Kathleen Hartnett White, Chairman 

R. B. "Ralph" Marquez, Commissioner 

Larry R. Soward, Commissioner 

Glenn Shankle, Executive Director 

TEXAS COMMISSION ON ENVIRONMENTAL QUALITY 

Protecting Texas by Reducing and Preventing Pollution 

September 8, 2005 

Richard E. Greene 

Regional Administrator 

U.S . Environmental Protection Agency, Region 6 

1445 Ross Avenue, Suite 1200 

Dallas, Texas 75202-2733 

Dear Mayor Greene: 

I'm writing in response to your letter received July 22, 2005, requesting commitments by the Texas 

Commission on Environmental Quality (TCEQ) to address specific areas of concern the U.S . 

Environmental Protection Agency (EPA) has identified within the Discrete Emission Reduction 

Credit (DERC) rules and procedures. Subj ect to Commission approval and public participation, the 

TCEQ Executive Director commits to making the following revisions to the DERC rules and 

procedures : 

l . 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 pennanent 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 implementation plan revision prior to 

approving any 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 

P.O . Box 13087 0 Austin, Texas 78711-3087 0 512/239-1000 0 Internet address: www.tceq.state .tx .us 
Richard E. Greene 

Page 2 

September 8, 2005 

Certification of Mobile Discrete Emission Credits; and Form DEC-2, 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 maybe 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 . 

During the conditional approval period, the TCEQ will not approve any trades involving the types 

of reductions described in Item No. 3 above; will not approve any use of shutdown credits that were 

generated after September 30, 2002; and, will require the waiver described in Item No. 4 above for 

generators and users of discrete emission credits . 

The TCEQ will submit the revisions to the EPA by December 1, 2006. The TCEQ also recognizes 

that the conditional approval will automatically become a disapproval if the revisions are not 

completed and submitted to the EPA by this date. 

Please feel free to contact me at (512) 239-3900, or Mr. Cory Chism at (512) 239-0539, should 

you have any questions regarding this correspondence or the Emissions Banking and Trading 

programs. 

Sincerely, 

Glenn Shankle, Executive Director 

Texas Commission on Environmental Quality 

GS/RC/pl 

cc: Ms . Adina Wiley, Region 6, U.S . Environmental Protection Agency, Dallas