November 23, 2009 

By Electronic Filing and Electronic Mail

Mr. Stanley M. Spruiell 

Air Permits Section (6PD-R) 

Environmental Protection Agency 

1445 Ross Avenue, Suite 1200 

Dallas, Texas 75202-2733 

Re: Comments on EPA's Proposed Disapproval of Various Texas SIP Amendments - 

EPA Docket ID Nos. EPA-R06-OAR-2006-0133; EPA-R06-OAR-2005-TX0032; EPA-R06-OAR-2005-TX-0025 

Dear Mr. Spruiell: 

 Bracewell & Giuliani LLP, counsel to the Electric Reliability Coordinating Council 

(ERCC), appreciates the opportunity to submit comments on the three proposals referenced 

above. ERCC is a group of companies that are committed to providing reliable and affordable 

power to American consumers and businesses. Its members include electric utilities, mining, and 

transportation companies, and it focuses its public education and advocacy efforts on major 

legislative and regulatory issues arising under the Clean Air Act, as well as issues related to coal 

ash and climate change policy. ERCC member companies provide electricity to millions of 

consumers and have spent billions of dollars in achieving beneficial environmental goals over 

the last decade. 

 As a technical matter, the United States Environmental Protection Agency (EPA) is 

simply proposing to disapprove certain revisions to the Texas State Implementation Plan (SIP) 

that the State of Texas would like to make. As a practical matter, however, these proposals (the 

"Proposed Disapprovals") have sent a signal that EPA may want to dismantle the comprehensive 

permitting program that Texas has developed and successfully implemented over the last decade 

– a program that has achieved substantial emission reductions while providing a fair and 

predictable regulatory framework that is protective of human health and the environment. 

These recent EPA proposals to disturb long-standing state rules have created enormous 

uncertainty -- not only in Texas but in other parts of the country as well. This type of uncertainty 

has a chilling effect on much-needed economic investment and makes it even more difficult for 

companies to create jobs and provide for economic growth. We urge EPA and the Texas 

Commission on Environmental Quality (TCEQ) to work together to resolve any legitimate 
Mr. Stanley M. Spruiell 

November 23, 2009 

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DC\261792.1 

concerns regarding public health or welfare in a way that removes this uncertainty as soon as 

possible – and minimizes any uncertainty in the meantime. 

As discussed below, EPA’s concerns about the Texas permitting program are largely 

misplaced. Given the substantial improvements in air quality that have been achieved in Texas 

over the last decade – in large measure because the State has been implementing the permitting 

programs now under dispute – it is hard to believe that these programs could actually be shown 

to interfere with Texas's ability to achieve the national ambient air quality standards (NAAQS). 

Most, if not all, of EPA’s concerns can be resolved through simple clarifications to the Texas 

programs – for example, by making it clear that the Texas programs do not supersede federal 

permitting requirements for new major sources and major modifications. 

We urge EPA to work with the TCEQ to ensure than any clarifications or changes are 

made and approved expeditiously. TCEQ has laid out an effective framework for resolving 

EPA’s approval concerns, and ERCC supports these on-going efforts. We also believe that EPA 

must keep the following points in mind: 

 

(1) The state program has created an incentive for companies to install pollution controls and 

implement other pollution reduction measures by giving them additional operational 

flexibility and reducing permitting delays. These incentives are important, fully 

consistent with the Clean Air Act, and should be maintained. 

(2) EPA should take immediate steps to reassure companies that have projects already in the 

permitting process that they can continue under the current program. If companies 

believe that EPA’s actions may be applied retroactively to projects that have already 

applied for permits, there is a substantial risk these projects will be put on hold, which 

will stifle much needed economic activity and cause irreparable harm. 

(3) EPA should also affirmatively recognize and reaffirm the validity of permits already 

issued. Any retroactive application of the Proposed Disapprovals to already-issued 

permits would create crippling uncertainty and manifestly unjust revocation of properlyobtained government authorizations. If the Agency believes that any such permits may 

need to be revised, then there must be a fair and predictable prospective process for 

making those revisions without causing undue harm to companies that relied, in good 

faith, on the only program in place – the program that has been successfully implemented 

by TCEQ. 

 
Mr. Stanley M. Spruiell 

November 23, 2009 

Page 3 

DC\261792.1 

I. EPA Has Failed to Demonstrate that the Proposed Revisions Interfere with Texas’ 

Ability to Achieve the NAAQS 

 Unlike many other states, Texas state law requires that all air emissions from stationary 

sources receive authorization from the state. TX HEALTH & SAFETY CODE § 382.0518(a). 

Because of this absolute requirement for authorization of air emissions, together with the 

numerous and varied emission sources that must be authorized across the state in rural, urban, 

industrialized, agricultural, ozone attainment and nonattainment areas, Texas has developed an 

extensive program to meet the permitting and resource challenges. See 30 T.A.C. § 116.110(a), 

which lists the required authorizations for all new sources and modifications. 

 Texas' minor source program must also meet the statutory Texas Clean Air Act 

requirement for authorization of all emissions. As EPA recently stated in its final Flexible Air 

Permitting Rule, states have discretion under the Federal Clean Air Act to implement the state 

minor source program as long as it does not 

interfere with attainment of the NAAQS. Aside from this requirement, which is 

stated in broad terms, the Act includes no specifics regarding the structure or 

functioning of minor NSR programs... As a result, SIP-approved minor NSR 

programs can vary quite widely from State to State. 

Operating Permit Programs; Flexible Air Permitting Rule; Final Rule, 74 Fed. Reg. 

51,418 at 51,421 (Oct. 6, 2009). 

 Based upon those EPA-adopted principles that the state SIP must not interfere with 

attainment and that state flexibility is inherent in the NSR minor source permitting program, we 

respectfully request that EPA re-evaluate and withdraw the Proposed Disapprovals. As 

discussed below, not only has Texas air quality shown dramatic improvement because the very 

measures proposed for disapproval have been in place, but the Proposed Disapprovals fail to 

recognize that the measures under review are similar to other approved state minor NSR 

programs.

A. EPA's Proposed Disapprovals Do Not Meet Congress’ or the Courts’ Documented 

Standards for SIP Disapproval

 The Clean Air Act grants EPA the authority to disapprove a SIP revision if such revision 

"would interfere with any applicable requirement concerning attainment and reasonable further 

progress." 42 U.S.C.A. § 7410(l). Both legislative history and court interpretations tie EPA's 

determination of a revision that "interferes" with a state SIP to the ability of the SIP provision to 

achieve the National Air Ambient Air Quality Standard. See S. Rep. No. 101-228, at 9, 1990 

U.S.C.C.A.N. 3385, 3395, "The requirement that the States ... submit [SIPs] to EPA for review 
Mr. Stanley M. Spruiell 

November 23, 2009 

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allows for federal oversight of the States' efforts to achieve and maintain the required level of air 

quality"; See also Train v. NRDC, 421 U.S. 60, 79 (1975) stating that "EPA's most basic 

responsibility in reviewing air quality plans under the Act is to determine whether "the ultimate 

effect of a State's choice of emission limitations is compliance with [NAAQS]." EPA suggests 

that somehow this burden is placed on the State submitting a proposed SIP program. This is 

simply incorrect. If EPA were to actually promulgate the Proposed Disapprovals, it must explain 

how the state programs it is disapproving interfere with compliance with the NAAQS. Without 

such findings and justifications, EPA's proposed disapproval would be arbitrary and capricious. 

 Applying this review standard to both initial plans and SIP revisions, courts have 

recognized that "in each instance the Agency must measure the existing level of pollution, 

compare it with the national standards, and determine the effect on this comparison of specified 

emission modifications." Hall v. United States EPA, 273 F.3d 1146, 1158 (9th Cir. Cal. 2001) 

citing Train v. NRDC, 421 U.S. 60 at 93 (1975). In other words, "EPA's analysis must 'rationally 

connect[]' its approval of particular plan revisions before it to its assessment of an area's 

prospects for meeting current attainment requirements. Hall v. United States EPA, 273 F.3d 

1146, 1161 (9th Cir. Cal. 2001) citing Ober v. Whitman, 243 F.3d 1190, 1195 (9th Cir. 2001). 

Likewise, EPA must "rationally connect" any proposed SIP disapproval with an interference to 

achieving the NAAQS. The Proposed Disapprovals fail to make that connection; rather, Texas 

air quality data demonstrates a consistent and strong improvement in air quality despite a 

growing population and economic development. 

 

B. Far from Interfering with NAAQS Achievement, the State’s Rules have 

Significantly Reduced Statewide Emissions 

 The proposed SIP revisions subject to disapproval have been submitted for EPA review 

on a staggered basis since 1994.1 Since that time, the Texas' permitting program has 

implemented substantial emission reductions that have led to dramatic improvements in air 

quality. These improvements can be demonstrated by reviewing both the records of emission 

reductions, and more importantly, the reductions measured by Texas ambient air quality 

monitors: 

 

1

 The Proposed Disapprovals report that the state provisions subject to the proposed 

actions were submitted to EPA for review during the following time periods: Flexible Permits 

(Nov. 29, 1994 to Sept. 11, 2000); Qualified Facilities (various provisions from March 13, 1996 

to Sept. 4, 2002); PCP Standard Permit (February 2, 2006); and Chapter 116 Rule Revisions 

(February 1, 2006). 
Mr. Stanley M. Spruiell 

November 23, 2009 

Page 5 

DC\261792.1 

Emission Reductions

Houston Galveston Brazoria Ozone Precursor Emission Reductions. Despite population 

growth, vehicle and industrial expansion in the Houston-area, the largest and only severe 

ozone nonattainment area in the state, a key ozone-forming pollutant-- nitrogen oxide-- 

has been reduced by 57%, to 475 tons per day, since 2000. Point sources alone have 

reduced the bulk of the NOx reductions in the Houston area by over 500 tons per day 

during the same time period. 

Electric Generating Units Emission Reductions. Electric Generating Units in Texas have 

consistently been below the nation's average emission in lb/mmBtu for Sulfur Dioxide, 

Nitrogen Oxides and Carbon Dioxide. (Data from the Acid Rain Score Card (1995 – 

2002) and Clean Air Markets Division Database (2003 – 2006).) 

Electric Generating Units Emissions Rank Among the Lowest in the Country. As of 

2008, EPA's Acid Raid Database reported that Texas' EGUs had the 9th lowest emission 

rate state average in the nation for NOx and the 19th lowest emission rate for SO2 in the 

nation. (EPA Acid Rain Database, 2008.) 

Monitored Ozone NAAQS Reductions2

Houston-Galveston-Brazoria Area Ozone Reductions. 2009 data places the HoustonGalveston region's 8-hour design value at 84 ppb, below the 85 ppb 8-hour NAAQS 

standard. That level represents a 25 percent reduction in from the 1994 design value of 

110 ppb, the year of the first SIP proposal. 

Dallas-Fort Worth Ozone Reductions. The Dallas area currently meets the one-hour 

ozone standard of 125 ppb and the 2009 8-hour design value currently measures 86 ppb, 

just slightly above the 85 ppb 8-hour standard. 

Beaumont Port Arthur Ozone Reductions. The Beaumont Port Arthur area meets both the 

eight-hour and one-hour ozone standards and has since 2007. 

Statewide Ozone Reductions. The HGB, Dallas and BPA areas have all seen declining 

ozone design values consistently since at least 2003. 

 

 As demonstrated by this snapshot of emission reductions and improving ozone data, it is 

clear that the revisions submitted and implemented over the course of the past decade have not

 

2 Update of Air Quality in Texas, presented by Susana Hildebrand, P.E., TCEQ Chief 

Engineer, to the TCEQ Commissioners at a Oct. 29, 2009 Work Session. 
Mr. Stanley M. Spruiell 

November 23, 2009 

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DC\261792.1 

interfered with ozone attainment. Quite the contrary, the specific programs have improved air 

quality, do not interfere with NAAQS attainment, and otherwise meet the requirements of Title I 

of the Clean Air Act and therefore should be approved. 

II. EPA's Proposed Disapprovals are Not Rationally Supported by Case Law and are 

Inconsistent with the Clean Air Act. 

 In addition to EPA's failure to assess the single most important factor in the Texas 

permitting program, the promotion of continued air quality improvement, the Proposed 

Disapprovals are also inconsistent with case law and the Clean Air Act. Because Congress 

placed the primary responsibility for developing SIPs upon the states, permitting programs 

among states can vary greatly. It is left EPA to determine if the respective state SIP satisfies the 

minimum statutory criteria required by the CAA. Union Electric Co. v. EPA, 427 U.S. 246 

(1976), rehearing denied 429 U.S. 873 (1976); Train v. NRDC, 421 U.S. 60 (1975); Florida 

Power and Light Co. v. Costle, 650 F.2d 586 (5th Cir. 1979.) Most recently the 5th Circuit 

recognized that "the EPA has no authority to question the wisdom of a State's choice of emission 

limitations if they are part of a SIP that otherwise satisfies the standards set forth in 42 U.S.C. 

§ 7410(a)(2)." CleanCOAlition v. TXU Power, 536 F.3d 469, 472 Fn.3 (5th Cir. Tex. 2008). 

 EPA has also recognized the State's role in crafting minor source NSR programs. EPA's 

stated goal was to "establish a flexible preconstruction permitting program for minor stationary 

sources...in order to create a more level regulatory playing field." Proposed Rules 17 Fed. Reg. 

48700/3 (August 21, 2006). This proposal also recognizes that "outside of Indian Country there 

is a great variation among State minor NSR permitting programs." Proposed Rules 17 Fed. Reg. 

48700/3 (August 21, 2006). The following sections demonstrate Texas' respective permitting 

programs are based upon the recognized Minor Source NSR flexibility and consistent with prior 

EPA approvals of other state SIPs. 

 ERCC has performed limited research of other SIP-approved programs throughout the 

United States. It is incumbent on EPA to thoroughly review other state programs it has approved 

to ensure that Texas industries are not placed at a competitive disadvantage from industries in 

other states. As described below, EPA is proposing to disapprove Texas programs that are more 

stringent than or consistent with other state programs and EPA's own proposal for minor sources 

on tribal lands. EPA's Proposed Disapprovals are inconsistent with EPA's long-standing policy 

to allow States flexibility in developing permitting programs to address minor modifications. It 

is not clear that EPA has invoked its SIP consistency process, but it must do so in this instance 

given this deviation from national policy. See Memorandum from John Seitz, Director, Office of 

Air Quality Planning and Standards, State Implementation Plan (SIP) Consistency Process, dated 

April 4, 10, 1996. EPA's Proposed Disapprovals could have dramatic impact on industries in 

Texas. EPA should solicit comments from all EPA Regions on whether the proposed actions are 

inconsistent with other State SIPs and compare the stringency of the Texas programs to those of 
Mr. Stanley M. Spruiell 

November 23, 2009 

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DC\261792.1 

other States. ERCC is confident that EPA will realize that the Texas programs are consistent and 

possibly more stringent than other permitting programs throughout the United States. 

 

A. The Pollution Control Project Standard Permit Meets the State Minor Source 

Program Requirements (EPA-R06-OAR-2005-TX-0032)

 The statutory basis for the minor source program is section 110(a)(2)(C) of the Act, 

which provides for the enforcement of the emission limitations in 110(a)(2)(A). This provision 

provides the state with great discretion to establish Minor Source permitting programs. Pollution 

Control Project (PCP) authorizations are not unique to Texas and provide an efficient 

authorization to allow pollution reduction measures to proceed quickly and without burdening 

the limited resources of the state permitting staff. Additionally, EPA's concern that the PCP 

Standard Permit is too broad is misplaced and fails to recognize the regulatory restrictions in 

place, not to mention the benefits that allow efficient emission reduction projects to proceed in 

the state. 

 There are at least two states with pollution control exemptions from the definition of 

modification, which allow pollution control projects to proceed with significantly fewer 

limitations than the Texas PCP imposes. 

Ohio. EPA has approved Ohio's state definition of "Modification" that excludes pollution 

control or pollution prevention projects that the executive director has determined 

environmentally beneficial. OHIO ADMIN. CODE 3745: 31-01 (VV) (iv). 68 Fed. Reg. 

2909 (January 22, 2003) (EPA effective date, March 10, 2003). 

Oregon. Pollution control projects that are determined by the Department to be 

environmentally beneficial are not considered major modifications. OR. ADMIN. R. 340-

200-0020(66)(d)(B) (July 1, 2001) (EPA effective date, March 24, 2003).

 Neither one of the above referenced programs limits the pollution control exemption from 

permitting by a category of pollution control techniques or industrial sources. In fact, both SIPapproved provisions fail to provide any guidance for an application, executive director review, 

recordkeeping or monitoring requirements. Ironically, it seems that the Texas PCP program is 

highlighted for disapproval because it placed too much emphasis on the requirements and 

limitations of the PCP program. This attention to detail should not unfairly subject the 

authorizations to disapproval where other, broader, PCP authorizations are approved. The Texas 

PCP program actually has more safeguards than the Oregon and Ohio programs. Moreover, 

those programs seem to apply to the definition of "major modification" as used in the states' 

major NSR programs, which is a much more important aspect of the regulations than the minor 

modification program. Texas' PCP program is solely a minor modification program. It appears 
Mr. Stanley M. Spruiell 

November 23, 2009 

Page 8 

DC\261792.1 

that EPA is proposing to apply to Texas a vastly more stringent approach that is designed to 

judge Texas in a way that EPA has not proposed for any other state. 

 EPA approved the general Standard Permit regulations in the Texas SIP, which 

are the bases for the PCP program currently under review. (30 T.A.C. Chapter 116, 

Subchapter F Sections 601-606; 610-611; 614; 615 ("Standard Permit General 

Provisions")). Approval and Promulgation of State Implementation Plans, Texas, Final 

Rule, 68 Fed. Reg. 64543 (Nov. 14, 2003); 40 C.F.R § 52.2270(c). The state PCP 

Standard Permit meets the Standard Permit General Provisions and therefore has been 

approved by EPA. There is now no rational basis to disapprove this particular Standard 

Permit program, especially when it is more stringent than programs EPA has approved in 

other states. 

 The following chart outlines the key factors that EPA discussed in the approval of 

the Standard Permit General Provisions. The right hand column delineates how the PCP 

Standard Permit meets these factors. 

 EPA's SIP approval for the Texas 

Standard Permit General Provisions

PCP Standard Permit Provisions 

1. Major modifications must meet 30 

T.A.C. § 116 Subchapter B for NSR 

requirements (30 T.A.C. 

§ 116.610(a)(2) and (b));

PCP requires compliance with 116.610. See 

30 T.A.C. 116.617(b)(1)(C). 

2. Any source must comply with all 

applicable federal NSPS; NESHAP; 

and TCEQ rules and regulations (30 

T.A.C. § 116.610(a)(3) - (6)); 

PCP requires compliance with 116.610. See 

30 T.A.C. 116.617(b)(1)(C). 

3. The applicant must submit a 

registration of emissions to limit a 

source's PTE (30 T.A.C. § 116.611);

PCP requires compliance with 116.611. See 

30 T.A.C. § 116.617(b)(1)(D). 

4. The applicant must comply with 

recordkeeping requirements which 

require each source subject to a 

Standard Permit to maintain records 

sufficient to demonstrate compliance 

with all conditions of the applicable 

Standard Permit (30 T.A.C. 

PCP requires compliance with 116.611. See 

30 T.A.C. 116.617(b)(1)(F); see also 30 

T.A.C. § 116.617(2), regarding registration 

requirements. 
Mr. Stanley M. Spruiell 

November 23, 2009 

Page 9 

DC\261792.1 

§ 116.615); and

5. Public Notice provisions, including a 

30-day notice and comment provision 

for the Standard Permit (30 T.A.C. 

§ 116.603).

The PCP Standard Permit was published in 

the Texas Register for public comment. See 

31 Tex. Reg. 515 (January 27, 2006) for the 

final rule. 

 Because the PCP Standard Permit was promulgated in strict accordance with EPA's SIPapproved Standard Permit program, EPA has no basis to now second-guess and retract its 

previous approval, which was properly promulgated under the SIP-approved program. 

 Furthermore, in no way is the PCP Standard Permit similar to the Pollution Control 

Projects exclusions to major NSR promulgated by EPA in its 2002 NSR Reform Rules. 67 

Fed. Reg. 80186 (December 31, 2002), vacated in New York v. EPA, 413 F.3d 3 (D.C. Cir. 

June 24, 2005). Unlike the vacated EPA rule, the Texas PCP Standard Permit does not 

exempt from major New Source Review requirements those pollutants that may actually 

increase as a result of the installation of a pollution control device. Nowhere in the PCP 

Standard Permit program does such an exclusion exist, and EPA has not identified any 

provision in the PCP program that would run afoul of the D.C. Circuit's opinion on this issue. 

The PCP Standard Permit is a minor modification program and within the discretion of the 

State of Texas' authority to address such modifications. 

B. Texas BACT Meets Federal SIP Standards and the Cited Deficiencies are not 

Sufficient to Propose Disapproval of the Entire PSD Program in Texas (R06-

OAR-2005-TX-0032)

EPA's proposal to disapprove the of Texas's NSR program is based upon the Agency's 

proposed disapproval of Texas' SIP revision that deletes the reference to the PSD definition of 

"best available control technology" ("BACT"). 74 Fed. Reg. 48467, 48472 (Sept. 23, 2009). 

Texas has an adequate and legally defensible definition of BACT, which is allowable under case 

law, EPA guidance and rulings from the Environmental Appeals Board. Contrary to EPA's 

statements in the Proposed Disapprovals, States have flexibility in their definition of BACT and 

implementation of BACT as long as the statutory factors in the BACT definition are present in 

the state’s analysis. 

EPA has made no finding that Texas' BACT definition is contrary or less stringent than 

the Federal definition of BACT. Accordingly, there is no legitimate substantive concern. 

Nonetheless, EPA is proposing the drastic action of disapproving the entire Texas PSD program. 

Such a disapproval would also discard all the benefits of the 2002 NSR Reform Rules. EPA 

would place Texas permittees at a severe disadvantage to all other permittees throughout the 

country that have the benefit of the 2002 NSR reforms rules. At a minimum, EPA should not 
Mr. Stanley M. Spruiell 

November 23, 2009 

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DC\261792.1 

disapprove the entire PSD program and should simply work with Texas to address its concerns 

relating to the BACT definition. 

The proposed deficiencies fall far short of demonstrating an interference with achieving 

the national standard. In addition, TCEQ has already committed to remedy the superficial 

deficiencies identified by EPA. Letter from Mark R. Vickery (TCEQ) to Lawrence E. Starfield 

(EPA Region 6) (June 5, 2009), available at 

http://www.tceq.state.tx.us/assets/public/permitting/air/Announcements/tceq_airpermitting_epa.p

df. See also Hall v. United States EPA, 273 F.3d 1146, 1160 (9th Cir. Cal. 2001) stating that 

EPA must consider anticipated revisions in determining whether the State will achieve 

attainment. 

The mere removal of a reference to the federal definition of BACT does not create a 

permitting deficiency or interfere with attainment. The mere statement that the Texas BACT 

definition differs from the federal regulation fails to explain how it interferes with the state SIP. 

Many States have BACT definitions in their EPA-approved SIPs that do not conform, word for 

word, to the BACT statutory language. See Connecticut - CONN. AGENCIES REGS. § 22a-174-1 

(EPA effective date, February 27, 2003); Maine - 06-096 ME. CODE R. § 100-17 (EPA 

effective date, November 21, 2007); New Hampshire – N.H. CODE ADMIN. R. ANN. ENV-A: 

§101.13 (EPA effective date, August 14, 1992); and Oklahoma – OKLA. ADMIN. CODE § 

252:100-1-3 (EPA effective date, January 7, 2000). 

Both EPA's and Texas' BACT definitions require the consideration of technical 

limitations, such as energy and environmental concerns, as well as the economic reasonableness 

of the emissions limitation, in order to determine BACT. Compare 40 C.F.R. 51.166(b)(12) 

with 30 T.A.C. § 116.111(2)(C). Further, both processes address the same fundamental concepts 

as expressed in the Clean Air Act. The key question is whether the "state permitting program 

provides a framework for adequate consideration of regulatory criteria and consistency within 

the PSD program." In re ConocoPhillips Co., PSD Appeal 07-02 slip op. at 30 (EAB June 2, 

2008) (quoting In re Cardinal, FG Co, 12 E.A.D. 153 at 161 (EAB 2005). 

Given the apparent equivalency of the result in applying the federal and Texas 

approaches to BACT analysis, it is unclear what basis EPA has to identify the “BACT 

Definition” as an issue sufficient to disapprove the SIP revision. To the extent EPA is asserting 

that the TCEQ staff was required to follow the exact “top down” approach to BACT analysis, 

such an argument has already been disclaimed by EPA and the Environmental Appeals Board 

and rejected by the U.S. Supreme Court. As stated by EPA when it actually approved the Texas 

PSD program in 1992, 

“The EPA did not intend to suggest that Texas is required to follow EPA’s 

interpretations and guidance issued under the Act in the sense that those 
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November 23, 2009 

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pronouncements have independent status as enforceable provisions of the Texas 

PSD SIP, such that the mere failure to follow such pronouncements, standing 

alone, would constitute a violation of the Act.” 57 Fed. Reg. 28095 (June 24, 

1992) (Exhibit ED-16). 

 During this same approval promulgation, EPA expressly confirmed that the State of 

Texas is not required to follow the EPA “top down” approach to BACT. Id. at 28095-6. 

Likewise in the case of Alaska Department of Environmental Conservation v. EPA, 540 U.S. 

461, 476 n. 7 (2004), the U.S. Supreme Court wrote: “Nothing in the act or its implementing 

regulations mandates top-down analysis.” 

 The ability to deviate from the top-down analysis is also supported by the Environmental 

Appeals Board, which has recognized in prior rulings the permitting authority's ability to vary 

from the NSR review manual as long as all regulatory criteria are considered and applied 

appropriately. ConocoPhillips, PSD Appeal 07-02 slip op. at 30 (EAB June 2, 2008) (citing In 

re Knauf Fiber Glass GmbH, 8 E.A.D. 121 at 129-30 n. 14, 135 n.25.) 

 Absent a showing from EPA that the Texas definition of BACT somehow inescapably 

leads to failure to consider and apply the appropriate regulatory criteria, or inexorably leads to 

the NAAQS are not being protected, EPA must defer to the State's authority under the Clean Air 

Act to address air quality issues. In fact, as explained above, Texas' air quality has substantially 

improved. Furthermore, Texas' BACT definition has resulted in some of the most stringent 

pollution control emission rates in the United States. EPA has not identified one instance where 

application of Texas' BACT definition resulted in less pollution control than if EPA's 5-step top 

down analysis was used. The issue that EPA has identified is non-substantive and solely one of 

semantics. There is no reasonable basis for EPA to disapprove Texas' BACT definition. 

C. The Qualified Facility Program Satisfies the Minor NSR Permitting Requirements

(EPA-R06-OAR-2005-TX-0025).

 The qualified facility program meets the requirements of 40 C.F.R part 51 subpart I as a 

legally enforceable, protective of air quality, minor source authorization that was subject to 

public notice and comment. In place since 1996, this minor source program has provided 

regulatory incentives to implement pollution reduction measures at existing facilities. While 

EPA's proposed disapproval focuses on textual questions that allegedly fail to limit the program 

to minor modifications, it does not provide any evidence that this authorization is actually used 

for major modifications or in fact interferes with air quality improvements. 

 Contrary to the purpose of the Clean Air Act, discontinuance of this program could deter 

or delay many pollution reduction measures because the cost and resources associated with a full 

notice and comment case-by-case permit would outweigh the economic benefits of the additional 
Mr. Stanley M. Spruiell 

November 23, 2009 

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DC\261792.1 

controls. Upon further review and consideration, EPA should determine that the qualified 

facility program satisfies the federal Clean Air Act requirements for a state minor source 

program and retract the SIP disapproval and finally approve this SIP revision. 

1. The Qualified Facility Program is Limited to the State Minor Source 

Program 

 The qualified facility program mandates compliance with 40 C.F.R. §§ 51.165 and 

51.166, which requires any new major source or major modification to be permitted under PSD 

or NNSR requirements, by clearly stating that any change authorized by the qualified facility 

program shall not "limit the application of otherwise applicable state or federal requirements." 

TEX. HEALTH & SAFETY CODE § 382.0512(c). TCEQ regulations support this limitation by 

requiring that qualified facility changes must be documented minor source modifications. See 30 

T.A.C. § 116.117(a)(4) which requires compliance with NNSR and PSD regulations; see also 30 

T.A.C. § 116.117(d) stating that "Nothing in this section shall limit the applicability of any 

federal requirement." EPA's dismissal of Section 116.117(a)(4) as a recordkeeping provision is 

unjustified. 74 Fed. Reg. 48450, 48457/1. This qualified facility regulatory reference to the PSD 

and NNSR programs requires the regulated entity to document that the change is in compliance 

with the federal major source permitting programs and in compliance with state and federal law. 

2. The Qualified Facility Program is Protective of Air Quality 

 The minor source qualified facility projects are limited in application and only authorized 

if the change does not result it 1) a net increase in allowable emissions of any air contaminant; 

and 2) the emission of any air contaminant not previously emitted. 30 T.A.C. § 116.116(e). 

The use of the qualified facility authorization is further restricted by the requirement that any 

facility eligible for the qualified facility minor source change must have received a 

preconstruction permit, which requires BACT review, within the past 10 years or uses pollution 

controls as effective as the BACT in effect 120 months before the change occurs. 30 T.A.C. § 

116.10 (11)(E). 

 Like the qualified facility program, EPA's proposed Indian Country minor source 

program is based upon an increase of allowable and not actual emissions. EPA stated that the 

use of allowables in the minor source program was based upon discretion provided "in defining 

[modification] as [EPA] thinks best for the minor NSR program.” 71 Fed. Reg. 48701/2 (August 

21, 2006). The EPA-developed minor source program also utilized emission rates in lieu of air 

quality impacts to determine exemptions from the minor source definition of modification 

because "applicability determinations based on projected air quality impacts would be 

excessively complex and resource intensive." Id. at 48701/3. Texas’ qualified facility program 

protects and improves air quality by limiting the use of this authorization to minor source 

modifications and providing incentives to implement emission reductions. 
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November 23, 2009 

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3. The Qualified Facility Program is Enforceable 

 In addition to the statutory and regulatory project emission thresholds and limitations 

discussed above, the regulations include enforceable registration and recordkeeping 

requirements. Documentation must be maintained for all qualified facility changes that describes 

the change, demonstrates compliance with the qualified facility program as well as state and 

federal law. 30 TAC § 116.117(a). TCEQ regulations also require that, at a minimum, an 

annual submission is made to the agency documenting any qualified facility changes not 

incorporated into a facility permit. 30 T.A.C. § 116.117(b). Additional notification and review 

requirements are imposed to assure appropriate state review and oversight of the qualified 

facility changes: 

• Pre-change qualification and approval is required for certain BACT 

determinations or where a MAERT is not available. 30 T.A.C. § 116.118 

• Pre-change qualification and approval required for certain intra-plant trading 

authorizations. 30 T.A.C. § 116.117(4). 

• Pre-change notification if a change will affect compliance with a permit 

condition. 30 T.A.C. § 116.117(3). 

 

 EPA's general comments questioning the proper permit application or registration for 

qualified facility authorization are unclear given the minor source nature of the program and its 

function as an exemption from a preconstruction permit. 74 Fed. Reg. 48450, 48462. The 

Program adequately imposes recordkeeping, reporting, notification and approval regulations to 

satisfy the minor NSR enforceability requirements. 

4. The Qualified Facility Program was subject to Public Review 

 Finally, the public review requirements have also been met. Although authorized by 

statute, the implementing regulations were subject to notice and comment. Proposed on 20 Tex. 

Reg. 8308 (October 10, 1995) finalized on 21 Tex. Reg. 1569 (February 27, 1996). EPA, in fact, 

commented on the proposed rule and agreed that it "adequately addresses the applicability of 

major sources and major modifications with respect to PSD and NA permitting requirements" 

 21 Tex. Reg. 1569 (February 27, 1996). 

D. The Texas Flexible Permit Program is Consistent with Federal NSR (EPA-R06-

OAR-2005-TX-0032)

 EPA should approve the Texas flexible permit program because it is consistent with the 

Federal NSR programs. Texas' flexible permit program is a permitting "bubble" program that 

consolidates all emission limitations into a single permit and in no way allows circumvention of 
Mr. Stanley M. Spruiell 

November 23, 2009 

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major NSR permitting as suggested by EPA. The concepts embedded in the flexible permit 

program have been part of the NSR program for many years and were upheld as consistent with 

the Clean Air Act by the U.S. Supreme Court in Chevron v. NRDC, 467 S.C. 837 (June 25, 

1984). Texas' flexible permit program is actually more stringent than EPA's interpretation of the 

NSR program upheld by the Supreme Court. 

 In defining a source for purposes of PSD permitting, EPA defined a "modification" as a 

significant new increase in emissions at a source. See 45 Fed. Reg. 52676, 52747 (August 7, 

1980). EPA later promulgated a plantwide definition of the term stationary source where it 

stated: 

Since the PSD definition defines 'source' in the essence as a plant, 

only new increases occurring at the entire plant need a PSD permit. 

For example, if a plant increased emissions at one piece of process 

equipment, but reduced emissions by the same amount at another 

piece of process equipment at the plant, then there would be no net 

increase in emission at the plant, and therefore no modification to 

the 'source.' 

46 Fed. Reg. 50766 (October 14, 1981). The question before the Supreme Court was "whether 

EPA's decision to allow States to treat all of the pollution-emitting devices within the same 

industrial grouping as though they were encased within a single 'bubble' is based on a reasonable 

construction of the statutory term 'stationary source.' Chevron, 467 U.S. at 838. EPA's decision 

to allow States to issue these types of permits was upheld by the Court. EPA is now proposing 

an about-face that would ignore the discretion it gave States in the 1980's and that was upheld in 

the same case that EPA's relies upon so heavily in its defense of its own rulemakings to this day. 

As matter of fact, EPA's approved SIP for the State of Oregon includes a very similar and 

possibly less stringent program than Texas' flexible permit program. Oregon implements a 

program called the Plant Site Emission Limit (PSEL) program. The PSEL program could be less 

stringent that the Texas' Flexible Permit program in that the term "major modification" in the 

Oregon SIP is triggered only where there is an increase in the PSEL by an amount equal to or 

more than the significant emission rate over the netting basis. OR. ADMIN. R. 340-200-

0020(66)(a) (July 1, 2001) (EPA effective date, March 24, 2003). Once again, ERCC calls for 

EPA to perform a detailed analysis of approved SIP programs throughout the United States and 

initiate the SIP consistency process within EPA to ensure fairness to Texas industries. 

 Texas flexible permitting program is explicit in that any new source or major 

modification to a source must go through major NSR and the Flexible Permit must be altered. 30 

T.A.C. § 116.805. When a flexible permit is issued for a new source or major modification, all 

PSD requirements must be fulfilled, including installation and operation of BACT. The fact that 

at the end of the day, the emission rates are reflected in a "bubble" permit is of no consequence 
Mr. Stanley M. Spruiell 

November 23, 2009 

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DC\261792.1 

and is consistent with applicable statutory and regulatory requirements under the Clean Air Act. 

EPA concludes that the flexible permit program does not incorporate emissions limitations and 

other requirements of the Texas SIP, including monitoring, recordkeeping, and reporting 

requirements. This conclusion is false. The emission limits and other requirements in the 

flexible permit program are derived from underlying Texas SIP programs, whether it is a PSD or 

a minor source authorization. The use of flexible permits is a well-established regulatory tool 

under the Clean Air Act and EPA should allow Texas, like other states, to exercise its discretion 

in development of its air permitting programs in this manner. 

 

III. EPA Should Recognize the Validity of Permits issued under the Texas Permitting 

Program and Refrain from Taking Enforcement Actions To Address EPA Concerns 

 EPA has expressed in the past that it may consider addressing its concerns with the Texas 

permitting program through enforcement actions. Any such enforcement initiative would create 

grave uncertainty by questioning past projects that were permitted in good faith and by stalling 

pending projects, which would seriously hinder job creation in Texas. To avoid these 

consequences, EPA should issue a statewide enforcement discretion for sources that obtained 

government authorization in good faith and as required by TCEQ, the primary permitting 

authority in Texas. 

 EPA should adhere to its own guidance on enforcement during pending SIP revisions. 

Michael S. Alushin and John Rasnic, Revised Guidance on Enforcement During Pending SIP 

Revision, March 1, 1991. There is recognition that EPA has the ability to bring enforcement 

actions alleging violations of approved SIP provisions during review of SIP revisions. General 

Motors Corp. v. United States, 496 U.S. 530 (June 14, 1990). EPA guidance, however, explains 

certain criteria for EPA to consider in whether to bring enforcement actions during a SIP review 

process. EPA must consider the following factors: 

1. Need for injunctive relief; 

2. For purposes of penalty-only cases, period of noncompliance in comparison to the 

length of Agency delay; 

3. Probability that the proposed SIP revisions will be approved; and 

4. Existence of a collateral suit compelling Agency action on the proposed SIP revisions 

indicating prejudice, and the degree of prejudice to potential Defendants. 

 Applying these factors to the pending proposed Texas SIP disapproval justifies statewide 

enforcement discretion. First, enforcement actions brought by EPA would not require any 

injunctive relief, as there is no evidence or demonstration that the proposed Texas SIP provisions 

excuse major NSR. As discussed above, the proposed SIP programs provide sufficient 

protections of air quality and have resulted in valid permitting of minor modifications and major 

sources. 
Mr. Stanley M. Spruiell 

November 23, 2009 

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Second, to the extent that EPA may consider penalty-only cases, EPA's substantial delay 

in addressing the SIP programs presents a great decree of prejudice to sources, and implicates 

due process concerns. Sources have been authorized under these programs, in some cases well 

over a decade ago, yet EPA only recently started to comment adversely on permits and the 

permitting program. Furthermore, complying with the proposed SIP provisions for the past 10-

plus years has not created any economic benefit to sources in Texas or presented any 

environmental harm. The programs have actually improved air quality in the State and have 

resulted in the installation of pollution controls throughout the State that have benefitted, not 

harmed, the public health and welfare. 

 Third, EPA cannot justify enforcement on these SIP issues based on the probability that 

the proposed SIP revisions would be disapproved, because as discussed herein the law does not 

support disapproval. The SIP revisions before EPA are reasonable and consistent with case law 

and other EPA approved-SIPs throughout the country. Any EPA action to disapprove these 

long-standing lawful programs would be counter to furthering air quality progress in Texas. The 

proposed SIP revisions programs appropriately implement the statutory requirements by placing 

regulatory burdens on sources, such as emission limitations, recordkeeping and reporting 

requirements, and enforcing mandates to comply with state and federal laws. The proposed 

revisions to the Texas SIP are lawful, and were reasonably expected by TCEQ to be approved by 

EPA. EPA's Proposed Disapprovals were unexpected, untimely, manifestly unjust and 

prejudicial to one state, and are therefore not properly justified. 

 Finally, because of the uncertainty and prejudice to Texas industries caused by EPA's 

unreasonable delay in addressing these Texas SIP programs, the BCCA Appeal Group has 

commenced a collateral suit compelling EPA action. Under EPA guidance, this lawsuit 

demonstrates actual prejudice from EPA's delay on the SIP provisions. Revised Guidance on 

Enforcement During Pending SIP Revision at 5. Given the years of EPA's delayed response and 

years of sources being permitted in good faith under the Texas programs, EPA would have 

unclean-hands in any enforcement action to address these SIP issues. Sources that have operated 

in compliance with the only applicable regulations on the books -- the Texas SIP programs -- 

should not be prejudiced as a result of EPA's inaction. 

 Furthermore, EPA's involvement with the Texas SIP is a regulatory function and is not an 

appropriate opportunity for enforcement. EPA enforcement should adhere to EPA's guidance 

against commingling enforcement and regulatory actions. See Memorandum from Gary S, 

Guzy, General Counsel, to Steve A. Herman, Due Process Considerations Raised by Agency 

"Commingling" of Enforcement and Regulatory Functions, September 21, 1999. 

 While EPA may be tempted to address enforcement on a case-by-case-bases, most, if not 

all, of Texas' sources are in the same position. One enforcement action against a particular 
Mr. Stanley M. Spruiell 

November 23, 2009 

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DC\261792.1 

source for failure to comply with the Texas SIP regulations in place prior to the SIP Revisions at 

issue would impose regulatory uncertainty and an inconsistent application of federal 

enforcement. EPA should recognize that the SIP issues are best addressed through consistent, 

programmatic solutions and not patchy litigation. The Proposed Disapprovals present unique 

issues in that the prejudice against Texas industries would be so significant. Given the amount 

of prejudice and the impact any one enforcement case could have in the State of Texas, EPA 

should provide statewide enforcement discretion and commit to not bring enforcement actions 

against sources that have been in good-faith compliance with state authorizations over the years. 

**************************** 

We believe that EPA’s concerns about the Texas permitting program are largely 

misplaced, and that most, if not all, of them can be resolved through simple clarifications to the 

Texas programs. EPA proposals to disturb long-standing state rules have created enormous 

uncertainty, which is having a chilling effect on much-needed economic investment. We urge 

EPA and the TCEQ to work together to resolve any issues in a way that removes this uncertainty 

as soon as possible – and minimizes any uncertainty in the meantime. 

Thank you for thoughtful consideration of these comments. If you have any questions 

regarding this submittal, please contact me at (202)828-5852. 

Very truly yours, 

Bracewell & Giuliani LLP 

/s/ Jeffrey R. Holmstead 

Jeffrey R. Holmstead