ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R06-0AR-2010-0148; FRL - _

Approval and Promulgation of Air 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, Subchapter HEmissions 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 October 24, 2006, submittal creates a new section for international emission reduction

provisions and amends existing sections to prohibit the generation and use of DERCs 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 of our September 6,

2006, final conditional approval ofthe DERC program with the submittal ofthe October 24,
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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 Clean Air 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 Clean Air Act (the Act or CAA).

DATES: This final rule will be effective [Insert date 30 days from date of publication in the

Federal Register].

ADDRESSES: EPA has established a docket for this action under Docket 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 either electronically in www.regulations.gov or in hard copy at the Air Planning

Section (6PD-L), Environmental Protection Agency, 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 between the hours of 8:30 a.m. and 4:30 p.m. weekdays except

for legal holidays. Contact the person listed in the FOR FURTHER INFORMATION

CONTACT paragraph below 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 of your visit. There

will be a 15 cent per page fee for making photocopies of documents. On the day ofthe visit,

please check in at the EPA Region 6 reception area at 1445 Ross Avenue, Suite 700, Dallas,

Texas.
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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 of Air Quality, 12124 Park 35

Circle, Austin, Texas 78753.

FOR FURTHER INFORMATION CONTACT: If you have questions concerning today's

final rule, please contact Ms. 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: Throughout this document, whenever "we",

"us", or "our" is used, we mean the EPA.

Table of Contents

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 Order Reviews
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I. What final Action is EPA Taking?

We are fully approving severable portions oftwo revisions to the Texas SIP submitted by

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, Subchapter H - Emissions Banking and Trading, Division 4 - Discrete Emission Credit

Banking and Trading. The October 24, 2006, submittal creates a new section for international

emission reduction provisions and amends existing sections to prohibit the 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 program with 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 of new 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.
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EPA proposed the above action on March 30, 2010, at 75 FR 15648 - 15655. Today, we

are approving the DERC program revisions 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 of Allowances 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
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(discrete emission reduction credits, or DERCs) and reductions from mobile sources (mobile

discrete emission reduction credits, or MDERCs).! Generally, discrete emission reductions of

criteria pollutants (excluding lead) or precursors of criteria pollutants 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 subsequent revisions 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 of Senate Bill

784, adopted during regular session, 2005, ofthe 79th Texas Legislature. Senate Bill 784 allows

for greater flexibility in the generation and use ofinternational 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.

III. What are EPA's responses to comments received on the proposed action?

EPA received no comments on our proposed rulemaking.

IV. Statutory and Executive Order Reviews.

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.
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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 criteria ofthe Clean Air Act. Accordingly, this action merely

approves state law as meeting Federal requirements and does not impose additional requirements

beyond those imposed by state law. For that reason, this action:

• is not a "significant regulatory action" subject to 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 significant economic impact on a substantial number 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 significant regulatory action based on health or safety risks subject

to Executive Order 13045 (62 FR 19885, April 23, 1997);

• is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May

22, 2001);
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• is not subject to requirements of Section 12(d) of the 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 specified by 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 preempt tribal 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 submit a 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 cannot take effect until 60 days

after it is published in the Federal Register. This action is not a "major rule" as defined by 5

U.S.C.804(2).
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Under section 307(b)(l) ofthe Clean Air Act, petitions for judicial review ofthis action

must be filed in the United States Court of Appeals for the appropriate circuit by [Insert date 60

days from date of publication of this 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 ofjudicial review nor does it extend the time within which a petition for judicial

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 of Subjects in 40 CFR Part 52

Environmental protection, Air pollution control, Intergovernmental Relations, Nitrogen

oxides, Ozone, Volatile organic compounds.

Dated:

Acting Regional Administrator, Region 6.
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40 CFR part 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

Subchapter H - Emissions Banking and Trading, Division 4 - Discrete Emission

Credit Banking and Trading.

b. Adding an entry for Section 101.375 under Subchapter H - 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 of plan.

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
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* * * * * * * sect~eneral Provisions 7/2512007 [Insert date of FR

101.372 publication]

[Insert FR page

number where

document begins]

Section Discrete Emission 10/4/2006 [Insert date of FR

101.373 Reduction Credit publication]

Generation and [Insert FR page

I Certification number where

document beains]

* * * * * * *

Section Emission Reductions 10/4/2006 [Insert date of FR

I

101.375 Achieved Outside the publication]

I

United States

I

[Insert FR page

number where

document begins]

Section Discrete Emission 7/2512007 [Insert date of FR

101.376 Credit Use publication]

[Insert FR page

number where

document begins1

Section Discrete Emission .10/4/2006 [Insert date of FR

101.378 Credit Banking and publication]

Trading [Insert FR page

number where

document beains]

* * * * * * *