating due to planned or unplanned maintenance. (4) Average activity level for fuel oilfiring--The product of an electric utility unit's maximum rated capacity for fuel oil firing and the average annual capacity factor for fuel oil firing for the period from January 1, 1990, to December 31, 1993. (5) Block one-hour average--An hourly average of data, collected starting at the beginning ofeach clock hour ofthe day and continuing until the start ofthe next clock hour. (6) Boiler--Any combustion equipment fired with solid, liquid, and/or gaseous fuel used to produce steam or to heat water. (7) Btu--British thermal unit. (8) Chemical processing gas turbine--A gas turbine that vents its exhaust gases into the operating stream ofa chemical process. (9) Continuous emissions monitoring system (CEMS)-- The total equipment necessary for the continuous determination and recordkeeping of process gas concentrations and emission rates in units ofthe applicable emission limitation. (10) Daily--A calendar day starting at midnight and continuing until midnight the following day.(11) Diesel engine--A compression-ignited two- or fourstroke engine that liquid fuel injected into the combustion chamber ignites when the air charge has been compressed to a temperature sufficiently high for auto-ignition. (12) Duct burner--A unit that combusts fuel and that is placed in the exhaust duct from another unit (such as a stationary gas turbine, stationary internal combustion engine, kiln, etc.) to allow the firing ofadditional fuel to heat the exhaust gases. (13) Electric generating facility (EGF)--A unit that generates electric energy for compensation and is owned or operated by a person doing business in this state, including a municipal corporation, electric cooperative, or river authority. (14) Electric power generating system--One electric power generating system consists ofeither: (A) for the purposes of Subchapter C of this chapter (relating to Combustion Control at Major Utility Electric Generation Sources in Ozone Nonattainment Areas), all boilers, auxiliary steam boilers, and stationary gas turbines (including duct burners used in turbine exhaust ducts) at electric generating facility (EGF) accounts that generate electric energy for compensation; are owned or operated by an electric cooperative, municipality, river authority, public utility, ora Public Utility Commission ofTexas regulated utility, or any ofits successors; and are entirely located in one ofthe following ozone nonattainment areas: (i) Beaumont-Port Arthur; (ii) Dallas-Fort Worth; (iii) Dallas-Fort Worth eight-hour; or (iv) Houston-Galveston-Brazoria; (B) for the purposes of Subchapter E, Division 1 of this chapter (relating to Utility Electric Generation in East and Central Texas), all boilers, auxiliary steam boilers, and stationary gas turbines at EGF accounts that generate electric energy for compensation; are owned or operated by an electric cooperative, independent power producer, municipality, river authority, or public utility, or any of its successors; and are located in Atascosa, Bastrop, Bexar, Brazos, Calhoun, Cherokee, Fannin, Fayette, Freestone, Goliad, Gregg, Grimes, Harrison, Henderson, Hood, Hunt, Lamar, Limestone, Marion, McLennan, Milam, Morris, Nueces, Parker, Red River, Robertson, Rusk, Titus, Travis, Victoria, or Wharton County; or (C) for the purposes ofSubchapterB ofthis chapter (relating to Combustion Control at Major Industrial, Commercial, and Institutional Sources in Ozone Nonattainment Areas), all units in the Houston-Galveston-Brazoria ozone nonattainment area that generate electricity but do not meet the conditions specified in subparagraph (A) ofthis paragraph, including, but not limited to, cogeneration units and units owned by independent power producers. (15) Emergency situation--As follows. (A) An emergency situation is any ofthe following: (i) an unforeseen electrical power failure from the serving electric power generating system; (ii) the period of time that an Electric Reliability Council ofTexas, Inc. (ERCOT)-issued emergency notice or energy emergency alert (EEA) (as defined inERCOTNodalProtocols, Section 2: Definitions andAcronyms (June 1, 2012) and issued as specified in ERCOT NodalProtocols, Section 6: AdjustmentPeriodandReal-Time Operations (June 1, 2012)) is applicable to the serving electric power generating system. The emergency situation is considered to end upon expiration ofthe emergency notice or EEA issued by ERCOT; (iii) an unforeseen failure ofon-site electrical transmission equipment (e.g., a transformer); (iv) an unforeseen failure ofnatural gas service; (v) an unforeseen flood or fire, or a life-threatening situation; (vi) operation ofemergency generators for Federal Aviation Administration licensed airports, military airports, ormanned space flight control centers for the purposes ofproviding power in anticipation ofa power failure due to severe storm activity; or (vii) operation ofan emergency generator as part of ERCOT's emergency response service (as defined in ERCOTNodal Protocols, Section 2: Definitions andAcronyms (June 1, 2012)) ifthe operation is in direct response to an instruction by ERCOT during the period of an ERCOT EEA as specified in clause (ii) ofthis subparagraph. (B) An emergency situation does not include: (i) operation for training purposes or other foreseeable events; or (ii) operation for purposes of supplying power for distribution to the electric grid, except as specified in subparagraph (A)(vii) ofthis paragraph. (16) Functionally identical replacement--A unit that performs the same function as the existing unit that it replaces, with the conditionthatthe unitreplacedmustbe physically removed or rendered permanently inoperable before the unit replacing it is placed into service. (17) Heat input--The chemical heat released due to fuel combustion in a unit, using the higher heating value ofthe fuel. This does not include the sensible heat ofthe incoming combustion air. In the case ofcarbon monoxide (CO) boilers, the heat input includes the enthalpy ofall regenerator off-gases and the heat ofcombustion ofthe incoming CO and ofthe auxiliary fuel. The enthalpy change ofthe fluid catalytic cracking unitregeneratoroff-gases refers to the total heat content ofthe gas at the temperature it enters the CO boiler, referring to the heat content at 60 degrees Fahrenheit, as being zero. (18) Heat treat furnace--A furnace that is used in the manufacturing, casting, orforging ofmetal to heatthe metal so as to produce specific physical properties in that metal. (19) High heat release rate--A ratio ofboiler design heat input to firebox volume (as bounded by the front firebox wall where the burner is located, the firebox side waterwall, and extending to the level just below or in front ofthe first row ofconvection pass tubes) greater than or equal to 70,000 British thermal units per hour per cubic foot. (20) Horsepower rating--The engine manufacturer's maximum continuous load rating at the lesser ofthe engine or driven equipment's maximum published continuous speed. (21) Incinerator--As follows. (A) For the purposes ofthis chapter, the term "incinerator" includes both ofthe following: (i) a control device that combusts or oxidizes gases or vapors (e.g., thermal oxidizer, catalytic oxidizer, vapor combustor); and



## ADOPTEDRULES April26, 2013 38 TexReg 2631(ii) an incinerator as defined in §101.1 ofthis title (relating to Definitions). (B) The term "incinerator" does not apply to boilers or process heaters as defined in this section, or to flares as defined in §101.1 ofthis title. (22) Industrial boiler--Any combustion equipment, not including utility or auxiliary steam boilers as defined in this section, fired with liquid, solid, or gaseous fuel, that is used to produce steam or to heat water. (23) International Standards Organization (ISO) conditions--ISO standard conditions of 59 degrees Fahrenheit, 1.0 atmosphere, and 60% relative humidity. (24) Large utility system--All boilers, auxiliary steam boilers. and stationary gas turbinesthat are located in the Dallas-FortWorth or the Dallas-Fort Worth eight-hour ozone nonattainment area, and were part ofone electric power generating system on January 1, 2000, thathada combinedelectric generating capacity equal to orgreaterthan 500 megawatts. (25) Lean-bum engine--A spark-ignited or compressionignited, Otto cycle, diesel cycle, or two-stroke engine that is not capable ofbeing operated with an exhaust stream oxygen concentration equal to or less than 0.5% by volume, as originally designed by the manufacturer. (26) Low annual capacity factor boiler, process heater, or gas turbine supplemental waste heat recovery unit--An industrial, commercial, or institutional boiler; process heater; or gas turbine supplemental waste heat recovery unit with maximum rated capacity: (A) greater than or equal to 40 million British thermal units per hour (MMBtu/hr), but less than I00 MMBtu/hr and an annual heat input less than or equal to 2.8 (1 0 11 ) British thermal units per year (Btu/yr), based on a rolling 12-month average; or (B) greater than or equal to 100 MMBtu/hr and an annual heat input less than or equal to 2.2 (1 011 ) Btu/yr, based on a rolling 12-month average. (27) Low annual capacity factor stationary gas turbine or stationary internal combustion engine--A stationary gas turbine or stationary internal combustion engine that is demonstrated to operate less than 850 hours per year, based on a rolling 12-month average. (28) Low heat release rate--A ratio of boiler design heat input to firebox volume less than 70,000 British thermal units per hour per cubic foot. (29) Major source--Any stationary source or group of sources located within a contiguous area and under common control that emits or has the potential to emit: (A) at least 50 tons per year (tpy) of nitrogen oxides 

### (NO) and is located in the Beaumont-PortArthur ozone nonattainment area; (B) at least 50 tpy ofNOxand is located in the DallasFort Worth or Dallas-Fort Worth eight-hour ozone nonattainment area; (C) at least 25 tpy ofNOxand is located in the HoustonGalveston-Brazoria ozone nonattainment area; or (D) the amount specified in the major source definition contained in the Prevention ofSignificant Deterioration ofAir Quality regulations promulgated by the United States Environmental Protection Agency in 40 Code of Federal Regulations §52.21 as amended June 3. 1993 (effective June 3. 1994), and is located in Atascosa, Bastrop, Bexar, Brazos, Calhoun, Cherokee, Coma!, Fannin, Fayette,



## 38 TexReg 2632 April26, 2013 Texas Register Freestone, Goliad, Gregg, Grimes, Harrison, Hays, Henderson, Hood, Hunt, Lamar, Limestone, Marion, McLennan, Milam, Morris, Nueces, Red River, Robertson, Rusk, Titus, Travis, Victoria, or Wharton County. (30) Maximum rated capacity--The maximum design heat input, expressed in million British thermal units per hour, unless: (A) the unit is a boiler, utility boiler, or process heater operated above the maximum design heat input (as averaged over any one-hour period), in which case the maximum operated hourly rate must be used as the maximum rated capacity; or (B) the unit is limited by operating restriction orpermit condition to a lesser heat input, in which case the limiting condition must be used as the maximum rated capacity; or (C) the unit is a stationary gas turbine, in which case the manufacturer's rated heat consumption at the International Standards Organization (ISO) conditions must be used as the maximum rated capacity, unless limited by permit condition to a lesser heat input, in which case the limiting condition must be used as the maximum rated capacity; or (D) the unit is a stationary, internal combustion engine, in which case the manufacturer's rated heat consumption at Diesel Equipment Manufacturer's Association orISO conditions mustbe used as the maximum rated capacity, unless limited by permit condition to a lesser heat input, in which case the limiting condition must be used as the maximum rated capacity. (31) Megawatt (MW) rating--The continuous MW output rating or mechanical equivalent by a gas turbine manufacturer at International Standards Organization conditions, without consideration to the increase in gas turbine shaft output and/or the decrease in gas turbine fuel consumption by the addition ofenergy recovered from exhaust heat. (32) Nitric acid--Nitric acid that is 30% to 100% in strength. (33) Nitric acid production unit--Any source producing nitric acid by either the pressure or atmospheric pressure process. (34) Nitrogen oxides 

### (NO)--The sum ofthe nitric oxide and nitrogen dioxide in the flue gas or emission point, collectively expressed as nitrogen dioxide. (35) Parts per million by volume (ppmv)--All ppmv emission specifications specified in this chapter are referenced on a dry basis. When required to adjust pollutant concentrations to a specified oxygen (0,) correction basis, the following equation must be used. Figure: 30 TAC §117.10(35) (No change.) (36) Peaking gas turbine or engine--A stationary gas turbine or engine used intermittently to produce energy on a demand basis. (37) Plant-wide emission rate--The ratio ofthe total actual nitrogen oxides mass emissions rate discharged into the atmosphere from affected units at a major source when firing at their ma'<imum rated capacity to the total maximum rated capacities for those units. (38) Plant-wide emission specification--The ratio ofthe total allowable nitrogen oxides mass emissions rate dischargeable into the atmosphere from affected units at a major source when firing at their maximum rated capacity to the total maximum rated capacities for those units. (39) Predictive emissions monitoring system (PEMS)-- The total equipment necessary tor the continuous determination andrecordkeeping ofprocess gas concentrations and emission rates using process or control device operating parameter measurements and a conversion equation or computer program to produce results in units ofthe applicable emission limitation. (40) Process heater--Any combustion equipmentfired with liquid and/or gaseous fuel that is used to transfer heat from combustion gases to a process fluid, superheated steam, or water for the purpose ofheating the process fluid or causing a chemical reaction. The term "process heater" does not apply to any unfired waste heat recovery heater that is used to recover sensible heat from the exhaust ofany combustion equipment, or to boilers as defined in this section. (41) Pyrolysis reactor--A unit that produces hydrocarbon products from the endothermic cracking offeedstocks such as ethane, propane, butane, and naphtha using combustion to provide indirect heating for the cracking process. (42) Reheat furnace--A furnace that is used in the manufacturing, casting, or forging ofmetal to raise the temperature ofthatmetal in the course ofprocessing to a temperature suitable for hotworking or shaping. (43) Rich-burn engine--A spark-ignited, Otto cycle, fourstroke, naturally aspirated or turbocharged engine that is capable of being operatedwith anexhaust stream oxygen concentration equal to or less than 0.5% by volume, as originally designed by the manufacturer. (44) Small utility system--All boilers, auxiliary steam boilers, and stationary gas turbines that are located in the Dallas-Fort Worth or the Dallas-Fort Worth eight-hour ozone nonattainment area, and were part of one electric power generating system on January 1, 2000, that had a combined electric generating capacity less than 500 megawatts. (45) Stationary gas turbine--Any gas turbine system that is gas and/or liquid fuel fired with or without power augmentation. This unit is either attached to a foundation or is portable equipment operated at a specific minor or major source for more than 90 days in any 12-month period. Two or more gas turbines powering one shaft must be treated as one unit. (46) Stationary internal combustion engine--A reciprocating engine that remains or will remain at a location (a single site at a building, structure, facility, or installation) for more than 12 consecutive months. Included in this definition is any engine that, by itselfor in or on a piece ofequipment, is portable, meaning designed to be and capable ofbeing carried or moved from one location to another. Indicia ofportability include, but are not limited to, wheels, skids, carrying handles, dolly, trailer, or platform. Any engine (or engines) that replaces an engine at a location and that is intended to perform the same or similar function as the engine being replaced is included in calculating the consecutive residence time period. An engine is considered stationary ifit is removed from one location for a period and then returnedto the same location in an attempt to circumventthe consecutive residence time requirement. Nonroad engines, as defined in 40 Code ofFederal Regulations §89.2, are not considered stationary for the purposes ofthis chapter. ( 47) System-wide emission rate--The ratio ofthe total actual nitrogen oxides mass emissions rate discharged into the atmosphere from affected units in an electric power generating system or portion thereoflocated within a single ozone nonattainment area when firing at their maximum rated capacity to the total maximum rated capacities for those units. For fuel oil firing, average activity levels must be used in lieu ofmaximum rated capacities for the purpose ofcalculating the system-wide emission rate. (48) System-wide emission specification--The ratio ofthe total allowable nitrogen oxides mass emissions rate dischargeable into the atmosphere from affected units in an electric power generating system orportion thereoflocatedwithin a single ozone nonattainment area whenfiring attheirmaximumrated capacityto the total maximumrated capacities for those units. For fuel oil firing, average activity levels must be used in lieu ofmaximum rated capacities for the purpose of calculating the system-wide emission specification. (49) Thirty-day rolling average--An average, calculated for each day that fuel is combusted in a unit, ofall the hourly emissions data for the preceding 30 days that fuel was combusted in the unit. (50) Twenty-four hour rolling average--An average, calculated for each hour that fuel is combusted (or acid is produced, for a nitric or adipic acid production unit), ofall the hourly emissions data for the preceding 24 hours that fuel was combusted in the unit. (51) Unit--A unit consists ofeither: (A) for the purposes of §§117.105, 117.205, 117.305, 117.1005, 117.1105, and 117.1205 ofthis title (relating to Emission Specifications for Reasonably Available Control Technology (RACT)) and each requirement of this chapter associated with §§117.105, 117.205, 117.305, 117.1005, 117.1105, and 117.1205 ofthis title, any boiler, process heater, stationary gas turbine, or stationary internal combustion engine, as defined in this section; (B) for the purposes of §§117.110, 117.210, 117.310, 117.1010, 117.1110, and 117.1210 ofthis title (relating to Emission Specifications for Attainment Demonstration) and eachrequirement of this chapter associated with §§117.110, 117.210, 117.310, 117.1010, 117.1110, and 117.1210 ofthis title, any boiler, process heater, stationary gas turbine, or stationary internal combustion engine, as defined in this section, or any other stationary source ofnitrogen oxides (NO) at a major source, as defined in this section; (C) for the purposes of§117.2010 ofthis title (relating to Emission Specifications) and each requirement ofthis chapter associated with§ 117.2010 ofthis title, any boiler, process heater, stationary gas turbine (including any duct burner in the turbine exhaust duct), or stationary internal combustion engine, as defined in this section; (D) for the purposes of §117.2110 ofthis title (relating to Emission Specifications for Eight-Hour Attainment Demonstration) and each requirement ofthis chapter associated with §117.2110 ofthis title, any stationary internal combustion engine, as defined in this section; (E) for the purposes of §117.3310 ofthis title (relating to Emission Specifications for Eight-Hour Attainment Demonstration) and each requirement ofthis chapter associated with§ 117.3310 ofthis title, any stationary internal combustion engine, as defined in this section; or (F) for the purposes of§ 117.410 and §117.1310 ofthis title (relating to Emission Specifications for Eight-Hour Attainment Demonstration) and each requirement ofthis chapter associated with §117.410 and§ 117.1310 ofthis title, any boiler, process heater, stationary gas turbine, or stationary internal combustion engine, as defined in this section, or any other stationary source ofNO, at a major source, as defined in this section. (52) Utility boiler--Any combustion equipment owned or operated by an electric cooperative, municipality, river authority, public utility, orPublic Utility Commission ofTexas regulated utility, fired with solid, liquid, and/or gaseous fuel, used to produce steam for the purpose of generating electricity. Stationary gas turbines, including



## ADOPTEDRULES April26, 2013 38 TexReg 2633any associated duct burners and unfired waste heat boilers, are not considered to be utility boilers. (53) Wood--Wood, wood residue, bark, or any derivative fuel or residue thereofin any form, including, but not limited to, sawdust, sander dust, wood chips, scraps, slabs, millings, shavings, and processed pellets made from wood or other forest residues. This agency hereby certifies thatthe adoption has been reviewed by legal counsel and found to be a valid exercise ofthe agency's legal authority. Filed with the Office ofthe Secretary of State on April 12, 2013. TRD-201301491 Robert Martinez Director, Environmental Law Division Texas Commission on Environmental Quality Effective date: May 2, 2013 Proposal publication date: November 2, 2012 For further information, please call: (512) 239-2141 

# • 

# • SUBCHAPTER D. BUSTION CONTROL AT MINOR OURCES IN OZONE NONATTAINM NT AREAS DIVISION 2. DALLA FORT WORTH EIGHT-HOUR OZONE ONATTAINMENT AREA MINOR SOURC S 30 TAC §§117.2103, 117.2130 117.2135, 117.2145 The Texas Commission on nvironmental Quality (TCEQ, agency, commission) adopts amendments to §§117.2103, 117.2130, 117.2135, and 117 2145 without changes to the proposed text as published in t e November 16, 2012

.. issue of the Texas Register (37 TexRe 9060) and the text w1ll not be republished. The adopted amendments will b submitted to the United States Environmental Protection Agen (EPA) as a revision to the state implementation plan (SIP). Background and Summary ofth Factual Basis for the Adopted Rules On April 5, 2012, Halliburton nergy**Service~, lncorpora~ed**  (Halliburton) submitted a peti on for rulemak1ng requestmg a partial exemption from the ules in 30**T~C** Chapter 117, Subchapter D, Division 2 that li it nitrogen ox1des (NOJ emissions from minor sources in the Dallas-Fort Worth (DFW) 1997 eight-hour ozone nonattainment area (DFW area). The commission approved the petition for r lemaking on May 30, 2012 and issued an order on June 1, 201 directing the executive director to examine the issues in the p ition and to initiate rulemaking (Project No. 2012-029-PET-NR. The unique service ofthe Hallib rton Drawworks Engine makes ongoing testing to demonstrate ompliance with the Chapter 117 NO emission limits impractical nd comparatively more expensive than the stationary engin testing envisioned during the adoption of the Chapter 117 rul sin 2007. To comply with the Chapter 117 testing requiremen s, Halliburton must arrange for both emissions testing equipm nt (a normal and expected expense) and for the rental, transp rt, and use of a dynamometer,



## 38 TexReg 2634 April26, 2013 Texas Register which is typically used by engin manufacturers for testing purposes. Preparing the engine for installation ofthe dynamometer and returning the engine to oper tionaI status subsequent to the emissions testing presents signi icant safety hazards associated with the removal ofthe drive tra n and transmission, removal of the torque converter, and the p acement and use of non-dedicated hoisting equipment on the ig floor. Performing a compliant emissions test ofthe Drawworks Engine takes three to four days to complete, whereas complian emissions testing on a typical stationary engine only requires pproximately half a day. Additionally, engines used to raise a d lower down-hole equipment in actual oil and gas operations i the field, which the Drawworks Engine is designed to simulate, etypically notsubjectto similar Chapter 117 testing requirement because they are not installed at a location long enough to trig er the definition of a stationary internal combustion engine in § 17.1 0. The Drawworks Engine is subject to Chapter 117, Subch pter D, Division 2 because the equipment has been made statio ary to provide testing and training facilities for sources that are ot subject to the rule. The adopted change will expand the list of exempted sources in §117.2103 to include stationary iesel engines that are used exclusively for product testing and ersonnel training, operate less than 1,000 hours per year on a r lling 12-month basis, and meet applicable Tier emission standar s for non-road engines listed in 40 Code of Federal Regulations CFR) §89.112(a), Table 1 (October 23, 1998) in effect at the ti e of installation, modification, reconstruction, or relocation. Th adopted exemption is narrow in scope and consistent with the imilar existing exemptions for stationary diesel engines located at minor sources, such as stationary engines used in research and testing and stationary engines used for purposes of perfo ance verification and testing. The adopted change will also re se the operating requirements of §117.2130, the monitoring re uirements of §117.2135, and the recordkeeping requirements f §117.2145 to reflectthe new category of exempt engines. Demonstrating Noninterference nder Federal Clean Air Act, Section 110(1) The commission provides the fo lowing information to demonstrate why the adopted new exem tion in §117.21 03 will not negatively impact the status of the s ate's progress towards attainmentwith the 1997 eight-hour oz ne National Ambient Air Quality Standard (NAAQS), will not in erfere with control measures, and will not prevent reasonable rther progress toward attainment of the ozone NAAQS. On December 6, 2000, as part of he Houston-Galveston-Brazoria (HGB) attainment demonstrat on SIP revision, the commission adopted a new control strat y for stationary reciprocating internal combustion engines, boi ers, and process heaters located at minor industrial, comme cial, and institutional sources of NO in the HGB area. The ado ted rulemaking exempted engines

### ~sed for specific purposes, uch as those used in research and testing and those used for the purposes of performance verification and testing. On May 23, 2007, as part of the DFW 1997 eight-hour ozone attainment demonstration SIP revi ion, the commission adopted new emission control requiremen s for stationary reciprocating internal combustion engines locat d at minor industrial, commercial, and institutional sources of N xin the DFW area. The NOx emission reductions were necess ry for the DFW area to attain the 1997 eight-hour ozone NAAQ

. Similarto the HGB rulemaking, the DFW rulemaking also ad pted exemptions for engines used for specific purposes, such s those used in research and