Case No. 14-60649 IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT

_____________________________________________________________________________ ENVIRONMENTAL INTEGRITY PROJ ECT, et al., Petitioners,

v. UNITED STATES ENVIRONMENTAL PROTECTION AGENCY, Respondent, STATE OF TEXAS and BCCA APPEAL GROUP, Respondent-Intervenors.

______________________________________________________________________________ On Petition for Review of Final Action of the United States Environmental Protection Agency

______________________________________________________________________________ BRIEF OF RESPONDENT U. S. E NVIROMENTAL PROTECTION AGENCY JOHN C. CRUDEN Assistant Attorney General ALAN D. GREENBERG Attorney, U.S. Department of Justice Environment & Natural Resources Division 999 18 th Street, Suite 370 Denver, CO 80202 303-844-1366 alan.greenberg@usdoj.gov Of Counsel: Counsel for Respondent BRUCE JONES Office of Regional Counsel, Region 6 United States Environmental Protection Agency DAVID COURSEN Office of General Counsel United States Environmental Protection Agency Case: 14-60649 Document: 00512954221 Page: 1 Date Filed: 03/02/2015i STATEMENT IN SUPPORT OF ORAL ARGUMENT
The United States Environmental Prot ection Agency (“EPA”) requests oral argument to assist the Court in understa nding the relevant regulatory provisions under the Clean Air Act’s New Source Revi ew programs and the State of Texas’s Flexible Permit Program, and the basis fo r the EPA’s decision in the final rule subject to judicial review in this case. Case: 14-60649 Document: 00512954221 Page: 2 Date Filed: 03/02/2015ii TABLE OF CONTENTS STATEMENT OF JU RISDICTION.......................................................................... 1 ISSUES PRES ENTED ............................................................................................... 1 STATEMENT OF THE CASE .................................................................................. 3 I. Clean Air Act Background .................................................................... 5 A. Ne w Source Rev iew ................................................................... 6 1. New Source Revi ew for Major Sources ............................. 7 2. New Source Revi ew for Minor Sources ............................. 9 II. The Texas Flexible Permit Progr am ................................................... 10 SUMMARY OF AR GUMENT ............................................................................... 13 STANDARD OF REVIEW ..................................................................................... 15 ARGUMENT ........................................................................................................... 17 I. The EPA Reasonably Approved the Flexible Permit Program Because It Is a Minor NSR Progr am That Does Not Interfere with Major NSR Re quirements ........................................................... 17 A. The EPA’s Determination Is Supported by the Regulatory Text of the Flex ible Permit Program ..................... 18 B. The EPA’s Determination Is Supported by This Court’s Decision in Flex I . ..................................................................... 24 C. The EPA Reasonably Relied on Texas’s Representation that the Flexible Permit Program Is a Minor NSR Program. .................................................................................... 27 D. The Citizen Groups Fail to De monstrate that the EPA’s Approval of the Program Is Arbitrary or Capricious. ............... 29 Case: 14-60649 Document: 00512954221 Page: 3 Date Filed: 03/02/2015iii II. The EPA Reasonably Approved th e Program Because It Does Not Alter Public Participation Opportunities Associated with Major Modifi cations. ........................................................................... 35 III. The EPA’s Responses to the Citizen Groups’ Comments Met the Requirements of th e Clean Air Act. .............................................. 39 CONCLUSI ON ........................................................................................................ 44 Case: 14-60649 Document: 00512954221 Page: 4 Date Filed: 03/02/2015iv TABLE OF AUTHORITIES CASES Alaska Dep't of Envtl. Conservation v. EPA , 540 U.S 461 (2 004) ................................................................................................ 8 BCCA Appeal Group v. EPA , 476 Fed. Appx. 579 (5 th Cir. 2012) ..................................................................... 33 Chemical Mfrs. Ass'n v. NRDC, Inc. , 470 U.S. 116 (19 85) ............................................................................................. 17 Chevron U.S.A., Inc. v. NRDC, Inc. , 467 U.S. 837 (19 84) ............................................................................................. 16 City of Portland, Oregon v EPA , 507 F.3d 706 (D.C. Cir. 2007) .............................................................................. 40 CleanCOALition v. TXU Power , 536 F.3d 469 (5th Cir. 2008) .................................................................................. 7 Envtl. Def. v. Duke Energy Corp. , 549 U.S. 561 (20 07) ........................................................................................ 7, 31 Int'l Fabricare Inst. v. EPA , 972 F.2d 384 (D.C. Cir. 1992) .............................................................................. 39 Louisiana Envtl. Action Network v. EPA , 382 F.3d 575 (5th Cir. 2004) ................................................................................ 16 Luminant Generation Co., LLC v. EPA , 714 F.3d 841 (5th Cir. 2013) ..................................................................... 5, 15, 17 New York v. EPA , 413 F.3d 3 (D.C. Ci r. 2005) .................................................................................. 32 Public Citizen, Inc. v. EPA , 343 F.3d 449 (5th Cir. 2003) ................................................................................ 16 Case: 14-60649 Document: 00512954221 Page: 5 Date Filed: 03/02/2015v Sierra Club v. EPA , 353 F.3d 976 (D.C. Cir. 2004) .............................................................................. 39 Texas Oil & Gas Ass'n v. EPA , 161 F.3d 923 (5th Cir. 1998) ................................................................................ 16 Texas v. EPA , 690 F.3d 670 (5th Ci r. 2012) ........................................................................ passim Thomas Jefferson Univ. v. Shalala , 512 U.S. 504 (19 94) ............................................................................................. 17 Train v. NRDC, Inc. , 421 U.S. 60 (197 5) .............................................................................................5, 6 Union Elec. Co. v. EPA , 427 U.S. 246 (19 76) ...........................................................................................5, 6

FEDERAL STATUTES
5 U.S.C. § 553( c) ..................................................................................................... 39 5 U.S.C. § 706 .......................................................................................................... 43 5 U.S.C. § 706( 2)(A) ................................................................................................ 15 42 U.S.C. §§ 7401- 7671q ......................................................................................1, 5 42 U.S.C. § 7407(a) ................................................................................................... 5 42 U.S.C. § 7407(d) ................................................................................................... 6 42 U.S.C. § 7408 ........................................................................................................ 5 42 U.S.C. § 7409 ........................................................................................................ 5 Case: 14-60649 Document: 00512954221 Page: 6 Date Filed: 03/02/2015vi 42 U.S.C. § 7410(a) ................................................................................................... 5 42 U.S.C. § 7410 (a)(1) ............................................................................................... 6 42 U.S.C. § 7410(a )(2)(A) ......................................................................................... 6 42 U.S.C. § 7410(a )(2)(C) ......................................................................................... 9 42 U.S.C. § 7410(k) ................................................................................................... 5 42 U.S.C. § 7410 (k)(3)............................................................................................. 39 42 U.S.C. § 7410( l ) .................................................................................................... 6 42 U.S.C. § 7411 (a)(4) ............................................................................................... 7 42 U.S.C. §§ 747 0-7492 ............................................................................................ 7 42 U.S.C. § 7473 ........................................................................................................ 8 42 U.S.C. § 7475(a) ................................................................................................... 8 42 U.S.C. § 7475 (a)(3) ............................................................................................... 8 42 U.S.C. § 7475(a )(4) ........................................................................................ 8, 21 42 U.S.C. § 7476 ........................................................................................................ 8 42 U.S.C. § 7479(1) ................................................................................................... 8 42 U.S.C. § 7479 (2)(C) .............................................................................................. 7 42 U.S.C. §§ 750 1-7515 ............................................................................................ 8 42 U.S.C. § 7501 (3) ................................................................................................. 21 42 U.S.C. § 7502 ........................................................................................................ 8 42 U.S.C. § 7502 (c)(5) ............................................................................................... 9 Case: 14-60649 Document: 00512954221 Page: 7 Date Filed: 03/02/2015vii 42 U.S.C. § 7503 ....................................................................................................8 , 9 42 U.S.C. § 7602(j) .................................................................................................... 8 42 U.S.C. § 7607 (b)(1)............................................................................................... 1

FEDERAL REGULATIONS 40 C.F.R. pt . 50 .......................................................................................................... 5 40 C.F.R. § 51.100(n) ................................................................................................ 6 40 C.F.R. §§ 51. 160-51.164 ....................................................................................... 9 40 C.F.R. § 51. 160(a) ............................................................................................... 10 40 C.F.R. § 51. 160(b) .............................................................................................. 10 40 C.F.R. § 51.161 ................................................................................................... 36 40 C.F.R. § 51.165 ..................................................................................................... 9 40 C.F.R. § 51.165 (a)(1)(iv) ...................................................................................... 8 40 C.F.R. § 51.166 ..................................................................................................... 9 40 C.F.R. § 51.166 (b)(12) ........................................................................................ 21

FEDERAL REGISTER NOTICES 75 Fed. Reg. 19,468 (A pr. 14, 2010) ....................................................................... 33 79 Fed. Reg. 551 (Jan . 6, 2014) ........................................................................ 37, 38 79 Fed. Reg. 8,368 (Feb. 12, 2014) ........................................................ 7, 22, 25, 34 Case: 14-60649 Document: 00512954221 Page: 8 Date Filed: 03/02/2015viii 79 Fed. Reg. 40,666 (Jul . 14, 2014) ................................................................. passim 79 Fed. Reg. 78,752 (D ec. 31, 2 014) ......................................................................... 4

STATE STATUTE
Tex. Health & Safety Code § 382.056( g) ................................................................ 38

STATE REGULATIONS

30 Tex. Admin. C ode § 39. 401 ................................................................................ 37 30 Tex. Admin. Code § 39.402(a )(2) ....................................................................... 37 30 Tex. Admin. C ode § 39. 405 ................................................................................ 37 30 Tex. Admin. Code § 39.411(b) ........................................................................... 37 30 Tex. Admin. Code § 39.411(c) ........................................................................... 37 30 Tex. Admin. Code § 39.411(e) ........................................................................... 37 30 Tex. Admin. C ode § 39.418 ............................................................................... 37 30 Tex. Admin. C ode § 39. 419 ................................................................................ 37 30 Tex. Admin. C ode § 55. 101 ................................................................................ 38 30 Tex. Admin. C ode § 55. 152 ................................................................................ 37 30 Tex. Admin. Code § 55.154(c) ........................................................................... 37 30 Tex. Admin. Code § 101.1(1) ............................................................................. 11 30 Tex. Admin. Code §§ 116.10-116. 1540 ............................................................. 10 Case: 14-60649 Document: 00512954221 Page: 9 Date Filed: 03/02/2015ix 30 Tex. Admin. Code § 116.10(4) ........................................................................... 11 30 Tex. Admin. Code § 116.10(9 )(E) ...................................................................... 29 30 Tex. Admin. Code § 116.10(15) ......................................................................... 11 30 Tex. Admin. Code § 116.12(20) .................................................................. 31, 32 30 Tex. Admin. Code § 116.12(20) (A) ................................................................... 31 30 Tex. Admin. C ode § 116. 110 .............................................................................. 19 30 Tex. Admin. Code § 116.110(a) ............................................................ 10, 29, 30 30 Tex. Admin. C ode § 116. 116 .............................................................................. 42 30 Tex. Admin. Code § 116.116(e) .................................................................. 33, 34 30 Tex. Admin. Code § 116. 117 ....................................................................... 33, 34 30 Tex. Admin. Code § 116. 118 ....................................................................... 33, 34 30 Tex. Admin. C ode § 116. 150 .............................................................................. 35 30 Tex. Admin. Code § 116.150(b) ......................................................................... 30 30 Tex. Admin. Code § 116.150(d) (1) .................................................................... 22 30 Tex. Admin. C ode § 116. 151 .............................................................................. 35 30 Tex. Admin. Code § 116.151(a) ......................................................................... 30 30 Tex. Admin. C ode § 116. 160 .............................................................................. 35 30 Tex. Admin. Code § 116.160(a) .................................................................. 22, 30 30 Tex. Admin. Code § 116.710(a) .................................................................. 10, 11 30 Tex. Admin. Code § 116.711(2)(H ) ........................................................... passim Case: 14-60649 Document: 00512954221 Page: 10 Date Filed: 03/02/2015x 30 Tex. Admin. Code § 116.711(2)(I) ............................................................. passim 30 Tex. Admin. Code § 116.711(2)(M)(v i) ............................................................. 20 30 Tex. Admin. Code § 116.715(b) ......................................................................... 11 30 Tex. Admin. Code § 116.715(c )(8) ..................................................................... 20 30 Tex. Admin. Code § 116.715(c)(1 1) ................................................................... 24 30 Tex. Admin. C ode § 116. 716 .............................................................................. 11 30 Tex. Admin. Code § 116.716(c) .................................................................. 11, 40 30 Tex. Admin. Code § 116.716(c)(1)( A) ............................................................... 22 30 Tex. Admin. Code § 116.716(c )(2) ..................................................................... 22 30 Tex. Admin. Code § 116. 718 ....................................................................... 12, 23 30 Tex. Admin. Code §116.72 1 ........................................................................ 40, 42 30 Tex. Admin. Code § 116.721(a) ................................................................. passim 30 Tex. Admin. Code § 116.740(a) ......................................................................... 38

STATE REGISTER NOTICE 35 Tex. Reg. 11,903 (D ec. 31, 2010 ) ............................................................... passim Case: 14-60649 Document: 00512954221 Page: 11 Date Filed: 03/02/20151 STATEMENT OF JURISDICTION On July 14, 2014, the EPA issued a final rule entitled “Approval and Promulgation of Implementation Plans; Texas; Revisions to the New Source Review State Implementation Plan; Flexible Permit Program, 79 Fed. Reg. 40,666 (July 14, 2014) (the “Final Rule”). The EPA promulgated the Final Rule pursuant to its authority under the Clean Air Act, 42 U.S.C. §§ 7401-7671q. This Court has subject matter jurisdic tion over the petition for review of the Final Rule under 42 U.S.C. § 7607(b)(1), becau se the Final Rule applies to Texas and, therefore, this Court of Appeals is an “appropriate circuit.” Seven citizen groups that claim to be interested in air quality in Texas (collectively “Citizen Groups”) timely filed their petition for review on September 12, 2014. See 42 U.S.C. § 7607(b)(1) (petitions must be filed within sixty days of notice in the Federal Register). ISSUES PRESENTED This case raises the general question of whether the EPA properly approved the Texas Flexible Permit Program (the “ Program”) as a revision to Texas’s Clean Air Act state implementation plan because it met the requirements for a minor New Source Review program. The Citizen Groups do not argue that the Program fails to meet the minor New Source Review require ments. Instead, they argue that the Case: 14-60649 Document: 00512954221 Page: 12 Date Filed: 03/02/20152 Program can be used to circumvent State rules for permitting major modifications to stationary sources associated with major New Source Review requirements. The Citizen Groups raise three issues: 1. Whether the EPA reasonably approved the Program as a minor New Source Review state implementation plan revision under the Clean Air Act because, consistent with a prior decision of this Court, the EPA determined that the Program does not interfere with major New Source Review state implementation plan requirements. 2. Whether the EPA reasonably appr oved the Program because the Texas state implementation plan provides public participation opportunities required by the Clean Air Act. 3. Whether the EPA reasonably responded to the Citizen Groups’ significant comments submitted in response to EPA’s proposed approval of the Program when EPA addressed the Citizen Groups’ contention that the Program would allow sources to evade comp liance with major New Source Review requirements. Case: 14-60649 Document: 00512954221 Page: 13 Date Filed: 03/02/20153 STATEMENT OF THE CASE The Clean Air Act (the “Act”) requires that the construction of new sources of emissions of six pollutants, and the modification of existing sources that result in increased emissions of these pollutant s, obtain permits that limit emissions to specified quantities. The applicable permitting program, known as New Source Review or “NSR,” differentiates between major sources and modifications – those that exceed threshold emission levels – and minor sources and modifications. Texas adopted a “Flexible Permit Program” that allows in certain circumstances the construction of new sources and modifications of existing sources at facilities covered by a flexible permit without further review by the State, as long as the change does not re sult in increased air pollutant emissions beyond those set in an emissions cap for th e facilities covered by the permit. Texas submitted a prior version of the Program to the EPA for approval as a minor New Source Review program revision to Texa s’s federally-enforceable clean air implementation plan. In 2010, the EPA disapproved the Program because the EPA determined, among other things, that the Program was ambiguous as to whether a facility may use the Program to avoid major New Source Review requirements. This Court reviewed the EPA’s disapproval of the Program, and found EPA’s explanation that the Program coul d result in evasion of major New Source Review requirements to be arbitrary and capricious. Texas v. EPA , 690 F.3d 670, Case: 14-60649 Document: 00512954221 Page: 14 Date Filed: 03/02/20154 678 (5 th Cir. 2012) (“ Flex I ”). The Court concluded that the Program does not allow evasion of major source requireme nts “because it affirmatively requires compliance with Major NSR.” Id. The Court vacated the EPA’s disapproval of the Program and remanded it to the EPA for the EPA’s further consideration. Id. at 686. On remand, the EPA reviewed a revised version of the Program and determined that the Program is a mi nor New Source Review program. The EPA conditionally approved the program. 1 The EPA based its approval in part on its determination, consistent with this Court’ s prior decision, that the revised Program does not allow facilities to evade comp liance with major New Source Review requirements. The Citizen Groups challenge the EPA’s approval primarily on the ground, previously addressed by this Court, th at the Flexible Permit Program enables facilities to evade major New Source Review requirements.

1 The EPA conditioned its approval on a commitment from Texas to adopt certain minor clarifications to the Progr am. 79 Fed. Reg. at 40,670. Texas has adopted revisions that it contends meet those commitments, and EPA has proposed to convert the conditional approval into a full approval. 79 Fed. Reg. 78,752 (Dec. 31, 2014). Case: 14-60649 Document: 00512954221 Page: 15 Date Filed: 03/02/20155 I. Clean Air Act Background The Clean Air Act (the “Act”), 42 U.S.C. §§ 7401-7671q, establishes a comprehensive program for controlling and improving the nation's air quality through a system of shared federal and state responsibility. Luminant Generation Co., LLC v. EPA , 714 F.3d 841, 845 (5 th Cir. 2013). Among other requirements, the Act instructs the EPA to establish National Ambient Air Quality Standards (“NAAQS”). NAAQS are nationally applicab le standards set by the EPA that establish permissible concentrations for certain air pollutants, such as ozone and nitrogen oxides, that may endanger public health or welfare. 42 U.S.C. §§ 7408, 7409; see 40 C.F.R. pt. 50. Under the Act, States have the primary responsibility for formulating pollution control strategies and ensuring that their ambient air meets the NAAQS. 42 U.S.C. § 7407(a) (each State shall “sp ecify the manner” in which NAAQS will be achieved); see Union Elec. Co. v. EPA , 427 U.S. 246, 256-57 (1976). Each State presents its comprehensive appro ach for attaining the NAAQS and meeting other requirements of the Act in a State Implementation Plan (“SIP”). 42 U.S.C. § 7410(a), 7410(k); see generally Train v. NRDC, Inc. , 421 U.S. 60 (1975). SIPs include the State’s “control strategy,” which is a combination of emission limitations and other measures designed to achieve the reduction of emissions necessary for attainment and maintenance of the NAAQS. See 42 U.S.C. § Case: 14-60649 Document: 00512954221 Page: 16 Date Filed: 03/02/20156 7410(a)(2)(A); 40 C.F.R. § 51.100(n). Every SIP or SIP revision must be adopted by the State after reasonable notice and hearing, and must be submitted to the EPA for approval. Id. § 7410(a)(1), ( l ). The Act grants the states considerable latitude in developing emissions limitations, see Train v. NRDC , Inc ., 421 U.S. at 79, subject to strict minimum compliance requirements as determined by the EPA. Union Elec. Co. v.
EPA , 427 U.S. 246, 256-57 (1976). The EPA cannot approve a SIP revision if the revision would interfere with any applicable requirement of the Act regarding attainment, or reasonable further progr ess towards attainment, or any other applicable requirement of the Act. 42 U.S.C. § 7410( l ). For each air pollutant subject to a NAAQS, a State must identify areas within its boundaries as either meeting or not meeting the NAAQS for that pollutant. 42 U.S.C. § 7407(d). An area that meets the NAAQS for a particular pollutant is classified as an “attainment ar ea”; an area that does not is classified as a “non-attainment area.” A. New Source Review The Act contains specific requirements for the permitting of new and modified sources of air pollution, which are referred to as “New Source Review” or “NSR.” There are three types of Ne w Source Review, one or more of which can apply at a given source, depending upon whether the source is minor or major, Case: 14-60649 Document: 00512954221 Page: 17 Date Filed: 03/02/20157 whether the construction or modification causes an increase in emissions for a given pollutant above the significance thres hold, and whether the source is located in an attainment area or a non-attain ment area for the given pollutant. See 79 Fed. Reg. 8,368, 8,376/3 (Feb. 12, 2014). 1. New Source Review for Major Sources The Act provides two different permitting programs for major sources, and their applicability depends on whether the s ources are located in an attainment or non-attainment area. For major sources in attainment areas, the Prevention of Significant Deterioration (“PSD”) program, 42 U.S.C. §§ 7470-7492, is intended to give “added protection to air quality in cer tain parts of the country notwithstanding attainment and maintenance of the NAAQS.” CleanCOALition v. TXU Power , 536 F.3d 469, 472 (5 th Cir. 2008) (internal quotation marks omitted); see also Envtl. Def. v. Duke Energy Corp ., 549 U.S. 561, 567-68 (2007) (describing PSD program). A PSD permit must be obtained prior to construction or modification 2

2 The Act defines “construction” to include “modification,” which “means any physical change in, or change in the me thod of operation of, a stationary source which increases the amount of any air po llutant emitted by such source or which results in the emission of any air pollutant not previously emitted.” 42 U.S.C. §§ 7411(a)(4), 7479(2)(C). Case: 14-60649 Document: 00512954221 Page: 18 Date Filed: 03/02/20158 of large pollutant-emitting facilities, 3 often referred to as “major sources.” 42 U.S.C. § 7475(a). The applicant for a PSD permit is required, among other things, to demonstrate that the proposed new or modified source will not cause a violation of the NAAQS or of “PSD increments,” which are limits on increases in ambient pollution concentrations over area-sp ecific baseline concentrations. See 42 U.S.C. §§ 7473, 7475(a)(3) and 7476. The source must also implement the “best available control technology” (or “BACT”) to limit emissions of each pollutant regulated under the Act. 42 U.S.C. § 7475(a)(4); see Alaska Dep’t of Envtl. Conservation v.
EPA , 540 U.S 461, 468 (2004). For non-attainment areas, major sources are subject to the more stringent non-attainment NSR program, which applies to major new or modified sources of a pollutant for which the area is designated non-attainment. 4 42 U.S.C. §§ 7502, 7503. The non-attainment NSR program serves to improve air quality in areas that do not meet the applicable NAAQS. Id . at §§ 7501-7515. For non-attainment NSR, a new or modified source must meet the lowest achievable emission rate and

3 The Act defines a “major emitting facility” for the PSD program as one that emits either 100 tons per year or 250 tons per year of any pollutant regulated under the Act, depending on the type of facility. Id . § 7479(1).

4 For non-attainment NSR, a major source is generally one that emits, or has the potential to emit, 100 tons per year or more of a pollutant for which the area in which it is located is designated non-atta inment. 42 U.S.C. § 7602(j); 40 C.F.R. § 51.165(a)(1)(iv). Case: 14-60649 Document: 00512954221 Page: 19 Date Filed: 03/02/20159 must obtain sufficient emission reductions from existing sources to offset its increased emissions. Id . §§ 7502(c)(5), 7503. PSD review and non-attainment NSR are collectively referenced as “Major NSR.” 2. New Source Review for Minor Sources Because a State’s SIP must regulate the construction and modification of any stationary source as necessary to assure achievement of the NAAQS, all SIPs must contain a minor New Source Review program. See 42 U.S.C. § 7410(a)(2)(C). Minor NSR programs include new sources and modifications to existing sources that have the potential to emit a rele vant pollutant below the major source thresholds of the PSD and non-attainment NSR programs. EPA has promulgated regulations specifying the requirements for minor NSR programs. See 40 C.F.R. §§ 51.160-51.164. 5 Each State’s SIP must set forth legally enforceable procedures , such as applications from owners or operators of sources subject to minor NSR, that will allow the State to determine whether the construction or modification of a minor source, or a “minor modification” of an

5 These requirements apply to all state NSR implementation plans, includingboth major and minor source programs. SIPs for permitting major sources in nonattainment areas must, in addition, meet the requirements of 40 C.F.R. § 51.165, and SIPs for major sources subject to PSD review must meet the requirements 40 C.F.R. § 51.166. Case: 14-60649 Document: 00512954221 Page: 20 Date Filed: 03/02/201510 existing major source, will (1) result in a violation of applicable portions of the State’s control strategy, or (2) interfere with attainment or maintenance of any NAAQS in the State or in a neighboring State. Id. at § 51.160(a), (b). II. The Texas Flexible Permit Program Chapter 116 of the administrative rules promulgated by the Texas Commission of Environmental Quality (the “Commission”) contains the State’s federally-approved New Source Review provisions. See 30 Tex. Admin. Code §§ 116.10 – 116.1540 (2015). These rules make any person who plans to construct a new facility or modify an existing facility that may emit air contaminants into the air of the State subject to the State’ s New Source Review permitting requirements. 30 Tex. Admin. Code § 116.110(a). The State’s New Source Review regulations contain several different permitting options , one of which is the Flexible Permit Program. Id. The Program provides an alternative to obtaining or amending a traditional New Source Review permit when a person is engaged in the construction of a minor source or the minor modification of an existing source. Id . § 116.710(a). A Case: 14-60649 Document: 00512954221 Page: 21 Date Filed: 03/02/201511 flexible permit may be issued for a facility, group of facilities, or an account. 6 Id. § 116.710(a). A flexible permit establishes one or more pollutant-specific emission caps for all or a designated group of facilities at an account. See Id. § 116.715(b). The flexible permit also includes indi vidual emission limitations for each air contaminant for all facilities authorized by the permit and not included under an emission cap. Id. §§ 116.715(b), 116.716. The emissions cap and individual emission limitations are established by calculating emissions for each covered fac ility based upon an application of either BACT, at the expected maximum operating capacity of each facility, or any more stringent applicable requirement. Id. at § 116.716(c). The calculated emissions are summed to determine the emission cap. Id. However, this cap does not negate compliance requirements with any esta blished individual emission limits for facilities that may be covered under the cap, including individual BACT emission limits established in the PSD permitting process or lowest achievable emission

6 Texas defines “facility” as “[a] discre te or identifiable structure, device, item, equipment, or enclosure that cons titutes or contains a stationary source, including appurtenances other than emissi on control equipment. A mine, quarry, well test, or road is not a facility.” 30 Tex. Admin. Code § 116.10(4). Texas defines “account,” in pertinent part, as “any combination of sources under common ownership or control and located on one or more contiguous properties, or properties contiguous except for interven ing roads, railroads, rights-of-way, waterways, or similar divisions.” Id. at § 101.1(1). Texas defines “source” as “[a] point of origin of air contaminants, whether privately or publicly owned or operated.” Id. at § 116.10(15). Case: 14-60649 Document: 00512954221 Page: 22 Date Filed: 03/02/201512 rates established under non-attainment NSR. Id. § 116.711(2)(H) and (I) (an application for a Flexible Permit must contain information that demonstrates that each facility complies with all applicab le requirements concerning either nonattainment NSR or PSD review). The Flexible Permit Program allows pe rsons to make certain operational or physical changes at one or more facilities covered under the flexible permit without further regulatory review provided any em ission increases do not exceed either the emission cap or individual emission limitations and the change meets other Program requirements. See id. §§ 116.718, 116.721(a). However, any change that varies from the representations made in th e flexible permit application or in the permit provisions is unlawful if it will cause a change in the method of control of emissions or the character of emissions, w ill relax emission controls, or result in a significant increase in emissions. Id. § 116.721(a). In this situation, the permittee must seek an amendment of the flexible permit and obtain Commission approval before proceeding with the change. Id. Case: 14-60649 Document: 00512954221 Page: 23 Date Filed: 03/02/201513 SUMMARY OF THE ARGUMENT This Court’s review of the Final Rule is governed by the familiar Administrative Procedure Act standard: the Citizen Groups must demonstrate that the EPA’s approval of the Program was arbitrary, capricious, an abuse of discretion, or otherwise contrary to law. The Citizen Groups cannot meet this high standard. The EPA reasonably approved the Flexible Permit Program as a minor New Source Review revision to the Texas SIP. In the Final Rule, the EPA repeatedly articulated, for the benefit of the public a nd future permittees, that the Program is a minor NSR program and cannot be used to evade Major NSR requirements. The Citizen Groups do not appear to disput e that the Program complies with the requirements for a minor NSR program. Rather, the Citizen Groups erroneously argue that the Program allows major modifications to circumvent major New Source Review. The EPA’s approval based on the Program constituting a minor NSR program is well-supported by the record. Numerous sections of the Program’s rules address the interplay between the Program and New Source Review, limit increases under the emission cap to those attributable to new minor sources or minor modifications, and prevent circumvention of Major NSR requirements. The rules require applicants for a flexible permit to demonstrate compliance with both Case: 14-60649 Document: 00512954221 Page: 24 Date Filed: 03/02/201514 non-attainment NSR and PSD review, a nd require any changes in control technologies or significant emission increases to comply with both of these Major NSR requirements. The EPA’s approval is consistent with both the reasoning and conclusion of this Court’s prior decision in Flex I holding that the Program does not allow sources to evade Major NSR because it affirmatively requires compliance with Major NSR. EPA’s determination is also supported by Texas’s characterization of the program as a minor NSR program. Most of the Citizen Groups’ arguments are based on the incorrect premise that the Program does not assure comp liance with Major NSR. The Citizen Groups’ arguments do not effectively count er the regulatory language in Texas’s New Source Review rules or this Court’s decision in Flex I . The Citizen Groups do not meet their burden of showing that the EPA’s determination that the Program is a minor NSR program is arbitrary or capricious. The Citizen Groups’ allegations regard ing insufficient public participation fails because Texas’s SIP provides the pub lic participation opportunities required by the Act. The Citizen Groups do not argue that the Program fails to comply with public participation requirements for minor source programs. Rather, they focus on public participation for major modifica tions, but the Texas public participation requirements applicable to major New S ource Review permits meet Clean Air Act Case: 14-60649 Document: 00512954221 Page: 25 Date Filed: 03/02/201515 requirements by providing two public notices of the application and the opportunity for public comment and a public meeting. The Citizen Groups base their argument on statutory and regulatory provisions that the State has not submitted to EPA as a SIP revision. These provisions are not part of Texas’s approved SIP, and permittees and the State must use the public participation rules currently approved into the SIP to meet the requirements of the Act. The Citizen Groups’ objections to the ad equacy of the EPA’s responses to their comments is based on a disagreemen t with the substance of the EPA’s responses, not any failure by the EPA to c onsider a relevant factor raised by the Citizen Groups. The EPA responded to th e Citizen Groups’ significant comments, as required by the Administrative Procedure Act. Assertions that the EPA “misreads Texas’s rules” or that “EPA is wrong,” Citizen Groups Brief at 44-45, do not establish a failure to respond. STANDARD OF REVIEW This Court reviews an EPA action that approves a SIP revision under the deferential standard of review for agency actions set forth in the Administrative Procedure Act, 5 U.S.C. § 706(2)(A). Luminant Generation Co., LLC v EPA , 714 F.3d 841, 850 (5 th Cir. 2013). The Citizen Groups must show that EPA’s final action on the Program was “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” Id. (quoting 5 U.S.C. § 706(2)(A)). This Case: 14-60649 Document: 00512954221 Page: 26 Date Filed: 03/02/201516 highly deferential standard presumes th e validity of agency actions and upholds them if they satisfy minimum standards of rationality. Texas Oil & Gas Ass’n v.
EPA , 161 F.3d 923, 933-34 (5th Cir. 1998); see Public Citizen, Inc. v. EPA , 343 F.3d 449, 455 (5 th Cir. 2003). Although this Court must assure itself that the agency considered the relevant factors in making the decision, the Court cannot substitute its own judgment for that of the agency. Texas Oil & Gas Ass’n , 161 F.3d at 933-34; Public Citizen , 343 F.3d at 455. Questions of statutory interpretation are governed by the familiar two-step test set forth in Chevron U.S.A., Inc. v. NRDC, Inc. , 467 U.S. 837, 842-45 (1984). See Louisiana Envtl. Action Network v. EPA , 382 F.3d 575, 581-82 (5 th Cir. 2004) (“We review the EPA’s interpretation of the [Act] under the standards set forth in Chevron . . . .”) . Under the first step, the reviewing court must determine “whether Congress has directly spoken to the precise question at issue.” Chevron , 467 U.S. at 842. If Congress’ intent is clear from the statutory language, the Court must “give effect to the unambiguously expressed intent of Congress.” Chevron , 467 U.S. at 843. If, however, the statute is “silent or ambiguous with respect to the specific issue,” the Court must decide whet her the Agency’s interpretation is based on a permissible construction of the statute. Id . To uphold EPA’s interpretation of the Act, the Court need not find that EP A’s interpretation is the only permissible construction that EPA might have adopted, but rather only that EPA’s Case: 14-60649 Document: 00512954221 Page: 27 Date Filed: 03/02/201517 interpretation is reasonable. Chemical Mfrs. Ass’n v. NRDC, Inc. , 470 U.S. 116, 125 (1985). EPA's interpretations of its own regulations are entitled to even greater deference. EPA's interpretation of its own regulations should be given “controlling weight unless it is plainly erroneous or inconsistent with the regulation.” Thomas Jefferson Univ. v. Shalala , 512 U.S. 504, 512 (1994); Luminant Generation, 714 F.3d at 851. ARGUMENT

I. The EPA Reasonably Approved the Flexible Permit Program Because It Is a Minor NSR Program That Do es Not Interfere with Major NSR Requirements. The Citizen Groups do not dispute that the Flexible Permit Program meets the federal minor New Source Review requi rements. Their challenge to the substance of the Program alleges that persons engaging in major modifications can use the Program to circumvent the requirements of Major NSR. That argument fails because the Program rules do not allow evasion of Major NSR. The EPA approved the Flexible Permit Program only as a minor NSR program. 79 Fed. Reg. at 40,668. In the Final Rule, EPA cautioned that permittees who use the Flexible Permit Program to circumvent Major NSR will be “violating the approved Texas SIP.” Id . The EPA’s approval of the Program as a minor NSR program is supported by numerous sections of the Program’s rules that prevent Case: 14-60649 Document: 00512954221 Page: 28 Date Filed: 03/02/201518 circumvention of Major NSR requirements, this Court’s prior holding that the Program does not allow sources to evade Major NSR, and Texas’s characterization of the Program as a minor NSR program. Because the Citizen Groups erroneously argue that the Program does not assure compliance with non-attainment NSR and PSD review, the Citizen Groups’ arguments do not meet their burden of showing the EPA’s determination arbitrary or capricious. A. The EPA’s Determination Is Supported by the Regulatory Text of the Flexible Permit Program. Numerous provisions of the Program’s rules establish the Program as a minor NSR program. Although EPA is approving the Flexible Permit Program as a minor NSR program, facilities covered by a flexible permit can include major sources and sources undergoing major m odifications. Because facilities covered by a flexible permit have the potential to undertake activities subject to Major NSR requirements, the Program requires the owne r or operator to continue to comply with Major NSR regulatory provisions when taking actions subject to Major NSR requirements. Based on the Program’s rules described below that preclude evasion of the Major NSR requirements, the EPA r easonably determined that the Flexible Permit Program does not interfere with th e requirements of the Clean Air Act or attainment or maintenance of NAAQS. The Program expressly requires that an application for a flexible permit must Case: 14-60649 Document: 00512954221 Page: 29 Date Filed: 03/02/201519 demonstrate that the facilities covered by the permit will meet all NSR requirements, including Major NSR requireme nts. A flexible permit application must show that, if the proposed facility, gr oup of facilities, or account is located in a non-attainment area, each facility comp lies “with all applicable requirements concerning nonattainment review in this chapter .” 30 Tex. Admin. Code § 116.711(2)(H) (emphasis added). Because “this chapter” – Chapter 116 of the Commission’s rules – contains the requirements to meet control technology and other requirements of the non-attainment NS R program, an applicant for a flexible permit must show compliance with non-attainment NSR. Id. § 116.711(2)(H); see id. § 116.110. Similarly, if the proposed facility, group of facilities or account is located in an attainment area, the appli cant for a flexible permit must demonstrate that the facility complies “with all app licable requirements in this chapter concerning PSD review.” Id. § 116.711(2)(I). Thus, an applicant for a flexible permit must demonstrate compliance with both components of Major NSR – the non-attainment and PSD requirements – fo r both new sources and modifications. The Citizen Groups apparently agree on this point. Administrative Record Document (“AR Doc.”) 46 at 4 of 90 (The Program rules “require flexible permit applicants to comply with federal NSR/PSD requirements.”) Texas amended the Flexible Permit Progr am rules in a manner that further confirms that sources must comply with Major NSR control technology Case: 14-60649 Document: 00512954221 Page: 30 Date Filed: 03/02/201520 requirements. The Program rules now require the applicant for a flexible permit to identify, for any facility currently aut horized by a New Source Review permit, any terms, conditions and representations in the New Source Review permit that will be superseded by, or incorporated into th e flexible permit, and include an analysis of how the conditions and control requi rements of the New Source Review permit will be carried forward in the proposed fl exible permit. 30 Tex. Admin. Code § 116.711(2)(M)(vi). Texas stated that this amendment “addresses the EPA’s comment that existing SIP permits’ major and minor NSR terms, limits and conditions must be tracked and accounted for.” AR Doc. 20 at 261 of 289 (35 Tex. Reg. 11,909, 11,914 (Dec. 31, 2010)). Texas’s requirements that an applica tion for a flexible permit demonstrate compliance with Major NSR in the applica tion is particularly significant because the demonstrations in the application ar e incorporated into the flexible permit issued to a facility and trigger continuing obligations. The Program rules provide that “[a]ll representations with rega rd to construction plans and operation procedures in an application for a flexible permit or flexible permit amendment, as well as any general and special cond itions, become conditions upon which the subsequent flexible permit is issued .” 30 Texas Admin. Code § 116.721(a); see id. §116.715(c)(8) (“The representations with regard to construction plans and operation procedures in an application for a permit or permit amendment are the Case: 14-60649 Document: 00512954221 Page: 31 Date Filed: 03/02/201521 conditions upon which a flexible permit or permit amendment is issued”). The Program rules make unlawful any variati on from the representations in the permit application or flexible permit provisions if the change will cause a change in the method of control of emissions or the character of the emissions, will relax emission controls, or will result in a significant increase in emissions unless the flexible permit is amended. Id. § 116.721(a). As a result, an owner cannot change emission controls or increase emissions si gnificantly from those represented in the permit application unless the owner s eeks to amend the permit through a new application, which triggers compliance with Major NSR. A facility’s compliance with applicable Major NSR rules is also evidenced by the Program’s rules governing determination of the control technologies for facilities covered by the flexible permit. As discussed above, supra at 8-9, the Act requires major sources or modifications to install emission controls that reflect the location of the source, e.g. , BACT as required by 42 U.S.C. § 7475(a)(4) and 40 C.F.R. § 51.166(b)(12) in attainment ar eas under PSD review, and controls that meet lowest achievable emission rates unde r the non-attainment NSR as defined at 42 U.S.C. § 7501(3). The Flexible Pe rmit Program incorporates these requirements. If the flexible permit is us ed to authorize a new major source or a major modification subject to New Source Review, emissions must be based on control technologies determined in accordance with the requirements governing Case: 14-60649 Document: 00512954221 Page: 32 Date Filed: 03/02/201522 major source non-attainment review or PSD review. 30 Texas Admin. Code § 116.716(c)(1)(A) (referencing S ubchapter B, Division 5 (non-attainment review) and Division 6 (PSD review)). The emi ssion limits will be based on expected maximum capacity of the facility, which is the same method under which limits are set under Texas’s non-attainment NSR a nd PSD review previously approved by EPA. 30 Texas Admin. Code §§ 116.150(d)(1); 116.160(a), (c)(1)(A). In addition, the Program requires facilities that must achieve the lowest achievable emission rate under non-attainment NSR to be include d in a separate emissions cap or listed as individual emission limitations, which precludes evasion of those emission limits through use of a flexible permit cap. Id. § 116.716(c)(2); see Doc. 20 at 260 of 289, (35 Tex. Reg. at 11,913). Based on these rules, the EPA reasonably found that the Program requires that any facilities subject to Major NSR requirements must install the control technologies mandated by Major NSR rules. See 79 Fed. Reg. at 8,380/2 (requirement of separate emission cap or individual emission limitation “ensures that sources subject to [lowest achievable emission rate] are fully controlled as required by federal NSR regulations”). The EPA also reasonably determined that the Flexible Permit Program maintains compliance with Major NSR th roughout the life of the permit because it authorizes modifications under the permit emission cap only for changes that qualify as minor NSR. Three Program secti ons address this constraint. First, the Case: 14-60649 Document: 00512954221 Page: 33 Date Filed: 03/02/201523 Program rules specify that any variation from representations made in the permit application or permit provisions that changes the method of control of emissions, the character of emissions, relaxes controls , or results in a significant increase in emissions must be made through an application to amend the flexible permit that meets the flexible permit application re quirements. 30 Tex. Admin. Code § 116.721(a). Second, as discussed above, supra at 18-19, the flexible permitapplication rule requires that applicants demonstrate compliance with nonattainment NSR and PSD review – in othe r words, compliance with Major NSR. Id. § 116.711(2)(H) and (I). Third, when assessing whether an emission increase is significant for purposes of requiring an application to amend, only minor NSR emission increases are insignificant. The Pr ogram rules provide that an increase in emissions from an existing facility authorized by a flexible permit “is insignificant, for the purposes of minor new source review under this subchapter , if the increase does not exceed either the emission cap or individual emission limitation.” Id. § 116.718 (emphasis added). Thus, increases in emissions under the Program can fall into two categories: (1) minor NSR emissions that do not ex ceed either the emission cap or an individual emission limitation, in which case the increase is covered under the flexible permit, or (2) minor NSR emi ssions that exceed the emission cap or individual emission limitation, and all Majo r NSR emissions, both of which require Case: 14-60649 Document: 00512954221 Page: 34 Date Filed: 03/02/201524 an application for a permit amendment and compliance with non-attainment NSR and PSD New Source Review. The amendm ent application process requires the permittee to determine whether those cha nges could ultimately trigger Major NSR requirements by performing a Major NSR a pplicability determination analysis to ensure that compliance with Major NSR is not evaded. See id. § 116.711(2)(H), (I). Finally, the Program rules address any potential conflict between the flexible permit conditions and any other applicable st ate or federal rule. The Program rules provide that that “[i]f more than one state or federal rule or regulation or flexible permit condition is applicable, then the most stringent limit or condition shall govern and be the standard by which co mpliance shall be demonstrated.” Id. §116.715(c)(11). To the extent the Program rules contain provisions that are not as stringent as applicable non-attainment NSR and PSD review, then the Major NSR requirements shall govern and be the standard for compliance. In sum, all of these Program rules establish that EPA reasonably approved the Program as a minor NSR program that cannot be used to circumvent major source permitting requirements. B. The EPA’s Determination Is Supported by This Court’s Decision in Flex I . This Court previously considered and rejected the primary argument raised Case: 14-60649 Document: 00512954221 Page: 35 Date Filed: 03/02/201525 by the Citizen Groups: the Program allows sources to evade Major NSR review. Flex I, 690 F.3d at 677-80. EPA’s approval of the Program is reasonable because it is consistent with this Court’s prior decision.
In Flex I , this Court reviewed EPA’s disapproval of a prior version of the Flexible Permit Program. That prior version of the Program is materially similar to the version now before the Court. See AR Doc. 20 at 1-2 of 289. EPA disapproved the prior version for severa l reasons, including EPA’s determination that the prior version of the Program did not clearly preclude major sources from evading Major NSR. See Flex I , 690 F.3d at 677-78. EPA based its determination on what it believed to be the absence of any regulatory provision clearly limiting the Program to minor NSR and clearly prohibiting the use of the Program from circumventing the Major NSR requirements. Id. at 677; see 79 Fed. Reg. at 8,369/2. The Court disagreed with that interp retation of the Program. The Court found that the “Flexible Permit Program does not allow Major NSR evasion because it affirmatively requires compliance with Major NSR.” Id. at 678. The Court quoted the provisions from the Program that require applications to demonstrate compliance with all a pplicable requirements concerning nonattainment review and PSD review. Id. The Court also relied upon the Program provision, discussed above, that if more than one state or federal rule is applicable, Case: 14-60649 Document: 00512954221 Page: 36 Date Filed: 03/02/201526 the most stringent will govern. Id. The Court concluded that EPA’s disapproval of the Program based on its potential to allo w evasion of Major NSR was arbitrary and capricious and in excess of its statut ory authority because the Program requires compliance with Major NSR. Id . at 679-680. “Major sources cannot use a flexible permit to avoid Major NSR without violating the law.” Id. at 686. On this Court’s remand of the matter to the EPA, the EPA reasonably approved the Program based on its determin ation that the Program will not allow evasion of Major NSR, relying in part on this Court’s decision in Flex I

. See 79 Fed. Reg. at 40,668. The Citizen Groups fail to explain persuasively how their arguments – almost all of which are based on the Program’s potential evasion of Major NSR – can be reconciled with the Program or this Court’s decision in Flex I . The Citizen Groups correctly assert that EPA initially disapproved the Flexible Permit Program because EPA found its terms ambiguous regarding compliance with Major NSR. Citizen Groups Brief at 37. The Citi zen Groups emphasize that they do not contend the Flexible Permit Program is ambiguous; rather, they assert that the program rules “ on their face unambiguously eliminate federal permitting requirements for Major Modifications.” Citizen Groups Brief at 37 (emphasis added). However, this distinction does not free their arguments from the precedent of this Court’s Flex I decision. The Court held that the Program “does not, on its Case: 14-60649 Document: 00512954221 Page: 37 Date Filed: 03/02/201527 face , allow major sources to evade Major NSR.” 690 F.3d at 678 (emphasis added). The arguments in the Citizen Groups’ brief often mirror the reasons EPA previously found the program ambiguous. This Court found those reasons arbitrary. The Citizen Groups’ arguments do not provide a basis for this Court to reverse its prior decision and now find that the Flexible Permit Program enables sources to evade Major NSR. C. The EPA Reasonably Relied on Texas’s Representation that the Flexible Permit Program Is a Minor NSR Program. The State has consistently asserted th at the Flexible Permit Program is a minor New Source Review program. AR Doc. 20, 257 of 289 (35 Tex. Reg. at 11,910/1) (the “rules created a new type of minor New Source Review (NSR) permit called a flexible permit”). During the state rulemaking that resulted in the Program EPA approved, the Commission main tained that the Program is a minor NSR permit program revision to the Texas SIP. AR Doc. 20 at 257 of 289 (35 Tex. Reg. at 11,910/2) (“the Texas flexible permit program is a minor NSR permit program which requires the application of . . . BACT to minor sources.”); see AR Doc. 20 at 258 of 289 (35 Tex. Reg. at 11,911). The Commission asserts that “[n]o provision of the Texas flexible permit program rules may be read to circumvent major NSR permitting or any state or fede ral permitting requirements.” AR Doc. Case: 14-60649 Document: 00512954221 Page: 38 Date Filed: 03/02/201528 20 at 258 of 289 (35 Tex. Reg. at 11,911/2); see AR Doc 20 at 257 of 289 (35 Tex. Reg. at 11,910/1) (“The flexible permit is not and has never been a substitute for or in lieu of major NSR permitting if major NSR review is triggered.”) The Commission commented that if a project is determined to be a major modification under non-attainment NSR or PSD rules, the owner or operator must obtain a major NSR permit or major modification under the appropriate major NSR permit program. AR Doc. 20 at 259 of 289 (35 Tex. Reg. at 11,912); see AR Doc

. 20 at 268-69 of 289 (35 Tex. Reg. at 11,921-22 (emphasizing applicability of major NSR requirements in response to EPA comments). The Commission further confirmed that the Program does not allow evasion of Major NSR through an interpretative le tter that responded to several questions the EPA posed regarding the Program. AR Doc. 22. The Commission confirmed that all facilities subject to PSD or non- attainment NSR review, which include major modifications to existing sources, must meet the control technologies determined in accordance with Texas’s PSD and non-attainment NSR programs. Id. The interpretative letter expressly stat es that “avoidance or circumvention of control equipment is not allowed for f acilities subject to PSD or non-attainment NSR.” AR Doc. 22 at 5 of 15. EPA reasonably relied on Texas’s view of the Program as a minor NSR program as additional support for its determination that the Program does not Case: 14-60649 Document: 00512954221 Page: 39 Date Filed: 03/02/201529 evade Major NSR requirements. D. The Citizen Groups Fail to Demonstrate that the EPA’s Approval of the Program Is Arbi trary or Capricious. The EPA agrees with the Citizen Groups that the construction or modification of facilities that exceed Major NSR thresholds must comply with the permitting and other requirements of the Major NSR. See Citizen Groups Brief at 29. However, the Flexible Permits Progr am does not allow evasion of the State’s regulations applicable to Major NSR; it requires sources to comply with Major NSR rules. The Citizen Groups allege opportunities for major modifications to evade Major NSR rules, Citizen Groups Brief at 30-32, but the Citizen Groups’ arguments are not based on a corr ect reading of the Program. The Citizen Groups first focus on the definition of “modification of existing facility,” but that focus is misplaced. Citizen Groups Brief at 30-31. A person engaging in the “modification of any existing facility” must obtain or satisfy the conditions of one of various availabl e permits under Texas’s New Source Review rules. 30 Texas Admin. Code § 116.110(a). The Citizen Groups highlight the clause in the definition of “modification of existing facility” that excludes from the definition a “physical change in, or change in the method of operation of, a facility where the change is within the scope of a flexible permit. ” Id. § 116.10(9)(E) (emphasis added); Citizen Groups Brief at 30-31. Relying on this permit Case: 14-60649 Document: 00512954221 Page: 40 Date Filed: 03/02/201530 exemption for changes “within the scope of a flexible permit,” the Citizen Groups erroneously argue that a person does not need to obtain a New Source Review permit for major modifications if the fac ility is covered by a flexible permit. Citizen Groups Brief at 30-32; 30 Texas Admin. Code § 116.110(a). The Citizen Groups’ contention is flaw ed because the changes that are “within the scope of a flexible permit” are limited to minor modifications under the NSR program. See supra at 22-23. Changes that will result in a change in the method of control of emissions or significantly increase emissions are not within the scope of a flexible permit. Such changes are unlawful under a flexible permit unless the owner applies for and obtains approval of a permit amendment, and the flexible permit cannot be amended unl ess the owner complies with major nonattainment NSR and PSD requirements. 30 Texas Admin. Code § 116.721(a). 7 The definition of “modification of existing facility” does not provide an exemption from regulatory requirements associated with major modifications. Instead, the relevant definition to determine whether the Citizen Groups’ concerns regarding major modifications is valid is the definition of “major modification,” and that definition re quires compliance with Major NSR for

7 Both non-attainment review a nd PSD review require that major modifications comply with those Major NSR sections’ permitting, control technology and other Major NSR requirements. See 30 Texas Admin. Code §§ 116.150(b); 116.151(a), 116.160(a). Case: 14-60649 Document: 00512954221 Page: 41 Date Filed: 03/02/201531 facilities under the Program. Texas defines “major modification,” for purposes of non-attainment NSR and PSD review, as 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.” Id. § 116.12(20)(A). The definition of “major modification” specifies the numeric thresholds of pollutants deemed significant. Id. § 116.12(20). If a physical or operational change results in a change in emissions that meets the threshold for a major modification, nothing in the Program rules or in the definition of major modification enables the owner to evade compliance with major NSR. As the Commission explained during its rulemaking, Texas’s choice to include both a minor NSR flexible permit and a major NSR permit in one permit document does not allow the minor NSR permit to remove any major NSR requirements. See AR Doc. 20 at 259 of 289 (35 Tex. Reg. at 11,912). Thus, EPA reasonably reject ed the Citizen Groups’ argument arising from the definition of modification of existing facility. The Citizen Groups incorrectly assert that the EPA’s approval does not conform to the Supreme Court’s articula tion of the Clean Air Act’s new source review program. Citizen Groups Brief at 31. The Citizen Groups, citing Envtl. Def. v. Duke Energy Corp. , 549 U.S. 561 (2007), state that Major NSR is triggered by “any physical change in, or change in the method of operation of, a major Case: 14-60649 Document: 00512954221 Page: 42 Date Filed: 03/02/201532 stationary source that would result in significant net increase of any pollutant subject to regulation under the Act.” Citizen Groups Brief at 31. Texas’ definition of major modification provides this same trigger for compliance with Major NSR for major modifications. See supra at 31; 30 Texas Admin. Code § 116.12(20). The Program rules, by mandating compliance with non-attainment NSR and PSD review for major modifications, require compliance with the Major NSR requirements addressed by the Supreme Court. The District of Columbia Circuit’s vacatur of the EPA’s former “Clean Unit” program is neither instructive nor persuasive authority here. Cf. Citizen Brief at 32- 34. Unlike the Flexible Permit Program, the Clean Unit program reviewed by the District of Columbia Circuit exempted operators from certain major New Source Review requirements th rough triggers based on allowable rather than actual emissions. New York v. EPA , 413 F.3d 3, 38-40 (D.C. Cir. 2005). In contrast, the Flexible Permit Program allows a person to over-control one facility in order to avoid additional c ontrols attributable to construction of
minor facilities or minor modifications of other facilities. See AR Doc. 20 at 259 of 289 (35 Tex. Reg. at 11,912/1). The Program, for the reasons explained above and by this Court in Flex I , retains compliance with Major NSR requirements, including major modifications triggered by actual emission increases, and does not allow evasion of Major NSR requirements. See supra at 18-24. The concerns Case: 14-60649 Document: 00512954221 Page: 43 Date Filed: 03/02/201533 articulated in New York v. EPA are not relevant here. The EPA’s disapproval of a separate Texas air program known as the “Qualified Facilities Program,” also fails to provide a basis to find the EPA’s decision approving the Flexible Permit Program arbitrary or capricious. See Citizen Groups Brief at 34-36; 75 Fed. Reg. 19,468 (Apr. 14, 2010) (disapproval of Qualified Facilities Program); BCCA Appeal Group v. EPA , 476 Fed. Appx. 579 (5 th Cir. 2012) (unpublished) (affirming the EPA’s disapproval of the Qualified Facilities Program). 8 The Qualified Facilities Program disapproved by EPA had material differences from the Flexible Pe rmit Program relevant to compliance with Major NSR. The disapproved Qualified Facilities Program, unlike the Flexible Permit Program, did not require an application to demonstrate compliance with applicable requirements concerning non-attainment NSR if the proposed facility is located in a non-attainment area. See AR Doc. 10 at 211-13 of 215 (30 Tex. Admin. Code §§ 116.116(e), 116.117, 116.118 (1996), establishing the disapproved Qualified Facilities Program as adopted by Texas on February 14, 1996); contra 30 Texas Admin. Code § 116.711(2 )(H). The disapproved Qualified

8 This Court’s rules provide for publication of “opinions that may in any way interest persons other than the parties to a case,” including opinions that create or resolve a conflict of authority within the circuit. Fifth Circuit Local Rule 47.5.1, 47.5.1(d). Each member of the panel deciding BCCA Appeal Group determined that its publication was neither justified nor required under this Court’s criteria for publication. See Fifth Circuit Local Rule 47.5.2 Case: 14-60649 Document: 00512954221 Page: 44 Date Filed: 03/02/201534 Facilities Program, unlike the Flexible Permit Program, did not require an application to demonstrate compliance with applicable PSD review requirements if the facility is located in an attainment area. See AR Doc. 10 at 211-13 of 215 (30 Tex. Admin. Code §§ 116.116(e), 116. 117, 116.118 (1996), establishing the disapproved Qualified Facilities Program); contra 30 Texas Admin. Code § 116.711(2)(I). The disapproved Qualifie d Facilities Program did not require permittees to submit permit applications to account for changes in emission controls or that result in significant emission increases, did not require facilities subject to lowest achievable emission rates to be included in a separate emissions cap, or require that the most stringent limit or condition shall govern and be the standard by which compliance shall be demonstrated. Doc. 10 at 211-13 of 215 (30 Tex. Admin. Code §§ 116.116(e), 116.117, 116.118 (1996), establishing the disapproved Qualified Facilities Program). All of these provisions were cited by the EPA or this Court to support the determination that the Flexible Permit Program would not evade Major NSR requirements. See 79 Fed. Reg. at 40,668- 69; 79 Fed. Reg. at 8,380; Flex I , 690 F.3d at 678-79. Thus, the EPA’s decision disapproving the Qualified Facilities Pr ogram, and this Court’s unpublished affirmation of the disapproval, was ba sed on materially different permitting provisions. Finally, the Flexible Permit Program does not enable permittees to avoid Case: 14-60649 Document: 00512954221 Page: 45 Date Filed: 03/02/201535 applicability determinations associated with major New Source Review. This Citizen Groups’ argument, Citizen Groups Brief at 39-40, again relies on the incorrect premise that the Flexible Perm it Program enables sources to evade Major NSR requirements. The Citizen Groups correctly explain that persons undertaking a project that will result in an increase in emissions must determine whether the modification is classified as a major modifi cation. Citizen Groups Brief at 38. The requirements to make this “applicability” determination are found in the Texas’s rules for non-attainment review and PSD revi ew located in Divisions 5 and 6 of its NSR Rules. 30 Texas Admin. Code §§ 116.150, 116.151, 116.160. The Flexible Permit Program requires compliance with Division 5 and Division 6 of the NSR rules. 30 Texas Admin. Code § 116.711( 2)(H) and (I). Thus, compliance with non-attainment NSR and PSD review re quires the applicant to make an applicability determination, and prev ents circumvention of Major NSR. 9
II. The EPA Reasonably Approved the Pr ogram Because It Does Not Alter Public Participation Opportunities Associated with Major Modifications. The Citizen Groups do not assert that the Program fails to meet the public

9 Simply because certain flexible permits have emission caps that can accommodate a major modification beneath th e cap does not mean that sources can undertake a major modification and utilize the space without first obtaining approval of a major modification and complying with applicable Major NSR requirements. See Citizen Groups Brief at 40. Case: 14-60649 Document: 00512954221 Page: 46 Date Filed: 03/02/201536 participation requirements associated with a minor New Source Review program that are contained in EPA regulations. See 40 C.F.R. § 51.161. The Citizen Groups’ discussion of public participati on under the Program does not cite these regulations, nor demonstrate that the Program, as a minor New Source Review program, violates these requirements such that it was unreasonable for the EPA to approve the Program. Thus, they offer no basis for finding that the Program does not comply with minor source program public participation requirements. Instead, the Citizen Groups make a cu rsory argument based on the mistaken hypothesis that some proposed major modi fications to facilities covered under a flexible permit will not be subject to major source public participation opportunities required by the Act. Citizen Groups Brief at 40-41. The Program does not alter the Citizen Groups’ public participation opportunities associated with major modifications, and those pub lic participation opportunities meet the requirements of the Act. Public participation associated with Major NSR permitting actions in Texas is governed by provisions in Chapters 39 and 55 of the Texas Administrative Code that EPA has separately approved as part of Texas’s SIP. Chapter 39 explicitly requires that “applications for a new major source or a major modification for facilities subject to the requirements of Ch apter 116, Subchapter B, Division 5 and 6 (relating to New Source Review Permits , Nonattainment Review Permits and Case: 14-60649 Document: 00512954221 Page: 47 Date Filed: 03/02/201537 Prevention of Significant Deterioration)” comply with public notice requirements of Chapter 39. 30 Tex. Admin Code § 39.402(a)(2). Chapter 39 includes requirements to provide two sets of pub lic notice and two opportunities for public comment arising from an application for a major modification. An applicant for a permit amendment must first provide a notice of the administratively complete application that provides basic informati on regarding the proposed modification. Id. §§ 39.405, 39.411(e), 39.418. The applicant must subsequently provide a second notice that contains details about the Commission’s preliminary decision and the draft permit, and the location wher e air quality analysis and other technical materials may be reviewed. See id . §§ 39.401, 39.419; 79 Fed. Reg. 551, 553 (Jan. 6, 2014) (describing two rounds of public notice); AR Doc. 3 at 31 of 116 (describing process). Both notices tr igger an opportunity for public comment. Id. § 39.411(b), (c). Additional requirements for notice, public comment, and public meeting opportunities for air permitting actions involving major modifications are provided in Chapter 55 of the Texas Administrative Code. This chapter also requires air permit applicants to provide the two public notices, a 30-day public comment period following the notice of preliminary decision, and holding public meetings for the purpose of taking public comment under certain circumstances. Id. §§ 55.152, 55.154(c). Thus, major modifications, by triggering non-attainment NSR Case: 14-60649 Document: 00512954221 Page: 48 Date Filed: 03/02/201538 or PSD review, require the applicant to provide public notice of the application, solicit public comments, and the opportunity to request a public meeting. 10 The EPA found these public participation rules consistent with the Act and approved them as revisions to the Texas SIP in a separate rulemaking in 2014. 79 Fed. Reg. at 570. The Citizen Groups’ challenge relies on limitations on public participation found in laws that are independent of the Flexible Permit Program and not part of the State’s approved SIP. The Citizen Groups cite to a statute and a rule that Texas has not submitted to the EPA for approval as a SIP revision. Tex. Health & Safety Code § 382.056(g); 30 Tex. Admin. Code § 55.101; see 79 Fed. Reg. 551 (approving Texas public partic ipation requirements as SIP revisions, but not this statute and regulation). As a conseque nce, EPA has taken no action regarding them and the statute and rule are not part of Texas’s approved SIP. 11 Texas must comply with the SIP-approved public par ticipation rules in Chapter 39 and 55 when acting on applications for major modifications, including major

10 An application to amend a flexible permit triggered by a change that will result in a significant increase in emissions requires compliance with this same set of public participation procedures. 30 Texas Admin. Code § 116.740(a).

11 Because Texas has not submitted this statute and regulation for EPA’s review for consistency with the Act, EP A does not respond in this brief to the Citizen Groups’ interpretation that the st atute and rule impermissibly limit public participation. Case: 14-60649 Document: 00512954221 Page: 49 Date Filed: 03/02/201539 modifications at sources with flexible permits, in order to meet the requirements of the Act. See 42 U.S.C. § 7410(k)(3) (a plan revision shall not be treated as meeting the requirements of the Act until the EPA approves the revision as complying with the applicable requirements of the Ac t). The EPA has determined the SIPapproved rules are consistent with the Ac t and, therefore, the EPA did not act arbitrarily or capriciously in approving the Program. III. The EPA’s Responses to the Citizen Groups’ Comments Met the Requirements of the Clean Air Act. The Administrative Procedure Act (“APA” ) requires the EPA to include in its Final Rule a response to each of the significant comments submitted during the comment period. 5 U.S.C. § 553(c); Int’l Fabricare Inst. v. EPA , 972 F.2d 384, 389 (D.C. Cir. 1992) (EPA is required to gi ve reasoned responses to all significant comments). An agency’s failure to re spond to comments in the course of a rulemaking is significant only insofar as it demonstrates that an agency’s decision was not based on considerati on of relevant factors. Sierra Club v. EPA , 353 F.3d 976, 986 (D.C. Cir. 2004). In this rulemaking, the Citizen Groups’ comments were based primarily on their contention that the Program would enable applications for major modifications to evade New Source Review. The EPA did not fail to consider this relevant factor; it has been a prominent i ssue associated with the Program for at Case: 14-60649 Document: 00512954221 Page: 50 Date Filed: 03/02/201540 least four years. As discussed be low, the EPA responded to the comments on evasion of New Source Review, and the other significant comments presented by the Citizen Groups. The Citizen Groups’ disagreement with the substance of EPA’s responses to their comments does not make the EPA’s responses unreasonable or arbitrary, or constitute grounds for reversing the Final Rule. See City of Portland, Oregon v EPA , 507 F.3d 706, 714-15 (D.C. Cir. 2007) (although petitioners attacked the merits of EPA’s responses to comments, EPA thought about the comments and provided reasoned rep lies, which is all the APA requires). The Citizen Groups first argue that th e EPA “failed to explain” how the Flexible Permit Program is consistent with the Act when it allegedly has the effect of exempting certain projects that result in significant increases in emissions from the requirement to determine whether the project is a “major modification,” i.e . the applicability determination. Citizen Gr oups Brief at 42-43. The EPA identified this comment as Comment 5 in the Final Rule. 79 Fed. Reg. at 40,668/2 (the Citizen Groups “commented that Flexible Permit changes may be made without evaluating Major NSR applicability). The EPA responded, stated its disagreement with the comment, and cited four differe nt Flexible Permit Program rules to support the EPA’s position that all flexible permit applications must comply with PSD review and non-attainment NSR requi rements, which include applicability requirements. Id. at 40,668/2, /3 (citing 30 Texa s Admin. Code §§ 116.711(2)(H) Case: 14-60649 Document: 00512954221 Page: 51 Date Filed: 03/02/201541 and (I), 116.716(c), 116.721). The response to this comment adequately explains EPA’s determination. The Citizen Groups’ next two points do not reflect an inadequate EPA response, but rather simply illustrate the Citizen Groups’ disagreement with the substance of the EPA’s explanation. The Citizen Groups quote their comment requesting identification of provisions th at assure compliance with Major NSR rules after issuance of a flexible perm it, and acknowledge that “EPA identified provisions in the program that it relied on to find that the program assures compliance” with Major NSR. Citizen Groups Brief at 43-44; see 79 Fed. Reg. at 40,668-69 (identifying provisions). The Citizen Groups complain that the EPA’s “response misreads Texas’s rules.” Citizen Groups Brief at 44. The Citizen Groups’ disagreement with EPA’s position doe s not constitute a failure to address the issues they raised, and ignores the fact that the EPA’s reading is consistent with the Court’s decision in Flex I

. Similarly, the Citizen Groups’ comments regarding the distinction between a person submitting an application and a pe rson making an alteration represent a disagreement regarding substance, not a failu re to address an issue. Citizen Groups Brief at 44-46. The Citizen Groups posed a comment regarding compliance with Major New Source Review requirements for projects “that do not trigger the application requirements” of the Flexible Permit Program. Citizen Groups Brief at Case: 14-60649 Document: 00512954221 Page: 52 Date Filed: 03/02/201542 44. The problem with the comment, as explained in the EPA’s response to comments and in this brief, is that a major modification will trigger the application requirements of the flexible permit program. See supra at 30-31. The EPA stated in its response to comments that if “change s are made to the stationary source that vary from the permit application representa tions, the applicant is required to amend or alter the flexible permit in accordance with procedures set out in 30 [Texas Admin. Code] Section 116.721,” which would require an application to amend for a major modification. 79 Fed. Reg. at 40,668/3. The Citizen Groups’ reply is “EPA is wrong.” Citizen Groups Brief at 45. This disagreement, and the Citizen Groups’ incorrect explanation of why the EPA is wrong, does not render the EPA’s response to comment inadequate. 12 The EPA’s reference in its response to comments to the State’s Changes to Facilities rule was an appropriate re sponse to one of the Citizen Groups’
comments. Cf. Citizen Groups Brief at 47. The Changes to Facilities Rule, 30 Texas Admin. Code § 116.116, is a part of the State’s New Source Review rules at Subchapter B, and requires a permit am endment for any physical or operation change that increases the emission rate of any contaminant. The Flexible Permit

12 The Citizen Groups’ lengthy discussion of “alterations,” Citizen Groups Brief at 44-46, is not relevant because any major modification would result in a “significant” increase and, therefore, require a permit amendment, not a permit alteration. Case: 14-60649 Document: 00512954221 Page: 53 Date Filed: 03/02/201543 rules also require an amendment for a change that will result in a significant increase in emissions. Contrary to th e Citizen Groups’ argument, both rules are triggered by increases in actual emissions and require a permit amendment for major modifications. Cf. Citizen Groups Brief at 47. Thus, the EPA’s response identified an applicable provision of the Texas SIP that applies Major NSR to major modifications. Yet again, the real thrust of Citizen Groups’ complaint about the adequacy of the EPA’s response to co mment is that they disagree with the EPA’s assertion that the flexible permit program “is a minor NSR program.” Citizen Groups Brief at 48. Finally, the Citizen Groups complain that EPA did not respond to comments related to public participation. Citizen Gr oups Brief at 48. Again, this comment is based on an incorrect assumption that th e Program will allow sources to evade Major NSR requirements, including public participation requirements associated with major modifications. See AR Doc. 46 at 5 of 90. EPA addressed the alleged evasion of Major NSR requirements in its response to comments. EPA responded to the Citizen Groups’ si gnificant comments. To the extent any inadequacies existed, the Citizen Gr oups have not shown prejudicial error. See 5 U.S.C. § 706 (due account shall be taken of the rule of prejudicial error). Case: 14-60649 Document: 00512954221 Page: 54 Date Filed: 03/02/201544 CONCLUSION For all these reasons, the Court should deny the Petition for Review. Respectfully submitted, JOHN C. CRUDEN Assistant Attorney General s/ Alan D. Greenberg ALAN D. GREENBERG United States Department of Justice Environment and Natural Resources Division 999 18 th Street, Suite 370 Denver, Colorado 80202 (303) 844-1366 Alan.greenberg@usdoj.gov OF COUNSEL DAVID COURSEN EPA Office of General Counsel Washington, D.C. BRUCE JONES EPA Office of Regional Counsel Dallas, TX Date: March 2, 2015 Case: 14-60649 Document: 00512954221 Page: 55 Date Filed: 03/02/201545 CERTIFICATE OF SERVICE I hereby certify that on March 2, 2015, I electronically filed the foregoing brief with the Clerk of the Court for th e United States Court of Appeals for the Fifth Circuit by using the appellate CM/ECF system. Counsel for the parties in the case are registered CM/ECF users and service will be accomplished by the appellate CM/ECF system.

s/ Alan D. Greenberg Case: 14-60649 Document: 00512954221 Page: 56 Date Filed: 03/02/201546 CERTIFICATE OF COMPLIANCE WITH FEDERAL RULE OF APPELLATE PROCEDURE 32(A) 1. This brief complies with the type-vol ume limitation of Fed. R. App. P. 32(a)(7)(B) because this brief contains 9,248 words, excluding the parts of the brief exempted by Fed. R. App. P. 32(a)(7)(B)(iii). Microsoft Word computed the word count.

2. This brief complies with the typeface requirements of Fed. R. App. P. 32(a)(5) and the type style requirements of Fed. R. App. P. 32(a)(6) because this brief has been prepared in a proportionally spaced typeface using Microsoft Word in 14-point Times New Roman font.

s/ Alan D. Greenberg Case: 14-60649 Document: 00512954221 Page: 57 Date Filed: 03/02/201547 CERTIFICATE UNDER ECF FILING STANDARD

In accordance with paragraph A(6) of this Court’s ECF filing standards, I hereby certify that (1) required privacy redactions have been made, 5 th Cir. R. 25.2.13; (2) the electronic submission is an exact copy of the paper document, 5 th Cir. R. 25.2.1; and (3) the document has been scanned for viruses with the most recent version of a commercial virus scanni ng program and is free of viruses.

s/ Alan D. Greenberg Case: 14-60649 Document: 00512954221 Page: 58 Date Filed: 03/02/2015ADDENDUM OF TEXAS REGULATIONS

30 Tex. Admin. C ode § 116. 710 ........................................................................... A-1 30 Tex. Admin. C ode § 116. 711 ........................................................................... A-3 30 Tex. Admin. C ode § 116. 716 ........................................................................... A-7 30 Tex. Admin. C ode § 116. 718 ........................................................................... A-9 30 Tex. Admin. C ode § 116. 721 ......................................................................... A-10 Case: 14-60649 Document: 00512954221 Page: 59 Date Filed: 03/02/2015§ 116.710. Applicability, 30 TX ADC § 116.710

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1 Texas Administrative Code Title 30. Environmental Quality Part 1. Texas Commission on Environmental Quality Chapter 116. Control of Air Pollution by Permits for New Construction or Modification Subchapter G. Flexible Permits 30 TAC § 116.710 Tex. Admin. Code tit. 30, § 116.710 § 116.710. Applicability Currentness
(a) Flexible permit. A person may obtain a flexible permit which allows for physical or operational changes as provided by this subchapter as an alternative to obtaining a new source review permit under § 116.110 of this title (relating to Applicability), or in lieu of amending an existing permit under § 116.116 of this title (relating to Changes to Facilities). A person may obtain a flexible permit under § 116.711 of this title (relating to Flexible Permit Application) for a facility, group of facilities, or account before any actual work is begun, provided however:

(1) only one flexible permit may be issued for an account;

(2) modifications to existing facilities included in a flexible permit may be authorized by the amendment of an existing flexible permit;

(3) a new facility may be authorized by the amendment of an existing flexible permit; and

(4) a flexible permit may not cover facilities at more than one account.

(b) Change in ownership. The new owner of a facility, group of facilities, or account shall comply with § 116.110(e) of this title, provided however, that all facilities authorized by a flexible permit must change ownership at the same time and to the same person, or both the new owner and existing permit holder must obtain a permit alteration allocating the emission caps or individual emission limitation prior to the transfer of the permit by the commission. After the sale of a facility, or facilities, but prior to the transfer of a permit requiring a permit alteration, the original permit holder remains responsible for ensuring compliance with the existing flexible permit and all rules and regulations of the commission.

(c) Submittal under seal of Texas licensed professional engineer. All applications for a flexible permit or flexible permit amendment shall comply with § 116.110(f) of this title.

(d) Responsibility for flexible permit application. The owner of the facility, group of facilities, or account or the operator of the facility, group of facilities, or account who is authorized to act for the owner is responsible for complying with this section, except as provided by subsection (b) of this section. Case: 14-60649 Document: 00512954221 Page: 60 Date Filed: 03/02/2015§ 116.710. Applicability, 30 TX ADC § 116.710

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2 Credits Source: The provisions of this §116.710 adopted to be effective December 8, 1994, 19 TexReg 9360; amended to be effective July 8, 1998, 23 TexReg 6973; amended to be effective September 4, 2000, 25 TexReg 8668; amended to be effective January 6, 2011, 35 TexReg 11909; amended to be effective July 31, 2014, 39 TexReg 5777.

Current through 40 Tex.Reg. No. 654, dated February 6, 2015, as effective on or before February 13, 2015. 30 TAC § 116.710, 30 TX ADC § 116.710

End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works. Case: 14-60649 Document: 00512954221 Page: 61 Date Filed: 03/02/2015§ 116.711. Flexible Permit Application, 30 TX ADC § 116.711

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1 Texas Administrative Code Title 30. Environmental Quality Part 1. Texas Commission on Environmental Quality Chapter 116. Control of Air Pollution by Permits for New Construction or Modification Subchapter G. Flexible Permits 30 TAC § 116.711 Tex. Admin. Code tit. 30, § 116.711 § 116.711. Flexible Permit Application

Currentness
In order to be granted a flexible permit or flexible permit amendment, the owner or operator of the proposed facility shall submit a permit application which 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, group of facilities, or account as determined under § 116.716 of this title (relating to Emission Caps and Individual Emission Limitations), will comply with all applicable rules of the commission and with the intent of the Texas Clean Air Act, including protection of the health and physical property of the people.

(ii) In considering the issuance of a flexible permit for construction or modification of any facility, group of facilities, or account within 3,000 feet or less 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, group of facilities, or account may have on the individuals attending these school facilities.

(B) Measurement of emissions. The proposed facility, group of facilities, or account will have provisions for measuring the emission of 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).

(i) All facilities authorized by the flexible permit shall utilize BACT consistent with the following: Case: 14-60649 Document: 00512954221 Page: 62 Date Filed: 03/02/2015§ 116.711. Flexible Permit Application, 30 TX ADC § 116.711

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2 (I) All new facilities must utilize BACT.

(II) Existing facilities must utilize BACT with consideration given to the technical practicability and economic reasonableness of reducing or eliminating the emissions. Control technology that is more stringent than BACT may be used on certain facilities to provide the emission reductions necessary to comply with this requirement on a group of existing facilities, provided however, that the existing level of control may not be lessened for any facility from its current authorization.

(ii) For pollutants from new or modified facilities that constitute a new major stationary source or major modification as defined by § 116.12 of this title (relating to Nonattainment and Prevention of Significant Deterioration Review Definitions), control technology shall be demonstrated as required by §§ 116.150, 116.151, or 116.160 of this title (relating to New Major Source or Major Modification in Ozone Nonattainment Areas; New Major Source or Major Modification in Nonattainment Area Other Than Ozone; and Prevention of Significant Deterioration Requirements, respectively), as applicable, for each new or modified facility.

(iii) For new facilities and proposed affected sources (as defined in § 116.15(1) of this title (relating to Section 112(g) Definitions)) subject to Subchapter E of this chapter (relating to Hazardous Air Pollutants: Regulations Governing Constructed or Reconstructed Major Sources (FCAA, § 112(g), 40 CFR Part 63)), the use of BACT shall be demonstrated for the individual facility or affected source.

(D) New Source Performance Standards (NSPS). The emissions from each affected facility as defined in 40 Code of Federal Regulations (CFR), Part 60 will meet at least the requirements of any applicable NSPS as listed under Title 40 CFR Part 60, promulgated by the United States Environmental Protection Agency under authority granted under the Federal Clean Air Act, § 111, as amended.

(E) National Emission Standards for Hazardous Air Pollutants (NESHAPS). The emissions from each facility subject to 40 CFR Part 61 will meet at least the requirements of any applicable NESHAPS, as listed under 40 CFR Part 61, promulgated by EPA under authority granted under the FCAA, § 112, as amended.

(F) NESHAPS for source categories. The emissions from each affected facility shall meet at least the requirements of any applicable maximum achievable control technology (MACT) 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, group of facilities, or account will achieve the performance specified in the flexible permit application. The applicant may be required to submit additional engineering data after a flexible permit has been issued in order to demonstrate further that the proposed facility, group of facilities, or account will achieve the performance specified in the flexible permit. In addition, initial compliance testing with ongoing compliance determined through engineering calculations based on measured process variables, parametric or predictive monitoring, stack monitoring, or stack testing shall be required as specified in each flexible permit. Case: 14-60649 Document: 00512954221 Page: 63 Date Filed: 03/02/2015§ 116.711. Flexible Permit Application, 30 TX ADC § 116.711

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 3 (H) Nonattainment review. If the proposed facility, group of facilities, or account is located in a nonattainment area, each facility shall comply with all applicable requirements concerning nonattainment review in this chapter.

(I) Prevention of Significant Deterioration (PSD) review. If the proposed facility, group of facilities, or account is located in an attainment area, each facility shall comply with all applicable requirements in this chapter concerning PSD review.

(J) Air dispersion modeling or ambient monitoring. Computerized air dispersion modeling or ambient monitoring may be required by the commission's Air Permits Division to determine the air quality impacts from the facility, group of facilities, or account. 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 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) Federal standards of review for constructed or reconstructed major sources of hazardous air pollutants. If the proposed source is an affected source (as defined in § 116.15(1) of this title), it shall comply with all applicable requirements under Subchapter E of this chapter.

(L) Mass cap and trade allocations. 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.

(M) Application content. In addition to other requirements of this chapter, the applicant shall:

(i) identify each air contaminant for which an emission cap is desired;

(ii) identify each facility to be included in the flexible permit;

(iii) identify each source of emissions to be included in the flexible permit and for each source of emissions identify the Emission Point Number (EPN) and the air contaminants emitted;

(iv) for each emission cap, identify all associated EPNs and facilities (including description, common name, and facility identification number) and provide emission rate calculations based on the expected maximum capacity and the proposed control technology;

(v) for each individual emission limitation, identify the EPN and provide emission rate calculations based on the expected maximum capacity and the proposed control technology; and

(vi) if the flexible permit application includes facilities currently authorized by a permit issued under Subchapter B of this chapter (relating to New Source Review Permits), the applicant shall identify any terms, conditions, and representations in the Subchapter B permit or permits which will be superseded by or incorporated into the flexible permit. The applicant shall include an analysis of how the conditions and control requirements of Subchapter B permits will be carried forward in the proposed flexible permit. Case: 14-60649 Document: 00512954221 Page: 64 Date Filed: 03/02/2015§ 116.711. Flexible Permit Application, 30 TX ADC § 116.711

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 4 (N) Proposed control technology and compliance demonstration. The applicant shall specify the control technology proposed for each facility and demonstrate compliance with all emission caps at expected maximum production capacity.

Credits Source: The provisions of this §116.711 adopted to be effective December 8, 1994, 19 TexReg 9360; amended to be effective July 8, 1998, 23 TexReg 6973; amended to be effective March 29, 2001, 26 TexReg 2398; amended to be effective September 12, 2002, 27 TexReg 8546; amended to be effective January 6, 2011, 35 TexReg 11909; amended to be effective July 31, 2014, 39 TexReg 5777.

Current through 40 Tex.Reg. No. 654, dated February 6, 2015, as effective on or before February 13, 2015. 30 TAC § 116.711, 30 TX ADC § 116.711

End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works. Case: 14-60649 Document: 00512954221 Page: 65 Date Filed: 03/02/2015§ 116.716. Emission Caps and Individual Emission Limitations, 30 TX ADC § 116.716

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1 Texas Administrative Code Title 30. Environmental Quality Part 1. Texas Commission on Environmental Quality Chapter 116. Control of Air Pollution by Permits for New Construction or Modification Subchapter G. Flexible Permits 30 TAC § 116.716 Tex. Admin. Code tit. 30, § 116.716 § 116.716. Emission Caps and Individual Emission Limitations Currentness
(a) Emission caps. To establish a cap for a pollutant, the executive director will develop an emission cap for:

(1) all facilities at an account; or

(2) a designated group of facilities at an account.

(b) Notwithstanding subsection (a) of this section, the executive director reserves the right to exclude any facility from an emissions cap if necessary to ensure compliance with the permit or to ensure the protection of human health and the environment.

(c) Emissions will be calculated for each facility within an emission cap as follows:

(1) Determination of control technology:

(A) if the permit is used to authorize any facility, group of facilities, or account, or any change to existing facilities, that constitutes a new major stationary source or major modification for the pollutant as defined by § 116.12 of this title (relating to Nonattainment and Prevention of Significant Deterioration Review Definitions), emissions shall be based on control technology determined in accordance with Subchapter B, Division 5 or 6 of this chapter (relating to Nonattainment Review Permits; and Prevention of Significant Deterioration Review, respectively) as applicable, at expected maximum capacity; or

(B) based on application of best available control technology as defined in § 116.10 of this title (relating to General Definitions), at expected maximum capacity.

(2) pollutants emitted from facilities subject to lowest achievable emission rate review in accordance with Subchapter B, Division 5 of this chapter must be included in a separate emissions cap or listed as individual emission limitations.

(3) the calculated emissions for all facilities within an emission cap will be summed. Case: 14-60649 Document: 00512954221 Page: 66 Date Filed: 03/02/2015§ 116.716. Emission Caps and Individual Emission Limitations, 30 TX ADC § 116.716

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2 (4) a lower emission cap than that determined by paragraph (3) of this subsection may be proposed by the permit applicant if technical information is provided to demonstrate that it is feasible to operate in compliance with the proposed emission cap.

(d) Individual emission limitations. An individual emission limitation will be established in the same permit for each pollutant not included in an emission cap for facilities authorized by the flexible permit. In addition, an individual emission limitation may be established for a pollutant included in an emission cap when the expected capacity of a facility is less than the expected maximum capacity to prevent a facility from exceeding emission levels appropriate for the proposed controls.

(e) The permit shall clearly identify, by a table or other appropriate means, the facilities that are subject to an emission cap, and the facilities that are subject to individual emission limitations. A facility may be subject to both an emission cap and an individual emission limitation.

(f) Adjustment of emission cap. The executive director will use the following criteria and procedures for adjustment of a cap.

(1) If a facility subject to an emission cap is shut down for a period longer than six months, the emission cap shall be adjusted by decreasing the emission cap by an amount that the shut down facility contributed to the original calculation of the emission cap. If a shut down facility is returned to operation, the emission cap shall be adjusted by increasing the emission cap by the amount that the facility contributed to the original calculation of the emission cap; however, the emission cap cannot be increased beyond the original emission cap amount.

(2) If a facility is to be added to the flexible permit, a permit amendment is required to establish a revised emission cap. If an existing emission cap is to be increased as a result of adding a new facility or the modification of a facility within the emission cap, an amendment application is required.

(3) An emission cap will be decreased for any facility, group of facilities, or account authorized by a flexible permit if that facility becomes subject to any new state or federal rule or regulation which would lower emissions or require an emission reduction. The adjustment will be made the next time the flexible permit is amended or altered. If an amendment to a flexible permit is not required to meet the new requirement, then within 60 days of making the change, the permittee must submit a request to alter the permit and include information describing how compliance with the new requirement will be demonstrated.

Credits Source: The provisions of this §116.716 adopted to be effective December 8, 1994, 19 TexReg 9360; amended to be effective January 6, 2011, 35 TexReg 11909; amended to be effective July 31, 2014, 39 TexReg 5777.

Current through 40 Tex.Reg. No. 654, dated February 6, 2015, as effective on or before February 13, 2015. 30 TAC § 116.716, 30 TX ADC § 116.716

End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works. Case: 14-60649 Document: 00512954221 Page: 67 Date Filed: 03/02/2015§ 116.718. Significant Emission Increase, 30 TX ADC § 116.718

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1 Texas Administrative Code Title 30. Environmental Quality Part 1. Texas Commission on Environmental Quality Chapter 116. Control of Air Pollution by Permits for New Construction or Modification Subchapter G. Flexible Permits 30 TAC § 116.718 Tex. Admin. Code tit. 30, § 116.718 § 116.718. Significant Emission Increase

Currentness
An increase in emissions from operational or physical changes at an existing facility authorized by a flexible permit is insignificant, for the purposes of minor new source review under this subchapter, if the increase does not exceed either the emission cap or individual emission limitation. This section does not apply to an increase in emissions from a new facility or to the emission of an air contaminant not previously emitted by an existing facility.

Credits Source: The provisions of this §116.718 adopted to be effective December 8, 1994, 19 TexReg 9360; amended to be effective January 6, 2011, 35 TexReg 11909; amended to be effective July 31, 2014, 39 TexReg 5777.

Current through 40 Tex.Reg. No. 654, dated February 6, 2015, as effective on or before February 13, 2015. 30 TAC § 116.718, 30 TX ADC § 116.718

End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works. Case: 14-60649 Document: 00512954221 Page: 68 Date Filed: 03/02/2015§ 116.721. Amendments and Alterations, 30 TX ADC § 116.721

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1 Texas Administrative Code Title 30. Environmental Quality Part 1. Texas Commission on Environmental Quality Chapter 116. Control of Air Pollution by Permits for New Construction or Modification Subchapter G. Flexible Permits 30 TAC § 116.721 Tex. Admin. Code tit. 30, § 116.721 § 116.721. Amendments and Alterations

Currentness
(a) Flexible permit amendments. All representations with regard to construction plans and operation procedures in an application for a flexible permit or flexible permit amendment, as well as any general and special conditions, become conditions upon which the subsequent flexible permit is issued. It shall be unlawful for any person to vary from such representation or flexible permit provision if the change will cause a change in the method of control of emissions or the character of the emissions, will relax emission controls, or will result in a significant increase in emissions unless application is made to the executive director to amend the flexible permit in that regard and such amendment is approved by the executive director or commission. Applications to amend a flexible permit shall be submitted with a completed Form PI-1 and are subject to the requirements of § 116.711 of this title (relating to Flexible Permit Application).

(b) Flexible permit alterations.

(1) A flexible permit alteration is for any variation from a representation in a flexible permit application or a general or special provision of a flexible permit that does not require a flexible permit amendment.

(2) All flexible permit alterations which may involve a change in a general or special condition contained in the flexible permit, or affect control equipment performance must receive prior approval by the executive director. The executive director shall be notified in writing of all other flexible permit alterations within ten days of implementing the change, unless the permit provides for a different method of notification. Any flexible permit alteration request or notification shall include information sufficient to demonstrate that the change does not interfere with the owner or operator's previous demonstrations of compliance with the requirements of § 116.711 of this title, including the protection of public health and welfare. The appropriate commission regional office and any local air pollution program having jurisdiction shall be provided copies of all flexible permit alteration documents.

(3) Flexible permit alterations shall not be subject to the requirements of Best Available Control Technology identified in § 116.711(2) of this title.

(c) Changes not requiring an amendment or alteration. The following changes do not require an amendment or alteration, except that an amendment is required if the change will cause a change in the method of control of emissions or the character of the emissions, will relax emission controls, will result in a significant increase in emissions as determined under § 116.718 of this title (relating to Significant Emission Increase), or conflicts with an existing permit condition: Case: 14-60649 Document: 00512954221 Page: 69 Date Filed: 03/02/2015§ 116.721. Amendments and Alterations, 30 TX ADC § 116.721

© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2 (1) a change in throughput; or

(2) a change in feedstock.

(d) Permit by rule under Chapter 106 of this title (relating to Permits by Rule) in lieu of permit amendment or alteration.

(1) Notwithstanding subsections (a) or (b) of this section, no permit amendment or alteration is required if the changes to the permitted facility qualify for a permit by rule under Chapter 106 of this title unless prohibited by permit provision as provided in § 116.715 of this title (relating to General and Special Conditions). All such changes permitted by rule to a permitted facility shall be incorporated into that facility's permit at such time as the permit is amended or renewed.

(2) Emission increases authorized by Chapter 106 of this title at an existing facility authorized by a flexible permit shall not cause an exceedance of the emissions cap or individual emission limitation.

Credits Source: The provisions of this §116.721 adopted to be effective December 8, 1994, 19 TexReg 9360; amended to be effective July 8, 1998, 23 TexReg 6973; amended to be effective September 4, 2000, 25 TexReg 8668; amended to be effective January 6, 2011, 35 TexReg 11909; amended to be effective July 31, 2014, 39 TexReg 5777.

Current through 40 Tex.Reg. No. 654, dated February 6, 2015, as effective on or before February 13, 2015. 30 TAC § 116.721, 30 TX ADC § 116.721

End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works. Case: 14-60649 Document: 00512954221 Page: 70 Date Filed: 03/02/2015