Kathleen Hartnett White, Chairman 

R. B. "Ralph" Marquez, Commissioner 

Larry R. Soward, Commissioner 

Margaret Hoffman, Executive Director .'- / 

~-· 

TEXAS COMMISSION ON ENVIRONMENTAL QUALITY 

Protecting Texas by Reducing and Preventing Pollution 

Docket No. 2003-0699-RUL 

March 1, 2004 

Mr. Richard Greene 

Regional Administrator 

U.S. Environmental Protection Agency, Region 6 

1445 Ross A venue 

Dallas, Texas 75202-2733 

Dear Mayor Greene: 

On January 28, 2004, the Texas Commission on Environmental Quality adopted amendments to 30 

Texas Administrative Code §§ill: 770, 116.772, and 116.776. Sections 116.770 and 116.772 are 

adopted as revisions to the state implementation plan. The adopted rules implement requirements from 

House Bill638, 78th Legislature, 2003,which allows grandfathered reciprocating internal combustion 

engines associated with pipelines that meet certain criteria to be considered permitted by statute. 

Adopted §116.770 adds new subsections (b) and (c), which specify that certain facilities are considered 

permitted and that the owners and operators of those facilities must submit registrations by July 1, 2004. 

Adopted section 116.772 includes changes to the cross-references in §116.772(a) and (b) to parallel 

changes made in §116.770. 

Enclosed are the proposed revision to the SIP, a public hearing certification, a complete record of the 

public hearing, and the accompanying order. I look forward to your expeditious approval of this SIP 

revision. 

Sincerely, 

tl11eenH~ (A)~ ' -

KHW/js \ (_1 

Enclosures 

cc: The Honorable Rick Perry, Governor of Texas 

Ms. Wendy Wyman, Environmental and Natural Resources Policy Director, Office of the 

Governor 

Ms. Margaret Hoffman, Executive Director, Texas Commission on Environmental Quality 

P.O. Box 13087 • Austin, Texas 78711-3087 • 512/239-1000 • Internet address: www.tceq.state.tx.us 

• •J 

... 4 

. _,.,... ' 
Mayor Richard Greene 

Page 2 

bee: Mr. Randolph Wood, Deputy Director, Office of Environmental Policy, Analysis, and 

Assessment 

Mr. Jim Muse, Director, Policy and Regulations Division 

Ms. Heather Evans, Strategic Assessment Division 

Kerri Rowland, Senior Attorney, Environmental Law Division 

Debra Barber, Project Manager, Policy and Regulations Division 

Joyce Spencer, Texas Register Coordinator, Policy and Regulations Division 
TEXAS COMMISSION ON ENVIRONMENTAL QUALITY 

Docket No. 2003-0699-RUL 

THE STATE OF TEXAS 

COUNTY OF TRAVIS 

This is to certify that the attached are true and correct copies of documents for a revision to the 

Texas State Implementation Plan, adopted on January 28, 2004 pursuant to 40 Code of Federal 

Regulations (CFR) § 51.104. I am the records administrator for the Policy and Regulations Division of 

the Texas Commission on Environmental Quality (Commission). 

cords Adminis ator, Policy and Regulations Division 

exas Commission on Environmental Quality 
\ .. " -~-

~-:) "'J 

,,...., 

Texas Commission on Environmental Quality 

Public Hearing 

October 30, 2003 

Concerning Revisions to 30 T AC Chapter 116, 

Control of Air Pollution by Permits for New Construction 

or Modification; and the State Implementation Plan 

Rule Log Number 2003-043-116-AI 
INTRODUCTION 

The Texas Commission on Environmental Quality (commission) held a public hearing in Austin on October 

30, 2003, to consider revisions to 30 TAC Chapter 116, Control of Air Pollution by Permits for New 

Construction or Modification, and to the state implementation plan. The adopted rules would eliminate the 

requirement for certain grandfathered reciprocating internal combustion engines located in the HoustonGalveston nonattainment area to obtain a permit and add a requirement for registration; change an eligibility 

requirement for obtaining partial reimbursement of the cost of controls for grandfathered reciprocating internal 

combustion engines; make a person or an affiliate of a person who pays or contributes money to the 

emissions reductions incentives account ineligible to receive money from the account; and alter the criteria 

for distributing money in the emissions reductions incentives account. 

Comments were accepted through November 10, 2003. All testimony and comments have been reviewed 

and seriously considered. This hearing record contains a complete record of the public hearings and is 

divided into the following four sections: 

o Public Notification and Proposal 

o Written and Oral Testimony 

o Evaluation of Testimony 

o Staff Recommendations (including order and Texas Register publication) 

Additional copies of this hearing record are maintained in the Texas Commission on Environmental Quality 

central office at 12100 Park 35 Circle, Austin, Texas 78753. For further information, please contact Clifton 

Wise at (512) 239-2263. 
PUBLIC 

NOTIFICATION AND 

PROPOSAL 
PUBLIC NOTIFICATION 

Notification to the public of the proposed revisions was conducted by the following procedures: 

1. Publication of notice of public hearings in the following newspapers on the date listed: 

Austin American Statesman; September 26, 2003 

Fort Worth Star-Telegram; September 29, 2003 

Houston Chronicle; September 26, 2003 

2. Publication of the proposed rules in the October 10, 2003 issue of the Texas Register (28 

TexReg 8814). 

3. Publication of the Notice of Public Hearings in the October 10, 2003 issue of the Texas Register 

(28 TexReg 8989). 

4. Correspondence forwarding the notice of public hearings to the following officials and agencies: 

Speaker of the House 

Lieutenant Governor 

City of Victoria Planning Department 

Dallas Department of Environmental and Health Services 

Dallas Department of Aviation 

El Paso City-County Health and Environmental District 

El Paso Metropolitan Planning Organization 

Federal Highway Administration 

Fort Worth Environmental Management Department 

Galveston County Health District 
Houston Department of Health and Human Services 

Harris County Pollution Control Department 

North Central Texas Council of Governments 

Houston-Galveston Area Council 

South East Texas Regional Planning Commission 

Texas Department of Transportation 

Texas Transportation Institute 

Arkansas Department of Pollution Control and Ecology 

Louisiana Department of Environmental Quality 

New Mexico Environmental Department 

Oklahoma Department of Environmental Quality 

U.S. Environmental Protection Agency 
Example of Newspaper Classified Ad 

Austin American-Statesman, September 26, 2003 

NOTICE OF PUBLIC HEARING BY 

THE TEXAS COMMISSION ON 

ENVIRONMENTAL QUALITY ON 

PROPOSED REVISIONS TO 30 

TAC CHAPTER 116 AND THE 

STATE IMPLEMENTATION PLAN 

The Texas Commission on Envi~ 

ronmental Quality (commission) 

will conauct a public hearing to . 

receive testimony concerning re- visions to 30 TAC .Chapter 116, 

Control ot Air Pollution by PermitS for New Construction or 

Modif1cat1on, Subchapter H, Permits for Grandfathered Facilities, 

Division 1, General Applicability, 

Sections 116.770 and 116.772; 

and Division 2, Small Business 

Stationary Source Permits, Pipeline Facilities Permits, and Existing Facility Permits, Section 

116.776. Sections 116.770 and 

116.772 are proposed as revi· 

sions to the state implementation plan. 

The proposed rulemaking would 

eliminate the requirement tor 

cenalll grandfathered reciprocating internal combustion engines located in the HoustonGalveston nonattainment area to obtain a permit and add a reQUirement for registration; 

change an eligibility requirement for obtaining partial reimbursement of the cost of 

controls for grandfathered reciprocatmg internal combustion en- gines: make a person or an 

affiliate of a person who pays or 

contributes money to the emis-

, sions reductions incentives ac- count ineligible to receive 

money from the account; and 

alter the criteria for distributing 

money in the emissions reductions incentives account. A public hearing on this proposal will be held in Austin on 

October 30, 2003 at 2:00 p.m. in 

Buildinq F, Room 2210 at the 

commiSsion's tentral office located at 12100 Park 35 Circle. 

The hearing will be structared 

for the receipt of oral or written 

comments by interested per- sons. Individuals may present 

oral statements when called 

upon in order of reaistrat•on. 

There will be no open discussion 

dunng the hearing: however, an 

agency staff member will be 

available to discuss the proposal 

30 mmutes prior to the hearinQ and will answer questions be;ore and after the heanng. 

Persons with disabilities who 

have special communication or 

other accommodation needs 

who are planmng to attend the 

heanng should contact the Office of Environmental Policy, 

Analysis, and Assessment at (5121 239-4900. Requests should be made as far in advance as 

possible. 

Comments may be submitted to 

Joyce Spencer. MC 205, Office of 

Environmental Policy, Analysis, 

and Assessment, Texas Commis- SIOn on Environmental Quality, 

P.O. Box 13087, Austin. Texas 78711-3087, or by fax to 

(5121239-4808. All comments 

'hould reference Rule log Num- ber 2003-043-116-AI, and must 

be receiVf'!d by 5:00 p.m.. November 10, 2003. For funher 

JnformatiOn, olease comact Debra Barber, Policy and Requlatlons Div1sion at (512) 239-6412. 

1ssued 1n Austm, Texas. on Sepremoer 24, 2003. 
TRD-200306432 

Paul C. Sarahan 

Director, Litigation Division 

Texas Commission on Environmental Quality 

Filed: September 30, 2003 

• • 

Notice of Public Hearing on 30 TAC Chapter 114, Control of 

Air Pollution from Motor Vehicles 

The Texas Commission on Environmental Quality (commission), in 

coordination with the North Central Texas Council of Governments 

(NCTCOG), serving as the Metropolitan Planning Organization 

(MPO) for the Dallas/Fort Worth Metropolitan Area (DFW), proposes to substitute certain transportation control measures (TCMs) 

contained in the DFW state implementation plan (SIP). As provided by commission rules, the commission and the NCTCOG 

have initiated a process to approve substitute TCMs for the DFW 

SIP. Documentation regarding each proposed substitute TCM is 

available for public review at the commission Web site located at 

http://www.tnrcc.state.tx.usloprdlsipslindex.html#hot or the NCTCOG 

Web site located at http://www.dfwcleanair.com/trans/new _rules.html. 

Documentation may also be obtained from Jaime Walker, Public Involvement Coordinator, North Central Texas Council ofGovemments, 

Transportation Department, Box 5888, Arlington, Texas 76005-5888 

or at (817) 695-9247 or by fax at (817) 640-3028. 

The commission will hold a public hearing on this proposal on October 29, 2003, at 12:00 p.m., in the North Central Texas Council of 

Governments, Transportation Board Room, Third Floor, located at 616 

Six Flags Drive, Suite 200, Arlington, Texas. The hearing is structured 

for the receipt of oral or written comments by interested persons. Registration will begin 30 minutes prior to the hearing. Individuals may 

present oral statements when called upon in order of registration. Open 

discussion will not occur during the hearing; however, commission and 

NCTCOG staff members will be available to discuss the proposal 30 

minutes before the hearing, and will answer questions before and after 

the hearing. 

Persons with disabilities who have special communication or other accommodation needs, who are planning to attend the hearing, should 

contact Jaime Walker at (817) 695-9247. Requests should be made as 

far in advance as possible. 

Comments may be submitted to Margie McAllister, Texas Commission 

on Environmental Quality, Office of Environmental Policy, Analysis, 

and Assessment, MC 206, P.O. Box 13087, Austin, Texas 78711-3087 

or fax (512) 239-5687. Comments must be received by 5:00p.m., October 29, 2003, and should reference Transportation Control Measure 

Substitution for the DFW area. For further information, please contact 

Margie McAllister at (512) 239-1967. 

TRD-200306436 

Stephanie Bergeron 

Director. Environmental Law Division 

Texas Commission on Environmental Quality 

Filed: September 30, 2003 

• • • 

vfotice of Public Hearing on Proposed Revisions to 30 TAC 

Chapter 116 and the State Implementation Plan 

The Texas Commission on Environmental Quality (commission) will 

conduct a public hearing to receive testimony concerning revisions to 

30 TAC Chapter 116, Control of Air Pollution by Permits for New Construction or Modification, Subchapter H, Permits for Grandfathered Facilities, Division 1, General Applicability, §116.770 and §116.772; and 

Division 2, Small Business Stationary Source Permits, Pipeline Facilities Permits, and Existing Facility Permits, § 116.77 6. Section 116.770 

and §116.772 are proposed as revisions to the state implementation 

plan. 

The proposed rulemaking would eliminate the requirement for certain 

grandfathered reciprocating internal combustion engines located in the 

Houston-Galveston nonattainment area to obtain a permit and add a 

requirement for registration; change an eligibility requirement for obtaining partial reimbursement of the cost of controls for grandfathered 

reciprocating internal combustion engines; make a person or an affiliate 

of a person who pays or contributes money to the emissions reductions 

incentives account ineligible to receive money from the account; and 

alter the criteria for distributing money in the emissions reductions incentives account. 

A public hearing on this proposal will be held in Austin on October 30, 

2003 at 2:00 p·.m. in Building F, Room 2210 at the commission's central office located at 12100 Park 35 Circle. The hearing will be structured for the receipt of oral or written comments by interested persons. 

Individuals may present oral statements when called upon in order of 

registration. There will be no open discussion during the hearing; however, an agency staff member will be available to discuss the proposal 

30 minutes prior to the hearing and will answer questions before and 

after the hearing. 

Persons with disabilities who have special communication or other accommodation needs who are planning to attend the hearing should contact the Office of Environmental Policy, Analysis, and Assessment at 

(512) 239-4900. Requests should be made as far in advance as possible. 

Comments may be submitted to Joyce Spencer, MC 205, Office of Environmental Policy, Analysis, and Assessment, Texas Commission on 

Environmental Quality, P.O. Box 13087, Austin, Texas 78711-3087, 

or by fax to (512) 239-4808. All comments should reference Rule Log 

Number 2003-043-116-Al, and must be received by 5:00p.m., November 10, 2003. For further information, please contact Debra Barber, 

Policy and Regulations Division at (512) 239-0412. 

TRD-200306367 

Stephanie Bergeron 

Director, Environmental Law Division 

Texas Commission on Environmental Quality 

Filed: September 26, 2003 

• • • 

Notice of Public Hearing on Proposed Revisions to 30 TAC 

Chapter 116 and the State Implementation Plan 

The Texas Commission on Environmental Quality (commission) will 

conduct a public hearing to receive testimony concerning revisions to 

30 TAC Chapter 116, Control of Air Pollution by Permits for New 

Construction or Modification, Subchapter B, New Source Review Permits, §116.112, Distance Limitations, and corresponding revisions to 

the state implementation plan (SIP), under the requirements of Texas 

Health and Safety Code, §382.ot7; Texas Government Code, Subchapter B, Chapter 2001; and 40 Code of Federal Regulations, §51.102 of 

the United States Environmental Protection Agency regulations concerning SIPs. 

The proposed rulemaking would allow for the storage of an inoperative concrete crusher within 440 yards of a residence, school, or place 

of worship; clearly define how distance measurements should be taken 

IN ADDITION October 10,2003 28 TexReg 8989 
and when they would be applicable for concrete crushers and other facilities; and allow concrete crushers to recycle broken concrete at temporary demolition sites within 440 yards of nearby structures, unless 

the facility is located in a county with a population of 2.4 million or 

more, or in a county adjacent to such a county. 

A public hearing on this proposal will be held in Austin on October 29, 

2003 at 2:00p.m. in Building F, Room 2210 at the commission's central office located at 12100 Park 35 Circle. The hearing will be structured for the receipt of oral or written comments by interested persons. 

Individuals may present oral statements when called upon in order of 

registration. There will be no open discussion during the hearing; however, an agency staff member will be available to discuss the proposal 

30 minutes prior to the hearing and will answer questions before and 

after the hearing. 

Persons with disabilities who have special communication or other accommodation needs who are planning to attend the hearing should contact the Office of Environmental Policy, Analysis, and Assessment at 

(512) 239-4900. Requests should be made as far in advance as possible. 

Comments may be submitted to Joyce Spencer, MC 205, Office of Environmental Policy, Analysis, and Assessment, Texas Commission on 

Environmental Quality, P.O. Box 13087, Austin, Texas 78711-3087, 

or by fax to (512) 239-4808. All comments should reference Rule Log 

Number 2003-046-116-AI, and must be received by 5:00p.m., October 

29,2003. For further information, please contact Clifton Wise, Policy 

and Regulations Division at (512) 239-2263. 

TRD-200306368 

Stephanie Bergeron 

Director, Environmental Law Division 

Texas Commission on Environmental Quality 

Filed: September 26, 2003 

• • 

Notice of Water Quality Applications 

• 

The following notices were issued during the period of August 25, 2003 

through September 29, 2003. 

The following require the applicants to publish notice in the newspaper. 

The public comment period, requests for public meetings, or requests 

for a contested case hearing may be submitted to the Office of the Chief 

Clerk, Mail Code 105, P 0 Box 13087, Austin Texas 78711-3087, 

WI1HIN30DAYSOFTHEDATEOFNEWSPAPERPUBLICATION 

OF THIS NOTICE. 

AEP TEXAS CENTRAL COMPANY which operates the Laredo 

Power Station, a steam electric power generation plant, has applied 

for a renewal of TPDES Permit No. 01200, which authorizes the 

discharge of cooling tower blowdown commingled with low volume 

waste, previously monitored chemical metal cleaning waste, and storm 

water runoff at a daily average flow not to exceed 1,300,000 gallons 

per day via Outfall 001. The facility is located adjacent to the Rio 

Grande, west of the intersection ofinterstate Highway 35 and Del Mar 

Boulevard in the City of Laredo, Webb County, Texas. 

AEP TEXAS CENTRAL COMPANY which operates the Barney M. 

Davis Power Station, a steam electric generating facility, has applied for 

a renewal ofTPDES Permit No. 01490, which authorizes the discharge 

of once through cooling water and previously monitored effluents (low 

volume wastewater and storm water runoff from internal Outfall 101 

and low volume wastewater, metal cleaning waste, and storm water 

runoff from internal Outfall 201) at a daily average flow not to exceed 

540,000,000 gallons per day via Outfall 001. The facility is located 

28 TexReg 8990 October 10, 2003 Texas Register 

at 4301 Waldron Road, south of Yorktown Boulevard at the base of 

the Encinal Peninsula, bounded on the east by Laguna Madre and on 

the west by Oso Creek, in the City of Corpus Christi, Nueces County, 

Texas. 

ANGELINA WATER SUPPLY CORPORATION has applied for arenewal of TPDES Permit No. 14128-001, which authorizes the discharge of treated water treatment filter backwash water at a daily average flow not to exceed 12,500 gallons per day. The facility is located on 

the east side of Farm-to-Market Road 326, approximately 1-3/4 miles 

south of U. S. Highway 69 and Community of Homer in Angelina 

County, Texas. 

ARIZONA PROPERTIES, INC. has applied for a new permit, proposed Texas Pollutant Discharge Elimination System (TPDES) Permit 

No. 14462-001, to authorize the discharge of treated domestic wastewater at a daily average flow not to exceed 46,000 gallons per day. The 

facility is located approximately 4,300 feet south-southwest of the intersection ofF arm-to-Market Road 1903 and State Highway 34 in Hunt 

County, Texas. 

CITY OF AUSTIN has applied for a new permit to authorize the discharge of treated domestic wastewater at a daily average flow not to 

exceed 65,000 gallons per day. The facility is located at 8250 Citation Avenue in the City of Austin, approximately 2,400 feet east 

of Farm-to-Market Road 973 and approximately 2,800 feet south of 

Farm-to-Market Road 812 in Travis County, Texas. 

C & P UTILITIES, INC. has applied for a renewal of TPDES Permit 

No. 12342-001, which authorizes the discharge of treated domestic 

wastewater at a daily average flow not to exceed 45,000 gallons per 

day. The facility is located approximately 800 feet north of Zaka Road, 

west ofWindfern Road at the southeast corner of Maple Leaf Gardens 

in Harris County, Texas. 

CAVINESS PACKING COMPANY, INC. which operates a slaughterhouse, has applied for a major amendment to Permit No. 01261 to 

increase the authorized daily average wastewater flow of effluent to be 

disposed of via irrigation from 100,000 gallons per day to 300,000 gallons per day and to include an additional 310 acre off-site irrigation 

tract for an increase in the total authorized irrigation tract area from 

20 acres to 330 acres. The current permit authorizes the disposal of 

process wastewater and holding pen runoff at a daily average flow not 

to exceed I 00,000 gallons per day via evaporation and irrigation of 20 

acres of grassland. This permit will not authorize a discharge of pollutants into water in the State. The facility and the primary land application site are located adjacent to the northwest side ofU.S. Highway 60, 

approximately 1.25 miles southwest of the intersection of U.S. Highway 60 and U.S. Highway 385 and southwest ofthe City of Hereford; 

the off-site land application site is located adjacent to the southeast side 

of U.S. Highway 60, approximately 1.5 miles southwest of the intersection of U.S. Highway 60 and U.S. Highway 385 and approximately 

0.25 miles southwest of the primary facility, and southwest ofthe City 

of Hereford, Deaf Smith County, Texas. 

CHEVRON PHILLIPS CHEMICAL COMPANY LP which operates 

a petrochemical and plastics manufacturing plant, has applied for a 

renewal ofTPDES Permit No. 00815, which authorizes the discharge 

of process wastewater, cooling tower blowdown, boiler blowdown, 

sanitary wastewater and storm water discharge at a daily average dry 

weather flow not to exceed 4,300,000 gallons per day via Outfall 

001; and storm water runoff on an intermittent and flow variable 

basis via Outfalls 002, 003, and 004. The facility is located at 1400 

Jefferson Road, on the south side of the Houston Ship Channel and 

approximately 0.5 miles west of the mouth of Green's Bayou, Harris 

County, Texas. 
Robert J. Huston, Chairman 

R. B. "Ralph" Marquez, Commissioner 

Kathleen Hartnett White, Commissioner 

Margaret Hoffman, Executive Director 

TEXAS COMMISSION ON ENVIRONMENTAL QUALITY 

Protecting Texas by Reducing and Preventing Pollution 

NOTICE OF PUBLIC HEARING BY THE 

TEXAS COMMISSION ON ENVIRONMENTAL QUALITY 

ON PROPOSED REVISIONS TO 30 TAC CHAPTER 116 

AND THE STATE IMPLEMENTATION PLAN 

The Texas Commission on Environmental Quality (commission) will conduct a public hearing to receive 

testimony concerning revisions to 30 TAC Chapter 116, Control of Air Pollution by Permits for New 

Construction or Modification, Subchapter H, Permits for Grandfathered Facilities, Division 1, General 

Applicability, Sections 116.770 and 116.772; and Division 2, Small Business Stationary Source Permits, 

Pipeline Facilities Permits, and Existing Facility Permits, Section 116.776. Sections 116.770 and 116.772 

are proposed as revisions to the state implementation plan. 

The proposed rulemaking would eliminate the requirement for certain grandfathered reciprocating internal 

combustion engines located in the Houston-Galveston nonattainment area to obtain a permit and add a 

requirement for registration; change an eligibility requirement for obtaining partial reimbursement of the cost 

of controls for grandfathered reciprocating internal combustion engines; make a person or an affiliate of a 

person who pays or contributes money to the emissions reductions incentives account ineligible to receive 

money from the account; and alter the criteria for distributing money in the emissions reductions incentives 

account. 

A public hearing on this proposal will be held in Austin on October 30, 2003 at 2:00p.m. in Building F, 

Room 2210 at the commission's central office located at 12100 Park 35 Circle. The hearing will be 

structured for the receipt of oral or written comments by interested persons. Individuals may present oral 

statements when called upon in order of registration. There will be no open discussion during the hearing; 

however, an agency staff member will be available to discuss the proposal 30 minutes prior to the hearing 

and will answer questions before and after the hearing. 

Persons with disabilities who have special communication or other accommodation needs who are planning to 

attend the hearing should contact the Office of Environmental Policy, Analysis, and Assessment at (512) 239-

4900. Requests should be made as far in advance as possible. 

Comments may be submitted to Joyce Spencer, MC 205, Office of Environmental Policy, Analysis, and 

Assessment, Texas Commission on Environmental Quality, P.O. Box 13087, Austin, Texas 78711-3087, or 

by fax to (512) 239-4808. All comments should reference Rule Log Number 2003-043-116-AI, and must be 

received by 5:00p.m., November 10, 2003. For further information, please contact Debra Barber, Policy 

and Regulations Division at (512) 239-0412. 

Issued in Austin, Texas, on September 24, 2003. 

P.O. Box 13087 ' Austm. Texas 7El7ll<iOS7 " 51:!/239-1000 c Internet address: www.tceq.statc.t:.u' 
ftBj Ne pemtit shall be issaeEI feF a new cemmereial 

hamFdeHs waste management faeility tmless the applieant tiemeflstFates that the faeility will be epemted sa as te safegi!IH'Ei jHihlie health 

afKI welfare and j'lFElteet physiGal propeFty and the ewrirenment.) 

f(B3 +he measi!Fement ef distances shall be taken tewaHI an established residenee, elmreh; seheel, 6ay eare eefttef; SI!Ffaee 

wateF beEiy HSed fer a jHihlie EiriHkiBg wateF SllJlPly; er dedicated publis 

Jlllfk that is m liSe when the pemlit llflplioation is fi.leEi with the oommissiefr. +he restrictions impeseEi by Sllbparagmphs W - tG) ef this 

paragraph do net apply te a residence, olwrefr,- seheel, day oare ee&-

ter, SllFfaee wateF be6y HSed fer a jHihlie drinking watef Sl:lflflly, er a 

deEiioated jHihlie park leeated withffi the boi!Bdaries ef a oemmereial 

~o11s waste management~ er J*Oflefty OWBed by the permit 

llflplioant.] 

«Fj +he meaSI!Fement ef distances shaH be taken frem a 

perimeter aFOilBd the prepesed h~m~Fdoos waste management llBit +he 

perimeter shall be ne mere than '1-S feet frem the edge ef the propesed 

hazardo11s waste management llBit] 

ill [~]Concrete crushing facilities. A concrete crushing 

facility must not be [leeated er] operated within 440 yards of any building in use [used] as a single or multi-family residence, school, or place 

of worship at the time the application for a permit to operate was made. 

[+his paragraph dees net apply te O*istiBg OOBOFete emshing faeili:ties, 

whieh are those faeilities that were al!thorized and ~ leeated er 

operating at the site as ef September -l, ;?.00-1-;] 

{A} The measurement of distances shall be taken from 

the point on the concrete crushing facility nearest to the residence, 

school, or place of worship to the point on the structure housing the residence, school, or place of worship that is nearest the concrete crushing 

facility. 

@} The minimum distance limitation and measurement 

requirements of this paragraph do not apply to concrete crushing facilities that were authorized to operate at the site as of September 1, 2001. 

_{Q Unless the facility is located in, or located in a 

county adjacent to, a county with a population of2.4 million or more, 

the minimum distance limitation and measurement requirements of 

this paragraph do not apply to facilities operated on a site for no more 

than 180 consecutive calendar days that crush concrete resulting from 

the demolition of a structure on that site for use primarily at that site, 

and which comply with all applicable conditions stated in commission 

rules, including operating conditions. 

{f) For applicable distance limitations at hazardous waste 

management facilities, see §335.205 of this title (relating to Prohibition of Permit Issuance). 

This agency hereby certifies that the proposal has been reviewed 

by legal counsel and found to be within the agency's legal authority to adopt. 

Filed with the Office of the Secretary of State on September 26, 

2003. 

TRD-200306369 

Stephanie Bergeron 

Director, Environmental Law Division 

Texas Commission on Environmental Quality 

Earliest possible date of adoption: November 9, 2003 

For further information, please call: (512) 239-5017 

• • • 

28 TexReg 8814 October 10, 2003 Texas Register 

JUBCHAPTER H. PERMITS FOR 

GRANDFATHERED FACILITIES 

The Texas Commission on Environmental Quality (commission) 

proposes amendments to §§116.770, 116.772, and 116.776. 

Sections 116.770 and 116.772 are proposed as revisions to the 

state implementation plan (SIP) and will be submitted to the 

United States Environmental Protection Agency (EPA). 

BACKGROUND AND SUMMARY OF THE FACTUAL BASIS 

FOR THE PROPOSED RULES 

When the legislature first created the Texas Clean Air Act in 

1971, the legislature did not require existing significant sources 

of air emissions to comply with (i.e., were grandfathered from) 

the then new requirement to obtain a permit. These existing 

sources are commonly known as grandfathered facilities. If 

grandfathered facilities had not been modified since 1971, 

they continued to be authorized to operate without a permit. 

The legislature addressed the issue of grandfathered facilities 

in 1997 and 1999, requiring the creation of: 1) a voluntary 

emissions reduction plan for the permitting of grandfathered facilities; and 2) directing the commission to implement directives 

regarding the permitting of grandfathered electric generating 

facilities. Then, the 77th Legislature, 2001, amended the Texas 

Health and Safety Code, Texas Clean Air Act, to require that 

all grandfathered facilities obtain permits. The mandatory 

permitting requirements of House Bi112912 were the culmination 

of legislative efforts, beginning in 1997, to permit or otherwise 

authorize all grandfathered facilities. House Bill 2912 created 

four new types of permits for grandfathered facilities: existing facility permits, small business stationary source permits, electric 

generating facility permits, and pipeline facility permits. House 

Bill 2912 also mandated the dates by which grandfathered 

facilities must apply for a permit and have controls operational or 

submit a shutdown notice. Grandfathered reciprocating internal 

combustion engines that are part of the processing, treating, 

compression, or pumping facilities connected to, or part of, 

a gathering or transmission pipeline may apply for a pipeline 

facilities permit. 

Additionally, House Bill 2914, §78, created a new incentive program to assist in retrofitting reciprocating internal combustion engines associated with pipelines. To implement this incentive program, the commission adopted §116.776, Distribution of Funds 

from the Emissions Reductions Incentives Account for Control of 

Emissions from Grandfathered Reciprocating Internal Combustion Engines Located in the East Texas Region. In order to be 

eligible for reimbursement under this program, the owner or operator of a grandfathered reciprocating internal combustion engine 

was required to make an annual reduction in emissions of nitrogen oxides (NO,) as compared to the emissions reported for the 

facility in the 1997 industrial point source emissions inventory. 

Most recently, the 78th Legislature, 2003, enacted House Bill 

638, relating to emissions reductions incentives and the emissions reductions incentives account. House Bill 638 changes 

the reimbursement eligibility requirement from a 50% reduction 

in annual emissions to the 50% reduction in NO emissions rate 

needed to obtain a pipeline facilities permit. It aiso prohibits the 

commission from requiring more stringent emissions reduction 

criteria than the reductions already required to obtain a pipeline 

facilities permit in order to receive money from the emissions 

reductions incentives account; prohibits persons, or affiliates of 

persons, who contribute money to the emissions reductions incentives account from receiving money from the fund; and allows 
wandfat~ere? r":ciprocating internal combustion engines assoCiated w1th pipelines that meet certain criteria to be considered 

permitted by statute. 

To implement these revisions to the Texas Clean Air Act the 

commission is prop~sing to amend the rules in Chapter '116, 

Subchapter H, Perm1ts for Grandfathered Facilities. 

SECTION BY SECTION DISCUSSION 

Section 116.770, Requirement to Apply 

The commission proposes to change the section title from "Requireme~tto Apply'' to "Requirement to Apply or Register'' to better spec1fy the purpose of the section. 

Proposed §116.770 adds new subsections (b) and (c), which 

would specify that certain facilities are considered permitted and 

that the owners and operators of those facilities must submit registrations. Specifically, proposed § 116. 770(b) would state that 

a reciprocating internal combustion engine required to obtain a 

pipeli~e facility permit that is subject to a mass emissions cap 

established by the commission is considered permitted if the facility is located in an ozone nonattainment area and is in compliance with all state and federal requirements for that area by 

June 20, 2003. 30 TAC §101.351(a) currently specifies that a 

mass emissions cap applies to the Houston/Galveston ozone 

nonattainment area. Proposed §116.770(b) would implement 

new Texas Health and Safety Code, §382.051860). Proposed 

~11~.770(b)(2) waul~ requir_e that the grandfathered reciprocatmg Internal combust1on engmes satisfy any currently applicable 

state or federal regulations in effect as of June 20 2003 the 

effective date of House Bill 638, in order to be con;idered' perm~ed. In additio~, the commission proposes new §116.770(c), 

wh1ch would reqUJre owners and operators of facilities that are 

considered permitted under §116.770(b) to submit registrations 

on or before July 1, 2004. The registration requirement is necessary for the executive director to determine whether all facilities 

that are considered to be permitted meet the criteria outlined in 

Ho~se Bill 638. The proposed subsections would require registration rather than require those facilities to obtain a permit under 

Chapter 116, qualify for a permit by rule, or shut down. The commi~sion proposes that registrations be submitted by July 1, 2004. 

Th1s date would allow owners and operators of facilities that are 

con~idered permitted to submit registrations a year after the efn:ctlve date of House ~ill. 638. This date is also approximately 

s1x months after the anticipated adoption date of these rules. 

Section 116. 772, Notice of Shutdown 

The commission proposes to change the cross-references in 

§116.772(a) and (b) to parallel changes made in §116.770. 

Section 116.776, Distribution of Funds from the Emission Reductions Incentives Account for Control of Emissions from Grandfathered Reciprocating Internal Combustion Engines Located in 

the East Texas Region. 

The ~.of!lm!ssi?n proposes to amend the title of §116.776 

from D1stnbut1on of Funds from the Emissions Reductions 

Incentives Account for Control of Emissions from Grandfathered 

Reciprocating Internal Combustion Engines Located in the 

East Texas Region" to "Emissions Reductions Incentives for 

Control o~ Emissi?ns from Grandfathered Reciprocating Internal 

Co":l~ust1on Engrne~ Located in the East Texas Region." In 

a~d1tron, the commission proposes new §116.776(a) specifymg that incentives will be made available through a grant 

program administered under §116.776 and 30 TAC Chapter 14 

Grants. The commission also proposes new § 116. 776(b )(6) 

to specify that, to seek a distribution from the account, the 

owner or operator must enter a contract with the commission 

in accordance with a request for grant applications. A request 

for grant applications is a request for proposals. The section 

is renumbered accordingly. Also, the commission proposes to 

amend §116.776(b) to specify that reimbursement is based on 

eligibility criteria and grant program requirements and proposes 

to amend §116.776(c) and (d) to use the term "incentive criteria" 

rather than "criteria for distribution". The proposed amendments 

would make clear that the commission is implementing the 

statute through a grant program. The commission proposes 

amendments to §116.776(b)(1) to specify that eligibility for reimbursement of the cost of controls from the emissions reductions 

ince~tives account would be based on hourly emissions reductions rather than annual emissions reductions. Specifically, 

proposed §116.776(b)(1) would require owners or operators 

o~ gra~d~thered reciprocating combustion engines associated 

~1th pipelines to reduce hourly NO, emission rates, expressed 

!n terms of grams per brake horsepower-hour, by at least 50%, 

rn order to be eligibl~ for reimbursement. The existing section, 

proposed as subsectron (b)( 1 ) , requires owners or operators to 

make 50% reduction in the annual emissions of NO as compared to the 1997 Industrial Point Source Emissions Inventory. 

Proposed §116.776(b)(1) is consistent with Texas Health and 

Safety Code, §382.051865(a), as amended. The commission 

proposes 0 

amend~ent~ to §116.776(b)(3~ and (8) to specify 

that a 50 Yo redu~1on 1n NO, may be ach1eved by replacing a 

grandfathered engme with an engine with a NO emission rate at 

least 50% lower than the rate of the grandfathered engine, and 

that the engines must obtain authorization under Chapter 116 

or 30 TAC Chapter 106. In addition, the commission proposes 

~mendments to ~116-!76(b)(8) to delete the language specifymg when the reg1strat1on of replacement for an electric engine 

be submitted. Also, the commission proposes amendments to 

§116.776(b)(10) to specify that engines with a NO emission 

rate at least 50% lower than the rate of the grandfathered 

engine, in addition to electric engines, must be installed and 

operated and the grandfathered engine be permanently shut 

down before the executive director can authorize payment from 

the emissions reductions incentive account. The commission 

also proposes new §116.776(b)(12), which would specify that 

a person or an affiliate of a person who pays or contributes 

to the _emissions reductions incentives account is ineligible 

to recerve money from the account. This would implement 

new ~ex~s Health and Safety Code, §382.051866(e). The 

commiSSion also proposes to amend §116.776(c) by adding 

th~ word "rate" when specifying that the commission may 

re1mburse costs associated with achieving emissions reductions 

between 30% and 50% of an engine's hourly NO emissions 

rate. The proposed amendment to §116. 776( c) would be 

consistent with Texas Health and Safety Code, §382.05165(c), 

as amended. Lastly, the commission proposes to change the 

crit~ria for distribution _of funds based on the statutory changes 

outlined by House Bill 638 and meetings with stakeholders 

held during the summer of 2002. House Bill 638 modifies 

Texas Health and Safety Code, §382.051865(d), to prohibit the 

commission from requiring any more stringent reduction criteria 

than the 50% reduction in grams per brake horsepower-hour 

for determining the eligibility for an emissions reduction project 

under the reimbursement program. The commission proposes 

to eliminate paragraphs (1) - (3) from existing §116.776(c}, 

and add a new criterion in §116.776(d)(2) specifying that the 

executive director will put a cap on the amount of reimbursement 

for each engine, if it determines it is appropriate in order to 

PROPOSED RULES October 10,2003 28 TexReg 8815 
maximize equitable distribution of the fund. The criteria will be 

implemented by reimbursing owners and operators of engines 

for 40% of the cost of controls up to a maximum of $100,000 

per engine. This amount of reimbursement was agreed upon by 

the participants in the stakeholder meetings. The commission 

anticipates signing contracts for more engines than can be 

covered by the amount of money appropriated to the agency 

for this purpose. Therefore, renumbered §116.776(d)(2) will 

allow the commission to reimburse owners or operators who 

achieve the reductions earlier and thus provide the most benefit 

to the air quality in Texas. Based on General Appropriations 

Act (2003), Article IX, §8.01(d), the unexpended balance in the 

emissions reductions incentives account at the end of Fiscal 

Year 2003 is available for distribution in Fiscal Year 2004 and 

2005. Therefore, the commission may also issue a subsequent 

request for grant applications, and/or recalculate the distribution 

of funds under these grant applications in order to distribute 

funds between all grantees according to the criteria specified in 

the request for grant application and contracts issued under it. 

FISCAL NOTE: COSTS TO STATE AND LOCAL GOVERNMENT 

John Davis, Analyst with Strategic Planning and Appropriations, 

has determined that for the first five-year period the proposed 

amendments are in effect, there will be no fiscal implications 

for the agency or most units of state and local government due 

to implementation of the proposed amendments. The proposed 

amendments could result in an increased number of units of state 

and local government that own or operate grandfathered reciprocating internal combustion engines associated with pipelines 

in the East Texas Region that would be eligible for partial reimbursement of the costs of pollution controls. The commission 

anticipates there will be some units of government eligible for 

these reimbursements; however, the total number is unknown at 

this time. Additionally, certain units of state government that own 

or operate grandfathered reciprocating internal combustion engines associated with pipelines in the Houston/Galveston ozone 

nonattainment area may benefit from cost savings by not having 

to apply for pipeline facility permits. 

The State of Texas began permitting new and modified sources 

of air pollutants in 1971. Sources built before the permitting rules 

became effective were not required to obtain permits for air emissions as long as they were not modified. These sources are 

known as grandfathered sources. 

The East Texas Region includes all counties traversed by or east 

of Interstate Highway 35 north of San Antonio or traversed by 

or east of Interstate Highway 37 south of San Antonio, including Bexar, Bosque, Coryell, Hood, Parker, Somervell, and Wise 

Counties. All other counties in Texas are considered to be in the 

West Texas Region. 

The proposed amendments implement provisions of House Bill 

638, 78th Legislature, 2003. House Bill638 changes the requirement for partial reimbursement of the cost of pollution controls 

on grandfathered reciprocating internal combustion engines associated with pipelines in the East Texas Region from a 50% 

reduction in annual NO, emissions to the 50% reduction in the 

hourly NO, emissions rate, expressed in terms of grams per 

brake horsepower-hour. To comply with this requirement, owners or operators of affected equipment could make changes to 

existing equipment, or replace a grandfathered engine with an 

engine with a NO, emission rate at least 50% lower than the 

rate of the grandfathered engine. The new engines would have 

28 TexReg 8816 October 10, 2003 Texas Register 

to obtain authorization under Chapter 116 or Chapter 106 before distribution from the incentives account may be requested. 

Additionally, the bill eliminated the requirement for the owners 

or operators of grandfathered reciprocating internal combustion 

engines located in the Houston/Galveston nonattainment area to 

obtain a permit for those engines, if the equipment was in compliance with state and federal emission control requirements. The 

proposed amendments are intended to implement these provisions. The commission does not know how many engines will 

be affected by these provisions. 

Units of state and local government that seek to obtain pipeline 

facility permits may be eligible for partial reimbursement of the 

costs of pollution controls required by the permits. The commission anticipates that changing the reimbursement requirements 

from a specific annual 50% reduction to a 50% reduction in the 

hourly emission rate will make it easier for more owners or operators of affected engines in the East Texas Region to apply for 

partial reimbursement of the costs of pollution control equipment. 

The commission anticipates that more owners and operators will 

be eligible to apply for partial reimbursement because the reduction in grams per brake horsepower-hour is more representative 

of the emissions controls added to an engine than a reduction in 

annual emissions. These engines run intermittently and may not 

run the same amount of time from year to year. Consequently, 

for an engine that ran very little in 1997 but most of the time in 

2002, one would see little or no reduction in annual emissions 

even though significant emission controls may have been added. 

Affected facilities in East Texas must submit an application before September 1, 2003, and any controls required by the permit 

must be in operation by March 1, 2007. 

House Bill2914, 77th Legislature, 2001, appropriated $16.2 million to the commission for the retrofitting of internal combustion 

engines. Under this provision, the commission was authorized 

to provide funds for competitive grants under the emissions reductions incentive program. 

In the Fiscal Year 2002 - 2003 biennium, the agency received 

$10.8 million for this purpose and intends to obligate that amount, 

plus any interest earned as of August 31, 2003, in grant awards. 

The unexpended balance in the emissions reductions incentives 

account at the end of Fiscal Year 2003 would be made available 

for distribution in Fiscal Years 2004 - 2005. The commission anticipates receiving the remaining $5.4 million in Fiscal Year 2004, 

and intends to distribute this funding in Fiscal Years 2004- 2005. 

The reimbursement to the grant recipients will be processed using a "charge back" method as authorized in Senate Bill 1, 77th 

Legislature, Article IX, §6.34, and as outlined in 34 TAG §5.56(f), 

relating to Appropriation Year Determination. 

The provisions in House Bill 638 that remove the permit requirement for certain affected grandfathered reciprocating internal 

combustion engines in the Houston/Galveston nonattainment 

area are anticipated to result in costs savings, which are not 

anticipated to be significant, to the owner or operators of these 

engines. The commission anticipates that facilities that qualify 

to be considered permitted under the provisions of House Bill 

638 will realize cost savings by not having to go through the 

permit application process and public notice. The proposed 

amendments will allow qualifying engines in the Houston/Galveston nonattainment area to register with the commission. No 

registration fee is anticipated. Previously, an owner or operator 

of an affected engine would have to apply for a permit and go 

through public notice. The permit application process costs 

approximately $10,000, while public notice costs range from 
$700 to $4,350, depending on the size of the city newspaper in 

which the notice is published. Of note, in order to qualify to be 

considered permitted, affected engines must still meet existing 

state and federal pollution control requirements. 

PUBLIC BENEFIT AND COSTS 

Mr. Davis has also determined that for each year of the first five 

years the proposed amendments are in effect, the public benefit 

anticipated from enforcement of and compliance with the proposed amendments will be increased eligibility for the partial reimbursement of the cost of controls. However, this benefit may 

be offset by fewer reductions in NO, emissions from pipeline engines because there will no longer be a requirement to achieve 

a 50% reduction in annual emissions of NO,. Additionally, there 

will be no opportunity for the public to comment on permits for 

engines located in the Houston/Galveston nonattainment area 

since they will now be permitted by statute. 

The proposed amendments, which are intended to implement 

certain provisions of House Bill 638, are not anticipated to result in additional costs for owners or operators of affected grandfathered reciprocating internal combustion engines associated 

with pipelines. The commission anticipates that more grandfathered engines in the East Texas Region will be eligible to receive 

partial reimbursement for installed pollution controls. Additionally, the commission anticipates costs savings for those eligible 

engines in the Houston/Galveston nonattainment area that are 

eligible to be considered permitted without having to go through 

the permit or public notice process. Details of the eligibility for 

reimbursement and the potential cost savings can be found in 

the FISCAL NOTE: COSTS TO STATE AND LOCAL GOVERNMENT section of this preamble. 

SMALL BUSINESS AND MICRO-BUSINESS ASSESSMENT 

There will be no adverse fiscal implications for small and micro-businesses as a result of implementation and enforcement 

of the proposed amendments, which are intended to implement 

provisions of House Bill 638. There are no known small or micro-businesses with equipment that would be affected by the proposed amendments. However, if there are small or micro-businesses operating equipment affected by the proposed amendments, they would be eligible for the partial reimbursement for 

pollution controls and may experience cost savings as discussed 

in the FISCAL NOTE: COSTS TO STATE AND LOCAL GOVERNMENT section of this preamble. 

LOCAL EMPLOYMENT IMPACT STATEMENT 

The commission reviewed this proposed rulemaking and determined that a local employment impact statement is not required 

because the proposed amendments do not adversely affect a 

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

proposed amended rules are in effect. 

DRAFT REGULATORY IMPACT ANALYSIS DETERMINATION 

The commission reviewed the proposed rulemaking in accordance with the regulatory analysis requirements of Texas Government Code, §2001.0225, and determined that the rulemaking does not meet the definition of a major environmental rule. 

A "major environmental rule" means a rule, the specific intent 

of which is to protect the environment or reduce risks to human 

health from environmental exposure and that may adversely affect in a material way the economy, productivity, competition, 

jobs, the environment, or the public health and safety of the state 

or a sector of the state. The proposed rulemaking implements 

requirements from House Bi11638, 78th Legislature, 2003, which 

prohibits the commission from requiring more stringent emissions reduction criteria than the reductions already required to 

obtain a pipeline facilities permit in order to receive money from 

the emissions reductions incentives account; prohibits persons, 

or affiliates of persons, who contribute money to the emissions 

reductions incentives account from receiving money from the 

fund; and allows grandfathered reciprocating internal combustion engines associated with pipelines that meet certain criteria 

to be considered permitted by statute. The proposed rules would 

allow more grandfathered reciprocating internal combustion engines associated with pipelines to be eligible for reimbursement 

from the emissions reductions incentives account. 

The proposed rules are not anticipated to have adverse effects 

on the economy, productivity, competition, jobs, the environment, 

or the public health and safety of the state or a sector of the 

state, since the proposed rules allow more engines to be eligible for reimbursement. Similarly, the requirements of the proposed rules are expected to result in little or no impacts on the 

economy, productivity, competition, jobs, the environment, or the 

public health and safety of the state or a sector of the state. All 

grandfathered reciprocating internal combustion engines associated with pipelines affected by the proposed rules are already 

required to meet control requirements specified by House Bill 

2912. 

Additionally, the analysis required by Texas Government Code, 

§2001.0225(c), does not apply because the proposed rules do 

not meet any of the four applicability requirements of a major environmental rule. The proposed rules do not exceed a standard 

set by federal law, exceed an express requirement of state law, 

exceed a requirement of a delegation agreement, or adopt a rule 

solely under the general powers of the agency. The proposed 

rules do not exceed the requirements of the Federal Clean Air 

Act or the Texas Clean Air Act. Additionally, the proposed rules 

do not exceed a requirement of a delegation agreement, since 

there is no agreement that is applicable to this rulemaking, and 

are not proposed solely under the general powers of the agency. 

The commission invites public comment regarding the draft regulatory impact analysis determination during the public comment 

period. 

TAKINGS IMPACT ASSESSMENT 

The commission evaluated the proposed rules and performed 

an analysis of whether the proposed rules are subject to Texas 

Government Code, Chapter 2007. The purpose of the proposed 

rules is to fulfill the commission's obligation to implement House 

Bi11638, 78th Legislature, 2003. The proposed rules will advance 

this purpose by prohibiting the commission from requiring more 

stringent emissions reduction criteria than the reductions already 

required to obtain a pipeline facilities permit in order to receive 

money from the emissions reductions incentives account; prohibiting persons, or affiliates of persons, who contribute money 

to the emissions reductions incentives account from receiving 

money from the fund; and allowing grandfathered reciprocating 

internal combustion engines associated with pipelines that meet 

certain criteria to be considered permitted by statute. The proposed rules will not burden private real property. The ability of 

an owner or operator to claim a reimbursement or be considered 

permitted by statute will not affect private property in a manner 

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

otherwise exist in the absence of governmental action. Consequently, the proposed rules do not meet the definition of a taking 

under Texas Government Code, §2007.002(5). 

PROPOSED RULES October 10, 2003 28 TexReg 8817 
CONSISTENCY WITH THE COASTAL MANAGEMENT PROGRAM 

The commission reviewed the proposed rulemaking and found 

the proposal is a rulemaking identified in the Coastal Coordination Act Implementation Rules, 31 TAC §505.11 (b)(2), relating 

to rules subject to the Coastal Management Program, and will, 

therefore, require that goals and policies of the Texas Coastal 

Management Program be considered during the rulemaking 

process. The commission reviewed this action for consistency 

and has determined that the proposed rules do not impact 

any Texas Coastal Management Program goals or policies. 

The prohibition against requiring more stringent emissions 

reduction criteria than the reductions already required to obtain 

a pipeline facilities permit in order to receive money from the 

emissions reductions incentives account; the prohibition against 

persons, or affiliates of persons, who contribute money to the 

emissions reductions incentives account from receiving money 

from the fund; and allowing grandfathered reciprocating internal 

combustion engines associated with pipelines that meet certain 

criteria to be considered permitted by statute will not change 

any otherwise applicable requirement associated with controls 

of the affected engines. Written comments on the consistency 

of this rulemaking may be submitted to the contact person at the 

address listed under the SUBMITTAL OF COMMENTS section 

of this preamble. 

EFFECT ON SITES SUBJECT TO THE FEDERAL OPERATING 

PERMITS PROGRAM 

This proposal has no impact on owners and operators of sites 

subject to the operating permit program unless they also own 

or operate grandfathered reciprocating internal combustion engines associated with pipelines. If so, the owners and operators 

of sites subject to the operating permit program will be required 

to revise their permits or permit applications. 30 TAC §122.10(2) 

specifies that all of the requirements of Chapter 116 are applicable requirements. Therefore, owners and operators of grandfathered reciprocating internal combustion engines associated 

with pipelines will be required to revise the operating permit to 

reflect that the facilities are considered permitted, rather than 

grandfathered. 

ANNOUNCEMENT OF HEARING 

The commission will hold a public hearing on this proposal in 

Austin on October 30, 2003 at 2:00 p.m. in Building F, Room 

2210, at the commission's central office located at 12100 Park 

35 Circle. The hearing is structured for the receipt of oral or written comments by interested persons. Registration will begin 30 

minutes prior to the hearing. Individuals may present oral statements when called upon in order of registration. Open discussion will not occur during the hearing; however, commission staff 

members will be available to discuss the proposal30 minutes before the hearing, and will answer questions before and after the 

hearing. 

Persons with disabilities who have special communication or 

other accommodation needs, who are planning to attend the 

hearing, should contact the Office of Environmental Policy, 

Analysis, and Assessment at (512) 239-4900. Requests should 

be made as far in advance as possible. 

SUBMITTAL OF COMMENTS 

Comments may be submitted to Joyce Spencer, Office of Environmental Policy, Analysis, and Assessment, MC 205, P.O. 

Box 13087, Austin, Texas 78711-3087 or faxed to (512) 239-

28 TexReg 8818 October 10, 2003 Texas Register 

4808. Comments must be received by 5:00p.m., November 10, 

2003, and should reference Rule Log Number 2003-043-116-AI. 

For further information, please contact Debra Barber, Policy and 

Regulations Division at (512) 239-0412. 

DIVISION 1. GENERAL APPLICABILITY 

30 TAC §116.770, §116.772 

STATUTORY AUTHORITY 

The amendments are proposed under Texas Health and Safety 

Code, Texas Clean Air Act, §382.011, which authorizes the commission to administer the requirements of the Texas Clean Air 

Act; §382.012, which provides for the commission the authority 

to develop a comprehensive plan for the state's air; §382.017, 

which authorizes the commission to adopt rules consistent with 

the policy and purposes of the Texas Clean Air Act; §382.051, 

which authorizes the commission to issue a permit for numerous similar sources; §382.0518, which authorizes the commission to issue permits for construction of new facilities or modifications of existing facilities; §382.05181, which requires grandfathered facilities to apply for a permit and comply with its conditions by certain dates, and requires certain actions of the commission; §382.05186, which requires pipeline facilities permits; 

§382.051865, which requires a reimbursement program forcertain emissions reductions from reciprocating internal combustion 

engines associated with pipelines; §382.051866, which requires 

an emissions reductions incentives account; and Texas Water 

Code, §5.103, which authorizes the commission to adopt rules. 

The proposed amendments implement Texas Health and Safety 

Code, Texas Clean Air Act, §382.002, concerning Policy and 

Purpose; §382.011, concerning General Powers and Duties; 

§382.012, concerning State Air Control Plan; §382.017, concerning Rules; §382.051, concerning Permitting Authority of 

Board; Rules; and §382.0518, concerning Preconstruction 

Permit; §382.05181, concerning Permit Required; §382.05186, 

concerning Pipeline Facilities Permits; §382.051865, concerning Reimbursement Program for Certain Emissions Reductions 

from Reciprocating Internal Combustion Engines Associated 

with Pipelines; §382.051866, concerning Emissions Reductions 

Incentives Account; and Texas Water Code, §5.103, concerning 

Rules. 

§ 116. 770. Requirement to Apply or Register. 

~ The owner or operator of a grandfathered facility must apply for a permit to operate that facility under this chapter, qualify for 

a permit by rule under Chapter I 06 of this title (relating to Permits by 

Rule), or submit a notice of shutdown before September I, 2003 for 

facilities located in the East Texas region as defined in§ I 01.330 of this 

title (relating to Definitions), and before September I, 2004 for facilities located in the West Texas region as defined in§ I 01.330 of this title 

or El Paso County. 

{Q1 A reciprocating internal combustion engine that is subject 

to the requirement to obtain a pipeline facilities permit and to a mass 

emissions cap as established by commission rule is considered permitted with respect to all air contaminants if the facility is: 

ill located in an area designated as a nonattainment area 

for an ozone national ambient air quality standard; and 

ru achieving compliance with all state and federal requirements designated for that area by June 20, 2003. 

if) The owner or operator of a reciprocating internal combustion engine that is considered permitted under subsection (b) of this 

section must submit a registration to the commission on or before July 
I, 2004, which must include Form PI-I G, Grandfathered Facility Permit Application. 

§116.772. Notice of Shutdown. 

(a) The owner or operator of a grandfathered facility who 

chooses to shut the facility down rather than obtain a permit under 

this chapter or qualify for a permit by rule under Chapter I 06 of this 

title (relating to Permits by Rule), shall notify the executive director 

in writing by completing Form PI- 1 GSD, Notice of Shutdown, prior 

to the deadlines specified in §116.770{10 or §116.774 of this title 

(relating to Requirement to Apply; and Eligibility for Small Business 

Stationary Source Permits). The owner or operator of a grandfathered 

facility who submits a Form PI- 1 GSD, Notice of Shutdown, prior to 

the deadlines specified in §116.770{10 or §116.774 of this title shall 

cease emitting air contaminants by: 

(1)- (2) (No change.) 

(b) · The owner or operator of a grandfathered facility who applies for a permit prior to the deadlines specified in § 116. 770{10 or 

§ 116.774 of this title, but prior to permit issuance, decides to shut the 

facility down must submit a Form PI-I GSD, Notice of Shutdown, prior 

to withdrawal of the permit application and must cease emitting air contaminants by the date specified in subsection (a)(l) or (2) of this section. 

(c)- (d) (No change.) 

This agency hereby certifies thatthe proposal has been reviewed 

by legal counsel and found to be within the agency's legal authority to adopt. 

Filed with the Office of the Secretary of State on September 26, 

2003. 

TRD-200306365 

Stephanie Bergeron 

Director, Environmental Law Division 

Texas Commission on Environmental Quality 

Earliest possible date of adoption: November 9, 2003 

For further information, please call: (512) 239-5017 

• • • 

DIVISION 2. SMALL BUSINESS STATIONARY 

SOURCE PERMITS, PIPELINE FACILITIES 

PERMITS, AND EXISTING FACILITY PERMITS 

30 TAC §116.776 

STATUTORY AUTHORITY 

The amendment is proposed under Texas Health and Safety 

Code, Texas Clean Air Act, §382.011, which authorizes the commission to administer the requirements of the Texas Clean Air 

Act; §382.012, which provides for the commission the authority 

to develop a comprehensive plan for the state's air; §382.017, 

which authorizes the commission to adopt rules consistent with 

the policy and purposes of the Texas Clean Air Act; §382.051, 

which authorizes the commission to issue a permit for numerous similar sources; §382.0518, which authorizes the commission to issue permits for construction of new facilities or modifications of existing facilities; §382.05181, which requires grandfathered facilities to apply for a permit and comply with its conditions by certain dates, and requires certain actions of the commission; §382.05186, which requires pipeline facilities permits; 

§382.051865, which requires a reimbursement program forcertain emissions reductions from reciprocating internal combustion 

engines associated with pipelines; §382.051866, which requires 

an emissions reductions incentives account; and Texas Water 

Code, §5.1 03, which authorizes the commission to adopt rules. 

The proposed amendment implements Texas Health and Safety 

Code, Texas Clean Air Act, §382.002, concerning Policy and 

Purpose; §382.0 11, concerning General Powers and Duties; 

§382.012, concerning State Air Control Plan; §382.017, concerning Rules; §382.051, concerning Permitting Authority of 

Board; Rules; and §382.0518, concerning Preconstruction 

Permit; §382.05181, concerning Permit Required; §382.05186, 

concerning Pipeline Facilities Permits; §382.051865, concerning Reimbursement Program for Certain Emissions Reductions 

from Reciprocating Internal Combustion Engines Associated 

with Pipelines; §382.051866, concerning Emissions Reductions 

Incentives Account; and TWC, §5.103, concerning Rules. 

§116. 776. [Distrihlllien efF-tmdsfomtlhe] Emissions Reductions Incentives {Aeeeunlj for Control of Emissions from Grandfathered Reciprocating Internal Combustion Engines Located in the East Texas 

Region. 

~} Emissions reductions incentives will be made available to 

eligible facilities through a grant program administered under this section and Chapter 14 of this title (relating to Grants). 

{hl (WJ Eligible facilities. Owners or operators of grandfathered reciprocating internal combustion engines are eligible for reimbursement of a portion of the cost of controls from the emissions reductions incentive account [Emissiens R-eEIRetiens Ineentives Ac-eetnlt] 

based on the following eligibility criteria and grant program requirements. 

( 1) The owner or operator of grandfathered reciprocating 

internal combustion engine or engines associated with pipelines must 

reduce the hourly emissions rate of nitrogen oxides (NO.),expressedin 

termsofgramsperbrak:ehorsepower-hour, byatleast50%: [make ffil aetllitl W% reduetien in the llfllRllll emissiens ef nitrogen maees (NG,j as 

eempared te the emissiens rep6fted from the grandfathered reeipreeating intemal eemlrustien engine 6f eflgines in tfte .J.991lBdlfstrial Peifl.t 

Sooree Emissiens lBventery.] 

(2) The grandfathered reciprocating internal combustion 

engine or engines must be located in the East Texas region as defined 

in §101.330 of this title (relating to Definitions). 

(3) The owner or operator must apply for and receive a 

pipeline facilities permit or replace the grandfathered reciprocating internal combustion engine with anenginewithaNO, emission rate which 

is at least 50% lower than the emission rate of the grandfatheredengine or 

an electric engine .. 

(4) The project to control emissions must be initiated on or 

before September 1, 2006. 

(5) The project to control emissions must be completed before March 1, 2007. 

@ The owner or operator ofthe grandfathered reciprocating 

internal combustion engine for which a distribution from the emissions 

reductions incentives account is sought, must enter a contract with the 

commission in accordance with a request for proposals (grant applicatiO!lS}UildeTChapter 14 of this title. 

ill [f&)] The owner or operator of the grandfathered reciprocating internal combustion engine for which a distribution from the 

emissions reductions incentives account [Emffisierls Reduetiens lBeenti-ves A-eeetlllt] is sought, must identify, at the time the permit application is filed, the facilities for which reimbursement is requested. 

PROPOSED RULES October 10,2003 28 TexReg 8819 
(ID [f71] The owner or operator who elects to replace a 

grandfathered reciprocating internal combustion engine with an electric engine must submit a Registration of Replacement of a Grandfathered Reciprocating Internal Combustion Engine with an Electric 

Engine [befere the 6Wflef er ~r ean request a distriblit:ion fFem 

the Emissions Reduetions Incentives Aeeoont]. The owner or operator 

who elects to achieve the 50% reduction in NO, emissions rate by replacing a grandfathered engine or engines with new· combustion engines must 

obtain authorization forthenew engines underthischapterorChapter 1 06 

of this title (relating to Permits by Rule). 

(2) [(&)] The emissions controls identified in the permit 

must be operating before the executive director can authorize payment 

from the emissions reductions incentives account [Emissions Redttetions Incentives Aeeoont]. 

!.!Q1 [f9j] For grandfathered reciprocating internal 

combustion engines replaced by electric engines or engines with a 

NO emission rate which is at least 50% lower than the emission rate of 

theWandfathered engine, the replacement [eleetrie] engine must be 

installed and operating and the grandfathered reciprocating internal 

combustion engine must be permanently shut down before the executive director can authorize payment from the emissions reductions 

incentivesaccount [Emissiens Reduetiens Incentives Aeeotmt]. 

£!.!) [~]Facilities required by any other state or federal 

law to make reductions in emissions of NO, are not eligible for reimbursement. 

@ A person or an affiliate of a person who pays or 

contributes money to the emissions reductions incentives account is 

ineligible to receive money from the account. 

~ [~)Limitations on reimbursement. The commission may 

reimburse the owner or operator of a grandfathered reciprocating internal combustion engine or engines for no more than the cost associated 

with achieving emissions reductions between 30% and 50% of the engine's hourly emissions rate of NO, before the addition of controls. 

The commission may distribute less than the amount calculated in this 

manner based on the amount of money contributed to the fund and the 

incentive criteria for distribution outlined in subsection@[~) of this 

section. 

@ [~]Incentive criteria [Gri-tefl.afer distribmion]. The commission will distribute any money in the fund based on the following 

incentive criteria: 

ffB wftetheF the faeiflty is leeated in an attainment area fur 

oame OF a neaF HOHattainment area fer ozenet] 

~ the percentage of reduction in the heufly emissions of 

NG, en a grams per brake llorsepeweF-hour basis achieved;] 

ff3-1 the cost effectiveness of the eentrels aellieve6 basetl 

en the tens of emissions aetl!ally reduced per dellar of the eest of the 

centro! method;- and] 

ill [~)when the reductions are actually achieved; and[.] 

ill if the executive director determines that a cap is appropriate in order to maximize equitable distribution of the fund, a cap on the 

amount to be reimbursed for each engine. 

~ [fdj] Verification of emissions reductions. Prior to reimbursement from the emissions reductions incentives account [Emissions 

Reeootiens Ineentives Ac-eeunt], the owner or operator of each grandfathered reciprocating internal combustion engine must provide documentation verifYing the amount of actual emission reductions achieved. 

28 TexReg 8820 October 10, 2003 Texas Register 

This agency hereby certifies that the proposal has been reviewed 

by legal counsel and found to be within the agency's legal authority to adopt. 

Filed with the Office of the Secretary of State on September 26, 

2003. 

TRD-200306366 

Stephanie Bergeron 

Director, Environmental Law Division 

Texas Commission on Environmental Quality 

Earliest possible date of adoption: November 9, 2003 

For further information, please call: (512) 239-5017 

• • • 

TITLE 34. PUBLIC FINANCE 

PART 1. COMPTROLLER OF PUBLIC 

ACCOUNTS 

CHAPTER 9. PROPERTY TAX ADMINISTRATION 

SUBCHAPTER A. PRACTICE AND 

PROCEDURE 

34 TAC §9.107 

The Comptroller of Public Accounts proposes amended rule 

§9.1 07, concerning appraised value limitation and tax credit 

for certain qualified property. The amendment is proposed to 

amend model application forms referenced in subsection (c)(1) 

to remove request for information that is confidential by the 

Public Information Act and to correct typographical errors on the 

application forms: Application For Appraised Value Limitation 

On Qualified Property (Form 50- 296); and Application For Tax 

Credit On Qualified Property (Form 50-300). 

James LeBas, Chief Revenue Estimator, has determined that 

for the first five-year period the rule will be in effect, there will 

be no significant revenue impact on the state or units of local 

government. 

Mr. LeBas also has determined that for each year of the first 

five years the rule is in effect, the public benefit anticipated as 

a result of enforcing the rule will be in providing additional information to taxpayers regarding state and local tax laws. The 

proposed amendment would have no significant fiscal impact on 

small businesses. 

Comments on the proposal may be submitted to Buddy Breivogel, Manager, Property Tax Division, P.O. Box 13528, Austin, 

Texas 78711-3528. 

This amendment is proposed under Tax Code, §313.031(a), 

which requires the comptroller to adopt rules and forms necessary for the implementation and administration of the provisions 

of Tax Code, Chapter 313. 

The amendment implements Tax Code, Chapter 313. 

§9.107. Appraised Value Limitation and Tax Credit for Certain Qualified Property. 

(a) Appraised value limitation applicant restriction. Corporations and limited liability companies that are subject to franchise tax 

under Tax Code, § 171.00 I, may apply to the governing body of a school 
WRITTEN AND 

ORAL TESTIMONY 
Reference Number 

W-1 

W-2 

INDEX OF WRITTEN TESTIMONY 

Submitted by 

Brandt Mannchen, Houston Sierra Club 

Guy Donaldson, United States Environmental Protection 

Agency 
Houston Regional Group 

P. 0. Box 3021 

Houston, Texas 77253-~21 ' > 

SIERRA 

CLUB 

FOUNDED 1892 

~7:13-895-9$09 

http:/ /texas.sierraclu~~hou~n/ ffi Pt. rTI =~··~ N :~) 

October 16, 2003 

Ms. Joyce Spencer 

Office Environmental Policy, Analysis, and Assessment 

MC205 

Texas Commission on Environmental Quality 

P.O. Box 13087 

Austin, Texas 78711-3087 

Dear Ms. Spencer, 

0 

Enclosed are the comments of the Houston Sierra Club (HSC) regarding the 

proposed amendments to 30 TAC Chapter 116.112 and 116.770, 116.772, and 

116.776. 

The HSC understands that the Texas Commission on Environmental Quality 

(TCEQ) has developed rules on the measurement of distances to structures that 

are in use at the time of the permit application because the Texas Legislature 

passed a bill requiring this change. However, the HSC goes on record as 

opposing this change in the law and change in the rules that implement that law. 

The State of Texas has no zoning and land use planning rules. Because of this 

one of the few rules that can be used to prevent air pollution nuisance conditions 

is the distance limitation for some air authorizations. The impact of the change in 

state law and proposed change rules is to ensure that additional air pollution 

nuisance conditions will occur. 

The company that gets its permit approved and meets the distance requirements 

at that time will be provided no more certainty of operation within the air pollution 

rules and laws because if a sufficient distance is not kept a nuisance condition is 

likely to occur as residential or other development occurs around the company's 

property. At least in the previous form, 30 TAC Chapter 116.112 provided a 

buffer that probably would have reduced or eliminate the possibility of nuisance 

air pollution conditions under certain circumstances. 

The HSC also opposes exempting from the distance limitation concrete crushing 

facilities located on a site for 180 consecutive days due to the demolition of a 

structure on that site; which use crushed concrete primarily on-site; and which 

comply with applicable conditions stated in commission rules, including operating 

conditions, unless the facility is located in, or adjacent to, a county with a 

population of 2.4 million or more. The fact that the TCEQ does not mandate, as 

"When we try to pick out anything by itself, we fmd it hitched to everything else in the universe." John MiJir 

Printed on 100% Kenaf tree free paper 
a condition of operation, in 30 TAC Chapter 116.112(b)(2)(C), that the facility not 

create an air pollution nuisance is troubling. 

Regarding the new permits that the State Legislature has required TCEQ to 

create for grandfathered facilities, under 30 TAC Chapter 116.770(b)(2), how can 

TCEQ consider a reciprocating internal combustion engine for a pipeline facility 

permitted when there is no documentation to demonstrate that the source is 

achieving compliance with all state and federal requirements? All TCEQ does is 

require that such compliance be achieved. There should be a requirement for a 

site visit by TCEQ or a local air quality agency to ensure that the facility is indeed 

in compliance before a permit is given to the facility. 

The HSC opposes any permit program that TCEQ has, regardless of the 

direction of the State Legislature, that does not require appropriate new source 

review or a similar permitting program to ensure that all permitted sources do 

emit the lowest amount of air pollution possible, within the cost and technological 

constraints of best available control technology. 

Sincerely, 

Brandt Mannchen 

Chair, Air Quality Committee 

Houston Sierra Club 

5431 Carew 

Houston, Texas 77096 

H713-S64-5962, W713-640-4313 

Thank you. 
11/10/2003 MON 17:33 ¥AX ~146657~6J U~~~A KD MULll~UlA "'1:1 .......... / ---

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY 

REGIONS 

Ms. Joyce Spencer 

Office of Environmental Policy, 

Analysis and Assessment (MC 205) 

1445 ROSS AVENUE, SUITE 1200 

DALLAS, TX 75202·2733 

NOV 10 2003 

Texas Commission on Environmental Quality 

P.O. Box 13087 

Austin, TX 78711-3087 

RE · Proposed Revisions to 30 Texas Administrative Code (TAC) Chapter 116 and the State 

Implementation Plan (SIP) Rule Log Number: 2003-043-116-AI 

Dear Ms. Spencer: 

Thank you for the opportunity to comment on the proposed changes to 30 T AC 

8 

Chapter 116 - Control of Air Pollution by Permits for New Construction or Modification. In this 

action, the Texas Commission on Environmental Quality (TCEQ) proposes to make several 

revisions to Sections 116.770, 116.772 and 116.776 in Subchapter H- Permits for Grandfathered 

Facilities. The TCEQ plans to submit only Sections 116.770 and 116.772 to the Environmental 

Protection Agency as revisions to the SIP. 

Based on our review of the proposed regulations, we have the following comments. We 

believe that incorporation of these comments will clarify and strengthen these regulations. 

1. Chapter 116 - Control of Air Pollution by Permits for New Construction or Modification 

If an emissions increase occurs as the result of modifying one or more grandfa.thered reciprocating 

internal combustion engines, and these increases trigger any Federal requirements, how will the 

State insure that the appropriate permit is applied for? 

2. Section 116.770- Requirement to Apply or Register 

The submittal does not document how an owner or operator of a grandfathered facility must 

demonstrate initial, and ongoing, compliance with all current applicable State and Federal. 

requirements for the Houston-Galveston ozone nonattainment area as of June 20, 2003. Please 

document methods of compliance. 

lntemet Address (URL) - htto://www.epa.gov/earth1 ret 

Recycled/Recyclable • Printed with Vegetable Oil Based Inks on Recycled Paper (Minimum 30% PostcOnsumer) 
11/10/2003 MON 17:33 FAX 2146657263 USEPA R6 MULTIMEDIA 

2 

Thank you for the opportunity to provide comments, and we look forward to seeing the 

final rule when it is submitted. Ifyou have any questions, please call Mr. Rick Barrett at 

(214) 665-7227. 

cc: Ms. Joyce Spencer 

Sincerely yours, 

#y}l~ Guy Donaldson 

Acting Chief 

Air Permits Section 

Texas Commission on Environmental Quality 

141003/003 
INDEX OF ORAL TESTIMONY 

Reference Number Submitted by 

No oral testimony was received pertaining to the proposal. 
EVALUATION OF 

TESTIMONY 
Texas Commission on Environmental Quality INTEROFFICE MEMORANDUM 

To: Commissioners Date: January 9, 2004 

---Thru:-----LaBonna-Gastafiuela,.-Ghief-Gler~ -· -- --~---------- -- ---- --- ··-----~~ ------·- ·-

Margaret Hoffman, Executive Director 

From: /[J ~dy Wood, Deputy Director V Office of Environmental Policy, Analysis, and Assessment 

Docket No.: 2003-0699-RUL 

Subject: Commission Approval for Rulemaking Adoption 

Chapter 116, Control of Air Pollution by Permits for New Construction or Modification 

HB 638: Pipeline Facility Reimbursement 

Rule Project No. 2003-043-116-AI 

Reasons for the rule package: 

Under what authority are we proposing these changes? 

• Texas Health and Safety Code: 

• §382. 011, which authorizes the commission to administer the requirements of the 

Texas Clean Air Act; 

• §382.012, which provides for the commission the authority to develop a 

comprehensive plan for the state's air; 

• §382.017, which authorizes the commission to adopt rules consistent with the 

policy and purposes of the Texas Clean Air Act; 

• §382. 051, which authorizes the commission to issue a permit for numerous similar 

sources; 

• §382.0518, which authorizes the commission to issue permits for construction of 

new facilities or modifications of existing facilities; 

• §382.05181, which requires grandfathered facilities to apply for a permit and 

comply with its conditions by certain dates, and requires certain actions of the 

commission; 

• §382.05186, which requires pipeline facilities permits; 

• §382.051865, which requires a reimbursement program for certain emissions 

reductions from reciprocating internal combustion engines associated with 

pipelines; 

• §382.051866, which requires an emissions reductions incentives account; and 

• Texas Water Code, §5.103, which authorizes the commission to adopt rules. 

Are these rules required by federal rule or state statute? Yes. Which ones? These changes 

are needed to implement House Bill (HB) 638, 78th Legislature, 2003, relating to emissions 

reductions incentives and the emissions reductions incentives account. 

Are there any legal deadlines by which these rules must be proposed, adopted, or effective? 

Although there are no specific deadlines in HB 638, the changes made by the statute became 

effective on June 20, 2003. The existing rules are inconsistent with the statute and need to be 
Commissioners 

Page 2 

January 9, 2004 

Re: Docket No. 2003-0699-RUL 

changed as quickly as possible. Permit applications for grandfathered facilities located in the East 

-Texas-region\vefedtie bf"Augusf3 I; -20D3~an.cr-granCapplicauons Torllie part1arrefrrl6iirsemenr 

for the cost of controls were due by August 15, 2003. Although these deadlines passed prior to 

the rules being adopted, the processing and approval of the permit applications is ongoing and no 

- money will be paid on any of the grant applications until the controls are in place and have been 

verified. This activity will all take place during the Fiscal_Year 2004- 2005 biennium. 

What issue(s) or probleui(s) are we trying to solve? This rulemaking resolves inconsistencies 

of current rules with ne~: statutory requirements in HB 638. 

Why is it important that we do this rule package? Current rules are not consistent with HB 

638. HB 638 changed the eligibility criteria for reimbursement; prohibited the commission from 

requiring more stringent emissions reductions in order to receive money from the emissions 

reductions incentives account; prohibited persons, or affiliates of persons, who contribute money 

-_ -- to the emissions reductions incentives account from receiving money from the fund; and allowed 

grandfathered reciprocating internal combustion engines associated with pipelines that meet certain 

criteria to be considered permitted by statute. 

How does it improve the environment? The rules will not necessarily result in an improvement 

to the environment. The statute and rules will most likely result in fewer reductions in nitrogen 

oxides (NOx) emissions from engines located in the East Texas region since there will no longer 

be a requirement to achieve a 50% reduction in annual emissions of NOx compared to the 1997 

inventory in order to be eligible for a partial reimbursement for the cost of controls. 

Other important background or historical information. When the legislature first created the 

Texas Clean Air Act in 1971, it did not require existing significant sources of air emissions to 

comply with (i.e., were grandfathered from) the then new requirement to obtain a permit. These 

existing significant sources are commonly known as grandfathered facilities. If a grandfathered 

facility has not been modified since 1971, it continues to be authorized to operate without a permit. 

The legislature addressed the issue of grandfathered facilities in 1997 and 1999 by requiring the 

creation of a voluntary emissions reduction plan for the permitting of grandfathered facilities and 

by directing the commission to implement directives regarding the permitting of grandfathered 

electric generating facilities. Then, the 77th Legislature, 2001, amended the Texas Health and 

Safety Code, Texas Clean Air Act, to require that all grandfathered facilities obtain permits. The 

mandatory permitting requirements of HB 2912 adopted that session were the culmination of 

legislative efforts, beginning in 1997, to permit or otherwise authorize all grandfathered facilities. 

HB 2912 created four new types of permits for grandfathered facilities: existing facility permits, 

small business stationary source permits, electric generating facility permits, and pipeline facility 

permits. Grandfathered reciprocating internal combustion engines that are part of the processing, 

treating, compression, or pumping facilities connected to, or part of, a gathering or transmission 

pipeline may apply for a pipeline facility permit. HB 2912 also mandated the dates by which 
Commissioners 

Page 3 

January 9, 2004 

Re: Docket No. 2003-0699-RUL 

griJ.!li!fa.tg«?!~d fa.~!li!!~~-!1!!!~!_ apply_fQF_~ Pt::!'!!!i!_an~_}:l~y~~~l1tr~_(}P~~tiona! or ~~~~t-~-~~_?_!~()"\Vn __ 

notice. 

Additionally, the 77th Legislature enacted HB 2914, §78, which created a new incentive program 

to assist in retrofitting reciprocating internal combustion engines associated with pipelines. To 

implement this incentive program, the commission adopted §116. 776, Distribution of Funds from 

the Emissions Reductions Incentives Account for Control of Emissions from Grandfathered 

Reciprocating Internal Combustion Engines Located in the East Texas Region. To be eligible for 

reimbursement under this program, the owner or operator of a grandfathered reciprocating internal 

combustion engine was required to make an actual reduction in emissions of NOx as compared to 

the emissions reported for the facility in the 1997 industrial point source emissions inventory. 

The 78th Legislature enacted HB 638, relating to emissions reductions incentives and the emissions 

reductions incentives account. HB 638 changed the reimbursement eligibility requirement from 

a reduction in annual emissions to the same 50% reduction in NOx emissions rate needed to obtain 

a pipeline facilities permit. It also prohibited the commission from requiring more stringent 

emissions reduction criteria than the reductions already required to obtain a pipeline facilities 

permit in order to receive money from the emissions reductions incentives account; prohibited 

persons, or affiliates of persons, who contribute money to the emissions reductions incentives 

account from receiving money from the fund; and allowed grandfathered reciprocating internal 

combustion engines associated with pipelines that meet certain criteria to be considered permitted 

by statute. 

What the rules will do: 

Project scope. Amendments to the rules change the requirement for eligibility for certain pipeline 

facilities to obtain partial reimbursement of the cost of controls and eliminate the requirement for 

the owners or operators of grandfathered reciprocating internal combustion engines located in the 

Houston/Galveston nonattainment area to obtain a permit for those engines. 

Changes required by federal rule. None. 

Changes required by state statute. 

HB 638: 

• 

• 

• 

• 

changed the requirement for partial reimbursement of the cost of controls from a 50% 

reduction in annual NO. emissions to the 50% reduction in NOx emissions rate needed to 

obtain a pipeline facilities permit; 

prohibited a person or an affiliate of a person who pays or contributes money to the 

emissions reductions incentives account from receiving money from the account; 

prohibited the commission from requiring any more stringent reduction criteria than the 

50% reduction in grams per brake horsepower-hour for determining the eligibility for an 

emissions reduction project under the reimbursement program; and 

permitted by statute grandfathered reciprocating internal combustion engines- associated 

with pipelines that meet certain criteria. 
Commissioners 

Page 4 

January 9, 2004 

Re: Docket No. 2003-0699-RUL 

Staff recommendations that differ from or fall outside of federal rule or state statute. . .. • --- .. ·correct cita:tio1:rs·anacross:.refetences-:-·-·-------- - --· ------· -...... .. . -- -- -····-·--

• 

• 

Require registration of facilities considered permitted by statute. Due to a lack of 

information as to which reciprocating internal combustion engines would be affected by 

the "considered permitted" language in the statute, the rules will require registration to 

identify these facilities. 

In response to stakeholder input prior to this rulemaking, specify that a 50% reduction in 

NOx may be achieved by replacing a grandfathered engine with an engine with a NOx 

emission rate at least 50% lower than the rate of the grandfathered engine and that 

authorization must be obtained under Chapter 116 or Chapter 106 before distribution from 

the incentives account may be requested. 

Impact on the regulated community: 

Who will be affected? The owners and operators of grandfathered reciprocating internal 

combustion engines associated with pipelines located in the East Texas region are the members of 

the regulated community affected by these changes. 

Does it create a group of affected persons who were not affected previously? No. How? 

Specifying that a 50% reduction in NOx may be achieved by replacing a grandfathered engine with 

an engine with a NOx emission rate at least 50% lower than the rate of the grandfathered engine 

does not create additional regulated entities; rather, the amendments would provide greater 

flexibility to'"those already affected by allowing an optional method for achieving compliance. 

Will there be a fiscal impact? If so, estimate. No fiscal implications are anticipated for industry 

since the requirement to obtain the 50% reduction in the NOx emissions rate was in place 

previously and is not a new requirement. Specifying that a 50% reduction in NOx may be achieved 

by replacing a grandfathered engine with an engine with a NOx emission rate at least 50% lower 

than the rate of the grandfathered engine would give owners and operators of grandfathered 

engines more flexibility to choose the most cost-effective way to achieve the 50% NOx rate 

reduction. 

Impact on the public: 

Who will be affected? Residents and businesses located in close proximity to pipeline engines 

in the East Texas region. Public benefits are expected to accrue from increased eligibility for the 

partial reimbursement of the cost of controls. However, this benefit may be offset by fewer 

reductions in NOx emissions from pipeline engines because there will no longer be a requirement 

to achieve a 50% reduction in annual emissions of NO, compared to the 1997 inventory in order 

to be eligible for a partial reimbursement for the cost of controls. Additionally, there will be no 

opportunity for the public to comment on permits for engines located in the Houston/Galveston 

nonattainment area since they will now be permitted by statute. 

Does it create a group of affected persons who were not affected previously? No. 
Commissioners 

Page 5 

January 9, 2004 

Re: Docket No. 2003-0699-RUL 

... _ ..... linJ>ai_~LQil,_j!g~l!cy_prQgr~s_; ___ Th~.Lll_les '!'ill_aff'ect !!!.~--Air_ ~~rmits Qivisio_n. __ 'I'_he_Qn!~_op~!!!~O~~- __ 

impacts will be the possible need to process more grant applications. This will be at least partially offset 

by the need to process fewer permit applications in the Houston/Galveston nonattainment area. 

Stakeholder meetings: No stakeholder meetings were held. 

Implications: 

What policy issues are affected? The only policy issue that may be affected is that there will be 

fewer NOx reductions in the East Texas region, which may result in the need for larger reductions 

from other sources. 

Are any policies that are not currently based on rule being made into a rule? No. 

What are the consequences if this rulemaking is not approved to go forward? If this 

rulemaking is not approved, existing rules and guidance will be in conflict with the statute and 

reimbursement of funds will not be distributed in a timely manner. 

Are there alternatives? The only alternative is to allow the existing rules to be inconsistent with 

the legislation. 

Potentially controversial matters: Potentially controversial issues include fewer NOx reductions in East 

Texas and the loss of the opportunity for the public to comment on permits for engines in the 

Houston/Galveston nonattainment area. Both of these issues are driven by the statutory changes. 

Public comment: A public hearing on this proposal was held October 30, 2003, and the public comment 

period closed on November 10, 2003. No person presented oral comments at the public hearing. The 

commission received written comments during the comment period from the Houston Regional Group of 

the Sierra Club (Sierra Club) and the United States Environmental Protection Agency (EPA). Sierra Club 

opposed the rule proposal, while EPA supported the rule proposal, but requested clarification. 

Significant changes from proposal: No changes were made to the rules in response to comments. Late 

comments were received from the Association of Texas Intrastate Natural Gas Pipelines. The comments 

addressed the rules and preamble, as well as the request for grant applications. Although no formal 

responses were included in the preamble for these late comments, some changes to the preamble have been 

made. Specifically, the prea~ble states that the 50% reduction in NOx rate can be achieved by replacing 

a reciprocating internal combustion engine with a turbine. 

The preamble has been changed to outline the process that the commission will use to distribute the funds 

in the emissions reductions incentives account. The commission will distribute up to $100,000 per eligible 

engine once the owner or operator installs controls and submits the necessary verification to the 

commission. After verification information has been received for all eligible engines or the final date for 

submission of verification information specified in all individual contracts, whichever occurs first, the 

commission will distribute any funds remaining in the account between all eligible grantees according to 

the criteria specified in the request for grant application and contracts issued under it. 
Commissioners 

Page 6 

January 9, 2004 

Re: Docket No. 2003-0699-RUL 

Additionally, the preamble specifies that the commission will specify a deadline for the submittal of project 

···verification in response·ttrthe-comments submttted-by-thei\.ssociation of·Texas-Intrastate·Natural-Gas--

Pipelines. The commenter requested that the preamble specify that the deadline for installation of controls 

be March 1, 2007. However, the statute specifies the same deadline of March 1, 2007 for two events that 

must occur in sequence: completion of the emission reductions project (which would require the submittal 

of project verification); and a deadline after which the commission may not pay or otherwise provide a 

financial incentive for such projects. In order to allow for adequate time to process payment requests, 

individual grant contracts may need to require an earlier date for project completion and submittal of 

verification information than the March 1, 2007 project completion date. Staff will decide on a fmal date 

for submission of verification information in individual contracts after additional discussions with internal 

staff and the Office of the Comptroller of Public Accounts regarding the time needed to process the 

payments. To provide certainty for early planning purposes, the preamble also states that November 1, 

2006 is the earliest date by which the commission will require submittal of verification information in an 

individual contract. This will allow staff to process the verifications and enable the commission to meet 

its statutory deadlines for making payment out of the emission reduction incentives account (which will 

require staff to calculate two distributions from the fund as outlined previously), while still allowing for 

flexibility through the grant contracts process. 

Agency contacts: 

Debra Barber, Rule Project Manager, 239-0412 

Tara Capobianco, Program Lead, 239-1117 

Terry Salem, Staff Attorney, 239-0469 

Diane Mazuca, Intergovernmental Relations Division, 239-3504 

Joyce Spencer, Texas Register Coordinator, 239-5017 

Attachments 

cc: 5 copies to the Chief Clerk for distribution 

Terri Seales 

Sonia Ralls 

David Schanbacher 

Brian Christian 

Ashley K. Wadick 

Dan Eden 

Derek Seal 

Randolph Wood 

Jim Muse 

Office of General Counsel 

Debra Barber 

Joyce Spencer 

cc (without attachments): 

Tara Capobianco, Program Lead/Program Liaison 

Terry Salem, Staff Attorney 

Kathy Vail, Regulation Development Team Leader 

Kerri Rowland, OLS Liaison 
EVALUATION OF TESTIMONY 

The Texas Commission on Environmental Quality (commission) adopts amendments to 

§§116.770, 116.772, and 116.776 without changes to the proposed text as published in the 

October 10, 2003 issue of the Texas Register (28 TexReg 8814). Sections 116.770, 116.772, 

and 116.776 will not be republished. 

Sections 116.770 and 116.772 are adopted as revisions to the state implementation plan (SIP) 

and will be submitted to the United States Environmental Protection Agency (EPA). 

BACKGROUND AND SUMMARY OF THE FACTUAL BASIS FOR THE ADOPTED RULES 

When the legislature first created the Texas Clean Air Act in 1971, the legislature did not 

require existing significant sources of air emissions to comply with (i.e., were grandfathered 

from) the then new requirement to obtain a permit. These existing sources are commonly 

known as grandfathered facilities. If grandfathered facilities had not been modified since 1971, 

they continued to be authorized to operate without a permit. The legislature addressed the 

issue of grandfathered facilities in 1997 and 1999, requiring the creation of: 1) a voluntary 

emissions reduction plan for the permitting of grandfathered facilities; and 2) directing the 

commission to implement directives regarding the permitting of grandfathered electric 

generating facilities. Then, the 77th Legislature, 2001, amended the Texas Health and Safety 

Code, Texas Clean Air Act, to require that all grandfathered facilities obtain permits. The 

mandatory permitting requirements of House Bill 2912 were the culmination of legislative 

efforts, beginning in 1997, to permit or otherwise authorize all grandfathered facilities. House 

Bill 2912 created four new types of permits for grandfathered facilities: existing facility permits, 

small business stationary source permits, electric generating facility permits, and pipeline facility 

-1-
permits. House Bill 2912 also mandated the dates by which grandfathered facilities must apply 

for a permit and have controls operational or submit a shutdown notice. Grandfathered 

reciprocating internal combustion engines that are part of the processing, treating, 

compression, or pumping facilities connected to, or part of, a gathering or transmission pipeline 

may apply for a pipeline facilities permit. 

Additionally, House Bill 2914, §78, created a new incentive program to assist in retrofitting 

reciprocating internal combustion engines associated with pipelines. To implement this 

incentive program, the commission adopted §116.776, Distribution of Funds from the Emissions 

Reductions Incentives Account for Control of Emissions from Grandfathered Reciprocating 

Internal Combustion Engines Located in the East Texas Region. In order to be eligible for 

reimbursement under this program, the owner or operator of a grandfathered reciprocating 

internal combustion engine was required to make an annual reduction in emissions of nitrogen 

oxides (NOx) as compared to the emissions reported for the facility in the 1997 industrial point 

source emissions inventory. 

Most recently, the 78th Legislature, 2003, enacted House Bill 638, relating to emissions 

reductions incentives and the emissions reductions incentives account. House Bill 638 

changed the reimbursement eligibility requirement from a 50% reduction in annual emissions to 

the 50% reduction in NOx emissions rate needed to obtain a pipeline facilities permit. It also 

prohibited the commission from requiring more stringent emissions reduction criteria than the 

reductions already required to obtain a pipeline facilities permit in order to receive money from 

the emissions reductions incentives account; prohibited persons, or affiliates of persons, who 

contribute money to the emissions reductions incentives account from receiving money from the 

-2-
fund; and allowed grandfathered reciprocating internal combustion engines associated with 

pipelines that meet certain criteria to be considered permitted by statute. 

To implement these revisions to the Texas Clean Air Act, the commission adopts amendments 

to the rules in Chapter 1 t6, Subchapter H, Permits for Grandfathered Facilities. 

SECTION BY SECTION DISCUSSION 

Section 116. 770, Requirement to Apply 

The commission adopts an amendment to this section that changes the section title from 

"Requirement to Apply" to "Requirement to Apply or Register" to better specify the purpose of 

the section. 

Adopted §116.770 adds new subsections (b) and (c), which specify that certain facilities are 

considered permitted and that the owners and operators of those facilities must submit 

registrations. Adopted §116.770(b) implements Texas Health and Safety Code, §382.05186(j). 

Specifically, adopted §116.770(b) states that a reciprocating internal combustion engine 

required to obtain a pipeline facility permit that is subject to a mass emissions cap established 

by the commission is considered permitted if the facility is located in an ozone nonattainment 

area and is in compliance with all state and federal requirements for that area by June 20, 

2003. 30 TAG §101.351(a) currently specifies that a mass emissions cap applies to the 

Houston/Galveston ozone nonattainment area. Adopted §116.770(b)(2) requires that the 

grandfathered reciprocating internal combustion engines satisfy any currently applicable state 

or federal regulations in effect as of June 20, 2003, the effective date of House Bill 638, in order 

to be considered permitted. In addition, the commission adopts new §116.770(c), which 

requires owners and operators of facilities that are considered permitted under §116.770(b) to 

submit registrations on or before July 1, 2004. The registration requirement is necessary for 

-3-
the executive director to determine whether all facilities that are considered to be permitted 

meet the criteria outlined in House Bill 638. The adopted subsections require registration rather 

than require those facilities to obtain a permit under Chapter 116, qualify for a permit by rule, or 

shut down. Registrations must be submitted by July 1, 2004. This date allows owners and 

operators of facilities that are considered permitted to submit registrations one year after the 

effective date of House Bill 638. This date is also approximately six months after the 

anticipated adoption date of these rules. 

Section 116. 772, Notice of Shutdown 

The commission adopts a change to the cross-references in §116.772(a) and (b) to parallel 

changes made in §116.770. 

Section 116.776, Distribution of Funds from the Emission Reductions Incentives Account for 

Control of Emissions from Grandfathered Reciprocating Internal Combustion Engines Located 

in the East Texas Region. 

The commission adopts an amendment to the title of §116.776 from "Distribution of Funds from 

the Emissions Reductions Incentives Account for Control of Emissions from Grandfathered 

Reciprocating Internal Combustion Engines Located in the East Texas Region" to "Emissions 

Reductions Incentives for Control of Emissions from Grandfathered Reciprocating Internal 

Combustion Engines Located in the East Texas Region." In addition, the commission adopts 

new §116.776(a) specifying that incentives will be made available through a grant program 

administered under §116. 776 and 30 TAC Chapter 14, Grants. The commission also adopts 

new §116.776(b)(6) to specify that, to seek a distribution from the account, the owner or 

operator must enter a contract with the commission in accordance with a request for grant 

applications. The remaining paragraphs are renumbered accordingly. Also, the commission 

-4-
adopts amendments to §116.776(b) to specify that reimbursement is based on eligibility criteria 

and grant program requirements. The commission also adopts amendments to §116.776(c) 

and (d) to use the term "incentive criteria" rather than "criteria for distribution." The adopted 

amendments make it clear that the commission is implementing the statute through a grant 

program. The commission adopts amendments to §116.776(b)(1) to specify that eligibility for 

reimbursement of the cost of controls from the emissions reductions incentives account is 

based on hourly emissions reductions rather than annual emissions reductions. Specifically, 

§116. 776(b )(1) requires owners or operators of grandfathered reciprocating internal combustion 

engines associated with pipelines to reduce hourly NOx emission rates, expressed in terms of 

grams per brake horsepower-hour, by at least 50%, in order to be eligible for reimbursement. 

The existing section, adopted as subsection (b)(1), requires owners or operators to make a 

50% reduction in the annual emissions of NOx as compared to the 1997 Industrial Point Source 

Emissions Inventory. Adopted §116.776(b)(1) is consistent with Texas Health and Safety Code, 

§382.051865(a), as amended. The commission adopts amendments to §116.776(b)(3) to 

specify that an owner or operator who opts to achieve the 50% reduction in NOx by replacing a 

grandfathered engine will also be eligible for reimbursement. The commission adopts 

amendments to §116.776(b)(8) to clarify that, if an owner or operator elects to achieve 

reductions via replacement of an engine, the owner or operator must obtain authorization under 

Chapter 116 or 30 TAC Chapter 106. Since turbines may also be considered engines or 

combustion engines, the replacement of a reciprocating internal combustion engine with a 

turbine is also eligible for reimbursement. In addition, the commission adopts amendments to 

§116.776(b)(8) to delete language that specifies when the registration of replacement for an 

electric engine should be submitted. Also, the commission adopts amendments to 

§ 116. 776(b )( 1 0) to specify that engines with a NOx emission rate at least 50% lower than the 

rate of the grandfathered engine, in addition to electric engines, must be installed and operated 

-5-
and the grandfathered engine be permanently shut down before the executive director can 

authorize payment from the emissions reductions incentive account. The commission also 

adopts new §116.776(b)(12), which specifies that a person or an affiliate of a person who pays 

or contributes to the emissions reductions incentives account is ineligible to receive money from 

the account. This new paragraph implements Texas Health and Safety Code, §382.051866(e). 

The commission also adopts an amendment to §116.776(c) by adding the word "rate" when 

specifying that the commission may reimburse costs associated with achieving emissions 

reductions between 30% and 50% of an engine's hourly NOx emissions rate. The adopted 

amendment to §116.776(c) is consistent with Texas Health and Safety Code, §382.051865(c), 

as amended. Lastly, the commission changes the criteria for distribution of funds based on the 

statutory changes outlined by House Bill 638 and stakeholder meetings held during the summer 

of 2002. House Bill 638 modifies Texas Health and Safety Code, §382.051865(d), to prohibit 

the commission from requiring any more stringent reduction criteria than the 50% reduction in 

grams per brake horsepower-hour for determining the eligibility for an emissions reduction 

project under the reimbursement program. The commission eliminates paragraphs ( 1) - (3) 

from existing §116.776(c), and adds a new criterion in §116.776(d)(2) specifying that the 

executive director will put a cap on the amount of reimbursement for each engine, if it 

determines it is appropriate in order to maximize equitable distribution of the fund. After 

discussions with participants in the stakeholder meetings, the commission originally decided to 

implement the criteria by reimbursing owners and operators of engines for 40% of the cost of 

controls up to a maximum of $100,000 per engine. The commission anticipated signing 

contracts for more engines than can be covered by the amount of money appropriated to the 

agency for this purpose. However, the number of requests for reimbursement was lower than 

anticipated. Based on General Appropriations Act (2003), Article IX, §8.01(d), the unexpended 

balance in the emissions reductions incentives account at the end of Fiscal Year 2003 is 

-6-
available for distribution in Fiscal Year 2004 and 2005. Therefore, the commission will 

distribute up to $100,000 per eligible engine once the owner or operator installs controls and 

submits the necessary verification to the commission. After verification information has been 

received for all eligible engines or the final date for submission of verification information 

specified in all individual contracts, whichever occurs first, the commission will distribute any 

funds remaining in the account between all eligible grantees according to the criteria specified 

in the request for grant application and contracts issued under it. If, during the grant review 

process, the commission determines that there will not be enough eligible costs to distribute all 

of the funds in the account, the commission may also issue a subsequent request for grant 

applications. In order to allow for adequate time to process payment requests under either of 

these options, the commission concluded that the individual grant contracts will need to reflect 

earlier project completion dates. 

House Bill638 and §116.776(b)(5) requires that the projects to control emissions be completed 

before March 1, 2007. However, Texas Health and Safety Code, §382.051865(g), also requires 

that the commission may not pay or otherwise provide a financial incentive for an emissions 

reduction project before the project is complete, and that the commission may not pay or 

otherwise provide a financial incentive on or after March 1 , 2007. If the commission were to 

receive project verification information immediately prior to the deadline, there would be no time 

to process the request prior to the deadline for payment. In addition, as discussed previously, 

the commission will distribute the funds in two separate rounds of payments: the first round of 

up to $100,000 being paid upon review of the verification information supplied by the grantee; 

and the second round to equitably distribute any funds remaining in the account to those 

owners or operators who have eligible costs of over $100,000. In no case will payments from 

the fund exceed 40% of the actual capital cost of controls for an individual engine. In order to 

-7-
address both the completion deadline and the payment deadline equitably, the commission will 

negotiate deadlines for project completion in the grant contracts. The commission determined 

that use of the contract mechanism will provide necessary flexibility for individual 

circumstances, while assuring that project verification information will be received in time to 

allow for processing prior to the payment deadline. The commission will decide on a final date 

for submission of verification information in individual contracts after additional discussions with 

internal staff and the Office of the Comptroller of Public Accounts regarding the time needed to 

process the payments. However, in order to provide certainty for early planning purposes, 

November 1, 2006 is the earliest date by which the commission will require submittal of 

verification information in an individual contract. 

FINAL REGULATORY IMPACT ANALYSIS DETERMINATION 

The commission reviewed the adopted rulemaking in accordance with the regulatory analysis 

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

does not meet the definition of a major environmental rule. A "major environmental rule" means 

a rule, the specific intent of which is to protect the environment or reduce risks to human health 

from environmental exposure and that may adversely affect in a material way the economy, 

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

sector of the state. The adopted rulemaking implements requirements from House Bill 638, 

78th Legislature, 2003, which prohibits the commission from requiring more stringent emissions 

reduction criteria than the reductions already required to obtain a pipeline facilities permit in 

order to receive money from the emissions reductions incentives account; prohibits persons, or 

affiliates of persons, who contribute money to the emissions reductions incentives account from 

receiving money from the fund; and allows grandfathered reciprocating internal combustion 

engines associated with pipelines that meet certain criteria to be considered permitted by 

-8-
statute. The adopted rules allow more grandfathered reciprocating internal combustion engines 

associated with pipelines to be eligible for reimbursement from the emissions reductions 

incentives account. 

The adopted rules are not anticipated to have adverse effects on the economy, productivity, 

competition, jobs, the environment, or the public health and safety of the state or a sector of the 

state, since the rules allow more engines to be eligible for reimbursement. Similarly, the 

requirements of the adopted rules are expected to result in little or no impacts on the economy, 

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

sector of the state. All grandfathered reciprocating internal combustion engines associated with 

pipelines affected by the rules are already required to meet control requirements specified by 

House Bill 2912. 

Additionally, the analysis required by Texas Government Code, §2001.0225(c), does not apply 

because the adopted rules do not meet any of the four applicability requirements of a major 

environmental rule. The adopted rules do not exceed a standard set by federal law, exceed an 

express requirement of state law, exceed a requirement of a delegation agreement, or adopt a 

rule solely under the general powers of the agency. The adopted rules do not exceed the 

requirements of the Federal Clean Air Act or the Texas Clean Air Act. Additionally, the adopted 

rules do not exceed a requirement of a delegation agreement, since there is no agreement that 

is applicable to this rulemaking, and are not adopted solely under the general powers of the 

agency. 

The commission received no public comments regarding the draft regulatory impact analysis 

determination during the public comment period. 

-9-
TAKINGS IMPACT ASSESSMENT 

The commission evaluated the adopted rules and performed an analysis of whether the rules 

are subject to Texas Government Code, Chapter 2007. The purpose of the adopted rules is to 

fulfill the commission's obligation to implement House Bill 638. The adopted rules advance this 

purpose by prohibiting the commission from requiring more stringent emissions reduction 

criteria than the reductions already required to obtain a pipeline facilities permit in order to 

receive money from the emissions reductions incentives account; prohibiting persons, or 

affiliates of persons, who contribute money to the emissions reductions incentives account from 

receiving money from the fund; and allowing grandfathered reciprocating internal combustion 

engines associated with pipelines that meet certain criteria to be considered permitted by 

statute. The adopted rules will not burden private real property. The ability of an owner or 

operator to claim a reimbursement or be considered permitted by statute will not affect private 

property in a manner which restricts or limits an owner's right to the property that would 

otherwise exist in the absence of governmental action. Consequently, the adopted rules do not 

meet the definition of a taking under Texas Government Code, §2007.002(5). 

CONSISTENCY WITH THE COASTAL MANAGEMENT PROGRAM 

The commission reviewed the adopted rulemaking and found it is a rulemaking identified in the 

Coastal Coordination Act Implementation Rules, 31 TAC §505.11 (b )(2), relating to rules subject 

to the Coastal Management Program, and, therefore, required that goals and policies of the 

Texas Coastal Management Program be considered during the rulemaking process. The 

commission reviewed this action for consistency and determined that the adopted rules do not 

impact any Texas Coastal Management Program goals or policies. The prohibition against 

requiring more stringent emissions reduction criteria than the reductions already required to 

obtain a pipeline facilities permit in order to receive money from the emissions reductions 

-10-
incentives account; the prohibition against persons, or affiliates of persons, who contribute 

money to the emissions reductions incentives account from receiving money from the fund; and 

allowing grandfathered reciprocating internal combustion engines associated with pipelines that 

meet certain criteria to be considered permitted by statute will not change any otherwise 

applicable requirement associated with controls of the affected engines. No comments on the 

consistency of this rulemaking were submitted during the comment period. 

EFFECT ON SITES SUBJECT TO THE FEDERAL OPERATING PERMITS PROGRAM 

This adoption has no impact on owners and operators of sites subject to the operating permit 

program unless they also own or operate grandfathered reciprocating internal combustion 

engines associated with pipelines. If so, the owners and operators of sites subject to the 

operating permit program will be required to revise their permits or permit applications. 30 TAC 

§122.10(2) specifies that all of the requirements of Chapter 116 are applicable requirements. 

Therefore, owners and operators of grandfathered reciprocating internal combustion engines 

associated with pipelines will be required to revise the operating permit to reflect that the 

facilities are considered permitted, rather than grandfathered. 

PUBLIC COMMENT 

A public hearing on this proposal was held October 30, 2003, and the public comment period 

closed on November 10, 2003. No oral comments were received at the public hearing. The 

commission received written comments on the rule proposal from the Houston Regional Group 

of the Sierra Club (Sierra Club) and the EPA. Sierra Club opposed the rule proposal, while EPA 

supported the rule proposal, but requested clarification. 

-11-
RESPONSE TO COMMENTS 

Sierra Club commented that it opposes any permit program that the commission has, 

regardless of the direction of the state legislature, that does not require appropriate new source 

review or a similar permitting program to ensure that all permitted sources do emit the lowest 

amount of air pollution possible, within the cost and technological constraints of best available 

control technology. 

The commission made no change in response to this comment. The commission is 

adopting rule changes directly implementing the statutory changes specified in House 

Bill 638. Section 116.770(b) specifies that reciprocating internal combustion engines 

subject to a mass emissions cap, located in an ozone nonattainment area, and achieving 

compliance with all state and federal requirements will be considered permitted. 

Although a specific facility authorized under §116.770(b) will not be required to get a 

permit, it will be required to register with the commission in order to be considered 

permitted. Registered facilities will also be required to make emission reductions under 

the Mass Cap and Trade Program or obtain allowances. Each facility may not 

specifically be required to emit the lowest amount of air pollution possible, but, as a 

whole, facilities that are subject to the Mass Cap and Trade Program will be required to 

make emission reductions. As noted, these facilities were previously "grandfathered" 

from the requirement to meet preconstruction permitting requirements when the Texas 

Clean Air Act was first created in 1971. The legislature determined in House Bill 638 that 

it would be appropriate for these facilities to meet different permitting requirements. 

The EPA asked how the state will ensure that the appropriate permit application is submitted if 

an emissions increase occurs as the result of modifying one or more grandfathered 

-12-
reciprocating internal combustion engines, and if the increases trigger any federal 

requirements. 

The commission made no change in response to this comment. The commission is 

adopting amendments to the permit requirements for grandfathered facilities in 

§§116. 770, 116.772, and 116.776. These sections of the commission rules do not 

authorize emission increases. Rather, these sections establish the requirement to 

register a facility that is considered permitted and the requirement to obtain a permit for 

a grandfathered facility. The validity of any registration issued for facilities eligible 

under House Bill 638 to be "considered permitted" is dependent upon the information 

submitted by the facility. If that information is determined to be incorrect, the 

registration would be invalid. 

The EPA commented that the proposed rules do not document how an owner or operator of a 

grandfathered facility must demonstrate initial and ongoing compliance with all current 

applicable state and federal requirements for the Houston/Galveston ozone nonattainment area 

as of June 20, 2003, and requested that the methods of compliance be documented. Sierra 

Club also asked how the commission can consider a reciprocating internal combustion engine 

for a pipeline facility permitted when there is no documentation to demonstrate that the source 

is achieving compliance with all state and federal requirements. Sierra Club further commented 

that all the commission requires is that compliance be achieved, and that there should be a 

requirement for a site visit by the commission or a local air pollution control agency to ensure 

that the facility is in compliance before a permit is issued to the facility. 

-13-
The commission made no change in response to these comments. Facilities eligible to 

be "considered permitted" under §116.770(b) are subject to the Mass Cap and Trade 

Program, which requires an annual determination regarding the status of emission 

allowances for those facilities. This will provide a mechanism for determining 

compliance with the emission limitations that apply to these facilities. The commission 

does not agree that a site visit is necessary to determine compliance, since the Mass 

Cap and Trade Program is a SIP-approved program that is already subject to other 

compliance reviews. 

-14-
STAFF 

RECOMMENDATIONS 
CHAPTER 16: CONTROL OF AIR POLLUTION BY PERMITS 

FOR NEW CONSTRUCTION OR MODIFICATION 

SUBCHAPTER H: PERMITS FOR GRANDFATHERED FACILITIES 

DIVISION 1: GENERAL APPLICABILITY 

§116.770, §116.772 

STATUTORY AUTHORITY 

The amendments are adopted under Texas Health and Safety Code, Texas Clean Air Act, 

§382.011, which authorizes the commission to administer the requirements of the Texas Clean 

Air Act; §382.012, which provides the commission the authority to develop a comprehensive 

plan for the state's air; §382.017, which authorizes the commission to adopt rules consistent 

with the policy and purposes of the Texas Clean Air Act; §382.051, which authorizes the 

commission to issue a permit for numerous similar sources; §382.0518, which authorizes the 

commission to issue permits for construction of new facilities or modifications of existing 

facilities; §382.05181, which requires grandfathered facilities to apply for a permit and comply 

with its conditions by certain dates, and requires certain actions of the commission; 

§382.05186, which requires pipeline facilities permits; §382.051865, which requires a 

reimbursement program for certain emissions reductions from reciprocating internal combustion 

engines associated with pipelines; §382.051866, which requires an emissions reductions 

incentives account; and Texas Water Code, §5.103, which authorizes the commission to adopt 

rules. 

§116.770. Requirement to Apply or Register. 

(a) The owner or operator of a grandfathered facility must apply for a permit to operate 

that facility under this chapter, qualify for a permit by rule under Chapter 106 of this title 

-1-
(relating to Permits by Rule), or submit a notice of shutdown before September 1, 2003 for 

facilities located in the East Texas region as defined in §1 01.330 of this title (relating to 

Definitions), and before September 1, 2004 for facilities located in the West Texas region as 

defined in §1 01.330 of this title or El Paso County. 

(b) A reciprocating internal combustion engine that is subject to the requirement to 

obtain a pipeline facilities permit and to a mass emissions cap as established by commission 

rule is considered permitted with respect to all air contaminants if the facility is: 

(1) located in an area designated as a nonattainment area for an ozone national 

ambient air quality standard; and 

(2) achieving compliance with all state and federal requirements designated for 

that area by June 20, 2003. 

(c) The owner or operator of a reciprocating internal combustion engine that is 

considered permitted under subsection (b) of this section must submit a registration to the 

commission on or before July 1, 2004, which must include Form Pl-1 G, Grandfathered Facility 

Permit Application. 

§116.772. Notice of Shutdown. 

(a) The owner or operator of a grandfathered facility who chooses to shut the facility 

down rather than obtain a permit under this chapter or qualify for a permit by rule under Chapter 

106 of this title (relating to Permits by Rule), shall notify the executive director in writing by 

-2-
completing Form Pl-1 GSD, Notice of Shutdown, prior to the deadlines specified in §116. 770(a) 

or §116.774 of this title (relating to Requirement to Apply; and Eligibility for Small Business 

Stationary Source Permits). The owner or operator of a grandfathered facility who submits a 

Form PI-1GSD, Notice of Shutdown, prior to the deadlines specified in §116.770(a) or §116.774 

of this title shall cease emitting air contaminants by: 

( 1) March 1, 2007, if the facility is not eligible for a small business stationary 

source permit and is located in the East Texas region as defined in §1 01.330 of this title 

(relating to Definitions); or 

(2) March 1, 2008, if the facility is eligible for a small business stationary source 

permit or is located in the West Texas region as defined in §101.330 of this title or El Paso 

County. 

(b) The owner or operator of a grandfathered facility who applies for a permit prior to 

the deadlines specified in §116.770(a) or §116.774 of this title, but prior to permit issuance, 

decides to shut the facility down must submit a Form Pl-1 GSD, Notice of Shutdown, prior to 

withdrawal of the permit application and must cease emitting air contaminants by the date 

specified in subsection (a)(1) or (2) of this section. 

(c) The owner or operator of a facility that has been shut down and for which a Notice 

of Shutdown has been submitted must obtain the proper authorization under this chapter or 

Chapter 106 of this title prior to operating the facility. 

(d) The Notice of Shutdown shall include, as a minimum, an identification of the facility 

-3-
to be shut down, the date the owner or operator intends to cease operating the facility, and an 

inventory of the type and amount of emissions that will be eliminated when the facility ceases to 

operate. 

-4-
SUBCHAPTER H: PERMITS FOR GRANDFATHERED FACILITIES 

DIVISION 2: SMALL BUSINESS STATIONARY SOURCE PERMITS, 

PIPELINE FACILITIES PERMITS, AND EXISTING FACILITY PERMITS 

§116.776 

STATUTORY AUTHORITY 

The amendment is adopted under Texas Health and Safety Code, Texas Clean Air Act, 

§382.011, which authorizes the commission to administer the requirements of the Texas Clean 

Air Act; §382.012, which provides the commission the authority to develop a comprehensive 

plan for the state's air; §382.017, which authorizes the commission to adopt rules consistent 

with the policy and purposes of the Texas Clean Air Act; §382.051, which authorizes the 

commission to issue a permit for numerous similar sources; §382.0518, which authorizes the 

commission to issue permits for construction of new facilities or modifications of existing 

facilities; §382.05181, which requires grandfathered facilities to apply for a permit and comply 

with its conditions by certain dates, and requires certain actions of the commission; 

§382.05186, which requires pipeline facilities permits; §382.051865, which requires a 

reimbursement program for certain emissions reductions from reciprocating internal combustion 

engines associated with pipelines; §382.051866, which requires an emissions reductions 

incentives account; and Texas Water Code, §5.1 03, which authorizes the commission to adopt 

rules. 

§116.776. Emissions Reductions Incentives for Control of Emissions from 

Grandfathered Reciprocating Internal Combustion Engines Located in the East Texas 

Region. 

(a) Emissions reductions incentives will be made available to eligible facilities through a 

-5-
grant program administered under this section and Chapter 14 of this title (relating to Grants). 

(b) Eligible facilities. Owners or operators of grandfathered reciprocating internal 

combustion engines are eligible for reimbursement of a portion of the cost of controls from the 

emissions reductions incentive account based on the following eligibility criteria and grant 

program requirements. 

( 1) The owner or operator of grandfathered reciprocating internal combustion 

engine or engines associated with pipelines must reduce the hourly emissions rate of nitrogen 

oxides (NOx), expressed in terms of grams per brake horsepower-hour, by at least 50%. 

(2) The grandfathered reciprocating internal combustion engine or engines must 

be located in the East Texas region as defined in §101.330 of this title (relating to Definitions). 

(3) The owner or operator must apply for and receive a pipeline facilities permit 

or replace the grandfathered reciprocating internal combustion engine with an engine with a 

NOx emission rate which is at least 50% lower than the emission rate of the grandfathered 

engine or an electric engine. 

(4) The project to control emissions must be initiated on or before September 1, 

2006. 

(5) The project to control emissions must be completed before March 1, 2007. 

(6) The owner or operator of the grandfathered reciprocating internal 

-6-
combustion engine for which a distribution from the emissions reductions incentives account is 

sought, must enter a contract with the commission in accordance with a request for proposals 

(grant applications) under Chapter 14 of this title. 

(7) The owner or operator of the grandfathered reciprocating internal 

combustion engine for which a distribution from the emissions reductions incentives account is 

sought, must identify, at the time the permit application is filed, the facilities for which 

reimbursement is requested. 

(8) The owner or operator who elects to replace a grandfathered reciprocating 

internal combustion engine with an electric engine must submit a Registration of Replacement 

of a Grandfathered Reciprocating Internal Combustion Engine with an Electric Engine. The 

owner or operator who elects to achieve the 50% reduction in NOx emissions rate by replacing 

a grandfathered engine or engines with new combustion engines must obtain authorization for 

the new engines under this chapter or Chapter 106 of this title (relating to Permits by Rule). 

(9) The emissions controls identified in the permit must be operating before the 

executive director can authorize payment from the emissions reductions incentives account. 

(10) For grandfathered reciprocating internal combustion engines replaced by 

electric engines or engines with a NOx emission rate which is at least 50% lower than the 

emission rate of the grandfathered engine, the replacement engine must be installed and 

operating and the grandfathered reciprocating internal combustion engine must be permanently 

shut down before the executive director can authorize payment from the emissions reductions 

incentives account. 

-7-
(11) Facilities required by any other state or federal law to make reductions in 

emissions of NOx are not eligible for reimbursement. 

(12) A person or an affiliate of a person who pays or contributes money to the 

emissions reductions incentives account is ineligible to receive money from the account. 

(c) Limitations on reimbursement. The commission may reimburse the owner or 

operator of a grandfathered reciprocating internal combustion engine or engines for no more 

than the cost associated with achieving emissions reductions between 30% and 50% of the 

engine's hourly emissions rate of NOx before the addition of controls. The commission may 

distribute less than the amount calculated in this manner based on the amount of money 

contributed to the fund and the incentive criteria for distribution outlined in subsection (d) of this 

section. 

(d) Incentive criteria. The commission will distribute any money in the fund based on 

the following incentive criteria: 

(1) when the reductions are actually achieved; and 

(2) if the executive director determines that a cap is appropriate in order to 

maximize equitable distribution of the fund, a cap on the amount to be reimbursed for each 

engine. 

(e) Verification of emissions reductions. Prior to reimbursement from the emissions 

-8-
reductions incentives account, the owner or operator of each grandfathered reciprocating 

internal combustion engine must provide documentation verifying the amount of actual emission 

reductions achieved. 

-9-
Docket No. 2003-0699-RUL 

On January 28, 2004, the Texas Commission on Environmental Quality (Commission), during a 

public meeting, considered adoption of the amendments to 30 Texas Administrative Code (TAC) 

§§116.770, 116.772 and 116.776. The Commission adopts these amendments, in Chapter 116, Control 

of Air Pollution by Permits for New Construction or Modification, Subchapter H, Permits for 

Grandfathered Facilities, Division 1, General Applicability, and Division 2, Small Business Stationary 

Source Permits, Pipeline Facilities Permits and Existing Facility Permits. Sections 116.770 and 

116.772 were considered as a revision to the state implementation plan (SIP). The Commission 

approved the submission of §116.770 and §116.772 as a revision to the SIP. 

Under Tex. Health & Safety Code Ann., §§382.011, 382.012, and 382.023, the Commission 

has the authority to control the quality of the state's air and to issue orders consistent with the policies 

and purposes of the Texas Clean Air Act, Chapter 382 of the Tex. Health & Safety Code. The 

proposed amendments were published for comment in the October 10, 2003 issue of the Texas Register 

(28 TexReg 8814). 

Pursuant to Tex. Health & Safety Code Ann., §382.017 (Vernon 2001), Tex. Gov't Code, 

Chapter 2001 (Vernon 2000 & Vernon Supp. 2001) and 40 Code of Federal Regulations §51.102 and 

after proper notice, the Commission conducted a public hearing to consider the amendments and 

revision to the SIP. Proper notice included prominent advertisement in the areas affected at least 30 

days prior to the date of the hearing. A public hearing was held in Austin on October 30, 2003. 

The Commission circulated hearing notices of its intended action to the public, including 

interested persons, the Regional Administrator of the United State Environmental Protection Agency 

(EPA), and all applicable local air pollution control agencies. The public was invited to submit data, 

views, and recommendations on the proposed amendments to §116.770 and §116.772 as a revision to 

the SIP, either orally or in writing, at the hearing or during the comment period. Prior to the scheduled 

hearing, copies of the proposed amendments were available for public inspection at the Commission's 

central office and regional offices. 

Data, views, and recommendations of interested persons regarding the proposed amendments 

and SIP revision were submitted to the Commission during the comment period, and were considered by 

the Commission as reflected in the analysis of testimony incorporated by reference into this Order. The 

Commission finds that the analysis of testimony includes the names of all interested groups or 
associations offering comment on the amended rules and the SIP revision and their position concerning 

the same. 

IT IS THEREFORE ORDERED BY THE COMMISSION that the amended rules and revisions 

to the SIP incorporated by reference into this Order are hereby adopted. The Commission further 

authorizes staff to make any non-substantive revisions to the rules necessary to comply with Texas 

Register requirements. The adopted rules and the preamble to the adopted rules and the revisions to the 

SIP are incorporated by reference into this Order as if set forth at length verbatim in this Order. 

IT IS FURTHER ORDERED BY THE COMMISSION that on behalf of the Commission, the 

Chairman should transmit a copy of this Order, together with the adopted rules and revisions to the SIP, 

to the Regional Administrator of EPA as a proposed revision to the Texas SIP pursuant to Federal Clean 

Air Act, §110, codified at 42 U.S. Code Ann., §§7410- 7671q, as amended. 

This Order constitutes the Order of the Commission required by the Administrative Procedure 

Act, Tex. Gov't Code, §2001.033. 

If any portion of this Order is for any reason held to be invalid by a court of competent 

jurisdiction, the invalidity of any portion shall not affect the validity of the remaining portions. 

Date issued: FEB 04 2004 TEXAS COMMISSION ON 

ENVIRONMENTAL QUALITY 
authorize the commission to a opt rules necessary to carry out 

its powers and duties under Te as Water Code; and under Texas 

Health and Safety Code, §382. 17, concerning Rules, which authorizes the commission to ad t rules consistent with the policy 

and purposes of the Texas Cl n Air Act. The amendments are 

also adopted under Texas He lth and Safety Code, §382.002, 

concerning Policy and Purpos , which establishes the commission's purpose to safeguard th state's air resources, consistent 

with the protection of public h alth, general welfare, and physical property; §382.011, conce ing General Powers and Duties, 

which authorizes the commi ion to control the quality of the 

state's air; §382.012, concern g State Air Control Plan, which 

authorizes the commission to prepare and develop a general, 

comprehensive plan for the pr per control of the state's air; and 

§382.016, concerning Monitor g Requirement; Examination of 

Records, which authorizes the mmission to prescribe reasonable requirements for measuri g and monitoring the emissions 

of air contaminants. 

This agency hereby certifies th t the adoption has been reviewed 

by legal counsel and found to a valid exercise of the agency's 

legal authority. 

Filed with the Office of the S cretary of State on January 30, 

2004. 

TRD-200400613 

Stephanie Bergeron 

Director, Environmental Law Divisi n 

Texas Commission on Environme al Quality 

Effective date: February 19, 2004 

Proposal publication date: Septa 

For further information, please call 

DIVISION 1. 

30 TAC §115.614 

STATUTORY AUTHORITY 

er 26, 2003 

(512) 239-6087 

• 

RPRODUCTS 

The repeal is adopted under xas Water Code, §5.1 03, concerning Rules, and §5.105, ncerning General Policy, which 

authorize the commission to a opt rules necessary to carry out 

its powers and duties under Te s Water Code; and under Texas 

Health and Safety Code, §382. 17, concerning Rules, which authorizes the commission to ad pt rules consistent with the policy and purposes of the Texa Clean Air Act. The repeal is 

also adopted under Texas He th and Safety Code, §382.002, 

concerning Policy and Purpos , which establishes the commission's purpose to safeguard th state's air resources, consistent 

with the protection of public h lth, general welfare, and physical property; §382.011, cancer ing General Powers and Duties, 

which authorizes the commi on to control the quality of the 

state's air; §382.012, concerni g State Air Control Plan, which 

authorizes the commission to repare and develop a general, 

comprehensive plan for the pr er control of the state's air; and 

§382.016, concerning Monitori g Requirements; Examination of 

Records, which authorizes the ommission to prescribe reasonable requirements for measuri g and monitoring the emissions 

of air contaminants. 

This agency hereby certifies th the adoption has been reviewed 

by legal counsel and found to b a valid exercise of the agency's 

legal authority. 

Filed with the Office of the Se retary of State on January 30, 

2004. 

TRD-200400614 

Stephanie Bergeron 

Director, Environmental Law Divisi 

Texas Commission on Environmen I Quality 

Effective date: February 19, 2004 

Proposal publication date: Septem er 26, 2003 

For further information, please call: (512) 239-6087 

• • 

CHAPTER 116. CONTROL OF AIR 

POLLUTION BY PERMITS FOR NEW 

CONSTRUCTION OR MODIFICATION 

SUBCHAPTER H. PERMITS FOR 

GRANDFATHERED FACILITIES 

The Texas Commission on Environmental Quality (commission) 

adopts amendments to §§116.770, 116.772, and 116.776 without changes to the proposed text as published in the October 10, 

2003, issue of the Texas Register (28 TexReg 8814). Sections 

116.770, 116.772, and 116.776 will not be republished. 

Sections 116.770 and 116.772 are adopted as revisions to the 

state implementation plan (SIP) and will be submitted to the 

United States Environmental Protection Agency (EPA). 

BACKGROUND AND SUMMARY OF THE FACTUAL BASIS 

FOR THE ADOPTED RULES 

When the legislature first created the Texas Clean Air Act in 

1971, the legislature did not require existing significant sources 

of air emissions to comply with (i.e., were grandfathered from) 

the then new requirement to obtain a permit. These existing 

sources are commonly known as grandfathered facilities. If 

grandfathered facilities had not been modified since 1971, 

they continued to be authorized to operate without a permit. 

The legislature addressed the issue of grandfathered facilities 

in 1997 and 1999, requiring the creation of: 1) a voluntary 

emissions reduction plan for the permitting of grandfathered facilities; and 2) directing the commission to implement directives 

regarding the permitting of grandfathered electric generating 

facilities. Then, the 77th Legislature, 2001, amended the Texas 

Health and Safety Code, Texas Clean Air Act, to require that 

all grandfathered facilities obtain permits. The mandatory 

permitting requirements of House Bill2912 were the culmination 

of legislative efforts, beginning in 1997, to permit or otherwise 

authorize all grandfathered facilities. House Bill 2912 created 

four new types of permits for grandfathered facilities: existing facility permits, small business stationary source permits, electric 

generating facility permits, and pipeline facility permits. House 

Bill 2912 also mandated the dates by which grandfathered 

facilities must apply for a permit and have controls operational or 

submit a shutdown notice. Grandfathered reciprocating internal 

combustion engines that are part of the processing, treating, 

compression, or pumping facilities connected to, or part of, 

a gathering or transmission pipeline may apply for a pipeline 

facilities permit. 

Additionally, House Bill 2914, §78, created a new incentive program to assist in retrofitting reciprocating internal combustion engines associated with pipelines. To implement this incentive program, the commission adopted §116.776, Distribution of Funds 

ADOPTED RULES February 13, 2004 29 TexReg 1369 
from the Emissions Reductions Incentives AccountforControl of 

Emissions from Grandfathered Reciprocating Internal Combustion Engines Located in the East Texas Region. In order to be 

eligible for reimbursement under this ~rogram, the own~r or op_erator of a grandfathered reciprocating Internal combustion eng1ne 

was required to make an annual reduction in emissions of nitrogen oxides (NO.) as com~ared ~o the emissi~ns. rep~rted for the 

facility in the 1997 industnal p01nt source em1ss1ons mventory. 

Most recently, the 78th Legislature, 2003, enacted House ~ill 

638, relating to emissions reductions incentive~ and the emissions reductions incentives account. House Bill 638 changed 

the reimbursement eligibility requirement from a 50% reduction 

in annual emissions to the 50% reduction in NO, emissions rate 

needed to obtain a pipeline facilities permit. It also prohibited the 

commission from requiring more stringent emissions reduction 

criteria than the reductions already required to obtain a pipeline 

facilities permit in order to receive money from the emis~ions 

reductions incentives account; prohibited persons, or affiliates 

of persons, who contribute money to the emissions reductions 

incentives account from receiving money from the fund; and allowed grandfathered reciprocating intern~l c~m~ustion engin~s 

associated with pipelines that meet certam cntena to be considered permitted by statute. To implement these revisions to the 

Texas Clean Air Act, the commission adopts amendments to the 

rules in Chapter 116, Subchapter H, Permits for Grandfathered 

Facilities. 

SECTION BY SECTION DISCUSSION 

Section 116. 770, Requirement to Apply 

The commission adopts an amendment to this section that 

changes the section title from "Requirement to Apply" to "Requirement to Apply or Register" to better specify the purpose of 

the section. 

Adopted §116.770 adds new subsections (b) a~d (c), which 

specify that certain facilities are considered permitted and that 

the owners and operators of those facilities must submit registrations. Adopted §116.770(b) implements Texas Health and 

Safety Code, §382.051860). Specifically, a~opted ~116.77~(b) 

states that a reciprocating internal combustion engme requ1red 

to obtain a pipeline facility permit that i~ s~bje~t to a. mass 

emissions cap established by the comm1ss1on IS con~1dered 

permitted if the facility is located in an ozone nonatta1nm~nt 

area and is in compliance with all state and federal requirements for that area by June 20, 2003. 30 TAC §101.351(a) 

currently specifies that a mass emissions cap applies to 

the Houston/Galveston ozone nonattainment area. Adopted 

§116.770(b)(2) requires that the grandfathered recip_rocating internal combustion engines satisfy an/currently applicable s~te 

or federal regulations in effect as of June 20, ~003, the effe_ct1ve 

date of House Bill 638, in order to be considered perm1tt~d. 

In addition, the commission adopts new §116.770(c), wh1ch 

requires owners and operators of facilities that are considered 

permitted under §116.770(b) to submit registrations on or before 

July 1, 2004. The registration requirement is ne~~~sary for the 

executive director to determine whether all facilities that are 

considered to be permitted meet the criteria outlined in House 

Bill 638. The adopted subsections require registration rather 

than require those facilities to obtain a permit under_ Chapter 

116, qualify for a permit by rule, or ~hut down. Reg1strat1ons 

must be submitted by July 1, 2004. Th1s date allo~s owners an? 

operators of facilities that are consi~ered permitted to ~ubm1t 

registrations one year after the effect1~e date of House B1ll 638. 

29 TexReg 1370 February 13, 2004 Texas Register 

This date is also approximately six months after the anticipated 

adoption date of these rules. 

Section 116. 772, Notice of Shutdown 

The commission adopts a change to the cross-references in 

§116.772(a) and (b) to parallel changes made in §116.770. 

Section 116.776, Distribution of Funds from the Emission Reductions Incentives Account for Control of Emissions from Grandfathered Reciprocating Internal Combustion Engines Located in 

the East Texas Region 

The commission adopts an amendment to the title of §116.776 

from "Distribution of Funds from the Emissions Reductions 

Incentives Account for Control of Emissions from Grandfathered 

Reciprocating Internal Combustion Engines Located. in the 

East Texas Region" to "Emissions Reductions Incentives for 

Control of Emissions from Grandfathered Reciprocating Internal 

Combustion Engines Located in the East Texas Region." In 

addition, the commission adopts new §116.776(a) specifying 

that incentives will be made available through a grant program 

administered under §116.776 and 30 TAC Chapter 14, Grants. 

The commission also adopts new §116.776(b)(6) to specify that, 

to seek a distribution from the account, the owner or operator 

must enter a contract with the commission in accordance with 

a request for grant applications. The remainin~ ~aragraphs 

are renumbered accordingly. Also, the comm1ss1on adopts 

amendments to § 116. 776(b) to specify that reimbursement is 

based on eligibility criteria and grant program requirements. 

The commission also adopts amendments to §116.776(c) and 

(d) to use the term "incentive criteria" rather than "criteria for 

distribution." The adopted amendments make it clear that the 

commission is implementing the statute through a grant program. The commission adopts amendments to §116.776(b)(1) 

to specify that eligibility for reimbursement of the cost of controls 

from the emissions reductions incentives account is based 

on hourly emissions reductions rather than an_nual emissions 

reductions. Specifically, §116.776(b)(1) requ1res owners. or 

operators of grandfathered reciprocating internal comb~st~on 

engines associated with pipelines to reduce hourly NO, em1ss1on 

rates, expressed in terms of grams per brake horsepower-hour, 

by at least 50%, in order to be eligib_le for reimburs~ment. The 

existing section, adopted as subsection (b)(1), reqUire_s ~wners 

or operators to make a 50% reduction in th':l annual em1ss_1o~s of 

NO as compared to the 19971ndustrial Pomt Source Em1ss1ons 

Inventory. Adopted §116.776(b)(1) is consistent with Texas 

Health and Safety Code, §382.051865(a), as amended. T~e 

commission adopts amendments to §116.776(b)(3) to spec1fy 

that an owner or operator who opts to achieve the 50% reduction 

in NO by replacing a grandfathered engine will also be eligible 

for rei'mbursement. The commission adopts amendments to 

§116.776(b)(8) to clarify that, if an owner or ~perator elects to 

achieve reductions via replacement of an engme, the owner or 

operator must obtain authorization under Chapte~ 116 or 30 TAC 

Chapter 106. Since turbines may also be cons1dere~ eng1~es 

or combustion engines, the replacem~nt ?f a rec1~r?catmg 

internal combustion engine with a turbine 1s also ehg1ble for 

reimbursement. In addition, the commission adopts amendments to §116.776(b)(8) to delete language th~t spe?ifies when 

the registration of replacement for an electnc engme should 

be submitted. Also, the commission adopts amendments to 

§116.776(b)(10) to specify that engines with a NO, emissi~n ra~e 

at least 50% lower than the rate of the grandfathered eng me, 1n 

addition to electric engines, must be installed and operated and 

the grandfathered engine be permanently shut down before the 
executive director can authorize payment from the emissions 

reductions incentive account. The commission also adopts new 

§116.776(b)(12), which specifies that a person or an affiliate of 

a person who pays or contributes to the emissions reductions incentives account is ineligible to receive money from the account. 

This new paragraph implements Texas Health and Safety Code, 

§382.051866(e). The commission also adopts an amendment 

to §116.776(c) by adding the word "rate" when specifying 

that the commission may reimburse costs associated with 

achieving emissions reductions between 30% and 50% of an 

engine's hourly NO, emissions rate. The adopted amendment 

to §116.776(c) is consistent with Texas Health and Safety Code, 

§382.051865(c), as amended. Lastly, the commission changes 

the criteria for distribution of. funds based on the statutory 

changes outlined by House Bill 638 and stakeholder meetings 

held during the summer of 2002. House Bill 638 modifies 

Texas Health and Safety Code, §382.051865(d), to prohibit the 

commission from requiring any more stringent reduction criteria 

than the 50% reduction in grams per brake horsepower- hour 

for determining the eligibility for an emissions reduction project 

under the reimbursement program. The commission eliminates 

paragraphs (1)- (3) from existing §116.776(c), and adds a new 

criterion in §116.776(d)(2) specifying that the executive director 

will put a cap on the amount of reimbursement for each engine, 

if it determines it is appropriate in order to maximize equitable 

distribution of the fund. After discussions with participants in 

the stakeholder meetings, the commission originally decided 

to implement the criteria by reimbursing owners and operators 

of engines for 40% of the cost of controls up to a maximum 

of $100,000 per engine. The commission anticipated signing 

contracts for more engines than can be covered by the amount 

of money appropriated to the agency for this purpose. However, 

the number of requests for reimbursement was lower than anticipated. Based on General Appropriations Act (2003), Article IX, 

§8.01(d), the unexpended balance in the emissions reductions 

incentives account at the end of Fiscal Year 2003 is available 

for distribution in Fiscal Year 2004 and 2005. Therefore, the 

commission will distribute up to $100,000 per eligible engine 

once the owner or operator installs controls and submits the 

necessary verification to the commission. After verification 

information has been received for all eligible engines or the 

final date for submission of verification information specified in 

all individual contracts, whichever occurs first, the commission 

will distribute any funds remaining in the account between all 

eligible grantees according to the criteria specified in the request 

for grant application and contracts issued under it. If, during the 

grant review process, the commission determines that there will 

not be enough eligible costs to distribute all of the funds in the 

account, the commission may also issue a subsequent request 

for grant applications. In order to allow for adequate time to 

process payment requests under either of these options, the 

commission concluded that the individual grant contracts will 

need to reflect earlier project completion dates. 

House Bill 638 and §116.776(b)(5) requires that the projects to 

control emissions be completed before March 1, 2007. However, Texas Health and Safety Code, §382.051865(g), also requires that the commission may not pay or otherwise provide a 

financial incentive for an emissions reduction project before the 

project is complete, and that the commission may not pay or otherwise provide a financial incentive on or after March 1, 2007. 

If the commission were to receive project verification information immediately prior to the deadline, there would be no time to 

process the request prior to the deadline for payment. In addition, as discussed previously, the commission will distribute the 

funds in two separate rounds of payments: the first round of up 

to $100,000 being paid upon review of the verification information supplied by the grantee; and the second round to equitably 

distribute any funds remaining in the account to those owners 

or operators who have eligible costs of over $100,000. In no 

case will payments from the fund exceed 40% of the actual capital cost of controls for an individual engine. In order to address 

both the completion deadline and the payment deadline equitably, the commission will negotiate deadlines for project completion in the grant contracts. The commission determined that 

use of the contract mechanism will provide necessary flexibility 

for individual circumstances, while assuring that project verification information will be received in time to allow for processing 

prior to the payment deadline. The commission will decide on a 

final date for submission of verification information in individual 

contracts after additional discussions with internal staff and the 

Office of the Comptroller of Public Accounts regarding the time 

needed to process the payments. However, in order to provide 

certainty for early planning purposes, November 1, 2006 is the 

earliest date by which the commission will require submittal of 

verification information in an individual contract. 

FINAL REGULATORY IMPACT ANALYSIS DETERMINATION 

The commission reviewed the adopted rulemaking in accordance with the regulatory analysis requirements of Texas 

Government Code, §2001.0225, and determined that the rulemaking does not meet the definition of a major environmental 

rule. A "major environmental rule" means a rule, the specific 

intent of which is to protect the environment or reduce risks 

to human health from environmental exposure and that may 

adversely affect in a material way the economy, productivity, 

competition, jobs, the environment, or the public health and 

safety of the state or a sector of the state. The adopted 

rulemaking implements requirements from House Bill 638, 

78th Legislature, 2003, which . prohibits the commission from 

requiring more stringent emissions reduction criteria than 

the reductions already required to obtain a pipeline facilities 

permit in order to receive money from the emissions reductions 

incentives account; prohibits persons, or affiliates of persons, 

who contribute money to the emissions reductions incentives 

account from receiving money from the fund; and allows grandfathered reciprocating internal combustion engines associated 

with pipelines that meet certain criteria to be considered permitted by statute. The adopted rules allow more grandfathered 

reciprocating internal combustion engines associated with 

pipelines to be eligible for reimbursement from the emissions 

reductions incentives account. 

The adopted rules are not anticipated to have adverse effects on 

the economy, productivity, competition, jobs, the environment, 

or the public health and safety of the state or a sector of the 

state, since the rules allow more engines to be eligible for reimbursement. Similarly, the requirements of the adopted rules are 

expected to result in little or no impacts on the economy, productivity, competition, jobs, the environment, or the public health and 

safety of the state or a sector of the state. All grandfathered reciprocating internal combustion engines associated with pipelines 

affected by the rules are already required to meet control requirements specified by House Bill 2912. 

Additionally, the analysis required by Texas Government Code, 

§2001.0225(c), does not apply because the adopted rules do 

not meet any of the four applicability requirements of a major 

environmental rule. The adopted rules do not exceed a standard 

set by federal law, exceed an express requirement of state law, 

ADOPTED RULES February 13,2004 29 TexReg 1371 
exceed a requirement of a delegation agreement, or adopt a rule 

solely under the general powers of the agency. The adopted 

rules do not exceed the requirements of the Federal Clean Air 

Act or the Texas Clean Air Act. Additionally, the adopted rules 

do not exceed a requirement of a delegation agreement, since 

there is no agreement that is applicable to this rulemaking, and 

are not adopted solely under the general powers of the agency. 

The commission received no public comments regarding the 

draft regulatory impact analysis determination during the public 

comment period. 

TAKINGS IMPACT ASSESSMENT 

The commission evaluated the adopted rules and performed an 

analysis of whether the rules are subject to Texas Government 

Code, Chapter 2007. The purpose of the adopted rules is to fulfill the commission's obligation to implement House Bi11638. The 

adopted rules advance this purpose by prohibiting the commission from requiring more stringent emissions reduction criteria 

than the reductions already required to obtain a pipeline facilities permit in order to receive money from the emissions reductions incentives account; prohibiting persons, or affiliates of persons, who contribute money to the emissions reductions incentives account from receiving money from the fund; and allowing 

grandfathered reciprocating internal combustion engines associated with pipelines that meet certain criteria to be considered 

permitted by statute. The adopted rules will not burden private 

real property. The ability of an owner or operator to claim a reimbursement or be considered permitted by statute will not affect 

private property in a manner which restricts or limits an owner's 

right to the property that would otherwise exist in the absence 

of governmental action. Consequently, the adopted rules do not 

meet the definition of a taking under Texas Government Code, 

§2007.002{5). 

CONSISTENCY WITH THE COASTAL MANAGEMENT PROGRAM 

The commission reviewed the adopted rulemaking and found it 

is a rulemaking identified in the Coastal Coordination Act Implementation Rules, 31 TAC §505.11(b)(2), relating to rules subject 

to the Coastal Management Program, and, therefore, required 

that goals and policies of the Texas Coastal Management Program be considered during the rulemaking process. The commission reviewed this action for consistency and determined that 

the adopted rules do not impact any Texas Coastal Management Program goals or policies. The prohibition against requiring more stringent emissions reduction criteria than the reductions already required to obtain a pipeline facilities permit in order to receive money from the emissions reductions incentives 

account; the prohibition against persons, or affiliates of persons, 

who contribute money to the emissions reductions incentives account from receiving money from the fund; and allowing grandfathered reciprocating internal combustion engines associated 

with pipelines that meet certain criteria to be considered permitted by statute will not change any otherwise applicable requirement associated with controls of the affected engines. No 

comments on the consistency of this rulemaking were submitted 

during the comment period. 

EFFECT ON SITES SUBJECT TO THE FEDERAL OPERATING 

PERMITS PROGRAM 

This adoption has no impact on owners and operators of sites 

subject to the operating permit program unless they also own 

or operate grandfathered reciprocating internal combustion engines associated with pipelines. If so, the owners and operators 

29 TexReg 1372 February 13, 2004 Texas Register 

of sites subject to the operating permit program will be required 

to revise their permits or permit applications. 30 TAC §122.10(2) 

specifies that all of the requirements of Chapter 116 are applicable requirements. Therefore, owners and operators of grandfathered reciprocating internal combustion engines associated 

with pipelines will be required to revise the operating permit to 

reflect that the facilities are considered permitted, rather than 

grandfathered. 

PUBLIC COMMENT 

A public hearing on this proposal was held October 30, 2003, 

and the public comment period closed on November 10, 2003. 

No oral comments were received at the public hearing. The commission received written comments on the rule proposal from the 

Houston Regional Group of the Sierra Club {Sierra Club) and 

the EPA. Sierra Club opposed the rule proposal, while EPA supported the rule proposal, but requested clarification. 

RESPONSE TO COMMENTS 

Sierra Club commented that it opposes any permit program that 

the commission has, regardless of the direction of the state legislature, that does not require appropriate new source review or 

a similar permitting program to ensure that all permitted sources 

do emit the lowest amount of air pollution possible, within the 

cost and technological constraints of best available control technology. 

The commission made no change in response to this comment. 

The commission is adopting rule changes directly implementing the statutory changes specified in House Bill 638. Section 

116.770(b) specifies that reciprocating internal combustion engines subject to a mass emissions cap, located in an ozone 

nonattainment area, and achieving compliance with all state and 

federal requirements will be considered permitted. Although a 

specific facility authorized under §116.770(b) will not be required 

to get a permit, it will be required to register with the commission 

in order to be considered permitted. Registered facilities will also 

be required to make emission reductions under the Mass Cap 

and Trade Program or obtain allowances. Each facility may not 

specifically be required to emit the lowest amount of air pollution possible, but, as a whole, facilities that are subject to the 

Mass Cap and Trade Program will be required to make emission 

reductions. As noted, these facilities were previously "grandfathered" from the requirement to meet preconstruction permitting 

requirements when the Texas Clean Air Act was first created in 

1971. The legislature determined in House Bill 638 that it would 

be appropriate for these facilities to meet different permitting requirements. 

The EPA asked how the state will ensure that the appropriate 

permit application is submitted if an emissions increase occurs 

as the result of modifying one or more grandfathered reciprocating internal combustion engines, and if the increases trigger any 

federal requirements. 

The commission made no change in response to this comment. 

The commission is adopting amendments to the permit requirements for grandfathered facilities in §§ 116.770, 116.772, and 

116.776. These sections of the commission rules do not authorize emission increases. Rather, these sections establish the 

requirement to register a facility that is considered permitted and 

the requirement to obtain a permit for a grandfathered facility. 

The validity of any registration issued for facilities eligible under 

House Bill 638 to be "considered permitted" is dependent upon 

the information submitted by the facility. If that information is determined to be incorrect, the registration would be invalid. 
The EPA commented that the proposed rules do not document 

how an owner or operator of a grandfathered facility must demonstrate initial and ongoing compliance with all current applicable 

state and federal requirements for the Houston/Galveston ozone 

nonattainment area as of June 20, 2003, and requested that the 

methods of compliance be documented. Sierra Club also asked 

how the commission can consider a reciprocating internal combustion engine for a pipeline facility permitted when there is no 

documentation to demonstrate that the source is achieving compliance with all state and federal requirements. Sierra Club further commented that all the commission requires is that compliance be achieved, and that there should be a requirement for a 

site visit by the commission or a local air pollution control agency 

to ensure that the facility is in compliance before a permit is issued to the facility. 

The commission made no change in response to these comments. Facilities eligible to be "considered permitted" under 

§116.770(b) are subject to the Mass Cap and Trade Program, 

which requires an annual determination regarding the status 

of emission allowances for those facilities. This will provide 

a mechanism for determining compliance with the emission 

limitations that apply to these facilities. The commission does 

not agree that a site visit is necessary to determine compliance, 

since the Mass Cap and Trade Program is a SIP-approved 

program that is already subject to other compliance reviews. 

DIVISION 1. GENERAL APPLICABILITY 

30 TAC §116.770, §116.772 

STATUTORY AUTHORITY 

The amendments are adopted under Texas Health and Safety 

Code, Texas Clean Air Act, §382.011, which authorizes the 

commission to administer the requirements of the Texas Clean 

Air Act; §382.012, which provides the commission the authority 

to develop a comprehensive plan for the state's air; §382.017, 

which authorizes the commission to adopt rules consistent 

with the policy and purposes of the Texas Clean Air Act; 

§382.051, which authorizes the commission to issue a permit 

for numerous similar sources; §382.0518, which authorizes the 

commission to issue permits for construction of new facilities or 

modifications of existing facilities; §382.05181, which requires 

grandfathered facilities to apply for a permit and comply with its 

conditions by certain dates, and requires certain actions of the 

commission; §382.05186, which requires pipeline facilities permits; §382.051865, which requires a reimbursement program 

for certain emissions reductions from reciprocating internal 

combustion engines associated with pipelines; §382.051866, 

which requires an emissions reductions incentives account; and 

Texas Water Code, §5.1 03, which authorizes the commission 

to adopt rules. 

This agency hereby certifies that the adoption has been reviewed 

by legal counsel and found to be a valid exercise of the agency's 

legal authority. 

Filed with the Office of the Secretary of State on January 30, 

2004. 

TRD-200400619 

Stephanie Bergeron 

Director, Environmental Law Division 

Texas Commission on Environmental Quality 

Effective date: February 19, 2004 

Proposal publication date: October 10, 2003 

For further information, please call: (512) 239-5017 

• • • 

DNISION 2. SMALL BUSINESS STATIONARY 

SOURCE PERMITS, PIPELINE FACILITIES 

PERMITS, AND EXISTING FACILITY PERMITS 

30 TAC §116.776 

STATUTORY AUTHORITY 

The amendment is adopted under Texas Health and Safety 

Code, Texas Clean Air Act, §382.011, which authorizes the 

commission to administer the requirements of the Texas Clean 

Air Act; §382.D12, which provides the commission the authority 

to develop a comprehensive plan for the state's air; §382.017, 

which authorizes the commission to adopt rules consistent 

with the policy and purposes of the Texas Clean Air Act; 

§382.051, which authorizes the commission to issue a permit 

for numerous similar sources; §382.0518, which authorizes the 

commission to issue permits for construction of new facilities or 

modifications of existing facilities; §382.05181, which requires 

grandfathered facilities to apply for a permit and comply with its 

conditions by certain dates, and requires certain actions of the 

commission; §382.05186, which requires pipeline facilities permits; §382.051865, which requires a reimbursement program 

for certain emissions reductions from reciprocating internal 

combustion engines associated with pipelines; §382.051866, 

which requires an emissions reductions incentives account; and 

Texas Water Code, §5.1 03, which authorizes the commission 

to adopt rules. 

This agency hereby certifies that the adoption has been reviewed 

by legal counsel and found to be a valid exercise of the agency's 

legal authority. 

Filed with the Office of the Secretary of State on January 30, 

2004. 

TRD-200400618 

Stephanie Bergeron 

Director, Environmental Law Division 

Texas Commission on Environmental Quality 

Effective date: February 19, 2004 

Proposal publication date: October 10, 2003 

For further information, please call: (512) 239-5017 

• 

CHAPTER 290. 

• 

DRINKING WATER 

The Texas Commission on Env· onmental Quality (commission) 

adopts the amendments to §§2 0.38, 290.39, 290.41 - 290.47, 

290.104, 290.106, 290.107, 2 0.111, 290.117, 290.121, and 

290.122. Sections 290.39, 90.42, 290.45, 290.46, and 

290.111 are adopted with ch nges to the proposed text as 

published in the August 8, 20 3 issue of the Texas Register 

(28 TexReg 6206). Sections 0.38, 290.41, 290.43, 290.44, 

290.47, 290.104, 290.106, 2 0.107, 290.117, 290.121, and 

ADOPTED RULES February 13, 2004 29 TexReg 1373