TECHNICAL SUPPORT DOCUMENT

30 TAC Chapter 101, Subchapter H, Division 4

Discrete Emission Credit Banking and Trading

§§101.372, 101.373, 101.375, 101.376, 101.378

Rule Project Number: 2005-054-101-PR

Rule Project Number: 2006-053-101-PR

March 16, 2010

FOR FURTHER INFORMATION CONTACT: Ms. Adina Wiley, United States Environmental 

Protection Agency Region 6, Air Permits Section (6PD-R), 1445 Ross Avenue, Dallas, Texas 

75202-2733, (214) 665-2115.
Subject : Review of Proposed Revisions to the Discrete Emission Credit Banking and 

Trading Program, submitted October 24, 2006 (Rule Project Number 2005-

054-101-PR) and August 16, 2007 (Rule Project Number 2006-053-101-PR)

Contents:

I. Executive Summary

II. Background

III. Summary of State Submittals

IV. Technical Review of State Submittals

V. Conclusion

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I. Executive Summary

What action is evaluated in this Technical Support Document?

This technical support document (TSD) reviews two proposed revisions to the Texas State 

Implementation Plan (SIP) concerning the Discrete Emission Credit Banking and Trading 

Program, referred to elsewhere in this document as the Discrete Emission Reduction Credit 

(DERC) program. This review will determine if the DERC program revisions are consistent with 

the requirements of the Clean Air Act and EPA’s policy and guidance.

October 24, 2006

 On October 4, 2006, the Texas Commission on Environmental Quality (TCEQ) adopted 

revisions to the DERC program to address the conditions of EPA’s final conditional approval 

of the DERC Program, September 6, 2006 (71 FR 52703). Additionally, the TCEQ adopted 

revisions to the DERC program mandated by Texas Senate Bill (SB) 784. The Chairman of 

the TCEQ, Ms. Kathleen Hartnett White, submitted these provisions as a SIP revision in a 

letter dated October 24, 2006, for rule project number 2005-054-101-PR. 

 On October 4, 2006, TCEQ also adopted revisions to the Emission Credit Banking and 

Trading Program, referred to elsewhere in this document as the Emission Reduction Credit 

(ERC) program, and the Emissions Banking and Trading of Allowances (EBTA) Program. 

These revisions were also submitted to EPA on October 24, 2006, as part of rule project 

number 2005-054-101-PR. EPA is taking separate action on the ERC program revisions at a 

in a separate rulemaking (see EPA-R06-OAR-2010-0147); therefore this TSD will not review 

the 2006 revisions to the ERC program. EPA is also taking separate action on the EBTA at a 

later date and in a separate rulemaking; therefore this TSD will not review the 2006 revisions 

to the EBTA program.

August 16, 2007

 On July 25, 2007, the TCEQ adopted revisions to the DERC program to address the 

recodification of the nitrogen oxide (NOX) rules at 30 TAC Chapter 117. The Chairman of 

the TCEQ, Ms. Kathleen Hartnett White, submitted these provisions as a SIP revision in a 

letter dated August 16, 2007, for rule project number 2006-053-101-PR. 

 At the same time that TCEQ adopted revisions to the DERC program on July 25, 2007, 

TCEQ also adopted revisions to the general air quality rules, the ERC Program, the Mass 

Emissions Cap and Trade (MECT) program, and the System Cap and Trade (SCT) Program. 

These revisions were also submitted to EPA on August 16, 2007, as part of rule project 

number 2006-053-101-PR. EPA is taking separate action on the ERC program revisions at a 

in a separate rulemaking (see EPA-R06-OAR-2010-0147); therefore this TSD will not review 

the 2007 revisions to the ERC program. EPA is also taking separate action on the SCT 

program at a later date and in a separate rulemaking; therefore this TSD will not review the 

2007 revisions to the SCT program. EPA approved the 2007 revisions to the MECT program 

through a direct final action on July 16, 2009 (74 FR 34503).

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What action has EPA taken on the DERC Program?

On September 6, 2006, EPA promulgated a final conditional approval of the DERC program (71 

FR 52703). Our conditional approval of the DERC program is contingent upon TCEQ 

satisfactorily addressing the terms of their September 8, 2005, commitment letter (available in the 

FDMS docket for this action). Our Federal Register notice for the final conditional approval 

noted that if the terms of the conditional approval were not completed and submitted to EPA by 

December 1, 2006, the conditional approval is automatically disapproved. 

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II. Background

What is Air Emissions Trading?

Air emissions trading programs are designed to promote flexibility and innovation in 

complying with State and Federal emission requirements. Air emissions trading programs 

create a marketplace for emission reductions implemented by source 1 and needed by 

source 2. For example, source 1 creates a marketable emissions reduction by reducing its 

emissions below the level it is required to meet, and below the level it has been meeting. 

Source 1 then sells or trades these reductions as credits to another source that is then 

allowed to release emissions above its required levels. In return for this flexibility, source 

2 must purchase additional credits beyond those needed to comply, therefore reducing 

overall emissions. Emissions trading uses market forces to reduce the overall cost of 

compliance for sources, while maintaining emission reductions and environmental benefits.

What is an Economic Incentive Program (EIP)?

An EIP is a regulatory program that achieves an air quality objective by providing marketbased incentives or information to emission sources. A uniform emission reduction 

requirement, based for instance on installation of a required emission control technology, 

does not take account of variations in processes, operations, and control costs across 

sources even of the same type, such as electric utilities, or petroleum refiners. By 

providing flexibility in how sources meet an emission reduction target, an EIP empowers 

sources to find the means that are most suitable and most cost-effective for their particular 

circumstances.

In addition, an EIP can create incentives for sources to go beyond an emission reduction 

target. By setting a price on pollution and pollution reductions through a fee-based 

approach or a trading program, some sources can realize an economic gain or avoid 

additional costs by selling excess emission reductions, or making the reductions for less 

than the cost imposed by a fee. Because of the improved efficiency, EIPs may also lead to 

achieving air quality goals more quickly.

What is the status of EIP programs in Texas?

TCEQ has adopted six EIP programs into state regulations. The regulations are found in 

Divisions 1 through 6 of 30 TAC Chapter 101, Subchapter H. The six EIP programs in 

Texas are summarized in Table II - 1. Additionally, TCEQ has adopted one federal 

trading program into state regulation, found in Divisions 7 of 30 TAC Chapter 101, 

Subchapter H.

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Table II - 1

TCEQ EIP Trading Programs and Regional Applicability

TCEQ

Trading 

Program

Geographical / Ozone Non-attainment Regions

DFW HGB BPA El Paso East and 

Central Texas

West Texas

ERC Optional Optional Optional n/a n/a n/a

EBTA n/a n/a n/a Mandatory Mandatory Mandatory

MECT n/a Mandatory n/a n/a n/a n/a

DERC Optional Optional Optional Optional Optional Optional

SCT Optional Optional Optional n/a Optional n/a

HECT n/a Mandatory n/a n/a n/a n/a

CAIR Federally Mandated Trading Program

Mandatory means that sources in the region must participate in the EIP program.

Optional means that sources in the region have the option to participate in the EIP program.

n/a - The EIP does not apply to the geographical region. 

DFW - Dallas Ft Worth ozone nonattainment area for both 1-hour and 8-hour ozone standard.

HGB - Houston/Galveston/Brazoria ozone nonattainment area for both 1-hour and 8-hour ozone standard.

BPA - Beaumont/Port Arthur ozone nonattainment area for both 1-hour and 8-hour ozone standard.

El Paso - El Paso ozone nonattainment area for 1-hour ozone standard. El Paso is maintenance for 8-hour ozone standard. 

East and Central Texas - Those counties east of Interstate Highway 35.

West Texas - Those counties west of the counties in the East and Central Texas area, excluding El Paso. 

The TCEQ EIP regulations are summarized below:

1. Emission Credit Banking and Trading (ERCs) (30 TAC Chapter 101, Subchapter 

H, Division 1)

The Emission Credit Banking and Trading EIP or Emission Reduction Credit 

(ERC) program for VOC and NOX in ozone nonattainment areas was first adopted 

by Texas at 30 TAC § 101.29 on December 23, 1997. Effective January 18, 2001, 

§ 101.29 was repealed and Chapter 101, Subchapter H, Divisions 1, 3, and 4 were 

created. This action created separate divisions for the ERC, MECT, and DERC 

programs. The submittal effective April 14, 2002, amended §101.302. The 

submittal effective January 17, 2003, completely reorganized the ERC and DERC 

program rules into more standardized formats parallel to each other, with a rule 

structure which followed a process of recognizing, quantifying, and certifying 

reductions as credits while explaining the guidelines for trading and using 

creditable reductions. The 2003 submittal amended §§101.300, 101.301, 101.302, 

101.303, 101.304, 101.306, 101.309, and 101.311. The December 6, 2004, 

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submittal amended §§101.300, 101.302, 101.303, 101.304, and 101.311. Our 

final approval on September 6, 2006, acted on the original submission of the ERC 

program and all subsequent revisions through the December 6, 2004 submittal. 

Division 1 defines emission credits (ECs) in terms of a rate (tons per year). 

Emission credits can be generated and banked from stationary sources as emission 

reduction credits (ERCs) or generated and banked from mobile sources as mobile 

emission reduction credits (MERCS). The ERCs from the bank have traditionally 

been used as offsets for permitting major new or modified facilities. ERCs have 

also been banked and traded for alternative compliance with Reasonably Available 

Control Technology (RACT) requirements. MERCs have not been banked or 

traded under the program to date. On December 6, 2004, TCEQ submitted 

revisions to the SIP that expanded the ERC program to cover reductions of criteria 

pollutants (excluding lead) or precursors of criteria pollutants for which an area is 

designated nonattainment. EPA published a final approval of the ERC program on 

September 6, 2006, 71 FR 52698. 

Since our final approval, TCEQ has revised the ERC program to address the 

commitments of the DERC conditional approval. Additionally, the TCEQ adopted 

revisions to the ERC program consistent with the requirements of Senate Bill 784, 

adopted during regular session, 2005, of the 79th Texas Legislature. Senate Bill 

784 allows for greater flexibility in the generation and use of international emission 

reductions. These revisions were adopted by the TCEQ on October 4, 2006, and 

became effective on October 26, 2006. The adopted regulations were submitted to 

EPA as a SIP revision on October 24, 2006. TCEQ has also promulgated 

revisions to the ERC program that update the cross-references to the new 

numbering structure in 30 TAC Chapter 117. These revisions were adopted on 

July 25, 2007, and became effective on August 16, 2007. The adopted regulations 

were submitted to EPA as a SIP revision on August 16, 2007. EPA is proposing 

approval of the 2006 and 2007 ERC program revisions in a separate rulemaking 

(see EPA-R06-OAR-2010-0147).

2. Emissions Banking and Trading of Allowances (EBTA) (30 TAC Chapter 101, 

Subchapter H, Division 2)

The Texas legislature passed Senate Bill 7 (SB7) in 1999 to deregulate electric 

utilities. SB 7 provided for a cap and trade program for grandfathered electric 

generating facilities (EGFs). The EBTA program establishes an emission 

reduction cap which provides for a 50% reduction in NOX emissions from EGFs 

and a 25 % reduction in SO2 emissions from solid fuel EGFs. The EBTA program 

began operation in 2003. Allowances for NOX and SO2 are deposited into each 

EGFs compliance account annually. The EGFs will be allowed to purchase, bank 

or sell allowances to meet operational demands. The EBTA program is divided 

into three regions; East and West Texas as divided by Interstate Highway 35 and 

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the El Paso region (consisting of El Paso County; Juarez, Mexico; and Sunland 

Park, New Mexico). The TCEQ has revised the EBTA to restructure the 

international trading provisions to parallel those found in the Division 1 and 4 

programs, and to add an audit mechanism. EPA has taken no action on the EBTA 

program to date.

3. Mass Emissions Cap and Trade (MECT) Program (30 TAC Chapter 101, 

Subchapter H, Division 3)

The MECT program was adopted as a State regulation on December 6, 2000. 

This program is mandatory for stationary facilities that emit NOX in the HGB 

ozone nonattainment area which are subject to emission specifications in the 

TCEQ NOX rules at 30 TAC Chapter 117.310, 117.1210, and 117.2010; and 

which are located as a site where they collectively have an uncontrolled design 

capacity to emit 10 tons per year or more of NOX. The program set a cap on NOX

emissions beginning January 1, 2002, with a final reduction to the cap occurring in 

2007. Facilities are required to meet NOX allowances on an annual basis. 

Facilities may purchase, bank, or sell their allowances. The program has a 

provision to allow a facility to use credit generated through the Division 1 EIP 

(ERCs) to permanently increase the allowances for the individual facility in the 

MECT if the credits were generated for NOX in the HGB area before December 1, 

2000. The program also has a provision to allow a facility to use credits generated 

through the Division 4 EIP (DERCs) in lieu of allowances if they are generated in 

the HGB area. EPA published a final rule approving the MECT program (except 

for the use of DERCs in the MECT, which we deferred acting on until our action 

on the DERC rule) on November 14, 2001 (66 FR 57252). Texas subsequently 

revised the MECT program in SIP submittals dated January 31, 2003 and 

December 6, 2004. EPA published a final approval of the MECT program 

revisions on September 6, 2006 (71 FR 52698), including revisions to the MECT 

necessary to accomplish the shift in attainment strategy from 90 percent control of 

industrial NOX sources to 80 percent control in the HGB area. The approved 

revisions also approved the use of discrete emissions credits generated from 

stationary sources (DERCs) or mobile sources (MDERCs) in lieu of MECT 

allowances. Since our 2006 final approval, TCEQ has promulgated revisions to 

the MECT to update the cross-references to the Chapter 117 NOX rules. EPA 

subsequently approved the revisions to the MECT through a direct final action on 

July 16, 2009 (see 74 FR 34503).

4. Discrete Emission Credit Banking and Trading (DERCs) (30 TAC Chapter 101, 

Subchapter H, Division 4)

The DERC program was first adopted by the state at 30 TAC § 101.29 on 

December 23, 1997. Effective January 18, 2001, § 101.29 was repealed and 

Chapter 101, Subchapter H, Divisions 1, 3, and 4 were created. This action 

8
created separate divisions for the ERC, MECT, and DERC programs. Discrete 

emission credits (DECs) are quantified, banked and traded in terms of mass (tons), 

not a rate as is the case with ECs. DECs may be generated from stationary 

sources and banked as discrete emission reduction credits (DERCs) or may be 

generated from mobile sources and banked as mobile discrete emission reduction 

credits (MDERCs). DECs may be generated and used statewide and can apply to 

all criteria pollutants, with the exception of lead. Traditionally DECs have been 

used for RACT compliance for VOCs and NOX. Amendments to the MECT 

program were adopted on October 18, 2001; these amendments also included 

changes made primarily for clarification to §§ 101.370, 101.372, and 101.373 in 

the DERC program. The DERC program was amended again effective April 14, 

2002, to include the provisions in Texas Senate Bill 1561 for air emissions trading 

across international boundaries. The submittal effective January 17, 2003, 

completely reorganized the ERC and DERC program rules into more standardized 

formats parallel to each other, with a rule structure which followed a process of 

recognizing, quantifying, and certifying reductions as credits while explaining the 

guidelines for trading and using creditable reductions. The December 6, 2004

submittal amended §§ 101.370, 101.373, 101.374, and 101.376. Our final 

conditional approval on September 6, 2006, acted on the original submission of the 

DERC program and all subsequent revisions through the December 6, 2004, 

submittal (71 FR 52703). Our conditional approval is contingent upon TCEQ 

satisfactorily addressing the terms of their September 8, 2005, commitment letter. 

Since our conditional approval, TCEQ has revised the DERC program to address 

the commitments of the conditional approval. Additionally, the TCEQ adopted 

revisions to the DERC program consistent with the requirements of Senate Bill 

784, adopted during regular session, 2005, of the 79th Texas Legislature. Senate 

Bill 784 allows for greater flexibility in the generation and use of international 

emission reductions. These revisions were adopted by the TCEQ on October 4, 

2006, and became effective on October 26, 2006. The adopted regulations were 

submitted to EPA as a SIP revision on October 24, 2006. TCEQ has also 

promulgated revisions to the DERC program that update the cross-references to 

the new numbering structure in 30 TAC Chapter 117. These revisions were 

adopted on July 25, 2007, and became effective on August 16, 2007. The adopted 

regulations were submitted to EPA as a SIP revision on August 16, 2007.

5. System Cap Trading (SCT) (30 TAC Chapter 101, Subchapter H, Division 5)

The TCEQ adopted system caps for electric generating facilities operating in the 

BPA, DFW, and HGB ozone nonattainment areas and the attainment counties of 

east and central Texas at 30 TAC § 117.138 on September 26, 2001, effective 

October 18, 2001. EPA approved the system caps on November 14, 2001 (66 FR 

57244). The System Cap Trading (SCT) program adopted by TCEQ on March 

21, 2001, and submitted to EPA as a revision to the SIP in Rule Log Number 2000-

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046-101-AI, provides flexibility for the electric industry in achieving the NOX

emissions reductions necessary to achieve ozone attainment in the BPA, DFW, and 

HGB ozone nonattainment area and the attainment counties of east and central 

Texas while maintaining reliability of service. Individual sources under common 

ownership or control may be voluntarily grouped together in a system with a 

system cap on total emissions from the sources in the system, established under 30 

TAC Chapter 117 emissions limitations. Emission allowables may be transferred 

from source to source within the system, provided the cap is not exceeded. The 

SCT provides a mechanism that streamlines the steps necessary for daily emission 

trading by allowing the increase of system caps from corresponding system cap 

emission reductions in the same nonattainment or attainment area. The system cap 

may be increased daily using a daily surplus, or on a 30-day rolling average using a 

30-day rolling average surplus for the same time period. TCEQ has promulgated 

revisions to the SCT program to update the cross-references to the Chapter 117 

NOX rules. EPA has taken no action on the SCT program to date.

6. Highly-Reactive Volatile Organic Compound Emission Cap and Trade (HECT) 

Program (30 TAC Chapter 101, Subchapter H, Division 6)

The HECT program was adopted as a State regulation on December 1, 2004. This 

program is mandatory for covered facilities including vent gas streams, flares, and 

cooling tower heat exchange systems that emit highly-reactive VOCs, as defined in 

§ 115.10, and that are located at a site subject to Chapter 115, Subchapter H. 

Facilities are required to meet HRVOC allowances on an annual basis. Facilities 

may purchase, bank or sell their allowances for use in the following control period. 

The program has a provision to allow a facility to use credits of less-reactive 

VOCs generated through the Division 1 EIP (ERCs) in lieu of allowances if they 

are generated in the HGB area. EPA published final approval of the HECT 

program on September 6, 2006.

7. Clean Air Interstate Rule (CAIR) Program (30 TAC Chapter 101, Subchapter H, 

Division 7)

The Texas CAIR program was adopted as a State regulation on July 12, 2006, and 

submitted as a SIP revision on August 4, 2006. The Division 7 regulations 

incorporate by reference the CAIR NOX Annual and SO2 trading programs as 

adopted by EPA on May 12, 2005 (70 FR 25162). Additionally, the Texas CAIR 

program establishes a NOX allocation methodology and provisions for the 

compliance supplement pool to replace the provisions at subpart EE of 40 CFR 

part 97, the CAIR Federal Implementation Plan. EPA published a direct final 

approval of the Texas CAIR NOX Abbreviated SIP for the Phase I allocation 

methodology on July 30, 2007 (72 FR 41453). TCEQ adopted revisions to the 

CAIR program on February 10, 2010, to update the NOX allocation methodology

and the incorporation by reference dates for the NOX annual and SO2 trading 

10
programs. These revisions will be submitted to EPA as a SIP revision.

What has EPA considered in reviewing and evaluating the October 24, 2006 and 

August 16, 2007, DERC SIP revisions submittals?

“Improving Air Quality with Economic Incentive Programs” (EPA-452/R-01-001, January

2001) is the EPA guidance document for reviewing and approving discretionary EIP 

submittals. The EIP Guidance applies to the establishment of a discretionary EIP for 

attaining or maintaining the national ambient air quality standards (NAAQS) for criteria 

pollutants. The EIP Guidance takes precedence over the discretionary EIP guidance 

provided in prior documents such as the 1994 EIP (April 7, 1994, 59 FR 16690, 40 CFR 

part 51, subpart U) and the guidance in the emission trading policy statement (ETPS) 

(December 4, 1986, 51 FR 43813). In addition, the Guidance represents EPA’s final 

action on the Open Market Trading Rule (August 3, 1995, 60 FR 39668 and August 25, 

1995, 60 FR 44290). The January 2001 EIP Guidance is the most recent statement of 

agency policy and it supercedes prior statements of agency policy. We have also 

considered the report by EPA’s Office of Inspector General, “Open Market Trading 

Program for Air Emissions Needs Strengthening” (No. 2002-P-00019, September 30, 

2002) as well as EPA air program responses to that report.

Additionally, since these revisions to the DERC program were submitted as a result of our 

final conditional approval of the DERC program, we will evaluate the revisions to the 

DERC program for consistency with the conditional approval commitments.

The above documents and other material considered will be included in the administrative 

record for the proposed rule.

What does EPA mean by guidance?

The EIP Guidance applies to discretionary EIPs, but it does not represent EPA’s final 

action regarding discretionary EIPs. Final action on any particular discretionary EIP, such 

as the DERC rule, occurs when EPA has approved or disapproved the EIP submitted as a 

SIP revision. The EIP Guidance describes elements of various types of discretionary 

EIPs, and phrases these elements in the imperative– that is, using the terms “must” or 

“shall.” This is done only to signify that EPA would propose to approve a SIP submittal 

of a program containing the indicated elements on grounds that under section 110(l) of the 

Clean Air Act (CAA), the SIP revision does not interfere with any applicable requirement 

concerning attainment, reasonable further progress, or any other applicable requirement.

How will EPA act on an EIP SIP submittal?

Once an EIP SIP revision is submitted, EPA will take action through notice-and-comment 

rule-making to determine if the statutory requirements have been met. Only action taken 

11
after the conclusion of that rule-making would constitute final Agency action. EPA would 

take steps to expedite its proposed approval in the case of SIP revisions containing 

programs that contain the elements of the EIP Guidance.

If a program that does not contain the elements of the EIP Guidance for the type of 

program that is submitted, EPA will still seek to determine whether the applicable CAA 

requirements were met, and if so EPA would approve the submission. EPA would make 

the determination through notice-and-comment rule-making.

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III. Summary of the State Submittals

A complete section-by-section summary of the DERC program can be found in the DERC 

TSD dated September 23, 2005, included in the docket for this action. EPA developed 

this original DERC TSD for our initial conditional approval action for the DERC program. 

This current TSD will only evaluate the revisions to the DERC program as submitted on 

October 24, 2006 and August 16, 2007 by TCEQ.

October 24, 2006

30 TAC Chapter 101, Subchapter H, Division 4

The proposed SIP revision removes all references to international emission reductions 

from section 101.372 and relocates these requirements to new section 101.375. The 

proposed SIP revision also revises section 101.372 to clarify the procedures for the use of 

an emission protocol as specified in the September 8, 2005, commitment letter from 

TCEQ to EPA.

The proposed SIP revision amends section 101.373 to remove the ability to generate 

DERCs from facility shutdowns, as specified in the September 8, 2005, commitment letter 

from TCEQ to EPA.

The proposed SIP revision creates new section 101.375 to contain all requirements for 

international emission reductions. TCEQ has created a separate section for optional 

reductions to allow for separate federal rulemaking action as necessary.

The proposed SIP revision amends section 101.376 to update cross-references to 

previously renumbered sections of the TAC.

The proposed SIP revision amends section 101.378 to change the lifetime of DERCs 

generated from shutdowns. DERCs generated from shutdowns before September 30, 

2002, will be available for use until September 8, 2010.

The TCEQ received four comment letters, one from EPA submitted on May 30, 2006.

August 16, 2007

30 TAC Chapter 101, Subchapter H, Division 4

The proposed SIP revision amends sections 101.372 and 101.376 to adopt the references 

to the newly renumbered 30 TAC Chapter 117 sections.

The TCEQ received two comment letters for this rulemaking, one from EPA submitted on 

March 23, 2007.

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IV. Technical Review of State Submittal

This technical review of the October 24, 2006, revisions to the DERC program at sections 

101.372, 101.373, 101.375, 101.376, and 101.378 and the August 16, 2007 revisions to 

the DERC program at sections 101.372 and 101.376 consists of a comparison between the 

relevant CAA requirements and the corresponding sections in the SIP submittal. Each SIP 

submittal is separately reviewed for completeness as a SIP submittal under Part 51, 

Appendix V. Next, a section-by-section review of the submittal in comparison to 40 CFR 

Part 51 is presented to determine whether the submittal satisfies the requirements for 

preparation, adoption, and submittal of a SIP revision. Then the proposed SIP revisions 

are analyzed with respect to the current SIP-approved ERC program language and the 

EIP Guidance. A comparison of the proposed SIP revisions with section 110(l) of the 

CAA is presented to determine whether the proposed revisions interfere with any 

applicable CAA provisions. Finally, since the TCEQ is under an obligation to revise the 

DERC program to satisfy the commitments of a conditional approval, the proposed 

October 24, 2006, SIP revisions and other associated TCEQ actions will be analyzed to 

determine if the conditional approval terms have been satisfied. These analyses produce a 

written evaluation that was used to make a determination of whether or not the October 

24, 2006, and August 16, 2007, DERC program revisions are in agreement with the CAA, 

other EPA policies or guidance, and whether the October 24, 2006, DERC program

revisions in concert with other TCEQ actions have satisfied the terms of the conditional 

approval.

A. October 24, 2006

1. Part 51, Appendix V Completeness Determination

2. Review with respect to Part 51

3. Review with respect to the current SIP-approved ERC Program and the 

EIP Guidance

4. Review with respect to Section 110(l) of CAA

5. Evaluation of the conditional approval terms

B. August 16, 2007

1. Part 51, Appendix V Completeness Determination

2. Review with respect to Part 51

3. Review with respect to the current SIP-approved ERC Program and the 

EIP Guidance

4. Review with respect to Section 110(l) of CAA

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IV.A. Evaluation of the October 24, 2006 SIP Submittal

1. Evaluation of the October 24, 2006 SIP Submittal with respect to Appendix 

V to Part 51

The criteria for completeness determination are found in Appendix V to Part 51 - Criteria 

for determining the completeness of plan submissions and are outlined below: 

1.0 Purpose: This appendix V sets forth the minimum criteria for determining whether 

a State implementation plan submitted for consideration by EPA is an official 

submission for purposes of review under § 51.103. 

1.1 The EPA shall return to the submitting official any plan or revision thereof which 

fails to meet the criteria set forth in this appendix V, and request corrective action, 

identifying the component(s) absent or insufficient to perform a review of the 

submitted plan.

1.2 The EPA shall inform the submitting official whether or not a plan submission 

meets the requirements of this appendix V within 60 days of EPA's receipt of the 

submittal, but no later than 6 months after the date which the State was required to 

submit the plan or revision. If a completeness determination is not made by 6 

months from receipt of a submittal, the submittal shall be deemed complete by 

operation of law on the date 6 months from receipt. A determination of

completeness under this paragraph means that the submission is an official 

submission for purposes of §51.103.

The attached checklist outlines the basic criteria included under 2.1, 2.2, and 2.3 of

Appendix V. 

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SIP Completeness Checklist for the October 24, 2006 SIP Submittal

Rule Log No: 2005-054-101-PR

Administrative Materials (2.1)

1. The package is sent with a formal submittal letter from the Governor or his or her 

designee requesting EPA's approval of the revision.

The SIP revision was submitted by a letter from Kathleen Hartnett White, 

Chairman of the Texas Commission on Environmental Quality, dated October 24, 

2006. The SIP submittal was received by EPA Region 6 External Affairs on 

October 31, 2006. Governor Rick Perry designated that the Chairman of the 

Texas Commission on Environmental Quality would be his designee for SIP 

submittals in a letter dated May 21, 2002.

2. Evidence is included that the State has adopted the revision in the State code or 

body of regulations, or that the State has issued the permit, order, consent 

agreement (hereafter document) in final form. This evidence would include the 

date of adoption or final issuance and the effective date of revision, if different 

from adoption/issuance date.

The revisions were adopted by the Texas Commission on Environmental Quality

on October 4, 2006, and became effective October 26, 2006. 

3. Evidence is included that the State has necessary legal authority under State law to 

adopt and implement the revision, e.g., a citation of the appropriate State 

authority.

The authority for promulgating changes to the Texas State Implementation Plan, 

Chapter 101 §§ 101.032, 101.306, 101.372, 101.373, 101.376, and 101.378; the 

repeal of §§ 101.338; and new §§ 101.305, 101.338, 101.339, and 101.375 is 

found in the Texas Clean Air Act, Chapter 382 of the Texas Health and Safety 

Code.

4. A copy is included of the actual regulation or document submitted for approval 

and incorporation by reference into the SIP including an indication of the changes 

made to the existing approved plan where applicable. The submittal shall be a 

copy of the official State regulation document signed, stamped, and dated by the 

appropriate State official indicating that it is fully enforceable by the State. The 

effective date of the regulation document shall, whenever possible, be indicated in 

the document itself.

The October 24, 2006, submittal included a copy of the official State regulation 

document, signed, stamped, and dated by Kathleen Hartnett White, Chairman of 

16
the Texas Commission on Environmental Quality.

5. Evidence is included that the State followed all the procedural requirements of its 

laws and/or its constitution in the conducting and completing the 

adoption/issuance of the plan. 

The SIP submittal package included a certification signed by Kevin McCalla,

Director of the Texas Commission on Environmental Quality General Law

Division, that demonstrated the SIP submittal was developed pursuant to 40 CFR 

51.104. 

6. Evidence is included that public notice was given of the proposed changes 

consistent with the procedures approved by EPA, including the date of publication 

of such notice, (e.g., notarized or certified copies of any public notices published in 

newspapers). (The notice should be at least 30 days prior to the public hearing(s).

Notices of public hearings were published in the following newspapers on the date 

listed:

 Austin American Statesman: April 19, 2006

 Beaumont Enterprise: April 17, 2006

 Fort Worth Star Telegram: April 17, 2006

 Houston Chronicle: April 17, 2006. 

A public hearing was held in Austin, Texas, on May 22, 2006.

7. A certification is included indicating that public hearing(s) was/were held in 

accordance with the information provided in the public notice(s) and the State's 

laws and constitution, if applicable.

An order adopting revisions to the SIP signed by Kathleen Hartnett White, 

Chairman of the Texas Commission on Environmental Quality was included. 

This order states that the public hearing was conducted pursuant to Texas Health 

and Safety Code § 382.017, Texas Government Code Chapter 2001, and 40 CFR 

§ 51.102.

8. A compilation of public comments and the State's response is included.

The SIP submittal package did include a compilation of comments. TCEQ 

received written testimony from four parties during the comment period, 

including EPA Region 6, and did not receive oral testimony.

Technical Support (2.2)

The State should include the following technical information in its SIP revision request 

17
package.

1. Identification of all regulated pollutants affected by the revision is included.

 Chapter 101, Subchapter H, Division 1 (ERC Program) applies to criteria 

pollutants, and precursors, for which an area is designated nonattianment 

with the exception of lead. However, the SIP revision under review does 

not change this applicability and therefore does not need to restate the list 

of regulated pollutants.

 Chapter 101, Subchapter H, Division 2 (EBTA Program) applies to NOX

and SO2. This SIP submittal amends a previously submitted SIP package 

for the EBTA program, in which the pollutants are identified.

 Chapter 101, Subchapter H, Division 4 (DERC Program) applies to 

criteria pollutants, and precursors, with the exception of lead. The SIP 

revision under review does not change this applicability and therefore 

does not need to restate the list of regulated pollutants.

2. Identification of the locations of affected sources including the EPA 

attainment/nonattainment designation of the locations and the status of the 

attainment plan for the affected area(s) is included.

The SIP submittal, covering the ERC, EBTA, and DERC Rules, amend existing 

regulations for statewide trading programs. Additionally, each rule does contain 

an international trading component.

3. Quantification of the changes in SIP allowable emissions from the affected sources 

is included. (Examples include estimates of changes in current actual emissions 

from affected sources and/or, where appropriate, quantification of changes in 

actual emissions from affected sources through calculations of the differences 

between certain baseline levels and allowable emissions anticipated if the revisions 

were approved.)

The SIP submittal, covering the ERC, EBTA, and DERC rules, amend existing 

regulations for statewide trading programs. The ERC and DERC programs 

establish economic incentive programs for voluntary generation and use of 

emission reductions. Each program includes provisions for quantifying 

creditable emission reductions and increases. The EBTA program is mandated 

by Texas SB 7; which established reduction requirements of 50% from baseline 

NOX emission levels and 25% from baseline SO2 emission levels. 

4. Demonstration is included that the NAAQS/PSD increments/RFP demonstration 

and visibility as applicable would be protected if the revision were approved and 

implemented.

18
The SIP submittal amends existing trading programs. While these trading 

programs are part of the attainment demonstrations developed within the State, 

they are not the sole method of attaining or maintaining the NAAQS, PSD, RFP 

or visibility programs. Attainment demonstrations for each area using these 

programs must account for the emissions attributed to the banking and trading 

programs.

5. FOR REDESIGNATIONS:

a. Is there a fully approved maintenance plan for the primary ambient air 

quality standards for at least 10 years as required by §175A of the Clean 

Air Act?

Not applicable.

b. Are contingency measures included?

Not applicable.

6. Modeling information, if applicable, is required to support the proposed revision. 

Modeling information is not necessary to support this SIP revision. Modeling is 

provided with attainment demonstrations accounting for the generation and use 

of emission reductions under the ERC, EBTA, and DERC programs.

7. Evidence is included where necessary, that emission limitations are based on 

continuous emission reduction technology (e.g., add-on controls, industrial/process 

equipment designs, reformulated materials, etc.).

This SIP submittal amends existing trading programs; it does not establish 

emission limitations.

8. Evidence is included indicating that a SIP revision contains emission limitations, 

work practice standards, and recordkeeping/reporting requirements to ensure 

stated emission levels.

This SIP submittal amends existing trading programs and does not contain or 

revise emission limitations or workplace standards. Recordkeeping and reporting 

requirements for the trading programs have previously been submitted to EPA. 

9. Compliance/enforcement strategies including how compliance will be determined 

in practice (including at what frequency).

The SIP submittal amends existing trading programs. The compliance strategies 

19
for each program were previously submitted to EPA. Additionally, each source 

participating in banking and trading programs must abide by the conditions of its 

respective permit. 

10. As appropriate, special economic and technological justifications are included per 

applicable EPA policies or an explanation why such justifications are not necessary 

should be included. For example, requests for alternative RACT may require such 

justification.

These justifications are not necessary for this SIP revision.

The October 24, 2006 SIP submittal (Rule Project No. 2005-054-101-PR) meets the 

completeness criteria established in 40 CFR part 51, Appendix V.

20
IV.A. Evaluation of the October 24, 2006 SIP Submittal

2. Evaluation of the October 24, 2006 DERC revisions with respect to 40 CFR 

51

Requirements for the preparation, adoption, and submittal of implementation plans can be 

found in 40 CFR Part 51. The October 24, 2006, proposed DERC revisions were 

evaluated against the applicable requirements in Part 51. This analysis is included in Table 

IV-A2 below. The revisions to the ERC and EBTA programs also submitted on October 

24, 2006, as revisions to the SIP are not included in the analysis below. EPA is proposing 

approval of the 2006 ERC revisions in a separate rulemaking (see EPA-R06-OAR-2010-

0147). The EBTA program will be acted on separately by EPA at a later date. 

Table IV-A2: Analysis of Part 51 Requirements

Part 51 – Requirements for Preparation, 

Adoption, and Submittal of Implementation 

Plans

DERC Program Revisions

30 TAC §§ 101.372, 101.373, 101.375, 101.376 

and 101.378

Subpart A – Emission Inventory Reporting 

Requirements

The DERC Program is a discretionary EIP for 

voluntary participation. The program does not 

affect the current TX SIP requirements for 

Emission Inventory Reporting.

Emission reporting requirements specific to the 

DERC program are contained in 30 TAC 101.379 

and were approved by EPA in our September 6, 

2006 conditional approval.

Subparts B – E [Reserved] Not applicable.

Subpart F – Procedural Requirements Subpart F – Procedural Requirements

§ 51.100 Definitions § 51.100 is not applicable to the SIP submittal 

under review in this TSD.

§ 51.101 Stipulations § 51.101 is not applicable to the SIP submittal 

under review in this TSD. 

§ 51.102 Public Hearings

 States must conduct one or more public 

hearings

 Public hearings will only be held after 

reasonable notice, given at least 30 days prior 

to the date of the hearing

 The state must submit with the revision a 

certification that the hearing was held in 

accordance with this section

 TCEQ held a public hearing on May 22, 2006 

in Austin, Texas.

 The public hearing was held after reasonable 

notice was given. TCEQ published notice of 

the public hearing in the following 

newspapers on the dates listed below:

 April 17, 2006 in the Beaumont 

Enterprise;

 April 17, 2006 in the Fort Worth StarTelegram;

 April 17, 2006 in the Houston Chronicle;

 April 19, 2006 in the Austin American 

Statesman.

 TCEQ submitted a certification that the public 

hearings were held in accordance with § 

51.102.

21
§ 51.103 Submission of plans, preliminary review 

of plans

 The state makes an official plan submission to 

EPA only when the submission conforms to the 

requirements of Part 51, Appendix V.

 The state delivers 5 copies of the plan with a 

letter giving notice of the action to the EPA 

regional office.

Please see section IV.A of this TSD for the 

evaluation of this SIP revision with respect to the 

Part 51, Appendix V Checklist.

The SIP submission meets the requirements for 

completeness.

§ 51.104 Revisions

 States may revise the plan from time to time

 EPA will approve revisions only after 

appropriate public hearing requirements have 

been met

 Revisions must be submitted in accordance 

with 51.103

TCEQ submitted the revisions to the DERC 

Program on October 24, 2006. This SIP revision, 

as demonstrated previously in this table and section 

IV.A of this document, has satisfied the public 

hearing requirements of § 51.102 and the 

requirements of § 51.103.

Subpart G – Control Strategy Subpart G – Control Strategy

§ 51.110 Attainment and Maintenance of National 

Standards

Requirements found in § 51.110 are not applicable 

to the SIP submittal under review in this document. 

The DERC Program is a discretionary EIP that 

provides for the voluntary generation and use of 

discrete emission reduction credits. The DERC 

Program is not an integral control strategy in any

of the Texas Attainment Demonstrations. 

However, EPA expects the TCEQ to account for the 

generation and use of DECs in all attainment 

demonstrations.

§ 51.111 Description of Control Measures Requirements found in § 51.110 are not applicable 

to the SIP submittal under review in this document. 

The DERC Program does not establish control 

strategies for Texas, rather the programs provides 

for the voluntary generation and use of DECs.

§ 51.112 Demonstration of Adequacy Requirements found in § 51.112 are not applicable 

to the SIP submittal under review in this document. 

Since the DERC program is not an integral piece of 

an attainment strategy, it is not necessary that the 

DERC program demonstrate adequacy for 

maintaining a national standard.

§ 51.113 Reserved Not applicable.

§ 51.114 Emissions Data and Projections Requirements found in § 51.114 are not applicable 

to the SIP submittal under review in this document. 

As the DERC program is not part of an attainment 

demonstration, the DERC program SIP revision 

does not need to provide a detailed emission 

inventory and summary of projected emission levels 

after the implementation of control strategies.

However, the DERC program does require that 

generators and users submit applications to the 

TCEQ that estimate and verify the emission 

reductions that are generated and/or used.

22
§ 51.115 Air Quality Data and Projections Requirements found in § 51.115 are not applicable 

to the SIP submittal under review in this document. 

The DERC program is not part of an attainment 

plan, therefore it is not necessary that the DERC 

revision SIP submittal include data on existing air 

quality or summarize expected air quality impacts 

from the implementation of control strategies.

§ 51.116 Data Availability

The State must make available to the public all data 

and calculations used in the preparation of each 

plan or plan revision.

Each plan must provide for public availability of 

emission data reported by source owners or 

operators.

Requirements found in § 51.116 are applicable to 

the DERC program SIP revision.

The TCEQ provided the public the opportunity to 

participate in stakeholder meetings in the 

rulemaking development process, and the public 

received comment periods on the proposed plan.

The Texas Clean Air Act, Texas Health and Safety

Code at Section 382.040 requires that all 

information submitted to the TCEQ for compliance 

purposes be made available to the public, unless a 

written request for nondisclosure is approved. 

§ 51.117 Additional provisions for lead Requirements found in § 51.117 are not applicable 

to the SIP submittal under review in this document. 

The DERC program at § 101.372(a) does not list 

lead as an applicable pollutant under the program.

§ 51.118 Stack Height Provisions Requirements found in § 51.118 are not applicable 

to the SIP submittal under review in this document. 

The DERC program is a discretionary program for 

voluntary generation and use of DECs and does not 

involve good engineering practices for stack 

heights.

§ 51.119 Intermittent Control Systems Requirements found in § 51.119 are not applicable 

to the SIP submittal under review in this document. 

The DERC program is a discretionary program for 

voluntary generation and use of DECs and does not 

require intermittent control systems.

§ 51.120 Requirements for State Implementation 

Plan Revisions relating to Motor Vehicles

Requirements found in § 51.120 are not applicable 

to the SIP submittal under review in this document. 

The DERC program does provide for the 

generation and use of mobile discrete emission 

reductions, but that is not related to the part 51 

requirements for SIP revisions relating to motor 

vehicles.

§ 51.121 Findings and requirements for 

submission of State Implementation Plan Revisions 

relating to emissions of oxides of nitrogen

Requirements found in § 51.121 are not applicable 

to the SIP submittal under review in this document. 

§ 51.121 establishes the requirements for the NOX

SIP Call; Texas was not subject to the NOX SIP 

Call.

§ 51.122 Emissions reporting requirements for SIP 

revisions relating to budgets for NOX emissions.

Requirements found in § 51.122 are not applicable 

to the SIP submittal under review in this document. 

§ 51.122 establishes the emission reporting 

requirements for the NOX SIP Call; Texas was not 

subject to the NOX SIP Call.

23
§ 51.123 Findings and requirements for 

submission of State Implementation Plan Revisions 

relating to Emissions of Oxides of Nitrogen 

pursuant to the Clean Air Interstate Rule

Requirements found in § 51.123 are not applicable 

to the SIP submittal under review in this document. 

§ 51.123 establishes the requirements for the NOX

Annual and Ozone season programs for the Clean 

Air Interstate Rule (CAIR).

§ 51.124 Findings and requirements for 

submission of State Implementation Plan Revisions 

relating to Emissions of Sulfur Dioxide pursuant to 

the Clean Air Interstate Rule

Requirements found in § 51.124 are not applicable 

to the SIP submittal under review in this document. 

§ 51.124 establishes the program requirements for 

the CAIR SO2 Programs.

§ 51.125 Emissions reporting requirements for SIP 

revisions relating to budgets for SO2 and NOX

emissions.

Requirements found in § 51.125 are not applicable 

to the SIP submittal under review in this document. 

§ 51.125 establishes the emission reporting 

requirements for the CAIR NOX and SO2 trading 

programs.

Subpart H – Prevention of Air Pollution Emergency

Episodes

Requirements found in 51, Subpart H are not 

applicable to the SIP submittal under review in this 

document. The DERC program is a discretionary

program for the generation and use of DECs and is

not part of the Texas air pollution emergency

episode plan.

Subpart I – Review of New Sources and 

Modifications

§ 101.376(b)(2) provides that DECs can be used as 

NSR permit offsets. 

§ 101.376(c)(2) prohibits the use of DECs for NSR 

netting.

EPA reviewed the use of DERCs and MDERCs as 

NSR offsets as part of our final conditional 

approval, and found this provision of the DERC 

program to meet the NSR offset requirements of 

section 173 of the CAA and 51.165. The revisions 

to the DERC program submitted in this SIP 

submittal do not revise § 101.376(b)(2) or (c)(2). 

Subpart J – Ambient Air Quality Surveillance Requirements found in 51, Subpart J are not 

applicable to the SIP submittal under review in this 

document. Ambient air quality surveillance is not 

part of the DERC program.

Subpart K – Source Surveillance Subpart K – Source Surveillance

§ 51.210 Each plan must provide for monitoring 

the status of compliance with rules and regulations 

that set forth any portion of the control strategy.

The Texas DERC program was developed and 

submitted in accordance with the Texas Health and 

Safety Code. Texas enforcement provisions are not 

typically in the State’s individual rules but are 

separately codified. Texas Water Code Chapter 7 

contains the State’s statutory provisions for 

enforcement of programs developed according to 

the Texas Health and Safety Code; i.e, the Texas 

DERC program. Section 382.111 of the Texas 

Health and Safety Code provides the ability to enter 

and periodically inspect stationary sources. Section 

382.021 establishes that the Texas Commission on 

Environmental Quality can determine the necessary

sampling and detection methods used to 

demonstrate compliance with an emission 

limitation. 

§ 51.211 The plan must provide for legally

enforceable procedures for requiring stationary

sources to maintain records and report the 

following to the State:

 Information on the nature and amount of 

emissions from the stationary source; and

 Other information as necessary for the State to 

determine whether the sources are in 

compliance.

24
§ 51.212 The plan must provide for periodic testing 

and inspection of stationary sources. Additionally, 

the plan must establish a system for detecting 

violations and include enforceable test methods.

§ 51.213 The plan must contain procedures for 

obtaining and maintaining data on actual emissions 

reductions achieved as a result of implementing 

transportation control measures.

§ 51.213 is not applicable to the DERC program. 

While the DERC program does provide for the 

generation and use of mobile discrete emission 

reductions, these reductions must be surplus to 

transportation control measures in the SIP.

§ 51.214 The plan must contain legally enforceable 

procedures to require stationary sources subject to 

emission standards as part of the applicable plan to 

install, calibrate, maintain, and operate continuous 

emission monitoring systems.

The DERC program does not establish emission 

standards under the Texas SIP that would mandate 

the installation or use of continuous emission 

monitoring systems. However, section

101.372(d)(2) provides the quantification 

procedures for DECs, and continuous monitoring 

data is an acceptable data source for actual 

emissions data in the event that the SIP approved 

testing and monitoring methods in Chapter 115 

and Chapter 117 are not available.

Subpart L – Legal Authority Subpart L – Legal Authority

§ 51.230 Each plan must show that the State has 

the necessary legal authority to carry out the plan, 

including the authority to adopt emission standards 

and limitations necessary for attainment of the 

NAAQS, enforce applicable laws and regulations 

and seek injunctive relief.

The DERC program was developed and submitted 

in accordance with the Texas Clean Air Act, 

Chapter 382 of the Texas Health and Safety Code. 

The Texas Health and Safety Code and the 

enforcement provisions in the Texas Water Code 

provide TCEQ the necessary legal authority to 

implement the SIP. A more detailed discussion 

immediately follows this table.

§ 51.231 The provision of law or regulation which 

the State determines provides the authorities 

required must be specifically identified and copies 

must be submitted with the plan. 

Texas identified in the submittal package that the 

SIP revision was developed in accordance with the 

Texas Health and Safety Code. EPA Region 6 does 

not require the State to submit copies of laws and 

regulations that have been submitted for prior SIP 

submittals. 

§ 51.232 A state government agency other than the 

State air pollution control agency may be assigned 

responsibility for carrying out a portion of the plan.

The DERC Program SIP revisions identified the 

TCEQ as the agency responsible for implementing 

the SIP.

Subpart M – Intergovernmental Consultation

Each plan must identify organizations by title that 

will participate in the development, 

implementation, and enforcement of the plan.

The DERC Program SIP revision identified the 

TCEQ as the agency responsible for developing, 

implementing, and enforcing the SIP.

25
Subpart N – Compliance Schedule The DERC program establishes an economic 

incentive program for the voluntary generation and 

use of DECs. This program does not establish a 

compliance schedule for any NAAQS, and 

therefore does not need to address the requirements 

of 40 CFR part 51, subpart N. 

However, the DERC program provides mechanisms 

by which users of DECs must demonstrate they 

have enough credits to cover their use obligations, 

see section 101.376. Section 101.379 provides for 

program audits and reporting through which the 

TCEQ will demonstrate to EPA and the public that 

the DERC program is operating effectively. 

Subpart O – Miscellaneous Plan Content 

Requirements

The DERC program SIP revision identified that no 

fiscal implications are anticipated for TCEQ or any

other state/local government through the 

implementation of these rules. Additionally, it was 

estimated that the public benefit as a result of 

implementing these revisions would be a continued 

reduction in air contaminants.

Subpart P – Protection of Visibility The DERC program SIP revision is not submitted 

as part of Texas’s plan to protect visibility. 

Subpart Q – Reports The DERC program SIP revision does not revise 

the existing reporting requirements for the 

emission inventory in the Texas SIP. EPA 

approved the emission inventory requirements at 30 

TAC 101.10 on August 26, 1994 (59 FR 44036).

Subpart R – Extensions Requirements found in 51, Subpart R are not 

applicable to the SIP submittal under review in this 

document. The DERC program SIP revision

submittal is not a request for an 18-month 

extension.

Subpart S – Inspection/Maintenance Program 

Requirements

Requirements found in 51, Subpart S are not 

applicable to the SIP submittal under review in this 

document. The DERC program establishes

discretionary economic incentive programs and is

not related to an inspection/maintenance program.

Subpart T – Conformity to State or Federal 

Implementation Plans of Transportation Plans, 

Programs, and Projects Developed, Funded, or 

Approved Under Title 23 U.S.C or the Federal 

Transit Laws

The DERC program does not interfere with the 

transportation conformity budgets developed for 

each nonattainment and maintenance area pursuant 

to subpart T. The DERC program provides that 

mobile sources can generate mobile discrete 

emission reduction credits, but these credits most 

be surplus to the baseline emissions in the SIP 

(section 101.374(b)).

26
Subpart U – Economic Incentive Programs 40 CFR part 51, subpart U establishes requirements 

for statutorily mandated economic incentive 

programs under sections 182(g)(3), 182(g)(5), 

187(d)(3), or 187(g) of the CAA. The DERC 

program is a discretionary economic incentive 

program, and therefore not subject to the 

requirements of subpart U.

Subpart W – Determining Conformity of General 

Federal Actions to State or Federal Implementation 

Plans

The DERC program does not interfere with the 

requirements for general conformity in subpart W. 

All discrete emission reductions, whether from 

stationary or mobile sources, must be surplus to the 

baseline emissions in the SIP.

Subpart X – Provisions for Implementation of 8-hr 

Ozone NAAQS

Requirements found in 51, Subpart X are for the 

implementation of the 8-hour ozone NAAQS. 

While DECs can be generated and used in 8-hour 

nonattainment areas, the DERC program is not part 

of the implementation of the 8-hour ozone 

standard. EPA expects that the TCEQ will account 

for the generation and use of DECs in all 8-hour 

attainment demonstrations.

Subpart Y – Mitigation Requirements The Chapter 101 revisions do not create procedures 

by which Texas could exclude air quality data due 

to exceptional events.

Subpart Z – Provisions for Implementation of 

PM2.5 National Ambient Air Quality Standards

Requirements found in 51, Subpart X are for the 

implementation of the PM2.5 NAAQS. The 

Chapter 101 revisions do not establish procedures 

for implementing the PM2.5 NAAQS.

Does TCEQ have the necessary legal authority to implement the revisions to 30 TAC 

Sections 101.372, 101.373, 101.375, 101.376, and 101.378 as part of the SIP?

Texas enforcement provisions are not typically in the State’s individual rules but are 

separately codified. Texas Water Code Chapter 7 contains the State’s statutory provisions 

for enforcement of the Texas DERC Program. In particular, TWC § 7.051 provides for 

the assessment of administrative penalties by the TCEQ, and § 7.032 provides for 

injunctive relief by the TCEQ. The TCEQ enforcement rule at 30 TAC § 70.5 

incorporates remedies found in the state statutes (Texas Water Code and the Texas Health 

and Safety Code), and permits referrals to EPA for civil, judicial or administrative action. 

It is our conclusion that TCEQ has adequate legal authority to enforce the DERC program

revisions as part of the SIP. Once we approve the revisions to the DERC program into 

the SIP, EPA will be able to enforce it under section 113 of the Clean Air Act.

The 40 CFR part 70, / CAA Title V operating permits program and the 40 CFR part 63, 

National Emission Standards for Hazardous Air Pollutants (NESHAPs) have been 

reviewed and found to have sufficient enforcement provisions. These same enforcement 

provisions will apply to the DERC Program. The Office of the Attorney General of the 

State of Texas has provided written opinions for these programs. The opinions state that 

27
TCEQ has the necessary legal authority to implement and enforce the programs. TCEQ 

has the authority to have reasonable requirements for measuring and monitoring air 

emissions and to require owners and operators of sources to make and maintain records of 

the emissions. 

The Office of the Attorney General of the State of Texas cited State laws and regulations 

that regulate, at a minimum, the same sources as the Clean Air Act and do so with 

standards that are no less stringent than those specified by the CAA. The cited laws and 

regulations are: Texas Health and Safety Code Ann. sections 382.016 (Monitoring 

Requirements, Examination of Records), 382.021 (Sampling Methods and Procedures), 

382.0514 (Sampling, Monitoring and Certification); 30 TAC sections 122.132 

(Application and Required Information for Initial Permit Issuance, Reopening, Renewal, 

or General Operating Permits), 122.134 (Complete Application), 122.136 (Application 

Deficiencies), 122.142 (Permit Content Requirements), 122.143 (General Terms and 

Conditions), 122.144 (Recordkeeping Terms and Conditions), 122.145 (Reporting Terms 

and Conditions), 122.146 (Compliance Certification Terms and Conditions), 122.165 

(Certification by Responsible Official; 30 TAC sections 101.8 (Sampling), 101.9 

(Sampling Ports).

Recordkeeping requirements specific to the DERC rule are set forth at § 101.372(h). The 

Attorney General has determined that TCEQ is allowed to prescribe sampling methods 

and procedures to be used to determine violations of and compliance with the TCEQ rules 

and orders. The DERC rule provides that any use of monitoring protocols other than

those specified in Chapter 115 and Chapter 117 will be approved by EPA 

(§ 101.372(d)(1)). The rules also specify procedures in the event that monitoring and 

testing data are unavailable at § 101.372(d)(2). The opinions of the Texas Attorney 

General indicate that TCEQ has the necessary legal authority to implement and enforce the 

DERC program in accordance with the requirements of the Clean Air Act. 

EPA’s guidance on practicable enforceability (provided in the FDMS docket for this 

action) is a series of agency memos on limiting potential to emit. While this guidance is 

not directly applicable to an emissions trading program, the requirements for sufficient 

monitoring do apply to the DERC program. The sources generating and certifying 

emission reductions as DECs must be able to quantify the emission reduction over time. 

The DERC EIP meets EPA’s expectations on practicable enforceability by requiring sites 

to calculate emission reductions using an EPA approved protocol. Facilities subject to the 

control specifications in Chapters 115 and 117 must use the testing and monitoring 

methodologies identified to show compliance with the emission standards. If this 

monitoring or testing data is unavailable or does not exist, the facility may report actual 

emissions for that period of time using the methods listed below in the following order of 

preference:

1. Continuous monitoring data;

2. Periodic monitoring data;

3. Testing data;

28
4. Manufacturer’s data;

5. Material balance.

A facility must submit justification to the TCEQ when not using the monitoring and testing 

protocols in Chapters 115 and 117.

For the above reasons EPA has concluded that the DERC program revisions meet the 

Clean Air Act requirements and EPA EIP Guidance expectations for penalties, corrective 

action, and practicable enforceability in the integrity element of enforceable.

29
IV.A Evaluation of the October 24, 2006 SIP Submittal

3. Evaluation of the October 24, 2006 Revisions to the Texas DERC Program 

with respect to the existing SIP-approved language and the EIP Guidance

The evaluation of the DERC program with respect to the EIP Guidance was conducted 

with our proposed conditional approval on October 5, 2005 (70 FR 58154) and final 

conditional approval of the program on September 6, 2006 (71 FR 52703). The October 

24, 2006, rule package currently under review in this TSD does not change the type of 

program or functionality of the DERC trading program with respect to the EIP Guidance. 

Therefore, the evaluation of the revisions to the DERC program at sections 101.372, 

101.373, 101.375, 101.376, and 101.378 will include a line item comparison of the 

federally approved DERC program and the State’s adopted revisions to determine 

approvability. Approvability of each revision will be based on the EIP Guidance and 

whether the measure strengthens the SIP. Note that this analysis will not reevaluate the 

portions of the DERC program that have not been revised since our final actions on 

September 6, 2006.

Table IV-A3.1: Revisions to § 101.372 – General Provisions

Federally Approved Version

September 6, 2006

71 FR 52703

Adopted State Language

October 4, 2006

Rule Project Number 2005-054-101-PR

(a) Applicable pollutants. Reductions of volatile 

organic compounds (VOC), nitrogen oxides 

(NOX), carbon monoxide (CO), sulfur dioxide 

(SO2), and particulate matter with an 

aerodynamic diameter of less than or equal to a 

nominal ten microns (PM10) may qualify as 

discrete emission credits as appropriate. 

Reductions of other criteria pollutants are not 

creditable. Reductions of one pollutant may not 

be used to meet the reduction requirements for 

another pollutant, unless:

(a) Applicable pollutants. Reductions of volatile 

organic compounds (VOC), nitrogen oxides 

(NOX), carbon monoxide (CO), sulfur dioxide 

(SO2), and particulate matter with an 

aerodynamic diameter of less than or equal to 

a nominal ten microns (PM10) may qualify

as discrete emission credits as appropriate. 

Reductions of other criteria pollutants are 

not creditable. Reductions of one pollutant 

may not be used to meet the reduction 

requirements for another pollutant, unless

urban airshed modeling demonstrates that 

one may be substituted for another subject to 

approval by the executive director and the 

United States Environmental Protection 

Agency (EPA).

(1) urban airshed modeling demonstrates that 

one may be substituted for another subject 

to approval by the executive director and 

the EPA; or

Moved to 101.372(a)

(2) the facility generating the emission 

reductions is located outside the United 

States and:

International trading provisions have been moved 

to 101.375, see discussion below.

(A) the substitution: International trading provisions have been moved 

to 101.375, see discussion below.

30
(i) results in a greater health benefit 

and is of equal or greater benefit to 

the overall air quality of the area, 

as determined by the executive 

director;

International trading provisions have been moved 

to 101.375, see discussion below.

(ii) is from the reduction of a criteria 

pollutant for which the area has 

been designated as nonattainment 

or which leads to the formation of 

a criteria pollutant for which an 

area has been designated as 

nonattainment; and

International trading provisions have been moved 

to 101.375, see discussion below.

(iii) is for any criteria pollutant for 

which the area has been 

designated as nonattainment or 

leads to the formation of a criteria 

pollutant for which the area has 

been designated as nonattainment; 

and

International trading provisions have been moved 

to 101.375, see discussion below.

(B) the user: International trading provisions have been moved 

to 101.375, see discussion below.

(i) demonstrates that the use of the 

reduction does not cause localized 

health impacts, as determined by

the executive director;

International trading provisions have been moved 

to 101.375, see discussion below.

(ii) submits all supporting information 

for calculations and modeling, and 

any additional information 

requested by the executive 

director; and

International trading provisions have been moved 

to 101.375, see discussion below.

(iii) is located within 100 kilometers of 

the Texas - Mexico border.

International trading provisions have been moved 

to 101.375, see discussion below.

(b) Eligible generator categories. Eligible 

categories include the following:

No change

(1) facilities (including area sources); No change

(2) mobile sources; or No change

(3) any facility, including area sources, or 

mobile source associated with actions 

by federal agencies under §101.30 of 

this title (relating to Conformity of 

General Federal Actions to State 

Implementation Plans).

No change

(c) Discrete emission credit requirements. No change

(1) To be creditable as a discrete emission 

reduction credit (DERC), an emission 

reduction must meet the following:

No change

(A) the reduction be real, 

quantifiable, and surplus at the 

time the discrete emission credit 

is generated;

No change

31
(B) the reduction must have 

occurred after the most recent 

year of emissions inventory used 

in the state implementation plan 

(SIP) for all applicable 

pollutants; and

No change

(C) the facility's annual emissions 

prior to the reduction strategy

must have been reported or 

represented in the emissions 

inventory used for the SIP.

No change

(2) To be creditable as a mobile discrete 

emission reduction credit (MDERC), 

an emission reduction must meet the 

following:

No change

(A) the reduction must be real, 

quantifiable, and surplus at the 

time it is created;

No change

(B) the reduction must have 

occurred after the most recent 

year of emissions inventory used 

in the SIP for all applicable 

pollutants;

No change

(C) the mobile source’s emissions 

must have been represented in 

the emissions inventory used for 

the SIP; and

No change

(D) the mobile sources must have 

been included in the attainment 

demonstration baseline 

emissions inventory. If a mobile 

reduction implemented is not in 

the baseline for emissions, this 

reduction does not constitute a 

discrete emission reduction.

No change

(3) Emission reductions from a facility or 

mobile source which are certified as 

discrete emission credits under this 

division cannot be recertified in whole 

or in part as emission credits under 

another division within this 

subchapter.

No change

(d) Protocol. No change

32
(1) All generators or users of discrete 

emission credits must use a protocol 

which has been submitted by the 

executive director to the EPA for 

approval, if existing for the applicable 

facility or mobile source, to measure 

and calculate baseline emissions. If 

the generator or user wishes to deviate 

from a protocol submitted by the 

executive director, EPA approval is 

required before the protocol can be 

used. Protocols shall be used as 

follows.

No change

(A) Facilities subject to the emission 

specifications under §§117.106, 

117.206, or 117.475 of this title 

(relating to Emission 

Specifications for Attainment 

Demonstrations; and Emission 

Specifications) shall quantify

reductions in NOX using the 

testing and monitoring 

methodologies identified to show 

compliance with the emission 

specification.

No change

(B) Facilities subject to the 

requirements under §§115.112, 

115.121, 115.122, 115.162, 

115.211, 115.212, 115.352, 

115.421, 115.541, or 115.542 

(relating to Emission 

Specifications; and Control 

Requirements) shall quantify VOC 

reductions using the testing and 

monitoring methodologies 

identified to show compliance 

with the emission specifications or 

the requirements.

No Change

(C) If the executive director has not 

submitted a protocol for the 

applicable facility or mobile source 

to the EPA for approval, the 

following applies:

No Change

33
(i) the amount of discrete emission 

credits from a facility or mobile 

source, in tons, will be 

determined and certified based 

on quantification methodologies 

at least as stringent as the 

methods used to demonstrate 

compliance with any applicable 

requirements for the facility or 

mobile source;

No Change

(ii) the generator must collect 

relevant data sufficient to 

characterize the facility’s or 

mobile source’s emissions of the 

affected pollutant and the 

facility’s or mobile source’s 

activity level for all 

representative phases of 

operation in order to 

characterize the facility’s or 

mobile source’s baseline 

emissions;

No Change

(iii) facilities with continuous 

emissions monitoring systems or 

predictive emissions monitoring 

systems in place shall use this 

data in quantifying actual 

emissions;

No Change

(iv) the chosen quantification 

protocol shall be made available 

for public comment for a period 

of 30 days and shall be viewable 

on the commission’s web site;

(iv) the chosen quantification protocol shall 

be made available for public comment for 

a period of 30 days and shall be viewable 

on the commission’s Web web site;

(v) the chosen quantification 

protocol and any comments 

received during the public 

comment period shall, upon 

approval by the executive 

director, be submitted to the 

EPA for a 45-day adequacy 

review; and

No Change

(vi) quantification protocols shall 

not be accepted for use with this 

division (relating to Discrete 

Emission Credit Banking and 

Trading) after a proposed 

disapproval of the protocol by

the EPA in the Federal 

Register.

(vi) quantification protocols shall not be 

accepted for use with this division 

(relating to Discrete Emission Credit 

Banking and Trading) if the executive 

director receives a letter objecting to the 

use of the protocol from the EPA during 

the 45-day adequacy review or the EPA 

proposes disapproval of the protocol in 

the Federal Register after a proposed 

disapproval of the protocol by the EPA in 

the Federal Register.

34
(2) In the event that the monitoring and testing 

data required under paragraph (1) of this 

subsection is missing or unavailable, the 

facility may report actual emissions for that 

period of time using these listed methods in 

the following order of preference to 

determine actual emissions:

No Change

(A) continuous monitoring data; No Change

(B) periodic monitoring data; No Change

(C) testing data; No Change

(D) manufacturer’s data; No Change

(E) EPA Compilation of Air Pollution 

Emission Factors (AP-42), 

September 2000; or

No Change

(F) Material balance. No Change

(3) When quantifying actual emissions in 

accordance with paragraph (2) of this 

subsection, the generator shall use the most 

conservative method for replacing the 

missing data, submit the justification for 

not using the methods in paragraph (1) of 

this subsection, and submit the justification 

for the method used.

No Change

(e) Credit certification. No Change

(1) The amount of discrete emission credits 

shall be rounded down to the nearest tenth 

of a ton when generated and shall be 

rounded up to the nearest tenth of a ton 

when used.

No Change

(2) Applications for certification will be 

reviewed in order to determine the 

credibility of the reductions. Reductions 

determined to be creditable will be certified 

by the executive director.

No Change

(3) The applicant will be notified in writing if 

the executive director denies the discrete 

emission credit notification. The applicant 

may submit a revised discrete emission 

credit notification in accordance with the 

requirements of this division.

No Change

(4) If a facility’s or mobile source’s emissions 

exceed its allowable emission limit, the 

amount of emissions exceeding the limit 

may not be certified as discrete emission 

credits.

No Change

35
(f) Geographic scope. Except as provided in 

paragraphs (7) and (8) of this subsection, only

emission reductions generated in the State of 

Texas may be creditable and used in the state 

with the following limitations.

(f) Geographic scope. Except as provided in 

paragraph (7) of this subsection and § 

101.375 of this title (relating to Emission 

Reductions Achieved Outside the United 

States) paragraphs (7) and (8) of this 

subsection, only emission reductions 

generated in the State of Texas may be 

creditable and used in the state with the 

following limitations.

(1) VOC and NOX discrete emission credits 

generated in an ozone attainment area may

be used in any county or portion of a county

designated as attainment or unclassified, 

except as specified in paragraphs (4) and 

(5) of this subsection and may not be used 

in an ozone nonattainment area.

No Change

(2) VOC and NOx discrete emission credits 

generated in an ozone nonattainment area 

may be used either in the same ozone 

nonattainment area in which they were 

generated, or in any county or portion of a 

county designated as attainment or 

unclassified.

No Change

(3) VOC and NOx discrete emission credits 

generated in an ozone nonattainment area 

may not be used in any other ozone 

nonattainment area, except as provided in 

this subsection.

No Change

(4) VOC discrete emission credits are 

prohibited from use within the covered 

attainment counties, as defined in §115.10 

of this title (relating to Definitions), if 

generated outside of the covered attainment 

counties. VOC discrete emission credits 

generated in a nonattainment area may be 

used in the covered attainment counties, 

except those generated in El Paso.

No Change

(5) NOx discrete emission credits are 

prohibited from use within the covered 

attainment counties, as defined in §115.10 

of this title, if generated outside of the 

covered attainment counties. NOx discrete 

emission credits generated in a 

nonattainment area, except those generated 

in El Paso, may be used in the covered 

attainment counties.

No Change

36
(6) CO, SO2 , and PM10 discrete emission 

credits must be used in the same 

metropolitan statistical area (as defined in 

Office of Management and Budget Bulletin 

Number 93-17 entitled "Revised Statistical 

Definitions for Metropolitan Areas" dated 

June 30, 1993) in which the reduction was 

generated.

No Change

(7) VOC and NOx discrete emission credits 

generated in other counties, states, or 

nations may be used in any attainment or 

nonattainment county provided a 

demonstration has been made and approved 

by the executive director and the EPA, to 

show that the emission reductions achieved 

in the other county, state, or nation 

improve the air quality in the county where 

the credit is being used.

(7) VOC and NOx discrete emission credits 

generated in other counties, states, or 

emission reductions in other nations may

be used in any attainment or 

nonattainment county provided a 

demonstration has been made and 

approved by the executive director and 

the EPA, to show that the emission 

reductions achieved in the other county, 

state, or nation improve the air quality in 

the county where the credit is being used.

(8) A facility may use discrete emission 

reductions generated outside the United 

States provided that the emission 

reductions are quantifiable, real, and 

surplus to any applicable international, 

federal, state, or local law and the result 

would provide a greater health benefit to 

the area as determined by the executive 

director. The applicant must:

International trading provisions have been moved 

to 101.375, see discussion below.

(A) demonstrate that the use of the 

reduction does not cause localized 

health impacts, as determined by the 

executive director;

International trading provisions have been moved 

to 101.375, see discussion below.

(B) submit all supporting information for 

calculations and modeling, and any

additional information requested by the 

executive director; and

International trading provisions have been moved 

to 101.375, see discussion below.

(C) be located within 100 kilometers of the 

Texas - Mexico border.

International trading provisions have been moved 

to 101.375, see discussion below.

(g) Ozone Season. In areas having an ozone season 

of less than 12 months (as defined in 40 CFR 

Part 58, Appendix D) VOC and NOx discrete 

emission credits generated outside this ozone 

season may not be used during the ozone 

season.

No Change

37
(h) Recordkeeping. The generator must maintain a 

copy of all notices and backup information 

submitted to the registry for a minimum of five 

years, following the completion of the 

generation period. The user must maintain a 

copy of all notices and backup information 

submitted to the registry for a minimum of five 

years, following the completion of the use 

period. Other relevant reference material or 

raw data must also be maintained on-site by the 

participating facilities or mobile sources. The 

user must also maintain a copy of the 

generator’s notice and backup information for a 

minimum of five years after the use is

completed. The records shall include, but not 

necessarily be limited to:

No Change

(1) the name, emission point number, and 

facility identification number of each 

facility or any other identifying number for 

mobile sources using discrete emission 

credits;

No Change

(2) the amount of discrete emission credits 

being used by each facility or mobile 

source; and

No Change

(3) the specific number, name, or other 

identification of discrete emission credits 

used for each facility or mobile source.

No Change

(i) Public information. All information submitted 

with notices, reports, and trades regarding the 

nature, quantity of emissions, and sales price 

associated with the use of generation of discrete 

emission credits is public information and may

not be submitted as confidential. Any claim of 

confidentiality for this type of information, or 

failure to submit all information may result in 

the rejection of the discrete emission reduction 

application. All nonconfidential notices and 

information regarding the generation, use, and

availability of discrete emission credits may be 

obtained from the registry.

No Change

(j) Authorization to emit. A discrete emission 

credit created under this division is a limited 

authorization to emit the specified pollutants in 

accordance with the provisions of this section, 

the FCAA, and the TCAA, as well as 

regulations promulgated thereunder. A discrete 

emission credit does not constitute a property

right. Nothing in this division should be 

construed to limit the authority of the 

commission or the EPA to terminate or limit 

such authorization.

(j) Authorization to emit. A discrete emission 

credit created under this division is a limited 

authorization to emit the specified pollutants 

in accordance with the provisions of this 

section, the Federal Clean Air Act FCAA, 

and the Texas Clean Air Act TCAA, as well 

as regulations promulgated thereunder. A 

discrete emission credit does not constitute a 

property right. Nothing in this division 

should be construed to limit the authority of 

the commission or the EPA to terminate or 

limit such authorization.

38
(k) Program participation. The executive director 

has the authority to prohibit a company from 

participating in discrete emission credit trading 

as a generator or user, if the executive director 

determines the company has violated the 

requirements of the program or abused the 

privileges provided by the program.

No Change

(l) Compliance burden and enforcement. No Change

(1) The user is responsible for assuring that a 

sufficient quantity of discrete emission 

credits are acquired to cover the applicable 

facility or mobile source’s emissions for the 

entire use period.

No Change

(2) The user is in violation of this section if the 

user does not possess enough discrete 

emission credits to cover the compliance 

need for the use period. If the user 

possesses an insufficient quantity of 

discrete emission credits to cover its 

compliance need, the user will be out of 

compliance for the entire use period. Each 

day the user is out of compliance may be 

considered a violation.

No Change

(3) Users may not transfer their compliance 

burden and legal responsibilities to a third 

party participant. Third party participants 

may only act in an advisory capacity to the 

user.

No Change

(m) Credit ownership. The owner of the initial 

discrete emission credit certificate shall be the 

owner or operator of the facility or mobile 

source creating the emission reduction. The 

executive director may approve a deviation from 

this subsection considering factors such as, but 

not limited to:

No Change

(1) whether an entity other than the owner or 

operator of the facility or mobile source 

incurred the cost of the emission reduction 

strategy; or

No Change

(2) whether the owner or operator of the 

facility or mobile source lacks the potential 

to generate one tenth of a ton of credit.

No Change

TCEQ revised section 101.372 by moving the international trading provisions to new 

section 101.375 in response to EPA’s conditional approval; in our conditional approval we 

recommended restructuring the rules to more clearly identify the international provisions. 

The revisions to the protocol provisions at 101.372(d)(1)(C)(vi) were also made in 

response to EPA’s conditional approval; in our conditional approval we recommended 

revisions to more clearly align the Texas DERC program with the EIP Guidance Section 

5.2(c). 

39
EPA submitted several comments on the revisions to section 101.372 in our May 30, 

2006, comment letter, specifically questioning whether the revisions to 101.372(f)(7) and 

(f)(8) were sufficient to clarify the need for EPA approval for individual transactions 

involving emission reductions generated in another State or Nation, as well as for those 

transactions from one nonattainment area to another or from attainment counties into 

nonattainment areas. TCEQ adequately addressed each submitted comment in the 

Response to Comments summary. 

The revisions to 101.372 are approvable.

Table IV-A3.2: Revisions to § 101.373 – Discrete Emission Reduction Credit 

Generation and Certification

Federally Approved Version

September 6, 2006

71 FR 52703

Adopted State Language

October 4, 2006

Rule Project Number 2005-054-101-PR

(a) Methods of generation No Change

(1) Discrete emission reduction credits 

(DERC) may be generated using one of the 

following methods or any other method 

that is approved by the executive director:

No Change

(A) the permanent shutdown of a facility

that causes a loss of capability to 

reduce emissions;

(A) the permanent shutdown of a facility

that causes a loss of capability to 

reduce emissions;

(B) the installation and operation of 

pollution control equipment that 

reduces emission below the level 

required of the facility; or

 (A) (B) the installation and operation of 

pollution control equipment that 

reduces emission below the level 

required of the facility; or

Previous 101.373(a)(1)(B). No change other than 

numbering.

(C) a change in the manufacturing 

process that reduces emissions below 

the level required of the facility.

 (B) (C) a change in the manufacturing 

process that reduces emissions 

below the level required of the 

facility.

Previous 101.373(a)(1)(C). No change other than 

numbering.

(2) DERCs may not be generated by the 

following strategies:

No Change

(A) temporary shutdown or permanent 

curtailment of an activity at a 

facility;

 (A) permanent or temporary shutdowns

or permanent curtailment of an 

activity at a facility;

Added permanent shutdowns as a prohibited 

generation strategy of DERCs.

40
(B) modification or discontinuation of 

any activity that is otherwise in 

violation of a federal, state, or local 

law;

No Change

(C) emission reductions required to 

comply with any provision under 42 

United States Code (USC), 

Subchapter I regarding tropospheric 

ozone, or 42 USC, Subchapter IV-A 

regarding acid deposition control;

No Change

(D) emission reductions of hazardous air 

pollutants, as defined in 42 USC, § 

7412, from application of a standard 

promulgated under 42 USC, § 7412;

No Change

(E) emission reductions that occurred as 

a result of transferring the emissions 

to another facility at the same site;

No Change

(F) emission reductions credited or used 

under any other emissions trading 

program;

No Change

(G) emission reductions occurring at a 

facility that received an alternative 

emission limitation to meet a state 

reasonably available control 

technology requirement, except to 

the extent that the emissions are 

reduced below the level that would 

have been required had the 

alternative emission limitation not 

been issued;

No Change

(H) emission reductions at a site facility

with a flexible permit, unless the 

reductions are made permanent and 

enforceable or the generator can 

demonstrate that the emission 

reductions were not used to satisfy 

the conditions for the facilities under 

the flexible permit;

No Change

(I) that portion of emission reductions 

funded through a state or federal 

program, unless specifically allowed 

under that program;

No Change

(J) emission reductions from a facility

subject to Division 3 of this 

subchapter (relating to Mass 

Emissions Cap and Trade Program); 

or

No Change

(K) emission reductions from the 

shutdown of a facility that was not 

included in the SIP.

No Change

(b) DERC baeline. No Change

41
(1) The baseline emissions may not exceed the 

quantity of emissions reported in the most 

recent year of emissions inventory used in 

the SIP. For reductions being certified in 

accordance with § 116.170(b) of this title 

(relating to Applicability of Emission 

Reductions as Offsets), the baseline 

emissions may not exceed the quantity of 

emissions reported in the emissions 

inventory used in the SIP in place at the 

time the reduction strategy was 

implemented.

No Change

(2) The two consecutive calendar years for the 

baseline activity and emissions rate must be 

selected from either a period including or 

following the most recent year of emission 

inventory used in the SIP or, if that period 

is less than ten years, the ten consecutive 

years immediately preceding the emission 

reduction.

No Change

(3) For facilities in an area in which a SIP 

demonstration is not required for a criteria 

pollutant, the two consecutive calendar 

years must include or follow the 1990 

emission inventory.

No Change

(4) For reduction strategies that exceed 12 

months, the baseline and SIP emissions 

inventory are established after the first year 

of generation and are fixed for the life of 

the strategy. A new baseline is established 

for each unique emission reduction 

strategy.

No Change

(5) For facilities in existence less than 24 

months or not having two complete 

calendar years of activity data, a shorter 

time period of not less than 12 months may

be considered by the executive director.

No Change

(c) DERC calculation. No Change

(1) DERCs, except for shutdowns, are 

calculated according to the following 

equations:

Figure: 30 TAC § 101.373(c)(1)

No Change

(2) The sum of the reduction generated and the 

total strategy emissions must not be greater 

than the quantity of emissions reported or 

represented in the emissions inventory used 

for SIP determination or the two-year 

average baseline emissions, whichever is 

less.

No Change

42
(3) For shutdown emission reduction 

strategies, the quantity of emission 

reduction generated is equivalent to the 

baseline emissions.

No Change

(4) The generation period for a shutdown is 

five years. Shutdown DERCs must be 

generated and noticed to the registry on an 

annual basis.

No Change

(d) DERC certification. No Change

(1) A DEC-1 Form, Notice of Generation and 

Generator Certification of Discrete 

Emission Credits, must be submitted to the 

executive director no later than 90 days 

after the end of the generation period, or no 

later than 90 days after the completion of 

the first 12 months of generation. 

Submission of the DEC-1 Form should 

continue every 12 months thereafter for 

each subsequent year of generation.

No Change

(2) DERCs shall be quantified in accordance 

with § 101.372(d) of this title (relating to 

General Provisions). The executive 

director shall have the authority to inspect 

and request information to assure that the 

emission reductions have actually been 

achieved.

No Change

(3) An application for DERCs must include, 

but is not limited to, a completed DEC-1 

Form signed by an authorized 

representative of the applicant along with 

the following information for each 

pollutant reduced as each applicable 

facility:

No Change

(A) the generation period; No Change

(B) a complete description of the 

generation activity;

No Change

(C) for shutdown emission reduction 

strategies, an explanation as to 

whether production shifted from the 

shutdown facility to another facility

at the same site;

No Change

(D) the amount of discrete emission 

credits generated;

No Change

(E) for volatile organic compound 

reductions, a list of the specific 

compounds reduced;

No Change

(F) documentation supporting the 

baseline emission activity, baseline 

emission rate, emission reduction 

strategy emission rate, and emission 

reduction strategy activity;

No Change

43
(G) emissions inventory data from the 

most recent year of emissions 

inventory used in the SIP and 

emissions inventory data for the two 

consecutive years used to determine 

the baseline activity for each 

applicable pollutant and emission 

point;

No Change

(H) the most stringent emission rate 

for the applicable facility, 

considering all the local, state, and 

federal applicable regulatory and 

statutory requirements;

No Change

(I) a complete description of the 

protocol used to calculate the 

emission reduction generated; and

No Change

(J) the actual calculations performed 

by the generator to determine the 

amount of discrete emission credits 

generated.

No Change

The revisions to section 101.373 revise the allowable and prohibited generation strategies 

for DERCs to reflect that permanent shutdowns are a prohibited strategy and make the 

necessary formatting revisions to capture this change. This revision is consistent with the 

EIP Guidance, Section 7.5(b) and with our conditional approval of the DERC program. 

The revisions to section 101.373 are approvable.

Table IV-A3.3: New § 101.375 – Emission Reductions Achieved Outside the United 

States

Adopted State Language

October 4, 2006

Rule Project Number 2005-054-101-PR

(a) A facility may use emission reductions achieved outside the United States of criteria pollutants or 

precursors of criteria pollutants if the facility meets the requirements of subsection (c) of this section.

(b) A facility may use emission reductions achieved outside the United States of criteria pollutants or 

precursors of criteria pollutants and substitute these reductions for reductions in other criteria 

pollutants or precursors of criteria pollutants if the facility meets the requirements of subsection (c) of 

this section; and

(1) the reduction is substituted for the reduction of another criteria pollutant and the substitution 

results in a greater health benefit and is of equal or greater benefit to the overall air quality of the 

area; or

(2) a reduction of an air contaminant for which the area in which the facility is located has been 

designated as nonattainment or which leads to the formation of a criteria pollutant for which an 

area has been designated as nonattainment is substituted for any air contaminant for which the 

area has been designated as nonattainment or leads to the formation of any criteria pollutant for 

which the area has been designated as nonattainment.

(c) The use of reductions outside the United States must be approved by the executive director and the 

United States Environmental Protection Agency (EPA), and the user of the emission reduction must:

44
(1) demonstrate to the executive director and EPA that the reduction is real, permanent, enforceable, 

quantifiable, and surplus to any applicable Mexican, federal, state, or local law;

(2) demonstrate that the use of the reduction does not cause localized health impacts, as determined 

by the executive director and EPA;

(3) submit all supporting information for calculations and modeling, and any additional information 

requested by the executive director and EPA; and

(4) be located within 100 kilometers of the Texas-Mexico border.

(d) This section does not apply to reductions in emissions of lead.

TCEQ created new section 101.375 in response to EPA’s conditional approval of the 

DERC rule in which we requested more clarity that EPA approval is required for the 

international trading provisions in the DERC program. EPA approved international 

reduction language on September 6, 2006 in our original DERC approval. At the time of 

our conditional approval, section 101.372(a)(2) established requirements for substituting 

one pollutant for another and section 101.372(f) provided the geographic restrictions for 

using international emission reductions. The October 4, 2006 revisions to the DERC 

program moved the international provisions to new section 101.375. 

Section 101.375 does not provide that a reduction in Mexico will be certified as a DERC 

in the TCEQ Emissions Bank, rather the reductions in Mexico would be used by a Texas 

source in lieu of a DERC. The Mexican reductions can be used to meet requirements for 

criteria pollutants or precursors (VOC reductions used for ozone requirements) or can be 

substituted for a criteria pollutant requirement in Texas. In either case, the use of Mexican 

reductions must be approved by the Executive Director and the EPA. The user must also 

demonstrate that the reductions are real, permanent, enforceable, quantifiable, and surplus 

to any applicable Mexican, federal, state, or local law; demonstrate that the use does not 

cause localized health impacts; and be located within 100km of the Texas-Mexico border.

EPA commented on May 30, 2006, that this new section 101.375 appeared to expand the 

DERC rule beyond its intended scope and could pose section 110(l) concerns because it 

was outside of our original approval of the DERC program (although the DERC program 

in general applied statewide regardless of attainment status, the use of international 

reductions was approved only for nonattainment areas along the border, i.e, El Paso). 

TCEQ’s response to comments on this rulemaking states “The Mexican emission 

reductions are not certifiable as credits and may only be applied for a specific use in an 

area of Texas affected by emissions or where a greater health benefit, as determined by the 

executive director and the EPA, is realized. Because each generation and use will be 

subjected to case-by-case review by both the executive director as well as the EPA to 

ensure a greater health benefit, FCAA § 110(l) will not be violated.”

EPA finds that new section 101.375 has expanded the scope of our original DERC 

program conditional approval because it does allow the use of international reductions in 

lieu of DERCs to occur in attainment or nonattainment areas within 100-km of the TexasMexico border. However the continued requirement at section 101.375 for EPA approval 

before any such use is consistent with the intent of our DERC program approval on 

45
September 6, 2006. EPA approval continues to be through a case-specific SIP revision 

that must clearly demonstrate through a detailed 110(l) analysis that the use of such 

international reductions will not jeopardize attainment or maintenance of the NAAQS or 

any other applicable standards. As noted in our September 6, 2006, final conditional 

approval of the DERC Program “...international trades present an especially difficult case. 

For instance, currently there is no approvable mechanism for demonstrating that 

reductions made in another country are surplus or enforceable. Nonetheless, emission 

reductions in other countries could potentially offer substantial air quality benefits in the 

United States.” See 71 FR 52703, 52705. In approving this revision to the DERC 

program, EPA is continuing to recognize “the concept of international trading and 

describing a framework (i.e., the submission of a SIP revision demonstrating, among other 

things, the validity and enforceability of foreign reductions) for such trading, in the event 

that a suitable and approvable mechanism is ever developed for resolving concerns 

including enforceability and surplus. Until such a mechanism is developed and approved 

by EPA, however, EPA will not approve international trades under the DERC rule.” See 

71 FR 52703, 52705. Further, it is important to note, that even though we are approving 

the use of international reductions in lieu of DERCs along the Texas-Mexico border, the 

use of these reductions must still meet the requirements of the CAA. Therefore, the 

international reductions are not available for use as federal NSR offsets since section 

173(c)(1) of the CAA requires that offset reductions come from the same nonattainment 

area as the proposed source or modification or another nonattainment area with an equal 

or higher nonattainment classification.

In addition to the expansion of scope concern highlighted previously, EPA also made 

several other comments regarding new section 101.375 in our May 30, 2006, comment

letter. These additional comments suggested alternate wording and requested clarification 

from TCEQ. The TCEQ adequately addressed these comments and revised the proposed 

section accordingly.

The provisions at new section 101.375 are approvable with the caveats specified above for 

EPA approval of any trades involving international emission reductions.

Revisions to § 101.376 – Discrete Emission Credit Use

Federally Approved Version

September 6, 2006

71 FR 52703

Adopted State Language

October 4, 2006

Rule Project Number 2005-054-101-PR

(a) Requirements to use discrete emission credits. 

Discrete emission credits may be used if the 

following requirements are met.

No Change

(1) The user shall have ownership of a 

sufficient amount of discrete emission 

credits before the use period for which the 

specific discrete emission credits are to be 

used.

No Change

46
(2) The user shall hold sufficient discrete 

emission credits to cover the user’s 

compliance obligation at all times.

No Change

(3) The user shall acquire additional discrete 

emission credits during the use period if it 

is determined the user does not possess 

enough discrete emission credits to cover 

the entire use period. The user shall 

acquire additional credits as allowed under 

this section prior to the shortfall, or be in 

violation of this section.

No Change

(4) Facility or mobile source operators may 

acquire and use only discrete emission 

credits listed on the registry.

No Change

(b) Use of discrete emission credits. With the 

exception of uses prohibited in subsection (c) of 

this section or precluded by commission order 

or condition within an authorization under the 

same commission account number, discrete 

emission credits may be used to meet or 

demonstrate compliance with any facility or 

mobile regulatory requirement including the 

following:

No Change

(1) to exceed any allowable emission level, if 

the following conditions are met:

No Change

(A) in ozone nonattainment areas, 

permitted facilities may use discrete 

emission credits to exceed permit 

allowables by no more than ten tons 

for NOx or five tons for VOCs in a 

12-month period as approved by the 

executive director. This use is 

limited to one exceedance, up to 12 

months, within any 24-month 

period, per use strategy. The user 

shall demonstrate that there will be 

no adverse impacts from the use of 

discrete emission credits at the levels 

requested; or

No Change

47
(B) at permitted facilities in counties 

or portions of counties designated as 

attainment or unclassified, discrete 

emission credits may be used to 

exceed permit allowables by values 

not to exceed the PSD significance 

levels as provided in 40 CFR 

52.21(b)(23), as approved by the 

executive director prior to use. This 

use is limited to one exceedance, up 

to 12 months, within any 24-month 

period, per use strategy. The user 

shall demonstrate that there will be 

no adverse impacts from the use of 

discrete emission credits at the levels 

requested;

No Change

(2) as new source review (NSR) permit offsets, 

if the following requirements are met:

No Change

(A) the user shall obtain the executive 

director’s approval prior to the use 

of specific discrete emission credits 

to cover, at a minimum, one year of 

operation of the new or modified 

facility in the NSR permit;

No Change

(B) the amount of discrete emission 

credits needed for NSR offsets 

equals the quantity of tons needed to 

achieve the maximum allowable 

emission level set in the user’s NSR 

permit. The user shall also purchase 

and retire enough discrete emissions 

credits to meet the offset ratio 

requirement in the user’s ozone 

nonattainment area. The user shall 

purchase and retire either the 

environmental contribution of 10% 

or the offset ratio, whichever is 

higher; and

No Change

(C) the NSR permit must meet the 

following requirements:

No Change

(i) the permit must contain an 

enforceable requirement that the 

facility obtain at least one 

additional year of offsets before 

continuing operation in each 

subsequent year;

No Change

(ii) prior to issuance of the permit the 

user shall identify the discrete 

emission credits; and 

No Change

48
(iii) prior to start of operation the user 

shall submit a completed DEC-2 

Form, Notice of Intent to Use 

Discrete Emission Credits, along 

with the original certificate; 

No Change

(3) to comply with the Mass Emissions Cap 

and Trade Program requirements as 

provided in § 101.356(g); or

No Change

(4) to comply with Chapters 114, 115, and 117 

of this title, as allowed.

No Change

(c) Discrete emission credit use prohibition. A 

discrete emission credit may not be used under 

this division:

No Change

(1) before it has been acquired by the user; No Change

(2) for netting to avoid the applicability of 

federal and state NSR requirements;

No Change

(3) to meet (as codified in 42 USC) FCAA 

requirements for;

No Change

(A) NSPS standards, § 111; No Change

(B) LAER standards, § 173(a)(2); No Change

(C) BACT, § 165(a)(4); No Change

(D) HAPs, § 112 including the 

requirements for MACT;

No Change

(E) Standards for solid waste 

combustion, § 129;

No Change

(F) Requirements for vehicle 

inspection and maintenance, § 

182(b)(4) or (c)(3);

No Change

(G) Ozone control standards, § 183(e) 

and (f);

No Change

(H) Clean-fueled vehicle requirements, 

§ 246;

No Change

(I) Motor vehicle emission standards, 

§ 202;

No Change

(J) Standards for non-road vehicles, § 

213;

No Change

(K) Requirements for reformulated 

gasoline, § 211(k)

No Change

(L) Requirements for Reid vapor 

pressure standards, § 211(h) and (i);

No Change

49
(4) to allow an emissions increase of an air 

contaminant above a level authorized in a 

permit or other authorization that exceeds 

the limitations of § 106.261(3) or (4) or § 

106.262(3) of this title, except as approved 

by the executive director. This paragraph 

does not apply to limit the use of discrete 

emission reduction credits (DERCs) or 

mobile discrete emission reduction credits 

(MDERCs) in lieu of allowances under § 

101.356(h).

(4) to allow an emissions increase of an air 

contaminant above a level authorized in 

a permit or other authorization that 

exceeds the limitations of § 106.261(3) 

or (4) or § 106.262(3) of this title, except 

as approved by the executive director and 

the United States Environmental 

Protection Agency. This paragraph does 

not apply to limit the use of discrete 

emission reduction credits (DERC) or 

mobile discrete emission reduction 

credits (MDERC) in lieu of allowances 

under § 101.356(h).

(5) to authorize a facility whose emissions are 

enforceable limited to below applicable 

major source threshold levels, as defined in 

§ 122.10, to operate with actual emissions

above those levels without triggering 

applicable requirements that would 

otherwise be triggered by such major 

source status; or

No Change

(6) to exceed an allowable emission level 

where the exceedance would cause or 

contribute to a condition of air pollution as 

determined by the executive director.

No Change

(d) Notice of intent to use. No Change

(1) A completed DEC-2 Form, signed by an 

authorized representative of the applicant 

shall be submitted to the executive director 

in accordance with the following 

requirements.

No Change

(A) Discrete emission credits may be 

used only after the applicant has 

submitted the notice and received 

executive director approval.

No Change

(B) The application must be submitted 

at least 45 days prior to the first day

of the use period if the discrete 

emission credits were generated 

from a facility, 90 days if the 

discrete emission credits were 

generated from a mobile source, and 

every 12 months thereafter for each 

subsequent year if the use period 

exceeds 12 months.

No Change

(C) A copy of the application shall 

also be sent to the federal land 

manager 30 days prior to use if the 

user is located within 100 kilometers 

of a Class I area, as listed in 40 CFR 

Part 81.

No Change

50
(D) The application must include, but 

is not limited to, the following 

information for each use:

No Change

(i) the applicable state and federal 

requirements that the discrete 

emission credits will be used to 

comply with and the intended use 

period;

No Change

(ii) the amount of discrete emission 

credits needed;

No Change

(iii) the baseline emission rate, activity

level, and total emissions for the 

applicable facility or mobile 

source;

No Change

(iv) the actual emission rate, activity

level, and total emissions for the 

applicable facility or mobile 

source;

No Change

(v) the most stringent emission rate 

and the most stringent emission 

level for the applicable facility or 

mobile source, considering all 

applicable regulatory

requirements;

No Change

(vi) a complete description of the 

protocol, as submitted by the 

executive director to the EPA for 

approval, used to calculate the 

amount of discrete emission 

credits needed;

No Change

(vii)the actual calculations performed 

by the user to determine the 

amount of discrete emission 

credits needed;

No Change

(viii) the date that the discrete 

emission credits were acquired or 

will be acquired;

No Change

(ix) the discrete emission credit 

generator and the original 

certificate of the discrete emission 

credits acquired or to be acquired;

No Change

(x) the price of the discrete emission 

credits acquired or the expected 

price of the discrete emission 

credits to be acquired, except for 

transfers between sites under 

common ownership or control;

No Change

51
(xi) a statement that due diligence was 

taken to verify that the discrete 

emission credits were not 

previously used, the discrete 

emission credits were not 

generated as a result of actions 

prohibited under this regulation, 

and the discrete emission credits 

will not be used in a manner 

prohibited under this regulation; 

and

No Change

(xii)a certification of use, that must 

contain certification under penalty

of law by a responsible official of 

the user of truth, accuracy, and 

completeness. This certification 

must state that based on 

information and belief formed 

after reasonable inquiry, the 

statements and information in the 

document are true, accurate, and 

complete.

No Change

(2) DERC use calculation. No Change

(A) To calculate the amount of 

discrete emission credits necessary

to comply with § 117.108, 117.138, 

117.210, or 117.223, a user may use 

the equations listed in those sections, 

or the following equations.

No Change

(i) For the rolling average cap:

Figure: 30 TAC § 101.376(d)(2)(A)(i)

No Change

(ii) For maximum daily cap:

Figure: 30 TAC § 101.376(d)(2)(A)(ii)

No Change

(B) The amount of discrete emission 

credits needed to demonstrate 

compliance or meet a regulatory

requirement is calculated as follows.

Figure: 30 TAC § 101.376(d)(2)(B)

No Change

(C) The amount of discrete emission 

credits needed to exceed an 

allowable emissions level is 

calculated as follows.

Figure: 30 TAC § 101.376(d)(2)(C)

No Change

(D) The user shall retire 10% more 

discrete emission credits than are 

needed, as calculated in this 

paragraph, to ensure that the facility

or mobile source environmental 

contribution retirement obligation 

will be met.

No Change

52
(E) If the amount of discrete emission 

credits needed to meet a regulatory

requirement or to demonstrate 

compliance is greater than ten tons, 

an additional 5.0% of the discrete 

emission credits needed, as 

calculated in this paragraph, must be 

acquired to ensure that sufficient 

discrete emission credits are 

available to the user with an 

adequate compliance margin.

No Change

(3) A user may submit a notice late in the case 

of an emergency, but the notice must be 

submitted before the discrete emission 

credits can be used. The user shall include 

a complete description of the emergency

situation in the notice of intent to use. All 

other notices submitted less than 45 days 

prior to use, or 90 days prior to use for a 

mobile source, will be considered late and 

in violation.

No Change

(4) The user is responsible for determining the 

credits it will purchase and notifying the 

executive director of the selected 

generating facility or mobile source in the 

notice of intent to use. If the generator’s 

credits are rejected or the notice of 

generation is incomplete, the use of discrete 

emission credits by the user may be delayed 

by the executive director. The user cannot 

use any discrete emission credits that have 

not been certified by the executive director. 

The executive director may reject the use of 

discrete emission credits by a facility or 

mobile source if the credit and use cannot 

be demonstrated to meet the requirements 

of this section.

No Change

(5) If the facility is in an area with an ozone 

season less than 12 months, the user shall 

calculate the amount of discrete emission 

credits needed for the ozone season 

separately from the non-ozone season.

No Change

(e) Notice of use. No Change

(1) The user shall calculate: No Change

(A) the amount of discrete emission 

credits used, including the amount of 

discrete emission credits retired to 

cover the environmental 

contribution, as described in 

subsection (d)(2)(C) of this section, 

associated with actual use; and

No Change

53
(B) the amount of discrete emission 

credits not used, including the 

amount of excess discrete emission 

credits that were purchased to cover 

the environmental contribution, as 

described in subsection (d)(2)(C) of 

this section, but not associated with 

the actual use, and available for 

future use.

No Change

(2) DERC use is calculated by the following 

questions.

No Change

(A) The amount of discrete emission 

credits used to demonstrate 

compliance or meet a regulatory

requirement is calculated as follows.

Figure: 30 TAC § 101.376(e)(2)(A)

No Change

(B) The amount of discrete emission 

credits used to comply with permit 

allowables is calculated as follows.

Figure: 30 TAC § 101.376(e)(2)(B)

No Change

(3) A DEC-3 Form, Notice of Use of Discrete 

Emission Credits, shall be submitted to the 

commission in accordance with the 

following requirements.

No Change

(A) The notice must be submitted 

within 90 days after the end of the 

use period;

No Change

(B) The notice must be submitted 

within 90 days of the conclusion of 

each 12-month use period, if 

applicable;

No Change

(C) The notice is to be used as the 

mechanism to update or amend the 

notice of intent to use and must 

include any information different 

from that reported in the notice of 

intent to use, including, but not 

limited to, the following items:

No Change

(i) purchase price of the discrete 

emission credits obtained prior to 

the current use period, except for 

transfers between sites under 

common ownership or control;

No Change

(ii) the actual amount of discrete 

emission credits possessed during 

the use period;

No Change

(iii) the actual emissions during the 

use period for VOCs and NOx;

No Change

(iv) the actual amount of discrete 

emission credits used;

No Change

(v) the actual environmental 

contribution; and

No Change

54
(vi) the amount of discrete emission 

credits available for future use.

No Change

(4) Discrete emission credits that are not used 

during the use period are surplus and 

remain available for transfer or use by the 

holder. In addition, any portion of the 

calculated environmental contribution not 

attributed to actual use is also available.

No Change

(5) The user is in violation of this section if the 

user submits the report of use later than the 

allowed 90 days following the conclusion 

of the use period.

No Change

TCEQ revised the prohibited DERC uses list at 101.376(c)(4) in response to our final 

conditional approval notice. In our final notice we stated that “We are not approving 

section 101.376(c)(4) into the Texas SIP because the cross-references to 30 TAC Chapter 

106 Permit by Rule, sections 106.261(3) or (4) or section 106.262(3) are incorrect and 

do not exist in State law, the Texas SIP, or the Texas Federal Operating Permits 

program. Consequently, unless and until the State adopts and submits a revision to EPA 

for approval as a SIP revision and EPA approves it, the use of discrete emission credits 

to exceed the provisions in certain types of pre-construction permits termed Permits by 

Rule is not available under the Texas SIP.” 

The references to Chapter 106 have been correctly updated. While EPA has not approved 

sections 101.261 and 106.262 into the Texas SIP, we are able to approve the revisions to 

section 101.376(c)(4). By approving the revisions to section 101.376(c)(4) we are not 

approving a use of DERCs that conflicts with the Texas SIP, rather we are approving a 

listed prohibition of DERC usage that would further support the Texas SIP. Additionally, 

if an owner or operator of a facility wished to use DERCs in a manner that exceeded 

limitations from sections 106.261 or 106.262, the use would have to be approved by 

TCEQ and EPA; EPA anticipates our approval would only occur through a case-specific 

SIP revision following a demonstration from the owner/operator that useage of DERCs in 

this manner would not undermine the attainment strategy of the area or constitute a 

violation of CAA section 110(l). The revisions to section 101.376 are approvable.

Revisions to § 101.378 – Discrete Emission Credit Banking and Trading

Federally Approved Version

September 6, 2006

71 FR 52703

Adopted State Language

October 4, 2006

Rule Project Number 2005-054-101-PR

(a) The credit registry. All discrete emission 

credit generators, users, and holders will be 

included in the commission’s credit registry.

No Change

55
(1) All notices submitted by a generator, 

holder, or user will be reviewed for 

credibility; and when deemed certified, 

posted to the credit registry.

No Change

(2) The credit registry will assign a unique 

number to each certificate which will 

include the amount of emission reductions 

generated to the tenth of a ton.

No Change

(3) The credit registry will maintain a listing 

of all credits available or used for each 

ozone nonattainment area. One combined 

listing for all the counties or portions of 

counties designated as attainment or 

unclassifiable will be provided by the 

credit registry.

No Change

(4) The registry shall not contain proprietary

information.

No Change

(b) Life of a discrete emission credit. A discrete 

emission credit is available for use after the 

DEC-1 Form, Notice of Generation and 

Generator Certification of Discrete Emission 

Credits, has been received, deemed creditable 

by the executive director, and deposited in the 

commission credit registry in accordance with 

subsection (a) of this section, and may be used 

anytime thereafter. All credits are deposited in 

the credit registry and reported as available 

credits until they are used or withdrawn.

(b) Life of a discrete emission credit. A discrete 

emission credit is available for use after the 

DEC-1 Form, Notice of Generation and 

Generator Certification of Discrete Emission 

Credits, has been received, deemed creditable 

by the executive director, and deposited in the 

commission credit registry in accordance with 

subsection (a) of this section, and may be used 

anytime thereafter except as stated in this 

subsection. All credits are deposited in the 

credit registry and reported as available 

credits until they are used or withdrawn.

No comparable language in existing SIP-approved 

§ 101.378.

(1) Discrete emission credits generated from 

shutdown strategies prior to September 30, 

2002, will be available for use until 

September 8, 2010.

No comparable language in existing SIP-approved 

§ 101.378.

(2) Discrete emission credits certified from 

facility shutdowns after September 30, 

2002, may not be used.

(c) Trading. Discrete emission credits are freely

transferable in whole or in part, and may be 

traded or sold to a new owner at any time after 

certification.

No Change

(1) Prior to the transfer, the executive director 

must be notified by means of a completed 

DEC-4 Form, Application for Transfer of 

Discrete Emission Credits.

No Change

56
(2) The executive director will issue a letter to 

the discrete emission credit purchaser 

reflecting the discrete emission credits 

purchased by the new owner, and a letter 

to the discrete emission credit seller 

showing any remaining discrete emission 

credits available to the original owner. 

Discrete emission credits are considered 

transferred only after the executive 

director grants approval of the transaction.

No Change

(3) The trading of discrete emission credits 

may be discontinued by the executive 

director in whole or in part and in any

manner, with commission approval, as a 

remedy for problems resulting from 

trading in a localized area of concern.

No Change

The revisions to 101.378(b) further support the prohibition on generation of DERCs from 

permanent shutdowns found in section 101.373. The revisions to 101.378 are consistent 

with the EIP Guidance, Section 7.5(b) and with our conditional approval of the DERC 

program. These revisions to section 101.378 are approvable.

57
IV.A Evalution of the October 24, 2006, SIP Submittal

4. Evaluation of the October 24, 2006, SIP submittal with respect to section 

110(l) of the Clean Air Act

Section 110(l) of the Clean Air Act states: 

Each revision to an implementation plan submitted by a State under this Act shall 

be adopted by such State after reasonable notice and public hearing. The 

Administrator shall not approve a revision of a plan if the revision would 

interfere with any applicable requirement concerning attainment and reasonable 

further progress (as defined in section 171), or any other applicable requirement 

of this Act. 

Thus, under section 110(l), this SIP revision must not interfere with attainment or 

reasonable further progress or any other applicable requirement of the Act. 

Because this analysis only focuses on the revisions to sections 101.372, 101.373, 101.375, 

101.376, and 101.378 of the DERC program, the 110(l) analysis will also only focus on 

these pieces of the October 24, 2006, SIP revision. The revisions to section 101.372 will 

not interfere with attainment, reasonable further progress or any other applicable 

requirement of the Act because the revisions removed optional provisions for international 

reductions and clarified the already SIP-approved procedure to use an emission 

quantification protocol. The revisions to section 101.373 will not interfere with 

attainment, reasonable further progress or any other applicable requirement of the Act 

because this section has been revised to prohibit the generation of DERCs from permanent 

shutdowns, consistent with EPA’s EIP Guidance. The revisions to section 101.376 will 

also not interfere with attainment, reasonable further progress or any other applicable 

requirement of the Act because this section has been revised to update the crossreferences in the list of prohibited DERC uses. The revisions to section 101.378 will also 

not interfere with attainment, reasonable further progress or any other applicable 

requirement of the Act because this section has been revised to limit the lifetime of 

DERCs generated from shutdowns, consistent with the terms of EPA’s September 6, 

2006, conditional approval. The revisions to section 101.375 could possibly interfere with 

attainment, reasonable further progress or any other applicable requirement of the Act 

because these revisions expand the use of international reductions to any location within 

100-km of the Texas-Mexico border, rather than consolidating the use of international 

reductions to nonattainment areas within 100-km of the Texas-Mexico border. However, 

any use of international reductions in lieu of DERCs as specified in section 101.375 is 

subject to EPA approval. Our approval will be through a case-specific SIP revision and 

based on a thorough section 110(l) demonstration from the TCEQ or the source that 

demonstrates the use of international reductions does not interfere with attainment, 

reasonable further progress, or any other applicable requirement of the Act.

58
IV.A. Evaluation of the October 24, 2006 SIP Submittal

5. Evaluation of the Terms of the DERC Conditional Approval

What is a conditional approval?

Under section 110(k)(4) of the Clean Air Act, EPA may conditionally approve a plan 

based on a commitment from the State to adopt specific enforceable measures within one 

year from the date of approval. The conditional approval remains in effect until EPA 

takes its final action – either a final approval or disapproval.

If EPA determines that the revised rule is approvable, EPA will propose approval of the 

rule through a notice and comment rulemaking. After responding to comments received, 

EPA will publish a final approval of the rule and the conditional approval is no longer in 

effect. However, if the State fails to meet its commitment within the one year period, then 

EPA must proceed with a disapproval action. EPA will propose disapproval of the rule 

through notice and comment rulemaking, and will finalize the disapproval after responding 

to all comments received. Note that EPA will conditionally approve a certain rule only 

once. Subsequent submittals of the same rule that attempt to correct the same specifically 

identified problems will not be eligible for conditional approval. 

What are the terms of the DERC program conditional approval?

EPA conditionally approved the DERC program on September 6, 2006. Our conditional 

approval was based on a commitment letter submitted by the TCEQ on September 8, 

2005. The September 8, 2005, commitment letter included the following provisions that 

the TCEQ agreed to address by December 1, 2006: 

1. Revise Title 30 Texas Administrative Code (30 TAC) § 101.373 to prohibit the 

future generation of DERCs from permanent shutdowns and to allow DERCs 

generated and banked from permanent shutdowns prior to September 30, 2002, to 

remain available for use for no more than five years from the date of this letter.

2. The TCEQ will perform a credit audit to remove from the emissions bank all 

DERCs generated from permanent shutdowns after September 30, 2002. Even if 

the shutdown itself occurred before September 30, 2002, no DERCs can be 

generated from that event after September 30, 2002.

3. Revise 30 TAC §§ 101.302(f), 101.372(f)(7) and 101.372(f)(8) to clarify that EPA 

approval is required for individual transactions involving emission reductions 

generated in another state or nation, as well as those transactions from one 

nonattainment area to another, or from attainment counties into nonattainment 

areas. The TCEQ further understands that the EPA would require a state 

59
implementation plan revision prior to approving an transaction between another 

state or nation, as well as, those transactions between counties not located within 

the same nonattainment area.

4. The TCEQ will revise Form DEC-1, Notice of Generation and Generator 

Certification of Discrete Emission Credits; Form MDEC-1, Notice of Generation 

and Generator Certification of Mobile Discrete Emission Credits; and Form DEC2, Notice of Intent to Use Discrete Emission Credits, to include a waiver to the 

federal statute of limitations defense for generators, and users of DERCs and 

mobile discrete emission reduction credits (MDERCs). Please be reminded that 

there is currently no applicable state statute of limitations in the State of Texas. In 

addition, the TCEQ will maintain its current policy of preserving all records 

relating to DERC and MDERC generation and use for a minimum of five years 

after the use strategy has ended.

5. Revise 30 TAC §§ 101.302 and 101.372 to clarify that a proposed quantification 

protocol may not be used if the TCEQ Executive Director receives a letter from 

the EPA objecting to the use of the protocol during the 45-day adequacy review 

period or if the EPA proposes disapproval of the protocol in the Federal Register.

6. Revise 30 TAC § 101.306 to specify that Emission Reduction Credits may be used 

within the highly reactive volatile organic compounds Emissions Cap and Trade 

program as an annual allocation of allowances as provided under 30 TAC § 

101.399.

Additionally, TCEQ agreed to comply with these commitments during the conditional 

approval period. Specifically, TCEQ agreed to not approve any trades involving the types 

of reductions described in item (3) above, not approve any use of discrete shutdown 

credits that were generated after September 30, 2002, and to require the waiver described 

in item (4) above for generators and users of discrete emission credits.

Were the terms of the DERC conditional approval met?

The September 8, 2005, commitment letter included several provisions specific to the 

ERC Program (see commitments 3, 5, and 6) but EPA is not including these provisions in 

our analysis of the DERC conditional approval. The ERC and DERC programs operate 

independently of each other and have been approved as separate, stand alone programs by 

EPA. Even though the commitment letter included commitments to modify the ERC 

program, the submission of these ERC provisions will not impact the functionality of the 

DERC program nor were these revisions to the ERC program necessary for the DERC 

program to be considered consistent with EPA regulations, policy and guidance. EPA has 

evaluated the October 24, 2006, ERC program revisions in a separate rulemaking (see 

EPA-R06-OAR-2010-0147). The following analysis of the September 8, 2005, 

commitments focuses solely on the DERC program-specific provisions.

1. Revise Title 30 Texas Administrative Code (30 TAC) § 101.373 to prohibit the 

future generation of DERCs from permanent shutdowns and to allow DERCs 

60
generated and banked from permanent shutdowns prior to September 30, 2002, to 

remain available for use for no more than five years from the date of this letter.

TCEQ adopted revisions to § 101.373 that removed shutdowns as a method of 

generation and added the following language under the list of prohibited 

generation activities at § 101.373(a)(2): “permanent or temporary shutdowns or 

permanent curtailment of an activity at a facility”. TCEQ adopted revisions to § 

101.378(b)(1) that revise the lifetime of a DEC. Section 101.378(b)(1) states that 

“Discrete emission credits generated from shutdown strategies prior to September 

30, 2002, will be available for use until September 8, 2010.” 

Note that the DERC calculation procedures at sections 101.373(c)(1), (3), and (4) 

discuss how DERCs are calculated from shutdowns. Additionally, section 

101.373(d)(3)(c) discusses how to certify the generation of DERCs from 

shutdown activities. EPA believes that the inclusion of this language was an 

oversight on TCEQ’s part when responding to our conditional approval 

commitments. The DERC program at section 101.373(a)(2)(A) clearly prohibits 

the generation of DERCs from shutdowns. Therefore, EPA feels that TCEQ 

should remove this language at their earliest convenience, but that the prohibition 

on generation of shutdown DERCs is not impacted by this erroneous calculation.

TCEQ met this commitment of the conditional approval. TCEQ adopted the 

appropriate provisions and submitted the revised rules as a SIP revision within the 

time frame.

2. The TCEQ will perform a credit audit to remove from the emissions bank all 

DERCs generated from permanent shutdowns after September 30, 2002. Even if 

the shutdown itself occurred before September 30, 2002, no DERCs can be 

generated from that event after September 30, 2002.

TCEQ confirmed in a letter dated February 5, 2010, that the credit audit was 

performed in January 2006. Additionally, TCEQ adopted two revisions to the SIP 

that will ensure that shutdowns after September 30, 2002, do not generate 

DERCs. First, the revision to § 101.373(a)(2) prohibits the future generation of 

DERCs from shutdowns (as discussed in item 1 above). Second, the TCEQ 

revised § 101.378(b)(2) so that “Discrete emission credits certified from facility 

shutdowns after September 30, 2002, may not be used.”

TCEQ met this commitment of the conditional approval. TCEQ adopted the 

appropriate provisions and submitted the revised rules as a SIP revision within the 

time frame.

3. Revise 30 TAC §§ 101.372(f)(7) and 101.372(f)(8) to clarify that EPA approval is 

required for individual transactions involving emission reductions generated in 

61
another state or nation, as well as those transactions from one nonattainment area 

to another, or from attainment counties into nonattainment areas. The TCEQ 

further understands that the EPA would require a state implementation plan 

revision prior to approving a transaction between another state or nation, as well 

as, those transactions between counties not located within the same nonattainment 

area.

Section 101.372(f) outlines the geographic scope of the DERC rule and generally 

provides that, with the exception of international reductions pursuant to section 

101.375, only reductions generated in the State of Texas can be certified as 

DERCs. Section 101.372(f)(7) was unchanged by TCEQ and continues to provide 

that reductions from other counties, states, or nations can be used in any 

attainment or nonattainment county provided a demonstration showing 

improvement in air quality has been approved by the TCEQ ED and EPA. The use 

of international reductions under 101.372(f)(7) is further modified by the 

restrictions at section 101.375. 

Section 101.372(f)(8) was moved to new section 101.375. Section 101.375 

establishes two ways that a facility could use an international reduction. First, a 

facility could use reductions of a criteria pollutant or precursor of criteria pollutant 

to meet requirements of the same criteria pollutant. This option would be used if a 

facility had a NOX requirement in Texas and could find NOX reductions in Mexico

or an ozone requirement in Texas and could find VOC reductions in Mexico. 

Alternately, a facility could use reductions of a criteria pollutant or its precursors 

to substitute for reductions in other criteria pollutants. For example, this situation 

would be one in which a source could be subject to a PM2.5 requirement and 

wants to use CO reductions to satisfy the requirement. Generally, both of these 

uses (the same criteria pollutant or the substitution) requires approval by EPA and 

the TCEQ ED; the source must demonstrate that the reduction is real, permanent, 

enforceable, quantifiable, and surplus to any applicable Mexican, federal, state, or 

local law; that the use of the reduction does not cause localized health impacts; 

submit all supporting information for calculations and modeling; and be located 

within 100km of the Texas-Mexico border.

There are additional requirements for the case where a facility wants to substitute 

the international reduction of a criteria pollutant or its precursor for the obligations 

of a different criteria pollutant (the example above in which the facility used CO

reductions for a PM2.5 requirement). The facility must either show that the 

reduction is substituted for the reduction requirement of another criteria pollutant 

and the substitution results in a greater health benefit and is of equal or greater 

benefit to the overall air quality of the area; or, the source must show that the 

reduction of a criteria pollutant (or precursor) for which the area is nonattainment 

is substituted for another criteria pollutant (or precursor) requirement for which an 

area is nonattainment. 

62
Even though section 101.372(f)(7) was not revised, EPA approval is clearly 

required for uses of reductions from other counties, states, or other nations. Uses 

of international reductions under section 101.372(f)(7) are further modified by the 

restrictions at section 101.375, which also clearly require EPA approval. TCEQ 

met the DERC-specific portion of this commitment.

4. The TCEQ will revise Form DEC-1, Notice of Generation and Generator 

Certification of Discrete Emission Credits; Form MDEC-1, Notice of Generation 

and Generator Certification of Mobile Discrete Emission Credits; and Form DEC2, Notice of Intent to Use Discrete Emission Credits, to include a waiver to the 

federal statute of limitations defense for generators, and users of DERCs and 

mobile discrete emission reduction credits (MDERCs). Please be reminded that 

there is currently no applicable state statute of limitations in the State of Texas. In 

addition, the TCEQ will maintain its current policy of preserving all records 

relating to DERC and MDERC generation and use for a minimum of five years 

after the use strategy has ended.

In a letter dated February 5, 2010, the TCEQ stated that even though the 

commitment included modifying Form MDEC-1, such form has never been 

created. However, Form MDEC-1 will include a waiver of the federal statute of 

limitations defense if at any time in the future the TCEQ creates said form.

Also in the February 5, 2010, letter, the TCEQ stated that the Forms DEC-1 and 

DEC-2 were modified in or before February 2007, but that the exact modification 

date could not be determined since the TCEQ does not keep copies of old versions 

of the form. Additionally, the TCEQ modified Form DEC-3, Notice of Use of 

Discrete Emission Credits, to include the same waiver of the federal statute of 

limitations defense even though modification of Form DEC-3 was not part of the 

commitment. Copies of the modified DEC-1, DEC-2, and DEC-3 forms were 

included with the letter. Note that the February 5, 2010, letter and attachments are

available in the FDMS docket for this action.

The TCEQ confirmed that during the time period between September 2006 and 

February 2007, there were no DERC generations submitted. So, even though 

Form DEC-1 was not revised until February 2007, there was not an instance where 

DERC generation did not have the appropriate waiver. However, between 

September 2006 and February 2007, there were 18 DEC-2 forms submitted to the 

TCEQ without the waiver of federal statute of limitations defense language. But, 

under the DERC program, any notification of intent to use DERCs submitted on a 

DEC-2 form, must be followed by a notification of use through the submission of a 

DEC-3 form. All 18 DEC-2 forms were followed by submissions of the DEC-3 

forms with the appropriate waiver language. 

63
Even though the DEC-1 and DEC-2 forms were not modified by the December 

2006 deadline specified in the commitment letter, EPA finds that the intent of this 

commitment has been satisfied. The intent of this commitment was to ensure that 

all DERC generation and use activities were covered by a waiver of the federal 

statute of limitations defense. Since no DERCs were generated during this time, 

there was no need for a DEC-1 form. The 18 DEC-2 forms provide notification 

that a source intends to use DERCs, the verification that the use occurred is 

through the submission of a DEC-3 form. TCEQ verified that all 18 DEC-2 forms 

were followed by the submission of a modified DEC-3 form – thereby covering all 

DERC usage activities with the waiver of the federal statute of limitations defense.

5. Revise 30 TAC § 101.372 to clarify that a proposed quantification protocol may 

not be used if the TCEQ Executive Director receives a letter from the EPA 

objecting to the use of the protocol during the 45-day adequacy review period or if 

the EPA proposes disapproval of the protocol in the Federal Register.

TCEQ revised section 101.372(d)(vi) to state that “quantification protocols shall 

not be accepted for use with this division if the executive director receives a letter 

objecting to the use of the protocol from the EPA during the 45-day adequacy 

review or the EPA proposes disapproval of the protocol in the Federal Register.”

TCEQ met this commitment of the conditional approval. TCEQ adopted the 

appropriate provision and submitted the revised rule as a SIP revision within the 

time frame.

64
IV.B. Evaluation of the August 16, 2007 SIP Submittal

1. Evaluation of the August 16, 2007, SIP submittal with respect to the Part 51, 

Appendix V Completeness Checklist

Part 51, Appendix V Completeness Checklists

The criteria for completeness determination is Appendix V to Part 51 - Criteria for 

determining the completeness of plan submissions and is outlined below: 

1.0 Purpose: This appendix V sets forth the minimum criteria for determining whether 

a State implementation plan submitted for consideration by EPA is an official 

submission for purposes of review under § 51.103. 

1.1 The EPA shall return to the submitting official any plan or revision thereof which 

fails to meet the criteria set forth in this appendix V, and request corrective action, 

identifying the component(s) absent or insufficient to perform a review of the 

submitted plan.

1.2 The EPA shall inform the submitting official whether or not a plan submission 

meets the requirements of this appendix V within 60 days of EPA's receipt of the 

submittal, but no later than 6 months after the date which the State was required to 

submit the plan or revision. If a completeness determination is not made by 6 

months from receipt of a submittal, the submittal shall be deemed complete by 

operation of law on the date 6 months from receipt. A determination of

completeness under this paragraph means that the submission is an official 

submission for purposes of §51.103.

The attached checklist outlines the basic criteria included under 2.1 and 2.2 of Appendix 

V. 

Section 2.3 of Appendix V describes the "parallel process procedure" which EPA had 

previously adopted to expedite the review of plans. This feature, however, is being 

deleted from the next revised CFR on completeness. Therefore, it is not included in the 

checklist.

65
SIP Completeness Checklist for the August 16, 2007 SIP Submittal

Rule Log No: 2006-053-101-PR

When preparing a SIP revision request, the SIP reviewer should go through this list to 

help identify that the package submitted to EPA is complete. States can use the check list 

to assure SIP submittals meet Appendix V criteria.

Administrative Materials (2.1)

1. The package is sent with a formal submittal letter from the Governor or his or her 

designee requesting EPA's approval of the revision.

The SIP revision was submitted by a letter from Kathleen Hartnett White, 

Chairman of the Texas Commission on Environmental Quality, dated August 16, 

2007. Governor Rick Perry designated that the Chairman of the Texas 

Commission on Environmental Quality would be his designee for SIP submittals 

in a letter dated May 21, 2002.

2. Evidence is included that the State has adopted the revision in the State code or 

body of regulations, or that the State has issued the permit, order, consent 

agreement (hereafter document) in final form. This evidence would include the 

date of adoption or final issuance and the effective date of revision, if different 

from adoption/issuance date.

The revisions were adopted by the Texas Commission on Environmental Quality 

on July 25, 2007, and became effective August 10, 2007.

3. Evidence is included that the State has necessary legal authority under State law to 

adopt and implement the revision, e.g., a citation of the appropriate State 

authority.

The authority for promulgating changes to the Texas State Implementation Plan, 

Chapter 101, Subchapter A – General Rules; Subchapter H – Emissions Banking 

and Trading is found in Chapter 382 of the Texas Health and Safety Code.

4. A copy is included of the actual regulation or document submitted for approval 

and incorporation by reference into the SIP including an indication of the changes 

made to the existing approved plan where applicable. The submittal shall be a 

copy of the official State regulation document signed, stamped, and dated by the 

appropriate State official indicating that it is fully enforceable by the State. The 

effective date of the regulation document shall, whenever possible, be indicated in 

the document itself.

66
The August 16, 2007, submittal included a copy of the official State regulation 

document, signed, stamped, and dated by Kathleen Hartnett White, Chairman of 

the Texas Natural Resource Conservation Commission.

5. Evidence is included that the State followed all the procedural requirements of its 

laws and/or its constitution in the conducting and completing the 

adoption/issuance of the plan. 

The authority for promulgating changes to the Texas State Implementation Plan 

is found in the Texas Clean Air Act, Chapter 382 of the Texas Health and Safety 

Code.

6. Evidence is included that public notice was given of the proposed changes 

consistent with the procedures approved by EPA, including the date of publication 

of such notice, (e.g., notarized or certified copies of any public notices published in 

newspapers). (The notice should be at least 30 days prior to the public hearing(s).

Notices of public hearing were published on February 12, 2007, in the Austin 

American Statesman, the Fort Worth Star-Telegram, and the Houston Chronicle.

7. A certification is included indicating that public hearing(s) was/were held in 

accordance with the information provided in the public notice(s) and the State's 

laws and constitution, if applicable.

The order adopting the new, amended, and repealed sections to 30 TAC Chapter 

101 provided evidence that the public hearing was conducted pursuant to Texas 

Health and Safety Code § 382.017 and 40 CFR § 51.102.

8. A compilation of public comments and the State's response is included.

The SIP submittal package did include a compilation of public comments and the 

State’s responses. The TCEQ received written comments from EPA Region 6 and 

Michelle Bonilla, a public citizen with Eternal Springs Wellness.

Technical Support (2.2)

The State should include the following technical information in its SIP revision request 

package.

1. Identification of all regulated pollutants affected by the revision is included.

This SIP revision repeals an effective date established in Chapter 101, 

Subchapter A. This section has no applicable regulated pollutants.

67
Chapter 101, Subchapter H, Division 1 (ERC Program) applies to criteria 

pollutants, and precursors, for which an area is designated nonattianment with 

the exception of lead. Chapter 101, Subchapter H, Division 3 (MECT Program) 

applies to NOX emissions. Chapter 101, Subchapter H, Division 4 (DERC 

Program) applies to criteria pollutants, and precursors, with the exception of 

lead. Chapter 101, Subchapter H, Division 5 (SCT Program) applies to NOX

emissions. However, the SIP revision under review does not change the 

applicability of these programs and therefore does not need to restate the list of 

regulated pollutants that were submitted as part of the original SIP submittals 

establishing each program.

2. Identification of the locations of affected sources including the EPA 

attainment/nonattainment designation of the locations and the status of the 

attainment plan for the affected area(s) is included.

The revisions to Chapter 101, Subchapter A apply statewide. 

The revisions to the ERC program at Chapter 101, Subchapter H, Division 1 

apply to all nonattainment areas statewide.

The revisions to the MECT program at Chapter 101, Subchapter H, Division 3 

apply only to facilities in the Houston/Galveston/Brazoria ozone nonattainment 

area.

The revisions to the DERC program at Chapter 101, Subchapter H, Division 4 

apply statewide.

The revisions to the SCT program at Chapter 101, Subchapter H, Division 5 

apply to nonattainment areas statewide and areas with unique emission limits 

established in Chapter 117.

3. Quantification of the changes in SIP allowable emissions from the affected sources 

is included. (Examples include estimates of changes in current actual emissions 

from affected sources and/or, where appropriate, quantification of changes in 

actual emissions from affected sources through calculations of the differences 

between certain baseline levels and allowable emissions anticipated if the revisions 

were approved.)

Quantification of the changes in SIP allowable emissions from the affected 

sources is not applicable to this SIP revision. 

4. Demonstration is included that the NAAQS/PSD increments/RFP demonstration 

and visibility as applicable would be protected if the revision were approved and 

implemented.

The SIP submittal does not include revisions to the PSD and NSR permitting 

programs. 

68
5. FOR REDESIGNATIONS:

a. Is there a fully approved maintenance plan for the primary ambient air 

quality standards for at least 10 years as required by §175A of the Clean 

Air Act?

Not applicable.

b. Are contingency measures included?

Not applicable.

7. Modeling information, if applicable, is required to support the propose revision. 

Modeling information is not necessary to support the SIP revision.

7. Evidence is included where necessary, that emission limitations are based on 

continuous emission reduction technology (e.g., add-on controls, industrial/process 

equipment designs, reformulated materials, etc.).

Evidence of emission limitations based on CEM technology is not applicable.

8. Evidence is included indicating that a SIP revision contains emission limitations, 

work practice standards, and recordkeeping/reporting requirements to ensure 

stated emission levels.

Not applicable. Enforceability is determined on case-by-case basis in each 

individual permit. 

9. Compliance/enforcement strategies including how compliance will be determined 

in practice (including at what frequency).

Not applicable. Determination of compliance is specified on case-by-case basis 

in each individual permit. 

10. As appropriate, special economic and technological justifications are included per 

applicable EPA policies or an explanation why such justifications are not necessary 

should be included. For example, requests for alternative RACT may require such 

justification.

These justifications are not necessary for this SIP revision.

69
The SIP submittal of Rule Log No.: 2006-053-101-AI meets the completeness 

criteria.

70
IV.B. Evaluation of the August 16, 2007, SIP Submittal

2. Evaluation of the August 16, 2007, SIP submittal with respect to the 

requirements of 40 CFR Part 51

Requirements for the preparation, adoption, and submittal of implementation plans can be 

found in 40 CFR Part 51. The August 16, 2007, proposed DERC revisions were 

evaluated against the applicable requirements in Part 51. This analysis is included in Table 

IV-B2 below. The revisions to the ERC and SCT program also submitted on August 16, 

2007, as revisions to the SIP are not included in the analysis below. EPA is proposing 

approval of the 2007 ERC revisions in a separate rulemaking (see EPA-R06-OAR-2010-

0147). The revisions to the SCT program will be addressed by EPA at a later date and in 

a separate rulemaking. The revisions to the General Air Quality Rules and the MECT 

program were evaluated in EPA’s July 16, 2009 direct final approval (see 74 FR 34503).

Table IV-B2: Analysis of Part 51 Requirements

Part 51 – Requirements for Preparation, 

Adoption, and Submittal of Implementation 

Plans

DERC Program Revisions

30 TAC §§ 101.372 and 101.376

Subpart A – Emission Inventory Reporting 

Requirements

The revisions to sections 101.372 and 101.376 

update cross-references in the DERC program and 

are not concerned with emissions inventory

reporting, nor do they modify current emissions 

inventory reporting requirements for TCEQ.

Subparts B – E [Reserved] Not applicable.

Subpart F – Procedural Requirements Subpart F – Procedural Requirements

§ 51.100 Definitions § 51.100 is not applicable to the Chapter 101 

sections under review in this TSD. 51.100 

establishes definitions used elsewhere in 40 CFR 

Part 51.

§ 51.101 Stipulations § 51.101 is not applicable to the Chapter 101 

sections under review in this TSD. 51.101 

establishes the stipulations that govern the 

use/intent of 40 CFR Part 51.

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§ 51.102 Public Hearings

 States must conduct one or more public 

hearings

 Public hearings will only be held after 

reasonable notice, given at least 30 days 

prior to the date of the hearing

 The state must submit with the revision a 

certification that the hearing was held in 

accordance with this section.

Rule Log Number 2006-053-101-PR

 TCEQ held a public hearing on this rule 

package in Austin, Texas on March 20, 2007.

 The public hearing was held after reasonable 

notice was given. TCEQ published notice of 

the public hearing in the following 

newspapers on the dates listed below for this 

rule package:

 Austin American Statesman – February 12, 

2007;

 Fort Worth Star Telegram – February 12, 

2007;

 Houston Chronicle – February 12, 2007.

 The SIP submittal included certification that 

the public hearing was held in accordance 

with Texas Health and Safety Code § 382.017 

and 40 CFR 51.102.

§ 51.103 Submission of plans, preliminary review 

of plans

 The state makes an official plan 

submission to EPA only when the 

submission conforms to the requirements 

of Part 51, Appendix V.

 The state delivers 5 copies of the plan with 

a letter giving notice of the action to the 

EPA regional office.

Please see Section IV.B.1. of this document for the 

completed Appendix V checklists for the rule 

package.

The rule package meets the requirements for 

completeness.

§ 51.104 Revisions

 States may revise the plan from time to 

time

 EPA will approve revisions only after 

appropriate public hearing requirements 

have been met

 Revisions must be submitted in accordance 

with 51.103

Kathleen Hartnett White submitted the Chapter 101 

revisions as SIP revisions on August 16, 2007.

Subpart G – Control Strategy Subpart G – Control Strategy

§ 51.110 Attainment and Maintenance of National 

Standards

Requirements found in § 51.110 are not applicable 

to the SIP submittal under review in this document. 

The revisions to sections 101.372 and 101.376 

update the DERC program to appropriately crossreference the recodification of the Chapter 117 

requirements and do not change the functionality of 

the DERC program.

The DERC program is a discretionary EIP that 

provides for the voluntary generation and use of 

discrete emission reduction credits. The DERC 

program is not an integral control strategy in any of 

the Texas Attainment Demonstrations. However, 

EPA expects the TCEQ to account for the 

generation and use of DECs in all attainment 

demonstrations.

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§ 51.111 Description of Control Measures Requirements found in § 51.110 are not applicable 

to the SIP submittal under review in this document. 

The DERC program does not establish control 

strategies for Texas, rather the program provides 

for the voluntary generation and use of DECs.

§ 51.112 Demonstration of Adequacy Requirements found in § 51.112 are not applicable 

to the SIP submittal under review in this document. 

Since the DERC program is not an integral piece of 

an attainment strategy, it is not necessary that the 

DERC program demonstrate adequacy for 

maintaining a national standard.

§ 51.113 Reserved Not applicable.

§ 51.114 Emissions Data and Projections Requirements found in § 51.114 are not applicable 

to the SIP submittal under review in this document. 

As the DERC program is not part of an attainment 

demonstration, the DERC program SIP revision 

does not need to provide a detailed emission 

inventory and summary of projected emission levels 

after the implementation of control strategies.

However, the DERC program does require that 

generators and users submit applications to the 

TCEQ that estimate and verify the emission 

reductions that are generated and/or used.

§ 51.115 Air Quality Data and Projections Requirements found in § 51.115 are not applicable 

to the SIP submittal under review in this document. 

The DERC program is not part of an attainment

plan, therefore it is not necessary that the DERC 

program SIP submittal includes data on existing air 

quality or summarize expected air quality impacts 

from the implementation of control strategies.

§ 51.116 Data Availability

The State must make available to the public all data 

and calculations used in the preparation of each 

plan or plan revision.

Each plan must provide for public availability of 

emission data reported by source owners or 

operators.

The TCEQ provided the public the opportunity to 

participate in stakeholder meetings in the 

rulemaking development process, and the public 

received comment periods on the proposed plan.

The Texas Clean Air Act, Texas Health and Safety

Code at Section 382.040 requires that all 

information submitted to the TCEQ for compliance 

purposes be made available to the public, unless a 

written request for nondisclosure is approved. 

§ 51.117 Additional provisions for lead Lead requirements found in § 51.117 are not 

applicable to the DERC program. The DERC 

program does not apply to lead emissions.

§ 51.118 Stack Height Provisions Requirements found in § 51.118 are not applicable 

to the SIP submittal under review in this document. 

The DERC program is a discretionary program for 

voluntary generation and use of DECs and does not 

involve good engineering practices for stack 

heights.

73
§ 51.119 Intermittent Control Systems Requirements found in § 51.119 are not applicable 

to the SIP submittal under review in this document. 

The DERC program is a discretionary program for

voluntary generation and use of DECs and does not 

require intermittent control systems.

§ 51.120 Requirements for State Implementation 

Plan Revisions relating to Motor Vehicles

Requirements found in § 51.120 are not applicable 

to the SIP submittal under review in this document. 

The DERC program does provide for the 

generation and use of mobile discrete emission 

reductions, but that is not related to the part 51 

requirements for SIP revisions relating to motor 

vehicles.

§ 51.121 Findings and requirements for 

submission of State Implementation Plan Revisions 

relating to emissions of oxides of nitrogen

Requirements found in § 51.121 are not applicable 

to the SIP submittal under review in this document. 

§ 51.121 establishes the requirements for the NOX

SIP Call; Texas was not subject to the NOX SIP 

Call.

§ 51.122 Emissions reporting requirements for SIP 

revisions relating to budgets for NOX emissions.

Requirements found in § 51.122 are not applicable 

to the SIP submittal under review in this document. 

§ 51.122 establishes the emission reporting 

requirements for the NOX SIP Call; Texas was not 

subject to the NOX SIP Call.

§ 51.123 Findings and requirements for 

submission of State Implementation Plan Revisions 

relating to Emissions of Oxides of Nitrogen 

pursuant to the Clean Air Interstate Rule

Requirements found in § 51.123 are not applicable 

to the SIP submittal under review in this document. 

§ 51.123 establishes the requirements for the NOX

Annual and Ozone season programs for the Clean 

Air Interstate Rule (CAIR).

§ 51.124 Findings and requirements for 

submission of State Implementation Plan Revisions 

relating to Emissions of Sulfur Dioxide pursuant to 

the Clean Air Interstate Rule

Requirements found in § 51.124 are not applicable 

to the SIP submittal under review in this document. 

§ 51.124 establishes the program requirements for 

the CAIR SO2 Programs.

§ 51.125 Emissions reporting requirements for SIP 

revisions relating to budgets for SO2 and NOX

emissions.

Requirements found in § 51.125 are not applicable 

to the SIP submittal under review in this document. 

§ 51.125 establishes the emission reporting 

requirements for the CAIR NOX and SO2 trading 

programs.

Subpart H – Prevention of Air Pollution Emergency

Episodes

Requirements found in 51, Subpart H are not 

applicable to the SIP submittal under review in this 

document. The DERC program is a discretionary

program for the generation and use of DECs and is 

not part of the Texas air pollution emergency

episode plan.

74
Subpart I – Review of New Sources and 

Modifications

§ 101.376(b(2) provides that DECs can be used as 

NSR permit offsets.

§ 101.376(c)(2) prohibits the use of DECs for 

netting to avoid the applicability of federal and 

state NSR requirements.

EPA reviewed the use of DERCs and MDERCs as 

NSR offsets as part of our approval of the program, 

and found these provisions of the DERC program 

to meet the NSR offset requirements of section 173 

of the CAA and 51.165. The revisions to the 

DERC program submitted in this SIP submittal do 

not revise § 101.376(b)(2) or (c)(2). 

Subpart J – Ambient Air Quality Surveillance Requirements found in 51, Subpart J are not 

applicable to the SIP submittal under review in this 

document. Ambient air quality surveillance is not 

part of the DERC program.

Subpart K – Source Surveillance Subpart K – Source Surveillance

§ 51.210 Each plan must provide for monitoring 

the status of compliance with rules and regulations 

that set forth any portion of the control strategy.

The Texas DERC program was developed and 

submitted in accordance with the Texas Health and 

Safety Code. Texas enforcement provisions are not 

typically in the State’s individual rules but are 

separately codified. Texas Water Code Chapter 7 

contains the State’s statutory provisions for 

enforcement of programs developed according to 

the Texas Health and Safety Code; i.e, the Texas 

ERC program. Section 382.111 of the Texas 

Health and Safety Code provides the ability to enter 

and periodically inspect stationary sources. Section 

382.021 establishes that the Texas Commission on 

Environmental Quality can determine the necessary

sampling and detection methods used to 

demonstrate compliance with an emission 

limitation. 

§ 51.211 The plan must provide for legally

enforceable procedures for requiring stationary

sources to maintain records and report the 

following to the State:

 Information on the nature and amount of 

emissions from the stationary source; and

 Other information as necessary for the State to 

determine whether the sources are in 

compliance.

§ 51.212 The plan must provide for periodic testing 

and inspection of stationary sources. Additionally, 

the plan must establish a system for detecting 

violations and include enforceable test methods.

§ 51.213 The plan must contain procedures for 

obtaining and maintaining data on actual emissions 

reductions achieved as a result of implementing 

transportation control measures.

§ 51.213 is not applicable to the DERC program. 

While the DERC program does provide for the 

generation and use of mobile discrete emission 

reductions, these reductions must be surplus to 

transportation control measures in the SIP.

§ 51.214 The plan must contain legally enforceable 

procedures to require stationary sources subject to 

emission standards as part of the applicable plan to 

install, calibrate, maintain, and operate continuous 

emission monitoring systems.

The DERC program does not establish emission 

standards under the Texas SIP that would mandate 

the installation or use of continuous emission 

monitoring systems. However, section 

101.372(d)(2) provides the quantification 

procedures for DECs, and continuous monitoring 

data is an acceptable data source for actual 

emissions data in the event that the SIP approved 

testing and monitoring methods in Chapter 115 

and Chapter 117 are not available.

Subpart L – Legal Authority Subpart L – Legal Authority

75
§ 51.230 Each plan must show that the State has 

the necessary legal authority to carry out the plan, 

including the authority to adopt emission standards 

and limitations necessary for attainment of the 

NAAQS, enforce applicable laws and regulations 

and seek injunctive relief.

The DERC program was developed and submitted 

in accordance with the Texas Clean Air Act, 

Chapter 382 of the Texas Health and Safety Code. 

The Texas Health and Safety Code and the 

enforcement provisions in the Texas Water Code 

provide TCEQ the necessary legal authority to 

implement the SIP. A more detailed discussion 

immediately follows this table.

§ 51.231 The provision of law or regulation which 

the State determines provides the authorities 

required must be specifically identified and copies 

must be submitted with the plan. 

Texas identified in the submittal package that the 

SIP revision was developed in accordance with the 

Texas Health and Safety Code. EPA Region 6 does 

not require the State to submit copies of laws and 

regulations that have been submitted for prior SIP 

submittals. 

§ 51.232 A state government agency other than the 

State air pollution control agency may be assigned 

responsibility for carrying out a portion of the plan.

The Chapter 101 revisions identified the TCEQ as 

the agency responsible for implementing the SIP.

Subpart M – Intergovernmental Consultation The Chapter 101 revisions identified the TCEQ as 

the agency responsible for developing, 

implementing, and enforcing the SIP.

Subpart N – Compliance Schedule The DERC program establishes an economic 

incentive program for the voluntary generation and 

use of DECs. This program does not establish a 

compliance schedule for any NAAQS, and 

therefore does not need to address the requirements 

of 40 CFR part 51, subpart N. 

However, the DERC program provides mechanisms 

by which users of DECs must demonstrate they

have enough credits to cover their use obligations, 

see section 101.376. Section 101.379 provides for 

program audits and reporting through which the 

TCEQ will demonstrate to EPA and the public that 

the DERC program is operating effectively. 

76
Subpart O – Miscellaneous Plan Content 

Requirements

 Each plan must include a description of 

resources available to the State at the date of 

the submittal of the plan and during the next 5-

years.

 Copies of all rules and regulations that are 

necessary to attain and maintain the NAAQS 

must be submitted.

 Each plan must provide for public notification 

when a standard has been violated

 During the development of the Chapter 101 

SIP revisions, the TCEQ determined that their 

fiscal and manpower resources are adequate 

and will not be adversely affected through the 

implementation of the revisions to the General 

Air Quality Rules. This analysis is 

documented in the preamble to the proposed 

and final rulemakings. 

 The revisions to Chapter 101 do not establish 

new emission limits or control strategies, 

therefore it is not necessary that a copy of all 

rules and regulations related to attaining or 

maintaining the NAAQS be submitted. 

 The Chapter 101 the revisions do not revise the 

public notice aspects of the Texas permit 

programs. Therefore it is not necessary for this 

SIP submittal to establish procedures whereby 

the public will be notified of NAAQS 

violations.

Subpart P – Protection of Visibility The Chapter 101 revisions are not submitted as part 

of Texas’s plan to protect visibility. 

Subpart Q – Reports The Chapter 101 revisions do not revise the 

existing reporting requirements for the emission 

inventory in the Texas SIP. EPA approved the 

emission inventory requirements at 30 TAC 101.10 

on August 26, 1994 (59 FR 44036).

Subpart R – Extensions Requirements found in 51, Subpart R are not 

applicable to the SIP submittal under review in this 

document. The Chapter 101 revisions submittal is 

not a request for an 18-month extension.

Subpart S – Inspection/Maintenance Program 

Requirements

Requirements found in 51, Subpart S are not 

applicable to the SIP submittal under review in this 

document. The Chapter 101 revisions are not 

related to an inspection/maintenance program.

Subpart T – Conformity to State or Federal 

Implementation Plans of Transportation Plans, 

Programs, and Projects Developed, Funded, or 

Approved Under Title 23 U.S.C or the Federal 

Transit Laws

The Chapter 101 revisions do not interfere with or 

change the transportation conformity budgets 

developed for each nonattainment and maintenance 

area pursuant to subpart T. 

Subpart U – Economic Incentive Programs 40 CFR part 51, subpart U establishes requirements 

for statutorily mandated economic incentive 

programs under sections 182(g)(3), 182(g)(5), 

187(d)(3), or 187(g) of the CAA. The DERC 

program is a discretionary economic incentive 

program, and therefore not subject to the 

requirements of subpart U.

Subpart W – Determining Conformity of General 

Federal Actions to State or Federal Implementation 

Plans

The Chapter 101 revisions do not change or modify

the Texas procedures used to determine conformity

of federal actions, consistent with subpart W. 

77
Subpart X – Provisions for Implementation of 8-hr 

Ozone NAAQS

Requirements found in 51, Subpart X are for the 

implementation of the 8-hour ozone NAAQS. The 

Chapter 101 revisions, while updating air quality

rules for use in ozone nonattainment areas, do not 

establish the measures by which an area will 

achieve attainment of the 8-hr ozone NAAQS.

Subpart Y – Mitigation Requirements The Chapter 101 revisions do not create procedures 

by which Texas could exclude air quality data due 

to exceptional events.

Subpart Z – Provisions for Implementation of 

PM2.5 National Ambient Air Quality Standards

Requirements found in 51, Subpart X are for the 

implementation of the PM2.5 NAAQS. The 

Chapter 101 revisions do not establish procedures 

for implementing the PM2.5 NAAQS.

Does TCEQ have the necessary legal authority to implement the revisions to 30 TAC 

Sections 101.372, 101.373, 101.375, 101.376, and 101.378 as part of the SIP?

Texas enforcement provisions are not typically in the State’s individual rules but are 

separately codified. Texas Water Code Chapter 7 contains the State’s statutory provisions 

for enforcement of the Texas DERC Program. In particular, TWC § 7.051 provides for 

the assessment of administrative penalties by the TCEQ, and § 7.032 provides for 

injunctive relief by the TCEQ. The TCEQ enforcement rule at 30 TAC § 70.5 

incorporates remedies found in the state statutes (Texas Water Code and the Texas Health 

and Safety Code), and permits referrals to EPA for civil, judicial or administrative action. 

It is our conclusion that TCEQ has adequate legal authority to enforce the DERC program

revisions as part of the SIP. Once we approve the revisions to the DERC program into 

the SIP, EPA will be able to enforce it under section 113 of the Clean Air Act.

The 40 CFR part 70, / CAA Title V operating permits program and the 40 CFR part 63, 

National Emission Standards for Hazardous Air Pollutants (NESHAPs) have been 

reviewed and found to have sufficient enforcement provisions. These same enforcement 

provisions will apply to the DERC Program. The Office of the Attorney General of the 

State of Texas has provided written opinions for these programs. The opinions state that 

TCEQ has the necessary legal authority to implement and enforce the programs. TCEQ 

has the authority to have reasonable requirements for measuring and monitoring air 

emissions and to require owners and operators of sources to make and maintain records of 

the emissions. 

The Office of the Attorney General of the State of Texas cited State laws and regulations 

that regulate, at a minimum, the same sources as the Clean Air Act and do so with 

standards that are no less stringent than those specified by the CAA. The cited laws and 

regulations are: Texas Health and Safety Code Ann. sections 382.016 (Monitoring 

Requirements, Examination of Records), 382.021 (Sampling Methods and Procedures), 

382.0514 (Sampling, Monitoring and Certification); 30 TAC sections 122.132 

(Application and Required Information for Initial Permit Issuance, Reopening, Renewal, 

78
or General Operating Permits), 122.134 (Complete Application), 122.136 (Application 

Deficiencies), 122.142 (Permit Content Requirements), 122.143 (General Terms and 

Conditions), 122.144 (Recordkeeping Terms and Conditions), 122.145 (Reporting Terms 

and Conditions), 122.146 (Compliance Certification Terms and Conditions), 122.165 

(Certification by Responsible Official; 30 TAC sections 101.8 (Sampling), 101.9 

(Sampling Ports).

Recordkeeping requirements specific to the DERC rule are set forth at § 101.372(h). The 

Attorney General has determined that TCEQ is allowed to prescribe sampling methods 

and procedures to be used to determine violations of and compliance with the TCEQ rules 

and orders. The DERC rule provides that any use of monitoring protocols other than

those specified in Chapter 115 and Chapter 117 will be approved by EPA 

(§ 101.372(d)(1)). The rules also specify procedures in the event that monitoring and 

testing data are unavailable at § 101.372(d)(2). The opinions of the Texas Attorney 

General indicate that TCEQ has the necessary legal authority to implement and enforce the 

DERC program in accordance with the requirements of the Clean Air Act. 

EPA’s guidance on practicable enforceability (provided in the FDMS docket for this 

action) is a series of agency memos on limiting potential to emit. While this guidance is 

not directly applicable to an emissions trading program, the requirements for sufficient 

monitoring do apply to the DERC program. The sources generating and certifying 

emission reductions as DECs must be able to quantify the emission reduction over time. 

The DERC EIP meets EPA’s expectations on practicable enforceability by requiring sites 

to calculate emission reductions using an EPA approved protocol. Facilities subject to the 

control specifications in Chapters 115 and 117 must use the testing and monitoring 

methodologies identified to show compliance with the emission standards. If this 

monitoring or testing data is unavailable or does not exist, the facility may report actual 

emissions for that period of time using the methods listed below in the following order of 

preference:

1. Continuous monitoring data;

2. Periodic monitoring data;

3. Testing data;

4. Manufacturer’s data;

5. Material balance.

A facility must submit justification to the TCEQ when not using the monitoring and testing 

protocols in Chapters 115 and 117.

For the above reasons EPA has concluded that the DERC program revisions meet the 

Clean Air Act requirements and EPA EIP Guidance expectations for penalties, corrective 

action, and practicable enforceability in the integrity element of enforceable.

79
IV.B. Evaluation of the August 16, 2007, SIP Submittal

3. Evaluation of the August 16, 2007 Revisions to the Texas DERC Program 

with respect to the existing SIP-approved language and the EIP Guidance

The evaluation of the DERC program with respect to the EIP Guidance was conducted

with our proposed conditional approval on October 5, 2005 (70 FR 58154) and final 

approval on September 6, 2006 (71 FR 52703). The August 16, 2007, rule package 

currently under review in this TSD does not change the type of program or functionality 

of the DERC trading program with respect to the EIP Guidance. Therefore, the 

evaluation of the revisions to the DERC and program at sections 101.372 and 101.376 

will include a line item comparison of the federally approved DERC program and the 

State’s adopted revisions to determine approvability. Approvability of each revision will 

be based on the EIP Guidance and whether the measure strengthens the SIP. Note that 

this analysis will not reevaluate the portions of the DERC program that have not been 

revised since our final actions on September 6, 2006.

Table IV-B3.1: Revisions to § 101.372 – General Provisions

Federally Approved Version

September 6, 2006

71 FR 52703

Adopted State Language

October 4, 2006

Rule Project Number 2005-054-

101-PR

Adopted State Language

July 25, 2007

Rule Project Number 2006-053-

101-PR

80
(a) Applicable pollutants. 

Reductions of volatile 

organic compounds 

(VOC), nitrogen oxides 

(NOX), carbon monoxide 

(CO), sulfur dioxide 

(SO2), and particulate 

matter with an 

aerodynamic diameter of 

less than or equal to a 

nominal ten microns 

(PM10) may qualify as 

discrete emission credits 

as appropriate. 

Reductions of other 

criteria pollutants are not 

creditable. Reductions of 

one pollutant may not be 

used to meet the reduction 

requirements for another 

pollutant, unless:

(a) Applicable pollutants. 

Reductions of volatile 

organic compounds (VOC), 

nitrogen oxides (NOX), 

carbon monoxide (CO), 

sulfur dioxide (SO2), and 

particulate matter with an 

aerodynamic diameter of 

less than or equal to a 

nominal ten microns 

(PM10) may qualify as 

discrete emission credits as 

appropriate. Reductions of 

other criteria pollutants are 

not creditable. Reductions 

of one pollutant may not be 

used to meet the reduction 

requirements for another 

pollutant, unless urban 

airshed modeling

demonstrates that one may

be substituted for another 

subject to approval by the 

executive director and the 

United States 

Environmental Protection 

Agency (EPA).

No Change

(1) urban airshed 

modeling 

demonstrates that one 

may be substituted for 

another subject to 

approval by the 

executive director and 

the EPA; or

Moved to 101.372(a) No Change

(2) the facility generating 

the emission 

reductions is located 

outside the United 

States and:

International trading provisions 

have been moved to 101.375, see 

discussion below.

No Change

(A) the 

substitution:

International trading provisions 

have been moved to 101.375, see 

discussion below.

No Change

(i) results in a greater 

health benefit and is 

of equal or greater 

benefit to the 

overall air quality of 

the area, as 

determined by the

executive director;

International trading provisions 

have been moved to 101.375, see 

discussion below.

No Change

81
(ii) is from the 

reduction of a 

criteria pollutant for 

which the area has 

been designated as 

nonattainment or 

which leads to the 

formation of a 

criteria pollutant for 

which an area has 

been designated as 

nonattainment; and

International trading provisions 

have been moved to 101.375, see 

discussion below.

No Change

(iii) is for any criteria 

pollutant for which 

the area has been 

designated as 

nonattainment or 

leads to the 

formation of a 

criteria pollutant for 

which the area has 

been designated as 

nonattainment; and

International trading provisions 

have been moved to 101.375, see 

discussion below.

No Change

(B) the user: International trading provisions 

have been moved to 101.375, see 

discussion below.

No Change

(i) demonstrates that 

the use of the 

reduction does not 

cause localized 

health impacts, as 

determined by the 

executive director;

International trading provisions 

have been moved to 101.375, see 

discussion below.

No Change

(ii) submits all 

supporting 

information for 

calculations and 

modeling, and any

additional 

information 

requested by the 

executive director; 

and

International trading provisions 

have been moved to 101.375, see 

discussion below.

No Change

(iii) is located within 

100 kilometers of 

the Texas - Mexico 

border.

International trading provisions 

have been moved to 101.375, see 

discussion below.

No Change

(b) Eligible generator 

categories. Eligible 

categories include the 

following:

No change No Change

82
(1) facilities (including 

area sources);

No change No Change

(2) mobile sources; or No change No Change

(3) any facility, including 

area sources, or 

mobile source 

associated with 

actions by federal 

agencies under 

§101.30 of this title 

(relating to 

Conformity of 

General Federal 

Actions to State 

Implementation 

Plans).

No change No Change

(c) Discrete emission credit 

requirements.

No change No Change

(1) To be creditable as a 

discrete emission 

reduction credit 

(DERC), an emission 

reduction must meet 

the following:

No change No Change

(A) the reduction 

be real, 

quantifiable, and 

surplus at the time 

the discrete 

emission credit is 

generated;

No change No Change

(B) the reduction 

must have occurred 

after the most 

recent year of 

emissions inventory

used in the state 

implementation 

plan (SIP) for all 

applicable 

pollutants; and

No change No Change

(C) the facility's 

annual emissions 

prior to the 

reduction strategy

must have been 

reported or 

represented in the 

emissions inventory

used for the SIP.

No change No Change

83
(2) To be creditable as a 

mobile discrete 

emission reduction 

credit (MDERC), an 

emission reduction 

must meet the 

following:

No change No Change

(A) the reduction 

must be real, 

quantifiable, and 

surplus at the time 

it is created;

No change No Change

(B) the reduction 

must have occurred 

after the most 

recent year of 

emissions inventory

used in the SIP for 

all applicable 

pollutants;

No change No Change

(C) the mobile 

source’s emissions 

must have been 

represented in the 

emissions inventory

used for the SIP; 

and

No change No Change

(D) the mobile 

sources must have 

been included in the 

attainment 

demonstration 

baseline emissions 

inventory. If a 

mobile reduction 

implemented is not 

in the baseline for 

emissions, this 

reduction does not 

constitute a discrete 

emission reduction.

No change No Change

84
(3) Emission reductions 

from a facility or 

mobile source which 

are certified as 

discrete emission 

credits under this 

division cannot be 

recertified in whole or 

in part as emission 

credits under another 

division within this 

subchapter.

No change No Change

(d) Protocol. No change No Change

(1) All generators or 

users of discrete 

emission credits must 

use a protocol which 

has been submitted by 

the executive director 

to the EPA for 

approval, if existing 

for the applicable 

facility or mobile 

source, to measure 

and calculate baseline 

emissions. If the 

generator or user 

wishes to deviate from 

a protocol submitted 

by the executive 

director, EPA 

approval is required 

before the protocol 

can be used. 

Protocols shall be 

used as follows.

No change No Change

85
(A) Facilities 

subject to the 

emission 

specifications under 

§§117.106, 

117.206, or 117.475 

of this title (relating 

to Emission 

Specifications for 

Attainment 

Demonstrations; 

and Emission 

Specifications) shall 

quantify reductions 

in NO

X using the 

testing and 

monitoring 

methodologies 

identified to show 

compliance with the 

emission 

specification.

No change (A) Facilities subject to 

the emission 

specifications under 

§§117.110, 117.210, 

117.310, 117.410, 

117.1010, 117.1110, 

117.1210, 117.1310, 

117.2010, 117.2110, 

or 117.3310 117.106, 

117.206, or 117.475

of this title (relating 

to Emission 

Specifications for 

Attainment 

Demonstration 

Demonstrations; 

Emission 

Specifications for 

Eight-Hour 

Attainment 

Demonstration; and 

Emission 

Specifications) shall 

quantify reductions in 

NO

X using the testing 

and monitoring 

methodologies 

identified to show 

compliance with the 

emission 

specification.

86
(B) Facilities 

subject to the 

requirements under 

§§115.112, 

115.121, 115.122, 

115.162, 115.211, 

115.212, 115.352, 

115.421, 115.541, 

or 115.542 (relating 

to Emission 

Specifications; and 

Control 

Requirements) shall 

quantify VOC 

reductions using the 

testing and 

monitoring 

methodologies 

identified to show 

compliance with the 

emission 

specifications or the 

requirements.

No Change (B) Facilities subject to 

the requirements 

under §§115.112, 

115.121, 115.122, 

115.162, 115.211, 

115.212, 115.352, 

115.421, 115.541, or 

115.542 of this title

(relating to Emission 

Specifications; and

Control Requirements 

and Emission 

Specifications) shall 

quantify VOC 

reductions using the 

testing and 

monitoring 

methodologies 

identified to show 

compliance with the 

emission 

specifications or the 

requirements.

(C) If the executive 

director has not 

submitted a protocol 

for the applicable 

facility or mobile 

source to the EPA 

for approval, the 

following applies:

No Change No Change

(i) the amount of 

discrete emission 

credits from a 

facility or mobile 

source, in tons, will 

be determined and 

certified based on 

quantification 

methodologies at 

least as stringent as 

the methods used to 

demonstrate 

compliance with 

any applicable 

requirements for the 

facility or mobile 

source;

No Change No Change

87
(ii) the generator must 

collect relevant data 

sufficient to 

characterize the 

facility’s or mobile 

source’s emissions 

of the affected 

pollutant and the 

facility’s or mobile 

source’s activity

level for all 

representative 

phases of operation 

in order to 

characterize the 

facility’s or mobile 

source’s baseline 

emissions;

No Change No Change

(iii) facilities with 

continuous 

emissions 

monitoring systems 

or predictive 

emissions 

monitoring systems 

in place shall use 

this data in 

quantifying actual 

emissions;

No Change No Change

(iv) the chosen 

quantification 

protocol shall be 

made available for 

public comment for 

a period of 30 days 

and shall be 

viewable on the 

commission’s web 

site;

(iv) the chosen 

quantification protocol 

shall be made available 

for public comment for a 

period of 30 days and 

shall be viewable on the 

commission’s Web web

site;

No Change

(v) the chosen 

quantification 

protocol and any

comments received 

during the public 

comment period 

shall, upon 

approval by the 

executive director, 

be submitted to the 

EPA for a 45-day

adequacy review; 

and

No Change No Change

88
(vi) quantification 

protocols shall not 

be accepted for use 

with this division 

(relating to Discrete 

Emission Credit 

Banking and 

Trading) after a 

proposed 

disapproval of the 

protocol by the EPA 

in the Federal 

Register.

(vi) quantification protocols 

shall not be accepted for 

use with this division 

(relating to Discrete 

Emission Credit 

Banking and Trading) if 

the executive director 

receives a letter 

objecting to the use of 

the protocol from the 

EPA during the 45-day

adequacy review or the 

EPA proposes 

disapproval of the 

protocol in the Federal 

Register after a 

proposed disapproval of 

the protocol by the EPA 

in the Federal Register.

No Change

(2) In the event that the 

monitoring and testing 

data required under 

paragraph (1) of this 

subsection is missing or 

unavailable, the facility

may report actual 

emissions for that period 

of time using these 

listed methods in the 

following order of 

preference to determine 

actual emissions:

No Change No Change

(A) continuous 

monitoring data;

No Change No Change

(B) periodic monitoring 

data;

No Change No Change

(C) testing data; No Change No Change

(D) manufacturer’s 

data;

No Change No Change

(E) EPA Compilation of 

Air Pollution 

Emission 

Factors (AP-42), 

September 2000; or

No Change No Change

(F) Material balance. No Change No Change

89
(3) When quantifying actual 

emissions in accordance 

with paragraph (2) of 

this subsection, the 

generator shall use the 

most conservative 

method for replacing the 

missing data, submit the 

justification for not 

using the methods in 

paragraph (1) of this 

subsection, and submit 

the justification for the 

method used.

No Change No Change

(e) Credit certification. No Change No Change

(1) The amount of discrete 

emission credits shall be 

rounded down to the 

nearest tenth of a ton 

when generated and 

shall be rounded up to 

the nearest tenth of a ton 

when used.

No Change No Change

(2) Applications for 

certification will be 

reviewed in order to 

determine the credibility

of the reductions. 

Reductions determined 

to be creditable will be 

certified by the 

executive director.

No Change No Change

(3) The applicant will be 

notified in writing if the 

executive director denies 

the discrete emission 

credit notification. The 

applicant may submit a 

revised discrete 

emission credit

notification in 

accordance with the 

requirements of this 

division.

No Change No Change

90
(4) If a facility’s or mobile 

source’s emissions 

exceed its allowable 

emission limit, the 

amount of emissions 

exceeding the limit may

not be certified as 

discrete emission

credits.

No Change No Change

(f) Geographic scope. Except 

as provided in paragraphs 

(7) and (8) of this 

subsection, only emission 

reductions generated in the 

State of Texas may be 

creditable and used in the 

state with the following 

limitations.

(f) Geographic scope. Except 

as provided in paragraph 

(7) of this subsection and § 

101.375 of this title 

(relating to Emission 

Reductions Achieved 

Outside the United States)

paragraphs (7) and (8) of 

this subsection, only

emission reductions 

generated in the State of 

Texas may be creditable 

and used in the state with 

the following limitations.

No Change

(1) VOC and NOX discrete 

emission credits 

generated in an ozone 

attainment area may be 

used in any county or 

portion of a county

designated as attainment 

or unclassified, except 

as specified in 

paragraphs (4) and (5) 

of this subsection and 

may not be used in an 

ozone nonattainment 

area.

No Change No Change

(2) VOC and NOX discrete 

emission credits 

generated in an ozone 

nonattainment area may

be used either in the 

same ozone 

nonattainment area in 

which they were 

generated, or in any

county or portion of a 

county designated as 

attainment or 

unclassified.

No Change No Change

91
(3) VOC and NO

X discrete 

emission credits 

generated in an ozone 

nonattainment area may

not be used in any other ozone nonattainment 

area, except as provided 

in this subsection.

No Change No Change

(4) VOC discrete emission 

credits are prohibited 

from use within the 

covered attainment 

counties, as defined in 

§115.10 of this title 

(relating to Definitions), 

if generated outside of 

the covered attainment 

counties. VOC discrete 

emission credits 

generated in a 

nonattainment area may

be used in the covered 

attainment counties, 

except those generated 

in El Paso.

No Change No Change

(5) NO

X discrete emission 

credits are prohibited

from use within the 

covered attainment 

counties, as defined in 

§115.10 of this title, if 

generated outside of the 

covered attainment 

counties. NO

X discrete 

emission credits 

generated in a 

nonattainment area, 

except those generated 

in El Paso, may be used

in the covered 

attainment counties.

No Change No Change

92
(6) CO, SO2 , and PM10 

discrete emission credits 

must be used in the 

same metropolitan 

statistical area (as 

defined in Office of 

Management and 

Budget Bulletin Number 

93-17 entitled "Revised 

Statistical Definitions 

for Metropolitan Areas" 

dated June 30, 1993) in 

which the reduction was 

generated.

No Change No Change

(7) VOC and NOX discrete 

emission credits 

generated in other 

counties, states, or 

nations may be used in 

any attainment or 

nonattainment county

provided a 

demonstration has been 

made and approved by

the executive director 

and the EPA, to show 

that the emission 

reductions achieved in 

the other county, state, 

or nation improve the 

air quality in the county

where the credit is being 

used.

No Change No Change

(8) A facility may use 

discrete emission 

reductions generated 

outside the United States 

provided that the 

emission reductions are 

quantifiable, real, and 

surplus to any applicable 

international, federal, 

state, or local law and 

the result would provide 

a greater health benefit 

to the area as 

determined by the 

executive director. The 

applicant must:

International trading provisions 

have been moved to 101.375, see 

discussion below.

No Change

93
(A) demonstrate that 

the use of the 

reduction does not 

cause localized 

health impacts, as 

determined by the 

executive director;

International trading provisions 

have been moved to 101.375, see 

discussion below.

No Change

(B) submit all 

supporting 

information for 

calculations and 

modeling, and any

additional 

information 

requested by the 

executive director; 

and

International trading provisions 

have been moved to 101.375, see 

discussion below.

No Change

(C) be located within 

100 kilometers of 

the Texas - Mexico 

border.

International trading provisions 

have been moved to 101.375, see 

discussion below.

No Change

(g) Ozone Season. In areas 

having an ozone season of 

less than 12 months (as 

defined in 40 CFR Part 58, 

Appendix D) VOC and NOX

discrete emission credits 

generated outside this ozone 

season may not be used 

during the ozone season.

No Change No Change

94
(h) Recordkeeping. The 

generator must maintain a 

copy of all notices and 

backup information 

submitted to the registry for 

a minimum of five years, 

following the completion of 

the generation period. The 

user must maintain a copy of

all notices and backup 

information submitted to the 

registry for a minimum of 

five years, following the 

completion of the use period. 

Other relevant reference 

material or raw data must 

also be maintained on-site by

the participating facilities or 

mobile sources. The user 

must also maintain a copy of 

the generator’s notice and 

backup information for a 

minimum of five years after 

the use is completed. The 

records shall include, but not 

necessarily be limited to:

No Change No Change

(1) the name, emission 

point number, and 

facility identification 

number of each facility

or any other identifying 

number for mobile 

sources using discrete 

emission credits;

No Change No Change

(2) the amount of discrete 

emission credits being 

used by each facility or 

mobile source; and

No Change No Change

(3) the specific number, 

name, or other 

identification of discrete 

emission credits used for 

each facility or mobile 

source.

No Change No Change

95
(i) Public information. All 

information submitted with 

notices, reports, and trades 

regarding the nature, 

quantity of emissions, and 

sales price associated with 

the use of generation of 

discrete emission credits is 

public information and may

not be submitted as 

confidential. Any claim of 

confidentiality for this type 

of information, or failure to 

submit all information may

result in the rejection of the 

discrete emission reduction 

application. All 

nonconfidential notices and 

information regarding the 

generation, use, and 

availability of discrete 

emission credits may be 

obtained from the registry.

No Change No Change

(j) Authorization to emit. A 

discrete emission credit 

created under this division is 

a limited authorization to 

emit the specified pollutants 

in accordance with the 

provisions of this section, the 

FCAA, and the TCAA, as 

well as regulations 

promulgated thereunder. A 

discrete emission credit does 

not constitute a property

right. Nothing in this 

division should be construed 

to limit the authority of the 

commission or the EPA to 

terminate or limit such 

authorization.

(j) Authorization to emit. A 

discrete emission credit 

created under this division 

is a limited authorization to 

emit the specified 

pollutants in accordance 

with the provisions of this 

section, the Federal Clean 

Air Act FCAA, and the 

Texas Clean Air Act 

TCAA, as well as 

regulations promulgated 

thereunder. A discrete 

emission credit does not 

constitute a property right. 

Nothing in this division 

should be construed to limit 

the authority of the 

commission or the EPA to 

terminate or limit such 

authorization.

No Change

96
(k) Program participation. The 

executive director has the 

authority to prohibit a 

company from participating 

in discrete emission credit 

trading as a generator or 

user, if the executive director 

determines the company has 

violated the requirements of 

the program or abused the 

privileges provided by the 

program.

No Change No Change

(l) Compliance burden and 

enforcement.

No Change No Change

(1) The user is responsible 

for assuring that a 

sufficient quantity of 

discrete emission credits 

are acquired to cover the 

applicable facility or

mobile source’s 

emissions for the entire 

use period.

No Change No Change

(2) The user is in violation 

of this section if the user 

does not possess enough 

discrete emission credits 

to cover the compliance 

need for the use period. 

If the user possesses an 

insufficient quantity of 

discrete emission credits 

to cover its compliance 

need, the user will be 

out of compliance for 

the entire use period. 

Each day the user is out 

of compliance may be 

considered a violation.

No Change No Change

(3) Users may not transfer their compliance burden 

and legal 

responsibilities to a 

third party participant. 

Third party participants 

may only act in an 

advisory capacity to the 

user.

No Change No Change

97
(m) Credit ownership. The 

owner of the initial discrete 

emission credit certificate 

shall be the owner or 

operator of the facility or 

mobile source creating the 

emission reduction. The 

executive director may 

approve a deviation from 

this subsection considering 

factors such as, but not 

limited to:

No Change No Change

(1) whether an entity other 

than the owner or 

operator of the facility

or mobile source 

incurred the cost of the 

emission reduction 

strategy; or

No Change No Change

(2) whether the owner or 

operator of the facility

or mobile source lacks 

the potential to generate 

one tenth of a ton of 

credit.

No Change No Change

The revisions to section 101.372 submitted on October 24, 2006, are approvable as 

discussed in Section IV.A of this TSD. The revisions to section 101.372 submitted on 

August 16, 2007 update the cross-references to the recodified Chapter 117. EPA 

proposed approval of the Chapter 117 recodification on July 11, 2008 (73 FR 39900) and 

finalized approval of the recodification on December 3, 2008 (73 FR 73562). The 

following table details the cross-reference changes from the SIP-approved language to the 

newly recodified Chapter 117 sections. This analysis shows that the cross-references have 

been updated correctly and no previously SIP-approved sections have been overlooked in 

the recodification. EPA identified several errors in the proposed cross-references in our 

March 23, 2007 comment letter. The TCEQ addressed our comments and updated the 

cross-referenced citations prior to adoption. The revisions to section 101.372 submitted 

on August 16, 2007 are approvable.

Table IV-B3.2: Cross-References between Section 101.372 and Chapter 117

SIP-Approved References in § 101.372 Recodified Chapter 117 References in the 

August 16, 2007 SIP Submittal of Section 

101.302

98
§ 117.106 – Emission Specifications for 

Attainment Demonstrations for Utility Electric 

Generation in Ozone Nonattainment Areas

§ 117.1010 – Emission Specifications for 

Attainment Demonstration at Major Utility Electric 

Generation Sources in the Beaumont-Port Arthur 

Ozone Nonattainment Area

§ 117.1110 – Emission Specifications for 

Attainment Demonstration at Major Utility Electric 

Generation Sources in the Dallas-Fort Worth 

Ozone Nonattainment Area

§117.1210 – Emission Specifications for 

Attainment Demonstration at Major Utility Electric 

Generation Sources in the HGB Ozone 

Nonattainment Area

§ 117.1310 –Emission Specifications for 

Attainment Demonstration at Major Utility Electric 

Generation Sources in the Dallas-Fort Worth 8-

Hour Ozone Nonattainment Area

§ 117.206 – Emission Specifications for 

Attainment Demonstrations for Industrial, 

Commercial, and Institutional Combustion Sources 

in Ozone Nonattainment Areas

§ 117.110 – Emission Specifications for 

Attainment Demonstration for Combustion Control 

at Major Industrial, Commercial, and Institutional 

Sources in the Beaumont-Port Arthur Ozone 

Nonattainment Area

§ 117.210 – Emission Specifications for 

Attainment Demonstration for Combustion Control 

at Major Industrial, Commercial, and Institutional 

Sources in the Dallas-Fort Worth Ozone 

Nonattainment Area

§117.310 – Emission Specifications for Attainment 

Demonstration for Combustion Control at Major 

Industrial, Commercial, and Institutional Sources 

in the Houston-Galveston-Brazoria Ozone 

Nonattainment Area

§ 117.410 – Emission Specifications for 

Attainment Demonstration for Combustion Control 

at Major Industrial, Commercial, and Institutional 

Sources in the Dallas-Forth Worth 8-Hour Ozone 

Nonattainment Area

99
§ 117.475 – Emission Specifications for Boilers, 

Process Heaters, and Stationary Engines and Gas 

Turbines at Minor Sources

§117.2010 – Emission Specifications for 

Combustion Control at Minor Sources in the 

Houston-Galveston-Brazoria Ozone Nonattainment 

Area

§ 117.2110 – Emission Specifications for 

Combustion Control at Minor Sources in the DallasFort Worth 8-Hour Ozone Nonattainment Area

§ 117.3310 – Emission Specifications for 

Combustion Control at Multi-Regional East Texas 

Sources for 8-Hour Ozone Attainment 

Demonstration

Table IV-B3.3: Revisions to Section 101.376

Federally Approved Version

September 6, 2006

71 FR 52703

Adopted State Language

October 4, 2006

Rule Project Number 2005-054-

101-PR

Adopted State Language

July 25, 2007

Rule Project Number 2006-053-

101-PR

(a) Requirements to use discrete 

emission credits. Discrete 

emission credits may be used 

if the following requirements 

are met.

No Change No Change

(1) The user shall have 

ownership of a sufficient 

amount of discrete 

emission credits before 

the use period for which 

the specific discrete 

emission credits are to 

be used.

No Change No Change

(2) The user shall hold 

sufficient discrete 

emission credits to cover 

the user’s compliance 

obligation at all times.

No Change No Change

100
(3) The user shall acquire 

additional discrete 

emission credits during 

the use period if it is 

determined the user 

does not possess enough 

discrete emission credits 

to cover the entire use 

period. The user shall 

acquire additional 

credits as allowed under 

this section prior to the 

shortfall, or be in 

violation of this section.

No Change No Change

(4) Facility or mobile source 

operators may acquire 

and use only discrete 

emission credits listed 

on the registry.

No Change No Change

(b) Use of discrete emission 

credits. With the exception 

of uses prohibited in 

subsection (c) of this section 

or precluded by commission 

order or condition within an 

authorization under the same 

commission account number, 

discrete emission credits 

may be used to meet or 

demonstrate compliance 

with an facility or mobile 

regulatory requirement 

including the following:

No Change No Change

(1) to exceed any allowable 

emission level, if the 

following conditions are 

met:

No Change No Change

101
(A) in ozone 

nonattainment areas, 

permitted facilities 

may use discrete 

emission credits to 

exceed permit 

allowables by no more 

than ten tons for NOX

or five tons for VOCs 

in a 12-month period 

as approved by the 

executive director. 

This use is limited to 

one exceedance, up to 

12 months, within any

24-month period, per 

use strategy. The user 

shall demonstrate that 

there will be no 

adverse impacts from 

the use of discrete 

emission credits at the 

levels requested; or

No Change No Change

(B) at permitted 

facilities in counties 

or portions of counties 

designated as 

attainment or 

unclassified, discrete 

emission credits may

be used to exceed 

permit allowables by 

values not to exceed 

the PSD significance 

levels as provided in 

40 CFR 52.21(b)(23), 

as approved by the 

executive director 

prior to use. This use 

is limited to one 

exceedance, up to 12 

months, within any 24-

month period, per use 

strategy. The user 

shall demonstrate that 

there will be no 

adverse impacts from 

the use of discrete 

emission credits at the 

levels requested;

No Change No Change

102
(2) as new source review 

(NSR) permit offsets, if 

the following 

requirements are met:

No Change No Change

(A) the user shall 

obtain the executive 

director’s approval 

prior to the use of 

specific discrete 

emission credits to 

cover, at a minimum, 

one year of operation 

of the new or 

modified facility in 

the NSR permit;

No Change No Change

(B) the amount of 

discrete emission 

credits needed for 

NSR offsets equals the 

quantity of tons 

needed to achieve the 

maximum allowable 

emission level set in 

the user’s NSR 

permit. The user 

shall also purchase 

and retire enough 

discrete emissions 

credits to meet the 

offset ratio 

requirement in the 

user’s ozone 

nonattainment area. 

The user shall 

purchase and retire 

either the 

environmental 

contribution of 10% 

or the offset ratio, 

whichever is higher; 

and

No Change No Change

(C) the NSR permit 

must meet the 

following 

requirements:

No Change No Change

103
(i) the permit must 

contain an 

enforceable 

requirement that 

the facility obtain 

at least one 

additional year of 

offsets before 

continuing 

operation in each 

subsequent year;

No Change No Change

(ii) prior to issuance 

of the permit the 

user shall identify

the discrete 

emission credits; 

and 

No Change No Change

(iii) prior to start of 

operation the user shall submit a 

completed DEC-2 

Form, Notice of 

Intent to Use 

Discrete 

Emission Credits, 

along with the 

original 

certificate; 

No Change No Change

(3) to comply with the Mass 

Emissions Cap and 

Trade Program 

requirements as 

provided in § 

101.356(g); or

No Change No Change

(4) to comply with Chapters 

114, 115, and 117 of 

this title, as allowed.

No Change No Change

(c) Discrete emission credit use 

prohibition. A discrete 

emission credit may not be 

used under this division:

No Change No Change

(1) before it has been 

acquired by the user;

No Change No Change

(2) for netting to avoid the 

applicability of federal 

and state NSR 

requirements;

No Change No Change

(3) to meet (as codified in 

42 USC) FCAA 

requirements for;

No Change No Change

(A) NSPS 

standards, § 111;

No Change No Change

104
(B)

LAER 

standards, § 

173(a)(2);

No Change No Change

(C) BACT, § 

165(a)(4);

No Change No Change

(D) HAPs, § 112 

including the 

requirements for 

MACT;

No Change No Change

(E) Standards for 

solid waste 

combustion, § 129;

No Change No Change

(F) Requirements 

for vehicle inspection 

and maintenance, § 

182(b)(4) or (c)(3);

No Change No Change

(G) Ozone control 

standards, § 183(e) 

and (f);

No Change No Change

(H) Clean-fueled 

vehicle requirements, 

§ 246;

No Change No Change

(I) Motor vehicle 

emission standards, § 

202;

No Change No Change

(J)Standards for 

non-road vehicles, § 

213;

No Change No Change

(K) Requirements 

for reformulated 

gasoline, § 211(k)

No Change No Change

(L) Requirements 

for Reid vapor 

pressure standards, § 

211(h) and (i);

No Change No Change

105
(4) to allow an emissions 

increase of an air 

contaminant above a 

level authorized in a 

permit or other 

authorization that 

exceeds the limitations 

of § 106.261(3) or (4) or 

§ 106.262(3) of this 

title, except as approved 

by the executive 

director. This 

paragraph does not 

apply to limit the use of 

discrete emission 

reduction credits 

(DERCs) or mobile 

discrete emission 

reduction credits 

(MDERCs) in lieu of 

allowances under § 

101.356(h).

(4) to allow an emissions 

increase of an air 

contaminant above a 

level authorized in a 

permit or other 

authorization that

exceeds the limitations of 

§ 106.261(3) or (4) or § 

106.262(3) of this title, 

except as approved by the 

executive director. This 

paragraph does not apply

to limit the use of 

discrete emission 

reduction credits 

(DERCs) or mobile 

discrete emission 

reduction credits 

(MDERCs) in lieu of 

allowances under § 

101.356(h).

No Change

(5) to authorize a facility

whose emissions are 

enforceable limited to 

below applicable major 

source threshold levels, 

as defined in § 122.10, 

to operate with actual 

emissions above those 

levels without triggering 

applicable requirements 

that would otherwise be 

triggered by such major 

source status; or

No Change No Change

(6) to exceed an allowable 

emission level where the 

exceedance would cause 

or contribute to a 

condition of air 

pollution as determined 

by the executive 

director.

No Change No Change

(d) Notice of intent to use. No Change No Change

106
(1) A completed DEC-2 

Form, signed by an 

authorized 

representative of the 

applicant shall be 

submitted to the 

executive director in 

accordance with the 

following requirements.

No Change

(A) Discrete 

emission credits may

be used only after the 

applicant has 

submitted the notice 

and received 

executive director 

approval.

No Change No Change

(B) The application 

must be submitted at 

least 45 days prior to 

the first day of the use 

period if the discrete 

emission credits were 

generated from a 

facility, 90 days if the 

discrete emission 

credits were generated 

from a mobile source, 

and every 12 months 

thereafter for each 

subsequent year if the 

use period exceeds 12 

months.

No Change No Change

(C) A copy of the 

application shall also 

be sent to the federal 

land manager 30 days 

prior to use if the user 

is located within 100 

kilometers of a Class I 

area, as listed in 40 

CFR Part 81.

No Change No Change

(D) The application 

must include, but is 

not limited to, the 

following information 

for each use:

No Change No Change

107
(i) the applicable 

state and federal 

requirements that 

the discrete 

emission credits 

will be used to 

comply with and 

the intended use 

period;

No Change No Change

(ii) the amount of 

discrete emission 

credits needed;

No Change No Change

(iii) the baseline 

emission rate, 

activity level, and 

total emissions 

for the applicable 

facility or mobile 

source;

No Change No Change

(iv) the actual 

emission rate, 

activity level, and 

total emissions 

for the applicable 

facility or mobile 

source;

No Change No Change

(v) the most stringent 

emission rate and 

the most stringent 

emission level for 

the applicable 

facility or mobile 

source, 

considering all 

applicable 

regulatory

requirements;

No Change No Change

(vi) a complete 

description of the 

protocol, as 

submitted by the 

executive director 

to the EPA for 

approval, used to 

calculate the 

amount of 

discrete emission 

credits needed;

No Change No Change

108
(vii)the actual 

calculations 

performed by the 

user to determine 

the amount of 

discrete emission 

credits needed;

No Change No Change

(viii) the date that 

the discrete 

emission credits 

were acquired or 

will be acquired;

No Change No Change

(ix) the discrete 

emission credit 

generator and the 

original 

certificate of the 

discrete emission 

credits acquired 

or to be acquired;

No Change No Change

(x) the price of the 

discrete emission 

credits acquired 

or the expected 

price of the 

discrete emission 

credits to be 

acquired, except 

for transfers 

between sites 

under common 

ownership or 

control;

No Change No Change

109
(xi) a statement that 

due diligence was 

taken to verify

that the discrete 

emission credits 

were not 

previously used, 

the discrete 

emission credits 

were not 

generated as a 

result of actions 

prohibited under 

this regulation, 

and the discrete 

emission credits 

will not be used 

in a manner 

prohibited under 

this regulation; 

and

No Change No Change

(xii)a certification of 

use, that must 

contain 

certification 

under penalty of 

law by a 

responsible 

official of the 

user of truth, 

accuracy, and 

completeness. 

This certification 

must state that 

based on 

information and 

belief formed 

after reasonable 

inquiry, the 

statements and 

information in 

the document are 

true, accurate, 

and complete.

No Change No Change

(2) DERC use calculation. No Change No Change

110
(A) To calculate the

amount of discrete 

emission credits 

necessary to comply 

with § 117.108, 

117.138, 117.210, or 

117.223 of this title 

(relating to System 

Cap; and Source Cap, 

a user may use the 

equations listed in 

those sections, or the 

following equations.

No Change (A) To calculate the 

amount of discrete 

emission credits 

necessary to comply 

with §§ 117.123, 

117.223, 117.320, 

117.323, 117.423, 

117.1020, 117.1120, 

117.1220, or

117.3020 of this title 

(relating to System 

Cap; and Source Cap; 

System Cap), § 

117.108, 117.138, 

117.210, or 117.223, 

a user may use the 

equations listed in 

those sections, or the 

following equations.

(i) For the rolling 

average cap:

Figure: 30 TAC § 

101.376(d)(2)(A)(i)

No Change See below.

(ii) For maximum 

daily cap:

Figure: 30 TAC § 

101.376(d)(2)(A)(ii

)

No Change See below.

(B) The amount of 

discrete emission 

credits needed to 

demonstrate 

compliance or meet a 

regulatory

requirement is 

calculated as follows.

Figure: 30 TAC § 

101.376(d)(2)(B)

No Change No Change

(C) The amount of 

discrete emission 

credits needed to 

exceed an allowable 

emissions level is 

calculated as follows.

Figure: 30 TAC § 

101.376(d)(2)(C)

No Change No Change

111
(D) The user shall 

retire 10% more 

discrete emission 

credits than are 

needed, as calculated 

in this paragraph, to 

ensure that the facility

or mobile source 

environmental 

contribution 

retirement obligation 

will be met.

No Change No Change

(E) If the amount 

of discrete emission 

credits needed to meet 

a regulatory

requirement or to 

demonstrate 

compliance is greater 

than ten tons, an 

additional 5.0% of the 

discrete emission 

credits needed, as 

calculated in this 

paragraph, must be 

acquired to ensure 

that sufficient discrete 

emission credits are 

available to the user 

with an adequate 

compliance margin.

No Change No Change

(3) A user may submit a 

notice late in the case of 

an emergency, but the 

notice must be 

submitted before the 

discrete emission credits 

can be used. The user 

shall include a complete 

description of the 

emergency situation in 

the notice of intent to 

use. All other notices 

submitted less than 45 

days prior to use, or 90 

days prior to use for a 

mobile source, will be 

considered late and in 

violation.

No Change No Change

112
(4) The user is responsible 

for determining the 

credits it will purchase 

and notifying the 

executive director of the 

selected generating 

facility or mobile source 

in the notice of intent to 

use. If the generator’s 

credits are rejected or 

the notice of generation 

is incomplete, the use of 

discrete emission credits 

by the user may be 

delayed by the executive 

director. The user 

cannot use any discrete 

emission credits that 

have not been certified 

by the executive 

director. The executive 

director may reject the 

use of discrete emission 

credits by a facility or 

mobile source if the 

credit and use cannot be 

demonstrated to meet 

the requirements of this 

section.

No Change No Change

(5) If the facility is in an 

area with an ozone 

season less than 12 

months, the user shall 

calculate the amount of 

discrete emission credits 

needed for the ozone 

season separately from 

the non-ozone season.

No Change No Change

(e) Notice of use. No Change No Change

(1) The user shall calculate: No Change No Change

113
(A) the amount of 

discrete emission 

credits used, 

including the amount 

of discrete emission 

credits retired to cover 

the environmental 

contribution, as 

described in 

subsection (d)(2)(C) 

of this section, 

associated with actual 

use; and

No Change No Change

(B) the amount of 

discrete emission 

credits not used, 

including the amount 

of excess discrete 

emission credits that 

were purchased to 

cover the 

environmental 

contribution, as 

described in 

subsection (d)(2)(C) 

of this section, but not 

associated with the 

actual use, and 

available for future 

use.

No Change No Change

(2) DERC use is calculated 

by the following 

questions.

No Change No Change

(A) The amount of 

discrete emission 

credits used to 

demonstrate 

compliance or 

meet a regulatory

requirement is 

calculated as 

follows.

Figure: 30 TAC § 

101.376(e)(2)(A)

No Change No Change

114
(B) The amount of 

discrete emission 

credits used to 

comply with 

permit allowables 

is calculated as 

follows.

Figure: 30 TAC § 

101.376(e)(2)(B)

No Change No Change

(3) A DEC-3 Form, Notice 

of Use of Discrete 

Emission Credits, shall 

be submitted to the 

commission in 

accordance with the 

following requirements.

No Change No Change

(A) The notice 

must be 

submitted within 

90 days after the 

end of the use 

period;

No Change No Change

(B) The notice 

must be 

submitted within 

90 days of the 

conclusion of 

each 12-month 

use period, if 

applicable;

No Change No Change

(C) The notice is to 

be used as the 

mechanism to 

update or amend 

the notice of

intent to use and 

must include any

information 

different from 

that reported in 

the notice of 

intent to use, 

including, but not 

limited to, the 

following items:

No Change No Change

115
(i) purchase price 

of the discrete 

emission 

credits obtained 

prior to the 

current use 

period, except 

for transfers 

between sites 

under common 

ownership or 

control;

No Change No Change

(ii) the actual 

amount of 

discrete 

emission 

credits 

possessed 

during the use 

period;

No Change No Change

(iii) the actual 

emissions 

during the use 

period for VOCs and 

NO

X

;

No Change No Change

(iv) the actual 

amount of 

discrete 

emission 

credits used;

No Change No Change

(v) the actual 

environmental 

contribution; 

and

No Change No Change

(vi) the amount of 

discrete 

emission 

credits 

available for 

future use.

No Change No Change

116
(4) Discrete emission 

credits that are not used 

during the use period 

are surplus and remain 

available for transfer or 

use by the holder. In 

addition, any portion of 

the calculated 

environmental 

contribution not 

attributed to actual use 

is also available.

No Change No Change

(5) The user is in violation 

of this section if the user 

submits the report of use 

later than the allowed 

90 days following the 

conclusion of the use 

period.

No Change No Change

On July 25, 2007, the TCEQ also adopted revisions to the following Figures as detailed 

below.

Figure: 30 TAC § 101.376(d)(2)(A)(i):

   

2000

Re )(

1

d

Amount of DERCs quired tons EREH RH

N

i

  iiii 



Where:

d = the number of days in the use period

i = each emission unit in the source or system cap

N = the total number of emission units in the source or system cap

Hi = actual daily heat input, in million British thermal units (MMBtu) per 

day, as calculated according to §§117.108(c)(1), 117.138(c), 

117.210(c)(1) or (2), or 117.223(b)(1) of this title (relating to System Cap; 

and Source Cap) as applicable §§ 117.123(b)(1), 117.223(b)(1), 

117.320(c)(1) and (2), 117.323(b)(1), 117.423(b)(1), 117.1020(c)(1), 

117.1120(c)(1), 117.1220(c)(1), or 117.3020(c) of this title (relating to 

Source Cap; and System Cap) as applicable

Ri = actual emission rate, in pounds (lb)/MMBtu, is defined as in 

§§117.108(c)(1), 117.138(c), 117.210(c)(1) or (2), or 117.223(b)(1) §§

117.123(b)(1), 117.223(b)(1), 117.320(c)(1) and (2), 117.323(b)(1),

117.423(b)(1), 117.1020(c)(1), 117.1120(c)(1) 117.1220(c)(1), or 

117.3020(c) of this title as applicable

EHi = expected new daily heat input, in MMBtu per day

ERi = expected new emission rate, in lb/MMBtu.

Figure: 30 TAC § 101.376(d)(2)(A)(ii):

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   

2000

1

Re )(

1

  



N

i Mi EREH i Mi RH i Amount of DERCs quired tons

Where:

i = each emission unit in the source or system cap

N = the total number of emission units in the source or system cap

Ri = in lb/MMBtu, as defined in §§117.108(c)(2), 117.210(c)(3), or 

117.223(b)(1) of this title (relating to System Cap; and Source Cap) as 

applicable §§ 117.123(b)(2), 117.223(b)(2), 117.320(c)(3), 117.323(b)(2),

117.423(b)(2), 117.1020(c)(2), 117.1120(c)(2) 117.1220(c)(2) of this title

as applicable

HMi = the maximum daily heat input, in MMBtu/day, as defined in 

§§117.108(c)(2), 117.210(c)(3), or 117.223(b)(1) of this title as applicable

§§ 117.123(b)(2), 117.223(b)(2), 117.320(c)(3), 117.323(b)(2), 

117.423(b)(2), 117.1020(c)(2), 117.1120(c)(2), or 117.1220(c)(2) of this 

title as applicable

EHMi = expected new maximum daily heat input, in MMBtu per day

ERi = expected new emission rate, in lb/MMBtu.

The revisions to section 101.376 submitted on October 24, 2006, are approvable as 

discussed in Section IV.A of this TSD. The revisions to section 101.376 and Figures 30 

TAC § 101.376(d)(2)(A)(i) and (ii) submitted on August 16, 2007, update the crossreferences to the recodified Chapter 117. EPA proposed approval of the Chapter 117 

recodification on July 11, 2008 (73 FR 39900) and finalized approval of the recodification 

on December 3, 2008 (73 FR 73562). The following table details the cross-reference 

change from the SIP-approved language to the newly recodified Chapter 117 sections. 

This analysis shows that the cross-references have been updated correctly and no 

previously SIP-approved sections have been overlooked in the recodification. In our 

March 23, 2007, comment letter EPA identified several errors in the cross-references. 

The TCEQ agreed with our comments and made the necessary changes prior to adoption. 

The revisions to section 101.376 submitted on August 16, 2007 are approvable.

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Table IV-B3.4: Cross-References between Section 101.376 and Chapter 117

SIP-Approved References in § 101.376 Recodified Chapter 117 References in the 

August 16, 2007 SIP Submittal of Section 

101.376

§117.108 – System Cap for Utility Electric 

Generation in Ozone Nonattainment Areas

§117.1020 – System Cap for Utility Electric 

Generation Sources in Beaumont-Port Arthur 

Ozone Nonattainment Area

§117.1120 – System Cap for Utility Electric 

Generation Sources in Dallas-Fort Worth Ozone 

Nonattainment Area

§117.1220 – System Cap for Utility Electric 

Generation Sources in Houston-Galveston-Brazoria 

Ozone Nonattainment Area

§ 117.138 – System Cap for Utility Electric 

Generation in East and Central Texas

§ 117.3020 – System Cap for Utility Electric 

Generation in East and Central Texas

§ 117.210 – System Cap for Industrial, 

Commercial, and Institutional Combustion Sources 

in Ozone Nonattainment Areas

§117.320 – System Cap for Industrial, Commercial, 

and Institutional Sources in Houston-GalvestonBrazoria Ozone Nonattainment Area

§117.223 – Source Cap for Industrial, Commercial, 

and Institutional Combustion Sources in Ozone 

Nonattainment Areas

§117.123 – Source Cap for Industrial, Commercial, 

and Institutional Sources in Beaumont-Port Arthur 

Ozone Nonattainment Area

§117.223 – Source Cap for Industrial, Commercial, 

and Institutional Sources in Dallas-Fort Worth 

Ozone Nonattainment Area

§117.323 – Source Cap for Industrial, Commercial, 

and Institutional Sources in Houston-GalvestonBrazoria Ozone Nonattainment Area

§117.423 – Source Cap for Industrial, Commercial, 

and Institutional Sources in Dallas-Fort Worth 8-

HR Ozone Nonattainment Area

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IV.B. Evalution of the August 16, 2007 SIP Submittal

4. Evaluation of the August 16, 2007, SIP submittal with respect to section 

110(l) of the Clean Air Act

Section 110(l) of the Clean Air Act states: 

Each revision to an implementation plan submitted by a State under this Act shall 

be adopted by such State after reasonable notice and public hearing. The 

Administrator shall not approve a revision of a plan if the revision would 

interfere with any applicable requirement concerning attainment and reasonable 

further progress (as defined in section 171), or any other applicable requirement 

of this Act. 

Thus, under section 110(l), this SIP revision must not interfere with attainment or 

reasonable further progress or any other applicable requirement of the Act. 

Because this analysis only focuses on the revisions to sections 101.372 and 101.376 of the 

DERC program, the 110(l) analysis will also only focus on these pieces of the August 16, 

2007 SIP revision. The August 16, 2007, updates to the DERC program will not interfere 

with attainment, reasonable further progress or any other applicable requirement of the 

Act because the revisions update references to the newly recodified Chapter 117 sections. 

These revisions are nonsubstantive and will not interfere with the SIP-approved 

functionality of the DERC program, which has already been demonstrated to be consistent 

with 110(l) through our September 6, 2006 approval. 

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V. Conclusion

The technical analysis provided in the preceding sections has compared the applicable 

sections of the CAA and 40 CFR Part 51 to TCEQ’s October 24, 2006, proposed 

revisions to the SIP, enacted at 30 TAC Chapter 101, Sections 101.302, 101.305, 

101.306, 101.338, 101.339, 101.372, 101.373, 101.375, 101.376, and 101.378. The 

technical analysis also reviewed TCEQ’s August 16, 2007, proposed revisions to the SIP, 

enacted at 30 TAC Chapter 101, Sections 101.1, 101.22, 101.302, 101.306, 101.350, 

101.351, 101.353, 101.354, 101.360, 101.372, 101.376, 101.383, and 101.385. 

This analysis found that the adoption of the revisions to sections 101.372, 101.373, 

101.375, 101.376, and 101.378 submitted on October 24, 2006, is consistent with the 

CAA and 40 CFR Part 51. Our analysis of the October 24, 2006, DERC revisions has 

also shown that the TCEQ satisfactorily addressed all DERC-specific provisions of the 

September 8, 2005, commitment letter. As such, our final conditional approval from 

September 6, 2006, is no longer necessary and EPA can propose full approval of the 

DERC program. EPA also finds that the adoption of the revisions to sections 101.372 

and 101.376 submitted on August 16, 2007, is consistent with the CAA and 40 CFR Part 

51. Therefore, it is recommended that a proposed approval of these sections be 

published. 

The revisions to sections 101.338 and 101.339 submitted on October 24, 2006 remain 

available for EPA review and action at a later date. Likewise, the revisions to sections 

101.1, 101.383, and 101.385 submitted on August 16, 2007, remain available for EPA 

review and action at a later date. EPA is proposing approval of the October 24, 2006, and 

August 16, 2007, revisions to sections 101.302, 101.305, and 101.306 in a separate 

rulemaking (see EPA-R06-OAR-2010-0147). EPA has already finally approved the 

August 16, 2007, revisions to sections 101.350, 101.351, 101.353, and 101.354.

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