### ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 52 [EPA-R06-0AR-2010-0147; FRL

-

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

AGENCY: Environmental Protection Agency (EPA).



### ACTION: Final rule.



### SUMMARY: EPA is approving severable portions oftwo revisions to the Texas State Implementation Plan (SIP) submittedby the State ofTexas on October24,2006, and August 16, 2007. These revisions amend existing sections and create a new section in Title 30 ofthe Texas Administrative Code (TAC), Chapter 101 - General Air Quality Rules, Subchapter HEmissions Banking and Trading, Division 1 - Emission Credit Banking and Trading, referred to elsewhere in this notice as the Emission Reduction Credit (ERC) Program. The October 24, 2006, submittal creates a new section for international emissionreduction provisions and amends existing sections to further clarify procedures for using emissionprotocols and to update the approved list ofemission credit uses. The August 16, 2007, submittal amends two sections of the ERC programto update cross-references to recently recodified 30 TAC Chapter 117 provisions. EPA has determined that these SIP revisions comply with the Clean Air Act and EPA regulations, are consistent with EPA policies, and will improve air quality. This action is being taken under section 110 and parts C and D ofthe Federal Clean Air Act (the Act or CAA).2

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

ADDRESSES: EPA has established a docket for this action under DocketID No. EPA-R06- OAR-2010-0147. All documents in the docket are listed in the www.regulations.gov index. Although listed in the index, some information is notpublicly available, e.g., CBI or other information whose disclosure is restrictedby statute. Certain other material, such as copyrighted material, will be publicly available only in hard copy. Publicly available docket materials are available either electronically in www.regulations.gov or in hard copy at the Air Planning Section (6PD-L), Environmental Protection Agency, 1445 Ross Avenue, Suite 700, Dallas, Texas 75202-2733. The file will be made available by appointmentfor public inspection in the Region 6 FOIA Review Room between the hours of8:30 a.m. and 4:30 p.m. weekdays except for legal holidays. Contactthe person listed in the FORFURTHERINFORMATION CONTACT paragraphbelow or Mr. Bill Deese at 214-665-7253 to make an appointment. If possible, please make the appointment at least two working days in advance ofyour visit. There will be a 15 cent per page fee for making photocopies ofdocuments. On the day ofthe visit, please check in at the EPA Region 6 reception area at 1445 Ross Avenue, Suite 700, Dallas, Texas.

The State submittal related to this SIP revision, and which is part ofthe EPA docket, is also available for public inspection at the State Air Agency listed below during official business hours by appointment:3

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



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



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



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



### I. What final action is EPA taking? We are fully approving severable portions oftwo revisions to the Texas SIP submitted by the Texas Commission on Environmental Quality (TCEQ) on October 24, 2006, and August 16, 2007, specific to the ERC Program. The revisions we are approving amend existing sections and

### 4
create a new section in the ERC Program at Title 30 ofthe Texas Administrative Code (TAC), Chapter 101 - General Air Quality Rules, SubchapterH - Emissions Banking and Trading, Division I - Emission Credit Banking and Trading. The October 24, 2006, submittal creates a
new section for international emissionreductionprovisions and amends existing sections to further clarify procedures for using emission protocols and to update the approved list of emission credit uses. The severable portions ofthe August 16, 2007 submittal that we are approving non-substantively revise the ERC Program to correctly update the cross-references to the stationary source nitrogen oxide (NOx) rules found in the Texas SIP at 30 TAC Chapter 117
as a result ofthe non-substantive recodification ofChapter 117 approved by EPA as part ofthe Texas SIP on December 3, 2008 (see 73 FR 73562). Consequently, we are approving the revisions to the Texas SIP at 30 TAC sections 101.302(a), 101.302(d)(1)(C)(vi), 101.302(f), and 101.306(a)(5) and the creation ofnew section 101.305 submitted on October 24,2006. Additionally, we are approving revisions to the Texas SIP at 30 TAC sections 101.302(d)(1)(A) and 1

## o1.306(b)(3) submitted on August 16,2007, by the TCEQ. EPA proposed the above action on MarchSf), 2010, at 75 FR 15645-15648. Today, we
are approving the ERC program revisions as proposed and find that they comply with the CAA and EPA regulations, are consistentwith EPA policies, and will improve air quality. This final approval is being taken under parts C and D ofthe CAA. In a separate rulemaking, EPA is approving the severable Discrete Emission Credit Banking and Trading Program (referredto elsewhere in this notice as the Discrete Emission Reduction Credit (DERC) Program) revisions at 30 TAC sections 101.372, 101.373, 101.375, 101.376, and 101.378 submitted on October 24,2006, and 30 TAC sections 101.372 and 1'01.376 submitted on August 16,2007 (see EPA-R06-0AR-2010-0418).5 At this time, EPA is not taking action on the revisions to the Emissions Banking and Trading ofAllowances Program at 30 TAC sections 101.338 and 101.339 submitted on October 24, 2006. EPA is also not taking action at this time on the revisions to the general air quality definitions at 30 TAC Section 101.1 or the revisions to the System Cap Trading Program at 30 TAC sections 101.383, and 101.385 submitted on August 16,2007. These severable revisions remain under review by EPA and will be addressed in separate actions.



### II. What is the background for this action? The ERC Program, SIP-approvedby EPA on September 6, 2006, establishes a marketbasedtrading program for the generation and use ofemission credits (generated and used at a specifiedemissionrate, tons per year) to provide flexibility for sources in complying with certain State and Federal requirements. Generally, emission reductions ofcriteriapollutants (excluding lead) or precursors ofcriteriapollutants for which an area is designated may be banked and used
as emission credits. EPA's September 6,2006, final approval ofthe ERC program addressed the original submission ofthe program on December 23, 1997, and the subsequent revisions on January 18,2001; April 14, 2002; January 17,2003; and December 6,2004. Since our September 6, 2006, final approval, TCEQ has revised the ERC programto address the commitments ofthe DERC conditional approval. Additionally, the TCEQ adopted revisions to the ERC program consistentwith the requirements ofSenate Bill 784, adopted during regular session, 2005, ofthe 79th Texas Legislature. Senate Bill 784 allows for greater flexibility in the generation and use ofinternational emissionreductions. These revisions were adopted by the TCEQ on October 4, 2006, and became effective on October 26, 2006. The adopted regulations were submittedto EPA as a SIP revision on October24, 2006. TCEQ has

### 6 also promulgatedrevisions to the ERC program that update the cross-references to the new numbering structure in 30 TAC Chapter 117. These revisions were adopted on July 25,2007, and became effective on August 16, 2007. The adopted regulations were submittedto EPA as a SIP revision on August 16, 2007.



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



### IV. Statutory and Executive Order Reviews. Under the Clean Air Act, the Administrator is required to approve a SIP submission that complies with the provisions ofthe Act and applicable Federal regulations. 42 U.S.C. 741O(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, EPA's role is to approve state choices, providedthat they meet the criteria ofthe Clean Air Act. Accordingly, this action merely approves state law as meeting Federal requirements and does not impose additional requirements beyondthose imposed by state law. For that reason, this action: • is not a "significantregulatory action" subject to review by the Office ofManagement and Budget under Executive Order 12866 (58 FR 51735, October 4,1993); • does not impose an information collection burden under the provisions ofthe Paperwork Reduction Act (44 U.S.C. 3501 et seq.); • is certified as not having a significant economic impact on a substantial number ofsmall entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.);7 -does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Actof 1995 (Public Law 104- 4); • does not have Federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10, 1999); • is not an economically significant regulatory action based on health or safety risks subject to Executive Order 13045 (62 FR 19885, Apri123, 1997); • is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May 22,2001); • is not subject to requirements ofSection 12(d) ofthe National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because application ofthose requirements would be inconsistent with the CleanAir Act; and • does not provide EPA with the discretionary authority to address, as appropriate, disproportionate human health or environmentaleffects, using practicable and legally permissible methods, under Executive Order 12898 (59 FR 7629, February 16,1994).

In addition, this rule does not have tribal implications as specifiedby Executive Order 13175 (65 FR 67249, November 9,2000), because the SIP is not approved to apply in Indian country located in the state, and EPA notes that it will not impose substantial direct costs on tribal governments or preempt tribal law. The Congressional Review Act, 5 U.S.C. 801 

### et seq., as addedby the Small Business Regulatory Enforcement Fairness Act of 1996, generallyprovides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy ofthe8 rule, to each House ofthe Congress and to the ComptrollerGeneral ofthe United States. EPA will submit a report containing this action and other required information to the U.S. Senate, the U.S. House ofRepresentatives, and the ComptrollerGeneral ofthe United States prior to publication ofthe rule in the Federal Register. A major rule cannot take effect until 60 days after it is published in the Federal Register. This action is not a "majorrule" as defined by 5 U.S.C. 804(2). Under section 307(b)(l) ofthe Clean Air Act, petitions forjudicial review ofthis action must be filed in the United States CourtofAppeals for the appropriate circuitby [Insert date 60 days from date ofpublication ofthis documentin the Federal]. Filing a petition for reconsideration by the Administrator ofthis final rule does not affect the finality ofthis action for the purposes of judicial review nor does it extend the time within which a petition forjudicial review may be filed, and shall not postpone the effectiveness ofsuch rule or action. This action may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)

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

Dated: Acting Regional Administrator, Region 6.9 40 CFR part 52 is amended as follows: PART 52-[AMENDED] 1. The authority citation for part 52 continues to read as follows: Authority: 42 U.S.C. 7401 

### et seq. Subpart SS - Texas 2. The table in § 52.2270(c) entitled "EPA Approved Regulations in the Texas SIP" under Chapter 101 is amended by: a. Revising the entries for Sections 101.302 and 101.306 under Subchapter HEmissions Banking and Trading, Division 1 - Emission Credit Banking and Trading. b. Adding an entry for Section 101.305 under SubchapterH - Emissions Banking and Trading, Division 1

- Emission Credit Banking and Trading, in numerical order. The revisions and additions read as follows: Section 52.2270



## '" * * * * (c) 

## * * * Identification ofplan.

EPA-Approved Regulations in the Texas SIP State Citation Title / Subject State approval EPA approval date Explanation / submittal date Chapter 101 - General Air Quality Rules 

## * * * * * * * Subchapter H - Emissions Rankine: and Trading Division 1 - Emission Credit Rankine: and Trading 

## * * * * * * * Section I General Provisions 7/25/2007 [Insertdate ofFR 101.302 publication]10 [Insert FR page numberwhere document beainsl 

## * * * * * * * Section Emission Reductions 10/4/2006 [Insert date ofFR 101.305 Achieved Outside the publication] United States [Insert FR page numberwhere document beainsl Section Emission Credit Use 7/25/2007 [Insert date ofFR 101.306 publication] [Insert FR page numberwhere document begins] 

## * * * * * * *