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The Texas Commission on Environmental Quality (TCEQ, agency, commission) 

proposes amendments to §§116.12, 116.111, 116.160, 116.610 and 116.611; and new 

§§116.164, and 116.169.

If adopted, the commission will submit the amendments to §§116.12, 116.111, 116.160, 

116.610 and 116.611; and new §§116.164, and 116.169 to the United States Environmental 

Protection Agency (EPA) as revisions to the State Implementation Plan (SIP).

Background and Summary of the Factual Basis for the Proposed Rules

In Massachusetts v. EPA (549 U.S. 497 (2007)) the Supreme Court of the United States 

ruled that greenhouse gases (GHGs) fit within the Federal Clean Air Act (FCAA or Act) 

definition of air pollutant. This ruling gave EPA the authority to regulate GHGs from new 

motor vehicles and engines if EPA made a finding under FCAA, §202(a) that six key 

GHGs taken in combination endanger both public health and welfare, and that combined 

emissions of GHGs from new motor vehicles and engines contribute to pollution that 

endangers public health and welfare. EPA issued its "Endangerment Finding" for GHGs 

0n December 15, 2009 (Endangerment and Cause or Contribute Findings for 

Greenhouse Gases Under Section 202(a) of the Clean Air Act, Final Rule, as published in 

the December 15, 2009, issue of the Federal Register (74 FR 66496)). Based on the 

Endangerment Finding, EPA subsequently adopted new emissions standards for motor 

vehicles (the "Tailpipe Rule" as published in the May 7, 2010, issue of the Federal 
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Register (75 FR 25324)). The rule established standards for light-duty motor vehicles to 

improve fuel economy thereby reducing emissions of GHGs. The standards were 

effective January 2, 2011. EPA also reconsidered its interpretation of the timing of 

applicability of Prevention of Significant Deterioration (PSD) requirements under the 

FCAA (the "Timing Rule" as published in the April 2, 2010, issue of the Federal Register

(75 FR 17004)). EPA's interpretation of the FCAA is that PSD requirements for 

stationary sources of GHGs take effect when the first national rule subjects GHGs to 

regulation under the Act. EPA determined that once GHGs were actually being 

controlled under any part of the Act they were subject to regulation under the PSD 

program. Specifically, EPA took the position that beginning on January 2, 2011, GHG 

control requirements would be required under the PSD and Title V permitting programs 

because national standards for GHGs under the Tailpipe Rule were effective on January 

2, 2011. 

EPA's regulation of GHGs under the FCAA presented substantial difficulties for the EPA 

and states, particularly with regard to the PSD program. For instance, the most common 

of the GHGs, carbon dioxide (CO2), is emitted in quantities that dwarf the Act's major 

source thresholds for program applicability. As a result, under EPA's Timing Rule, PSD 

requirements could have expanded from approximately 500 issued permits annually to 

more than 81,000 nationwide, as published in the June 3, 2010, issue of the Federal 

Register (75 FR 31514, 31537 and 31538). To avoid this result, EPA excluded much of this 
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new construction activity from the PSD program by altering the Act's statutory emission 

rate applicability thresholds for GHGs. This "Tailoring Rule," as published in the June 3, 

2010, issue of the Federal Register (75 FR 31514) newly defined the term "subject to 

regulation" and established higher GHGs emission thresholds for applicability of PSD 

and Title V permitting than specified in the FCAA. The Tailoring Rule also phased in 

permitting requirements in a multi-stepped process.

Before the Massachusetts decision in 2007, EPA took the position that GHGs are not 

regulated under the FCAA, and GHGs unquestionably were not regulated when EPA 

approved Texas' SIP in 1992. Texas has had an approved SIP since 1972, as published in 

the May 31, 1972, issue of the Federal Register (37 FR 10842). In 1983, Texas was 

delegated authority to implement the PSD program, as published in the February 9, 

1983, issue of the Federal Register (48 FR 6023). Following this delegation, Texas 

submitted several SIP revisions to enable it to administer the PSD program (collectively 

the "PSD SIP submission"). EPA approved Texas' PSD SIP in 1992, granting the state full 

authority to implement the PSD program, as published in the June 24, 1992, issue of the 

Federal Register (57 FR 28093). 

The Texas PSD SIP submission and approval proceedings produced a well-developed 

record on how Texas would address the applicability of newly-regulated pollutants under 

the PSD program. During the SIP submission process, Texas consistently explained to 
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EPA that the PSD provisions in the SIP are not prospective rulemaking, and do not 

incorporate future EPA interpretations of the Act or its regulations. 

EPA's GHGs regulations created practical difficulties about how EPA could apply its 

Tailoring Rule in states with approved SIPs. In August 2010, Texas advised EPA that it 

could not retroactively reinterpret its SIP to cover GHGs, which were not regulated at the 

time Texas' SIP was approved in 1992 and were, in fact, a composite pollutant defined for 

the first time in the Tailoring Rule. Texas also explained that the PSD program only 

encompassed National Ambient Air Quality Standard (NAAQS) pollutants, but 

confirmed as a regulatory matter that the approved PSD program encompasses all 

federally regulated new source review (NSR) pollutants, including any pollutant that 

otherwise is subject to regulation under the FCAA, as stated in §116.12(14)(D). 

Following promulgation of the Tailoring Rule, EPA issued a proposed "Finding of 

Substantial Inadequacy and SIP Call," as published in the September 2, 2010, issue of 

the Federal Register (75 FR 53892). This action proposed finding the SIPs of 13 states, 

including Texas', "substantially inadequate" because these SIPs did not apply PSD 

requirements to GHGs-emitting sources. EPA proposed to require these states (through 

their SIP-approved PSD programs) to regulate GHGs as defined in the Tailoring Rule.

EPA also proposed a Federal Implementation Plan (FIP) that would apply specifically to 

states that did not or could not agree to reinterpret their SIPs to impose the Tailoring 
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Rule and did not meet SIP submission deadlines. EPA finalized its GHG SIP Call in the 

December 12, 2010, issue of the Federal Register (75 FR 77698) and required Texas to 

submit revisions to its SIP by December 1, 2011.

EPA published an interim final rule partially disapproving Texas' SIP; imposing the 

GHGs FIP effective as of its date of publication, as published in the December 30, 2010, 

issue of the Federal Register (75 FR 82430). EPA stated that FCAA, §110(k)(6) 

authorized it to change its previous approval of Texas' PSD SIP into a partial approval 

and partial disapproval. EPA's basis was that it had erroneously approved Texas' PSD 

SIP submission because the SIP did not appropriately address the applicability of 

newly-regulated pollutants to the PSD program in the future. EPA further stated that its 

action was independent of the GHG SIP Call because that action was aimed at a narrower 

issue of applicability to GHGs, whereas its decision retroactively disapproving Texas' 

PSD SIP submission was addressed to Texas' purported failure to address, or assure the 

legal authority for, application of PSD to all pollutants newly subject to regulation. EPA 

published the final rule retroactively disapproving Texas' PSD SIP in part and 

promulgating the FIP as published in the May 3, 2011, issue of the Federal Register (76 

FR 25178). 

The effect of EPA's FIP is that major source preconstruction permitting authority is 

divided between two authorities - EPA for GHGs and the state of Texas for all other 
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pollutants. Currently, major construction projects and expansions in Texas that require 

PSD permits must file applications with both EPA Region 6 (for GHGs) and TCEQ (for 

all non-GHG pollutants).

House Bill (HB) 788, 83rd Legislature, 2013 added new Texas Health and Safety Code 

(THSC), §382.05102. The new section grants TCEQ authority to authorize emissions of 

GHGs consistent with THSC, §382.051, to the extent required under federal law. THSC,

§382.05102 directs the commission to adopt implementing rules, including a procedure 

to transition GHG PSD applications currently under EPA review to the TCEQ. Upon 

adoption, the rules must be submitted to EPA for review and approval into the Texas SIP.

THSC, §382.05102 excludes permitting processes for GHGs from the contested case 

hearing procedures in THSC, Chapter 382; Texas Water Code (TWC), Chapter 5; and 

Texas Government Code, Chapter 2001. THSC, §382.05102 also requires that the 

commission repeal the rules adopted under this authority and submit a SIP revision to 

EPA, if, at a future date, emissions of GHG are no longer required to be authorized under 

federal law.

The commission is initiating this rulemaking to fulfill the directive from the legislature.

The legislature found that "in the interest of the continued vitality and economic 

prosperity of the state, the Texas Commission on Environmental Quality, because of its 

technical expertise and experience in processing air quality permit applications, is the 
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preferred authority for emissions of {GHGs}."

Texas has challenged in federal court EPA's GHG regulations as well as EPA's SIP Call 

and FIP. Implementation of HB 788 through this rulemaking is not adverse to Texas' 

claims in its ongoing challenges to EPA's actions regarding GHGs generally or relating to 

the SIP. The commission's action to conduct rulemaking for submittal and approval by 

EPA is consistent with Texas' position that state law does not give EPA the authority to 

automatically change state regulations.

Concurrently with this proposal, the commission is proposing revisions to Chapters 39 

(Public Notice), 55 (Requests for Reconsideration and Contested Case Hearings; Public 

Comment), 101 (General Air Quality Rules), 106 (Permits by Rule), and 122 (Federal 

Operating Permits Program) to implement HB 788. Except where specifically noted, all 

proposed changes to Chapters 39, 55, 101, 106, 116, and 122 are necessary to achieve the 

goal of implementation of HB 788, obtaining SIP approval of certain rules, and 

rescission of the FIP.

Section by Section Discussion

§116.12, Nonattainment and Prevention of Significant Deterioration Definitions

The commission proposes to amend §116.12 to add the definitions of carbon dioxide 

equivalent (CO2e) emissions and the pollutant GHGs. The commission proposes 
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amendments to the definitions of federally regulated NSR pollutant, major stationary 

source, and major modification.

The proposed definition of GHGs references the proposed definition in §101.1(42),

Definitions, and establishes that the regulated pollutant GHGs is an aggregate group of 

six greenhouse gases including: carbon dioxide (CO2), nitrous oxide (N2O), methane 

(CH4), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and sulfur hexafluoride 

(SF6). HFCs are compounds containing only hydrogen, fluorine, and carbon atoms. PFCs

are compounds containing only carbon and fluorine atoms. This proposed definition is 

consistent with EPA's definition in 40 Code of Federal Regulations (CFR)

§51.166(b)(48)(i). Other gases that are considered greenhouse gases are not included in

the definition of the pollutant GHGs.

The proposed definition in §116.12(7) of CO2e emissions is consistent with EPA's 

definition in 40 CFR §51.166(b)(48)(ii). The new definition is necessary to establish the 

threshold for sources to be considered major for GHGs, consistent with EPA's Tailoring 

Rule. The CO2e emissions are determined by multiplying the mass amount in tons per 

year (tpy) of emissions of each of the gases (that are included in the definition of the 

pollutant of GHGs) by the global warming potential (GWP) of the gas, and adding the 

results. The GWPs are published in the 40 CFR Part 98, Subpart A, Table A-1 - Global 

Warming Potentials. For example, a source emits 5 tpy CO2, 25 tpy of CH4, and 10 tpy of
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the hydroflourcarbon trifluoromethane (CHF3). The GWP of CO2e is 1, the GWP of CH4 is 

21, and the GWP of CHF3 is 11,700. The CO2e of the source would be 117,530 tpy CO2e.

This value is reached by multiplying 5 tpy CO2 times 1, 21 tpy CH4 by 25, and 10 tpy CHF3

by 11,700, then adding each result to total 117,530 tpy CO2e.

The proposed definition of CO2e emissions includes EPA's deferral for CO2 emissions 

from bioenergy and other biogenic sources as published in the July 20, 2011, issue of the 

Federal Register (76 FR 43490). This deferral established that biogenic CO2 emissions 

are not required to be counted for applicability purposes under the PSD program until 

July 21, 2014. EPA committed to conduct a detailed examination of the science 

associated with biogenic CO2 emissions from stationary sources during the deferral 

period. In the meantime, certain CO2 emissions from the combustion or decomposition 

of non-fossilized and biodegradable organic material are not required to be included in 

the total mass of CO2 used to determine CO2e emissions. For example, CO2 generated 

from the combustion of biogas collected from (or the biological decomposition of) waste 

in landfills, wastewater treatment, or manure management processes is not required to 

be included in the calculation of CO2e emissions. Also exempted is CO2 generated from 

the following: fermentation during ethanol production; combustion of the biological 

fraction of municipal solid waste or biosolids; combustion of the biological fraction of 

tire-derived fuel; and combustion of biological material, including all types of wood and 

wood waste, forest residue, and agricultural material. Additional information regarding 
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the deferral for biogenic sources is available on EPA's Web site 

http://www.epa.gov/climatechange/ghgemissions/biogenic-emissions.html. 

The proposed amendment to the definition of federally regulated NSR pollutant in 

§116.12(15) will establish GHGs emitted over the federal Tailoring Rule thresholds as a 

pollutant subject to Texas' PSD permitting program.

Sources that emit GHGs are only subject to the PSD permitting program if they meet or 

exceed the thresholds proposed in new §116.164, Prevention of Significant Deterioration 

Applicability for Greenhouse Gases Sources.

The proposed new definition if GHGs in §116.12(16) establishes that the regulated 

pollutant GHGs is the aggregate group of six GHGs including: CO2, N2O, CH4, HFCs, 

PFCs, and CF6. This proposed definition is consistent with EPA's definition in 40 CFR 

§51.166(b)(48). HFCs are compounds containing only hydrogen, fluorine, and carbon 

atoms. PFCs are compounds containing only carbon and fluorine atoms. Other gases that 

are commonly considered GHGs are not included in the definition of the pollutant 

GHGs.

The proposed amendment to the definition of major stationary source and major 

modification (in §116.12(19) and (20), respectively) reference proposed new §116.164 in 
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order to simplify understanding of the thresholds established specifically for GHGs.

The commission also proposes clarifying amendments to §116.12 including renumbering 

to accommodate the proposed new definitions; deleting the sentence, "The terms in this 

section are applicable to permit review for major source construction and major source 

modification in nonattainment areas" because the definitions apply in attainment areas 

as well; and clarifying the title and citation of a referenced section in the foot note to 

Table I - Major Source/Major Modification Emission Thresholds.

§116.111, General Application

The commission proposes to amend §116.111 to add subsection (a)(2)(I)(ii) to establish 

the requirement to obtain authorization under the PSD permitting program for sources 

of GHGs which meet the thresholds proposed in new §116.164. The proposed 

amendment is necessary because the existing language in subparagraph (I) only requires 

PSD review in attainment areas. The proposed amendment clarifies that authorization of 

GHGs above the tailored thresholds is required statewide. The proposed amendment 

includes relettering subparagraph (I) to accommodate the two conditions which require 

PSD review. Consistent with current practice, the commission intends to issue a separate 

PSD GHG permit.
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§116.160, Prevention of Significant Deterioration Requirements 

The commission proposes to amend subsection (a) to require that new major sources of 

GHGs or major modifications of GHGs comply with the requirements of the PSD 

permitting program regardless of the location of the sources. The PSD permitting 

requirements are proposed to be statewide because there is no NAAQS for GHGs. This is 

consistent with the federal PSD permitting regulations.

The proposed amendment to subsection (a) will result in the applicable PSD 

requirements applying to sources that emit GHGs above the thresholds in proposed 

§116.164. The federal PSD rules, like the preconstruction requirements in the THSC, 

require a best available control technology (BACT) determination and an air quality

analysis. As EPA's guidance on PSD permitting for GHGs indicates, the focus of the 

application review is on the control technology choice. EPA has recognized that the 

unique nature of emissions of GHGs and impacts present challenges to permitting 

authorities conducting PSD review for these emissions. For instance, EPA has indicated 

that no air quality analysis is required for PSD GHG permits. In "PSD and Title V 

Permitting Guidance for Greenhouse Gases," (dated March 2011) prepared by EPA's 

Office of Air Quality Planning and Standards, EPA stated that, "...monitoring for GHGs is 

not required because EPA regulations provide an exemption in 40 CFR §52.21(i)(5)(iii) 

and §51.166(i)(5)(iii) for pollutants that are not listed in the appropriate section of the 

regulations, and GHGs are not currently included in that list. However, 40 CFR 
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§52.21(m)(1)(ii) and §51.166(m)(1)(ii) of EPA's regulations apply to pollutants for which 

no NAAQS exists. These provisions call for collection of air quality monitoring data 'as 

the Administrator determines is necessary to assess ambient air quality for that pollutant 

in any (or the) area that the emissions of that pollutant would affect.' In the case of 

GHGs, the exemption in 40 CFR §52.21(i)(5)(iii) and §51.166(i)(5)(iii) is controlling 

since GHGs are not currently listed in the relevant paragraph. Nevertheless, EPA does 

not consider it necessary for applicants to gather monitoring data to assess ambient air 

quality for GHGs under 40 CFR §52.21(m)(1)(ii) and §51.166(m)(1)(ii), or similar 

provisions that may be contained in state rules based on EPA's rules. GHGs do not affect 

"ambient air quality" in the sense that EPA intended when these parts of EPA's rules 

were initially drafted." A NAAQS for GHGs has not been established due to the extreme 

difficulty in determining what concentration level is requisite to protect public health 

and welfare. The uniformity of GHG concentrations throughout the ambient air also 

make localized impacts determinations problematic. Considering the nature of

emissions of GHGs and their global impacts, EPA stated that it is not "practical or 

appropriate to expect permitting authorities to collect monitoring data for purpose of 

assessing ambient air impacts of GHGs."

Furthermore, consistent with EPA's statement in the Tailoring Rule, EPA stated, "...it is

not necessary for applicants or permitting authorities to assess impacts from GHGs in 

the context of the additional impacts analysis or Class I area provisions of the PSD 
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regulations for the following policy reasons. Although {it is EPA's position that emissions 

of GHGs} contribute to global warming and other climate changes that result in impacts 

on the environment, including impacts on Class I areas and soils and vegetation due to 

the global scope of the problem, climate change modeling and evaluations of risks and 

impacts of emissions of GHGs is typically conducted for changes in emissions orders of 

magnitude larger than the emissions from individual projects that might be analyzed in 

PSD permit reviews. Quantifying the exact impacts attributable to a specific GHGs 

source obtaining a permit in specific places and points would not be possible with 

current climate change modeling. Given these considerations, emissions of GHGs would 

serve as the more appropriate and credible proxy for assessing the impact of a given 

facility. Thus, EPA believes that the most practical way to address the considerations 

reflected in the Class I area and additional impacts analysis is to focus on reducing 

emissions of GHGs to the maximum extent. In light of these analytical challenges,

compliance with the best available control technology analysis is the best technique that 

can be employed at present to satisfy the additional impacts analysis and Class I area 

requirements of the rules related to GHGs. "TCEQ intends to implement the PSD GHG 

permitting requirements consistent with the EPA's recognition of the unique nature of 

emissions of GHGs. The "PSD and Title V Permitting Guidance for Greenhouse Gases," 

(EPA-457/B-11-001 March 2011) guidance is available on the EPA's Web site: 

http://www.epa.gov/nsr/ghgdocs/ghgpermittingguidance.pdf.
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Further, because GHG emissions are typically non-toxic, relatively inactive and 

nonflammable, concentrations of GHGs high enough to produce health effects are 

extremely unlikely to be found in ambient air. Therefore, while health effects of GHG 

emissions will be evaluated consistent with the preceding statement when determining 

issuance of a PSD GHG permit, modeling or additional impacts review of GHGs will not 

be conducted as part of the review of an application for a PSD GHG permit. In addition, 

it is not necessary to review individual emissions of GHGs for purposes of global effects 

on the climate because no numerical standard exists. As discussed elsewhere in this 

preamble, this is because of the inherent difficulty in determining: 1) the appropriate 

concentration level as well as; 2) localized impacts because of the uniformity of GHG 

concentrations throughout the ambient air. The impacts review for individual air 

contaminants will continue to be addressed, as applicable, in the state's traditional 

minor and major NSR permits program per Chapter 116.

The commission proposes subsection (b)(2) to include references to the netting 

requirements for applicability thresholds in §116.164 for GHGs. The proposed 

amendment establishes the emission netting thresholds for GHGs which may cause an 

existing source to become subject to the PSD permitting program when the source is 

undergoing a modification. The subsection is proposed to be relettered to clarify that the 

de minimis threshold test (netting) includes the threshold for GHGs on mass basis and

CO2e emissions for modifications of emissions of GHGs.
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The commission proposes the amendment to subsection (c) to clarify that emissions of 

GHGs have the threshold specified in proposed new §116.164. 

§116.164, Prevention of Significant Deterioration Applicability for Greenhouse Gases 

Sources

The commission proposes new §116.164 to establish the specific PSD permitting major 

source thresholds for emissions of GHGs. Consistent with EPA's Tailoring Rule,

emissions of GHGs at sources that emit or will emit GHGs must be evaluated on a mass 

basis and as CO2e emissions. In proposed new subsection (a), there are five 

circumstances which will require a source to conduct PSD review for emissions of GHGs.

Two are considered by EPA as "anyway sources" or "anyway modifications" because they 

are subject to PSD permitting due to emissions of a regulated NSR pollutant that is not 

GHGs. In the proposed rule language these two categories are §116.164(a)(1) and (2), 

respectively. Two categories are considered by EPA as "non-anyway sources" and 

"non-anyway modifications" because they are not subject to PSD permitting for a 

regulated NSR pollutant other than GHGs. In the proposed rule language these 

categories are §116.164(a)(3) and (4), respectively. These sources will become subject to 

PSD permitting for GHGs as discussed in this preamble. The final category is existing

sources that are not major for any pollutants. In the proposed rule language this category 

is in §116.164(a)(5).
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EPA's approach to regulating GHGs is that the emissions of GHGs (on a mass basis) 

must first meet or exceed the definition of a "major stationary source" in 40 CFR 

§52.21(b)(1)(i) (for EPA and delegated state air permit programs) or 40 CFR 

§51.166(b)(1)(i) (for approved state air permit programs). The Tailoring Rule established 

that emissions of CO2e must meet or exceed the tailored thresholds established in the 

federal definition of "subject to regulation" in 40 CFR §52.21(b)(49) and §51.166(b)(48).

EPA details this approach in the preamble for the Tailoring Rule, as published in the 

June 3, 2010, issue of the Federal Register (75 FR 31523 and 31524), and page 9 of EPA's 

guidance (EPA-457/B-11-001 March 2011, PSD and Title V Permitting Guidance for 

Greenhouse Gases), available on EPA's Web site:

http://www.epa.gov/nsr/ghgdocs/ghgpermittingguidance.pdf.

The EPA evaluated potential streamlining mechanisms as part of Step 3 of the Tailoring 

Rule. The commission intends to explore options to efficiently process PSD GHG 

applications. The commission has existing authority to establish a streamlined 

application review and permit issuance process for groups of sources, such as sources 

that belong to the same industrial source category, or that have common processes and 

equipment. The executive director has researched streamlining options presented in the 

FCAA Advisory Committee GHG Permit Streamlining Workgroup Final Report, available 

on EPA's Web site: 
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http://www.epa.gov/nsr/ghgdocs/20120914CAAACPermitStreamlining.pdf. The 

commission will work with stakeholders during implementation of the PSD GHG 

permitting program to identify and develop appropriate streamlining options.

Proposed §116.164(a)(1)

The first circumstance proposed in §116.164(a)(1) is a new major stationary source 

subject to the PSD permitting program because of emissions of one or more pollutants 

that are not GHGs. EPA calls this category "new anyway sources" because these are 

major sources subject to PSD permitting for a pollutant that is not GHGs as defined in 40 

CFR §51.166(b)(1). These sources will become subject to PSD permitting for GHGs as a 

result of Step 1 of the Tailoring Rule (effective January 2, 2011) under 40 CFR 

§51.166(b)(48)(iv)(a). Additional information on this category can be found in Appendix 

A and in Table II-A, Summary of PSD Applicability Criteria for New Sources of GHGs, in 

EPA's guidance.

These sources must include GHGs in the PSD review if the source emits or has the 

potential to emit 75,000 tpy of CO2e or more. For example, a new source is proposed that 

will have the potential to emit: 300 tpy of volatile organic compounds (VOC); 5,000 tpy 

CO2; and 4,500 tpy CH4. Under the existing PSD permitting program in Texas, this 

source is subject to PSD permitting because its emissions of VOC exceed the major 

source threshold in 40 CFR §51.166(b)(1). In addition, the emissions of GHGs must be 
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evaluated against the threshold in proposed §116.164(a)(1) to determine if the PSD 

review must include GHGs. In this example, the source will have a potential to emit 

99,500 tpy CO2e (multiply 5,000 tpy CO2 by the GWP of 1, multiply 4,500 tpy CH4 by the 

GWP of 21, and add the two results to get 99,500 tpy CO2e). This source would be 

required to include emissions of GHGs in the PSD review because the source would emit 

greater than or equal to 75,000 tpy CO2e.

Proposed §116.164(a)(2)

The second circumstance proposed in §116.164(a)(2) is an existing major stationary 

source subject to the PSD permitting program because of emissions of a pollutant(s) that 

are not GHGs. EPA calls these "anyway modifications." These are major sources subject 

to PSD permitting for a pollutant that is not GHGs as defined in 40 CFR §51.166(b)(1).

These sources will become subject to PSD permitting for GHGs as a result of Step 1 of the 

Tailoring Rule under 40 CFR §51.166(b)(48)(iv)(b) when these sources will have a 

modification that results in an emissions increase of a regulated NSR pollutant and an 

emissions increase of CO2e as defined in 40 CFR §51.166(b)(48)(iii). Because an 

emission rate for GHGs is not listed in 40 CFR §51.166(b)(23)(i), any GHGs emission 

rate greater than zero on a mass basis is considered significant, according to 40 CFR 

§51.166(b)(23)(ii). The modification must also meet the tailored threshold of 75,000 tpy 

CO2e or more in 40 CFR §51.166(b)(48)(iv)(b). Therefore, if the project causes a 

significant net emissions increase for a non-GHG pollutant, then the project is a major 
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modification for GHGs only if it also results in a net emissions increase for GHGs at or 

above the threshold in proposed 40 CFR §51.166(b)(48)(iv)(b) as well. Additional 

information on this category can be found in Appendix C and in Table II-B, Summary of 

PSD Applicability Criteria for Modified Sources of GHGs, in EPA's guidance.

When the existing source has a major modification (as defined in §116.12) of a 

pollutant(s) that is not GHGs, the source must include GHGs in the PSD review if there is 

also a net emissions increase equal to or greater than 75,000 tpy CO2e. For example, an 

existing source major for PSD permitting is proposing changes in operation that would 

have the potential to emit net increases of: 450 tpy of nitrogen oxides (NOX), 150 tpy of 

carbon monoxide (CO); 7,000 tpy CO2; and 3,800 tpy CH4. Under the existing PSD 

permitting program in Texas, this action meets the definition of a major modification for 

NOX and CO, and those pollutants are subject to PSD review. In addition, the emissions 

of GHGs must be evaluated against the threshold in proposed §116.164(a)(2) to 

determine if the PSD review must include GHGs. In this example, the source will have a 

potential to emit 86,800 tpy CO2e (multiply 7,000 tpy CO2 by the GWP of 1, multiply 

3,800 tpy CH4 by the GWP of 21, and add the two results to get 86,800 tpy CO2e). This 

source would be required to include emissions of GHGs in the PSD review because the 

action meets the definition of a major modification in §116.12 for a federally regulated 

NSR pollutant that is not GHGs, and there would be a net emission increase of GHGs 

that exceeds zero tpy GHGs on mass basis, and 75,000 tpy CO2e or more, as established 
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in proposed new §116.164(a)(2).

In another example for the second circumstance, an existing source major for PSD 

permitting (for non-GHGs) is proposing changes in operation that would have the 

potential to emit net increases of 35 tpy NOX, 15 tpy CO, 1,000 tpy CO2, and 3,700 tpy 

CH4. The net emission increases of NOX and CO do not meet the definition of a major 

modification in §116.12 because the proposed potential emissions of both NOX and CO 

are below the significant levels in 40 CFR §51.166(b)(23). While the CO2e emissions of 

the proposed modification are 78,700 tpy CO2e, which is over the significant threshold in 

proposed §116.164, the emissions of GHGs are not subject to PSD review for this action 

because the source is not also undergoing a major modification for a federally regulated 

NSR pollutant that is not GHGs.

Proposed §116.164(a)(3)

The third circumstance proposed in §116.164(a)(3) is a new stationary source that is 

major for GHGs only (these sources are minor for all non-GHGs pollutants). EPA calls 

these "non-anyway sources" because they are subject to PSD only because of emissions of 

GHGs. These sources will become subject to PSD permitting for GHGs as a result of Step 

2 of the Tailoring Rule under 40 CFR §51.166(b)(48)(v)(a). Additional information on 

this category can be found in Appendix B and in Table II-A in EPA's guidance.
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These sources will be subject to the PSD permitting program for only GHGs if both the 

mass basis emissions of GHGs and the CO2e emissions meet or exceed the thresholds in 

proposed §116.164(a)(3). These sources must have mass basis emissions of GHGs that 

are greater than or equal to 250 tpy, or 100 tpy if the source is listed in 40 CFR 

§51.166(b)(1)(i). Additionally, these sources must meet or exceed the tailored threshold 

of 100,000 tpy CO2e. If both of the thresholds are met, the source is subject to the PSD 

permitting program solely because of emissions of GHGs.

For example, a new proposed source would have the potential to emit 35 tpy NOX, 20 tpy 

CO, 500 tpy CO2, and 6 tpy of the hydroflurocarbon nitrogen trifluoride (NF3) (the GWP 

for NF3 is 17,200). The emissions of NOX and CO are not over the major source 

thresholds for those pollutants. The mass basis for GHGs would be 506 tpy, which 

exceeds the 250 tpy threshold. The CO2e emissions would be 103,700, which exceeds the 

100,000 tpy threshold. This new source would be subject to PSD permitting solely 

because of emissions of GHGs. Since this source is not major for any pollutant other than 

GHGs (the emissions of NOX and CO are not over the significant thresholds in 40 CFR 

§51.166(b)(23)), only the GHGs are subject to PSD review. All other pollutants would be 

subject to appropriate minor source authorization.

In another example for the third circumstance, a proposed new source would have the 

potential to emit 45 tpy NOX, 15 tpy CO, 90 tpy CO2, and 6 tpy NF3. The emissions of 
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NOX and CO are below the major source thresholds. The mass basis of emissions of 

GHGs is 96 (90 tpy CO2 plus 6 tpy NF3). While the CO2e emissions are 103,290 tpy CO2e, 

the source is not considered major for GHGs because the mass basis is not over the 

threshold of 100 tpy GHGs if the source is listed on the named source category list in 40 

CFR §51.166(b)(1)(i), or greater than or equal to 250 tpy GHG if the source is not on the 

list. Both the mass basis threshold and the tailored CO2e threshold must be met or 

exceeded for the source to be considered a major source and subject to the PSD 

permitting program.

Proposed §116.164(a)(4)

The fourth circumstance, proposed in new §116.164(a)(4), is an existing stationary 

source that is major for GHGs and is proposing a major modification for GHGs. EPA 

calls these "non-anyway modifications." These sources will become subject to PSD 

permitting for GHGs in Step 2 of the Tailoring Rule under 40 CFR §51.166(b)(48)(v)(b).

These are existing sources that emit or have the potential to emit over the major source 

thresholds for GHGs. When the source will make changes that result in a net increase in 

emissions of GHGs above zero on a mass basis and greater than or equal to the tailored 

threshold of 75,000 tpy CO2e in 40 CFR §51.166(b)(48)(v)(b), it becomes subject to PSD 

permitting. As previously noted, because GHGs are not listed in 40 CFR 

§51.166(b)(23)(i), any emission rate greater than zero is considered significant according 

to 40 CFR §51.166(b)(23)(ii). Additional information on this category can be found in 
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Appendix D and in Table II-B in EPA's guidance.

These sources are existing major sources of GHGs if two thresholds are met or exceeded: 

the mass basis emissions of GHGs meet or exceed the defined threshold, and CO2e meets 

or exceeds the tailored threshold. These sources must have mass basis emissions of 

GHGs that are greater than or equal to 250 tpy, or 100 tpy if the source is listed in 40 

CFR §51.166(b)(1)(i). Additionally, these sources must meet or exceed the tailored 

threshold of 100,000 tpy CO2e. These existing major sources are subject to the PSD 

permitting program when there is a physical change or change in method of operation 

that results in a net emissions increase of greater than zero tpy GHGs on a mass basis 

and greater than or equal to 75,000 tpy CO2e. In the following example, an existing 

source is authorized to emit the following: 50 tpy NOX, 30 tpy CO, 45 tpy SO2, 5,000 tpy 

CO2, 250 tpy CH4, and 4 tpy SF6. The source is currently a minor source in regard to 

criteria pollutants; however, the source is an existing major source in regard to GHGs.

This is because the source currently has the potential to emit 5,000 tpy CO2, 250 tpy of 

CH4, and 4 tpy of SF6. The total mass basis is 5,254 tpy GHGs. The GWP of CO2 is 1, CH4

is 21, and SF6 is 23,900, so the source emits or has the potential to emit 105,850 tpy CO2e 

emissions. Both the mass basis and tailored GHGs thresholds are exceeded. This source 

is considered a major stationary source for GHGs. If the source proposes a change in 

operation that affects emissions of GHGs, the next step would be to calculate the 

proposed net emissions increases that will result from the proposed change in operation.
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If the net emissions increase is greater than zero tpy of GHGs on a mass basis, and 

greater than or equal to 75,000 tpy CO2e, then the emissions of GHGs will be subject to 

PSD review as part of a major modification.

In another example of the fourth circumstance, an existing source is authorized to emit 

the following: 500 tpy SO2, 95,000 tpy CO2, and 250 tpy CH4. The source is currently a 

major source of SO2 and GHGs. This source is proposing changes in operation that would 

have the potential to emit net increases of: 15 tpy SO2, 70,000 tpy CO2; and 500 tpy 

methane. The netted emission increases of SO2 does not meet the definition of a major 

modification in §116.12 because the proposed potential emissions of SO2 are below the 

significant levels in 40 CFR §51.166(b)(23). However, because the net emissions increase 

is greater than zero tpy of GHGs on a mass basis, and greater than or equal to 75,000 tpy 

CO2e (80,500 tpy CO2e in this example), then the emissions of GHGs would be subject to 

PSD review as a major modification.

Proposed §116.164(a)(5)

The fifth circumstance in proposed §116.164(a)(5) is an existing minor stationary source

with emissions below the major source thresholds for all pollutants. This category of 

sources was not specifically addressed by EPA in the Tailoring Rule, however, an existing 

minor source that has a physical change or change in the method of operation that would 

constitute a major stationary source in and of itself is considered a new major stationary 
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source and subject to PSD according to 40 CFR §51.166(b)(1)(i)(C). Additional 

information on this category can be found in Appendix D and Table II-B in EPA's 

guidance.

For example, the source has the potential to emit 20 tpy NOX, 10 tpy CO, 0.5 tpy SO2, and 

90 tpy CO2. The emissions of GHGs for this source are below both the mass basis 

threshold of 250 tpy (or 100 tpy if the source is on the named source category list), and 

under the tailored 100,000 tpy CO2e threshold. The emissions of GHGs from this source 

would become subject to the PSD permitting program if the source proposed a change

that would result in an emissions increase greater than or equal to 100,000 tpy CO2e,

and greater than or equal to 250 tpy GHGs (or 100 tpy GHGs, if the source is listed on 

the named source category list).

Proposed §116.164(b)

The commission is proposing new §116.164(b) to clarify that emissions of GHGs at a new 

or modified facility that are below the thresholds in EPA's Tailoring Rule, as described by 

the conditions in proposed §116.164(a), do not require preconstruction authorization, 

consistent with HB 788 and EPA's interpretation of PSD GHG permitting requirements.

This proposed amendment is appropriate because EPA does not consider emissions 

lower than the tailored thresholds to be defined as subject to regulation and EPA does 

not require authorization of these emissions. The Texas Clean Air Act (TCAA) allows the 
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commission to develop rules to establish a level of emissions for groups of facilities that 

do not require preconstruction authorization. In addition, emission increases below 

those thresholds resulting from a change at an existing permitted facility are not defined 

as a modification that requires preconstruction authorization under the TCAA. In order 

to demonstrate that emissions of GHGs from new or modified facilities or sources will 

not trigger PSD review, owners or operators must keep sufficient records to demonstrate 

authorization is not required for these GHG emissions. The commission intends to 

develop guidance to help smaller sources determine the type of records that are 

necessary to demonstrate compliance with this subsection. Sources will continue to be 

required to seek authorization for emissions from new or modified sources that are not 

GHGs.

§116.169, Greenhouse Gas Transition

The commission proposes new §116.169 to fulfill requirements established in HB 788.

Proposed subsection (a) provides for the transition of certain PSD permitting 

applications which were previously submitted to EPA. Once EPA approves the SIP 

revisions and rescinds the FIP, the commission will accept the transfer of and review 

applications. The commission will work with EPA and applicants to determine if the 

commission or EPA will complete review of the application and issuance of a PSD GHG 

permit. Based on these discussions, TCEQ expects EPA will retain PSD permit 

implementation authority for those specific sources that have submitted PSD GHG
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applications to EPA, but for which final agency action or the exhaustion of all 

administrative and judicial appeals processes have not yet been concluded or completed 

upon the effective date of EPA's final SIP approval of the new and amended sections in 

this chapter and rescission of the FIP. 

§116.610, Applicability

The commission proposes to amend §116.610(a)(1) and (b) to clarify that sources of 

GHGs may use standard permits to authorize emissions of pollutants that are not GHGs.

GHGs will not be authorized under standard permits. Instead, emissions of GHGs which 

meet or exceed the thresholds set in the EPA's Tailoring Rule are subject to the PSD 

permitting program. Sources subject to the PSD permitting program solely because of 

emissions of GHGs may continue to utilize standard permits to authorize emissions of 

pollutants that are not GHGs, in conjunction with a PSD permit that authorizes GHGs.

Projects which trigger PSD requirements due to emissions of non-GHGs cannot qualify 

for a standard permit.

§116.611, Registration to Use a Standard Permit

The commission proposes to amend §116.611. Section §116.611(b) currently allows a 

source to begin construction 45 days after the executive director receives the registration 

for a standard permit. The proposed amendment to subsection (b) clarifies that sources 

which are subject to the PSD permitting program solely because of emissions of GHGs, 
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and using a standard permit to authorize emissions of pollutants that are not GHGs, may 

not begin construction until the source is issued a PSD GHG permit.

The commission proposes to amend subsection (c) to establish a deadline for sources 

that are currently operating to certify emissions of GHGs. Since GHGs were not 

previously subject to permitting requirements, sources will have the opportunity to 

evaluate potential to emit GHGs and certify emissions, if necessary. These sources will 

have 90 days after EPA's final action approving the amendments concurrently proposed 

for Chapter 122, Federal Operating Permits, Potential to Emit, to certify emissions of 

GHGs to avoid applicability of Title V permitting. New sources of GHGs would be 

required to certify emissions no later than the date of operation. The commission invites 

comments regarding the timing allotted for certifying emissions of GHGs.

Fiscal Note: Costs to State and Local Government

Jeffrey Horvath, Analyst in the Strategic Planning and Assessment Section, has 

determined that for the first five-year period the proposed rules are in effect, significant 

fiscal implications are anticipated for the agency and for some other units of state or 

local government as a result of administration or enforcement of the proposed rules. The 

proposed rules would permit air emissions of GHGs under the PSD program.

The proposed rules would implement provisions in HB 788, 83rd Legislature, 2013, to 
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establish the TCEQ as the permitting authority for major sources of GHG emissions in 

Texas, consistent with federal law. The proposed changes to Chapter 116 are part of a 

concurrent rulemaking that involves changes to other TAC chapters intended to 

implement HB 788. Other chapters in the rulemaking include Chapters 39, 55, 101, 106, 

and 122. Fiscal notes for proposed revisions to those chapters are provided separately.

The proposed rules establish that GHGs is a federally regulated NSR pollutant which can 

be subject to PSD permitting and that owners or operators of major sources with 

emissions of GHGs will be subject to PSD permitting requirements. The proposed rules 

would provide GHG emission thresholds for new sources and modifications in order to 

determine when PSD permits will be required.

The proposed rules also contain provisions for the transfer of applications from EPA to 

TCEQ.

A proposed change to §116.610(b) will allow a facility or project that triggers the 

requirement for a PSD permit as a result of emissions of GHGs to still use a standard 

permit to authorize their other minor emissions, to the extent allowed under federal PSD 

regulations. A change to §116.611(b) specifies that projects which are using a standard 

permit to authorize non-GHGs cannot begin construction until after the PSD permit for 

their emissions of GHGs is issued. 
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Other, minor changes to Chapter 116 clarify the statewide applicability of PSD 

permitting, and provide instructions on how emissions of GHGs are to be calculated.

PSD fee permit revenue is deposited into the Clean Air Account 0151 and is calculated 

based on 1% of the capital cost of the project with a minimum assessed fee of $3,000 and 

maximum of $75,000. Agency staff estimates that the implementation of the new rules 

will result in approximately 400 additional PSD permit applications over the five-year 

period covered by the fiscal note. Very few additional PSD permit applications are 

expected to be processed in Fiscal Year 2014 as the new rule is not expected to be in 

effect and SIP-approved until late in the fiscal year. However, beginning in Fiscal Year

2015, approximately 100 additional PSD permit applications each fiscal year are 

expected to be received and processed. This fiscal note assumes that of the 100 new 

major PSD GHG permit applications each year, an estimated 70% would have previously 

qualified for a Permit By Rule (PBR) or a Standard Permit (SP). It is further assumed 

that for this 70% or an estimated 70 permit applications per year, most of these would 

fall in the lower end of the PSD fee scale, which for the purposes of this fiscal note is 

estimated to be $20,000. Therefore, given the fee increase for 70 permit applications 

that would go from a PBR or SP to a PSD permit, the agency could see an increase in PSD 

fee revenue of $1,368,500 each year (assuming $20,000 fee for PSD less $450 PBR fee x 

70 projects/year = $1,368,500/year). The other 30% of the 100 additional PSD permit 
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applications expected each year would be those sites that are expected to change from a 

minor NSR permit to a PSD permit. The anticipated fee increase for the other 30 projects 

(30% of 100) that went from case-by-case minor NSR to PSD is estimated to result in a 

$27,288 fee increase for each permit application. This change in permit type is expected 

to result in an additional $818,640 each year ($27,288 fee increase x 30 permit 

applications each year). The total estimated increase in PSD fee revenue is anticipated to 

be $2,187,140 each year. However, it must be pointed out that the level of additional fee 

revenue to be collected would depend upon the number of additional PSD applications 

received and the capital cost of each project involved, both of which are highly variable 

and difficult to predict. Any additional revenue would be used to support PSD permitting 

activities.

All PSD permits, including PSD permits for GHGs, require public notice as part of the 

permit application process. Costs may be associated with these public notice 

requirements. The costs for public notice associated with PSD GHG permits are not 

significantly different from the costs of public notice for PSD permits for non-GHG 

pollutants.

State agencies that operate devices such as boilers or incinerators that are stationary 

sources of GHG of sufficient size may require a PSD permit. Local governments that own 

or operate sites of an industrial or heavy commercial nature, such as power generating 
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stations and landfills would also be affected. Some of these sites already have PSD 

permits due to major emissions of other pollutants. Agency staff does not have sufficient 

information to determine how many state agencies may be affected by the proposed 

rules, but based upon information that is available, it is roughly estimated that 60 local 

government facilities could be affected (or 15% of the estimated 400 PSD permits 

anticipated to be affected by the proposed rules). This estimate would result in 

approximately 15 new governmental permit applications each year (very few if any 

applications in the first year, but 15 applications for each subsequent year).

Owners or operators of new or modified facilities with emissions of GHGs that meet or 

exceed defined threshold levels would be required to obtain a PSD permit, and pay the 

PSD permit fee, and comply with Emissions Inventory (EI) requirements under §101.10.

Costs for each facility to implement and conduct the EI each year are estimated to be 

$3,000. It is estimated that each of the 60 new governmental permits would have an 

incremental cost on average of $21,871. Total costs for the estimated 270 local 

government facilities for the first five years the proposed rules are in effect are estimated 

to be $1,762,260. This figure consists of $450,000 in cumulative costs for conducting 

emissions inventories, and $1,312,260 in cumulative permit fees. Under current federal 

regulations these sources are already required to get the PSD permit from EPA. It is also 

not known if permitting costs would be more or less through EPA or the TCEQ.
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Public Benefits and Costs

Mr. Horvath has also determined that for each year of the first five years the proposed 

rules are in effect, the public benefit anticipated from the changes seen in the proposed 

rules will be the continued protection of the public health and safety through the 

implementation of an efficient and effective state permit review process, while 

maintaining compliance with state and federal law.

The proposed rules will have a fiscal impact on businesses that own or operate new or 

modified facilities with emissions of GHGs that meet or exceed defined threshold levels.

The proposed rules are not anticipated to have direct fiscal implications for individuals 

unless they own or operate affected facilities. Any business or industry with new or 

modified stationary sources which have emissions of GHGs in quantities that meet or 

exceed certain threshold levels must obtain a PSD permit, pay a permit fee, and comply 

with EI requirements. Under current federal regulations these sources are already 

required to get the PSD permit from EPA. It is also not known if permitting costs would 

be more or less through EPA or the TCEQ. However, PSD permit requirements 

themselves are not expected to be burdensome as best available control technology for 

GHGs generally does not require add-on controls, and sources are likely already 

equipped with sufficient monitoring technology to determine their emissions of GHGs 

(which are generally based on fuel consumption).
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Staff estimates that approximately 100 owners and operators of major sources of GHG

will be required to submit PSD GHG permit applications each year for at least four of the 

five years covered by this fiscal note. Of these 100 new applications expected to be 

submitted each year, approximately 85 (or 85%) are estimated to be commercial or 

industrial and come from businesses (non-governmental). These sites are likely to be in 

the oil and gas industry, petrochemical industry, electric utilities, and general 

manufacturing, but may also be in other types of industries. Owners and operators

required to obtain a PSD permit will be required to pay a PSD permit fee, and comply 

with EI requirements. Very few applications are expected in the first year, as the rules 

either will not have been approved by EPA, or will have been approved by EPA for only a 

short time. For the estimated 85 commercial or industrial permit applications each year, 

the total estimated costs over the first five years the proposed rules would be in effect is 

estimated to be $1,859,035 each year. The cumulative total fee increase over the first five 

years the proposed rules would be in effect is estimated to be $7,436,140. This estimate 

comes out to approximately $21,871 in incremental permit application fees for each 

application. Costs for each facility to implement and conduct the EI each year are 

estimated to be $3,000. Total cumulative EI costs for an estimated 85 facilities over the 

first five years the proposed rules would be in effect would be $2,550,000. The EI costs 

increase year-by-year because it is an ongoing requirement and the number of sources 

subject to the EI requirement is increasing.
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There is substantial uncertainty as to the actual number of permits that would be needed 

for these sites, and the fee varies widely with project specifics, so this estimate is highly 

speculative. Permitting costs are not expected to continue at the 85 site per year level 

after the first five years the proposed rules are in effect.

Small Business and Micro-Business Assessment

Adverse fiscal implications are anticipated for small or micro-businesses for the first 

five-year period the proposed rules are in effect. Any business or industry with new or 

modified stationary sources with emissions of GHGs in quantities that meet or exceed 

certain threshold levels must obtain a PSD permit, pay a permit fee and comply with EI 

requirements. Under current federal regulations these sources are already required to 

get the PSD permit from EPA. It is also not known if permitting costs would be more or 

less through EPA or the TCEQ. The GHG thresholds set by EPA trigger PSD applicability 

at some small facilities which previously were not subject to the requirement to get a PSD 

permit. There is not enough data on emissions of GHGs from small businesses to predict 

how many will be affected with a high degree of accuracy. Staff estimates that 

approximately 40 small business sites would be affected by the PSD requirements, but 

the number could be substantially higher. These sites are likely to be in the oil and gas

industry, petrochemical industry, electric utilities, and general manufacturing, but may 

also be in other types of industries. The one-time incremental cost for the PSD permit is 

estimated to be approximately $21,871 for each small or micro-business permit 
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application. Total permitting costs for an estimated 10 small business sites for each year 

of the five-year period would be $218,710/year, or $874,840 in total for the five-year 

period. This assumes very few applications in the first year, with the remaining 

applications coming in over the last four years. Total cumulative EI costs for an 

estimated 40 small businesses over the first five years the proposed rules are in effect 

would be $300,000. The EI costs increase year-by-year because it is an ongoing 

requirement and the number of sources subject to the EI requirement is increasing.

Small Business Regulatory Flexibility Analysis

The commission has reviewed this proposed rulemaking and determined that a small 

business regulatory flexibility analysis is not required because the proposed rules are 

required by state and federal law and therefore are consistent with the health, safety, or 

environmental and economic welfare of the state.

Local Employment Impact Statement

The commission has reviewed this proposed rulemaking and determined that a local 

employment impact statement is not required because the proposed rules do not 

adversely affect a local economy in a material way for the first five years that the 

proposed rules are in effect. 
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Draft Regulatory Impact Analysis Determination

The commission reviewed the proposed rulemaking in light of the regulatory impact 

analysis requirements of Texas Government Code, §2001.0225, and determined that the 

rulemaking does not meet the definition of a major environmental rule as defined in that 

statute, and in addition, if it did meet the definition, would not be subject to the 

requirement to prepare a regulatory impact analysis.

A major environmental rule means a rule, the specific intent of which is to protect the 

environment or reduce risks to human health from environmental exposure, and that 

may adversely affect in a material way the economy, a sector of the economy, 

productivity, competition, jobs, the environment, or the public health and safety of the 

state or a sector of the state. The specific intent of the proposed revisions to Chapter 116 

is to add six GHGs to the pollutants regulated under the commission's PSD permitting 

program and to establish the emissions thresholds for applicability of the program 

consistent with federal requirements in the final PSD and Title V GHG Tailoring Rule in 

the June 3, 2010, issue of the Federal Register (75 FR 31514). 

Additionally, even if the rules met the definition of a major environmental rule, the 

rulemaking does not meet any of the four applicability criteria for requiring a regulatory 

impact analysis for a major environmental rule, which are listed in Texas Government, 

§2001.0225(a). Texas Government, §2001.0225, applies only to a major environmental 
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rule, the result of which is to: 1) exceed a standard set by federal law, unless the rule is 

specifically required by state law; 2) exceed an express requirement of state law, unless 

the rule is specifically required by federal law; 3) exceed a requirement of a delegation 

agreement or contract between the state and an agency or representative of the federal 

government to implement a state and federal program; or 4) adopt a rule solely under 

the general powers of the agency instead of under a specific state law.

The proposed rules would implement requirements of the FCAA. Under 42 United States 

Code (USC), §7410, each state is required to adopt and implement a SIP containing 

adequate provisions to implement, attain, maintain, and enforce the NAAQS within the 

state. One of the requirements of 42 USC, §7410 is for states to include programs for the 

regulation of the modification and construction of any stationary source within the area 

covered by the plan as necessary to assure that the NAAQS are achieved, including a 

permit program as required in FCAA, Parts C and D, or NSR. This rulemaking will 

implement provisions in HB 788 to establish the TCEQ as the permitting authority for 

major sources of emissions of GHGs in Texas and to do so consistent with federal law.

Specifically, amendments to Chapter 116 will add the following terms to nonattainment 

and PSD definitions: GHGs, and CO2e emissions. The rulemaking will also amend 

definitions and the PSD rules in Subchapter B to subject GHGs to PSD permitting 

requirements at specific Tailoring Rule thresholds.
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The requirement to provide a fiscal analysis of regulations in the Texas Government 

Code was amended by Senate Bill (SB) 633 during the 75th Legislature, 1997. The intent 

of SB 633 was to require agencies to conduct a regulatory impact analysis of 

extraordinary rules. These are identified in the statutory language as major 

environmental rules that will have a material adverse impact and will exceed a 

requirement of state law, federal law, or a delegated federal program, or are adopted 

solely under the general powers of the agency. With the understanding that this 

requirement would seldom apply, the commission provided a cost estimate for SB 633 

that concluded, "based on an assessment of rules adopted by the agency in the past, it is 

not anticipated that the bill will have significant fiscal implications for the agency due to 

its limited application." The commission also noted that the number of rules that would 

require assessment under the provisions of the bill was not large. This conclusion was 

based, in part, on the criteria set forth in the bill that exempted rules from the full 

analysis unless the rule was a major environmental rule that exceeds a federal law.

Because of the ongoing need to meet federal requirements, the commission routinely 

proposes and adopts rules incorporating or designed to satisfy specific federal 

requirements. The legislature is presumed to understand this federal scheme. If each 

rule proposed by the commission to meet a federal requirement was considered to be a 

major environmental rule that exceeds federal law, then each of those rules would 

require the full regulatory impact analysis (RIA) contemplated by SB 633. This 
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conclusion is inconsistent with the conclusions reached by the commission in its cost 

estimate and by the Legislative Budget Board in its fiscal notes. Since the legislature is 

presumed to understand the fiscal impacts of the bills it passes, and that presumption is 

based on information provided by state agencies and the Legislative Budget Board, the 

commission believes that the intent of SB 633 was only to require the full RIA for rules 

that are extraordinary in nature. While the proposed rules may have a broad impact, that 

impact is no greater than is necessary or appropriate to meet the requirements of the 

FCAA and thus allow EPA to lift its federal permitting program on GHG sources in 

Texas. In fact, the proposed rules create no additional impacts since major GHG sources 

in Texas must currently obtain a PSD permit from EPA and the proposed rules merely 

supplant EPA as the authority for GHG PSD permitting in Texas. For these reasons, the 

proposed rules fall under the exception in Texas Government Code, §2001.0225(a), 

because they are required by, and do not exceed, federal law.

The commission has consistently applied this construction to its rules since this statute 

was enacted in 1997. Since that time, the legislature has revised the Texas Government 

Code, but left this provision substantially unamended. It is presumed that "when an 

agency interpretation is in effect at the time the legislature amends the laws without 

making substantial change in the statute, the legislature is deemed to have accepted the 

agency's interpretation." (Central Power & Light Co. v. Sharp, 919 S.W.2d 485, 489 

(Tex. App. Austin 1995), writ denied with per curiam opinion respecting another issue, 
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960 S.W.2d 617 (Tex. 1997); Bullock v. Marathon Oil Co., 798 S.W.2d 353, 357 (Tex. 

App. Austin 1990, no writ). Cf. Humble Oil & Refining Co. v. Calvert, 414 S.W.2d 172 

(Tex. 1967); Dudney v. State Farm Mut. Auto Ins. Co., 9 S.W.3d 884, 893 (Tex. App. 

Austin 2000); Southwestern Life Ins. Co. v. Montemayor, 24 S.W.3d 581 (Tex. App. 

Austin 2000, pet. denied); and Coastal Indust. Water Auth. v. Trinity Portland Cement 

Div., 563 S.W.2d 916 (Tex. 1978)).

The commission's interpretation of the RIA requirements is also supported by a change 

made to the Administrative Procedure Act (APA) by the legislature in 1999. In an 

attempt to limit the number of rule challenges based upon APA requirements, the 

legislature clarified that state agencies are required to meet these sections of the APA 

against the standard of "substantial compliance" (Texas Government Code, §2001.035). 

The legislature specifically identified Texas Government Code, §2001.0225 as falling 

under this standard. As discussed in this analysis and elsewhere in this preamble, the 

commission has substantially complied with the requirements of Texas Government 

Code, §2001.0225.

The proposed rules implement requirements of the FCAA, specifically to adopt and 

implement SIPs, including a requirement to adopt and implement permit programs.

This rulemaking will implement provisions in HB 788 to establish the TCEQ as the 

permitting authority for major sources of emissions GHGs in Texas and to do so 
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consistent with federal law. Specifically, amendments to Chapter 116 will add the 

following terms to nonattainment and PSD definitions: GHGs, and CO2e emissions. The 

rulemaking will also amend definitions and the PSD rules in Subchapter B to subject 

GHGs to PSD permitting requirements at specific Tailoring Rule thresholds.

The proposed rules were not developed solely under the general powers of the agency, 

but are authorized by specific sections of THSC, Chapter 382 (also known as the Texas 

Clean Air Act and the TWC), which are cited in the Statutory Authority section of this 

preamble. Further, the proposed rules do not exceed a standard set by federal law or 

exceed a requirement of a delegation agreement or contract between the state and an 

agency or representative of the federal government to implement a state and federal 

program. Therefore, this proposed rulemaking action is not subject to the regulatory 

analysis provisions of Texas Government Code, §2001.0225(b).

Written comments on the draft regulatory impact analysis determination may be 

submitted to the contact person at the address listed under the Submittal of Comments 

section of this preamble.

Takings Impact Assessment

Under Texas Government Code, §2007.002(5), taking means a governmental action that 

affects private real property, in whole or in part or temporarily or permanently, in a 
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manner that requires the governmental entity to compensate the private real property 

owner as provided by the Fifth and Fourteenth Amendments to the United States 

Constitution or Texas Constitution §17 or §19, Article I; or a governmental action that 

affects an owner's private real property that is the subject of the governmental action, in

whole or in part or temporarily or permanently, in a manner that restricts or limits the 

owner's right to the property that would otherwise exist in the absence of the 

governmental action; and is the producing cause of a reduction of at least 25% in the 

market value of the affected private real property, determined by comparing the market 

value of the property as if the governmental action is not in effect and the market value of 

the property determined as if the governmental action is in effect.

The commission completed a takings impact analysis for the proposed rulemaking action 

under the Texas Government Code, §2007.043. The primary purpose of this proposed 

rulemaking, as discussed elsewhere in this preamble, is to implement provisions in HB 

788 to establish the TCEQ as the permitting authority for major sources of emissions of 

GHGs in Texas and to do so consistent with federal law. Specifically, proposed 

amendments to Chapter 116 would add the following terms to nonattainment and PSD

definitions: GHGs, and CO2e emissions. The rulemaking will also amend definitions and 

the PSD rules in Subchapter B to subject GHGs to PSD permitting requirements at 

specific Tailoring Rule thresholds.
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The proposed rules will not create any additional burden on private real property. The 

proposed rules will not affect private real property in a manner that would require 

compensation to private real property owners under the United States Constitution or 

the Texas Constitution. The proposal also will not affect private real property in a 

manner that restricts or limits an owner's right to the property that would otherwise 

exist in the absence of the governmental action. Therefore, the proposed rulemaking will 

not cause a taking under Texas Government Code, Chapter 2007.

Consistency with the Coastal Management Program

The commission determined that this rulemaking action relates to an action or actions 

subject to the Texas Coastal Management Program (CMP) in accordance with the Coastal 

Coordination Act of 1991, as amended (Texas Natural Resources Code, §§33.201 et seq.), 

and the commission rules in 30 TAC Chapter 281, Subchapter B, concerning Consistency 

with the CMP. As required by §281.45(a)(3) and 31 TAC §505.11(b)(2), relating to 

Actions and Rules Subject to the Coastal Management Program, commission rules 

governing air pollutant emissions must be consistent with the applicable goals and 

policies of the CMP. The commission reviewed this rulemaking for consistency with the 

CMP goals and policies in accordance with the rules of the Coastal Coordination 

Advisory Committee and determined that the rulemaking is consistent with the 

applicable CMP goals and policies. The CMP goal applicable to this rulemaking is the 

goal to protect, preserve, and enhance the diversity, quality, quantity, functions, and 
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values of coastal natural resource areas (31 TAC §501.12(l)). The proposed rules amend 

and update rules that govern the applicability of the PSD program to major sources of 

GHG emissions. The CMP policy applicable to this rulemaking is the policy that 

commission rules comply with federal regulations in 40 CFR, to protect and enhance air 

quality in the coastal areas (31 TAC §501.14(q)). This rulemaking complies with 40 CFR 

Part 51, Requirements for Preparation, Adoption, and Submittal of Implementation 

Plans. Therefore, in accordance with 31 TAC §505.22(e), the commission affirms that 

this rulemaking is consistent with CMP goals and policies.

Written comments on the consistency of this rulemaking may be submitted to the 

contact person at the address listed under the Submittal of Comments section of this 

preamble.

Effect on Sites Subject to the Federal Operating Permits Program

Prevention of Significant Deterioration is an applicable requirement under Chapter 122, 

Federal Operating Permits. This rulemaking affects the issuance or amendment of a PSD 

permit for major GHG sources, and therefore would result in new or revised federal 

operating permits for those sources.

Announcement of Hearing

The commission will hold a public hearing on this proposal in Austin on December 5, 
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2013, at 2:00 p.m. in Building E, Room 201S, at the commission's central office located 

at 12100 Park 35 Circle. The hearing is structured for the receipt of oral or written 

comments by interested persons. Individuals may present oral statements when called 

upon in order of registration. Open discussion will not be permitted during the hearing; 

however, commission staff members will be available to discuss the proposal 30 minutes 

prior to the hearing.

Persons who have special communication or other accommodation needs who are 

planning to attend the hearing should contact Sandy Wong, Office of Legal Services at 

(512) 239-1802. Requests should be made as far in advance as possible.

Submittal of Comments

Written comments may be submitted to Charlotte Horn, MC 205, Office of Legal 

Services, Texas Commission on Environmental Quality, P.O. Box 13087, Austin, Texas 

78711-3087, or faxed to (512) 239-4808. Electronic comments may be submitted at:

http://www5.tceq.texas.gov/rules/ecomments/. File size restrictions may apply to 

comments being submitted via the eComments system. All comments should reference 

Rule Project Number 2013-040-116-AI. The comment period closes December 9, 2013.

Copies of the proposed rulemaking can be obtained from the commission's Web site at 

http://www.tceq.texas.gov/nav/rules/propose_adopt.html. For further information, 

please contact Tasha Burns, Operational Support, Air Permits Division at (512) 
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239-5868. 
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SUBCHAPTER A: DEFINITIONS

§116.12

Statutory Authority

The amendment is proposed under Texas Water Code (TWC), §5.102, concerning 

General Powers, which provides the commission with the general powers to carry out its 

duties under the TWC; TWC, §5.103, concerning Rules, which authorizes the 

commission to adopt rules necessary to carry out its powers and duties under the TWC; 

and TWC, §5.105, concerning General Policy, which authorizes the commission by rule to 

establish and approve all general policy of the commission. The amendment is also 

proposed under Texas Health and Safety Code (THSC), §382.017, concerning Rules, 

which authorizes the commission to adopt rules consistent with the policy and purposes 

of the Texas Clean Air Act; THSC, §382.002, concerning Policy and Purpose, which 

establishes the commission's purpose to safeguard the state's air resources, consistent 

with the protection of public health, general welfare, and physical property; THSC, 

§382.011, concerning General Powers and Duties, which authorizes the commission to 

control the quality of the state's air; THSC, §382.012, concerning State Air Control Plan, 

which authorizes the commission to prepare and develop a general, comprehensive plan 

for the proper control of the state's air; THSC, §382.051, concerning Permitting 

Authority of Commission; Rules, which authorizes the commission to issue permits for 

construction of new facilities or modifications to existing facilities that may emit air 
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contaminants; THSC, §382.0513, concerning Permit Conditions, which authorizes the 

commission to establish and enforce permit conditions consistent with this chapter;

THSC, §382.0515, concerning Application for Permit, which specifies permit application 

requirements; THSC, §382.0517, concerning Determination of Administrative 

Completion of Application, which specifies when the commission shall determine 

applications are administratively complete; THSC, §382.0518, concerning 

Preconstruction Permit, which authorizes the commission to issue preconstruction 

permits; and THSC, §382.05102, which relates to the permitting authority of the 

commission for emissions of GHGs. Additional relevant sections are Texas Government 

Code, §2006.004, concerning Requirements to Adopt Rules of Practice and Index Rules, 

Orders, Decisions, which requires state agencies to adopt procedural rules and, Texas 

Government Code, §2001.006, which authorizes state agencies to adopt rules or take 

other administrative action that the agency deems necessary to implement legislation. 

The amendment is also proposed under Federal Clean Air Act (FCAA), 42 United States 

Code (USC), §§7401, et seq., which requires states to submit state implementation plan 

revisions that specify the manner in which the national ambient air quality standards 

will be achieved and maintained within each air quality control region of the state. 

The proposed amendment implements House Bill 788, 83rd Legislature, 2013, THSC, 

§§382.002, 382.011, 382.012, 382.017, 382.051, 382.0513, 382.05102, 382.0515, 

382.0517, 382.0518, and 383.05195; and Texas Government Code, §2001.004 and 
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§2001.006; and FCAA, 42 USC, §§7401 et seq.

§116.12. Nonattainment and Prevention of Significant Deterioration Review 

Definitions.

Unless specifically defined in the Texas Clean Air Act (TCAA) or in the rules of the 

commission, the terms used by the commission have the meanings commonly ascribed 

to them in the field of air pollution control. [The terms in this section are applicable to 

permit review for major source construction and major source modification in 

nonattainment areas.] In addition to the terms that are defined by the TCAA, and in 

§101.1 of this title (relating to Definitions), the following words and terms, when used in 

[Chapter 116,] Subchapter B, Divisions 5 and 6 of this chapter [title] (relating to 

Nonattainment Review Permits and Prevention of Significant Deterioration Review); 

and [Chapter 116,] Subchapter C, Division 1 of this chapter [title] (relating to Plant-Wide

Applicability Limits), have the following meanings, unless the context clearly indicates 

otherwise. 

(1) Actual emissions--Actual emissions as of a particular date are equal to 

the average rate, in tons per year, at which the unit actually emitted the pollutant during 

the 24-month period that precedes the particular date and that is representative of 

normal source operation, except that this definition shall not apply for calculating 
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whether a significant emissions increase has occurred, or for establishing a plant-wide 

applicability limit. Instead, paragraph (3) of this section relating to baseline actual 

emissions shall apply for this purpose. The executive director shall allow the use of a 

different time period upon a determination that it is more representative of normal 

source operation. Actual emissions shall be calculated using the unit's actual operating 

hours, production rates, and types of materials processed, stored, or combusted during 

the selected time period. The executive director may presume that the source-specific 

allowable emissions for the unit are equivalent to the actual emissions, e.g., when the 

allowable limit is reflective of actual emissions. For any emissions unit that has not 

begun normal operations on the particular date, actual emissions shall equal the 

potential to emit of the unit on that date. 

(2) Allowable emissions--The emissions rate of a stationary source, 

calculated using the maximum rated capacity of the source (unless the source is subject 

to federally enforceable limits that restrict the operating rate, or hours of operation, or 

both), and the most stringent of the following: 

(A) the applicable standards specified in 40 Code of Federal 

Regulations Part 60 or 61; 
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(B) the applicable state implementation plan emissions limitation 

including those with a future compliance date; or 

(C) the emissions rate specified as a federally enforceable permit 

condition including those with a future compliance date. 

(3) Baseline actual emissions--The rate of emissions, in tons per year, of a 

federally regulated new source review pollutant. 

(A) For any existing electric utility steam generating unit, baseline 

actual emissions means the average rate, in tons per year, at which the unit actually 

emitted the pollutant during any consecutive 24-month period selected by the owner or 

operator within the five-year period immediately preceding when the owner or operator 

begins actual construction of the project. The executive director shall allow the use of a 

different time period upon a determination that it is more representative of normal 

source operation. 

(B) For an existing facility (other than an electric utility steam 

generating unit), baseline actual emissions means the average rate, in tons per year, at 

which the facility actually emitted the pollutant during any consecutive 24-month period 

selected by the owner or operator within the ten-year period immediately preceding 
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either the date the owner or operator begins actual construction of the project, or the 

date a complete permit application is received for a permit. The rate shall be adjusted 

downward to exclude any emissions that would have exceeded an emission limitation 

with which the major stationary source must currently comply with the exception of 

those required under 40 Code of Federal Regulations Part 63, had such major stationary 

source been required to comply with such limitations during the consecutive 24-month 

period. 

(C) For a new facility, the baseline actual emissions for purposes of 

determining the emissions increase that will result from the initial construction and 

operation of such unit shall equal zero; and for all other purposes during the first two 

years following initial operation, shall equal the unit's potential to emit. 

(D) The actual average rate shall be adjusted downward to exclude 

any non-compliant emissions that occurred during the consecutive 24-month period. 

For each regulated new source review pollutant, when a project involves multiple 

facilities, only one consecutive 24-month period must be used to determine the baseline 

actual emissions for the facilities being changed. A different consecutive 24-month 

period can be used for each regulated new source review pollutant. The average rate shall 

not be based on any consecutive 24-month period for which there is inadequate 
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information for determining annual emissions, in tons per year, and for adjusting this 

amount. Baseline emissions cannot occur prior to November 15, 1990. 

(E) The actual average emissions rate shall include fugitive 

emissions to the extent quantifiable. Until March 1, 2016, emissions previously 

demonstrated as resulting from planned maintenance, startup, or shutdown activities; 

historically unauthorized; and subject to reporting under Chapter 101 of this title 

(relating to General Air Quality Rules) shall be included to the extent that they have been 

authorized, or are being authorized. 

(4) Basic design parameters--For a process unit at a steam electric 

generating facility, the owner or operator may select as its basic design parameters either 

maximum hourly heat input and maximum hourly fuel consumption rate or maximum 

hourly electric output rate and maximum steam flow rate. When establishing fuel 

consumption specifications in terms of weight or volume, the minimum fuel quality 

based on British thermal units content shall be used for determining the basic design 

parameters for a coal-fired electric utility steam generating unit. The basic design 

parameters for any process unit that is not at a steam electric generating facility are 

maximum rate of fuel or heat input, maximum rate of material input, or maximum rate 

of product output. Combustion process units will typically use maximum rate of fuel 

input. For sources having multiple end products and raw materials, the owner or 
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operator shall consider the primary product or primary raw material when selecting a 

basic design parameter. The owner or operator may propose an alternative basic design 

parameter for the source's process units to the executive director if the owner or operator 

believes the basic design parameter as defined in this paragraph is not appropriate for a 

specific industry or type of process unit. If the executive director approves of the use of 

an alternative basic design parameter, that basic design parameter shall be identified 

and compliance required in a condition in a permit that is legally enforceable. 

(A) The owner or operator shall use credible information, such as 

results of historic maximum capability tests, design information from the manufacturer, 

or engineering calculations, in establishing the magnitude of the basic design parameter. 

(B) If design information is not available for a process unit, the 

owner or operator shall determine the process unit's basic design parameter(s) using the 

maximum value achieved by the process unit in the five-year period immediately 

preceding the planned activity. 

(C) Efficiency of a process unit is not a basic design parameter. 

(5) Begin actual construction--In general, initiation of physical on-site 

construction activities on an emissions unit that are of a permanent nature. Such 
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activities include, but are not limited to, installation of building supports and 

foundations, laying of underground pipework, and construction of permanent storage 

structures. With respect to a change in method of operation, this term refers to those 

on-site activities other than preparatory activities that mark the initiation of the change. 

(6) Building, structure, facility, or installation--All of the 

pollutant-emitting activities that belong to the same industrial grouping, are located in 

one or more contiguous or adjacent properties, and are under the control of the same 

person (or persons under common control). Pollutant-emitting activities are considered 

to be part of the same industrial grouping if they belong to the same "major group" (i.e., 

that have the same two-digit code) as described in the Standard Industrial Classification 

Manual, 1972, as amended by the 1977 supplement. 

(7) Carbon dioxide equivalent (CO2e) emissions--shall represent 

(A) an amount of greenhouse gases (GHGs) emitted, and shall be 

computed by multiplying the mass amount of emissions in tons per year (tpy) for the 

GHGs, as defined in §101.1 of this title (relating to Definitions), by the gas's associated 

global warming potential as published in 40 Code of Federal Regulations Part 98, 

Subpart A, Table A-1 – Global Warming Potentials, and summing the resultant values.
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(B) for purposes of this paragraph, prior to July 21, 2014, the mass 

of the GHG carbon dioxide (CO2) shall not include CO2 emissions resulting from the 

combustion or decomposition of non-fossilized and biodegradable organic material 

originating from plants, animals, or micro-organisms (including products, by-products, 

residues and waste from agriculture, forestry and related industries as well as the 

non-fossilized and biodegradable organic fractions of industrial and municipal wastes, 

including gases and liquids recovered from the decomposition of non-fossilized and 

biodegradable organic material).

(8) [(7)] Clean coal technology--Any technology, including technologies 

applied at the precombustion, combustion, or post-combustion stage, at a new or 

existing facility that will achieve significant reductions in air emissions of sulfur dioxide 

or oxides of nitrogen associated with the utilization of coal in the generation of 

electricity, or process steam that was not in widespread use as of November 15, 1990. 

(9) [(8)] Clean coal technology demonstration project--A project using 

funds appropriated under the heading "Department of Energy-Clean Coal Technology," 

up to a total amount of $2.5 billion for commercial demonstration of clean coal 

technology, or similar projects funded through appropriations for the United States 

Environmental Protection Agency. The federal contribution for a qualifying project shall 

be at least 20% of the total cost of the demonstration project. 
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(10) [(9)] Commence--As applied to construction of a major stationary 

source or major modification, means that the owner or operator has all necessary 

preconstruction approvals or permits and either has: 

(A) begun, or caused to begin, a continuous program of actual 

on-site construction of the source, to be completed within a reasonable time; or 

(B) entered into binding agreements or contractual obligations, 

which cannot be canceled or modified without substantial loss to the owner or operator, 

to undertake a program of actual construction of the source to be completed within a 

reasonable time. 

(11) [(10)] Construction--Any physical change or change in the method of 

operation (including fabrication, erection, installation, demolition, or modification of an 

emissions unit) that would result in a change in actual emissions. 

(12) [(11)] Contemporaneous period--For major sources the period 

between: 

(A) the date that the increase from the particular change occurs; and 
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(B) 60 months prior to the date that construction on the particular 

change commences. 

(13) [(12)] De minimis threshold test (netting)--A method of determining if 

a proposed emission increase will trigger nonattainment or prevention of significant 

deterioration review. The summation of the proposed project emission increase in tons 

per year with all other creditable source emission increases and decreases during the 

contemporaneous period is compared to the significant level for that pollutant. If the 

significant level is exceeded, then prevention of significant deterioration and/or 

nonattainment review is required. 

(14) [(13)] Electric utility steam generating unit--Any steam electric 

generating unit that is constructed for the purpose of supplying more than one-third of 

its potential electric output capacity and more than 25 megawatts electrical output to any 

utility power distribution system for sale. Any steam supplied to a steam distribution 

system for the purpose of providing steam to a steam-electric generator that would 

produce electrical energy for sale is included in determining the electrical energy output 

capacity of the affected facility. 
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(15) [(14)] Federally regulated new source review pollutant--As defined in 

subparagraphs (A) - (E) [(D)] of this paragraph: 

(A) any pollutant for which a national ambient air quality standard 

has been promulgated and any constituents or precursors for such pollutants identified 

by the United States Environmental Protection Agency; 

(B) any pollutant that is subject to any standard promulgated under 

Federal Clean Air Act (FCAA), §111; 

(C) any Class I or II substance subject to a standard promulgated 

under or established by FCAA, Title VI; [or] 

(D) any pollutant that otherwise is subject to regulation under the 

FCAA; except that any or all hazardous air pollutants either listed in FCAA, §112 or added 

to the list under FCAA, §112(b)(2), which have not been delisted under FCAA, §112(b)(3), 

are not regulated new source review pollutants unless the listed hazardous air pollutant 

is also regulated as a constituent or precursor of a general pollutant listed under FCAA, 

§108; or [.] 
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(E) greenhouse gases that meet or exceed the thresholds established 

in §116.164 of this title (relating to Prevention of Significant Deterioration Applicability 

for Greenhouse Gases Sources). 

(16) Greenhouse gases (GHGs)--as defined in §101.1 of this title (relating to 

Definitions).

(17) [(15)] Lowest achievable emission rate--For any emitting facility, that 

rate of emissions of a contaminant that does not exceed the amount allowable under 

applicable new source performance standards promulgated by the United States 

Environmental Protection Agency under 42 United States Code, §7411, and that reflects 

the following: 

(A) the most stringent emission limitation that is contained in the 

rules and regulations of any approved state implementation plan for a specific class or 

category of facility, unless the owner or operator of the proposed facility demonstrates 

that such limitations are not achievable; or

(B) the most stringent emission limitation that is achieved in 

practice by a specific class or category of facilities, whichever is more stringent. 
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(18) [(16)] Major facility--Any facility that emits or has the potential to 

emit 100 tons per year or more of the plant-wide applicability limit (PAL) pollutant in an 

attainment area; or any facility that emits or has the potential to emit the PAL pollutant 

in an amount that is equal to or greater than the major source threshold for the PAL 

pollutant in Table I of this section for nonattainment areas. 

(19) [(17)] Major stationary source--Any stationary source that emits, or 

has the potential to emit, a threshold quantity of emissions or more of any air 

contaminant (including volatile organic compounds (VOCs)) for which a national 

ambient air quality standard has been issued. The major source thresholds are identified 

in Table I of this section for nonattainment pollutants and the major source thresholds 

for prevention of significant deterioration pollutants are identified in 40 Code of Federal 

Regulations (CFR) §51.166(b)(1). For greenhouse gases, the major source thresholds are 

specified in §116.164 of this title (relating to Prevention of Significant Deterioration 

Applicability for Greenhouse Gases Sources). A source that emits, or has the potential to 

emit a federally regulated new source review pollutant at levels greater than those 

identified in 40 CFR §51.166(b)(1) is considered major for all prevention of significant 

deterioration pollutants. A major stationary source that is major for VOCs or nitrogen 

oxides is considered to be major for ozone. The fugitive emissions of a stationary source 

shall not be included in determining for any of the purposes of this definition whether it 
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is a major stationary source, unless the source belongs to one of the categories of 

stationary sources listed in 40 CFR §51.165(a)(1)(iv)(C). 

(20) [(18)] Major modification--As follows. 

(A) Any physical change in, or change in the method of operation of 

a major stationary source that causes a significant project emissions increase and a 

significant net emissions increase for any federally regulated new source review 

pollutant. At a stationary source that is not major prior to the increase, the increase by 

itself must equal or exceed that specified for a major source. At an existing major 

stationary source, the increase must equal or exceed that specified for a major 

modification to be significant. The major source and significant thresholds are provided 

in Table I of this section for nonattainment pollutants. The major source and significant 

thresholds for prevention of significant deterioration pollutants are identified in 40 Code 

of Federal Regulations §51.166(b)(1) and (23), respectively and in §116.164 of this title

(relating to Prevention of Significant Deterioration Applicability for Greenhouse Gases 

Sources).

Figure: 30 TAC §116.12(20)(A)

[Figure: 30 TAC §116.12(18)(A)] 

TABLE I
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MAJOR SOURCE/MAJOR MODIFICATION 

EMISSION THRESHOLDS

POLLUTANT

designation1

MAJOR 

SOURCE

tons/year

SIGNIFICANT

LEVEL2

tons/year

OFFSET 

RATIO

minimum

OZONE (VOC, 

NOX)3

I marginal

II moderate

III serious

IV severe

100

100

50

25

40

40

25

25

1.10 to 1

1.15 to 1

1.20 to 1

1.30 to 1

CO

I moderate

II serious

100

50

100

50

1.00 to 14

1.00 to 14

SO2 100 40 1.00 to 14

PM10

I moderate

II serious

100

70

15

15

1.00 to 14

1.00 to 14

NOx5 100 40 1.00 to 14

Lead 100 0.6 1.00 to 14

1 Texas nonattainment area designations as defined in §101.1[(70)] of this title (relating 

to Definitions).

2 The significant level is applicable only to existing major sources and shall be evaluated 

after netting, unless the applicant chooses to apply nonattainment new source review 

(NNSR) directly to the project. The appropriate netting triggers for existing major 

sources of NOX and VOC are specified in §116.150 of this title (relating to New Major 

Source or Major Modification in Ozone Nonattainment Areas) and for other pollutants 

are equal to the significant level listed in this table.

3 VOC and NOX are precursors to ozone formation and should be quantified individually 

to determine whether a source is subject to NNSR under §116.150 of this title.

4 The offset ratio is specified to be greater than 1.00 to 1.

VOC = volatile organic compounds

NOX = oxides of nitrogen

NO2 = nitrogen dioxide

CO = carbon monoxide
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SO2 = sulfur dioxide

PM10 = particulate matter with an aerodynamic diameter less than or equal to ten 

microns

5 Applies to the National Ambient Air Quality Standard [NAAQS] for [nitrogen dioxide 

(]NO2[)].

(B) A physical change or change in the method of operation shall not 

include: 

(i) routine maintenance, repair, and replacement; 

(ii) use of an alternative fuel or raw material by reason of an 

order under the Energy Supply and Environmental Coordination Act of 1974, §2(a) and 

(b) (or any superseding legislation) or by reason of a natural gas curtailment plan under 

the Federal Power Act; 

(iii) use of an alternative fuel by reason of an order or rule of 

42 United States Code, §7425; 

(iv) use of an alternative fuel at a steam generating unit to the 

extent that the fuel is generated from municipal solid waste; 
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(v) use of an alternative fuel or raw material by a stationary 

source that the source was capable of accommodating before December 21, 1976 (unless 

such change would be prohibited under any federally enforceable permit condition 

established after December 21, 1976) or the source is approved to use under any permit 

issued under regulations approved under this chapter; 

(vi) an increase in the hours of operation or in the production 

rate (unless the change is prohibited under any federally enforceable permit condition 

that was established after December 21, 1976); 

(vii) any change in ownership at a stationary source; 

(viii) any change in emissions of a pollutant at a site that 

occurs under an existing plant-wide applicability limit; 

(ix) the installation, operation, cessation, or removal of a 

temporary clean coal technology demonstration project, provided that the project 

complies with the state implementation plan and other requirements necessary to attain 

and maintain the national ambient air quality standard during the project and after it is 

terminated; 
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(x) for prevention of significant deterioration review only, the 

installation or operation of a permanent clean coal technology demonstration project 

that constitutes re-powering, provided that the project does not result in an increase in 

the potential to emit of any regulated pollutant emitted by the unit. This exemption shall 

apply on a pollutant-by-pollutant basis; or 

(xi) for prevention of significant deterioration review only, 

the reactivation of a clean coal-fired electric utility steam generating unit. 

(21) [(19)] Necessary preconstruction approvals or permits--Those permits 

or approvals required under federal air quality control laws and regulations and those air 

quality control laws and regulations that are part of the applicable state implementation 

plan. 

(22) [(20)] Net emissions increase--The amount by which the sum of the 

following exceeds zero: the project emissions increase plus any sourcewide creditable 

contemporaneous emission increases, minus any sourcewide creditable 

contemporaneous emission decreases. Baseline actual emissions shall be used to 

determine emissions increases and decreases. 
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(A) An increase or decrease in emissions is creditable only if the 

following conditions are met: 

(i) it occurs during the contemporaneous period; 

(ii) the executive director has not relied on it in issuing a 

federal new source review permit for the source and that permit is in effect when the 

increase in emissions from the particular change occurs; and 

(iii) in the case of prevention of significant deterioration 

review only, an increase or decrease in emissions of sulfur dioxide, particulate matter, or 

nitrogen oxides that occurs before the applicable minor source baseline date is creditable 

only if it is required to be considered in calculating the amount of maximum allowable 

increases remaining available. 

(B) An increase in emissions is creditable if it is the result of a 

physical change in, or change in the method of operation of a stationary source only to 

the extent that the new level of emissions exceeds the baseline actual emission rate. 

Emission increases at facilities under a plant-wide applicability limit are not creditable. 
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(C) A decrease in emissions is creditable only to the extent that all of 

the following conditions are met: 

(i) the baseline actual emission rate exceeds the new level of 

emissions; 

(ii) it is federally enforceable at and after the time that actual 

construction on the particular change begins; 

(iii) the executive director has not relied on it in issuing a 

prevention of significant deterioration or a nonattainment permit; 

(iv) the decrease has approximately the same qualitative 

significance for public health and welfare as that attributed to the increase from the 

particular change; and 

(v) in the case of nonattainment applicability analysis only, 

the state has not relied on the decrease to demonstrate attainment or reasonable further 

progress. 
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(D) An increase that results from a physical change at a source 

occurs when the emissions unit on which construction occurred becomes operational 

and begins to emit a particular pollutant. Any replacement unit that requires shakedown 

becomes operational only after a reasonable shakedown period, not to exceed 180 days. 

(23) [(21)] Offset ratio--For the purpose of satisfying the emissions offset 

reduction requirements of 42 United States Code, §7503(a)(1)(A), the emissions offset 

ratio is the ratio of total actual reductions of emissions to total emissions increases of 

such pollutants. The minimum offset ratios are included in Table I of this section under 

the definition of major modification. In order for a reduction to qualify as an offset, it 

must be certified as an emission credit under Chapter 101, Subchapter H, Division 1 or 4 

of this title (relating to Emission Credit Banking and Trading; or Discrete Emission 

Credit Banking and Trading), except as provided for in §116.170(b) of this title (relating 

to Applicability of Emission Reductions as Offsets). The reduction must not have been 

relied on in the issuance of a previous nonattainment or prevention of significant 

deterioration permit. 

(24) [(22)] Plant-wide applicability limit--An emission limitation 

expressed, in tons per year, for a pollutant at a major stationary source, that is 

enforceable and established in a plant-wide applicability limit permit under §116.186 of 

this title (relating to General and Special Conditions). 
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(25) [(23)] Plant-wide applicability limit effective date--The date of 

issuance of the plant-wide applicability limit permit. 

(26) [(24)] Plant-wide applicability limit major modification--Any physical 

change in, or change in the method of operation of the plant-wide applicability limit 

source that causes it to emit the plant-wide applicability limit pollutant at a level equal to 

or greater than the plant-wide applicability limit. 

(27) [(25)] Plant-wide applicability limit permit--The new source review 

permit that establishes the plant-wide applicability limit. 

(28) [(26)] Plant-wide applicability limit pollutant--The pollutant for 

which a plant-wide applicability limit is established at a major stationary source. 

(29) [(27)] Potential to emit--The maximum capacity of a stationary source 

to emit a pollutant under its physical and operational design. Any physical or enforceable 

operational limitation on the capacity of the stationary source to emit a pollutant, 

including air pollution control equipment and restrictions on hours of operation or on 

the type or amount of material combusted, stored, or processed, may be treated as part 

of its design only if the limitation or the effect it would have on emissions is federally 
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enforceable. Secondary emissions, as defined in 40 Code of Federal Regulations 

§51.165(a)(1)(viii), do not count in determining the potential to emit for a stationary 

source. 

(30) [(28)] Project net--The sum of the following: the project emissions 

increase, minus any sourcewide creditable emission decreases proposed at the source 

between the date of application for the modification and the date the resultant 

modification begins emitting. Baseline actual emissions shall be used to determine 

emissions increases and decreases. Increases and decreases must meet the creditability 

criteria listed under the definition of net emissions increase in this section. 

(31) [(29)] Projected actual emissions--The maximum annual rate, in tons 

per year, at which an existing facility is projected to emit a federally regulated new source 

review pollutant in any rolling 12-month period during the five years following the date 

the facility resumes regular operation after the project, or in any one of the ten years 

following that date, if the project involves increasing the facility's design capacity or its 

potential to emit that federally regulated new source review pollutant. In determining 

the projected actual emissions, the owner or operator of the major stationary source shall 

include unauthorized emissions from planned maintenance, startup, or shutdown 

activities, which were historically unauthorized and subject to reporting under Chapter 

101 of this title (relating to General Air Quality Rules), to the extent they have been 
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authorized, or are being authorized; and fugitive emissions to the extent quantifiable; 

and shall consider all relevant information, including, but not limited to, historical 

operational data, the company's own representations, the company's expected business 

activity and the company's highest projections of business activity, the company's filings 

with the state or federal regulatory authorities, and compliance plans under the 

approved state implementation plan. 

(32) [(30)] Project emissions increase--The sum of emissions increases for 

each modified or affected facility determined using the following methods: 

(A) for existing facilities, the difference between the projected actual 

emissions and the baseline actual emissions. In calculating any increase in emissions 

that results from the project, that portion of the facility's emissions following the project 

that the facility could have accommodated during the consecutive 24-month period used 

to establish the baseline actual emissions and that are also unrelated to the particular 

project, including any increased utilization due to product demand growth may be 

excluded from the project emission increase. The potential to emit from the facility 

following completion of the project may be used in lieu of the projected actual emission 

rate; and 
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(B) for new facilities, the difference between the potential to emit 

from the facility following completion of the project and the baseline actual emissions. 

(33) [(31)] Replacement facility--A facility that satisfies the following 

criteria: 

(A) the facility is a reconstructed unit within the meaning of 40 Code 

of Federal Regulations §60.15(b)(1), or the facility replaces an existing facility; 

(B) the facility is identical to or functionally equivalent to the 

replaced facility; 

(C) the replacement does not alter the basic design parameters of 

the process unit;

(D) the replaced facility is permanently removed from the major 

stationary source, otherwise permanently disabled, or permanently barred from 

operation by a permit that is enforceable. If the replaced facility is brought back into 

operation, it shall constitute a new facility. No creditable emission reductions shall be 

generated from shutting down the existing facility that is replaced. A replacement facility 
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is considered an existing facility for the purpose of determining federal new source 

review applicability. 

(34) [(32)] Secondary emissions--Emissions that would occur as a result of 

the construction or operation of a major stationary source or major modification, but do 

not come from the source or modification itself. Secondary emissions must be specific, 

well-defined, quantifiable, and impact the same general area as the stationary source or 

modification that causes the secondary emissions. Secondary emissions include 

emissions from any off-site support facility that would not be constructed or increase its 

emissions, except as a result of the construction or operation of the major stationary 

source or major modification. Secondary emissions do not include any emissions that 

come directly from a mobile source such as emissions from the tail pipe of a motor 

vehicle, from a train, or from a vessel. 

(35) [(33)] Significant facility--A facility that emits or has the potential to 

emit a plant-wide applicability limit (PAL) pollutant in an amount that is equal to or 

greater than the significant level for that PAL pollutant. 

(36) [(34)] Small facility--A facility that emits or has the potential to emit 

the plant-wide applicability limit (PAL) pollutant in an amount less than the significant 

level for that PAL pollutant. 
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(37) [(35)] Stationary source--Any building, structure, facility, or 

installation that emits or may emit any air pollutant subject to regulation under 42 

United States Code, §§7401 et seq. 

(38) [(36)] Temporary clean coal technology demonstration project--A 

clean coal technology demonstration project that is operated for a period of five years or 

less, and that complies with the state implementation plan and other requirements 

necessary to attain and maintain the national ambient air quality standards during the 

project and after it is terminated.
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SUBCHAPTER B: NEW SOURCE REVIEW PERMITS

DIVISION 1: PERMIT APPLICATION

§116.111

Statutory Authority

The amendment is proposed under Texas Water Code (TWC), §5.102, concerning 

General Powers, which provides the commission with the general powers to carry out its 

duties under the TWC; TWC, §5.103, concerning Rules, which authorizes the 

commission to adopt rules necessary to carry out its powers and duties under the TWC; 

and TWC, §5.105, concerning General Policy, which authorizes the commission by rule to 

establish and approve all general policy of the commission. The amendment is also 

proposed under Texas Health and Safety Code (THSC), §382.017, concerning Rules, 

which authorizes the commission to adopt rules consistent with the policy and purposes 

of the Texas Clean Air Act; THSC, §382.002, concerning Policy and Purpose, which 

establishes the commission's purpose to safeguard the state's air resources, consistent 

with the protection of public health, general welfare, and physical property; THSC, 

§382.011, concerning General Powers and Duties, which authorizes the commission to 

control the quality of the state's air; THSC, §382.012, concerning State Air Control Plan, 

which authorizes the commission to prepare and develop a general, comprehensive plan 

for the proper control of the state's air; THSC, §382.051, concerning Permitting 

Authority of Commission; Rules, which authorizes the commission to issue permits for 

construction of new facilities or modifications to existing facilities that may emit air 
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contaminants; THSC, §382.0513, concerning Permit Conditions, which authorizes the 

commission to establish and enforce permit conditions consistent with this chapter;

THSC, §382.0515, concerning Application for Permit, which specifies permit application 

requirements; THSC, §382.0517, concerning Determination of Administrative 

Completion of Application, which specifies when the commission shall determine 

applications are administratively complete; THSC, §382.0518, concerning 

Preconstruction Permit, which authorizes the commission to issue preconstruction 

permits; and THSC, §382.05102, which relates to the permitting authority of the 

commission for emissions of greenhouse gases. Additional relevant sections are Texas 

Government Code, §2006.004, concerning Requirements to Adopt Rules of Practice and 

Index Rules, Orders, Decisions, which requires state agencies to adopt procedural rules 

and, Texas Government Code, §2001.006, which authorizes state agencies to adopt rules 

or take other administrative action that the agency deems necessary to implement 

legislation. The amendment is also proposed under Federal Clean Air Act (FCAA), 42 

United States Code (USC), §§7401, et seq., which requires states to submit state 

implementation plan revisions that specify the manner in which the national ambient air 

quality standards will be achieved and maintained within each air quality control region 

of the state. 

The proposed amendment implements House Bill 788, 83rd Legislature, 2013, THSC, 

§§382.002, 382.011, 382.012, 382.017, 382.051, 382.0513, 382.05102, 382.0515, 
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382.0517, 382.0518, and 383.05195; and Texas Government Code, §2001.004 and 

§2001.006; and FCAA, 42 USC, §§7401 et seq.

§116.111. General Application.

(a) In order to be granted a permit, amendment, or special permit amendment, 

the application must include: 

(1) a completed Form PI-1 General Application signed by an authorized 

representative of the applicant. All additional support information specified on the form 

must be provided before the application is complete; 

(2) information which demonstrates that emissions from the facility, 

including any associated dockside vessel emissions, meet all of the following. 

(A) Protection of public health and welfare. 

(i) The emissions from the proposed facility will comply with 

all rules and regulations of the commission and with the intent of the Texas Clean Air Act 

(TCAA), including protection of the health and property of the public. 
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(ii) For issuance of a permit for construction or modification 

of any facility within 3,000 feet of an elementary, junior high/middle, or senior high 

school, the commission shall consider any possible adverse short-term or long-term side 

effects that an air contaminant or nuisance odor from the facility may have on the 

individuals attending the school(s). 

(B) Measurement of emissions. The proposed facility will have 

provisions for measuring the emission of significant air contaminants as determined by 

the executive director. This may include the installation of sampling ports on exhaust 

stacks and construction of sampling platforms in accordance with guidelines in the 

"Texas Commission on Environmental Quality Sampling Procedures Manual." 

(C) Best available control technology (BACT) must be evaluated for 

and applied to all facilities subject to the TCAA. Prior to evaluation of BACT under the 

TCAA, all facilities with pollutants subject to regulation under Title I Part C of the 

Federal Clean Air Act (FCAA) shall evaluate and apply BACT as defined in 

§116.160(c)(1)(A) of this title (relating to Prevention of Significant Deterioration 

Requirements). 

(D) New Source Performance Standards (NSPS). The emissions 

from the proposed facility will meet the requirements of any applicable NSPS as listed 
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under 40 Code of Federal Regulations (CFR) Part 60, promulgated by the United States 

Environmental Protection Agency (EPA) under FCAA, §111, as amended. 

(E) National Emission Standards for Hazardous Air Pollutants 

(NESHAP). The emissions from the proposed facility will meet the requirements of any 

applicable NESHAP, as listed under 40 CFR Part 61, promulgated by EPA under FCAA, 

§112, as amended. 

(F) NESHAP for source categories. The emissions from the 

proposed facility will meet the requirements of any applicable maximum achievable 

control technology standard as listed under 40 CFR Part 63, promulgated by the EPA 

under FCAA, §112 or as listed under Chapter 113, Subchapter C of this title (relating to 

National Emissions Standards for Hazardous Air Pollutants for Source Categories (FCAA 

§112, 40 CFR Part 63)). 

(G) Performance demonstration. The proposed facility will achieve 

the performance specified in the permit application. The applicant may be required to 

submit additional engineering data after a permit has been issued in order to 

demonstrate further that the proposed facility will achieve the performance specified in 

the permit application. In addition, dispersion modeling, monitoring, or stack testing 

may be required. 
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(H) Nonattainment review. If the proposed facility is located in a 

nonattainment area, it shall comply with all applicable requirements in this chapter 

concerning nonattainment review. 

(I) Prevention of Significant Deterioration (PSD) review. 

(i) If the proposed facility is located in an attainment area, it 

shall comply with all applicable requirements in this chapter concerning PSD review.

(ii) If the proposed facility or modification meets or exceeds 

the applicable greenhouse gases thresholds defined in §116.164 of this title (relating to 

Prevention of Significant Deterioration Applicability for Greenhouse Gases Sources) 

then it shall comply with all applicable requirements in this chapter concerning PSD 

review for sources of greenhouse gases.

(J) Air dispersion modeling. Computerized air dispersion modeling 

may be required by the executive director to determine air quality impacts from a 

proposed new facility or source modification. In determining whether to issue, or in 

conducting a review of, a permit application for a shipbuilding or ship repair operation, 

the commission will not require and may not consider air dispersion modeling results 
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predicting ambient concentrations of non-criteria air contaminants over coastal waters 

of the state. The commission shall determine compliance with non-criteria ambient air 

contaminant standards and guidelines at land-based off-property locations. 

(K) Hazardous air pollutants. Affected sources (as defined in 

§116.15(1) of this title (relating to Section 112(g) Definitions)) for hazardous air 

pollutants shall comply with all applicable requirements under Subchapter E of this 

chapter (relating to Hazardous Air Pollutants: Regulations Governing Constructed or 

Reconstructed Major Sources (FCAA, §112(g), 40 CFR Part 63)). 

(L) Mass cap and trade allowances. If subject to Chapter 101, 

Subchapter H, Division 3, of this title (relating to Mass Emissions Cap and Trade 

Program), the proposed facility, group of facilities, or account must obtain allowances to 

operate. 

(b) In order to be granted a permit, amendment, or special permit amendment, 

the owner or operator must comply with the following notice requirements. 

(1) Applications declared administratively complete before September 1, 

1999, are subject to the requirements of [Chapter 116, Subchapter B,] Division 3 of this 

subchapter (relating to Public Notification and Comment Procedures). 
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(2) Applications declared administratively complete on or after September 

1, 1999, are subject to the requirements of Chapter 39 of this title (relating to Public 

Notice) and Chapter 55 of this title (relating to Request for Reconsideration and 

Contested Case Hearings; Public Comment). Upon request by the owner or operator of a 

facility which previously has received a permit or special permit from the commission, 

the executive director or designated representative may exempt the relocation of such 

facility from the provisions in Chapter 39 of this title if there is no indication that the 

operation of the facility at the proposed new location will significantly affect ambient air 

quality and no indication that operation of the facility at the proposed new location will 

cause a condition of air pollution.
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SUBCHAPTER B: NEW SOURCE REVIEW PERMITS

DIVISION 6: PREVENTIONOF SIGNIFICANT DETERIORATION REVIEW

§§116.160, 116.164, 116.169

Statutory Authority

The amendments and new sections are proposed under Texas Water Code (TWC), 

§5.102, concerning General Powers, which provides the commission with the general 

powers to carry out its duties under the TWC; TWC, §5.103, concerning Rules, which 

authorizes the commission to adopt rules necessary to carry out its powers and duties 

under the TWC; and TWC, §5.105, concerning General Policy, which authorizes the 

commission by rule to establish and approve all general policy of the commission. The 

amendments and new sections are also proposed under Texas Health and Safety Code 

(THSC), §382.017, concerning Rules, which authorizes the commission to adopt rules 

consistent with the policy and purposes of the Texas Clean Air Act; THSC, §382.002, 

concerning Policy and Purpose, which establishes the commission's purpose to 

safeguard the state's air resources, consistent with the protection of public health, 

general welfare, and physical property; THSC, §382.003, concerning Definitions, which 

defines certain terms used in the Chapter 382; THSC, §382.011, concerning General 

Powers and Duties, which authorizes the commission to control the quality of the state's 

air; and THSC, §382.012, concerning State Air Control Plan, which authorizes the 

commission to prepare and develop a general, comprehensive plan for the proper control 
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of the state's air; THSC, §382.051, concerning Permitting Authority of Commission; 

Rules, which authorizes the commission to issue permits for construction of new 

facilities or modifications to existing facilities that may emit air contaminants; THSC,

§382.05101 concerning De Minimis Air Contaminants, which authorizes the commission 

to develop by rule criteria to establish a de minimis level of air contaminants below 

which a permit, standard permit or permit by rule is not required; THSC, §382.0513, 

concerning Permit Conditions, which authorizes the commission to establish and 

enforce permit conditions consistent with this chapter; THSC, §382.0515, concerning 

Application for Permit, which specifies permit application requirements; THSC,

§382.0517, concerning Determination of Administrative Completion of Application, 

which specifies when the commission shall determine applications are administratively 

complete; THSC, §382.0518, concerning Preconstruction Permit, which authorizes the 

commission to issue preconstruction permits; and THSC, §382.05102, which relates to 

the permitting authority of the commission for emissions of greenhouse gases.

Additional relevant sections are Texas Government Code, §2006.004, concerning 

Requirements to Adopt Rules of Practice and Index Rules, Orders, Decisions, which 

requires state agencies to adopt procedural rules and, Texas Government Code,

§2001.006, which authorizes state agencies to adopt rules or take other administrative 

action that the agency deems necessary to implement legislation. The amendments and 

new sections are also proposed under Federal Clean Air Act (FCAA), 42 United States 

Code (USC), §§7401, et seq., which requires states to submit state implementation plan 
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revisions that specify the manner in which the national ambient air quality standards 

will be achieved and maintained within each air quality control region of the state. 

The proposed new and amended sections implement House Bill 788, 83rd Legislature, 

2013, THSC, §§382.002, 382.003, 382.011, 382.012, 382.017, 382.051, 382.05101, 

382.0513, 382.05102, 382.0515, 382.0517, 382.0518, and 383.05195; and Texas 

Government Code, §2001.004 and §2001.006; and FCAA, 42 USC, §§7401 et seq.

§116.160. Prevention of Significant Deterioration Requirements.

(a) Each proposed new major source or major modification in an attainment or 

unclassifiable area shall comply with the requirements of this section. In addition, each 

proposed new major source of greenhouse gases (GHGs) or major modification involving 

GHGs shall comply with the applicable requirements of this section. The owner or 

operator of a proposed new or modified facility that will be a new major stationary 

source for the prevention of significant deterioration air contaminant shall meet the 

additional requirements of subsection (c)(1) - (4) of this section. 

(b) De minimis [The deminimis] threshold test (netting):
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(1) is required for all modifications to existing major sources of federally 

regulated new source review pollutants, unless the proposed emissions increases 

associated with a project, without regard to decreases, are less than major modification 

thresholds for the pollutant identified in 40 Code of Federal Regulations (CFR) 

§52.21(b)(23); and [.] 

(2) is required for GHGs at existing major sources if the proposed 

modification results in an emissions increase, without regard to decreases, as required in 

§116.164(a)(2) and (4)(B) of this title (relating to Prevention of Significant Deterioration 

Applicability for Greenhouse Gases Sources). 

(c) In applying the de minimis threshold test (netting), if the net emissions 

increases are greater than the major modification levels for the pollutant identified in 40 

CFR §52.21(b)(23) and for GHGs in §116.164 of this title, the following requirements 

apply. 

(1) In addition to those definitions in §116.12 of this title (relating to 

Nonattainment and Prevention of Significant Deterioration Review Definitions) the 

following definitions from prevention of significant deterioration of air quality 

regulations promulgated by the United States Environmental Protection Agency (EPA) 
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in 40 CFR §52.21 and the definitions for protection of visibility and promulgated in 40 

CFR §51.301 as amended July 1, 1999, are incorporated by reference: 

(A) 40 CFR §52.21(b)(12) - (15), concerning best available control 

technology, baseline concentrations, dates, and areas; 

(B) 40 CFR §52.21(b)(19), concerning innovative control 

technology; and 

(C) 40 CFR §52.21(b)(24) - (28), concerning federal land manager, 

terrain, and Indian reservations/governing bodies. 

(2) The following requirements from prevention of significant 

deterioration of air quality regulations promulgated by the EPA in 40 CFR §52.21 are 

hereby incorporated by reference: 

(A) 40 CFR §52.21(c) - (k), concerning increments, ambient air 

ceilings, restrictions on area classifications, exclusions from increment consumption, 

redesignation, stack heights, exemptions, control technology review, and source impact 

analysis; 
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(B) 40 CFR §52.21(m) - (p), concerning air quality analysis, source 

information, additional impact analysis, and sources impacting federal Class I areas; 

(C) 40 CFR §52.21(r)(4), concerning relaxation of an enforceable 

limitation; and 

(D) 40 CFR §52.21(v), concerning innovative technology. 

(3) The term "facility" shall replace the words "emissions unit" in the 

referenced sections of the CFR. 

(4) The term "executive director" shall replace the word "administrator" in 

the referenced sections of the CFR except in 40 CFR §52.21(g) and (v). 

(d) All estimates of ambient concentrations required under this subsection shall 

be based on the applicable air quality models and modeling procedures specified in the 

EPA Guideline on Air Quality Models, as amended, or models and modeling procedures 

currently approved by the EPA for use in the state program, and other specific provisions 

made in the prevention of significant deterioration state implementation plan. If the air 

quality impact model approved by the EPA or specified in the guideline is inappropriate, 

the model may be modified or another model substituted on a case-by-case basis, or a 
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generic basis for the state program, where appropriate. Such a change shall be subject to 

notice and opportunity for public hearing and written approval of the administrator of 

the EPA.

§116.164. Prevention of Significant Deterioration Applicability for 

Greenhouse Gases Sources.

(a) Greenhouse Gases (GHGs) are subject to Prevention of Significant 

Deterioration review under the following conditions:

(1) New source, major for non-GHGs. The stationary source is a new major 

stationary source for a federally regulated new source review (NSR) pollutant that is not 

GHGs, and will emit or have the potential to emit 75,000 tons per year (tpy) or more

carbon dioxide equivalent (CO2e); or

(2) Existing source, major for non-GHGs. The stationary source is an 

existing major stationary source for a federally regulated NSR pollutant that is not 

GHGs, and will have a significant net emissions increase of a federally regulated NSR 

pollutant that is not GHGs, and a net emissions increase greater than zero tpy GHGs on a 

mass basis and 75,000 tpy or more CO2e.
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(3) New source, major for GHGs Only. The new stationary source that will 

emit or has the potential to emit greater than or equal to 100 tpy GHGs on a mass basis, 

if the source is listed on the named source category list in 40 Code of Federal Regulations 

(CFR ) §51.166(b)(1)(i), or greater than or equal to 250 tpy GHGs on a mass basis; and 

100,000 tpy or more CO2e.

(4) GHGs major modification at an existing major source.

(A) The existing stationary source emits or has the potential to emit 

greater than or equal to 100 tpy GHGs on a mass basis, if the source is listed on the 

named source category list in 40 CFR §51.166(b)(1)(i), or greater than or equal to 250 tpy 

GHGs on a mass basis; and 100,000 tpy or more CO2e; and

(B) the stationary source undertakes a physical change or change in 

the method of operation that will result in a net emissions increase greater than zero tpy 

GHGs on a mass basis, and a net emissions increase of 75,000 tpy or more CO2e.

(5) Existing source that is not major. The existing stationary source 

undertakes a physical change or change in the method of operation that will result in an 

emissions increase greater than or equal to 100 tpy GHGs on a mass basis, if the source is 
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listed on the named source category list in 40 CFR §51.166(b)(1)(i), or greater than or 

equal to 250 tpy GHGs on a mass basis; and 100,000 tpy or more CO2e.

(b) New stationary souces with emissions of GHGs, or existing stationary sources 

that undertake a physical change or change in the method of operations that includes 

emissions of GHGs, that do not meet any of the conditions in subsection (a) of this 

section do not require authorization under this subchapter, Subchapter F of this chapter 

(relating to Standard Permits), Subchapter G of this chapter (relating to Flexible 

Permits), and Chapter 106 of this title (relating to Permits by Rule) for emissions of 

GHGs. Owners or operators of these sources must keep records sufficient to 

demonstrate the amount of emissions from the source. Records must be made available 

at the request of personnel from the commission or any local air pollution control agency 

having jurisdiction.

§116.169. Greenhouse Gases (GHGs) Application Transition.

Upon the effective date of the United States Environmental Protection Agency 

(EPA) approval of this chapter and rescission of the Federal Implementation Plan as 

published in the May 3, 2011, issue of the Federal Register (76 FR 25178), the 

commission will accept transfer of and review applications previously filed with EPA for 
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greenhouse gas prevention of significant deterioration permits. These applications will 

be subject to the applicable requirements of this chapter.
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SUBCHAPTER F: STANDARD PERMITS

§116.610

Statutory Authority

The amendment is and new sections are proposed under Texas Water Code (TWC), 

§5.102, concerning General Powers, which provides the commission with the general 

powers to carry out its duties under the TWC; TWC, §5.103, concerning Rules, which 

authorizes the commission to adopt rules necessary to carry out its powers and duties 

under the TWC; and TWC, §5.105, concerning General Policy, which authorizes the 

commission by rule to establish and approve all general policy of the commission. The 

amendment is are also proposed under Texas Health and Safety Code (THSC), §382.017, 

concerning Rules, which authorizes the commission to adopt rules consistent with the 

policy and purposes of the Texas Clean Air Act; THSC, §382.002, concerning Policy and 

Purpose, which establishes the commission's purpose to safeguard the state's air 

resources, consistent with the protection of public health, general welfare, and physical 

property; THSC, §382.011, concerning General Powers and Duties, which authorizes the 

commission to control the quality of the state's air; THSC, §382.012, concerning State 

Air Control Plan, which authorizes the commission to prepare and develop a general, 

comprehensive plan for the proper control of the state's air; THSC, §382.051, concerning 

Permitting Authority of Commission; Rules, which authorizes the commission to issue 

permits for construction of new facilities or modifications to existing facilities that may 
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emit air contaminants; THSC, §382.0513, concerning Permit Conditions, which 

authorizes the commission to establish and enforce permit conditions consistent with 

this chapter; THSC, §382.0515, concerning Application for Permit, which specifies 

permit application requirements; THSC, §382.0517, concerning Determination of 

Administrative Completion of Application, which specifies when the commission shall 

determine applications are administratively complete; THSC, §382.0518, concerning 

Preconstruction Permit, which authorizes the commission to issue preconstruction 

permits; THSC, §382.05102, which relates to the permitting authority of the commission 

for emissions of GHGs; and THSC, §382.05195 concerning Standard Permits, which 

authorizes the commission to issue standard permits for new or existing similar 

facilities. Additional relevant sections are Texas Government Code, §2006.004, 

concerning Requirements to Adopt Rules of Practice and Index Rules, Orders, Decisions, 

which requires state agencies to adopt procedural rules and, Texas Government Code,

§2001.006, which authorizes state agencies to adopt rules or take other administrative 

action that the agency deems necessary to implement legislation. The amendment is also 

proposed under Federal Clean Air Act (FCAA), 42 United States Code (USC), §§7401, et 

seq., which requires states to submit state implementation plan revisions that specify the 

manner in which the national ambient air quality standards will be achieved and 

maintained within each air quality control region of the state. 

The proposed amendment implements House Bill 788, 82rd Legislature, 2013, THSC, 
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§§382.002, 382.011, 382.012, 382.017, 382.051, 382.0513, 382.05102, 382.0515, 

382.0517, 382.0518 and 383.05195; and Texas Government Code, §2001.004 and 

§2001.006; and FCAA, 42 USC, §§7401 et seq.

§116.610. Applicability.

(a) Under the Texas Clean Air Act, §382.051, a project that meets the 

requirements for a standard permit listed in this subchapter or issued by the commission 

is hereby entitled to the standard permit, provided the following conditions listed in this 

section are met. For the purposes of this subchapter, project means the construction or 

modification of a facility or a group of facilities submitted under the same registration. 

(1) Any project that results in a net increase in emissions of air 

contaminants from the project other than [carbon dioxide,] water, nitrogen, [methane,] 

ethane, hydrogen, oxygen, or greenhouse gases (GHGs) as defined in §101.1 of this title 

(relating to Definitions), or those for which a national ambient air quality standard has 

been established must meet the emission limitations of §106.261 of this title (relating to 

Facilities (Emission Limitations)), unless otherwise specified by a particular standard 

permit. 
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(2) Construction or operation of the project must be commenced prior to

the effective date of a revision to this subchapter under which the project would no 

longer meet the requirements for a standard permit. 

(3) The proposed project must comply with the applicable provisions of the 

Federal Clean Air Act (FCAA), §111 (concerning New Source Performance Standards) as 

listed under 40 Code of Federal Regulations (CFR) Part 60, promulgated by the United 

States Environmental Protection Agency (EPA). 

(4) The proposed project must comply with the applicable provisions of 

FCAA, §112 (concerning Hazardous Air Pollutants) as listed under 40 CFR Part 61, 

promulgated by the EPA. 

(5) The proposed project must comply with the applicable maximum 

achievable control technology standards as listed under 40 CFR Part 63, promulgated by 

the EPA under FCAA, §112 or as listed under Chapter 113, Subchapter C of this title 

(relating to National Emissions Standards for Hazardous Air Pollutants for Source 

Categories (FCAA, §112, 40 CFR Part 63)). 
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(6) If subject to Chapter 101, Subchapter H, Division 3 of this title (relating 

to Mass Emissions Cap and Trade Program) the proposed facility, group of facilities, or 

account must obtain allocations to operate. 

(b) Any project that constitutes a new major stationary source or major 

modification as defined in §116.12 of this title (relating to Nonattainment and Prevention 

of Significant Deterioration Review Definitions) because of emissions of air 

contaminants other than greenhouse gases is subject to the requirements of §116.110 of 

this title (relating to Applicability) rather than this subchapter. A new major stationary 

source or major modification which is subject to Chapter 116, Subchapter B, Division 6 of 

this chapter (relating to Prevention of Significant Deterioration Review) due solely to 

emissions of greenhouse gases may use a standard permit under this chapter for air 

contaminants that are not greenhouse gases.

(c) Persons may not circumvent by artificial limitations the requirements of 

§116.110 of this title. 

(d) Any project involving a proposed affected source (as defined in §116.15(1) of 

this title (relating to Section 112(g) Definitions)) shall comply with all applicable 

requirements under Subchapter E of this chapter (relating to Hazardous Air Pollutants: 

Regulations Governing Constructed or Reconstructed Major Sources (FCAA, §112(g), 40 
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CFR Part 63)). Affected sources subject to Subchapter E of this chapter may use a 

standard permit under this subchapter only if the terms and conditions of the specific 

standard permit meet the requirements of Subchapter E of this chapter.

§116.611. Registration to Use a Standard Permit.

(a) If required, registration to use a standard permit shall be sent by certified mail, 

return receipt requested, or hand delivered to the executive director, the appropriate 

commission regional office, and any local air pollution program with jurisdiction, before 

a standard permit can be used. The registration must be submitted on the required form 

and must document compliance with the requirements of this section, including, but not 

limited to: 

(1) the basis of emission estimates; 

(2) quantification of all emission increases and decreases associated with 

the project being registered; 

(3) sufficient information as may be necessary to demonstrate that the 

project will comply with §116.610(b) of this title (relating to Applicability); 
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(4) information that describes efforts to be taken to minimize any collateral 

emissions increases that will result from the project; 

(5) a description of the project and related process; and 

(6) a description of any equipment being installed. 

(b) Construction may begin any time after receipt of written notification from the 

executive director that there are no objections or 45 days after receipt by the executive 

director of the registration, whichever occurs first, except where a different time period is 

specified for a particular standard permit or the source obtains a prevention of 

significant deterioration permit for greenhouse gases as provided in §116.164(a) of this 

title (relating to Prevention of Significant Deterioration Applicability for Greenhouse 

Gases Sources). 

(c) In order to avoid applicability of Chapter 122 of this title (relating to Federal 

Operating Permits), a certified registration shall be submitted. The certified registration 

must state the maximum allowable emission rates and must include documentation of 

the basis of emission estimates and a written statement by the registrant certifying that 

the maximum emission rates listed on the registration reflect the reasonably anticipated 

maximums for operation of the facility. The certified registration shall be amended if the 

basis of the emission estimates changes or the maximum emission rates listed on the 
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registration no longer reflect the reasonably anticipated maximums for operation of the 

facility. The certified registration shall be submitted to the executive director; to the 

appropriate commission regional office; and to all local air pollution control agencies 

having jurisdiction over the site. Certified registrations must also be maintained in 

accordance with the requirements of §116.115 of this title (relating to General and Special 

Conditions). 

(1) Certified registrations established prior to December 11, 2002, [the 

effective date of this rule] shall be submitted on or before February 3, 2003. 

(2) Certified registrations established on or after December 11, 2002, [the 

effective date of this rule] shall be submitted no later than the date of operation.

(3) Certified registrations established for greenhouse gases (as defined in 

§101.1 of this title (relating to Definitions) on or after the effective date of EPA's final 

action approving amendments to §122.122 of this title (relating to Potential to Emit) into 

the State Implementation Plan: 

(A) for existing sites that emit or have the potential to emit 

greenhouse gases, no later than 90 days after the effective date of EPA's final action on 

§122.122 of this title; or
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(B) for new sites that emit or have the potential to emit greenhouse 

gases, no later than the date of operation.