TECHNICAL SUPPORT DOCUMENT

July 24, 2013

30 TAC Chapter 122 – Federal Operating Permits

Subchapter C: Initial Permit Issuances, Revisions, 

Reopenings, and Renewals

Division 2: Permit Revisions

§§ 122.215 – 122.218

No material in this submittal package was designated as Confidential Business Information.

FOR FURTHER INFORMATION CONTACT: Ms. Adina Wiley, United States Environmental 

Protection Agency Region 6, Air Permits Section (6PD-R), 1445 Ross Avenue, Dallas, Texas, 

75202-2733, (214) 665-2115
2

Subject: Review of Revisions to the State Implementation Plan – Texas Administrative 

Code Title 30, Chapter 122: Federal Operating Permits, Subchapter C: Initial 

Permit Issuances, Revisions, Reopenings and Renewals, Division 2: Permit 

Revisions, Sections 122.214, 122.215, 122.216, 122.217, 122.218

Contents:

I. Executive Summary

II. Technical Review

A. Part 51, Appendix V Completeness Checklists

B. Analysis of State Submittals

III. Conclusion
3

I. Executive Summary

This technical support document (TSD) reviews portions of two proposed revisions to the Texas 

State Implementation Plan (SIP) concerning the Federal Operating Permits Program. The Federal 

Operating Permits applies statewide. This review will determine if the program revisions 

submitted on October 4, 2001, and August 11, 2003 (as discussed below), are consistent with the 

requirements of the Clean Air Act and EPA’s policy and guidance and should be approved into 

the Texas SIP.

October 4, 2001

In a letter dated October 4, 2001, Governor Rick Perry submitted revisions to the Texas SIP at 

Rule Log No. 2000-043-122-AI that were adopted by the Texas Natural Resources Conservation 

Commission (TNRCC) on May 9, 2001, and became effective on June 3, 2001.

1 This SIP 

submittal included revisions to the following parts of the Texas Air Code, Title 30, Chapter 122:

1. Minor permit revisions at 30 TAC 122.215,

2. Applications for Minor Permit Revisions at 30 TAC 122.216,

3. Procedures for Minor Permit Revisions at 30 TAC 122.217, and 

4. Minor Permit Revision Procedures for Permit Revisions Involving the Use of Economic 

Incentives, Marketable Permits and Emissions Trading at 30 TAC 122.218.

August 11, 2003

In a letter dated August 11, 2003, Mr. Robert J. Huston, Chairman of the TNRCC, submitted 

revisions to the Texas SIP at Rule Log No. 2002-056-122-AI that were adopted by the TNRCC

on November 20, 2002, and became effective on December 11, 2002. This SIP submittal 

included revisions to the following parts of the Texas Air Code, Title 30, Chapter 122:

1. Revisions to the Procedures for Minor Permit Revisions at 30 TAC 122.217.

 1 Note that the Texas Natural Resource Conservation Commission (TNRCC) was a predecessor to the current Texas 

environmental agency, the Texas Commission on Environmental Quality. This analysis will identify the TNRCC 

when talking about a specific action taken by the TNRCC such as rule adoption and SIP submittal, but will generally 

refer to the TCEQ when discussing current duties of the state environmental agency.
4

II. Technical Review

II.A Evaluation of the October 4, 2001 and August 11, 2003 SIP Submittals with respect to 

the Part 51, Appendix V Completeness Checklist Part 51, Appendix V Completeness 

Checklists

The criteria for completeness determination is Appendix V to Part 51 - Criteria for determining 

the completeness of plan submissions and is outlined below: 

1.0 Purpose: This appendix V sets forth the minimum criteria for determining whether a State 

implementation plan submitted for consideration by EPA is an official submission for 

purposes of review under § 51.103.

1.1 The EPA shall return to the submitting official any plan or revision thereof which fails to 

meet the criteria set forth in this appendix V, and request corrective action, identifying 

the component(s) absent or insufficient to perform a review of the submitted plan.

1.2 The EPA shall inform the submitting official whether or not a plan submission meets the 

requirements of this appendix V within 60 days of EPA's receipt of the submittal, but no 

later than 6 months after the date which the State was required to submit the plan or 

revision. If a completeness determination is not made by 6 months from receipt of a 

submittal, the submittal shall be deemed complete by operation of law on the date 6 

months from receipt. A determination of completeness under this paragraph means that 

the submission is an official submission for purposes of §51.103.

The attached checklist outlines the basic criteria included under 2.1 and 2.2 of Appendix V.

Section 2.3 of Appendix V describes the "parallel process procedure" which EPA had previously 

adopted to expedite the review of plans. This feature, however, is being deleted from the next 

revised CFR on completeness. Therefore, it is not included in the checklist.
5

SIP Completeness Checklist – October 4, 2001

Rule Log No: 2000-043-122-AI

When preparing a SIP revision request, the SIP reviewer should go through this list to help 

identify that the package submitted to EPA is complete. States can use the check list to assure 

SIP submittals meet Appendix V criteria.

Administrative Materials (2.1)

1. The package is sent with a formal submittal letter from the Governor or his or her 

designee requesting EPA's approval of the revision.

The SIP revision was submitted by a letter from Governor Rick Perry dated October 4, 

2001.

2. Evidence is included that the State has adopted the revision in the State code or body of 

regulations, or that the State has issued the permit, order, consent agreement (hereafter 

document) in final form. This evidence would include the date of adoption or final 

issuance and the effective date of revision, if different from adoption/issuance date.

The revisions were adopted by the Texas Natural Resource Conservation Commission on 

May 9, 2001, and became effective June 3, 2001.

3. Evidence is included that the State has necessary legal authority under State law to adopt 

and implement the revision, e.g., a citation of the appropriate State authority.

The authority for promulgating changes to the Texas State Implementation Plan, Chapter 

122, Subchapter C, Division 2, Sections 122.215-218 is found in Chapter 382 of the 

Texas Health and Safety Code.

4. A copy is included of the actual regulation or document submitted for approval and 

incorporation by reference into the SIP including an indication of the changes made to the 

existing approved plan where applicable. The submittal shall be a copy of the official 

State regulation document signed, stamped, and dated by the appropriate State official 

indicating that it is fully enforceable by the State. The effective date of the regulation 

document shall, whenever possible, be indicated in the document itself.

The October 4, 2001, submittal included a copy of the official State regulation document, 

signed, stamped, and dated by Robert J. Huston, Chairman of the Texas Natural 

Resource Conservation Commission.

5. Evidence is included that the State followed all the procedural requirements of its laws 

and/or its constitution in the conducting and completing the adoption/issuance of the 

plan.
6

A certification signed by LaDonna Castanuela, Chief Clerk of the Texas Natural 

Resource Conservation Commission was included that demonstrated the SIP submittal 

was developed pursuant to 40 CFR 51.104.

6. Evidence is included that public notice was given of the proposed changes consistent 

with the procedures approved by EPA, including the date of publication of such notice, 

(e.g., notarized or certified copies of any public notices published in newspapers). (The 

notice should be at least 30 days prior to the public hearing(s).

Notices of public hearing were published on January 19, 2001, in the Austin American 

Statesman, the Fort Worth Star Telegram, and the Houston Chronicle. A public hearing 

was held in Austin, Texas, on February 20, 2001.

7. A certification is included indicating that public hearing(s) was/were held in accordance 

with the information provided in the public notice(s) and the State's laws and 

constitution, if applicable.

A certification signed by LaDonna Castanuela, Chief Clerk, Texas Natural Resource 

Conservation Commission was included. This certification states that the public hearing 

was held pursuant to 40 CFR § 51.102(a) and that notice of the hearing was given which 

conformed to 40 CFR § 51.102(d).

8. A compilation of public comments and the State's response is included.

The SIP submittal package did include a compilation of public comments and the State’s 

responses. The Texas Natural Resource Conservation Commission received comments 

from 12 organizations and 118 individuals during the public comment period.

Technical Support (2.2)

The State should include the following technical information in its SIP revision request package.

1. Identification of all regulated pollutants affected by the revision is included.

This is not applicable to the SIP revision under review. This revision provides procedures 

for minor permit revisions and does not regulate specific pollutants.

2. Identification of the locations of affected sources including the EPA 

attainment/nonattainment designation of the locations and the status of the attainment 

plan for the affected area(s) is included.

This SIP revision applies to minor permits issued by the Texas Natural Resource 

Conservation Commission on a statewide basis.
7

3. Quantification of the changes in SIP allowable emissions from the affected sources is 

included. (Examples include estimates of changes in current actual emissions from 

affected sources and/or, where appropriate, quantification of changes in actual emissions 

from affected sources through calculations of the differences between certain baseline 

levels and allowable emissions anticipated if the revisions were approved.)

Quantification of the changes in SIP allowable emissions from the affected sources is not 

applicable to this SIP revision. The SIP revision requires at section 122.216(6) that any 

permit holder requesting a minor permit revision must quantify the emissions resulting 

from the change.

4. Demonstration is included that the NAAQS/PSD increments/RFP demonstration and 

visibility as applicable would be protected if the revision were approved and 

implemented.

Not applicable to this SIP revision. Section 122.215(3) states that a minor permit revision 

does not require or change a case-by-case determination of an emission limitation or 

other standard, or a source-specific determination for temporary sources of ambient 

impacts, or a visibility or increment analysis.

5. FOR REDESIGNATIONS:

a. Is there a fully approved maintenance plan for the primary ambient air quality 

standards for at least 10 years as required by §175A of the Clean Air Act?

Not applicable.

b. Are contingency measures included?

Not applicable.

(A). Modeling information, if applicable, is required to support the propose revision.

Modeling information is not necessary to support the SIP revision.

7. Evidence is included where necessary, that emission limitations are based on continuous 

emission reduction technology (e.g., add-on controls, industrial/process equipment 

designs, reformulated materials, etc.).

Evidence of emission limitations based on CEM technology is not applicable.

8. Evidence is included indicating that a SIP revision contains emission limitations, work 

practice standards, and recordkeeping/reporting requirements to ensure stated emission 

levels.
8

Enforceability is determined on case-by-case basis in each individual permit. Section 

122.215 also states that a minor permit revision cannot violate any applicable 

requirement and does not involve significant changes to existing monitoring, reporting, 

or recordkeeping requirements.

9. Compliance/enforcement strategies including how compliance will be determined in 

practice (including at what frequency).

Determination of compliance is specified on case-by-case basis in each individual permit.

Section 122.215 also states that a minor permit revision cannot violate any applicable 

requirement and does not involve significant changes to existing monitoring, reporting, 

or recordkeeping requirements.

10. As appropriate, special economic and technological justifications are included per 

applicable EPA policies or an explanation why such justifications are not necessary 

should be included. For example, requests for alternative RACT may require such 

justification.

These justifications are not necessary for this SIP revision.

The SIP submittal of Rule Log No.: 2000-043-122-AI meets the completeness criteria.
9

SIP Completeness Checklist – August 11, 2003

Rule Log No: 2002-056-122-AI

When preparing a SIP revision request, the SIP reviewer should go through this list to help 

identify that the package submitted to EPA is complete. States can use the check list to assure 

SIP submittals meet Appendix V criteria.

Administrative Materials (2.1)

1. The package is sent with a formal submittal letter from the Governor or his or her 

designee requesting EPA's approval of the revision.

The SIP revision was submitted by a letter from Robert J. Huston, Chairman of the Texas 

Commission on Environmental Quality, on August 11, 2003.

2. Evidence is included that the State has adopted the revision in the State code or body of 

regulations, or that the State has issued the permit, order, consent agreement (hereafter 

document) in final form. This evidence would include the date of adoption or final 

issuance and the effective date of revision, if different from adoption/issuance date.

The revisions were adopted by the Texas Natural Resource Conservation Commission on 

November 20, 2002, and became effective December 11, 2002.

3. Evidence is included that the State has necessary legal authority under State law to adopt 

and implement the revision, e.g., a citation of the appropriate State authority.

The authority for promulgating changes to the Texas State Implementation Plan, Chapter 

122, Subchapter C, Division 2, Section 122.217 is found in Chapter 382 of the Texas 

Health and Safety Code.

4. A copy is included of the actual regulation or document submitted for approval and 

incorporation by reference into the SIP including an indication of the changes made to the 

existing approved plan where applicable. The submittal shall be a copy of the official 

State regulation document signed, stamped, and dated by the appropriate State official 

indicating that it is fully enforceable by the State. The effective date of the regulation 

document shall, whenever possible, be indicated in the document itself.

The August 11, 2003, submittal included a copy of the official State regulation document, 

signed, stamped, and dated by Robert J. Huston, Chairman of the Texas Commission on 

Environmental Quality.

5. Evidence is included that the State followed all the procedural requirements of its laws 

and/or its constitution in the conducting and completing the adoption/issuance of the 

plan.
10

The SIP submittal package included a certification signed by Jim Muse, Records 

Administrator, Policy and Regulations Division of the Texas Commission on 

Environmental Quality, that demonstrated the SIP submittal was developed pursuant to 

40 CFR 51.104.

6. Evidence is included that public notice was given of the proposed changes consistent 

with the procedures approved by EPA, including the date of publication of such notice, 

(e.g., notarized or certified copies of any public notices published in newspapers). (The 

notice should be at least 30 days prior to the public hearing(s).

Notices of public hearings were published in the following newspapers on the date listed:

• Austin American Statesman: July 14, 2002 and March 14, 2003

• El Paso Times: July 13, 2002

• Fort Worth Star Telegram: July 13, 2002 and March 14, 2003

• Houston Chronicle: July 13, 2002 and March 11, 2003. 

Public hearings were held in Austin, Texas, on August 19, 2002 and April 14, 2003.

7. A certification is included indicating that public hearing(s) was/were held in accordance 

with the information provided in the public notice(s) and the State's laws and 

constitution, if applicable.

An order adopting revisions to the SIP signed by Robert J. Huston, Chairman of the 

Texas Commission on Environmental Quality was included. This order states that the 

public hearing was conducted pursuant to Texas Health and Safety Code § 382.017, 

Texas Government Code Chapter 2001, and 40 CFR § 51.102.

8. A compilation of public comments and the State's response is included.

The SIP submittal package did include a compilation of comments.

Technical Support (2.2)

The State should include the following technical information in its SIP revision request package.

1. Identification of all regulated pollutants affected by the revision is included.

This is not applicable to the SIP revision under review. This revision provides procedures 

for minor permit revisions and does not regulate specific pollutants.

2. Identification of the locations of affected sources including the EPA 

attainment/nonattainment designation of the locations and the status of the attainment 

plan for the affected area(s) is included.

This SIP revision applies to minor permits issued by the Texas Commission on 

Environmental Quality on a statewide basis.
11

3. Quantification of the changes in SIP allowable emissions from the affected sources is 

included. (Examples include estimates of changes in current actual emissions from 

affected sources and/or, where appropriate, quantification of changes in actual emissions 

from affected sources through calculations of the differences between certain baseline 

levels and allowable emissions anticipated if the revisions were approved.)

Quantification of the changes in SIP allowable emissions from the affected sources is not 

applicable to this SIP revision.

4. Demonstration is included that the NAAQS/PSD increments/RFP demonstration and 

visibility as applicable would be protected if the revision were approved and 

implemented.

Not applicable to this SIP revision.

5. FOR REDESIGNATIONS:

a. Is there a fully approved maintenance plan for the primary ambient air quality 

standards for at least 10 years as required by §175A of the Clean Air Act?

Not applicable.

b. Are contingency measures included?

Not applicable.

(B). Modeling information, if applicable, is required to support the propose revision.

Modeling information is not necessary to support the SIP revision.

7. Evidence is included where necessary, that emission limitations are based on continuous 

emission reduction technology (e.g., add-on controls, industrial/process equipment 

designs, reformulated materials, etc.).

Evidence of emission limitations based on CEM technology is not applicable.

8. Evidence is included indicating that a SIP revision contains emission limitations, work 

practice standards, and recordkeeping/reporting requirements to ensure stated emission 

levels.

Enforceability is determined on case-by-case basis in each individual permit.

9. Compliance/enforcement strategies including how compliance will be determined in 

practice (including at what frequency).
12

Determination of compliance is specified on case-by-case basis in each individual permit.

10. As appropriate, special economic and technological justifications are included per 

applicable EPA policies or an explanation why such justifications are not necessary 

should be included. For example, requests for alternative RACT may require such 

justification.

These justifications are not necessary for this SIP revision.

The SIP submittal of Rule Log No.: 2002-056-122-AI meets the completeness criteria.
13

II.B Analysis State Submittal

History of the Minor Permit Provisions in the Texas Title V Program

Under Title V of the Clean Air Act (CAA), as amended on November 15, 1990, the EPA 

promulgated rules, which define the minimum elements of an approvable State operating permits 

program. Those rules include the corresponding standards and procedures by which EPA will 

approve, oversee, and withdraw approval of a State operating permits program (see 57 FR 

32250, July 21, 1992). The EPA codified these rules at Title 40 Code of Federal Regulations 

(CFR) part 70 (the part 70 regulations). Title V required States to develop and submit to EPA 

programs for issuing operating permits to all major stationary sources and to certain other 

sources.

The CAA required States to develop and submit these programs to EPA by November 15, 1993, 

and that EPA approve or disapprove each program within one year after receiving the submittal.

EPA's program review occurs under § 502 of the CAA and the part 70 regulations, which 

together outline criteria for approval or disapproval. Where a program substantially, but not fully 

meets the requirements of part 70, EPA may grant the program interim approval (IA). If EPA has 

not fully approved a program by two years after November 15, 1993, or by the end of an IA, then 

EPA must establish and implement a Federal program. 42 United States Code (U.S.C.) 7661a(d) 

and (g).

In our June 7, 1995, Federal Register notice (60 FR 30037), EPA identified several 

inconsistencies between Texas’s Chapter 122 Federal Operating Permits Program and Part 70, 

including the provisions for minor permit revisions. TCEQ amended sections 122.215 – 122.218 

to ensure Chapter 122 is consistent with 40 CFR § 70.7(e)(2)(i). These amendments were 

adopted by the state on May 9, 2001, and submitted to EPA for inclusion in the Texas Title V 

Operating Permit program on May 30, 2001, and submitted to EPA as a SIP revision on October 

4, 2001. EPA published approval of these revisions into the Federal Operating Permit program 

on December 6, 2001 (66 FR 63318), based on our determination that TCEQ had corrected the 

deficiencies identified in Chapter 122, including those pertaining to the minor permit revisions.

TCEQ subsequently adopted amendments to 122.217 regarding minor permit procedures on 

November 20, 2002. These amendments removed an obsolete reference to the monitoring 

process for general operating permits and renumbered the section for consistency. These 

amendments to 122.217 were submitted to EPA as revisions to the Texas Title V Operating 

Permit Program on December 9, 2002; and submitted as a SIP revision on August 11, 2003. EPA 

published approval of these revisions into the Federal Operating Permit program on March 30, 

2005 (70 FR 16134).

While EPA has reviewed and approved the amendments to sections 30 TAC 122.215-122.218 

into the Texas Operating Permit Program, this review marks the first time that EPA has taken 

action on these sections as revisions to the Texas SIP. In doing so, we are acting on the original 

submission of October 4, 2001, and the subsequent revisions through the August 11, 2003, 

submittal.
14

Summary of the State Submittal

30 TAC Sections 122.215 – 122.218 establish provisions for minor permit revisions in the Texas 

Federal Operating Permits Program. These sections are already approved under the Texas 

Federal Operating Permits Program but must also be included in the SIP for full functionality.

What is considered a minor permit revision?

Section 122.215 defines a minor permit revision to include any change that:

• does not violate any applicable requirement;

• does not involve significant changes to existing monitoring, reporting, or recordkeeping 

requirements in the permits;

• does not require or change a case-by-case determination of an emission limitation or 

other standard, or a source-specific determination for temporary sources of ambient 

impacts, or a visibility or increment analysis;

• does not seek to establish or change a permit term or condition for which there is no 

corresponding underlying applicable requirement and that the source has assumed to 

avoid an applicable requirement to which the source would otherwise be subject; and

• is not a modification under any provision of Title I of the CAA.

Notwithstanding the requirements of section 122.215, section 122.218 establishes that minor 

permit revision procedures may also be used for permit revisions involving the use of economic 

incentives, marketable permits, emissions trading, and other similar approaches, to the extent that 

such minor permit revision procedures are explicitly provided for in the SIP or in applicable 

requirements promulgated by EPA.

How does a source apply for a minor permit revision?

Sections 122.216 and 122.217 describe what information is required in a minor permit revision 

application and how the TCEQ will process the application.

The application for the minor permit revision must include, at a minimum, a description of the 

change; a description of the affected emission units; the provisional terms and conditions as 

defined in § 122.10 (General Definitions) that codify the new applicable requirement; a 

statement that the change qualifies for a minor permit revision; a certification in accordance with 

§ 122.165 (Certification by a Responsible Official); and the emissions resulting from the change.

The complete application is submitted to the TCEQ Executive Director (ED).

Upon receipt of a complete minor revision permit application, the TCEQ Executive Director 

(ED) will notify the EPA and the affected state(s) within five working days. The TCEQ ED may 

issue a minor permit revision provided that the changes meet the criteria for a minor permit 

revision; the TCEQ ED has received a complete application; the conditions of the permit provide 

for compliance with the requirements of 30 TAC Chapter 122 (Federal Operating Permits 

Program); and the requirements for public announcement, affected state review, and EPA review 

have all been satisfied. The TCEQ will take final action on the minor permit revision application 
15

no later than 90 days after receipt of an application, or 15 days after the end of the EPA review 

period, whichever is later.

Can a source operate the requested changes before the issuance of the revised operating 

permit?

Consistent with the minor permit provisions at 40 CFR 70.7(e)(2)(v), 30 TAC Section 122.217 

does provide sources the ability to operate the requested minor changes before issuance of the 

revised operating permit, as long as the source meets a few requirements. The permit holder must 

comply with all applicable requirements, state-only requirements, and provisional terms and 

conditions as defined in section 122.10 governing the change. The applicable requirements are 

always enforceable in every case. The permit holder does not need to comply with the original 

terms and conditions codified in the operating permit if they have been replaced by provisional 

terms or conditions before issuance or denial of a revision or renewal. The permit holder must 

also have submitted to the TCEQ ED a complete application containing all information required 

under section 122.216. Additionally, the permit holder must also maintain all the information 

required under 122.216 until the permit is revised.
16

Why do the Minor Permit Revisions need to be part of the SIP?

Because of the different CAA requirements and authorizations surrounding each program, EPA 

generally prefers to not approve a state’s Title V permitting provisions into the applicable SIP. 

However, there are instances where approving a portion of the Title V program into the SIP is 

appropriate and necessary to ensure proper functionality for both the Title I and V permitting 

programs. For instance, EPA approved the “potential to emit” provisions at 30 TAC 122.122 into 

the Texas SIP on November 14, 2003 (68 FR 64543). In this instance, EPA required TCEQ to 

revise the “potential to emit” provisions through our January 7, 2002, Notice of Deficiency of the 

Texas Title V program; we further required that the corrected PTE provisions be submitted as 

revisions to both the Texas SIP and Title V programs.

The TCEQ adopted revisions to the Texas Title V minor permit provisions at 30 TAC 122.215-

218 to satisfy inconsistencies identified by EPA June 7, 1995, in the Texas part 70 program. 

After correcting the deficiencies and adopting revised rules at 30 TAC 122.215 – 218, the TCEQ 

has submitted and requested Title V and SIP approval. EPA has already evaluated and approved 

the revisions into the state’s part 70 program. We now address whether these provisions should 

be SIP-approved. 

The TCEQ has requested SIP approval because of section 122.218; which provides that minor 

permit procedures may be used for emission trading programs and other similar approaches only 

to the extent that such minor permit revision procedures are explicitly provided for in the Texas 

SIP or in the applicable requirements promulgated by the EPA.

Texas has several emissions trading programs approved into the Texas SIP, but none of these 

programs explicitly provide for the use of Title V minor permit revision procedures. Our analysis 

and approval of each of these state trading programs, found that through approval of the trading 

programs into the Texas SIP, these programs themselves would become applicable requirements 

under the approved Texas part 70 program. Since the programs themselves do not provide for the 

use of minor permit revisions under title V, the minor permit revision procedures in the part 70 

program must be explicitly included in the SIP to ensure the Texas sources participating in the 

SIP-approved trading programs can use the minor permit revision mechanisms. Following is a 

brief summary of the Texas emissions trading programs, also known as Economic Incentive 

Programs (EIPs).

What is an Economic Incentive Program?

An EIP is a regulatory program that achieves an air quality objective by providing market-based 

incentives or information to emission sources. A uniform emission reduction requirement, based 

for instance on installation of a required emission control technology, does not take account of 

variations in processes, operations, and control costs across sources even of the same type, such 

as electric utilities, or petroleum refiners. By providing flexibility in how sources meet an 

emission reduction target, an EIP empowers sources to find the means that are most suitable and 

most cost-effective for their particular circumstances.

In addition, an EIP can create incentives for sources to go beyond an emission reduction target. 

By setting a price on pollution and pollution reductions through a fee-based approach or a 
17

trading program, some sources can realize an economic gain or avoid additional costs by selling 

excess emission reductions, or making the reductions for less than the cost imposed by a fee. 

Because of the improved efficiency, EIPs may also lead to achieving air quality goals more 

quickly.

What is the status of EIPs in Texas?

TCEQ has adopted five EIPs into state regulations. The regulations are found in Divisions 1 – 4 

and 6 of 30 TAC Chapter 101, Subchapter H. The five EIP programs in Texas are summarized 

in Table II - 1. Additionally, TCEQ has adopted one federal trading program into state 

regulation, found in Division 7 of 30 TAC Chapter 101, Subchapter H.

Table II – 1

TCEQ EIP Trading Programs and Regional Applicability

TCEQ

Trading 

Program

Geographical / Ozone Non-attainment Regions

DFW HGB BPA El Paso East and 

Central Texas

West Texas

ERC Optional Optional Optional n/a n/a n/a

EBTA n/a n/a n/a Mandatory Mandatory Mandatory

MECT n/a Mandatory n/a n/a n/a n/a

DERC Optional Optional Optional Optional Optional Optional

HECT n/a Mandatory n/a n/a n/a n/a

CAIR Federally Mandated Trading Program

Mandatory means that sources in the region must participate in the EIP program.

Optional means that sources in the region have the option to participate in the EIP program.

n/a - The EIP does not apply to the geographical region. 

DFW - Dallas Ft Worth ozone nonattainment area for both 1-hour and 8-hour ozone standard.

HGB - Houston/Galveston/Brazoria ozone nonattainment area for both 1-hour and 8-hour ozone standard.

BPA - Beaumont/Port Arthur ozone nonattainment area for both 1-hour and 8-hour ozone standard.

El Paso - El Paso ozone nonattainment area for 1-hour ozone standard. El Paso is maintenance for 8-hour ozone standard. 

East and Central Texas - Those counties east of Interstate Highway 35.

West Texas - Those counties west of the counties in the East and Central Texas area, excluding El Paso. 

The TCEQ emissions trading regulations are summarized below:

1. Emission Credit Banking and Trading (ERCs) (30 TAC Chapter 101, Subchapter H, 

Division 1)

The Emission Credit Banking and Trading EIP or Emission Reduction Credit (ERC) 

program for VOC and NOX in ozone nonattainment areas was first adopted by Texas at 

30 TAC § 101.29 on December 23, 1997. Effective January 18, 2001, § 101.29 was 

repealed and Chapter 101, Subchapter H, Divisions 1, 3, and 4 were created. This action 

created separate divisions for the ERC, MECT, and DERC programs. The submittal 

effective April 14, 2002, amended §101.302. The submittal effective January 17, 2003, 
18

completely reorganized the ERC and DERC program rules into more standardized 

formats parallel to each other, with a rule structure which followed a process of 

recognizing, quantifying, and certifying reductions as credits while explaining the 

guidelines for trading and using creditable reductions. The 2003 submittal amended 

§§101.300, 101.301, 101.302, 101.303, 101.304, 101.306, 101.309, and 101.311. The 

December 6, 2004, submittal amended §§101.300, 101.302, 101.303, 101.304, and 

101.311. Our final approval on September 6, 2006, acted on the original submission of 

the ERC program and all subsequent revisions through the December 6, 2004 submittal. 

Division 1 defines emission credits (ECs) in terms of a rate (tons per year). Emission 

credits can be generated and banked from stationary sources as emission reduction credits 

(ERCs) or generated and banked from mobile sources as mobile emission reduction 

credits (MERCs). The ERCs from the bank have traditionally been used as offsets for 

permitting major new or modified facilities. ERCs have also been banked and traded for 

alternative compliance with Reasonably Available Control Technology (RACT) 

requirements. MERCs have not been banked or traded under the program to date. On 

December 6, 2004, TCEQ submitted revisions to the SIP that expanded the ERC program 

to cover reductions of criteria pollutants (excluding lead) or precursors of criteria 

pollutants for which an area is designated nonattainment. EPA published a final approval 

of the ERC program on September 6, 2006, 71 FR 52698. 

After EPA’s final approval on September 6, 2006, TCEQ revised the ERC program to 

address the commitments of the DERC conditional approval. Additionally, the TCEQ 

adopted revisions to the ERC program consistent with the requirements of Senate Bill 

784, adopted during regular session, 2005, of the 79th Texas Legislature. Senate Bill 784 

allows for greater flexibility in the generation and use of international emission 

reductions. These revisions were adopted by the TCEQ on October 4, 2006, and became 

effective on October 26, 2006. The adopted regulations were submitted to EPA as a SIP 

revision on October 24, 2006. TCEQ also promulgated revisions to the ERC program 

that update the cross-references to the new numbering structure in 30 TAC Chapter 117. 

These revisions were adopted on July 25, 2007, and became effective on August 16, 

2007. The adopted regulations were submitted to EPA as a SIP revision on August 16, 

2007. EPA fully approved the 2006 and 2007 revisions to the ERC program on April 30, 

2010. See 75 FR 27647, May 18, 2010.

2. Emissions Banking and Trading of Allowances (EBTA) (30 TAC Chapter 101, 

Subchapter H, Division 2)

The TCEQ created the EBTA Program to implement the requirements of Senate Bill (SB) 

7, from the 76th Legislature, 1999, which deregulated the electric utility industry. Under 

SB 7, TCEQ was required to develop a permitting system and a mass cap and trade 

system to distribute allowances for use by electric generating facilities. The TCEQ 

created the EBTA Program to establish an emission reduction cap which provides for a 

50% reduction in NOX emissions from EGFs and a 25 % reduction in SO2 emissions 

from solid fuel EGFs. The permitting system required under SB 7 and established at 30 

TAC Chapter 116, Subchapter I, is the subject of a separate rulemaking review and action 
19

by EPA (see Docket EPA-R06-OAR-2005-TX-0031). The EBTA program began 

operation in 2003. Allowances for NOX and SO2 are deposited into each EGFs 

compliance account annually. The EGFs will be allowed to purchase, bank or sell 

allowances to meet operational demands. The EBTA program is divided into three 

regions; East and West Texas as divided by Interstate Highway 35 and the El Paso region 

(consisting of El Paso County; Juarez, Mexico; and Sunland Park, New Mexico). 

The first SIP submittal to EPA on January 3, 2000, established the details of the emission 

trading program, including the establishment of the trading regions, the allowance 

allocation formula, and the banking provisions for unused allowances. This submittal 

established new §§ 101.330-101.337 and was contained in rule log number 99033-101-

AI. The second SIP submittal (rule log number 1999-029B-116-AI) sent to EPA on 

September 9, 2001, amended the Allocation of Allowances at § 101.333. The third 

revision to the EBTA was submitted to EPA on July 15, 2002, and established new § 

101.338, which provided for the use of emission reductions from outside the United 

States to be used in lieu of EBTA allowances. Section 101.338 was added to the EBTA 

in response to SB 1561 which allows surplus emission reductions achieved outside the 

United States to satisfy emission reduction requirements in Texas by allowing reductions 

in one air contaminant to substitute for reductions in another criteria pollutant. This 

submittal was part of rule log number 2001-063-101-AI. The final revision to the EBTA 

was submitted to the EPA on October 24, 2006, for rule project number 2005-054-101-

PR. The 2006 amendments to the EPA repealed and replaced the international provisions 

in section 101.338 and created section 101.339 for program audits and reports. 

EPA approved the EBTA program through direct final action on November 16, 2010 (see 

75 FR 69884).

3. Mass Emissions Cap and Trade (MECT) Program (30 TAC Chapter 101, Subchapter H, 

Division 3)

The MECT program was adopted as a State regulation on December 6, 2000. This 

program is mandatory for stationary facilities that emit NOX in the HGB ozone 

nonattainment area which are subject to emission specifications in the TCEQ NOX rules 

at 30 TAC Chapter 117.310, 117.1210, and 117.2010; and which are located as a site 

where they collectively have an uncontrolled design capacity to emit 10 tons per year or 

more of NOX. The program set a cap on NOX emissions beginning January 1, 2002, with 

a final reduction to the cap occurring in 2007. Facilities are required to meet NOX

allowances on an annual basis. Facilities may purchase, bank, or sell their allowances. 

The program has a provision to allow a facility to use credit generated through the 

Division 1 EIP (ERCs) to permanently increase the allowances for the individual facility 

in the MECT if the credits were generated for NOX in the HGB area before December 1, 

2000. The program also has a provision to allow a facility to use credits generated 

through the Division 4 EIP (DERCs) in lieu of allowances if they are generated in the 

HGB area. EPA published a final rule approving the MECT program (except for the use 

of DERCs in the MECT, which we deferred acting on until our action on the DERC rule) 

on November 14, 2001 (66 FR 57252). Texas subsequently revised the MECT program 

in SIP submittals dated January 31, 2003 and December 6, 2004. EPA published a final 
20

approval of the MECT program revisions on September 6, 2006 (71 FR 52698), 

including revisions to the MECT necessary to accomplish the shift in attainment strategy 

from 90 percent control of industrial NOX sources to 80 percent control in the HGB area. 

The approved revisions also approved the use of discrete emissions credits generated 

from stationary sources (DERCs) or mobile sources (MDERCs) in lieu of MECT 

allowances. Since our 2006 final approval, TCEQ has promulgated revisions to the 

MECT to update the cross-references to the Chapter 117 NOX rules. EPA subsequently 

approved the revisions to the MECT through a direct final action on July 16, 2009 (see 74 

FR 34503).

TCEQ adopted revisions to the MECT program in conjunction with the development of 

the Houston/Galveston/Brazoria 1997 8-hour ozone attainment demonstration on March 

10, 2010. The MECT amendments were submitted as revisions to the Texas SIP on April 

6, 2010. EPA is reviewing these pending revisions to the Texas SIP and will address in a 

separate rulemaking from our action on the submitted revisions to 30 TAC Chapter 122. 

4. Discrete Emission Credit Banking and Trading (DERCs) (30 TAC Chapter 101, 

Subchapter H, Division 4)

The DERC program was first adopted by the state at 30 TAC § 101.29 on December 23, 

1997. Effective January 18, 2001, § 101.29 was repealed and Chapter 101, Subchapter 

H, Divisions 1, 3, and 4 were created. This action created separate divisions for the ERC, 

MECT, and DERC programs. Discrete emission credits (DECs) are quantified, banked 

and traded in terms of mass (tons), not a rate as is the case with ECs. DECs may be 

generated from stationary sources and banked as discrete emission reduction credits 

(DERCs) or may be generated from mobile sources and banked as mobile discrete 

emission reduction credits (MDERCs). DECs may be generated and used statewide and 

can apply to all criteria pollutants, with the exception of lead. Traditionally DECs have 

been used for RACT compliance for VOCs and NOX. Amendments to the MECT 

program were adopted on October 18, 2001; these amendments also included changes 

made primarily for clarification to §§ 101.370, 101.372, and 101.373 in the DERC 

program. The DERC program was amended again effective April 14, 2002, to include 

the provisions in Texas Senate Bill 1561 for air emissions trading across international 

boundaries. The submittal effective January 17, 2003, completely reorganized the ERC 

and DERC program rules into more standardized formats parallel to each other, with a 

rule structure which followed a process of recognizing, quantifying, and certifying 

reductions as credits while explaining the guidelines for trading and using creditable 

reductions. The December 6, 2004 submittal amended §§ 101.370, 101.373, 101.374, 

and 101.376. Our final conditional approval on September 6, 2006, acted on the original 

submission of the DERC program and all subsequent revisions through the December 6, 

2004, submittal (71 FR 52703). Our conditional approval is contingent upon TCEQ 

satisfactorily addressing the terms of their September 8, 2005, commitment letter. 

After EPA’s final conditional approval on September 6, 2006, TCEQ revised the DERC 

program to address the commitments of the conditional approval. Additionally, the 

TCEQ adopted revisions to the DERC program consistent with the requirements of 

Senate Bill 784, adopted during regular session, 2005, of the 79th Texas Legislature. 
21

Senate Bill 784 allows for greater flexibility in the generation and use of international 

emission reductions. These revisions were adopted by the TCEQ on October 4, 2006, 

and became effective on October 26, 2006. The adopted regulations were submitted to 

EPA as a SIP revision on October 24, 2006. TCEQ also promulgated revisions to the 

DERC program that update the cross-references to the new numbering structure in 30 

TAC Chapter 117. These revisions were adopted on July 25, 2007, and became effective 

on August 16, 2007. The adopted regulations were submitted to EPA as a SIP revision 

on August 16, 2007. EPA fully approved the 2006 and 2007 revisions to the DERC 

program on April 30, 2010. See 75 FR 27644, May 18, 2010.

5. Highly-Reactive Volatile Organic Compound Emission Cap and Trade (HECT) Program 

(30 TAC Chapter 101, Subchapter H, Division 6)

The HECT program was adopted as a State regulation on December 1, 2004. This 

program is mandatory for covered facilities including vent gas streams, flares, and 

cooling tower heat exchange systems that emit highly-reactive VOCs, as defined in 

§ 115.10, and that are located at a site subject to Chapter 115, Subchapter H. Facilities 

are required to meet HRVOC allowances on an annual basis. Facilities may purchase, 

bank or sell their allowances for use in the following control period. The program has a 

provision to allow a facility to use credits of less-reactive VOCs generated through the 

Division 1 EIP (ERCs) in lieu of allowances if they are generated in the HGB area. EPA 

published final approval of the HECT program on September 6, 2006.

TCEQ adopted revisions to the HECT program in conjunction with the development of 

the Houston/Galveston/Brazoria 1997 8-hour ozone attainment demonstration on March 

10, 2010. The HECT amendments were submitted as revisions to the Texas SIP on April 

6, 2010. EPA is reviewing these pending revisions to the Texas SIP and will address in a 

separate rulemaking from our action on the submitted revisions to 30 TAC Chapter 122.

6. Clean Air Interstate Rule (CAIR) Program (30 TAC Chapter 101, Subchapter H, Division 

7)

The Texas CAIR program was adopted as a State regulation on July 12, 2006, and 

submitted as a SIP revision on August 4, 2006. The Division 7 regulations incorporate 

by reference the CAIR NOX Annual and SO2 trading programs as adopted by EPA on 

May 12, 2005 (70 FR 25162). Additionally, the Texas CAIR program establishes a NOX

allocation methodology and provisions for the compliance supplement pool to replace the 

provisions at subpart EE of 40 CFR part 97, the CAIR Federal Implementation Plan. 

EPA published a direct final approval of the Texas CAIR NOX Abbreviated SIP for the 

Phase I allocation methodology on July 30, 2007 (72 FR 41453). 

TCEQ adopted revisions to the CAIR program on February 10, 2010, to update the NOX

allocation methodology and the incorporation by reference dates for the NOX annual and 

SO2 trading programs. These revisions were submitted to EPA as a SIP revision on 

March 4, 2010. EPA is reviewing these pending revisions to the Texas SIP and will 
22

address in a separate rulemaking from our action on the submitted revisions to 30 TAC 

Chapter 122.

Does TCEQ have the necessary legal authority to implement the revisions to Chapter 122 as 

part of the SIP?

The application of penalties or obtaining corrective action, and citizen filing of lawsuits are not 

addressed in §§ 122.215-218 of the Federal Operating Permits Program. Texas enforcement 

provisions are not typically in individual rules but are separately codified. Texas Water Code 

Chapter 7 contains the statutory provisions for enforcement of the Federal Operating Permits 

Program. In particular, TWC § 7.051 provides for the assessment of administrative penalties, and 

§ 7.032 provides for injunctive relief. The TCEQ enforcement rule at 30 TAC § 70.5 

incorporates remedies found in the state statutes (Texas Water Code and the Texas Health and 

Safety Code), and permits referrals to EPA for civil, judicial or administrative action. Once the 

rule is approved into the SIP, EPA will be able to enforce it under section 113 of the Clean Air 

Act.

The 40 CFR part 70, CAA Title V operating permits program has been reviewed and found to 

have sufficient enforcement provisions. The Office of the Attorney General of the State of Texas 

has provided a written opinion for this program. The opinion states that TCEQ has the necessary 

legal authority to implement and enforce the Title V operating permits program. TCEQ has the 

authority to have reasonable requirements for measuring and monitoring air emissions and to 

require owners and operators of sources to make and maintain records of the emissions.

Therefore, TCEQ has the necessary legal authority to implement and enforce the minor permit 

revision procedures in accordance with the requirements of the CAA.

The Office of the Attorney General of the State of Texas cited State laws and regulations that 

regulate, at a minimum, the same sources as the Clean Air Act and do so with standards that are 

no less stringent than those specified by the CAA. The cited laws and regulations are: Texas 

Health and Safety Code Ann. sections 382.016 (Monitoring Requirements, Examination of 

Records), 382.021 (Sampling Methods and Procedures), 382.0514 (Sampling, Monitoring and 

Certification); 30 TAC sections 122.132 (Application and Required Information for Initial 

Permit Issuance, Reopening, Renewal, or General Operating Permits), 122.134 (Complete 

Application), 122.136 (Application Deficiencies), 122.142 (Permit Content Requirements), 

122.143 (General Terms and Conditions), 122.144 (Recordkeeping Terms and Conditions), 

122.145 (Reporting Terms and Conditions), 122.146 (Compliance Certification Terms and 

Conditions), 122.165 (Certification by Responsible Official; 30 TAC sections 101.8 (Sampling), 

101.9 (Sampling Ports).

What is EPA’s analysis of the Chapter 122 Federal Operating Permits program with respect to 

section 110(l) of the Clean Air Act?

Section 110(l) of the Clean Air Act states: 
23

Each revision to an implementation plan submitted by a State under this Act shall be 

adopted by such State after reasonable notice and public hearing. The Administrator 

shall not approve a revision of a plan if the revision would interfere with any applicable 

requirement concerning attainment and reasonable further progress (as defined in 

section 171), or any other applicable requirement of this Act.

Thus, under section 110(l), this SIP revision must not interfere with attainment or reasonable 

further progress or any other applicable requirement of the Act. 

Generally, because Title V minor permit revisions are defined at § 122.215 as not violating 

applicable requirements and not being a modification under Title I of the CAA, the limitations 

placed on what permit actions will qualify as a Title V minor permit revisions will ensure that 

these SIP revisions will not interfere with attainment, reasonable further progress, or any other 

applicable requirement of the CAA.

Section 122.218 does allow a minor permit revision to be used for permits involving the use of 

economic incentives, marketable permits, emissions trading, and other similar approaches.

Section 122.218 could be used when the permit holder becomes subject to a federal emissions 

trading program such as the Acid Rain Program or Clean Air Interstate Rule. The federal trading 

programs have been designed by EPA to assist states in addressing interstate transport at a 

national level and to satisfy an upwind state’s significant contribution to nonattainment and 

maintenance. Therefore, it can be assumed that using Section 122.218 to revise a permit based on 

participation in a federal trading program will not interfere with attainment or reasonable further 

progress.

Additionally, Section 122.218 could be used when a permit holder wishes to modify their permit 

based upon participation in one of the state’s five SIP-approved emissions trading programs or 

EIPs. Texas’s emissions trading programs are published at 30 TAC Chapter 101 General Air 

Quality, Subchapter H Emissions Banking and Trading, Divisions 1-4 and 6.

The EPA guidance document for reviewing and approving discretionary EIP submittals is

“Improving Air Quality with Economic Incentive Programs” (EPA-452/R-01-001, January 

2001). The EIP Guidance applies to the establishment of a discretionary EIP for attaining or 

maintaining the national ambient air quality standards (NAAQS) for criteria pollutants. The EIP 

Guidance identifies three fundamental principles that apply to all EIPs: integrity, equity, and 

environmental benefit. Four elements make up the integrity principle: surplus, quantifiable, 

enforceable, and permanent. The equity principle consists of two elements: general equity and 

environmental justice. 

As a general matter, the satisfaction of the environmental benefit principle and the other integrity 

principles applicable to trading programs will tend to demonstrate that a trading program will do 

no worse than maintain existing air quality. Accordingly, EPA has determined that discretionary 

EIPs that are consistent with the EIP Guidance are consistent with section 110(l):

Congress did not address specific requirements for EIPs in the CAA. Consistent with our

mandate, the EPA has interpreted what an EIP should contain in order to meet the
24

requirements of the CAA. This document is a guidance document that sets forth EPA’s 

non-binding policy for EIPs. This document does not represent final EPA action on the 

requirements for EIPs. Rather, this document identifies several different types of 

economic incentive programs, and proposes elements for each type that, if met, EPA 

currently believes would assure that the program would meet the applicable CAA 

provisions. The guidance phrases these elements in the imperative – that is, using the 

terms “must” or “shall”. This is done only to signify that EPA would propose to approve 

a SIP submittal of a program containing the indicated elements on grounds that under 

section 110(l) of the CAA, the SIP revision does not interfere with any applicable 

requirement concerning attainment, reasonable further progress, or any other applicable 

requirement.

(EIP Guidance, section 1.9.) Thus, if the Texas trading programs are consistent with the EIP 

Guidance the programs will each satisfy section 110(l). 

On September 9, 2006, EPA published approval of the Emission Credit Banking and Trading 

Program (Division 1), the Discrete Emission Credit Banking and Trading Program (Division 4), 

the Highly-Reactive Volatile Organic Compound Emissions Cap and Trade Program (Division 

6), and revisions to the Mass Emissions Cap and Trade Program (Division 3). EPA published 

approval of the Emissions Banking and Trading of Allowances Program (Division 2) on January 

3, 2011. 

In each of these rulemakings we established that these discretionary EIPs are consistent with the 

EIP Guidance and therefore, satisfy section 110(l). For a further discussion please see the 

following rulemaking dockets: EPA-R06-OAR-TX-2005-0006, EPA-R06-OAR-2005-TX-0029, 

EPA-R06-OAR-2005-TX-0033, EPA-R06-OAR-2005-TX-0023, and EPA-R06-OAR-2005-TX0012, respectively.

III. Conclusion

The technical analysis provided in the preceding sections has provided an adequate justification 

for the inclusion in the Texas SIP of the title V Minor Permit Revision procedures established at 

30 TAC Sections 122.215 – 122.218. These provisions are necessary so that the SIP-approved 

emissions trading programs in 30 TAC Chapter 101 can be fully implemented as intended 

through Title V. The preceding technical analysis has also demonstrated that the TCEQ has 

adequate legal authority to implement and enforce the title V Minor Permit Revisions as part of 

the Texas SIP. Therefore, it is recommended that EPA propose full approval of the October 4, 

2001, and August 11, 2003 SIP submittals. 

It is recommended that a direct final approval of these sections be published. Direct final 

approvals are appropriate for non-controversial rulemakings. EPA feels that the SIP-approval of 

the October 4, 2001 and August 11, 2003 SIP Submittals for the title V Minor Permit Revision 

procedures at 30 TAC 122.215 – 122.218 is non-controversial because these provisions have 

already been approved into the Texas Part 70 program and have been in effect and operational 

since 2001/2003, without any negative impact to attainment or maintenance in Texas.