ENVIRONMENTAL PROTECTION AGENCY 40 CFR

### Part 52 [EPA-R06-0AR-2010-0148; FRL

-

_ Approval and Promulgation ofAir Quality Implementation Plans; Texas; Revisions to the Discrete Emission Credit Banking and Trading Program

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

SUMMARY: EPA is approving severable portions oftwo revisions to the Texas State Implementation Plan (SIP) submitted by the State ofTexas on October 24,2006, and August 16, 2007. These revisions amend existing sections and create a new section in Title 30 ofthe Texas Administrative Code (TAC), Chapter 101 - General Air Quality Rules, SubchapterHEmissions Banking and Trading, Division 4 - Discrete Emission Credit Banking and Trading, referred to elsewhere in this notice as the Discrete Emission Reduction Credit (DERC) Program. The October24, 2006, submittal creates a new section for international emission reduction provisions and amends existing sections to prohibit the generation and use ofDERCs from shutdown activities and further clarify procedures for using emission protocols. The August 16, 2007, submittal amends two sections ofthe DERC program to update cross-references to recently recodified 30 TAC Chapter 117 provisions. Additionally, EPA finds that the Texas Commission on Environmental Quality (TCEQ) has satisfied all elements ofour September 6, 2006, final conditional approval ofthe DERC program with the submittal ofthe October24,2 2006, SIP submittal; and as such, the DERC program conditional approval is converted to a full approval. EPA has determined that these SIP revisions comply with the CleanAir Act and EPA regulations, are consistent with EPA policies, and will improve air quality. This action is being taken under section 110 and parts C and D ofthe Federal CleanAir Act (the Act or CAA).

DATES: This final rule will be effective [Insert date 30 days from date ofpublication in the Federal Register].

ADDRESSES: EPA has established a docket for this action underDocket ID No. EPA-R06- OAR-2010-0148. All documents in the docket are listed in the www.regulations.gov index. Although listed in the index, some information is not publicly available, e.g., CBI or other information whose disclosure is restricted by statute. Certain other material, such as copyrighted material, will be publicly available only in hard copy. Publicly available docket materials are available eitherelectronically in www.regulations.gov or in hard copy at the Air Planning Section (6PD-L), Environmental ProtectionAgency, 1445 Ross Avenue, Suite 700, Dallas, Texas 75202-2733. The file will be made available by appointment for public inspection in the Region 6 FOIA Review Room betweenthe hours of8:30 a.m. and 4:30 p.m. weekdays except for legal holidays. Contactthe person listed in the FOR FURTHERINFORMATION CONTACT paragraphbelow or Mr. Bill Deese at 214-665-7253 to make an appointment. If possible, please make the appointment at least two working days in advance ofyour visit. There will be a 15 cent per page fee for making photocopies ofdocuments. On the day ofthe visit, please check in at the EPA Region 6 reception area at 1445 Ross Avenue, Suite 700, Dallas, Texas.3

The State submittal related to this SIP revision, and which is part ofthe EPA docket, is also available for public inspection at the State Air Agency listed below during official business hours by appointment:

Texas Commission on Environmental Quality, Office ofAir Quality, 12124 Park 35 Circle, Austin, Texas 78753.

FORFURTHERINFORMATION CONTACT: If you have questions concerning today's final rule, please contactMs. Adina Wiley (6PD-R), Air Permits Section, Environmental Protection Agency, Region 6, 1445 Ross Avenue (6PD-R), Suite 1200, Dallas, TX 75202-2733. The telephone number is (214) 665-2115. Ms. Wiley can also be reached via electronic mail at wiley.adina@epa.gov.

SUPPLEMENTARY INFORMATION: Throughoutthis document, whenever "we", "us", or "our" is used, we mean the EPA.



### Table ofContents I. What final action is EPA taking? II. What is the background for this action? III. What are EPA's responses to comments received on the proposed action? IV. Statutory and Executive OrderReviews4 

### I. What final Action is EPA Taking? We are fully approving severable portions oftwo revisions to the Texas SIP submittedby the TCEQ on October 24,2006, and August 16,2007, specific to the DERC Program. The revisions we are approving amend existing sections and create a new section in the DERC Program at Title 30 ofthe Texas Administrative Code (TAC), Chapter 101 - General Air Quality Rules, SubchapterH - Emissions Banking and Trading, Division 4 - Discrete Emission Credit Banking and Trading. The October24, 2006, submittal creates anew section for international emission reduction provisions and amends existing sections to prohibitthe generation and use of discrete emission reduction credits from shutdown activities and further clarify procedures for using emission protocols. Additionally, EPA finds that the TCEQ has satisfied all elements of
our September 6,2006, final conditional approval ofthe DERC programwith the submittal of the October 24,2006, SIP submittal; and as such, the DERC program conditional approval is converted to full SIP approval. The severable portions ofthe August 16, 2007, submittal that we
are approving non-substantively revise the DERC Program to correctly update the crossreferences to the stationary source nitrogen oxide (NOx) rules found in the Texas SIP at 30 TAC Chapter 117 as a result ofthe non-substantive recodification ofChapter 117 approved by EPA as part ofthe Texas SIP on December 3,2008 (see 73 FR 73562). Additionally, in both the October 24, 2006, and August 16, 2007, SIP submittals TCEQ has made several non-substantive revisions to update grammar and document style. Consequently, we are approving the revisions to the Texas SIP at 30 TAC sections 101.372(a), 101.372(d), 101.372(f), 101.3720), 1Ol.373(a), 101.376(c)(4), and 101.378(b) and the creation ofnew section 101.375 submitted on October 24, 2006. Additionally, we are approving revisions to the Texas SIP at 30 TAC sections 101.372(d) and 101.376(d) submitted on August 16,2007, by the TCEQ.

### 5
EPA proposed the above action on March 30, 2010, at 75 FR 15648 - 15655. Today, we
are approving the DERC programrevisions as proposed and find that they comply with the CAA and EPA regulations, are consistent with EPA policies, and will improve air quality. This final approval is being taken under parts C and D ofthe CAA. In a separate rulemaking, EPA is approving the severable Emission Credit Banking and Trading Program (referred to elsewhere in this notice as the Emission Reduction Credit (ERC) Program) revisions at 30 TAC sections 101.302, 101.305, and 101.306 submitted on October 24, 2006, and 30 TAC sections 101.302 and 101.306 submitted on August 16,2007 (see EPA-R06- OAR-2010-0417). At this time, EPA is not taking action on the revisions to the Emissions Banking and Trading ofAllowances Program at 30 TAC sections 101.338 and 101.339 submitted on October 24, 2006. EPA is also not taking action at this time on the revisions to the general air quality definitions at 30 TAC Section 101.1 or the revisions to the System Cap Trading Program at 30 TAC sections 101.383, and 101.385 submitted on August 16,2007. These severable revisions remain under review by EPA and will be addressed in separate actions.



### II. What is the background for this action? The DERC Program, conditionally approved by EPA on September 6,2006, establishes an open market trading program to provide flexibility for sources in complying with certain State and Federal requirements. In an open market trading program, a source generates emission credits by reducing its emissions during a discrete period oftime. These credits, called discrete emission credits, or DECs, in the Texas program, are quantified in units ofmass. Discrete emission credit (DEC) is a generic term that encompasses reductions from stationary sources

### 6 (discrete emission reduction credits, or DERCs) and reductions from mobile sources (mobile discrete emission reduction credits, or MDERCs).! Generally, discrete emission reductions of criteriapollutants (excluding lead) orprecursors ofcriteriapollutants may be banked and used as DERCs. EPA's September 6, 2006, final conditional approval ofthe DERC program addressed the original submission ofthe program on December 23, 1997, and the subsequentrevisions on January 18,2001; April 14, 2002; January 17,2003; and December 6,2004. Since our September 6, 2006, final conditional approval, TCEQ has revised the DERC program to address the commitments ofthe DERC conditional approva1. Additionally, the TCEQ adopted revisions to the DERC program consistent with the requirements ofSenate Bill 784, adopted during regular session, 2005, ofthe 79th Texas Legislature. Senate Bill 784 allows for greater flexibility in the generationand use ofinternational emission reductions. These revisions were adopted by the TCEQ on October4,2006, 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 promulgatedrevisions 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.



### III. What are EPA's responses to comments received on the proposed action? EPA received no comments on our proposedrulemaking.



### IV. Statutory and Executive OrderReviews.

I In this action, when we refer to the program as the "DERC Rule" or the "DERC Program" we are speaking ofthe entire Discrete Emission Credit Banking and Trading Program, which encompasses both DERCs and MDERCs.7 Under the Clean Air Act, the Administrator is required to approve a SIP submission that complies with the provisions ofthe Act and applicable Federal regulations. 42 U.S.C. 741O(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteriaofthe Clean Air Act. Accordingly, this action merely approves state law as meeting Federal requirements and does not impose additional requirements beyond those imposedby state law. For that reason, this action: • is not a "significantregulatory action" subjectto review by the Office ofManagement and Budget under Executive Order 12866 (58 FR 51735, October 4, 1993); • does not impose an information collection burden under the provisions ofthe Paperwork Reduction Act (44 U.S.C. 3501 et seq.); • is certified as not having a significanteconomic impact on a substantialnumber ofsmall entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.); -does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Public Law 104- 4); • does not have Federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10,1999); • is not an economically significantregulatory action based on health or safety risks subject to Executive Order 13045 (62 FR 19885, April 23, 1997); • is not a significantregulatory action subject to Executive Order 13211 (66 FR 28355, May 22, 2001);

### 8 • is not subject to requirements ofSection 12(d) ofthe National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because application ofthose requirements would be inconsistent with the Clean Air Act; and • does not provide EPA with the discretionary authority to address, as appropriate, disproportionate human health or environmental effects, using practicable and legally permissible methods, under Executive Order 12898 (59 FR 7629, February 16, 1994).
In addition, this rule does not have tribal implications as specifiedby Executive Order 13175 (65 FR 67249, November 9,2000), because the SIP is not approved to apply in Indian country located in the state, and EPA notes that it will not impose substantial direct costs on tribal governments or preempttribal law.

The Congressional Review Act, 5 U.S.C. 801 

### et seq., as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy ofthe rule, to each House ofthe Congress and to the Comptroller General ofthe United States. EPA will submita report containing this action and other required information to the U.S. Senate, the U.S. House ofRepresentatives, and the Comptroller General ofthe United States prior to publication ofthe rule in the Federal Register. A major rule cannottake effect until 60 days after it is published in the Federal Register. This action is not a "majorrule" as defined by 5 U.S.C.804(2).9 Under section 307(b)(l) ofthe Clean Air Act, petitions forjudicial review ofthis action mustbe filed in the United States Court ofAppeals for the appropriate circuit by [Insert date 60 days from date ofpublication ofthis document in the Federal]. Filing a petition for reconsideration by the Administrator ofthis final rule does not affect the finality ofthis action for the purposes of judicial review nor does it extend the time within which apetition forjudicial review may be filed, and shall not postpone the effectiveness ofsuch rule or action. This action may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)

List ofSubjects in 40 CFRPart 52 Environmental protection, Air pollution control, Intergovernmental Relations, Nitrogen oxides, Ozone, Volatile organic compounds.

Dated: Acting Regional Administrator, Region 6.10
40 CFRpart 52 is amended as follows: 

### PART 52-[AMENDED] 1. The authority citation for part 52 continues to read as follows: 

### Authority: 42 U.S.C. 7401 

### et seq. 

### Subpart SS - Texas 2. The table in 

### § 52.2270(c) entitled "EPA Approved Regulations in the Texas SIP" under Chapter 101 is amended by:
a. Revising the entries for Sections 101.372, 101.373, 101.376, and 101.378 under SubchapterH - Emissions Banking and Trading, Division4 - Discrete Emission Credit Banking and Trading. b. Adding an entry for Section 101.375 under SubchapterH - Emissions Banking and Trading, Division 4 - Discrete Emission Credit Banking and Trading, in numerical order. The revisions and additions read as follows:



### Section 52.2270


## * * * * * (c) 

## * * * Identification ofplan.

EPA-Approved Regulations in the Texas SIP
I State Citation Title / Subject State approval EPA approval date Explanation / submittal date 

### Chapter 101- General Air Quality Rules 

## * * * * * * * Subchapter H - Emissions Banking and Trading 

## * * * * * * * Division 4 - Discrete Emission Credit Banking and Trading

### 11



## * * * * * * *

## sect~eneral Provisions 7/2512007 [Insert date ofFR 101.372 publication] [Insert FR page numberwhere document begins] Section Discrete Emission 10/4/2006 [Insert date of FR 101.373 Reduction Credit publication] Generation and [Insert FR page

I Certification numberwhere document beains] 

## * * * * * * * Section Emission Reductions 10/4/2006 [Insert date ofFR 

# I 101.375 Achieved Outside the publication]

I United States

I [Insert FR page numberwhere document begins] Section Discrete Emission 7/2512007 [Insert date ofFR 101.376 Credit Use publication] [Insert FR page numberwhere documentbegins

## 1 Section Discrete Emission .10/4/2006 [Insert date ofFR 101.378 CreditBanking and publication] Trading [Insert FR page numberwhere document beains] 

## * * * * * * *