OFFICE OF THE GOVERNOR

RICK PERRY GOVERNOR 

## April 12, 2001

Mr . Gregg A

. Cooke Regional Administrator U .S. Environmental Protection Agency, Region 6 1445 Ross Avenue, Suite 1200 

## Dallas, Texas 75202-2733 Dear Mr. Cooke: i+ ` r"F

. ~"^,',

:1 ^+J ~a . C7)



### Enclosed is a proposed revision to the Texas State Implementation Plan (SIP) that the Texas Natural Resource Conservation Commission (TNRCC) adopted on March 7, 2001 . The amendments concern 30 TACChapter 116, Control ofAirPollution by Permits for New Construction or Modification, § 116 .111, 116.115, 116

.610, 116

.615, 116

.711, and 116.715; and new §116.176. The amendments supplement the cap and trade programfor the Houston/Galveston (HGA) ozone nonattainment area by clarifying that any source of emissions ofnitrogen oxides (NOX) in the HGAarea that uses permits by rule or flexible, standard, or general permits must obtain allowances for those emissions if the facility, or group offacilities, has a collective design capacity to emit ten tons or more of NO ., per year and is subject to an emission standard in 30TACChapter 117 and by allowing the use of NOX allowances to meet the correlating portion of emissions offset requirements. Apublic hearing certification, a complete record of the public hearing, and the accompanying order are also enclosed. I look forward to your expeditious approval ofthis SIPrevision.

RP:bpk Enclosures cc: Mr. Robert J. Huston, Chairman, TNRCC Jeffrey A

. Saitas, P.E., Executive Director, TNRCC 

## I

## TEXAS NATURAL RESOURCE CONSERVATION COMMISSION

THE STATE OF TEXAS § COUNTY OF TRAVIS §

This is to certify that the attached are true and correct copies of a revision to the Texas State Implementation Plan, adopted on March 7, 2001, pursuant to 40 Code of Federal Regulations (CFR) §51 .104. Prior tothe adoption of this revision, a public hearing was held pursuant to 40CFR, §51 .102(a), and notice of the hearing was given which conformed to the requirements of 40 CFR, §51 .102(d) . I am the custodian of the records of the Texas Natural Resource Conservation Commission (Commission) . To certify which, witness my hand and the seal of the Commission, this the 21st day of March, 2001 .



### nna Castanuel ChfefClerk Texas Natural Resource Conservation Commission

### Texas Natural Resource Conservation Commission Public Hearing November 16, 2000 Concerning 30 TAC Chapter 116 regarding the cap and trade program and revisions to the State Implementation Plan Rule Log Number 2000-047-116-AI

### INTRODUCTION

The commission held a public hearing in Houston on November 16, 2000, to consider amendments to §§116.111, 116.115, 116.610, 116.615, 116.711, and 116.715; new116.176; and corresponding revisions to the State Implementation Plan. The proposed amended sections would supplement the cap and trade programproposed for the Houston/Galveston (HGA) ozone nonattainment area (25 TexReg 8137) by clarifying that any source of emissions of nitrogen oxides (NO,,) in the HGA area that uses permits by rule or flexible, standard, or general permits must obtain allowances for those emissions if the source emits, or has the potential to emit, ten tons per year and is subject to an emission standard in 30TAC Chapter 117, Control ofAir Pollution fromNitrogen Compounds . The proposed new section would allow

the use of NO,, allowances to meet the correlating portion of emissions offset requirements. Written comments were accepted through November 20, 2000 . All testimony and comments have been reviewed and seriously considered. This volume contains a complete record of the public hearing 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

Additional copies of this hearing record are maintained in the TNRCC central office at 12100 Park 35 Circle, Austin, Texas 78753. For further information, contact Beecher Cameron at (512) 239-1495.

# PUBLIC NOTIFICATIONAND PROPOSAL

### PUBLIC NOTIFICATION

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

1 . Publication of the notice of public hearing in the following newspaper on the date listed: Houston Chronicle; October 13, 2000



### 2 . Publication of the proposed rules in the October 20, 2000 issue of the Texas Register (25 TexReg 10449)

3 . Correspondence forwarding the notice of public hearings to the following officials and agencies : Speaker of the House Lieutenant Governor City of El Paso. City of Victoria Planning Department Dallas Department of Health and Human Services El Paso City-County Health District Federal Highway Administration Fort Worth Public Health 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 Air Quality Bureau 

### Oklahoma Department of Environmental Quality U . S. Environmental Protection Agency

### EXAMPLE OF NEWSPAPER CLASSIFIED AD Houston Chronicle October 13, 2000



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### the hearing and #* Offte Policy, ( 4M 

### a» vta catbn or ather ettorrrrbdation

:t~ nirq toetterd Envlrom~ental Requests should be made a: far 512) 239 " 

### advance possible. as Carm~ents maYbe submlttedto Lola Brown .AAC 

### Policy, Office AnaNsis. e, of ErMronrentat

Natural Resource Cvraarvat Assessrnent. Texas TOM P m 7,871 Austh, ttt4ulorL PA

. Box 13097 Ca W

( ts 512) Z39-1808

.A1i oomrr 3067, or by fax to 20007047-116-Al, reference Rule Loo Number 2 , e by50 ra 1 0 . ~00 . rriber Nov a.m must be caNad

W wrRpouia , y Texas, l

tior~s~DhcxL~t51~~ me P~ott~c r ~ y 4000 . on October Iswed inagencies and the LBB, the commission believes that the intent of

SB633wasonly to require thefull RIA for rules that areextraordinary in nature. Whilethe SIP ruleswill have a broad impact, that impact is no greaterthan is necessaryor appropriate to meet the requirements of the FCAA. Forthese reasons, rules proposed for inclusionin theSIPfall under theexception in Texas Government Code, §2001 .0225(a), becausethey are required by federal law . The commission performed photochemical grid modeling which predicts that NO emission reductions, such as those required by these rules, will result in reductions in ozone formation in the HGAozone nonattainment area. This rulemaking does not exceed an express requirement of state law . This rulemaking is intended to obtain NO

. emission reductions which will result in reductions in ozone formation in the HGAozone nonattainment area and help bring HGA into compliance with the air quality standards established underfederal law as NAAQS for ozone

. The rulemaking does not exceed a standard set by federal law, exceed an express requirement of state law(unless specifically required by federal law), or exceed a requirement of adelegation agreement. The rulemaking was not developedsolely under the general powers of the agency, but was specifically developed to meet the NAAQS established under federal lawand authorized under Texas Clean Air Act (TCAA), §§382.011, 382.012, and 382 .017 as well as under 42 USC, §7410(a)(2)(A) . The commission invites public comment on the draft RIA . TAKINGS IMPACT ASSESSMENT Thecommission completedatakings impact assessment for the proposed rules. The following is asummary of that assessment . Theseamendments are proposed as part of astrategy to reduce and permanentlycap emissionsof NO . to alevel which wouldallow the HGAnonattainment area to attin the NAAQS for ozone . Promulgation and enforcement of the rules will not burden private real property

. The proposed amendments do notaffect private property in a manner which restricts or limits an owner's right to the property that would otherwise exist in the absence of a governmental action. Additionally, the allowances that are thesubject of these rules are not property rights. Consequently, these proposed amendments do not meet the definition of atakings under Texas Government Code, §2007.002(5) . Although the proposed rule revisions do notdirectly prevent a nuisance or prevent an immediate threat to life or property, they do prevent a real and substantial threat to public health and safety, and partially fulfill afederal mandate under the USC, §7410 . Specifically, the emission limitations and control requirements within this proposalwere developed in order to meet the ozone NAAQSset by the EPAunder the USC, §7409 . States are primarily responsible for ensuring attainment and maintenance of the NAAQS once the EPA has established them . Under the USC, §7410and related provisions, states must submit, for approval by the EPA, SIPs that providefor the attainment and maintenance of NAAQS through control programs directed to sources of the pollutants involved. Therefore, the purpose of the rule proposal is to implement a NO strategy which is necessary for the HGA area to meet the ai ; quality standards established underfederal law as NAAQS. Consequently, theexemption whichapplies to these proposed rules is that of an action reasonably taken to fulfill an obligation mandated by federal law . Therefore, these proposed revisions will not constitute a takings under Texas Government Code, Chapter 2007. CONSISTENCY WITH THE COASTAL MANAGEMENT PRO- GRAM Thecommission determined the proposed rulemaking relates to an action or actions subject to the Texas Coastal Management Plan (CMP) in accordance with the Coastal Coordination Act of 1991, as amended (Texas Natural Resource Code, §33 .201 et seq.), and the commission's rules in 30TAC Chapter 281, Subchapter B, concerning Consistencywith theTexas Coastal Management Program

. As required by 30TAC§505.11(b)(2) and 30 TAC§281 .45(a)(3), relating to actions and rules subject to the CMP, commission rules governing air pollutant emissions must be consistent with the applicable goals and policies of the CMP The commission reviewed this action for consistency with the CMP goals and policies in accordance with the regulations of the Coastal Coordination Council and determined the proposed rules are consistent with the applicable CMPgoal expressed in 31 TAC§501 .12(1) of protecting and preserving the quality and values of coastal natural resource areas, and the policy in 31 TAC§501 .14(q), which requires thecommission protectair quality in coastal areas. The proposed amendments would statethat applicants for permits of newor modified sources in HGAmust comply with Chapter 101, Subchapter H, Division 3 . These proposedamendments do notauthorizeany new NO . air emissions. Interested persons may submit comments on the onsistency of the proposed ruleswith the CMPduring thepublic comment period. EFFECT ON SITESSUBJECTTO THE FEDERAL OPERATING PERMITS PROGRAM The proposed amendments to §§116 .111, 116

.115, 116.610, 116.615, 116.711, and 116.715 are not considered applicable requirements under 30 TACChapter 122, thus these changes would not require revisions to theaffected sourcesoperating permit. The proposed new §116.176 is considered an applicable requirement under 30TACChapter 122, thus owners or operators subject to the Federal Operating Permits Programmust, consistent with the revision process in Chapter 122, revise their operating permit to include the proposed new §116 .176 requirements for each emission unit affected by the revisions to §116.176 at their site. ANNOUNCEMENT OF HEARING The commission will hold a public hearing on this proposal in Houston on November 16, 2000at 2:00p.m . at the City of Houston Pollution Control Building Auditorium, located at 7411 Park Place Boulevard. Thehearing will be structured forthe 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 communicationor other accommodation needs, whoare planning to attend the hearing, should contact theOffice of Environmental Policy, Analysis, andAssessment at (512) 239-4900. Requests should be made as far in advance as possible. SUBMITTAL OF COMMENTS Comments may be submitted to Ms. Lola Brown, Office of Environmental Policy, Analysis, and Assessment, MC 206, PO . Box 13087, Austin,Texas 78711-3087 or faxed to (512) 239-4808. All comments should reference Rule Log Number2000-047-116-Al . Comments must be received by 5:00p .m ., November 20, 2000

. Forfurther information, please contact Matthew R . Bakerat (512) 239-1091 or Beecher Cameron at (512) 239-1495. 

## 25 TexReg 10452 October 20, 2000 Texas Register6,000emission sources in the HGAthat may be affected by the Federal Clean Air Act (FCAA), §109 (42 United States Code

proposed rulemaking. The allowance trading provision of the (USC), §7409), and therefore meet a federal requirement . Pro- ' t d d to rovide visions of 42 USC, §7410, require states to adopt a SIP which mass emissions cap and trade programis m en e p i-1- for "implementation, maintenance, and enforcement flexibility for regulated NO sources and potentia' in planning and determining the most economical mix of the application of emission control technology with the purchase of other NO, source's surplus allowances to meet emission reduction requirements. Additionally, NO, sources that remain within their allowances may receive additional revenuethrough the sale of surplus allowances to other emission sources . DRAFT REGULATORY IMPACT ANALYSIS DETERMINATION regulatory analysis requirements of Texas Government Code, §2001 .0225

. The commission determined that these proposed amendments to Chapter 116do not meetthe definition of a "major environmental rule" as defined in Texas Government Code, §2001 .0225

. Major environmental rule" means a rule, the specific intent of which, is to protect the environment or reduce risks to human health fromenvironmental exposure, andthat may adversely affect in a material way the economy, a sector of the economy, productivity, competition,jobs, theenvironment, or the public health and safety of thestate or a sector of thestate. The commission is proposing theseamendments to achieveadministrative consistency with proposed amendments to Chapter 101, (25TexReg 8137) . The proposed Chapter 101 amendments (25 TexReg 8137) would require sources or groups of sources in the HGAarea, which have the capacity to emit NO, in amounts greater than or equal to ten tons per year, to hold sufficient allowances to offset their actual NO, emissions under a cap and trade program

. These proposed amendments would require an applicantsubject to Chapter 101, Subchapter H, Division 3to acknowledgethat they are required to obtain allowances to comply with the cap and trade programto operate and that they must identify a source or sources of allowances prior to operation. In addition, the proposed amendments to Chapter 116 would allowapplicants of newmajor sources and major modifications to use allowances for the correlating portion of any offsets required under §116.150, New MajorSource or Major Modification in Ozone Nonattainment Areas. These amended sections would state that applicants of newor modified sources in HGAare to comply with Chapter 101, Subchapter H, Division 3 . These proposed sections do not expand the currently proposed cap and trade program

for the HGAarea. Theproposed amendments to Chapter 116do not adversely affect in a material waythe economy, asector of theeconomy, productivity, competition, jobs, the environment, orthe public health andsafety of thestateor asec- bill that exempted proposed rules fromthe full analysis u tor of the state; therefore, these amended sections do not con- the rule was a major environmental rule that exceeds a federal stitute a major environmental rule. In addition, Texas Govern- law . As previously discussed, 42 USCdoes not require specific ment Code, §2001 .0225, only applies to a major environmental programs, methods, or reductions in order to meet the NAAQS; rule, the result of which is to: 1 .) exceed a standard set by fed- thus, states must develop programs for each nonattainment area eral law, unless the rule is specifically required by state law ; 2.) to ensure that area will meet the attainment deadlines . Because exceed an express requirement of state law, unless the rule is of the ongoing need to address nonattainment issues, the comspecifically required by federal law ; 3 .) exceed a requirement of a delegation agreement or contract between the state andan mission routinely proposes and adopts SIP rules. Thecommission bases these actions on the presumption that the legislature agency or representative of thefederal governmentto implement a state and federal program ; or 4 .) adopt a rule solely under understandsthis federal scheme. If each rule proposed for incluthe general powers of the agency instead of under a specific sion in the SIPwas considered to be a major environmental rule g p that exceeds federal law, then every SIP rule would require the state law . This rulemaking is not subject to the regulatory anal- full RIA contemplated by SB 633 . This conclusion is inconsisysis provisions of §2001 .0225(b), because the proposed rules tent with the conclusions reached by the commission in its cost do not meet any of the four applicability requirements. Specifi- estimate and by the Legislative Budget Board (LBB) in its fiscal proposal cally, the were

emission developed banking in and order to trading meet the requirements ozone within this national notes

. It is a rule of statutory interpretation that thelegislature is presumption state ambientair quality standard (NAAQS) set by the EPAunder the a d that d Understand

sbased onl informationthe bysses, provi of the primary NAAQS in each air quality control region of the state. While §7410 does not require specific programs, methods, or reductions in order to meet the standard, state SIPS must include "enforceable emission limitations andother control measures, meansor techniques (including economic incentives such as fees, marketable permits, and auctions of emissions rights), as well as schedules and timetables for compliance as may be 

### necessary or appropriate to meet the applicable requirements on

__ . .._. . ._a .~, . ., ., . . .~o,l ndamakinn in liaht of the of this chapter," (meaning Chapter 85, Air P011uti Prevention some spe- and Control) . It is true that 42 USC does require cific measures for SIP purposes, like the inspection and maintenance program, but those programs are the exception, not the rule, in the SIP structure of 42 USC . The provisions of 42 USC recognize that states are in the best position to determine what programs and controls are necessary or appropriate in order to meet the NAAQS

. This flexibility allows states, affected industry, and the public, to collaborate on the best methods for attaining the NAAQS for the specific regions in the state. Even though 42 USC allows states to develop their own programs, this flexibility does not relieve a state fromdeveloping a programthat meets the requirements of §7410 . Thus,whilespecific measures are notgenerally required, the emission reductions are required. States arenotfree to ignore therequirements of §7410and must develop programs to assure that the nonattainment areas of the state will be brought into attainment on schedule. The requirement to provide a fiscal analysis of proposed regulations in theTexas Government Code was amended by Senate Bill (SB) 633 during the 75th Legislative Session, 1999. The intent of S13 633was to require agencies to conduct a regulatory impact analysis (RIA) of extraordinary tuleg=Tt~ese~areidentified in the statutory language as major environmental rules that will have a material adverse impact and will exceed a requirement of state law, federal law, or a delegated federal program, or are adopted solely under the general powers of the agency. With the understanding that this requirement would seldom apply, the commission provided a cost estimate for SB 633that concluded "based on an assessment of rules adopted by the agency in the past, it is not anticipated that the bill will have significant fiscal implications for the agency due to its limited application." The commission also noted that the number of rules that would require assessment under the provisions of the bill was not large. This conclusion was based, in part, on thecriteria setforth in the nIPSS



## PROPOSED RULES October 20, 2000 25TexReg 10451

### SUBCHAPTER B. NEW SOURCE REVIEW 

# PERMITS DIVISION 1 . PERMIT APPLICATION 30TAC §116

.111, §116.115 STATUTORYAUTHORITY The amendments are proposed under the Texas Health and Safety Code, TCAA, §382.011, which authorizes the commission to control the quality of the state's air; §382 .012, which authorizes the commission to develop a plan for control of the state's air; §382.017, which provides the commission the authority to adopt rules consistent with the policy and purposes of the TCAA; and USC, §7410(a)(2)(A), which requires SIPs to include enforceable emission limitations and other control measures or techniques, including economic incentives such as fees, marketable permits, and auction of emission rights. The proposed amendments implement TCAA, §382.011, General Powers and Duties; §382 .012, State Air Control Plan; and §382.017, Rules. §116 .111 . GeneralApplication . (a) In orderto be granteda permit, amendment, or special permit amendment, the application must include:

(1) (No change.) (2) information whichdemonstrates that all of the following are met. (A)- (K) (Nochange.)

Mass capandtrade allowances. If subject to Chapter 101 Subchapter HDivision 3 of this title (relating to mass Emissions CapandTradeProgram) the proposed facility,group offac ilities, or account must obtain allowances to operate (b) (No change.) §116 .115 . General andSpecial Conditions. (a) (No change.) (b) General conditions. Holders of permits, special permits, standard permits, and special exemptions shall comply with the following: (1) (No change.)

(2) thefollowinggeneral conditions ifthepermit or amendment is issued or amended on or after August 16, 1994, regardless of whether they arespecifically stated within the permit document.

(A)-(B) (No change.) (C) Start-up notification. (i)- (ii) (No change.) ili Prior to operation of the facilities authori zed by the permit the permit holder shall identify to the Office of Permitting, Remediation and Registration the source or sources o f allowances to be utilized for compliance with Chapter 101 Subchapter H, Division 3 ofthis title (relating to Mass Etnissions Cap and Trade Program) .

(D)- (I) (No change.) (c) (No change.) This agency hereby certifies that theproposal has been reviewed by legal counsel andfoundto be withintheagency's legal authority to adopt. Filed with the Office of the Secretary of State, on October 9, 

## 2000. TRD-200006932 Margaret Hoffman Director, Environmental LawDivision Texas Natural Resource Conservation Commission Earliest possible date of adoption: November 19, 2000 For further information, please call : (512) 239-0348 

### DIVISION 7. EMISSION REDUCTIONS: OFFSETS 30 TAC§116

.176 STATUTORYAUTHORITY The new

section is proposed under the Texas Health and Safety Code, TCAA, §382.011, which authorizes the commission to control the quality of the state's air; §382.012, which authorizes the commission to develop a plan for control of the state's air; §382.017, which provides the commission the authority to adopt rules consistent with the policy and purposes of the TCAA; and USC, §7410(a)(2)(A),which requires SIPs to includeenforceable emission limitations and other control measures or techniques, including economic incentives such as fees, marketable permits, and auction of emission rights. The new

section implements TCAA, §382.011, General Powers and Duties; §382

.012, State Air Control Plan; and §382.017, Rules. §11 6 .176 . Use of Mass CapAllowances for Off sets. Any allowances required to comply with the mass emission cap under Chapter 101 Subchapter ti, Division 3of this title (relathng to Mass Em issions Cap and Trade Program) may be used to meet the conelat in portionof theemission offset requirements neededto com plywith $116 150of this title (relattnQto New MaiorSou

rce or Major Modifi cation in Ozo

ne Nonattainment Areas) . This agency hereby certifiesthat the proposal has been reviewed by legal counsel andfound to bewithin the agency's legal authority to adopt. 

### Filed with the Office of the Secretary of State, on October 9, 2000 . TRD-200006933 Margaret Hoffman Director, Environmental LawDivision Texas Natural Resource Conservation Commission Earliest possible date of adoption: November 19, 2000 For further information, please call : (512) 239-0348 

### SUBCHAPTER F STANDARD PERMITS 30TAC §116.610, §116

.615 STATUTORY AUTHORITY The amendments are proposed under the Texas Health and Safety Code, TCAA, §382 .011, which authorizes the commission to control the quality of the state's air; §382.012, whicf authorizes the commission to develop a plan for control o' 

## PROPOSED RULES October 20, 2000 25 TexReg 10453the state's air; §382.017, which provides the commission the authority to adopt rules consistent with the policy and purposes of the TCAA; and USC, §7410(a)(2)(A), which requires SIPs to include enforceable emission limitations and other control measures or techniques, including economic incentives such as fees, marketable permits, and auction of emission rights. The proposed amendments implement TCAA, §382.011, General Powers and Duties; §382.012, State Air Control Plan; and §382.017, Rules

. §116 .610 . Applicability

. (a) Under theTCAA, §382 .051, a project whichmeets the requirements for a standard permit listed in this subchapter or issued by the commission is hereby entitled to thestandard permit, provided the following conditions listed in this section are met. For the purposes ofthis subchapter, project means the construction or modification of a facility or a group offacilities subinitted under thesame registration: (1)-(4) (No change.) (5) the proposed project must comply with the applicable maximum achievable control technology standards as listed under 40 CFR Part 63, promulgated by the EPA under FCAA, § 112 or as listed under Chapter 113, Subchapter Cof this title (relating to National Emissions Standards for HazardousAir Pollutants for Source Categories (FCAA_ §112, 40CFR63)) ; and [:]

If subject to Chapter 101, Subchapter H, Division 3 of this title (relatingto Mass Emissions Cap andTrade Program) the proposedfacility, group of facilities, oraccount must obtain allocations to operate. (b)-(d) (No change.) §116 .615 . General Conditions. Thefollowing general conditions areapplicable to holders of standard permits, butwill not necessarily be specifically stated within the standard permit document.

(1)-(4) (Nochange.) (5) Start-up notification. The appropriate air programregional office of the commission and any other air pollution control programhavingjurisdiction shall be notified prior to the commencement of operations of the facilities authorized by a standard pem-tit in such a manner that a representative of theexecutive director may be present.

B~ For phased construction, which may involve aseries of units commencing operations at different times, the owner or operator of the facility shall provide separate notification for thecommencement of operations for each unit .

Priorto beginningoperations ofthefacilities authorized by the permit, the permit holder shall identify to the Office of Permitting, Remediation, and Registration thesource or sources of allowances to be utilized for compliance with Chapter 101, Subchapter H, Division 3 of this title (relating to Mass Emissions Cap and Trade Program) . ('jD) Aparticular standard permit maymodify start-up notification requirements. (6)-(10) (No change.) This agency hereby certifies that the proposal has been reviewed by legal counsel andfoundto bewithin theagency's legal authority to adopt. Filed with the Office of the Secretary of State, on October 9, 2000 . TRD-200006934 Margaret Hoffman Director, Environmental LawDivision Texas Natural Resource Conservation Commission Earliest possible date of adoption: November 19, 2000 For further information, please call : (512) 239-0348 

### SUBCHAPTER G

. FLEXIBLE PERMITS 30TAC§116.711,§116.715 STATUTORY AUTHORITY The amendments are proposed under the Texas Health and Safety Code, TCAA, §382 .011, which authorizes the commission to control the quality of the state's air; §382 .012, which authorizes the commission to develop a plan for control of the state's air; §382.017, which provides the commission the authority to adopt rules consistent with the policy and purposes of the TCAA; and USC, §7410(a)(2)(A), which requires SIPs to include enforceable emission limitations and other control measures or techniques, including economic incentives such as fees, marketable permits, and auction of emission rights. The proposed amendments implement TCAA, §382.011, General Powers and Duties; §382.012, State Air Control Plan; and §382.017, Rules. §116 .711 . Flexible PermitApplication. Any applicationfor anew flexiblepermit or flexiblepermit amendment must include a completed FormPI-1 General Application. The Form PI-1 must be signed by an authorized representative of the applicant. The FormPI-1 specifies additional support information which must be provided before the application is deemed complete. In order to be granted a flexible permit or flexible permit amendment, the owner or operator of the proposed facility shall submit information to the commission which demonstrates that all of the following are met.

(1)-(11) (No change.) Mass cap and trade allocations. If subject to Chapter 101, Subchapter H, Division 3of this title (relatingto Mass Emissions _Cap and Trade Program) the proposed facility, group of facilities, or account must obtain allocations to operate.

[¢1-2-)] Application content. In addition to any other requirements of this chapter, the applicant shall :

(A) identify each aircontaminantforwhichan emission cap is desired; permit ; (B) identify each facility to be included in theflexible

(C) identify each source of emissions to be included in theflexible permit andfor each source of emissions identify the Emission Point Number (EPN) andtheair contaminants emitted;

(D) for each emission cap, identify all associated EPNs and provideernissionrate calculations based ontheexpected maximum capacity and the proposed control technology;

(E) for each individual emission limitation, identify the EPNandprovideemission ratecalculations based ontheexpectedmaximum capacity andthe proposed control technology. 

## 25TexReg I0454 October 20, 2000 Texas Register[{-1-3)) Proposed control technology and compliance

demonstration. The applicant shall specify the control technology proposed for each unit to meet the emission cap and demonstrate compliancewith all emission caps atexpected maximumproduction capacity. §116 .715 . General and Special Conditions. (a)-(b) (No change.) (c) The following general conditions shall be applicable to every flexible permit .

(1)-(2) (No change.) (3) Start-up notification. Theappropriate regional office of the commission andany local program

havingjurisdiction shall be notified prior to the commencement of operations of the facilities authorized by the permit in such a manner that a representative of the commission may be present. B~ Phased construction,which mayinvolveaseries of facilities commencing operations at different times, shall provideseparate notification for thecommencement of operations for each facility.

Prior to beginning operations of thefacilities authorized by the permit the permit holder shall identify to the Office of Permitting Remediation and Registration the source or sourcesof allowances to be utilized for compliance with Chapter 101 Subchapter H Division 3 of this title (relating to Mass Emissions Cap and Trade Program) .

2000 . (4)-(10) (Nochange.) (d) (No change.) This agency herebycertifies that theproposal has been reviewed by legal counsel and foundto be within theagency's legal authority to adopt. Filed with the Office of the Secretary of State, on October 9, TRD-200006935 Margaret Hoffman Director, Environmental LawDivision Texas Natural Resource Conservation Commission Earliest possible date of adoption: November 19, 2000 For further information, please call : (512) 239-0348 

## TITLE 37. PUBLIC SAFETY AND C, TIONS 

## PART 7. TEXAS COMMISSI 

# ON LAW

ENFORCEMENT O

; STANDARDS AND EDUCA

(Editor's note: The text of thefollow, will not be published. The sections 

### 37 TAC §§211 .1, 211 .3, 211 .7, 211 .9,/211 .10, 211.15-211 .27, 211 .29-211 .31, 211 .33, 211 .71, 211 .~9, 211 .101, 211 .102, 211 .104, 211 .108 g sections proposedfor repeal be examined in the offices of the Texas Commission on Law Enforcement Officer Standan ucation or in the Texas Register office, Room245, James Building, 1019Brazos Street, Austin.) The Texas Commission on Law Enforcement Offi and Education (Commission) proposes the repe 211 .3, 211 .7, 211 .9, 211 .10, 211 .15, 21 .16, 2' 211 .19, 211 .20, 211 .21, 211 .22, 211 .23, 2' 211 .26, 211 .27, 211 .29, 211 .30, 211 .31, 211 .89, 211 .101, 211 .102, 211 .104, and 21 the Commission's administrative procedures. the Definitions section has been expanded a 

### have been proposed for organization purpo changes include, the renumbering of the s rules sequential and substantive changes to better meet theCommission's mission . Dr. D .C. JimDozier, Executive Director of determined that for the first five-year per in effect, therewill be no fiscal implicatio cal government as a result of administer are no fiscal implications caused by rep Chapter 211 and readopting themin the Dr. Dozier also hasdetermined that for years this repeal is in effect the publi result of the reorganization of the rule solete references and better organiza particular topics making for aclearer There will be no effect on small busJ increase in economic costs to indi comply with this section. Written comments should be sub Executive Director,Texas Commi ficer Standards and Education, Suite 200, Austin, Texas 78723, This repeal is proposed under tated, Chapter 1701, §1701 .15 sion to promulgate rules for th The following statute is affec tions Code Annotated, Chapt, ers. §211 .1 . Definitions. §211 .3 . Filing ofDocumen §211 .7 . Place and Nature §211 .9 . Contested Cases §211 .10 . Proposalfor De §211 .15. License Action. §211.16 . Notice. Appeal . License Ho Public Info Contemplat Fees and P Issuance o Date ofLi Date ofA, Meeting Underc Licens Execu fHearings.

nd Hearings. ision and Exceptions or Briefs.

s . . . . , . §.- 211 .18 . §211 .19 . §211 .20 . §211 .21 . §211 .22. §211 .23. §211 .24 . §211 .25 . §211 .26. §211 .27 . §211 .29 . Meetings. §211 .30 . Spec`fic Authority to Waive Rules. §211 .31. Medorandum of Understanding on Continuity r Standards I of §§211 .1, 1 .17, 211 .18, 1 .24, 211 .25, 11 .33, 211 .71, :108 concerning In Chapter 211, several changes es. The proposed ctions to make the re being proposed he Commission, has d that this repeal is s for the state and lo' g this section. There aling the provisions of revised Chapter 211 . ach year of thefirst five benefit anticipated as a is the elimination of obon of the rules relating to nderstanding of the rules . esses and no anticipated duals who are required to i itted to Dr. D

.C. JimDozier, sion on Law

Enforcement Of330 U.S. Highway 290 East, r by facsimile (512) 936-7714. exas Occupations Code Annowhich authorizes the Commisadministration of this chapter. d by this repeal : Texas Occupar 1701, §1701 .151 -General Powr Lists. tion. Rule Making. ment. Duplicate or DelayedDocuments . ensing, Certification, or Acknowledgment. ~pointment . ates and Procedures. 'ver Records. Renewal . on ofOrders Showing Action Taken at Commission of Care. 

## PROPOSED RULES October 20, 2000 25 TexReg 10455Robert 1. Huston, Chairman

R . B . "Ralph" Marquez, Commissioner John M . Baker, Commissioner JeffreyA . Saitas, Executive Director 

# TEXAS NATURAL RESOURCE CONSERVATION COMMISSION

Protecting Texas by Reducing and PreventingPollution



### NOTICE OF PUBLIC HEARING BY THE TEXAS NATURAL RESOURCE CONSERVATION COMMISSION

ON PROPOSEDREVISIONS TO 30TACCHAPTERS 106AND116 ANDTHE STATE IMPLEMENTATION PLAN The Texas Natural Resource Conservation Commission (commission) will conduct a public hearing to receive testimony concerning revisions to 30TACChapters 106, and 116 and to the State Implementation Plan (SIP) under the requirements ofTexas Health and Safety Code, §382.017; Texas Government Code, Subchapter B, Chapter 2001 ; and 40 Code of Federal Regulations, §51 .102 of the United States Environmental ProtectionAgency regulations concerningSIPs. Therevisions toChapter 116areproposed as revisions to the SIP. OnAugust 9, 2000, the commission approved for publication (25 TexReg 8137) a proposal in Chapter 101, General Air Quality Rules that would establish an emission cap and trade program . This programwould be applicable to all stationary sources of nitrogen oxides (NO) in the Houston/Galveston (HGA) nonattainment area that emit or have the potential to emit ten tons or more of NO,, per year and have an emission standard in Chapter 117. This proposal is primarily a clarification of the applicability of the emission cap and trade programfor the HGAarea . The proposal would amend the appropriate sections in Chapters 106 and 116 to state that the cap and trade programapplies to users of permits by rule and standard, flexible, or general permits . The users of these permits would be required to acknowledge their need for allowances at registration for the permit and to identify a source or sources of allowances prior to beginning operation of the source. This proposal does not expand the applicability of the cap and trade program . The proposed new§ 116.176 would allowthe use of allowances to meet emission offset requirements under Chapter 116. A public hearing on this proposal will be held in Houston on November 16, 2000at 2:00 p.m . at the City of Houston Pollution Control Building Auditorium, located at 7411 Park Place Boulevard. 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 opendiscussion 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 withdisabilities who have special communication or other accommodation needs who are planning to attend the hearing should contact the Office of Environmental Policy, Analysis, andAssessment at (512) 239-4900. Requests should be made as far in advance as possible.

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

,. .a- .i , . .- -,,i m--dna anv.haard ink

### Page 2

Comments may be submitted to Lola Brown, MC 205, Office of Environmental Policy, Analysis, and Assessment, Texas Natural Resource Conservation Commission, P.O . Box 13087, Austin, Texas 78711- 3087, or by fax to (512) 239-4808. All comments should reference Rule Log Number 2000-047-116-AI, and must be received by 5:00p.m ., November 20, 2000

. For further information, please contact Beecher Cameron, Policy and Regulations Division, (512) 239-1495. 

### Issued in Austin, Texas, on October 4, 2000.

### Texas Natural Resource Conservation Commission Page 1

Chapter 116 - Control ofAir Pollution by Permits for New Construction or Modification Rule Log No. 2000-047-116-AI The Texas Natural Resource Conservation Commission (commission) proposes amendments to § 116. 111, General Application; § 116.115, General and Special Conditions; § 116.610, Applicability ; § 116.615, General Conditions; § 116.711, Flexible Permit Application; and § 116.715, General and Special Conditions. The commission also proposes new§116.176, Use of Mass Cap Allowances for Offsets . These amended and new sections will be submitted to the United States Environmental Protection Agency (EPA) as revisions to the state implementation plan (SIP) . 

### BACKGROUNDANDSUMMARY OF THE FACTUAL BASIS FORTHE PROPOSED RULES On August 9, 2000the commission proposed rules, which were published in the August 25, 2000 issue of the Texas Register (25 TexReg 8137), that would establish a systemof allocation and trading of emission allowances for nitrogen oxides (NOx) in the Houston/Galveston (HGA) nonattainment area. An allowance would be equal to one ton of NO . emissions and sources would be required to obtain a sufficient number of allowances to equal or exceed its emissions for a calendar year . The purpose of this systemis to limit emissions of individual sources of NO,, in HGA so that a regional maximum, or cap, of emissions is not exceeded. The NOX emission limitations would apply to existing and new sources. Individual sources may buy or sell allowances, but the total number of allowances in the HGA region may not exceed the predetermined cap. This proposal would require that applicants for a flexible permit or standard permit in the HGA area acknowledge, in the permit application, the requirement to obtain allowances prior to operation. This proposal also requires that the applicant, prior to commencing operations, identify a source of allowances .

### Texas Natural Resource Conservation Commission Page 2

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

### Rule Log No. 2000-047-116-AI SECTION BY SECTION DISCUSSION The proposed new§116.111(a)(2)(L) would require permit applicants under Chapter 116, Subchapter B, Division 1, Permit Application, to acknowledge they must obtain allowances to operate. The proposed new§116.115(b)(2)(C)(iii) would add language to the general conditions of New Source Review(NSR) permits, specifying that facilities, groups of facilities, or accounts subject to the proposed Chapter 101, Subchapter H, Division 3, concerning Mass Emissions Cap and Trade Program (25 TexReg 8137), must identify the source of sources of allowances to be used for compliance. The proposed new§116.176would allowpermit applicants for sources subject to the proposed Chapter 101, Subchapter H, Division 3, concerning Mass Emissions Cap and Trade Program(25 TexReg 8137), that are required to submit NO,, offsets in accordance with §116.150, NewMajor Source or Major Modification in Ozone Nonattainment Areas, to use allowances to meet the correlating portion of the emission offsets. The proposed new§ 116.61 0(a)(6) would require permit applicants under Chapter 116, Subchapter F, Standard Permits, to acknowledge they must obtain allowances to operate. The proposed new§116.615(5)(C) would add language to the general conditions of standard permits specifying that facilities, groups of facilities or accounts subject to the proposed Chapter 101, Subchapter H, Division 3, concerning Mass Emissions Cap and Trade Program(25 TexReg 8137) must identify the source or sources of allowances to be used for compliance.

### Texas Natural Resource Conservation Commission Page 3

Chapter 116 - Control of Air Pollution by Permits for New Construction or Modification Rule Log No. 2000-047-116-AI The proposed new§116.711(12) would require permit applicants under Chapter 116, Subchapter G, Flexible Permits, to acknowledge that they must obtain allowances to operate.

The proposed new§116.715(c)(3)(C) would add language to the general conditions of flexible permits specifying that facilities, groups of facilities, or accounts subject to the proposed Chapter 101, Subchapter H, Division 3, concerning Mass Emissions Cap and Trade Program(25 TexReg 8137) must identify the source or sources of allowances to be utilized for compliance. FISCAL NOTE: COSTS TOSTATE AND LOCAL GOVERNMENT John Davis, Technical Specialist with Strategic Planning and Appropriations, determined that for each year of the first five-year period the proposed amendments are in effect beginning January 1, 2002, there may be positive fiscal implications which are not anticipated to be significant for units of state or local government which emit ten tons of NO,, or more per year as a result of administration or enforcement of the proposed amendments . There would be no fiscal implications to units of state and local government that do not emit more than ten tons of NO,, per year . The proposed amendments are intended to achieve administrative consistency with concurrently proposed amendments by requiring a new or modified NO,, sources seeking flexible, standard, or general permits in the HGA ozone nonattainment area to acknowledge, in the permit application, the requirement to obtain emission allowances and to identify the source of the allowances, prior to commencing operations. Additionally, the proposed amendments would allowa new or modified NO,,

### Texas Natural Resource Conservation Commission Page 4

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

### Rule Log No. 2000-047-116-AI

source that is required to submit NO,, offsets, to .use allowances to meet the correlating portion of the emission offsets . In the rulemaking approved on August 9, 2000 (25 TexReg 8137), the commission proposed a mass emissions cap and trade programfor the HGA area . The proposed mass emissions cap and trade programwould implement and manage a mandatory annual NO,, emission cap, phased-in between January 1, 2002 to January 1, 2005, on all existing and new stationary sources located in the HGA area, which consists of: Brazoria, Chambers, Fort Bend, Galveston, Harris, Liberty, Montgomery, and Waller Counties . The NO,, emission cap affects sources or groups of sources in the HGAarea that have the capacity to emit ten tons of NO,, or more per year and requires affected new or modified sources to obtain allowances (NO,, emissions in tons) which the source would be allowed to emit during the calendar year. The NO,, source would only be allowed to exceed the emission cap by obtaining surplus allowances fromother sources. Additionally, the amendments also allowthe use of allowances to satisfy the correlating portion of the emission offsets required for federal nonattainment NSR requirements. Offsets are emission reductions fromother sources that counteract the increase releases fromthe new

or modified projects. Since the proposed amendments do not add additional regulatory requirements that have not already been proposed, the commission estimates there will be no additional costs to units of state and local government as a result of implementing the proposed amendments other than the cost to purchase and trade allowances, which was estimated to be approximately $500 - $5,000 per allowance (ton) . Although the total number of emission sources owned or operated by units of state and local

### Texas Natural Resource Conservation Commission Page 5

Chapter 116 - Control of Air Pollution by Permits for New Construction or Modification Rule Log No. 2000-047-116-AI government is unknown, there are approximately 6,000 emission sources in the HGAthat may be affected by the proposed rulemaking. The allowance trading provision of the mass emissions cap and trade programis intended to provide flexibility for regulated NO . sources and potential cost savings in planning and determining the most economical mix of the application of emission control technology with the purchase of other NO,, source's surplus allowances to meet emission reduction requirements. Additionally, NO,, sources that remain within their allowances may receive additional revenue through the sale of surplus allowances to other emission sources. PUBLIC BENEFIT AND COSTS Mr . Davis also determined for each of the first five years the proposed amendments are in effect, the public benefit anticipated as a result of implementing the proposed amendments will be that new or modified facilities subject to the emissions cap and trade programwill be required to identify the source of allowances prior to commencing operations and operate within the established NO,, emissions cap, which is intended to reduce overall NO,, emissions for the HGA area. The proposed amendments are intended to achieve administrative consistency with the proposed mass emissions cap and trade programby requiring new or modified NO,, sources seeking flexible, standard, or general permits, that meet the minimum emission capacity requirements of the mass emissions cap and trade program, to acknowledge the requirement to obtain sufficient allowances to offset their actual NO,, emissions and identify the source of the allowances, prior to commencing operations . Additionally, the amendments also allowthe use of allowances to satisfy the correlating portion of the emission offsets required for federal nonattainment NSR requirements.

### Texas Natural Resource Conservation Commission Page 6

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

### Rule Log No. 2000-047-116-Al Since the proposed amendments do not add additional regulatory requirements that have not already been proposed, the commission estimates there will be no additional costs to individuals and businesses as a result of implementing the proposed amendments other than the cost to purchase and trade allowances, which was estimated to be approximately $500- $5,000 per allowance (ton) . Although the total number of emission sources owned or operated by individuals and businesses is unknown, it is anticipated that the majority of the approximately 6,000 emission sources operating in the HGAwill be owned and operated by individuals and businesses . The allowance trading provision of the mass emissions cap and trade programis intended to provide flexibility for regulated NO,, sources and potential cost savings in planning and determining the most economical mix of the application of emission control technology with the purchase of other NO,, source's surplus allowances to meet emission reduction requirements . Additionally, NO ., sources that remain within their allowances may receive additional revenue through the sale of surplus allowances to other emission sources. SMALL BUSINESS ANDMICRO-BUSINESS ASSESSMENT No adverse economic effects are anticipated to any small or micro-business as a result of the implementation of the proposed amendments. The proposed amendments would require newor modified NO,, sources to identify the source of the allowances, prior to commencing operations. Additionally, the amendments also allow the use of allowances to satisfy the correlating portion of the emission offsets required for federal nonattainment NSR requirements. The amendments proposed in this rulemaking are intended to achieve administrative consistency with the proposed mass emissions cap and trade programby requiring new or modified NO,, sources,

### Texas Natural Resource Conservation Commission Page 7

Chapter 116 - Control ofAir Pollution by Permits for New Construction or Modification Rule Log No. 2000-047-116-AI seeking flexible, standard, or general permits, that meet the minimum emission capacity requirements of the mass emissions cap and trade program, to acknowledge the requirement to obtain sufficient allowances to offset their actual NO,, emissions and identify the source of the allowances, prior to commencing operations. Additionally, the amendments also allowthe use of allowances to satisfy the correlating portion of the emission offsets required for federal nonattainment NSR requirements . Since the proposed amendments do not add additional regulatory requirements that have not already been proposed, the commission estimates there will be no additional costs to small or micro-businesses as a result of implementing the proposed amendments other than the cost to purchase and trade allowances, which was estimated to be approximately $500 - $5,000 per allowance (ton) . Although the total number of emission sources owned or operated by small or micro-businesses is unknown, there are approximately 6,000 emission sources in the HGA that may be affected by the proposed rulemaking. The allowance trading provision of the mass emissions cap and trade programis intended to provide flexibility for regulated NO,, sources and potential cost savings in planning and determining the most economical mix of the application of emission control technology with the purchase of other NO,, source's surplus allowances to meet emission reduction requirements. Additionally, NO,, sources that remain within their allowances may receive additional revenue through the sale of surplus allowances to other emission sources . 

### DRAFT REGULATORY IMPACT ANALYSIS DETERMINATION The commission reviewed the proposed rulemaking in light of the regulatory analysis requirements of Texas Government Code, §2001 .0225. The commission determined that these proposed amendments to Chapter 116 do not meet the definition of a "major environmental rule" as defined in Texas

### Texas Natural Resource Conservation Commission Page 8

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

### Rule Log No. 2000-047-116-AI Government Code, §2001 .0225. "Major environmental rule" means a rule, the specific intent of which, is to protect the environment or reduce risks to human health fromenvironmental exposure, and that may adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, or the public health and safety of the state or a sector of the state. The commission is proposing these amendments to achieve administrative consistency with proposed amendments to Chapter 101, (25 TexReg 8137) . The proposed Chapter 101 amendments (25 TexReg 8137) would require sources or groups of sources in the HGA area, which have the capacity to emit NO,, in amounts greater than or equal to ten tons per year, to hold sufficient allowances to offset their actual NO,, emissions under a cap and trade program . These proposed amendments would require an applicant subject to Chapter 101, Subchapter H, Division 3 to acknowledge that they are required to obtain allowances to comply with the cap and trade programto operate and that they must identify a source or sources of allowances prior to operation. In addition, the proposed amendments to Chapter 116 would allow

applicants of new

major sources and major modifications to use allowances for the correlating portion of any offsets required under §116.150, New Major Source or Major Modification in Ozone Nonattainment Areas. These amended sections would state that applicants of new or modified sources in HGA are to comply with Chapter 101, Subchapter H, Division 3. These proposed sections do not expand the currently proposed cap and trade programfor the HGAarea. The proposed amendments to Chapter 116 do not adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, or the public health and safety of the state or a sector of the state; therefore, these amended sections do not constitute a major environmental rule. In addition, Texas Government Code, §2001 .0225, only applies to a major environmental rule, the result of which is to: 1 .) exceed a standard set by federal law, unless the rule is specifically required

### Texas Natural Resource Conservation Commission Page 9

Chapter 116 - Control ofAir Pollution by Permits for New Construction or Modification 

### Rule Log No. 2000-047-116-AI by state law

; 2.) exceed an express requirement of state law, unless the rule is specifically required by federal law

; 3.) exceed a requirement of a delegation agreement or contract between the state and an agency or representative of the federal government to implement a state and federal program ; or 4.) adopt a rule solely under the general powers of the agency instead of under a specific state law . This rulemaking is not subject to the regulatory analysis provisions of §2001 .0225(b), because the proposed rules do not meet any of the four applicability requirements . Specifically, the emission banking and trading requirements within this proposal were developed in order to meet the ozone national ambient air quality standard (NAAQS) set by the EPA under the Federal Clean Air Act (FCAA), §109 (42 United States Code (USC), §7409), and therefore meet a federal requirement . Provisions of 42 USC, §7410, require states to adopt a SIP which provides for "implementation, maintenance, and enforcement" of the primary NAAQS in each air quality control region of the state. While §7410does not require specific programs, methods, or reductions in order to meet the standard, state SIPs must include "enforceable emission limitations and other control measures, means or techniques (including economic incentives such as fees, marketable permits, and auctions of emissions rights), as well as schedules and timetables for compliance as may be necessary or appropriate to meet the applicable requirements of this chapter," (meaning Chapter 85, Air Pollution Prevention and Control) . It is true that 42 USC does require some specific measures for SIP purposes, like the inspection and maintenance program, but those programs are the exception, not the rule, in the SIP structure of 42 USC. The provisions of 42 USC recognize that states are in the best position to determine what programs and controls are necessary or appropriate in order to meet the NAAQS. This flexibility allows states, affected industry, and the public, to collaborate on the best methods for attaining the NAAQS for the specific regions in the state. Even though 42 USC allows states to develop their own programs, this

### Texas Natural Resource Conservation Commission Page 10

Chapter 116 - Control ofAir Pollution by Permits for New Construction or Modification 

### Rule Log No. 2000-047-116-AI flexibility does not relieve a state fromdeveloping a programthat meets the requirements of §7410. Thus, while specific measures are not generally required, the emission reductions are required. States are not free to ignore the requirements of §7410and must develop programs to assure that the nonattainment areas of the state will be brought into attainment on schedule . The requirement to provide a fiscal analysis of proposed regulations in the Texas Government Code was amended by Senate Bill (SB) 633 during the 75th Legislative Session, 1999. The intent of SB 633 was to require agencies to conduct a regulatory impact analysis (RIA) of extraordinary rules. These are identified in the statutory language as major environmental rules that will have a material adverse impact and will exceed a requirement of state law, federal law, or a delegated federal program, or are adopted solely under the general powers of the agency. With the understanding that this requirement would seldomapply, the commission provided a cost estimate for SB 633 that concluded "based on an assessment of rules adopted by the agency in the past, it is not anticipated that the bill will have significant fiscal implications for the agency due to its limited application." The commission also noted that the number of rules that would require assessment under the provisions of the bill was not large. This conclusion was based, in part, on the criteria set forth in the bill that exempted proposed rules fromthe full analysis unless the rule was a major environmental rule that exceeds a federal law . As previously discussed, 42 USC does not require specific programs, methods, or reductions in order to meet the NAAQS; thus, states must develop programs for each nonattainment area to ensure that area will meet the attainment deadlines. Because of the ongoing need to address nonattainment issues, the commission routinely proposes and adopts SIP rules. The commission bases these actions on the presumption that the legislature understands this federal scheme. If each rule proposed for inclusion in

### Texas Natural Resource Conservation Commission Page 11

Chapter 116 - Control ofAir Pollution by Permits for New Construction or Modification Rule Log No. 2000-047-116-AI the SIP was considered to be a major environmental rule that exceeds federal law, then every SIP rule would require the full RIA contemplated by SB 633. This conclusion is inconsistent with the conclusions reached by the commission in its cost estimate and by the Legislative Budget Board (LBB) in its fiscal notes. It is a rule of statutory interpretation that the legislature is presumed to understand the fiscal impacts of the bills it passes, and that presumption is based on information provided by state agencies and the LBB, the commission believes that the intent of SB 633 was only to require the full RIA for rules that are extraordinary in nature. While the SIP rules will have a broad impact, that impact is no greater than is necessary or appropriate to meet the requirements of the FCAA . For these reasons, rules proposed for inclusion in the SIP fall under the exception in Texas Government Code, §2001 .0225(a), because they are required by federal law . The commission performed photochemical grid modeling which predicts that NO,, emission reductions, such as those required by these rules, will result in reductions in ozone formation in the HGA ozone nonattainment area . This rulemaking does not exceed an express requirement of state law . This rulemaking is intended to obtain NQ, emission reductions which will result in reductions in ozone formation in the HGA ozone nonattainment area and help bring HGA into compliance with the air quality standards established under federal lawas NAAQS for ozone. The rulemaking does not exceed a standard set by federal law, exceed an express requirement of state law(unless specifically required by federal law), or exceed a requirement of a delegation agreement . The rulemaking was not developed solely under the general powers of the agency, but was specifically developed to meet the NAAQS established under federal lawand authorized under Texas Clean Air Act (TCAA), §§382.011, 382.012, and 382.017 as well as under 42 USC, §7410(a)(2)(A) .

### Texas Natural Resource Conservation Commission Page 12

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

### Rule Log No. 2000-047-116-AI The commission invites public comment on the draft RIA. 

### TAKINGS IMPACT ASSESSMENT The commission completed a takings impact assessment for the proposed rules. The following is a summary of that assessment . These amendments are proposed as part of a strategy to reduce and permanently cap emissions of NO,, to a level which would allowthe HGA nonattainment area to attain the NAAQS for ozone. Promulgation and enforcement of the rules will not burden private real property. The proposed amendinents do 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 a governmental action. Additionally, the allowances that are the subject of these rules are not property rights . Consequently, these proposed amendments do not meet the definition of a takings under Texas Government Code, §2007.002(5) . Although the proposed rule revisions do not directly prevent a nuisance or prevent an immediate threat to life or property, they do prevent a real and substantial threat to public health and safety, and partially fulfill a federal mandate under the USC, §7410 . Specifically, the emission limitations and control requirements within this proposal were developed in order to meet the ozone NAAQS set by the EPA under the USC, §7409 . States are primarily responsible for ensuring attainment and maintenance of the NAAQS once the EPA has established them . Under the USC, §7410 and related provisions, states must submit, for approval by the EPA, SIPs that provide for the attainment and maintenance of NAAQS through control programs directed to sources of the pollutants involved. Therefore, the purpose of the rule proposal is to implement a NO,, strategy which is necessary for the HGA area to meet the air quality standards established under federal lawas NAAQS. Consequently, the exemption which applies to these proposed rules is that of an action

### Texas Natural Resource Conservation Commission Page 13

Chapter 116 - Control of Air Pollution by Permits for New Construction or Modification Rule Log No. 2000-047-116-AI reasonably taken to fulfill an obligation mandated by federal law . Therefore, these proposed revisions will not constitute a takings under Texas Government Code, Chapter 2007. 

### CONSISTENCY WITH THE COASTAL MANAGEMENT PROGRAM The commission determined the proposed rulemaking relates to an action or actions subject to the Texas Coastal Management Plan (CMP) in accordance with the Coastal Coordination Act of 1991, as amended (Texas Natural Resource Code, §§33.201 et seq.), and the commission's rules in 30TAC Chapter 281, Subchapter B, concerning Consistency with the Texas Coastal Management Program . As required by 30 TAC §505.11(b)(2) and 30TAC §281 .45(a)(3), relating to actions and rules subject to the CMP, commission rules governing air pollutant emissions must be consistent with the applicable goals and policies of the CMP . The commission reviewed this action for consistency with the CMP goals and policies in accordance with the regulations of the Coastal Coordination Council and determined the proposed rules are consistent with the applicable CMPgoal expressed in 31 TAC §501 .12(1) of protecting and preserving the quality and values of coastal natural resource areas, and the policy in 31 TAC §501 .14(q), which requires the commission protect air quality in coastal areas. The proposed amendments would state that applicants for permits of new or modified sources in HGA must comply with Chapter 101, Subchapter H, Division 3. These proposed amendments do not authorize any newNO,, air emissions . Interested persons may submit comments on the consistency of the proposed rules with the CMPduring the public comment period. EFFECT ON SITES SUBJECT TOTHE FEDERAL OPERATING PERMITS PROGRAM

### Texas Natural Resource Conservation Commission Page 14

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

### Rule Log No. 2000-047-116-AI The proposed amendments to §§116.111, 116.115, 116.610, 116.615, 116.711, and 116.715 are not considered applicable requirements under 30TAC Chapter 122, thus these changes would not require revisions to the affected sources operating permit . The proposed new§116.176 is considered an applicable requirement under 30TAC Chapter 122, thus owners or operators subject to the Federal Operating Permits Programmust, consistent with the revision process in Chapter 122, revise their operating permit to include the proposed new§116.176 requirements for each emission unit affected by the revisions to § 116.176 at their site. 

### ANNOUNCEMENT OF HEARING The commission will hold a public hearing on this proposal in Houston on November 16, 2000 at 2:00 p.m . at the City of Houston Pollution Control Building Auditorium, located at 7411 Park Place Boulevard. 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.

### Texas Natural Resource Conservation Commission Page 15

Chapter 116 - Control ofAir Pollution by Permits for New Construction or Modification Rule Log No. 2000-047-116-AI 

### SUBMITTAL OF COMMENTS Comments may be submitted to Ms. Lola Brown, Office of Environmental Policy, Analysis, and Assessment, MC206, P.O. Box 13087, Austin, Texas 78711-3087 or faxed to (512) 239-4808. All comments should reference Rule Log Number 2000-047-116-AI . Comments must be received by 5:00 p.m ., November 20, 2000 . For further information, please contact MatthewR . Baker at (512) 239- 1091 or Beecher Cameron at (512) 239-1495. STATUTORY AUTHORITY The amendments are proposed under the Texas Health and Safety Code, TCAA, §382.011, which authorizes the commission to control the quality of the state's air; §382.012, which authorizes the commission to develop a plan for control of the state's air; §382.017, which provides the commission the authority to adopt rules consistent with the policy and purposes of the TCAA ; and USC, §7410(a)(2)(A), which requires SIPs to include enforceable emission limitations and other control measures or techniques, including economic incentives such as fees, marketable permits, and auction of emission rights. The proposed amendments implement TCAA, §382.011, General Powers and Duties; §382.012, State Air Control Plan; and §382.017, Rules .

### Texas Natural Resource Conservation Commission Page 16

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

### Rule Log No. 2000-047-116-AI

CHAPTER 116

: CONTROL OF AIR POLLUTION BY PERMITS FORNEW CONSTRUCTION OR MODIFICATION SUBCHAPTER B

: NEW SOURCE REVIEW

PERMITS DIVISION 1 : PERMIT APPLICATION

§116.111, §116.115

§116.111 . General Application. (a) In order to be granted a permit, amendment, or special permit amendment, the application must include: (1) (No change .)

(2) information which demonstrates that all of the following are met . (A) - (K) (No change .) (L) Mass cap and trade allowances . If subject to Chapter 101 . Subchapter H Division 3, of this title (relating to Mass Emissions Cap and Trade Program) the proposed facility, group of facilities, or account must obtain allowances to operate (b) (No change .)

### Texas Natural Resource Conservation Commission Page 17

Chapter 116 - Control of Air Pollution by Permits for New Construction or Modification Rule Log No. 2000-047-116-AI 

### §116.115 . General and Special Conditions. (a) (No change.) (b) General conditions . Holders of permits, special permits, standard permits, and special exemptions shall comply with the following;

(1) (No change .) (2) the following general conditions if the permit or amendment is issued or amended on or after August 16, 1994, regardless of whether they are specifically stated within the permit document . (A) - (B) (No change.) (C) Start-up notification. (i) - (ii) (No change.) (iii) Prior to operation of the facilities authorized by the permit, the permit holder shall identify to the Office of Permitting, Remediation, and Registration the source or

### Texas Natural Resource Conservation Commission Page 18

Chapter 116 - Control ofAir Pollution by Permits for New Construction or Modification Rule Log No. 2000-047-116-Al

sources of allowances to be utilized for compliance with Chapter 101 Subchapter H Division 3 of this title (relating to Mass Emissions Cap and Trade Program), (D) - (I) (No change .) (c) (No change .)

### Texas Natural Resource Conservation Commission Page 19

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

### Rule Log No. 2000-047-116-AI

SUBCHAPTER B

: NEW SOURCE REVIEW

PERMITS DIVISION 7: EMISSION REDUCTIONS: OFFSETS &116.176

STATUTORY AUTHORITY The new

section is proposed under the Texas Health and Safety Code, TCAA, §382.011, which authorizes the commission to control the quality of the state's air; §382.012, which authorizes the commission to develop a plan for control of the state's air; §382.017, which provides the commission the authority to adopt rules consistent with the policy and purposes of the TCAA ; and USC, §7410(a)(2)(A), which requires SIPs to include enforceable emission limitations and other control measures or techniques, including economic incentives such as fees, marketable permits, and auction of emission rights . The new

section implements TCAA, §382.011, General Powers and Duties; §382.012, State Air Control Plan; and §382.017, Rules . §116.176. Use of Mass Cap Allowances for Offsets. Any allowances required to comply with the mass emission cap under Chapter 101, Subchapter H . Division 3 of this title (relating to Mass Emissions Cap and Trade Program) may be used to meet the correlating portion of the emission offset requirements needed to comply with &116.150 of this title (relating to New

Major Source or Major Modification in Ozone Nonattainment Areas) .

### Texas Natural Resource Conservation Commission Page 20

Chapter 116 - Control ofAir Pollution by Permits for New Construction or Modification 

### Rule Log No. 2000-047-116-AI SUBCHAPTER F: STANDARD PERMITS

§116.610, §116.615 STATUTORY AUTHORITY The amendments are proposed under the Texas Health and Safety Code, TCAA, §382.011, which authorizes the commission to control the quality of the state's air; §382.012, which authorizes the commission to develop a plan for control of the state's air; §382.017, which provides the commission the authority to adopt rules consistent with the policy and purposes of the TCAA ; and USC, §7410(a)(2)(A), which requires SIPs to include enforceable emission limitations and other control measures or techniques, including economic incentives such as fees, marketable permits, and auction of emission rights. The proposed amendments implement TCAA, §382.011, General Powers and Duties ; §382.012, State Air Control Plan; and §382.017, Rules. §116.610

. Applicability. (a) Under the TCAA, §382.051, a project which meets the requirements for a standard permit listed in this subchapter or issued by the commission is hereby entitled to the standard permit, provided the following conditions listed in this section are met . For the purposes of this subchapter, project means the construction or modification of a facility or a group of facilities submitted under the same registration:

### Texas Natural Resource Conservation Commission Page 21

Chapter 116 - Control ofAir Pollution by Permits for New Construction or Modification Rule Log No. 2000-047-116-AI

(1) - (4) (No change.) (5) the proposed project must comply with the applicable maximum achievable control technology standards as listed under 40 CFR Part 63, promulgated by the EPA under FCAA, § 112 or as listed under Chapter 113, Subchapter C of this title (relating to National Emissions Standards for Hazardous Air Pollutants for Source Categories (FCAA1 §112, 40 CFR 63)) : and [ .]

(6) If subject to Chapter 101, Subchapter H, Division 3 of this title (relating to Mass Emissions Cap and Trade Program) the proposed facility, group of facilities, or account must obtain allocations to operate. (b) - (d) (No change.) §116.615. General Conditions. The following general conditions are applicable to holders of standard permits, but will not necessarily be specifically stated within the standard permit document .

(1) - (4) (No change.) (5) Start-up notification.

### Texas Natural Resource Conservation Commission Page 22

Chapter 116 - Control of Air Pollution by Permits for New Construction or Modification Rule Log No. 2000-047-116-AI (A) The appropriate air programregional office of the commission and any other air pollution control programhaving jurisdiction shall be notified prior to the commencement of operations of the facilities authorized by a standard permit in such a manner that a representative of the executive director may be present . (B) For phased construction, which may involve a series of units commencing operations at different times, the owner or operator of the facility shall provide separate notification for the commencement of operations for each unit. (C) Prior to beginning operations of the facilities authorized by the permit the permit holder shall identify to the Office of Permitting Remediation and Registration the source or sources of allowances to be utilized for compliance with Chapter 101 Subchapter H Division 3 of this title (relating to Mass Emissions Cap and Trade Program) (D) A particular standard permit may modify start-up notification requirements. (6) - (10) (No change.)

### Texas Natural Resource Conservation Commission Page 23

Chapter 116 - Control of Air Pollution by Permits for New Construction or Modification Rule Log No. 2000-047-116-AI SUBCHAPTER G

: FLEXIBLE PERMITS §116.711,§116.715

STATUTORY AUTHORITY The amendments are proposed under the Texas Health and Safety Code, TCAA, §382.011, which authorizes the commission to control the quality of the state's air; §382.012, which authorizes the commission to develop a plan for control of the state's air ; §382.017, which provides the commission the authority to adopt rules consistent with the policy and purposes of the TCAA; and USC, §7410(a)(2)(A), which requires SIPs to include enforceable emission limitations and other control measures or techniques, including economic incentives such as fees, marketable permits, and auction of emission rights. The proposed amendments implement TCAA, §382.011, General Powers and Duties ; §382.012, State Air Control Plan; and §382.017, Rules . 

### §116 .711 . Flexible Permit Application. Any application for a new flexible permit or flexible permit amendment must include a completed FormPI-1 General Application. The FormPI-1 must be signed by an authorized representative of the applicant . The FormPI-1 specifies additional support information which must be provided before the application is deemed complete. In order to be granted a flexible permit or flexible

### Texas Natural Resource Conservation Commission Page 24

Chapter 116 - Control of Air Pollution by Permits for New Construction or Modification Rule Log No. 2000-047-116-AI permit amendment, the owner or operator of the proposed facility shall submit information to the commission which demonstrates that all of the following are met .

(1) - (11) (No change.) (12) Mass can and trade allocations If subject to Chapter 101 Subchapter H Division 3 of this title group of facilities, or account must obtain allocations to operate.

(13) [(12)] Application content . In addition to any other requirements of this chapter, the applicant shall : (A) identify each air contaminant for which an emission cap is desired; (B) identify each facility to be included in the flexible permit ; (C) identify each source of emissions to be included in the flexible permit and for each source of emissions identify the Emission Point Number (EPN) and the air contaminants emitted; (D) for each emission cap, identify all associated EPNs and provide emission rate calculations based on the expected maximumcapacity and the proposed control technology;

### Texas Natural Resource Conservation Commission Page 25

Chapter 116 - Control of Air Pollution by Permits for New Construction or Modification Rule Log No. 2000-047-116-AI (E) for each individual emission limitation, identify the EPN and provide emission rate calculations based on the expected maximumcapacity and the proposed control technology. (14) [(13)] Proposed control technology and compliance demonstration. The applicant shall specify the control technology proposed for each unit to meet the emission cap and demonstrate compliance with all emission caps at expected maximumproduction capacity. §116.715. General and Special Conditions. (a) - (b) (No change.) (c) The following general conditions shall be applicable to every flexible permit . (1) - (2) (No change.) (3) Start-up notification. (A) The appropriate regional office of the commission and any local program havingjurisdiction shall be notified prior to the commencement of operations of the facilities authorized by the permit in such a manner that a representative of the commission may be present .

### Texas Natural Resource Conservation Commission Page 26

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

### Rule Log No. 2000-047-116-AI M) Phased construction, which may involve a series of facilities commencing operations at different times, shall provide separate notification for the commencement of operations for each facility. (C) Prior to beginning operations of the facilities authorized by the permit the permit holder shall identify to the Office of Permitting Remediation and Registration the source or sources of allowances to be utilized for compliance with Chapter 101 Subchapter H Division 3 of this title (relating to Mass Emissions Cap and Trade Program) .



### (4) - (10) (Nochange.) (d) (No change.)

# WRITTEN AND ORAL TESTIMONY

### INDEX OF WRITTENTESTIMONY

Reference Number Submitted By W-1 Brandt Mannchen, Sierra Club - Houston Regional Group W-2 Becky Weber, U.S. Environmental Protection Agency

# SIERRA CLUB November 1, 2000 Ms. Lola Brown . Office ofEnvironmental Policy, Analysis, &Assessment MC206 TNRCC P. 0 . Box 13087 Austin, Texas 78711-3087 Dear Lola, 

### Houston Regional Group P.O . Box 3021 Houston, Texas 77253-3021 713/895-9309

Enclosed are the comments ofthe Houston Sierra Club (HSC) regarding 30TAC106 .4, 116 .111, 116.115, 116 .176, 116 .610, 116.615, 116.711, &116 .715, whichdeal with emissions banking, trading, mass cap, and trade allocations. The HSCis very concerned about these changes. The changes proposed in these rules should have been in the Houston-Galveston Non-attainment Area Ozone SIP that was proposed by TNRCCin August 2000 . Public hearings were held in September 2000 . Very few

people will know

or be able to comment about these changes because there is no publicity surrounding their proposal . Yet these changes are perhaps some of the most far-reaching TNRCChas proposed for the Houston-Galveston Area Non-attainment SIP on emissions banking and trading. Our concerns about emissions banking, trading, mass cap, and trade allocation programs are not new . They have been stated before in our comments of09/24/2000, about the Houston-Galveston Non-attainment Area Ozone SIP and in the comments ofBrandt 1Vlannchen to MatthewBaker dated 02/24/2000 . We will outline these concerns here and enclose a copy ofthe twosets ofcomments as part of our official comments. Environmentaljustice inequalities are our first concern. The People of the State ofTexas who live near air pollution sources that use emission trading totheir benefit, so reductions ofpollutants do not have to occur at the plant site, will beforced to breathe air pollution that is hazardous to theirhealth. Airpollutionwill reduce the length of lives, kill, injure, or make living less pleasant, desirable, andworthwhilefor people who live near these plants. People's property will be devalued andwill beworth less due toair pollution levels that are dangerous to health The health, welfare, and environment ofresidents that live next to these plants will be degraded. This is not fair or legal since TNRCCis charged with the task ofprotecting all peoplefromhealth, welfare, and environment impacts. Companies should be required to be good neighbors in our State. Compames must workwiththe communities they exist in to reduce their air pollution maximally and ensure levels do not harm people and the environment . Companies must be required totake the responsibility and be good corporate citizens, be part ofthe community, and not set their needs apart from those ofthe community. Buying goodwill and not making emission reductions in neighborhoods does not suffice. Real emission reductions must be made because it is the right thing to do. Emissions trading allows some companies toavoid doingtheir fair share to reduce emissions in the location where their plant is located andwhere it has air pollution impacts. By allowing suchactions TNRCCdoes not level the playing fieldwith equivalent, real, reductions for all sources where they are located. The emissions trading proposal inthe SIPallows the use of credits from other counties, states, or nations. This is not appropriate and the changes proposed herewill allow this to occur bysetting up a mechanism where this can occur for all types ofpermit approval . We are opposed to this. TNRCChas also set up in

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

~~t

### the SIPa mechanismto allowtrading of one pollutant for another. We fear this allowance will be abused

in the future and allowtrading ofone pollutant that is totally unrelated for another pollutant The changes proposed by these rules allow this type ofemissions trading to occur. We oppose this. The unfairness ofemissions trading is demonstrated by the lack ofpower, money, and the right social class that most people havewho live near plants. Usually, such trades occur inworkingclass or poverty stricken areas, where people of color live or those with little power topolitically fight such actions. In a severe ozone non-attainment area it seems beyond beliefthat emissions trading would be allowed. The Houston-Galveston Area needs all the reductions it can get, within its ozone non-attainmentboundaries, to have a chance ofmeeting the ozone standard by 2007. In reality what occurs in 2005 will determine whether the Houston-Galveston SIPwill succeed. The present federal ozone standard requires that thefourth ozone exceedance over the standard constitutes the firstviolation ofthe standard Once the Houston-Galveston Area exceeds the ozone standard four times in 2005wewill not beable tolegally, meet the ozonestandard by 2007 . Inaddition, many ofthe controls will not be in place until 2005-2007 so the likelihood of meeting the standard is severely reduced. TNRCC has back end loaded emission reductions when it needed to front end load these reductions. TNRCChas repeated the mistakes ofthe State ofTexas in 1979, 1982, and 1987 when minimalist emission reductions were also made. We are in nodanger ofover controllingVOCand NOx emissions to reduce ozone. Overall, the HSC, at this time, opposes all ofthe changes in this proposal . We believe the best ozone control strategy is to reduceall NOx &VOCsources as muchas possible. Wecan then meet the old ozone standard of0.12ppm, maintain that standardwhenit is reached, and make reductions thatwill reduce emissions to meet the new ozone standard of0.08ppmover an 8 hr. period. Until we can meet the health based standard consistently we believe it is premature toallow emissions banking, trading, mass cap, and trading allowance programs. The fact that the Houston-Galveston Area has exceeded the ozone standard means that we have exceeded the carryingcapacity ofour airshed to clean itself . We need to reduce emissions accordingly. For 30years we have exceeded our airshed's ability to clean the air. It is long past time that we correct this situation and restore pure, cleanair tothe public and protect the People's health, welfare, and environment Weappreciate this opportunity tocomment Thankyou. Sincerely, Brandt Mannchen Houston Sierra Club AirQuality Task Force 5115 Maple Bellaire, Texas 77401 H713-664-5962, W713-640-4313

# SIERRA CLUB ' Houston Regional Group P.O. Box 3021 Houston, Texas 77253-3021 713/895-9309 Q -'eptember 2=1, 2000 Information Request Included With These Comments 

### HeatherEvans Office ofEnvironmental Policy, Analysis &Assessment MC206 P . 0 . Box 13087 Austin, Texas 78711-2087 Dear Heather, Enclosed are thecomments ofthe Houston Sierra Club regardingthe Revisions to the State Implementation Plan (SIP) for the Control ofOzoneAir Pollution, post 1999 Rate ofProgress and Attainment Demonstration SIP forthe Houston/Galveston Ozone Nonatiainment Area. Appendices A-L. and all proposed rules for reduction ofnitrogen oxides (NOx) andvolatile organic compounds (VOC's) . We request acopy ofthe final document, the responses to comments, andthe SIP packet that the Commission will be given before voting on the SIP . 

### INTRODUCTIONANDSUMMp,Ry Our summary of this entire effort is that it is woefully inadequate for showing attainment ofthe ozone standard by 2007. The Houston/Cralveston Area (HGA) is exceeding its airshed carrying rapacity. This is why we have numerous unacceptably high ozone readings that are above the human health based ozone standard. This proposal advocates using technologies that are not proven in the field (air conditioner coatings, emulsion fuel, etc

.), allows some large industrial sources to have minimal reductions (kilns and heat ffeatm ; furnaces) . advocates shifts in timeswhen certain uses canoccur that are not enforceable (lawn equipment and construction), has loopholes in standards that defeat the purpose ofthe rules (construction, » mph speed limit), does not contain a modeling runthat shows attainment oftheozone standard, allows other than modeling to show compliance with the standard that is allowed nowhere else in the country (weight ofevidence), models for attainment without knowing the effect each rule adopted will have,allows atransportation emissions budget which is based on an inaccurate travel demand model, has an incomplete emissions inventory, and has no ozone maintenance plan. 

### TIvRCCw

ants citizens and the EPAto believe this halfbaked effort equates toa proposed SIP that is stringent While stating that control measures are "potential° TNRCCwants to make major changes to this SIP proposal and not allow the public a full 30 days tome iew and comment on these changes before the SIP is submitted to EPA. TNRCCcriticizes the public by saying solutions and not gripes are what it wants to hear. TNRCCapparently has forgotten whopays its budget . Apparently, TNRCChas forgotten it has not, in 30years, brought the citizens of Houston clean air. That dogwon't hunt! To beginthese comments we have two solutions that will reduce NOx & VOC emissions by 100's and 1 .000's of tons. All grandfathered facilities must be permitted and required to have, at a minimum, best availablecontrol technology;specific monitoring requirements for NOx and VOC emissions, stringent record keepingrequirements, cumulative effects modeling of air emissions, and operationand maintenance procedures to ensure the proper operationof processes and control equipment.

"When we trv to pick out anything bv itself, we find it hitched to everything else in the universe ." John ajuirIn addition, an upset, maintenance, start-up, and shutdown emissions reduction plan, with a goal of 25% reduction in emissions, must be submitted for approval by TNRCC, with EPAoversight and citizen review and comment, and then implemented by each majorsource of 25 tpyor more of NOt and VOC . This plan, alongwith a focused enforcement effort with the best engineers and investigators at TNRCCand local air pollutionagencies, investigating significant upset andother releases, will reduce emissions cons: .derably. The HGAcan reach attainment . ButTNRCC's minimalist incremental, policy will not get us where ye want to be. «'e do notwant to wait another 30years for cleanair. 'INRCC must be more concerneda~bout people dying prematurely, getting sick unnecessarily, having their Quality of Like andwelfare being reduced, and having their environmentdegraded, than worrying about issuingair permits faster and worrying about thehealth andwelfare of industry. Then andonly then will we make true progress and once again breathe cleanair in Houston . 

### REVISIONS TOTHE SIP FORTHE CONTROL OF OZONE AIRPOLLUTION, POST-1999 RATE-0FPROGRESS AND ATTAINMENT DEMONSTRATION SIP FOR THE HOUSTON/GALVESTON OZONE NONATTAINMENT AREA, INSPECTION/MAINTENANCE SIP FORTHE HOUSTON/GALVESTON OZONE NONATTAINMENT AREA, 08/09/2000 1) Page I-1, there is no ozonemaintenance plan. One is required to ensure that once attainment has been achieved that it is maintained. 2) Page 1-3, this plan is 6years late. The U . S. Environmental Protection Agency (EPA) has illegally allowedthe delayed submittal ofan attainment SIP . We request EPAensure this SIPmeetsall requirements ofthe Federal CleanAirActand if it does not that the sanctions clock be started. 3) Page 1-4, it is interesting that TNRCCadmits that the 1995plan did notachieve attainment by saying, "This submittal included modeling demonstrating ro ess totivard attainment" . Notattainment, but progress toward. 4) Page I-6. the Houston Sierra Club requests from TNRCCa copy of this '~voluntary regional initiative to reducevehicletrips," that the Houston-Galveston Area Council (HGAC) is implementing. This document must be in this SIP ifTNRCCplans to take credit for any emission reductions due to its implementation. - 

### 5) , Page 1-9, 150ppm

sulfur in gasoline is not low sulfur gasoline. The 15 ppm proposed in the rules is low sulfur gasoline. 6) Page 1-10, Beaumont-Port Arthur (BPA) is not downwind ofthe Houston-Galveston Area (HGA) . The predominantwinds in the HGAare south, southsoutheast, or southeast BPAis east and northeastof HGA . IfTNRCC

will look at the wind roses on its website it Rill seethat predominantlyeasterly windsare more frequent during theyear than westerly winds. HGAdoes send emissions to BPAsome ofthe time but BPAsends HGAemissions more ofthe time. Be honest . 7) Page 1-11, this SIPis notcomplete because all the rules are not proposed whichwill reduce NOx and VOC . TNRCC

admits that control strategies are top ential and has not made the commitment necessary to ensure that all control strategies listed will actually be implemented . In fact TNRCCstates it will not make such a decision until it submits the SIPat the end of December . TNRCCwas required by EPAto submitthis proposed SIPwith ail control-strategies modeled anddocumented. 8) Page I-11, the SIP is notcomplete because the motorvehicle emissions budget (MVEB) will be recalculated andthepublic will get almost no opportunity to comment onthis except for thefew minutesat the Commission meetingwhen the SIPis approved for submittal to EPA . The public must have another opportunity, with at least 30 days ofreviewandcomment period, to look atthe entire SIP, in its final form

. Otherwise you are cheating the public from reviewingthe entire SIP and havingany reasonable chance to influence changes in the SIP . This is what TNRCCdid for the November SIP andthe Gap SIP: Significant changes will be made but thepublic is locked outofmeaningful participation. HGACis usinga discredited and inaccurate . IviVEB andan inaccurate travel demand model to allow

it to declare conformity. TNRCCand EPAareallowing this to occurwith improper oversight anddirection . How is it that the transportation part ofthe SIP can usea MVEB that is not approved by EPAand is not the same one that is in this SIP? Without the proper budget TNRCC cannot model accurately andcannot determinewhat the emissionsarefrom motorvehicles. Seethe enclosed documents regarding HGACtheTIP, andthe MTPas part ofour comments. These documents outline theflaws and inadequacies ofthe HGACtransportation portion ofthis SIP . 9) Page 1-12, Weight ofEvidence (WOE) is notappropriate for the HGA, BPA, and Dallas-Fort Worth Areas (DFW). EPAandthe Clean Air Act requirea demonstration ofozone attainment using agrid type model . WOE is illegal under EPA's own rules andthe CleanAirAct. Further, EPAis allowing a WOE calculation method that is unique to the HGASIP and is not allowedany-where else in the U . S . Two other WOE methods do notwork in the HGAso a third, untried method, has been allowed. WOE consists ofshavingthe peaks by averaging ozoneexceedance values and modeling values so that some type of calculation can be made to supposedly show attainment This is Voo Doo Scienceat its worst. We oppose anyWOE attainment demonstration . 10) Page 1-12,we disagree with the statement that there is a "shortage of readilyavailable control options." See thecomments ofBrandt Mannchen, O1/31/2000 for the GAPSIP, and 08/02/1999 for the November 1999 SIP. Thereare many control strategy options available . TNRCCdoes not have the political will to require their use. 11) Page 1-12, the stakeholders referred to repeatedly are not representative ofthe diversityof the HGA community. TNRCCignores that little or no input comes fromunions, people with asthma and respiratory ailments, doctors and others in the medical profession, university andother researchers, teachers, senior citizens, children's advocates, public health advocates, public transit advocates, civic clubs and neighborhood associations, people directly affected by industry and highways, minority communities, poor communities, churches, schools, and others in thegreater HGAcommunity. The TNRCCallows HGACto hold meetings during work days when most of the public cannot attend. TNRCCallows HGACto hold meetings at its offices instead ofgoinginto the community . TNRCC must have a representative citizens' advisory committee that meets in the evenings and weekends in different communities in the HGAandwhosemeetings are advertised in newspapers, on radio, andTV even if ads have to be bought. Right now TNRCC ensures that a small group of the public hasaccess, knoas about, &participates in meetings. This is shameful . 12) Page I-13, TNRCC claims theSIPwill ensure the HGAreaches attainment by 2007. But TNRCCdoes not state that by 2005, if4or more violations ofthe 0 .12 ppm ozone standard occur that the HGA-will not be in attainment TNRCChas most NOxandVOCreductions so thev will not occur until 2006 and 2007. This ensures that we have no monitoring data to support further controls until we have already exceeded the standard. TNRCChas been told for 10 yrs to front end load emission reductions. TNRCChas failed to listen to good advice and is back in loading reductions. This is afailed strategy as wasseen in 1979, 1982 and 1987 SIP's andattainment dates. TNRCC continues this failed policy andguarantees thepublic must breathedirty, life threatening air for many years to come. 13) Page 1-1, TNRCCnow says the 1995 NOxwaiver was based on episodes "which m arginall yexhibited model performance in accordance with EPAmodeling performancestandards." Atthetime TNRCC did not broadcast this obvious fact and ignoredthosewho brought it up . TNRCCpresented to EPAthe case that the modeling was convincing of dis-benefits for NOx control by allowing more ozone formation

. Funny, how

TNRCCnow

claims the modeling was marginal but at thetime defended its results. Will the same occur in severalyears about the modeling in this attainment SIP? 14) Page 1-2, TNRCCdoes not commit to control NOx andVOCemissions outsidethe 8county ozone nonattainm

ent area. This is foolish andwill ensure transportcontinues to play an important role in the inabilityof the HGAto reachattainment15) Pages 1-3 &I-11, TNRCConly says it will "list and quantify potential control measures to meet the shortfall of NOx reductions needed for attainment" Once againTNRCCwill not make a commitment to control strategies but hedges its bets saying it will keep its options open_ Unfortunately, EPAallows this worst kind of non-commitment and makes little or noeffort to stop it Shame on EPA! 

### 16) Page 3-1, TNRCCstill only focuses on one ozone episode to model . There are several kinds of ozone meteorological episodes that must be modeled. But TNRCCignores these. The most prevalent circulation pattern locally, the sea breeze/land circulation, is not modeled. The single or few hour high spike ozone exceedance, probably due to upset emissions from industrialized areas, is ignored. TNRCCensures attainmentwill not occur because the different ozone formation scenarios are not modeled for attainment 17) Pages 3-3 &3-4, TNRCCuses old land use data. This ensures that biogenic emissionsareoverstated and urbanization changes which affect meteorologyand area source, mobile source, andindustrial emissions are understated This ensures the emissions inventory (EI) is inaccurate. Forest losses due to sprawl, clearcutting andother lagging, and pasture developmentare notaccurately portrayed . 

### 18) Page 3-4, TNRCCarbitrarily reduces the NOx emissions by saying this would be in line with VOC/NOx ratios know

by monitoring. It is more likely that the NOx and VOCEl is so inaccurate that this accounts for the problems. You cannot arbitrarily changes important modelingfactors without adequate documentation,justification, and proof for the changes. TNRCCis ignoring this and going ahead anyway. It appears that any changes are OK ifTNRCCcanjustify themas getting it closer to attainment, whether they are correct or not andwhether TNRCChas proof for the changes or not 19) Page 3-7, the model continues to underpredict ozone concentrations significantly even with a revised El . The modeling performance is not acceptable. TNRCCignores this and continues to claim it can justify attainment when it has nomodeling that will show this. 20) Pages 3-7 &3-8, TNRCCaccepts growth based on local forecasts. These same local forecasts are not checked for accuracy by looking back;;ard and determining how close the forecast was to what really occurred. The Houston Sierra Club has been told by HGACthat they do not perform back«ard forecastingaudits. This ensures we continue to perpetuate the mistakes ofthe past for the future. By predicting high growth rates and then building for that growth rate local governments ensure that these forecasts become self-fulfilling prophesies. 21) Page 3-8, TNRCCunderestimates emissions and defines away the NOr gap. The Houston Sierra Club has observed that whenTNRCCis faced with an SIP deadline that it miraculously finds less pollution and therefore less emissions to clean-up . After the SIPis approved TNRCCtends tofind more emissions for its EI's. This happened in 1982 and is happening -with this SIP . TNRCCis playing fast and loosewith emission estimates. 22) Page 3-9, TNRCCnever states what percent compliance for Stage I in Eastern Counties is expected. Whowill able provide enough investigators to coverthis huge areaandensure that compliance occurs? Thereis absolutely no discussion about enforcement personnel, enforcement resources . andwhat the present situation is for getting investigations accomplished in a reasonable period oftime, both by TNRCCand the local air pollution programs. Wherewill all the needed additional investigators con:' fromif TNRCCis notwilling to commit tofull enforcement? 23) Page 3-10, ifheavy highway and municipal/utilityconstruction arerequired to service employment ai . : population centers andthese generate large amounts of emissions themselves or enable other sources to g nerate large amounts of emissions why is TNRCCand local governments allowing these pollution 

### e generatingactivities? 0 24) Page 3-10, ifTNRCCdoes not know how much population, employment, change in population, and change in employment account for construction and growth then TNRCCis admitting that it is not ableto estimate emissionsfromgrowth in the HGA . This meansthe EI and its distribution will be inaccurate in the modeling. This ensures inaccurate model results. 25) Page 3-12, TNRCChas ignored data that documents SUVuse in HGAmay be much greater than what it has projected

. In the DFtiy SIPtheSUVproportion ofthe motor vehicle population is 11% . In the HGATRNCCuses a 4.5% figure. TNRCCmustjustify why the HGAdoes not use a similar SUV population as DFW

. You areinsuringinaccurate Et MVEB, modeling results, and control strategy requirements. 

### 26) Pages 3-13 &3-14, TNRCCfailed in time to complete the newly permitted source adjustments for this SIP . This is a significant El problem . With nonewly permitted sources in 8 nonattainment counties TNRCCensures that accurate emission reductions cannot be determined In addition, the public Rill never get an opportunity to review these figures and respond for 30days. The permitted source adjustments are onlyfor pernnittedfacilities and TNRCCignores the cumulative impacts ofmany permits by rule facilities. Again the accuracy ofthe EL which is the foundation of accurate modeling, is compromised. 27) Page 3-14, biogenic emissions are not accurately accounted for because of Overestimates. Biogenic emissions should be less than shown because large areas are cleared, developed, and logged. In addition, TNRCCdid not change the base case regarding biogenic emissions when infact the El did change._ These changes need to be reflected and the biogenic El must be accurate. 28) Pages 3-15 cYZ 3-16, the voluntary mobile emission reduction programis illegal becausethereare no enforceable commitments. In Appendix K, all the VMEP's are illegal because there is nocommitment to implement them

. HGACstates for everyoneofthe VMEP's that it will "make a best faith effort to implementthis project." This is notan enforceable commitment. 

### 29) Page 3-15, modeling, with the CAM-X2 does not show attainment of thestandard. 30) Page 3-16, TNRCCadmits that there has been no model run with the specific rules proposed. Therefore the publicwill not have time to review and comment on the results ofthe model run when it is done with the rules before the SIP is sent tothe EPA TNRCCsimply assumes a 90%NOx reduction and does not document this actuallywill occur with the rules proposed. In fact TNRCC states, "the modeled ozone concentrations (and resulting gap) must be considered approximate." So TNRCCagain has no SIP that that the public can review and comment on ~;ith accurate modeling. TNRCChas missed the deadline again How many second chances will EPA give ZNRCCbefore the sanctions clock is started? 31) Page 3-17, strategy H2 is flawed. This strategy, when modeled, does not showattainment32) Page 3-18, modeling does not show attainment When changes are made and additional modeling runs are made the public will not get 3- days to review and comment on the final version ofthe model run. The WOE method used in HGAis not used anywhere else in the U . S. This is not science and not legitimate. This is a unproven method which averages out the peaks to reduce NOx reductions needed. TNRCCshould be ashamed ofits avoidance of responsibility by not providing cleanair for the Citizens ofTexas

. 33) Page 3-19, INRCCclaims a reduction in thegapoffrom118tpdto 78tpd but is not able to show a complete modeling runwith all controls to demonstratewhat thereductions really mean andwhere they come from

. TNRCCadmits that the gap maychange again so it ensures the public will not be able to review

and comment on the SIP for 30 days before it sends the SIPto EPA We object! 34) Page 3-10, TNRCCis revising the point source El whichthe public will not have theopportunity to review andcommentfor 30 days before adecision is made andthe document is sent to EPAin December .35) Pages 54, 5-7,5-10, .&5-13 the public RU not be able to reviewand comment on thechanges in the iViVEBfor 30 days and have a public hearing with adequate advertising about it before the SIPis submitted in December . Table 5.1-1, on page 5-2, shows area and non-road sources of NOx increase in 2002and other tables show similar increases until 2007 when miraculously all emissions drop. Thereis nodocumentation to showhow effective each control strategy will b? (%emissions reduction) . TNRCCis counting on reductionsthat will not occur. 36) Page 6=1, the VMEP is not legally enforceable and no specific commitment is made. All HGACsays is it will make agood faitheffort to implement proposed VEMP's whichcan change depending on what local political entities. This does notensure that reductions will be achieved. 

### 37) Page 64, the accelerated purchase ofTier 2l3 diesel trucks shouldstart May 2002and not 2004. A 2004 start is too late to provide significant emission reductions. The NOx reduction systems mentioned on Page 6-5, should also be started in 2002 for them to significantly reduce emissions. 38) Page 6-5, there is no commitment given to enforce a 55 mph speed limit . This will take the concerted effort of all law

enforcement personnel as well as an education program . There is nothing in the SIP whichcommits documents how effective the 55 mphspeed limitwill be andwhat level ofenforcement is needed andwill be given. 39) Page 6-5, airport ground serviceequipment phasein needs to start in 2002and not 2003. This ensures quickeremission reductions. 

### =10) Page 6-6, there is no explanation of how energy efficiency for buildings will be enforced and how emission reductionswill be calculated fromenergy saved. The public needs to know this information and be able to review

it. How enforceable is this and how will it be enforced? 41) Page 6-6, TNRCCdoes not say how itwill enforce TCM

implementation From1996-1999 over 100 miles ofbicycle lanes were not built . This TCM failure has not been addressed by HGACand there is no mention of how

these emission reductions will be recouped in the MTP or TIP for theyear 2000 . 42) Page 6-6, TNRCC, for the VOCRule Changes, recalculates existing rules and says there are more emission reductions than calculated before. TNRCCdoes not document the reality ofthese additional emission reductions in the field. .This is a case of Voo Doo Reductions. 43) Page 6-7

. TN-RCC delays full implementation of the UM program for the entire 8counties. All 8 counties need to implement this I/M programby 2002. We need emission reductions as fast and large as possible. TNRCCpersists in back end loadingemission reductions insteadoffront end loading . This back end loadingofemission reductions is afailed strategy as shown by failure to reachthe ozone standard in 1987. TACB, now TNRCC, did the same back end loading andcompliance was not achieved. 44) Page 6-12, TNRCChas not revealed the results ofits additional airplane monitoring research with Baylor University. Some information about this research was in the GapSIP . ButTNRCCrevealed thatthe data for many monitoring trips bad not been analyzed andwas notavailable. Thepublic has theright to seetheresults ofthese monitoring trips alongwith an analysis by TNRCCof what they mean for transboundary air pollution. 

### 45) Page 6-16, there is a lot ofORVactivity in Sam Houston National Forest and a lot of ATVuse in rural areas inthe HGA

. There are significant emissions generated by thesevehicles and they need to be estimated accurately. 46) Page 6-18, ifTNRCCcannot show compliance by 2005then the HGAwill not reach the ozone standard. The standard does not allowmore than 3 violations over any 3 year period. Most of TNRCC's reductions come after or during 2005. TNRCCis setting upthe HGAfor nonattainment before the 2007 attainment deadline. .

### 47) Page 6-26, the TNRCCmust reveal how well thevoluntary emission trip reduction program has done in the HGA

. 48) Page 6-27, TNRCCneeds to explain thesmokingvehicle program in detail . How

does it work, how will adequate enforcement resources be available, and how much emissions will be reduced. 49) Page 6-27, the Houston Sierra Club is very concerned aboutAERCO . Theentire emissions banking, credit, andtrading program is basedon environmentaljustice inequalities that 'INRCC does not address. We believe there should be a level playingfieldwith equivalent, real, reductions forall sources. Some sources should not be allowed to get out oftheir personal responsibility for reducing their own emissions by buying emission credits. This concerns us greatly andTNRCChas not addressed these concerns. 50) Page 6-28 &

6-38, we areconcernedabout the economic incentive program, especially for larger companies

. This can be construed as a reward to companies for reducing emissions that they will have to reduce in thefuture anyway. Thevoluntary nature ofthe programdoes not constitute an enforceable commitment and cannot be allowed as guaranteed emission reduction strategy. Company's should reduce emissions because they are responsible community members, are responsible to the public citizens, and because the emissionsarehurting thepublic's health51) Page 6-30, TNRCChas not estimated theadditional emissions that Shoal Point (Megaport), Bayport, Grand Parkway, and secondary development will produceand what their effects are on ozone attainment. 52) Page 7-1, this strategy of back loadingemission reductions will fail . It did so in 1987 andit will now . TNRCCis doingthe public a disservice by conducting its business ofprotecting public health in this manner. 

### CO\NMNTS ONAPPENDICES 1) Agpendix A a. Using 1992 data for landings andtake-offs provides avery inaccurate picture of emissions from ground support equipment use . Use ofHouston airports has increased tremendously since 1992. TNRCCmust recalculate theemissions fromground equipmentandaircraft usingthe most recent data. b. TNRCC

.should notassume 100%electrification since some emission generating equipment may be exempted by ZNRCC . TNRCCtakes maximum credits when there is a good chance that maximum

reductions will not occur. This is not beingconservative in estimaring emission reductions. 

### 2) A" -=

dix B a . It is not clear, on page B-13, whether contractors/subcontractors with thehighest surrogate rankings, who were surveyed, will have the same equipment andratio ofequipment as those not surveyed including small companies. It is ofconcernon page B-14 that 24% oftheequipment lacked basic information like make/model and hors,,-power ratings. On page B-15 it is troubling that 31 .6%

ofengine specific estimates foractivity were notavailable . We are notas confident as TNRCCthat the assumption thattherewas no_signi$cant contribution to equipment activity in the 8 County area from

sources outside theregion, B-17, is accurate. We do not believe it is good to limit a survey to two contractors, on page B-18, becausethey areresponsible for 70.1% ofthe activity. Tlhs meansthat there is a good likelihood that TNRCCwiil notcorrectly estimate theactivities ofthe other contractors because no survey was done and because thev are smaller than -- the contractors surveyed. On page B-21, it is of concernthat engine specific horsepower was obtained for only 50% ofthe surveyed equipment whileactivity estimateswere obtained for 63% oftheequipment. On page B-23, only 57% engine specific horsepower data wasavailable and only 17%

activity data wasavailabIc. On page B-24, only 28.5% ofthetotal appraisedvaluefor equipmentwas obtained. Finally, on page B-42, it is stated that the areal distribution of construction activity may have shifted outward fromdowntown Houston in the recent past . All of these problems cumulatively makes us concerned thatthis emissions estimate is notaccurate and TNRCCis relying too much on this information for its off-road emissions inventory . 

### 3) Appendix C a. TNRCChas not included emissions fromtheTexas City Megaport also known as Shoal Point We were told at the 09/1212000 HGACTIP/MI'Pmeeting, by a Texas City Megaport supporter, that 7,000trucks/day would be generated by the Megaport and this facility would also utilize the Grand Parkway. TNRCCmust look at all emissions generated fromsuch large projects. 4) Appendix D 

### a. We have no comments on this Appendix. 5) Appendix 

### a.

6) TNRCCcontinues to estimate biogenic emissionswithout current land use information . Anecdotally, the Houston Sierra Club haswatched the 1-35and 1-59 corridors develop. We have seen urbanization take placearound Lake Conroe, Sam Houston National Forest, andjust southof Cleveland, Texas. We know much forest is lost to developmentevery year, is lost to pastureland everyyear, is fragmented every year, is cut over so it is understocked . TNRCCneeds to ground truth land use data usingthe most up-to-date, yearly, aerial photos to determine land useand biogenic and other ernissionestimates. Appendix-F a. We have no comments on this Appendix 7) Anpendix G 

### a. On page G-6, assuming 100% rule effectiveness is both unrealistic and notaccomplishable. In addition, the number of enforcement personnel in thefield andthe rate of compliance must be taken into consideration. TNRCCis living in a dream world if it thinks its rules will be 100% effective in reducing emissions. 

### 8) Azfyendix H a. TNRCCmust calculate emissions from permits by rule (PBR) . PBRwill, cumulatively, generate a lot of emissions. Both VOCand NOx must be estimatedwith PBR Estimates need to take into account sources that emit at least 10tpyor more. Currently, withthis study, TNRCCignores sourceswith 24.99tpy of emissions or less. There is no indication that upset, maintenance, startup, and shutdown emissions areaccountedfor in these calculations. These types of emissions can be a significant portion oftotal emissions. It is troublingthat TNRCCdid not even have time to include -these emissions in this SIPand modeling effort. TNRCCneeds to use more foresight in planning SIPactivities. - 

### 9) Appendix Ia . How will TNRCCensure that all TCM's are implemented and are effective? From1996-1999 over 100miles of bicycle projects were not built YetTNRCCdid nothingto ensure these TCM's were accomplished. If park and ride lots for HOV's are mostly empty, how successful are they? Ifthe City, County, and Metro are considering allowing single personvehicles on HOV's, how effectivewill they be? Ifthe County is planning to construct a tollroad right next to the SW Freeway wherearailroad right-of-way is, how successful will mass transit be? 

### 10) Anpendi .

xJ a. How

does TNRCCexpect to enforce idling rules for large trucks when it does not have, and neither do thelocal airpollutioncontrol programs, enough enforcement personnel, currently, to do present investigations in a timely fashion? What about idling at banks, drug stores, restaurants, andother drive throughs? Why does not TNRCCalso be banthis extended idling? If a vehicle fromanother area or state is givenaticket, how will TNRCCensure that compliance occurs? On page J-4, TNRCCassumes 100% rule effectiveness. This will not occur and is an overestimate of emission reductions. This is dishonest and a shameful ploy. 

### 11) ADnendLC K a. We are opposedto includingemission reduction estimates fromthe voluntary mobile emissions reduction program

(VEND) in this SIP

. These strategies are not firm commitments and HGAC andTNRCCcanchange them at any time. We want control strategies that really reduce emissions and notsome promiseto try to voluntarily reduce emissions. For instance, theassumption that buying light duty vehicles that are more polluting will reduce emissions may not occur. People who sell these old cars will still need a car to drive. Unless someone finances their next car they will continue to drive the cheapest cars they canfind which will be the oldest and most polluting vehicles. In addition, in many cases theactual miles traveled in these cars andtheactual emissions coming from the carwill not be known so we maybe counting emission reductions that never occurred. Allowing HGACto saythey will make a "bestfaith effort to implement this project" for all the VMEp's is tantamount to saying there is no commitment for theseemission reductions. There is no enforceability here . We oppose the school year change as "Voo Doo Science." During the summer many of teenagers andtheir parents ,"ill still drive their cars. Teenagers may actually drive cars more since they will not have to be at one place (school) for 9 hours a day. By shifting to Septemberwe may actuallyjust shift ozoneviolations more toward September or June or July. This approach does not ensure emissionswill actually be less. TNRCChas no surplus investigators to ensure that smokingvehicles come in and test out ofcycle. If Transtar works and speeds up vehicles won'tTNRCCbe increasing NOx emissionssince speeds will be higher and vehicles will generate more NOxemissions? Theassumption that the averagework trip distance, one-way, is 30 miles is a vast overestimate. TNRCCoverestimates emission reductions. This is not an honest accounting ofvehicle trip lengths. b. We oppose emission credit andtrading program with mass caps as they are currently set-up. Such programs are not set-up to take into account environmentaljustice issues. Thosewho live closest to industry areforced to continue to breathe harmfulair that should have been cleaned up . Maximum

reductions are needed fromeverysource to level the playing field soeveryone abides by the same rules. This programis set-up to allow industry offthe hook TNRCCuses unsubstantiatedandoverestimatedfi~uzes of 6-10 billiondollars ofcapital costs to reduce NOx fromlarge point sources. Industry consistently has overestimated cleanair compliance costs. By allowing emissions trading not every industry will be doingits fair share to reduce emissions. Emission trading programs arezero sum games that do notresult in cleaner air butallow those whoshould be reducing emissions to avoid or delay reductions. 12) Appendi x L a . All tables are in twopieces andyou cannot determinewhich information goes together . The tables are uselessfor comparingdifferent control strategies.

### CON11V1ENTS ON PROPOSED NOY AND VOCRULES 1) Rules 101 .300-101 .374 a. On page 6 ofthis proposal, the gap is stated as 81 tpd. But elsewhere in this SIP 78 tpd is given as the gap in NOx emission reductions. Which is correct? b . On page 12, we oppose using EPAemission factors to determine how much emission reductions are allowedfrom

a scrapped vehicle

. IfT'NRCCis goingto have a scrappage programit must require that two vital bits ofinformation be known. First, an I/M test be conducted to get the actual emissions generated by the vehicle. Second, the actual mileagethe vehicle has traveled over thepast year. Without these bits of information any program is worthless andwill overestimate emission reductions and thus endanger theaccuracy of the emissions budget and inventory. c. Under 101 .29, we oppose allowing thetradingof emission credits achieved in the county, state, or nation. This ensures environmentaljustice inequities will continue as TNRCCforces people to breathedirtyairthat is harmful to their health- welfare, andenvironmentwhile not reducing, emissionsthat should be eliminated. d. We are opposed to providing"additional flexibilities" andallowing substitutes for "someof the measures considered here" as stated on page 9 . Flexibility is TNRCC's code word forweakening ofstandards and making, emission reductions industry friendly and less strict than needed. By being indeterminate TNRCCis failing to make the commitment required in an SIPattainment demonstration

. This is not acceptable. . e . The definition for "Actual emissions" must be changed to require actual monitoring so that the most accurate way to measureernissions is required. f We oppose usingthe EPA's mobile emissions baseline unless the emissions estimate, inventory, and budget is improved so it reflects actual emissions . Currently, according to the National Academy of Sciences, EPA's MOBILE model is grossly inaccurate and underestimates vehicle emissions. 

### 9- We oppose the creation and use of MERC's. Vehicular emissions must be reduced maximally . We have no business ina nonattainment area allowing emission credits and trading whenweare producingair that is hazardous to humans. h. Under 101 .302(e)(1) &(2), we oppose allowing creditsfromanother county, state, or nation- Are we to thepointwherewe reduce pollution in Mexico rather than doingthe jobourselves. We also oppose allowing credits and trading between nonattaiuunent areas. Each airshed must adhere to its carrying capacity andmust make its ownreductions. We must notfoist off on another airshed the responsibility to reduce emissions . i . Under 101 .353, we oppose allowingthe Executive Director to deviatefrom these rules to determinetheamount ofallowances to be allocated to a source. Does this mean that basedon the size andpolitical power ofa company that the Executive Director mayrule in its favor andaward more credits than this rule allows? 

### j . Under 101 .372(a), TNRCCis allowing the camel's nose under the tent by saying reduction of one pollutant can be substituted for reduction ofa different Pollutant. Different pollutants should bereduced individually unless there is scientific information to show they should be reduced together . They should never be traded. This ensures that TNRCCwill allow unhealthy levels of onepollutant while reducing another one when both need to be reduced. We oppose this abdication ofresponsibility. k . Under 101 .372(e)(2), we oppose allowing DEC's generated in an ozone nonatiainmentarea to be used in a county or area that is attainment or unclassified. Emission reductions must come from theairshedwherethereductions are needed andthe unhealthy airexists. Under 101 .372(e)(5), we oppose allowing DEC'sfromother counties, states, or nations to be used in attainment or nonatiainment areas. Each area must be responsible for its own emission reductions within its



### . own airshed. Otherwise youforce people to breathe pollution that they should not have to breathe. 1. Under 101 .373(f)(6)(A)(ii), we oppose DEC's being used to allow exceedances of permit allowables. Apermit must not be allowedto be an instrument offlexibility when dealing with emission ofair pollutants. Whyshould Tlv'RCCallow a company to exceed its allowable emissions in a permit? What is a permit worthif it can be exceeded and thereforepotentially cause health problems? 

### 2) Rules 110.10-1 10.19 a . Under 110

.12(a), we oppose theexperimental ozone reductionthat comes fromcoating an air conditioner with supposed ozonereducing coating . This is not proven technology andthere is no wayto determine, if it does work, what its ozone reductionpotential will be in years to come. TNRCCmust no predicate its ozone reductioncontrol strategies on control technologies that are not proven. We need absolute NOx andVOCreductions and not hopeful reductions. This is "Voo Doo Technology" andtheseare "Voo Doo Rules"! A50% ozone reduction is not best available control technology andcertainly is not lowest achieveable emissions reduction technology. Certification under 110

.14 is not sufficient . TheThIRCC must have tests submitted and must ensure the tests have been conducted correctly. Otherwiseshyster companies will statesell units that do not meet testing and control requirements. We seea bigpossibility of rip-offartists entering the field with these rules. Under 110 .15(2)(A), the highest ozone ppb level used for testing is not high enough. The HGAgets 0

.250 ppm

ozone. This technology should reduce ozonelevels down to below 0 .12 ppm or it is worthless. If under 110 .17, air conditioning manufacturers canshow the technology does notexist how

will TNRCCmake up theemissions that will not be reduced? The SIP is silent about this. Ifthis technology really works the entire state should be required to use air conditioners with these controls so a person cannot go to the next county andget a different air conditioner. 

### 3) Rules 114.50-114.52 a. The proposed I/M

test is not strict enough. What is needed is an I/M 240 test in conjunctionwith a test ofthe on-board diagnostics. This will be a stricter test than the one proposed and will reduce emissions maximally. The I/M test, in some form, should be required statewide so that the maximum

reduction of ozone precursors and their transboundary air pollutionwill occur. All eight counties listed must beginstricter UM tests on O1/01/2002. There is no reason to delay and wait for emission reductions when they are achievable now . 4) Rules 114.6-114.319 a . We support these rules but they should be state wide so no onecan cheat andgetdiesel fuel that has more than 15 ppm sulfur from

counties that do not have to comply with these rules. By making therules statewide TNRCCensures that the maximum reductionof ozoneprecursors and their transboundaryair pollution occurs. 5) Rules 114

.322-11 4

.329a. We support requiring low sulfur gasoline (15ppm or less) in the HGA

. IfTNRCCreally believes -- that "air pollution knows no boundaries" it will require this rule apply to theentire state so there can be no cheating by people filling up in counties where low sulfur gasoline is not offered. This will ensure transboundaryair pollution is minimized as much as possible. This maximizes all ozonenon-attainment areas' chances of coming into compliance with the Clean AirAct Amendments.



### .. 6) Rules 114.330-114.339 a . TNRCC

states these rules will apply to on-road heavyduty diesel engines registered in HGAand non-road heavy duty diesel engines that are primarily operated in the HGA . TIr7RCCneeds to define what "primarily" means regarding use in the HGAandreveal this information to the public. b. Accordingto TNRCConly preliminary lab results areavailable for diesel emulsion additives. We am concerned that TNRCCis using control strategies that are unproven and will not get the anticipated reductions. TNRCCmust not propose strategies that are unprovenjust to get paper emission reductions for the SIP . Doingthis so EPAwill approve thedocument and then having these strategies fail will mean needed NOx and VOCreductions do not occur. We are opposed to use ofcontrol strategies for this attainment SIPwhichare experimental . Future use of these technologies, when they are proven is fine. Wewant real emission reductions and not ones predicated on the hope the control technology will work in the real world. This SIPneeds reductions that are real, Rill occur, andare measureable. c. For rule 114.331 we want a smaller throughput figure. TNRCCshould use 10,000 gallons, which is thelimit used for Stage I &II controls for motorvehiclefuel dispensing facilities. 

### a. Rules 114.421-114.429 a. This proposal should apply tothe entire state so maximum reductions in transboundary air' pollution can be made and so people cannot use county boundaries as ways to avoid adhering emission reductions. a. Rules 114.440-114

.4-19 a. We arevery concernedTNRCCis advocating an unproven control strategy for this SIP. Only lab tests have been run. We need real world tests to ensure that this proposal will reduce NOx as hoped. By usingunproven control strategies TNRCCendangers actual NOx reductions since there is more likelihood an unproven technology will fail versus a proven one . This will allow TNRCCto get phantom NOac reductions. This is unfair to citizens who areforce to breathe theair and damage their heaItl~ welfare, andenvironment. b . Ifthis rule is approved the definition for heavy duty non-road engine should be changed so the horsepower rating starts at 100hp . The definition of"primarily operated" must be cha- ;ed to use oftheengine for 30 days/year and not 60 days/year. We need to maximize emission reductions and minimize emission exemptions. c . We areopposed to any generation of emission credits as allowed under 114 .445 . Emissions trading andcredit program ensure that environmentaljusticewill not occur and peoplewill be forced to breathe air tha? is M!ll~ned when 'INRCC should be ma..~amally reducing air emissions. If TNRCCpasses this proposal it should applyto the entire state to maximally reduce transboundary air pollution

. 

### a. Rules 114.452-114.459a. We are opposed to delaying the emissions of lawn service equipment (operating restrictions) . This

. proposal does~not reduce any emissions. This proposal may not reduce ozone formationpotential because we have a seabreezeJland circulation whichtakes emissions away andthen turns them around and pushes themback where they came from . This proposal could actually make ozone formation potential worse because emissions will not actually be reduced but simply feed ozone precursor clouds with additional pollutants over time. We do favor banning leaf blowerswhich besides causing air pollutionalso create noise pollution and w-ater pollution. Many users of leaf blowers blow

organic debris down the storm sewer. This will load up streamswith organic matter that a~ill cause oxygen depletion andfish kills. TNRCCcan requirethat all or some lawn equipment be electric instead of gasoline fired . This rule is virtually unenforceablesinceTNRCC and local air pollutionagencies do not have the investigators to ensure that the rules are enforced. 

### 10) Rules 114.460-114.469 a. We oppose 114.462(d) whichallows emissions credits and trading. See abovefor problems this causes. We request this proposal alsoapply to Hooks Airport since it is the largest private airport in the area and there is a need to reduce emissions fromsucha large source. 11) Rules 114.470

-114.479 a. We oppose the use of any emissions credits and tradingfor this rule. See above for reasons why emissions trading and credit programs cause problems. The TNRCChas not explained or planned for how investigators will be trained and how it will enforce the requirements ofthese rules. b. Under 114.476, records should be maintained for 5years. This the length of time TNRCCuses for compliance history . These tworequirements should coincide and notconflict . 

### 12) Rules 11-1 .482-114

.489 a . We are opposed to any construction equipment operating restrictions. These rules do not reduce emissions but simply allow them to occurat a different time period. With the seabreeze/land circulation theemissions will continue to causeozoneformation- Therules arefiutherweakened by allowing concrete using activity to be exempt. Since concrete using activity is one of the largest, if not the largest, sources ofemissions fromconstruction equipment the effectiveness of these rules will be destroyed by this exemption . 

### 13) Rules 114

.500-114.509 a . TNRCCdoes not state how it will enforce these rules. There are not enough investigators available to give serious enforcement effort to these rules. These rules exemptpassengervehicles which should not be allowed to idle at drive through banks, pharmacies, and similar businesses. The definition ofidling, under 114.500, allows someone to sit in drive, since they will be in gear, andidle. All someone has to do to avoid prosecution is put thevehicle in gear and let their engine run

. Ifthese rules are goingto be effective they must be statewide to maximall y reduce 

### transboundary air pollution_ The gross vehicle weight should not be limited to 14,000 lbs. It should goas low

as 8,0001bs to apply to as manyvehicles as possible. We oppose 114 .507(a)(6) . Vehicles should not beable to escape this rule because they are defrosting windshields. This is a large loophole. 14) Rules 115.122-1 15.129 a. Theserules must be state aide so maximum reductionof precursors andtheir transbo pollution will occur. 

### 13) Rules 113.161-1 13.169a. Theserules must, be state wide so the maximum reduction ofprecursors and their transboundary air -- pollutionwill occur. 

### 16) Rules 115

.211-115.216 a. Theserules must be state wide so maximum reduction of precursors andtheir transboundaryair pollutionwill occur. 

### 17) Rule 115

.240 a. These rules must be state wide so maximum reduction of precursors and their transboundary air pollutionwill occur. 18) Rule 115.430 a. Theserules must be statewide so maximum reduction ofprecursors and their transboundaryair pollutionwill occur. 

### 19) Rules 115.449 a. These rules must be statewide so maxim um reduction ofprecursors and their transboundaryair pollution will occur. 

### 20) Rule 115.950 a. We are opposed to emissions credit and trading programs. These prog-ams ensure that environmentaljustice inequitieswill continue since those with little power, money, or are not in the right social class are forced to breathe dirty air which should have been cleaned up . 21) Rule 117.10 a. The tables on pages 9, 11, 12, 13, do not add up. The column Tier II Reductions = Tier I + II does not add up whenthe reductionsfromTier I and Tier II are added together. For instance, for Utility Boilers, Tier I reductions are 97.6 tpdwhileTier II reductions are 172 tpd whichequals 269 .6 tpd. But theTier II reductions is only 184 tp( . TNRCCmust do a betterjob of putting tables together and explaining what is on the table. b . The definition of low annual capacity needs to be lowered . Currently. this termuses BTU's used in ayear for large boilers and 850hrsfor turbines or stationary internal combustion engines . The BTU's used in ayear should be reducedfrom 2 .2 and 2.8 times tento the eleventh to 1 .0 times ten to theeleventh and 500hrs. This waythe NOYrules will applyto more sources and greater NOx , reductions will be achieved. 

### 22) Rules 117.101-117.121 a. Under 117.103(d), the NO :c control strategy reductions should applyto all NOxsources that emit 10tpyor more. This maximizes NOx reductions and gives the HGAan equivalent reductionto the LosAngeles area., which has controls on sources that emit this amount of NOx pollution in ayear . 

### b. Under 117.106(c) &(d), the NIB slip allowed should be lower than 10ppm . It should be 5-7 ppm since this is best available control technology. We nerd to the best for HGA to protect the populationfromparticulate pollution and smogformation. . c. Under 117.107, emissions averaging should be abolished TNRCCnerds to gofor the maximum NOx reduction from

each unit and not allowsome units to reduce NOx less than other similar units.

### d: Under 117.108(i) ; we oppose allowing permanently retired or decommissioned units to be used in a source cap emission limit Oncea unit has shutdown it should not be used as if it were still operating and give a company an advantageso it does not have to control its other units ma.,arnally for NOx. e. Under 117.114(a) &(c), unitswithout CEMS or PEMS must be required to verify their emissions after any modification. By allowing such units to foregoverification when the modifications are supposed to lower NOx emissionsTNRCCdoes notfind out whether the modification actually reduces NOxemissions and ifso by how much. This information is crucial for emissions inventory updates and to ensure compliance with TNRCCrules. 23) Rule 117

.1 38 

### a. We have no comments on this proposal . 24) Rules 117.201- 117.221 a. Under 117

.205, we request the operating hoursfor gas turbines and stationary internal combustion engines be loweredto 500to take in as manv sources as possible and reduce NOx maximally . In additional stationary internal combustion engines should be required to provide NOx controls if they have 100 hp or more. 

### b . Under 117.206(c)(12), the 64% reduction in NOx for pulping liquor recovery furnaces is too low . The percent reductions should be 80-90% . c . Under 117.206(c)(13), the 39%NOx reduction for ldlns is too low . Kilns must reduce NOx emissions 80-90%

. d . Under 117

.206(c)(14), the 35%

NOx reduction for heat treating furnaces and reheat furnaces is low . These units must reduce NOxemissions 80-90% . e. Under 117.206(c)(15), the 41% NOx reduction for the dn~er category is low . These units must reduce NOx at least 80-90% . ' f . Under 117

.206(c)(16), the 61%

NOx reductionfor incinerators is low . These units must reduce NOx 80-90%

. g . 

### Under 117.210, we oppose system raps because they allowunits to not maximally reduce their NOx emisisons. We need every NOx reduction we can get to reduce ozone aswell as particulate air pollution and protect the health, welfare, and environment ofthe public. h. Under 117.214(a) &(c), we oppose not requiring units -with no CEhLS/pEMS to test their emission limits after a modification that reduce emissions. Accurate NOx information for the emissions inventoryis necessaryas well as monitoring to ensure that reductions claimed have actually occurred. i . Theemission limits for the Beaumont/Port Arthur Nonattainm eni Area for Electric Generating Utilities and all industrial, commercial, andinstitutional sources of NOx should be the same at thosefor the HGA

. Sincethetwo nonattainment areas are so closetogether and since they both receive tiansboundarv air pollutionfromeach other andsincethey both send transboundary air pollution to DFW

and other areas of Texas where ozonevalues are high they both need equivalent reductions. . 

### 25) Rules 117.471-1 17.479a . Under 117.479, we oppose not requiringemission testings for units with no CEM/PEM when - modifications occurthat reduce emissions. TNRCCneeds accurate emissions inventory information about NOx and needs to monitor to ensure that NOx reductions occur. 26) Rules 117.5 10 &117.520 a. The HoustonSierra Club supports a three year compliance schedule for utility electric generation unit NOx controls because reductions are needed now . 27) Rule 117

.534 

### a. We have no comments on this proposal . 28) Rule 117.570 a. The Houston Sierra Club opposes this emissions credits, trading, and banking proposal . Enclosed is a report by the Public Employersfor Environmental Ethics (PEER) which documentsemissions trading is flawed. In addition we submit comments from earlier this year by Brandt Mannchen whichdetail problems with emissions trading. Some of the problems involve environmental justice issues. People who live in areaswhereindustries do not have to reduce their emissions becausethey buy credits suffer from higher air pollution levels and breath air pollution that others do not have to. Many of these people are poor, from a minority racial or ethnic background, or hold little political power. In other words, these are the people Society dumps on . In addition. HGAis the most severe ozone nonattainment area in thecountry. Toachievethe ozone standard TNRCCneeds every NOx reduction it can get. Instead TNRCCallows some companies to escape their responsibility by using credits that are bought so they do not have to reduce theirfair share of airpollution

. These companies are not being good citizens and must be required to reduce their emissions like everyone else. Fairness in the market requires there be a level regulatory playing field. TNRCCis not allowing this to occur. 

### CONCLUSION The TNRCCmust revise the SIP and demonstrate by modeling that ozone attainment can occur. If TNRCCcannot dothis with a modeling runand no WOE it must take atime out and gather the information and conduct the research so it can develop a modeling run that legitimately shows attainment instead of using illegal VooDoo Science (WOE) to show attainment It is far better to stop and review the entire nonattainment picture than to commit to a SIP that will not reachattainment andwill continue to expos°. millions of people to unhealthy ozonethat will shortentheir lives, decrease theirwelfareand Quality of Life, and damage their environment. Dothe right thing!!! Sincerely, Brandt Mannchen Air Quality Task Force Conservation Committee Houston Sierra Club 5115 Maple 

### Bellaire, Texas 77401 H713-664-5962, W713-640-4-313February 24, 2000



### Matthew Baker Office ofPermitting, Remediation, andRegistration EmissionsBanking and Trading Program MC 162 TNRCC - P. O . Box 13087 - Austin, Texas 78711-3087 Dear Mr. Baker, Enclosed are my personal comments regarding the document "Options for the Emission Credit Banking & Trading Program(EBTP) with the Proposed NOx SIPs." 1) I am

concerned this proposal is not going before thepublic across the state in public meetings so there can be discussion, review, and comment. I was fortunateto find out about this proposal fromafriend whowas asked to attend thestakeholders meeting by someoneelse. It seems TNRCC has avery limited list ofwhoit considers stakeholders. IfTNRCCis goingto seriously consider such a drastic change fromthe current SIP process then the public must be given the opportunity, on the ground floor, to learnabout and comment on the proposal . Putting the proposal on the web site is not sufficient for public notification. By the time the public gets an opportunity to comment on this proposal during the SIPprocessTNRCCwill already have made the decision to go forwardwith EBTP. Thepublic will be left out in the cold. I request TNRCCextend thecomment period to the end of March and have aseries ofpublic meetings in the Houston-Galveston, Beaumont-Port Arthur, Dallas-Fort Worth, Austin, San Antonio, and Tyler-Longviewnon-attainment or near non-attainment areas, at a minimum . I also request TNRCCsend out a notice to all personswho recently attended the Houston-Galveston, DallasFort Worth, and Beaumont-Port Arthur SIP public hearings. I request TNRCCput a notice in all large major metropolitan newspapers and in each major population center in East Texas so there is maximum public notice given on this proposal . This is ofparticular concern to me since I have been submitting comments and attending public hearings before TACB and TivRCC for 24 years . It is a sad commentary that someone who has participated as much as I have is not contacted by TNRCC . It is even a sadder commentary that many people do not even know about the proposal and will have no chance to comment. 2) The first question TNRCCneeds to ask is not "how" but "should we." There needs to be a public debate about EBTP and whether it should be used at all . There has never been such a debate. TZNrRCC, in the early 1990s, simply adopted some emissions and banking programs and the public had no real opportunity to fully discuss and debate the issue. The pluses and minuses of EBTP need to be laid out andthen a series ofpublic meetings held to fully engage the public in determining ifthis is what it wants. Unfortunately the assumption is that EBTP will occurand the only question is whereand how large the areas will be where inter pollutant tradingwill be allowed. Leavingthe citizens out ofthe decision making process and making their comments superfluous is not the wayto deal with those who are your bosses. 3) I am

concerned EBTP undermines moral arguments that pollution must be reduced for the health ofthe general public. By allowing a companyto avoid its societal responsibility ofcleaning up its wasteso it does not affect its neighbors or the communityTINRCC strengthens arguments that there is a "right to pollute." TIvZtCC must make clear that thereis no right to pollute and only use EBTP, ifat all, in the most limited circumstances. -t) By advocating EBTP TLNRCCalso undermines the principlethat all pollution sources should reduce their emissions. Why should one source, due to its ability to pay off a pollution debt be able to pollute while another source must reduce its emissions. By requiring each company to reduce its pollution weensure there is alevel economic playingfield. By allowing some companies to payfor theright to pollutewe allow

them to poison theair for afew bits ofsilver. This is not fair environmentally, economically, or socially. 

### 5) Another concern about EBTP is whowill be left tobreathe thefiltfi and,who will get cleaner air. This is anenvironmentaljustice concern as well as one offairness. The companies that are willing to buy the ability topollutewill subject their neighbors to additional air pollutionwhichwill harmhealth, shorten life, or kill people as well as harm thewelfare, property, and environment ofthe community. TNRCC is aiding companies in their ability to get awaywith such crimes. Usually those whoare politically least powerful, poor, or minority suffer disproportionately from these emissions. In fact we can often call such communities sacrifice areas because no one seems to care they have to breathe more polluted air. 6) I My support command and control . Air inspectors can more easily assess compliance when they know preciselywhat is required ofacompanyand canreadily monitor actions. Caps are more difficult to understand and assess becausethey rely on more paperwork and can more easily be conducted so the appearance is compliance but reality is otherwise . Command and control is easily understood by citizens and companies alikeand performance can be easily tracked and compliance determined: When deadlines are vague aboutwhen emission reductions are duethen the reductions urill not get made and inspectors will be loath to push hard until a "for certain" deadline arrives . If inspectors do not understand £BTPthen they will assume compliance and genuine compliance will not be assessed. 7) Reductions predicated on yearly cuts in emissionsare not how companies actually operate. Usually a companywill set a deadline of severalyears out becauseit takes time to allocate the money, conduct engineering, hire consulting firms or others to help with the project, and finally construct theproject. Having a reduced amount of emissions each year as a target is not a real world wayto reduce emissions. 8) There is little or no time to develop an £BTP. We have only until 2005 in the Houston-Galveston Area to meet the attainment goal . Even though the deadline is 2007 ifwe get 4ozone exceedances in 2005 wewill already have exceeded the standard and it will not be possible to demonstrate attainrnent by 2007. Such a complicated programdoes not lend itselfto short timeframes. That is whycommandand control makesso much sense because in short timeframes it is easy to understand and thetarget is very plainto see

. We can by rule decide what the reductions arefrom each source and then give a certain time to come into compliance. Cap and tradeis too ephemeral to understand and implement quickly. 9) It is obvious that this is a ploy by Tl\tRCCto buy time and delay reductions as much as possible in the hope that Governor Bushwill be elected President and he will or Congress will change the Clean Air Act toweaken deadlines and sanction requirements. I oppose this type ofcynical posturing. We need to gofor cleanair as fast and as hard as we can. No quarter! 10) Anystrategy used to reduce emissions must be based on actual emissions monitoring. I oppose using P£Ms becausethey do not measure actual emissions . They cannot tell you what is actually coming out ofa vent and how

much is coming out of a vent . The type and amount of pollutants coming out of vents is exactly the information we need to assess whether ecnissions reductions occur. T\'RCC must require CEMs wherever it is technologically possible. Only then will we see what our real emissions are . This will also help improve ouremis5ions inventory (£I) so it is more accurate. 11) Why is TNRCCallowing the source to determine its own annual emissions rate? This should be thejob oftheTNRCC

. Do we really want to trust those who will benefit the most fromcheating on emissions? That is Eke giving a car thiefthe keys to your car and asking himto watch it for you. We do not need paperor phantom

reductions like have been found in the Toxic Release Inventory. We need real data with excellent auditing and oversight fromthe TNRCC . How are we going to get this expert auditing when inspectors arealready overloaded with work and are not trained well? iV1y guess is T\'RCCwill rely on self-policing whichwill allow cheating to occur. I object .12) I do not support bankingemissions. By bankingemissionswe allow acompanyto polluteat that facility at a latertime or sell theair pollutionto someone else so they canpollutewhen they should be cleaningup

. - This is wrongand is notfair for thosewho have to breathe theadditional air pollution . Once emissionsai-e eliminated they must not be allowedto be emitted later at thesame facility or somewhere else. By making air pollution a commoditywe allow people to feel they have a right to pollute . Citizens have neversaid they favorgiving acompanythe rigltt to polluteand certainly have never been asked by TNRCCabout this. I oppose selling excess allocations. 13) It is notclearwhat will happen to acompanythat misses apollution reduction deadline with acap and trade . It seems to me it will take severalyears to get thereductions needed to catch-up with the annual reduction

. It is much simply to say by aparticular date therewill only be so much pollution allowedor no pollutionwill be allowed. Youneed thefirmdeadline and specific limits that command and control give toget people to take their responsibility seriously . 14) The use ofEBTPis rife with pollution estimation problems. Whowill verify independently that the company's emission estimates and reductions indeed have occurred and are correct? I can see a problemoccur like Title V where permit engineers aretaking the company's word and inspectors are finding major problems in thefield. Theproblem with this is the inspectors do not have adequate time or training to really deal with issues in a comprehensive fashion because they have so much work. TNRCC will push theenforcement ofthis programdown to the regions and will starve the regions for personnel and adequate resources to do thejob right. 15) IfTNRCCis goingto rely on EIs to determineallocations there is a real problem . Although the EIs are much better than the past no one really knows how good they are. That is because TNRCChas not gone out and audited stringently companies to see how TNRCCs estimates based on actual plant visits matchthe companies' . The same problem will occur with EIs in the EBTP. 16) TNRCCkeeps talking about flexibility . Whenever I hear that word I reach for my pocket . In the past that word has always been a code for "delay" and reduced pollution reductions. I am doubtful TNRCC will do theright thingand will not use its vaunted "case-by-case" analysis to allow some companies to get away without reducing theirfair share . No wherein this proposal do I see any significant emphasis on quality assurance, auditing, and methods to stop and detect cheating. 17) TNRCCstates that for a Subregion, a disadvantage is that it does not encourage reductions in areas surrounding nonattaiment areas. This is false . Right now

TNRCCis requiring reductions in all ofEast Texas based on the problemoftransport to assist the Dallas-Fort Worth, Houston-Cralveston, and Beaumont-Port Arthur nonattainment areas. In addition, TNRCChas the authority to reduce emissions in areas outside nonattainment areas to help the nonattainment areas come into compliance. IS) TNRCCis trying to use modeling demonstrations to show that EBTP will work. T\'RCChas spent almost 10years modeling and still is not able to get a model run that shows complete attainment . Models are a method to obfuscatethe truth and confuse thepublic. The information used in models is usually not accurate enough to be depended on to give a good approximation ofthe truth. I do not trust TNRCC and its work with models. Too often it is used to confuse and hide the truth. 19) I am

opposed to allowing anytrading where Houston companies can buy pollution rights in Austin and claim they have reduced emissions. We need emission reductions in Houston and not Austin. Those of us who live in Houston will get little benefit frompollution reductions in Austin but will breathe less filth ifthe reduction occurs in Houston. This type ofall over the state trading ignores local impacts and sentences certain populations to dirty air for much longer times than command and control requires. 20) We need reductions all over East Texas. We cannot afford to trade and all-)wpollution in onepart of East Texas and providefor less pollution in another part . IfTNRCCis really serious then it needs to have 90%NOx &VOC reductions fromall major sources in all of East Texas. Only by maximizingcontrols willwe approach attainment ofthepresent ozone standard, providefor maintenance ofthe standard afterwe attain it, and start to reduce emissionsforattainment ofthe more stringent 8 hour standard. We do not have excess ecnissions andarein nodanger of.overcontrolling. I have heardthat argument for over 20years in Houstonandit is a myth. I am .oppood to a MegaRegion. 

### 21) I find it amazing that TNRCCtalks about choosing a baselinethat may makeit easier for industry so they donot have to reduceeumissions as much: The EIs mentioned, are inaccurate and because oftheir inaccuracy they cannot be used for EBTP . The TNRCCmust tell the public about the % error associated with EIs, models, and other estimation techniques that it proposes to use to establish an EBTP. Then the public can decide whether it wants totake the risk ofgross underestimation or overestimation ofemissions. 22) TNRCCsuggests that TitleV compliance assurance monitoring can be used toensure accurate emissions. TitleVhasvery little real monitoring that will give youa good idea of how the quality assurance ofthe EBTPis faring. Title V compliance assurance monitoring is afalse hope for monitoring and auditing accuracy. ' 

### 2;) Why should we reward any polluter for early emission reductions? These companies are after all putting poisons intothe air and it is their social duty and responsibility to reduce emissions sotheir neighbors and community are not hurt. 24) I amopposed to pooled emission reductions becausetheagency then acts in a capacity to protect and subsidize polluters as new polluters move into an area. The Houston-Galveston area has already exceeded its carrying capacity for its airshed. Why dowe want more polluters to come when we cannot control the existing pollution? This makes no sense . There is a limits to growth and ifnot acknowledged and followed thepublic subsidizes industry with its health. 25) Ti`F1KCC states compliance is reduced 30-50% with EBTP. I request a copy ofthedocument that this figure is based on. It is easy to see wherethis will lead. TNRCCwill promisethe Governor and the Legislature that it can do more with less andwill not expand inspector positions like it should, will hold inspector positions steady while increasing the workload, or will cut positions. This ensures that compliance and attainrnent will never occur. Then TvRCC can whine and say we tried all we could but it is impossible to achieve clean air. This is very cy-nical indeed. 26) T\TRCC does not include the start-up costs ofthis program including training inspectors andtrying to get themfamiliar with how to enforce EBTP. It will be very difficult to 0 gain program

familiarity fast enough to ensure thereductions areachieve that we say will occur. . T'NRCC is hiding the true costs of EBTP. The costs are borne by citizens while the companies are subsidized by citizens. This does not 

### sound fair to me. 27) TNRCChas no penalty programit will implement if cheating is found. What will happen to a company that cheats? Will it be fined? Will it be takento court? Will it be required to come into compliance sooner? Will it have to publicly apologizeto citizens? What arethe disincentives for cheating? 28) Thereis no assessment, analysis, andevaluation oftheimplications ifthis program fails for all nonattainment areas. Will sanctions then have to be leveled?. Command and control is proven. This program is not.I request TNTRCCreject EBTp becauseit will confusecitizens and inspectors, subsidize industry profits fromcitizens' heatth,welfare and environment, andwill not get the emission reductions needed to reach ozone attainment foralI ofEast Texas . Th1RCC is usingthis strategy as a delaying tactic and is bending over backwardsto reward industry when the citizens aretheones who need relief . I oppose this program . Sincerely, 

### Brandt Mannchen 5115 Maple Bellaire, Texas 77401 H713-664-5962, W713-640-4313tfco S74,- C ., 3, ~1'r~oz ~~T4t PROt~~ UNITED STATES ENVIRONMENTAL PROTECTION AGENCY REGION 6 1445 ROSS AVENUE, SUITE 1200 DALLAS, TX 75202-2733 

## November 20, 2000 Ms. Lola Brown MC205 Office ofEnvironmental Policy, Analysis, and Assessment Texas Natural Resource Conservation Commission 

## P. 0 . Box 13087 Austin, Texas 78711-3087 

# t'~tCt1Vr--U 

# F1pV 27 2000 ^FFICE OF ENVfRONMENTAI :NIICY, ANALYSIS & ASSESSMENT



### RE: EPAComments on TNRCC Rule LogNumber 2000-047-116-AI Dear Ms. Brown

: We appreciate the opportunity to provide comments on the Texas Natural Resource Conservation Commission (TNRCC) Rule Log Number 2000-047-116-AI . It is understood that the proposed regulation would supplement the proposed nitrogen oxide (NOx) emission cap and trade rule by specifying that new or modified sources obtaining permits under Chapters 106 or 116 of 30 TACshall be required to obtain NO,, emission allowances prior to operation. Attached are our comments onthe proposed rules. The major itemof concern identified by Region 6relates to the definition of "facility" in relation to the proposed rules. The rules should clearly state that the term"facility" is consistent with the TNRCCdefinition found at 

## § 116 .12(4) . This definition offacility includes all emission sources within contiguous property, under common control, and the same two digit SIC code. It is our understanding that all NO . emission sources at each facility, including small sources with emissions below ten tons per year (tpy), were modeled in the attainment demonstration. The control strategy requiring 90%reduction of NO,, emissions relies uponthe use ofallowances for all NO,, emissions at facilities withtotal NOx emissions greater than tentpy. Asecond item

ofconcern regards facilities (contiguous property, etc.), which are subject to the mass cap and trade allowances that have new permits for individual sources with emissions less than ten tpy, be required to obtain allowances prior to operation. The proposed rules canbe interpreted that these small sources do not need to obtain allowances. Ifthey are not required to obtain allowances, the annual emissions fromthe facility could exceed the mass cap and trade allowances which would compromise the entire attainment demonstration. 

## This concern was raised inour previous comments regarding the mass cap and trade rule. The total allowances ofthe mass cap and trade systemshould be consistent withthe emission

Internet Address (URL) . http://www .epa.gov Recycled/Recyclable *Printed with Vegetable 00 Based Inks on Recycled Paper (Minimum251/6 Postconsumer)

## reductions relied upon to demonstrate attainment. Ifindividual sources ofemissions less thanten

tpy were included in the controlled sources at a facility inthe SIP attainment demonstration, they must have allowances to operate under the mass cap and trade program . Should you require additional clarification of our comments, we look forward to discussing them

withyou. Ifyou have any questions, please call Tom Diggs at (214) 665-31024 . 

## Sincerely yours, Becky Weber Associate Director Attachment : EPARegion 6Comments 

## cc: Tom

Diggs, 6PD-L Jole Luehrs, 6PD-R

### EPARegion 6Comments on Supplement to HGANOx Cap & Trade for Permits by Rule TNRCCRule Log Number 2000-047-116-AI



## November 20, 2000 BACKGROUND TNRCCproposed a NO . Cap &Trade rule for the Houston GalvestonArea (HGA) one hour ozone nonattainment area whichwas published in the Texas Register on August 25, 2000 . An allowance would equal one tonof NO . emissions per year. Sources would be required to obtain a sufficient number of allowances to equal or exceed its actual NO . emissions for each calendar year. The purpose of the Cap & Trade systemis to limit NO . emissions of individual stationary sources in HGAso that aregional maximum or cap ofemissions is not exceeded. The NOX emission limitations would apply to existing and new stationary sources. Individual sources may buy or sell allowances, but the total number ofallowances in the HGAregion may not exceed the predetermined cap. 

## The proposal, TNRCCRule Log Number 2000-047-116-AI, would supplement the proposed emission cap and trade rule by specifying that facilities using permits by rule under Chapter 106of 30TACmay be required to obtain NOXemission allowances prior to operation. Permits by Rule § 106.4(a)(8) The permits by rule requirement of §106.4(a)(8) states that the proposed facility or group of facilities shall obtain allowances for NO . ifthey are subject to the mass cap and trade program . TNRCCdefines facility in §116 .10(4) as "a discrete or identifiable structure, device, item, equipment, or enclosure that constitutes or contains a stationary source, including appurtenances other than emission control equipment. Amine, quarry, well test, or road is not a facility." TNRCCdefines "building, structure, facility, or installation" in §116 .12(4) as "All ofthe pollutant-emitting activities whichbelong to the same industrial grouping, are located in one or more contiguous or adjacent properties, and are under the control ofthe same person (or persons under common control) except the activities of any vessel . Pollutant-emitting activities shall be considered as part ofthe same industrial grouping if they belong to the same "major group" (i .e., which have the same two-digit code) as described in the Standard Industrial Classification Manual, 1972, as amended by the 1977 supplement." The Pern*s by Rule requirement of §106 .4(a)(8) should clarify that the definition ofa facility used in this section is equivalent to the definition offacility in § 116 .12(4) . Since § 116

.10(4)

### defines facility as "a discrete . . . structure . . . that constitutes or contains . . . a stationary

source . . . . this definition couldbe interpreted as meaning that the facility is only the one particular stationary emission point that is subject to the Permit by Rule regulation. This section should be clarifiedto clearly indicate that facility means all pollutant-emitting activities that are part ofthe same industrial grouping ina two-digit SICcategory on contiguous or adjacent properties and under common control . This would make the definition offacility in this section consistent with the definition offacility in §116,12(4) . Not only thepermit by rule emission sources but the entire facility as defined in §116 .12(4) should obtain the allowances. 

## Since afacility with allowable emissions of 10tons per year is subject to the mass cap and trade program, the requirement to obtain allowances would apply to each and every emission source at the facility (contiguous/adjacent properties; common control ; and having the same two-digit SIC code) where the Permits by Rule emission source is to be located. The concern is that the EPAapproved modeled after control strategy inthe attainment demonstration included individual emission sources with emissions less than 10tpy. In this case, the reductions from

these sources have beenrelied upon in showing attainment and should be included inthe cap. By having adefinition offacility that excludes these sources fromobtaining allowances compromises the attainment demonstration. For instance, ifall sources at the facility had allowable NO . emissions of 8 tpy and a proposed Permits by Rule source had emissions of9tpy, the facility would be required by §106 .4(a)(8) to obtain 17 allowances assuming a definition offacilityconsistent with §116.12(4) . An interpretation ofthe definition offacility consistent with § 116 .10(4) would require only 9tpy of allowances. 

## Chapter 116: Subchapter B : New Source Review

Permits Division 1 : Permit Application General Application § 116.111(a)(2)(L) Section 116

.111(a)(2)(L) states that the proposed facility or group offacilities shall obtain allowances for NO, to operate ifthey are subject to the mass cap andtrade program . This requirement to obtain allowances should apply to each and everyemission source at the facility. This section should be clarifiedto clearly indicate that facility means all pollutant-emitting activities that are part ofthe same industrial grouping in atwo-digit SICcategory on contiguous or adjacent properties and under common control . This would make the definitionoffacility in this section consistent withthe definition offacility in §116.12(4) . Not only the permitted emission sources but the entire facility as defined in § 116.12(4) should obtainthe allowances. The concern is that the EPAapproved modeled after control strategy inthe attainment demonstration included individual emission sources withemissions less than 10 tpy. In this case, the reductions from

these sources have been relied upon in showing attainment and should be

~r 'r ' ~i

## 3

included inthe cap. By having a definition offacility that excludes these sources from obtaining allowances compromises the attainment demonstration.

General and Special Conditions §116 .115(b)(2)(C)(iii) Section 116

.115(b)(2)(C)(iii) states that prior to operation ofthe facilities authorized by the permit the permit holder shall identify the source or sources ofallowances of NO . to complywith the requirements ofthe mass cap and trade program . This requirement to identify allowances should applyto each and every emission source at the facility. This section should be clarified to clearlyindicate that facility means all pollutant-emitting activities that are part ofthe same industrial grouping in a two-digit SIC category on contiguous or adjacent properties and under common control . This would make the definition offacility in this section consistent withthe definition offacility in §116.12(4) . Not only the permitted emission sources but the entire facility as defined in §116

.12(4) should obtain the allowances. In the event that the permitted sources debottleneck other existing sources, the facility should identify the source of allowances for the increase in emissions due to the debottlenecking. 

## The concern is that the EPAapproved modeled after control strategy in the attainment demonstration included individual emission sources withemissions less than 10tpy. Inthis case, the reductions from

these sources have been relied upon in showing attainment and should be included in the cap. By having a definition offacility that excludes these sources from obtaining allowances compromises the attainment demonstration.

Use of Mass Cap and Trade Allowances for Offsets §116.176 Section 116

.176 states that any allowance required to comply with the mass cap and trade program

may be used to meet the correlating portion ofthe emission offset requirements needed to comply with §116.150 relating to new major source or major modification in ozone nonattainment areas. 

## It is unclear what is the meaning ofthe phrase "correlating portion" with respect to emission offset requirements. The term"correlating portion" should be defined. The Clean AirAct (CAA) § 173(c)(1) regarding offsets states that "The owner or operator ofa new or modified majorstationary source may complywith any offset requirement in effect under thispartfor increased emissions ofany airpollutant only by obtainingemission reductions of such airpollutantfromthe same source or othersources in thesame nonattainment area . . . Such emission reductions shall be, by the time a new or modified source commences operation, in effect andenforceable andshall assure that the total tonnage ofincreasedemissions ofthe air pollutantfromthe new or modified source shall be offset by an equalor greaterreduction, as applicable, in the actual emissions ofsuch airpollutantfromthe same or other sources in the area." § 173(c)(2) further states that the Emission reductions otherwise required by thisAct shall notbe creditable as emissions reductionsforpurposes ofanysuch offset requirement.

## It is understoodthat the mass cap and trade programrepresents RACT for sources in the Houston

nonattainment area. The RACT emission limitation for all NOx sources at facilities withemissions equal to or greater than 10 tpy is represented by the mass cap ofNO . allowances. Within the Houston ozone nonattainment area any new source must obtain NO

. offsets of 1 .3:1 as defined in the CAAat §173(c)(1) . Since the mass cap and trade allowances have been relied upon in the attainment demonstration for Houston, the CAArequires that all emission reductions used as offsets be surplus to RACT. These surplus offsets must be created by controlling NO . emissions below

the mass cap andtrade allowance for the source. To make these surplus reductions permanent and enforceable, the RACT emission limitation, i .e., the mass cap and trade allowance must be reduced by the source making the reduction. Likewise the new source being permitted must obtain allowances equal to the amount ofthe new emissions. In addition the new

source must obtain 30% more offsets to meet the 1 .3:1 offset ratio. The 30% or correlating portion ofthe offsets maycome fromadditional allowances or from surplus 

## emission reduction credits inthe ERC bank. Even though they are both economic incentive programs, the emission reduction credit (ERC) bank is entirely different from the mass cap and trade allowance trading system ERCs by definition are surplus and permanent . Therefore, they can be used as offsets for permitting purposes. Allowances may be purchased and sold by a facility each year in order to meet the mass cap and trade limit for that year only. Thus, it is inappropriate to use allowances as offsets. Since ERCs are surplus to state and federal requirements they may be banked to be used as future offsets. Specific allowances are associated with the surplus ERCs that may be used fromthe bank ifthe facility (contiguous property, common control and two digit SICcode) has ten or more tpy ofNO,, emissions making it subject to the mass cap and trade program . As an example, a new

source of 100 tpy NO

. emissions is required by the offset ratio provision to obtain 130tpy ofERCs from the bank assuming there are no internal offsets. In order to remain surplus at the time ofuse the 130tpy of ERCs must have been reductions below the mass cap and trade limitation and thus would have 130allowances associated with them Inthis example the mass cap would be reduced by 30 Ipydue to the offset requirements. However, the new

source could obtain 30tpy of ERCs from the bank and obtainthe 100tpy offset requirement fromallowances ofother facilities. Under this scenario, the mass cap would remain unchanged. Inthe scenarios above, the new source must meet the requirements ofobtaining 1 .3:1 offsets but may or maynot reduce the total allowance cap depending uponthe source ofthe offsets. By obtaining offsetsfrom

small facilities not subject to the mass cap andtrade rule or the ERCbank, the new sourcewould not reduce the total cap ofallowances. Ifthe new source obtained all

## 5

130%of the required offsets from the allowances, the cap would permanently reduce by an amount equal to 30%ofthe new source's emissions. Standard Permits § 116.610(a)(6) Section 116.610(a)(6) states that a project which meets the requirements for a standard permit subject to the mass cap and trade program, the proposed facility, group offacilities oraccount must obtainallowances for NOXto operate. This section should be clarifiedto clearly indicate that facility means all pollutant-emitting activities that are part ofthe same industrial grouping in a two-digit SICcategory on contiguous or adjacent properties and under common control . This would make the definition offacility in this section consistent withthe definition offacility in §116 .12(4) . Not only the proposed emissionsource but the entire §116 .12(4) facility should obtain the allowances. 

## The concern is that the EPA approved modeled after control strategy inthe attainment demonstration included individual emission sources with emissions less than 10tpy. Inthis case, the reductions fromthese sources have been relied upon in showing attainment and should be included in the cap. By having a definition offacility that excludes these sources fromobtaining allowances compromises the attainment demonstration.

Standard Permits - General Conditions §116.615(6)(C) Section 116

.615(6)(C) states that prior to beginning operations offacilities authorized by the generalpermit, identification ofsources of allowances to meet the requirements of the mass cap and trade program

is required. This section should be clarified to clearlyindicate that facility means all pollutant-emitting activities that are part of the same industrial grouping in atwo-digit SICcategory on contiguous or adjacent properties and under common control . This wouldmake the definition offacility inthis section consistent withthe definition offacility in § 116 .12(4) . Not only the proposed emission source but the entire §116.12(4) facility should obtain the allowances. 

## Flexible Permits §116.711(12) Section 116

.711(12) statesthat a project which meets the requirements for a flexible permit subject to the mass cap and trade program, the proposed facility, group offacilities or account must obtain allowances ofNOx to operate. This sectionshould be clarified to clearly indicate that facility means all pollutant-emitting activities that are part ofthe same industrial grouping in a two-digit SIC category on contiguous or adjacent properties and under common controL This would make the definition offacility in this section consistent with the definition offacility in § 116 .12(4) . Not only the proposed emission source but the entire § 116 .12(4) facility should obtain the allowances. 

## The concern is that the EPAapproved modeled after control strategy in the attainment demonstration included individual emission sources with emissions less than 10 tpy. Inthis case,

## the reductions fromthese sources have beenrelied upon in showing attainment and should be

included in the cap. By having a definition offacility that excludes these sources fromobtaining allowances compromises the attainment demonstration.

Flexible Permits - Generaland Special Conditions §116.715(c)(3)(C) Section 116

.715(c)(3)(C) states that prior to beginning operations offacilities authorized by the flexible permit, identification of sources ofallowances to meet the requirements ofthe mass cap and trade program

is required. This section should be clarified to clearly indicate that facility means allpollutant-emitting activities that are part ofthe same industrial grouping in atwodigit SICcategory on contiguous or adjacent properties andunder common control . This would make the definition offacility in this section consistent with the definition offacility in § 116 .12(4) . Not only the proposed emission source but the entire §116 .12(4) facility should obtain the allowances.

### INDEXOF ORAL TESTIMONY

Reference Number Submitted bv

No oral testimony was received pertaining to this proposal .

# EVALUATION OF

TESTIMONY

### EVALUATION OF TESTIMONY

The Texas Natural Resource Conservation Commission (commission) adopts amendments to § 116. 111, General Application; §116.115, General and Special Conditions; §116.610, Applicability ; §116.615, General Conditions ; § 116.711, Flexible Permit Application; and § 116.715, General and Special Conditions . The commission also adopts new§116.176, Use of Mass Cap Allowances for Offsets . Sections 116.111 and 116.115 are adopted with changes to the proposed text as published in the October 20, 2000 issue of the Texas Register (25 TexReg 10449) . Sections 116.176, 116.610, 116.615, 116.711, and 116.715 are adopted without changes and will not be republished. These amended and new

sections will be submitted to the United States Environmental Protection Agency (EPA) as revisions to the state implementation plan (SIP) . BACKGROUND AND SUMMARY OF THE FACTUAL BASIS FORTHE ADOPTED RULES On December 6, 2000the commission adopted rules, which were published in the January 12, 2001 issue of the Texas Register (26 TexReg 283), that establishes a systemof allocation and trading of emission allowances for nitrogen oxides (NOX) in the Houston/Galveston (HGA) nonattainment area . An allowance is equal to one ton of NOX emissions and facilities are required to obtain a sufficient number of allowances equal to or exceeding its emissions for a calendar year . The purpose of this systemis to limit emissions of NO,, fromindividual facilities in HGA so that a regional maximum, or cap, of emissions is not exceeded. The NOX emission limitations apply to existing and new stationary facilities. Individual facilities may buy or sell allowances, but the total number of allowances in the HGA region may not exceed the predetermined cap.

### This adoption requires that applicants for permits authorized under 30 TAC Chapter 116 in the HGA

area acknowledge, in the permit application, the requirement to obtain allowances prior to operation. This adoption also requires that the applicant, prior to commencing operations, identify a source of allowances . SECTION BY SECTION DISCUSSION The new§116.111(a)(2)(L) requires permit applicants under Chapter 116, Subchapter B, Division 1, Permit Application, to acknowledge they must obtain allowances to operate. The commission has deleted the reference to the effective date (March 21, 1999) in §116.111(b)(1) because that date is no longer correct . The new§ 116.115(b)(2)(C)(iii) adds language to the general conditions of New Source Review(NSR) permits, specifying that facilities, groups of facilities, or accounts subject to Chapter 101, Subchapter H, Division 3, concerning Mass Emissions Cap and Trade Program(26 TexReg 283), must identify the source or sources of allowances to be used for compliance. The commission has amended §116.115(c)(2)(A)(ii) to state the correct title of Chapter 106 as Permits by Rule. The new§116.176 allows permit applicants for facilities subject to Chapter 101, Subchapter H, Division 3, that are required to submit NO, offsets in accordance with §116.150, NewMajor Source or Major Modification in Ozone Nonattainment Areas, to use allowances to meet the correlating portion of the emission offsets . The new§ 116.610(a)(6) requires permit applicants under Chapter 116, Subchapter F, Standard Permits, to acknowledge they must obtain allowances to operate. 

### 2

### The new§116.615(5)(C) adds language to the general conditions of standard permits specifying that

facilities, groups of facilities or accounts subject to Chapter 101, Subchapter H, Division 3, must identify the source or sources of allowances to be used for compliance. The new§116.711(12) requires permit applicants under Chapter 116, Subchapter G, Flexible Permits, to acknowledge that they must obtain allowances to operate. The new§ 116.715(c)(3)(C) adds language to the general conditions of flexible permits specifying that facilities, groups of facilities, or accounts subject to Chapter 101, Subchapter H, Division 3, must identify the source or sources of allowances to be used for compliance. FINAL REGULATORY IMPACT ANALYSIS DETERMINATION The commission reviewed the adopted rulemaking in light of the regulatory analysis requirements of Texas Government Code, §2001 .0225. The commission determined that these amendments to Chapter 116 do not meet the definition of a "major environmental rule" as defined in Texas Government Code, §2001 .0225. "Major environmental rule" means a rule, the specific intent of which, is to protect the environment or reduce risks to human health fromenvironmental exposure, and that may adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, or the public health and safety of the state or a sector of the state. The commission adopts these amendments to achieve administrative consistency with amendments to Chapter 101, adopted on December 6, 2000 (26 TexReg 283) . The Chapter 101 amendments require facilities or groups of facilities in the HGA area, which have a collective design capacity to emit NO, in amounts greater than or equal to ten tons per year, to hold sufficient allowances equal to or greater than their actual NOX emissions under a cap and trade program . These amendments require a permit applicant 

### 3

### subject to Chapter 101, Subchapter H, Division 3, to acknowledge that they are required to obtain

allowances to comply with the cap and trade programto operate and that they must identify a source or sources of allowances prior to operation. In addition, the amendments to Chapter 116 allowapplicants of new major sources and major modifications to use allowances for the correlating portion of any offsets required under §116.150, NewMajor Source or Major Modification in Ozone Nonattainment Areas . These adopted sections state that applicants of newor modified facilities in HGA are to comply with Chapter 101, Subchapter H, Division 3. These adopted sections do not expand the cap and trade programfor the HGA area . The amendments to Chapter 116 do not adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, or the public health and safety of the state or a sector of the state; therefore, these amended and new sections do not constitute a major environmental rule. In addition, Texas Government Code, §2001 .0225, only applies to a major environmental rule, the result of which is to: 1 .) exceed a standard set by federal law, unless the rule is specifically required by state law ; 2.) exceed an express requirement of state law, unless the rule is specifically required by federal law ; 3.) exceed a requirement of a delegation agreement or contract between the state and an agency or representative of the federal government to implement a state and federal program ; or 4.) adopt a rule solely under the general powers of the agency instead of under a specific state law . This rulemaking is not subject to the regulatory analysis provisions of §2001 .0225(b), because the adopted rules do not meet any of the four applicability requirements. Specifically, the emission banking and trading requirements within this rulemaking are an element of the control strategy for the HGA SIP which is necessary in order for HGA to meet the ozone national ambient air quality standard (NAAQS) set by the EPA under the Federal Clean Air Act (FCAA), §109 (42 United States Code (USC), §7409) . Additional elements of this control strategy were adopted by the commission on December 6, 2000 . These rules do not exceed an express standard set by federal lawsince they implement requirements of the FCAA . Provisions of 42 USC, §7410, 

### 4

### require states to adopt a SIP which provides for "implementation, maintenance, and enforcement" of

the primary NAAQS in each air quality control region of the state. While §7410 does not require specific programs, methods, or reductions in order to meet the standard, state SIPs must include "enforceable emission limitations and other control measures, means or techniques (including economic incentives such as fees, marketable permits, and auctions of emissions rights), as well as schedules and timetables for compliance as may be necessary or appropriate to meet the applicable requirements of this chapter," (meaning Chapter 85, Air Pollution Prevention and Control) . It is true that 42 USC does require some specific measures for SIP purposes, like the inspection and maintenance program, but those programs are the exception, not the rule, in the SIP structure of 42 USC . The provisions of 42 USC recognize that states are in the best position to determine what programs and controls are necessary or appropriate in order to meet the NAAQS. This flexibility allows states, affected industry, and the public, to collaborate on the best methods for attaining the NAAQS for the specific regions in the state. Even though 42 USC allows states to develop their own programs, this flexibility does not relieve a state fromdeveloping a programthat meets the requirements of §7410. Thus, while specific measures are not generally required, the emission reductions are required. States are not free to ignore the requirements of §7410 and must develop programs to assure that the nonattainment areas of the state will be brought into attainment on schedule. The requirement to provide a fiscal analysis of proposed regulations in the Texas Government Code was amended by Senate Bill (SB) 633 during the 75th Legislative Session, 1999. The intent of SB 633 was to require agencies to conduct a regulatory impact analysis (RIA) of extraordinary rules . These are identified in the statutory language as major environmental rules that will have a material adverse impact and will exceed a requirement of state law, federal law, or a delegated federal program, or are adopted solely under the general powers of the agency. With the understanding that this requirement 

### 5

### would seldomapply, the commission provided a cost estimate for SB 633 that concluded "based on an

assessment of rules adopted by the agency in the past, it is not anticipated that the bill will have significant fiscal implications for the agency due to its limited application." The commission also noted that the number of rules that would require assessment under the provisions of the bill was not large. This conclusion was based, in part, on the criteria set forth in the bill that exempted proposed rules fromthe full analysis unless the rule was a major environmental rule that exceeds a federal law . As previously discussed, 42 USC does not require specific programs, methods, or reductions in order to meet the NAAQS; thus, states must develop programs for each nonattainment area to ensure that area will meet the attainment deadlines . Because of the ongoing need to address nonattainment issues, the commission routinely proposes and adopts SIP rules . The commission bases these actions on the presumption that the legislature understands this federal scheme. If each rule proposed for inclusion in the SIP was considered to be a major environmental rule that exceeds federal law, then every SIP rule would require the full RIA contemplated by SB 633. This conclusion is inconsistent with the conclusions reached by the commission in its cost estimate and by the Legislative Budget Board (LBB) in its fiscal notes . It is a rule of statutory interpretation that the legislature is presumed to understand the fiscal impacts of the bills it passes, and that presumption is based on information provided by state agencies and the LBB, the commission believes that the intent of SB 633 was only to require the full RIA for rules that are extraordinary in nature. While the SIP rules will have a broad impact, that impact is no greater than is necessary or appropriate to meet the requirements of the FCAA. For these reasons, rules proposed for inclusion in the SIP fall under the exception in Texas Government Code, §2001 .0225(a), because they are required by federal law . The commission performed photochemical grid modeling which predicts that NO, emission reductions, such as those required by these rules, will result in reductions in ozone formation in the HGAozone nonattainment area . This rulemaking does not exceed an express requirement of state law . This rulemaking is intended to obtain NO, emission 

### 6

### reductions which will result in reductions in ozone formation in the HGAozone nonattainment area and

help bring HGA into compliance with the air quality standards established under federal lawas NAAQS for ozone. The rulemaking does not exceed a standard set by federal law, exceed an express requirement of state law(unless specifically required by federal law), or exceed a requirement of a delegation agreement . The rulemaking was not developed solely under the general powers of the agency, but was specifically developed to meet the NAAQS established under federal lawand authorized under Texas Clean Air Act (TCAA), §§382.011, 382.012, and 382.017, as well as under 42 USC, §7410(a)(2)(A) . TAKINGS IMPACT ASSESSMENT The commission evaluated this rulemaking action and performed an analysis of whether the rules are subject to Texas Govermnent Code, Chapter 2007. The following is a summary of that analysis . These amendments are adopted as part of a strategy to reduce and permanently cap emissions of NO,, to a level which would allow the HGA nonattainment area to attain the NAAQS for ozone. Promulgation and enforcement of the rules will not burden private real property. The amendments do 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 a governmental action. Additionally, the allowances that are the subject of these rules are not property rights. Consequently, these amendments do not meet the definition of a takings under Texas Government Code, §2007.002(5) . Although the rule revisions do not directly prevent a nuisance or prevent an immediate threat to life or property, they do prevent a real and substantial threat to public health and safety, and partially fulfill a federal mandate under the USC, §7410

. Specifically, the emission limitations within this adoption were developed in order to meet the ozone NAAQS set by the EPA under the USC, §7409. States are primarily responsible for ensuring attainment and maintenance of the NAAQS once the EPA has established them . Under the 

### 7

### USC, §7410 and related provisions, states must submit, for approval by the EPA, SIPs that provide for

the attainment and maintenance of NAAQS through control programs directed to sources of the pollutants involved. Therefore, the purpose of the rulemaking is to implement a NO, strategy which is necessary for the HGA area to meet the air quality standards established under federal lawas NAAQS. Consequently, the exemption which applies to these rules is that of an action reasonably taken to fulfill an obligation mandated by federal law . Therefore, these revisions do not constitute a takings under Texas Government Code, Chapter 2007. CONSISTENCY WITH THE COASTAL MANAGEMENT PROGRAM The commission determined the adopted rulemaking relates to an action or actions subject to the Texas Coastal Management Plan (CMP) in accordance with the Coastal Coordination Act of 1991, as amended (Texas Natural Resource Code, §§33.201 et seq.), and the commission's rules in 30TAC Chapter 281, Subchapter B, concerning Consistency with the Texas Coastal Management Program . As required by 30 TAC §505.11(b)(2) and 30 TAC §281 .45(a)(3), relating to actions and rules subject to the CMP, commission rules governing air pollutant emissions must be consistent with the applicable goals and policies of the CMP. The commission reviewed this action for consistency with the CMP goals and policies in accordance with the regulations of the Coastal Coordination Council and determined the rules are consistent with the applicable CMP goal expressed in 31 TAC §501 .12(1) of protecting and preserving the quality and values of coastal natural resource areas, and the policy in 31 TAC §501 .14(q), which requires the commission protect air quality in coastal areas . The amendments state that applicants for permits of new or modified facilities in HGA must comply with Chapter 101, Subchapter H, Division 3. These rules do not authorize any newNO, air emissions . EFFECT ON SITES SUBJECT TOTHE FEDERAL OPERATING PERMITS PROGRAM 8

### The amendments to §§116.111, 116.115, 116.610, 116.615, 116.711, and 116.715 are not considered

applicable requirements under 30 TAC Chapter 122, thus these changes do not require revisions to the affected facilities' operating permit . The new§ 116.176 is considered an applicable requirement under 30 TAC Chapter 122, thus owners or operators subject to the Federal Operating Permits Program must, consistent with the revision process in Chapter 122, revise their operating permit to include the new§ 116.176 requirements for each emission unit affected by the revisions to § 116.176 at their site. HEARING AND COMMENTERS The commission held a public hearing in Houston on November 16, 2000 . No comments were received at the hearing, but the commission received written comments fromthe EPA and the Sierra Club Houston Regional Group (Sierra-Houston) during the public comment period which closed on November 20, 2000. The EPA requested clarifications on several points of the proposal, and SierraHouston opposed the proposal . ANALYSIS OF TESTIMONY The EPA commented that the commission should clarify the application and definition of "facility . " The definition of "facility" in §116.10(4) should be consistent with the intended use of the same termin proposed §106.4(a)(8) . The EPA questioned whether the termwas intended to mean that only the emission point that was authorized under the permit by rule would be required to obtain allowances or would all emission points of the same industrial grouping on contiguous or adjacent property, under common ownership or control, be required to obtain allowances . The rules were not revised based on this comment . The intent of proposed §106.4(a)(8) is to notify the owner(s) seeking to authorize a facility or group of facilities under a permit by rule that 

### 9

### if those facilities are subject to the cap and trade program, sufficient allowances will need to be

obtained equal to or greater than the total actual NO,, emissions fromall facilities subject to Chapter 117 at the site. All facilities at a site that are subject to Chapter 117 and that collectively have a design capacity of ten tons of NO . emissions per year or greater will be required to obtain allowances. The term"facility" is defined in TCAA, §382.003(6) . The EPA made the identical comment about the use of the term "facility" in the proposed §116.111(a)(2)(L), §116.115(b)(2)(C)(iii), §116.610(a)(6), §116.615(6)(C), §116.711(12), and §116.715(c)(3)(C) . The use of the term "facility" in these sections should be clarified to mean that a facility includes all emission points in the same industrial classification on contiguous or adjacent property and under common ownership or control . The rules were not revised based on this comment . The industrial classification is relevant to the cap and trade programonly if that classification includes facilities subject to Chapter 117. The intent of this rulemaking is to ensure that facilities authorized by Chapter 116 have sufficient allowances to operate. Afacility or group of facilities at a site becomes subject to the cap and trade program

if they are subject to Chapter 117 and collectively have a design capacity of ten tons of NO,, . emissions per year or greater. Any additional facilities authorized at that site will also be subject . The term"facility" is defined in TCAA, §382.003(6) . The EPA commented that the commission should clarify the intent of § 116.176. The section allows the use of allowances required to comply with the emission cap and trade programin 30TAC Chapter 101, Subchapter H, Division 3 to meet the correlating portion of emission offset requirements needed to comply with §116.150, NewMajor Source or Major Modification in Ozone Nonattainment Area . The 

### 10

### EPA stated that the use of emission reduction credits (ERCs) is appropriate to meet offsets as ERCs are

surplus and permanent . Allowances are renewed every year and are therefore not appropriate for use as offsets . The rules were not revised based on this comment . The FCAA requires that offsets be provided and that those offsets provide a net air quality benefit . The adopted cap and trade rules set the cap at a level necessary for stationary facilities as part of a comprehensive SIP for the HGA nonattainment area to reach attainment by 2007. Because no new or modified facility, subject to the NO . requirements of Chapter 117 and which is located at a site where such a facility or group of facilities has a collective design capacity of ten tons per year or more, will be allocated new allowances, any allowance they use will be `surplus' fromanother facility participating under the cap. The net effect will be a zero sumgain on the number of allowances in the cap. This reflects the `correlating portion' of the offset requirement . Because all new and modified facilities (as described above) will be required to obtain allowances froma facility already participating in the cap, it is ensured that NO,, emissions will be reduced to levels necessary for attainment . Even though further reduction will not be necessary since the cap has been set at a level to reach attainment, the rules will still require that an additional 30%of offsets be retired for compliance with the FCAA. This reduction will be an added benefit to the environment and will reduce emissions even beyond those levels necessary. Sierra-Houston commented that the proposed amendments in Chapters 101, 106, and 116 should have been part of the HGA SIP proposal that went through public hearings in September 2000. SierraHouston stated that very few people would knowabout the proposals because there was no publicity surrounding them, and that the proposals are far reaching. II

### The rules were not revised based on this comment . This amendment is directly related to the NO,,

cap and trade program, but could not be proposed and adopted on the same schedule. One of the affected sections in this adoption was open under another rulemaking related to the implementation of SB 766 fromthe 1999 session of the Texas Legislature when the cap and trade rules were proposed. The SB 766 implementation and the cap and trade rules were proceeding under fixed but different schedules due to statutory and federal deadlines. Under the Administrative Procedures Act (APA), the commission must wait until a section undergoing amendment is completed and effective before that section may be opened again for amendment . This rulemaking was proposed and published consistent with the APA requirements. Sierra-Houston stated that the emission cap and trade programwill result in no emission reductions in plants close to poor and minority neighborhoods . The rules were not revised based on this comment . The effect of implementing the NOX cap and trade programwill be an overall NO,, reduction of approximately 90%fromstationary facilities in the HGA nonattaimnent area. Facilities subject to the cap and trade program will be required to reduce actual emissions to a level equal to or lower than their individual cap, or purchase allowances fromanother facility participating under the cap and trade program . This trading will result in a net zero effect on the level of the cap, and will not result in increased emissions based on the location of the specific facility. Sierra-Houston opposed the cap and trade programin general and stated that requiring emission reductions at all facilities will result in the greatest reduction of ozone. Sierra-Houston stated that



### 12

### many emission controls will not be required until 2005, which will reduce the chances of the HGA area

obtaining the ozone standard by 2007. The rules were not revised based on this comment . The overall NO . cap was set at an annual level believed necessary for stationary facilities in order for the HGA nonattainment area to reach attainment by 2007. Thus, compliance with the cap will achieve the necessary reduction from the stationary source category. For facilities not wishing to make reductions to meet their individual cap, additional allowances will need to be obtained from another facility or facilities. Because these purchased allowances will be obtained from a facility participating in the cap and trade program, this results in an equal reduction from the seller . There is no net increase in the number of allowances. In addition, the cap is being initially set at historical emission levels and will reduce over time with the final reduction taking place in 2007. Based on the existing SIP, the reductions necessary from stationary facilities need to be in full effect by 2007 and not 2005 to demonstrate attainment . STATUTORY AUTHORITY The amendments are adopted under the Texas Health and Safety Code, TCAA, §382.011, which authorizes the commission to control the quality of the state's air ; §382.012, which authorizes the commission to develop a plan for control of the state's air ; §382.017, which provides the commission the authority to adopt rules consistent with the policy and purposes of the TCAA ; §382.051, which authorizes the commission to adopt rules as necessary to comply with changes in federal lawor regulations applicable to permits issued under Chapter 382; and USC, §7410(a)(2)(A), which requires SIPs to include enforceable emission limitations and other control measures or techniques, including economic incentives such as fees, marketable permits, and auction of emission rights. 

### 13

# STAFF RECOMMENDATIONS

### CHAPTER 116 : CONTROL OF AIR POLLUTIONBY PERMITS FOR NEW CONSTRUCTION OR MODIFICATION SUBCHAPTER B

: NEW SOURCE REVIEW

PERMITS DIVISION 1 : PERMIT APPLICATION

§116.111, §116.115 

### §116.111 . General Application. (a) In order to be granted a permit, amendment, or special permit amendment, the application must include: (1) a completed FormPI-1 General Application signed by an authorized representative of the applicant . All additional support information specified on the formmust be provided before the application is complete;

(2) information which demonstrates that all of the following are met . (A) Protection of public health and welfare. (i) The emissions fromthe proposed facility will comply with all rules and regulations of the commission and with the intent of the TCAA, including protection of the health and physical property of the people. (ii) For issuance of a permit for construction or modification of any facility within 3,000 feet of an elementary, junior high/middle, or senior high school, the commission 1

### shall consider any possible adverse short-termor long-termside effects that an air contaminant or

nuisance odor fromthe facility may have on the individuals attending the school(s) . (B) Measurement of emissions. The proposed facility will have provisions for measuring the emission of significant air contaminants as determined by the executive director. This may include the installation of sampling ports on exhaust stacks and construction of sampling platforms in accordance with guidelines in the "Texas Natural Resource Conservation Commission (TNRCC) Sampling Procedures Manual ." (C) Best available control technology (BACT) . The proposed facility will utilize BACT, with consideration given to the technical practicability and economic reasonableness of reducing or eliminating the emissions fromthe facility . (D) New

Source Performance Standards (NSPS) . The emissions fromthe proposed facility will meet the requirements of any applicable NSPS as listed under Title 40 Code of Federal Regulations (CFR) Part 60, promulgated by the EPA under FCAA, §111, as amended. (E) National Emission Standards for Hazardous Air Pollutants (NESHAP) . The emissions fromthe proposed facility will meet the requirements of any applicable NESHAP, as listed under 40 CFR Part 61, promulgated by EPA under FCAA, §112, as amended. (F) NESHAPfor source categories. The emissions fromthe proposed facility will meet the requirements of any applicable maximum achievable control technology standard as listed under 40 CFR Part 63, promulgated by the EPA under FCAA, §112 or as listed under Chapter 113, 2

### Subchapter C of this title (relating to National Emissions Standards for Hazardous Air Pollutants for

Source Categories (FCAA § 112, (40 CFR 63)) . (G) Performance demonstration. The proposed facility will achieve the performance specified in the permit application. The applicant may be required to submit additional engineering data after a permit has been issued in order to demonstrate further that the proposed facility will achieve the performance specified in the permit application. In addition, dispersion modeling, monitoring, or stack testing may be required . (H) Nonattainment review . If the proposed facility is located in a nonattainment area, it shall comply with all applicable requirements in this chapter concerning nonattaimnent review

. (I) Prevention of Significant Deterioration (PSD) review . If the proposed facility is located in an attainment area, it shall comply with all applicable requirements in this chapter concerning PSD review . (J) Air dispersion modeling. Computerized air dispersion modeling may be required by the executive director to determine air quality impacts froma proposed new facility or source modification. (K) Hazardous air pollutants . Affected sources (as defined in §116.15(1) of this title (relating to Section 112(g) Definitions)) for hazardous air pollutants shall comply with all applicable requirements under Subchapter C of this chapter (relating to Hazardous Air Pollutants : 3

### Regulations Governing Constructed or Reconstructed Major Sources (FCAA, §112(g), 40 CFR Part

63)) . (L) Mass cap and trade allowances. If subject to Chapter 101, Subchapter H, Division 3, of this title (relating to Mass Emissions Cap and Trade Program), the proposed facility, group of facilities, or account must obtain allowances to operate. (b) In order to be granted a permit, amendment, or special permit amendment, the owner or operator must comply with the following notice requirements . _

(1) Applications declared administratively complete before September 1, 1999, are subject to the requirements of Chapter 116, Subchapter B, Division 3 (relating to Public Notification and Comment Procedures)

.

(2) Applications declared administratively complete on or after September 1, 1999, are subject to the requirements of Chapter 39 of this title (relating to Public Notice) and Chapter 55 of this title (relating to Request for Reconsideration and Contested Case Hearings ; Public Comment)

. Upon request by the owner or operator of a facility which previously has received a permit or special permit fromthe commission, the executive director or designated representative may exempt the relocation of such facility fromthe provisions in Chapter 39 of this title if there is no indication that the operation of the facility at the proposed new location will significantly affect ambient air quality and no indication that operation of the facility at the proposed newlocation will cause a condition of air pollution.

### §116.115. General and Special Conditions. (a) General and special conditions . Permits, special permits, standard permits, and special exemptions may contain general and special conditions. (b) General conditions . Holders of permits, special permits, standard permits, and special exemptions shall comply with the following:

(1) the general conditions contained in the permit document if issued or amended prior to August 16, 1994; or

(2) the following general conditions if the permit or amendment is issued or amended on or after August 16, 1994, regardless of whether they are specifically stated within the permit document . (A) Voiding of permit . A permit or permit amendment under this chapter is automatically void if the permit holder does one of the following: (i) fails to begin construction within 18 months of date of issuance. The executive director may grant a one-time 18-month extension to the date to begin construction; (ii) discontinues construction for more than 18 consecutive months prior to completion; or

### (iii) fails to complete construction within a reasonable time. (B) Report of construction progress . The permit holder shall report start of construction, construction interruptions exceeding 45 days, and completion of construction. The report shall be given to the appropriate regional office of the commission not later than 15 working days after occurrence of the event . (C) Start-up notification. (i) The permit holder shall notify the appropriate air programregional office of the commission prior to the commencement of operations of the facilities authorized by the permit . The notification must be made in such a manner as to allowrepresentative of the commission to be present at the commencement of operations. (ii) The permit holder shall provide a separate notification for the commencement of operations for each unit of phased construction, which may involve a series of units commencing operations at different times. (iii) Prior to operation of the facilities authorized by the permit, the permit holder shall identify to the Office of Permitting, Remediation, and Registration the source or sources of allowances to be utilized for compliance with Chapter 101, Subchapter H, Division 3 of this title (relating to Mass Emissions Cap and Trade Program)

. (D) Sampling requirements . 6

### (i) If sampling is required, the permit holder shall contact the

commission's Office of Compliance and Enforcement prior to sampling to obtain the proper data forms and procedures . (ii) All sampling and testing procedures must be approved by the executive director and coordinated with the regional representatives of the commission. (iii) The permit holder is also responsible for providing sampling facilities and conducting the sampling operations or contracting with an independent sampling consultant . (E) Equivalency of methods. The permit holder must demonstrate or otherwise justify the equivalency of emission control methods, sampling or other emission testing methods, and monitoring methods proposed as alternatives to methods indicated in the conditions of the permit . Alternative methods shall be applied for in writing and must be reviewed and approved by the executive director prior to their use in fulfilling any requirements of the permit . (F) Recordkeeping. The permit holder shall : (i) maintain a copy of the permit along with records containing the information and data sufficient to demonstrate compliance with the permit, including production records and operating hours;

### (ii) keep all required records in a file at the plant site. If, however, the

facility normally operates unattended, records shall be maintained at the nearest staffed location within Texas specified in the application; (iii) make the records available at the request of personnel fromthe commission or any air pollution control programhaving jurisdiction; (iv) comply with any additional recordkeeping requirements specified in special conditions attached to the permit ; and (v) retain information in the file for at least two years following the date that the information or data is obtained. (G) Maximumallowable emission rates. The total emissions of air contaminants fromany of the sources of emissions must not exceed the values stated on the table attached to the permit entitled "Emission Sources--MaximumAllowable Emission Rates." (H) Maintenance of emission control . The permitted facilities shall not be operated unless all air pollution emission capture and abatement equipment is maintained in good working order and operating properly during normal facility operations . The permit holder shall provide notification for upsets and maintenance in accordance with §101 .6 and §101 .7 of this title (relating to Upset Reporting and Recordkeeping Requirements ; and Maintenance, Startup and Shutdown Reporting, Recordkeeping, and Operational Requirements)

.

### (I) Compliance with rules . (i) Acceptance of a permit by an applicant constitutes an acknowledgment and agreement that the permit holder will comply with all rules, regulations, and orders of the commission issued in conformity with the TCAA and the conditions precedent to the granting of the permit . (ii) If more than one state or federal rule or regulation or permit condition are applicable, the most stringent limit or condition shall govern and be the standard by which compliance shall be demonstrated. (iii) Acceptance includes consent to the entrance of commission employees and agents into the permitted premises at reasonable times to investigate conditions relating to the emission or concentration of air contaminants, including compliance with the permit . (c) Special conditions. The holders of permits, special permits, standard permits, and special exemptions shall comply with all special conditions contained in the permit document .

(1) Special conditions may be attached to a permit that are more restrictive than the requirements of Title 30 of the Texas Administrative Code.

(2) Special condition for written approval .

### (A) The executive director may require as a special condition that the permit

holder obtain written approval before constructing a source under : (i) a standard permit under Subchapter F of this chapter (relating to Standard Permits) ; or (ii) an exemption under Chapter 106 of this title (relating to Permits by Rule) . (B) Such written approval may be required if the executive director specifically finds that an increase of a particular pollutant could either : (i) result in a significant impact on the air environment ; or (ii) cause the facility to become subject to reviewunder : (1) Subchapter C of this chapter (relating to Hazardous Air Pollutants : Regulations Governing Constructed or Reconstructed Major Sources (FCAA, §112(g), 40 CFR Part 63)) ; or (II) the provisions in § 116.150 and § 116.151 of this title (relating to Nonattainment Review) and §§116.160 - 116.163 of this title (relating to Prevention of Significant Deterioration Review) . 

### 10

### SUBCHAPTER B : NEW SOURCE REVIEW

PERMITS DIVISION 7: EMISSION REDUCTIONS: OFFSETS

§116.176

STATUTORY AUTHORITY The new

section is adopted under the Texas Health and Safety Code, TCAA, §382.011, which authorizes the commission to control the quality of the state's air; §382.012, which authorizes the commission to develop a plan for control of the state's air; §382.017, which provides the commission the authority to adopt rules consistent with the policy and purposes of the TCAA ; and USC, §7410(a)(2)(A), which requires SIPs to include enforceable emission limitations and other control measures or techniques, including economic incentives such as fees, marketable permits, and auction of emission rights . §116.176. Use of Mass Cap Allowances for Offsets. Any allowances required to comply with the mass emission cap under Chapter 101, Subchapter H, Division 3 of this title (relating to Mass Emissions Cap and Trade Program) may be used to meet the correlating portion of the emission offset requirements needed to comply with § 116.150 of this title (relating to NewMajor Source or Major Modification in Ozone Nonattainment Areas) .

### SUBCHAPTER F: STANDARD PERMITS §116.610, §116.615 STATUTORY AUTHORITY The amendments are adopted under the Texas Health and Safety Code, TCAA, §382.011, which authorizes the commission to control the quality of the state's air; §382.012, which authorizes the commission to develop a plan for control of the state's air; §382.017, which provides the commission the authority to adopt rules consistent with the policy and purposes of the TCAA ; and USC, §7410(a)(2)(A), which requires SIPs to include enforceable emission limitations and other control measures or techniques, including economic incentives such as fees, marketable permits, and auction of emission rights . 

### §116.610. Applicability. (a) Under the TCAA, §382.051, a project which meets the requirements for a standard permit listed in this subchapter or issued by the commission is hereby entitled to the standard permit, provided the following conditions listed in this section are met . For the purposes of this subchapter, project means the construction or modification of a facility or a group of facilities submitted under the same registration: (1) any project which results in a net increase in emissions of air contaminants fromthe project other than carbon dioxide, water, nitrogen, methane, ethane, hydrogen, oxygen, or those for which a National Ambient Air Quality Standard has been established must meet the emission limitations of §106.261(3) or (4) or §106.262(3) of this title (relating to Facilities (Emission Limitations), and 12

### Facilities (Emission and Distance Limitations)), unless otherwise specified by a particular standard

permit ; (2) construction or operation of the project must be commenced prior to the effective date of a revision to this subchapter under which the project would no longer meet the requirements for a standard permit ;

(3) the proposed project must comply with the applicable provisions of the FCAA, §111 (concerning New Source Performance Standards) as listed under Title 40 Code of Federal Regulations (CFR) Part 60, promulgated by the EPA;

(4) the proposed project must comply with the applicable provisions of FCAA, § 112 (concerning Hazardous Air Pollutants) as listed under 40 CFR 61, promulgated by the EPA ; (5) the proposed project must comply with the applicable maximumachievable control technology standards as listed under 40 CFR Part 63, promulgated by the EPA under FCAA, §112 or as listed under Chapter 113, Subchapter C of this title (relating to National Emissions Standards for Hazardous Air Pollutants for Source Categories (FCAA, § 112, 40 CFR 63)) ; and

(6) If subject to Chapter 101, Subchapter H, Division 3 of this title (relating to Mass Emissions Cap and Trade Program) the proposed facility, group of facilities, or account must obtain allocations to operate.

13

### (b) Any project, except those authorized under § 116.617 of this title (relating to Standard

Permits for Pollution Control Projects), which constitutes a newmajor source, or major modification under the new

source reviewrequirements of the FCAA, Part C (Prevention of Significant Deterioration Review) or Part D (Nonattainment Review) and regulations promulgated thereunder is subject to the requirements of §116.110 of this title (relating to Applicability) rather than this subchapter. (c) Persons may not circumvent by artificial limitations the requirements of § 116.110 of this title. (d) Any project involving a proposed affected source (as defined in §116.15(1) of this title (relating to Section 112(g) Definitions)) shall comply with all applicable requirements under Subchapter C of this chapter (relating to Hazardous Air Pollutants : Regulations Governing Constructed or Reconstructed Major Sources (FCAA, § 112(g), 40 CFR Part 63)) . Affected sources subject to Subchapter C of this chapter may use a standard permit under this subchapter only if the terms and conditions of the specific standard permit meet the requirements of Subchapter C of this chapter . §116.615. General Conditions. The following general conditions are applicable to holders of standard permits, but will not necessarily be specifically stated within the standard permit document .

(1) Protection of public health and welfare. The emissions fromthe facility must comply with all applicable rules and regulations of the commission adopted under the Texas Health and 14

### Safety Code, Chapter 382, and with intent of the TCAA, including protection of health and property of

the public. (2) Standard permit representations. All representations with regard to construction plans, operating procedures, and maximum emission rates in any registration for a standard permit become conditions upon which the facility or changes thereto, must be constructed and operated. It is unlawful for any person to vary fromsuch representations if the change will affect that person's right to claima standard permit under this section . Any change in condition such that a person is no longer eligible to claima standard permit under this section requires proper authorization under § 116.110 of this title (relating to Applicability) . If the facility remains eligible for a standard permit, the owner or operator of the facility shall notify the executive director of any change in conditions which will result in a change in the method of control of emissions, a change in the character of the emissions, or an increase in the discharge of the various emissions as compared to the representations in the original registration or any previous notification of a change in representations. Notice of changes in representations must be received by the executive director no later than 30days after the change.

(3) Standard permit in lieu of permit amendment . All changes authorized by standard permit to a facility previously permitted under § 116.110 of this title (relating to Applicability) shall be administratively incorporated into that facility's permit at such time as the permit is amended or renewed. (4) Construction progress . Start of construction, construction interruptions exceeding 45 days, and completion of construction shall be reported to the appropriate regional office not later than 15 working days after occurrence of the event, except where a different time period is specified for a particular standard permit . 15

### (5) Start-up notification. (A) The appropriate air programregional office of the commission and any other air pollution control programhavingjurisdiction shall be notified prior to the commencement of operations of the facilities authorized by a standard permit in such a manner that a representative of the executive director may be present . (B) For phased construction, which may involve a series of units commencing operations at different times, the owner or operator of the facility shall provide separate notification for the commencement of operations for each unit. (C) Prior to beginning operations of the facilities authorized by the permit, the permit holder shall identify to the Office of Permitting, Remediation, and Registration the source or sources of allowances to be utilized for compliance with Chapter 101, Subchapter H, Division 3 of this title (relating to Mass Emissions Cap and Trade Program)

. (D) A particular standard permit may modify start-up notification requirements. (6) Sampling requirements. If sampling of stacks or process vents is required, the standard permit holder shall contact the Office of Air Quality and any other air pollution control programhavingjurisdiction prior to sampling to obtain the proper data forms and procedures . All sampling and testing procedures must be approved by the executive director and coordinated with the regional representatives of the commission. The standard permit holder is also responsible for 

### 16

### providing sampling facilities and conducting the sampling operations or contracting with an independent

sampling consultant .

(7) Equivalency of methods. The standard permit holder shall demonstrate or otherwisejustify the equivalency of emission control methods, sampling or other emission testing methods, and monitoring methods proposed as alternatives to methods indicated in the conditions of the standard permit . Alternative methods must be applied for in writing and must be reviewed and approved by the executive director prior to their use in fulfilling any requirements of the standard permit . (8) Recordkeeping . Acopy of the standard permit along with information and data sufficient to demonstrate applicability of and compliance with the standard permit shall be maintained in a file at the plant site and made available at the request of representatives of the executive director, the EPA, or any air pollution control programhaving jurisdiction. For facilities that normally operate unattended, this information shall be maintained at the nearest staffed location within Texas specified by the standard permit holder in the standard permit registration. This information must include, but is not limited to, production records and operating hours. Additional recordkeeping requirements may be specified in the conditions of the standard permit . Information and data sufficient to demonstrate applicability of and compliance with the standard permit must be retained for at least two years following the date that the information or data is obtained. The copy of the standard permit must be maintained as a permanent record.

(9) Maintenance of emission control . The facilities covered by the standard permit may not be operated unless all air pollution emission capture and abatement equipment is maintained in 17

### good working order and operating properly during normal facility operations. Notification for upsets

and maintenance shall be made in accordance with §101 .6 and §101 .7 of this title (relating to Upset Reporting and Recordkeeping Requirements; and Maintenance, Startup and Shutdown Reporting, Recordkeeping, and Operational Requirements)

.

(10) Compliance with rules . Registration of a standard permit by a standard permit applicant constitutes an acknowledgment and agreement that the holder will comply with all rules, regulations, and orders of the commission issued in conformity with the TCAA and the conditions precedent to the claiming of the standard permit . If more than one state or federal rule or regulation or permit condition are applicable, the most stringent limit or condition shall govern. Acceptance includes consent to the entrance of commission employees and designated representatives of any air pollution control programhavingjurisdiction into the permitted premises at reasonable times to investigate conditions relating to the emission or concentration of air contaminants, including compliance with the standard permit .

### SUBCHAPTER G : FLEXIBLE PERMITS §116.711, §116.715

STATUTORY AUTHORITY The amendments are adopted under the Texas Health and Safety Code, TCAA, §382.011, which authorizes the commission to control the quality of the state's .air; §382.012, which authorizes the commission to develop a plan for control of the state's air ; §382.017, which provides the commission the authority to adopt rules consistent with the policy and purposes of the TCAA; and USC, §7410(a)(2)(A), which requires SIN to include enforceable emission limitations and other control measures or techniques, including economic incentives such as fees, marketable permits, and auction of emission rights . §116.711 . Flexible Permit Application. Any application for a new flexible permit or flexible permit amendment must include a completed FormPI-1 General Application . The FormPI-1 must be signed by an authorized representative of the applicant . The FormPI-1 specifies additional support information which must be provided before the application is deemed complete. In order to be granted a flexible permit or flexible permit amendment, the owner or operator of the proposed facility shall submit information to the commission which demonstrates that all of the following are met .

(1) Protection of public health and welfare. The emissions fromthe proposed facility, group of facilities, or account as determined under § 116.716 of this title (relating to Emission Caps and 

### 19

### Individual Emission Limitations), will comply with all rules and regulations of the commission and with

the intent of the TCAA, including protection of the health and physical property of the people. In considering the issuance of a flexible permit for construction or modification of any facility, group of facilities, or account within 3,000 feet or less of an elementary, junior high/middle, or senior high school, the commission shall consider any possible adverse short-termor long-termside effects that an air contaminant or nuisance odor fromthe facility, group of facilities, or account may have on the individuals attending these school facilities .

(2) Measurement of emissions. The proposed facility, group of facilities, or account will have provisions for measuring the emission of air contaminants as determined by the executive director . This may include the installation of sampling ports on exhaust stacks and construction of sampling platforms in accordance with guidelines in the "Texas Natural Resource Conservation Commission Sampling Procedures Manual . "

(3) Best available control technology (BACT) . The proposed facility, group of facilities, or account will utilize BACT, with consideration given to the technical practicability and economic reasonableness of reducing or eliminating the emissions fromthe facility on a proposed facility, group of facilities, or account basis. Control technology beyond BACT may be used on certain facilities to provide the emission reductions necessary to comply with this requirement on a group of facilities or account basis, provided however, that the existing level of control may not be lessened for any facility. For new facilities and proposed affected sources (as defined in §116.15(1) of this title (relating to Section 112(g) Definitions)) subject to Subchapter C of this chapter (relating to Hazardous Air Pollutants: Regulations Governing Constructed or Reconstructed Major Sources (FCAA, §112(g), 40 CFR Part 63)), the use of BACT shall be demonstrated for the individual facility or affected source. 

### 20

### (4) New Source Performance Standards (NSPS) . The emissions fromeach affected facility as defined in 40Code of Federal Regulations (CFR), Part 60 will meet at least the requirements of any applicable NSPS as listed under Title 40 CFR Part 60, promulgated by the EPA under authority granted under the FCAA, §111, as amended.

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

(6) NESHAPS for source categories. The emissions fromeach affected facility shall meet at least the requirements of any applicable MACT standard as listed under 40 CFR Part 63, promulgated by the EPA under FCAA, § 112 or as listed under Chapter 113, Subchapter C of this title (relating to National Emissions Standards for Hazardous Air Pollutants for Source Categories (FCAA § 112, 40 CFR 63)) .

(7) Performance demonstration . The proposed facility, group of facilities, or account will achieve the performance specified in the flexible permit application. The applicant may be required to submit additional engineering data after a flexible permit has been issued in order to demonstrate further that the proposed facility, group of facilities, or account will achieve the performance specified in the flexible permit . In addition, initial compliance testing with ongoing compliance determined through engineering calculations based on measured process variables, parametric or predictive monitoring, stack monitoring, or stack testing may be required. 21

### (8) Nonattainment review . If the proposed facility, group of facilities, or account is located in a nonattainment area, each facility shall comply with all applicable requirements under the undesignated head concerning nonattainment review in Subchapter B of this chapter (relating to New Source ReviewPermits) .

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

(10) Air dispersion modeling or ambient monitoring. Computerized air dispersion modeling and/or ambient monitoring may be required by the commission's New Source Review Permits Division to determine the air quality impacts fromthe facility, group of facilities, or account .

(11) Federal standards of reviewfor constructed or reconstructed major sources of hazardous air pollutants . If the proposed source is an affected source (as defined in §116.15(1) of this title (relating to Section 112(g) Definitions)), it shall comply with all applicable requirements under Subchapter C of this chapter (relating to Hazardous Air Pollutants: Regulations Governing Constructed or Reconstructed Major Sources (FCAA, §112(g), 40 CFR Part 63)) .

(12) Mass cap and trade allocations. If subject to Chapter 101, Subchapter H, Division 3 of this title (relating to Mass Emissions Cap and Trade Program) the proposed facility, group of facilities, or account must obtain allocations to operate.



### 22

### (13) Application content . In addition to any other requirements of this chapter, the

applicant shall : (A) identify each air contaminant for which an emission cap is desired; (B) identify each facility to be included in the flexible permit ; (C) identify each source of emissions to be included in the flexible permit and for each source of emissions identify the Emission Point Number (EPN) and the air contaminants emitted; (D) for each emission cap, identify all associated EPNs and provide emission rate calculations based on the expected maximumcapacity and the proposed control technology; (E) for each individual emission limitation, identify the EPN and provide emission rate calculations based on the expected maximumcapacity and the proposed control technology. (14) Proposed control technology and compliance demonstration . The applicant shall specify the control technology proposed for each unit to meet the emission cap and demonstrate compliance with all emission caps at expected maximumproduction capacity.

### §116.715. General and Special Conditions. (a) Flexible permits may contain general and special conditions. The holders of flexible permits shall comply with any and all such conditions . Upon a specific finding by the executive director that an increase of a particular air contaminant could result in a significant impact on the air environment, or could cause the facility, group of facilities, or account to become subject to review under § 116.150 and § 116.151 and § § 116.160 - 116.163 of this title (relating to Nonattainment Review or Prevention of Significant Deterioration Review) or Subchapter C of this chapter (relating to Hazardous Air Pollutants: Regulations Governing Constructed or Reconstructed Major Sources (FCAA, §112(g), 40 CFR Part 63)), the permit may include a special condition which requires the permittee to obtain written approval fromthe executive director before constructing a facility under a standard permit or a permit by rule under Chapter 106 of this title (relating to Permits by Rule) . (b) A pollutant specific emission cap or multiple emission caps and/or individual emission limitations shall be established for each air contaminant for all facilities authorized by the flexible permit . (c) The following general conditions shall be applicable to every flexible permit .

(1) Voiding of permit . A flexible permit or flexible permit amendment under this subchapter is automatically void if the holder fails to complete construction as specified in the flexible permit . Upon request, the executive director may grant a one time 12-month extension of the date to complete construction. This section does not apply to physical or operational changes allowed without an amendment under §116.721 of this title (relating to Amendments and Alterations) . 24

### (2) Construction progress . The start of construction, construction interruptions

exceeding 45 days, and completion of construction shall be reported to the appropriate regional office of the commission not later than 15 working days after occurrence of the event .

(3) Start-up notification.

- (A) The appropriate regional office of the commission and any local program havingjurisdiction shall be notified prior to the commencement of operations of the facilities authorized by the permit in such a manner that a representative of the commission may be present . (B) Phased construction, which may involve a series of facilities commencing operations at different times, shall provide separate notification for the commencement of operations for each facility. (C) Prior to beginning operations of the facilities authorized by the permit, the permit holder shall identify to the Office of Permitting, Remediation, and Registration the source or sources of allowances to be utilized for compliance with Chapter 101, Subchapter H, Division 3 of this title (relating to Mass Emissions Cap and Trade Program) .

(4) Sampling requirements. If sampling of stacks or process vents is required, the flexible permit holder shall contact the commission's Engineering Services Section, Office of Compliance and Enforcement prior to sampling to obtain the proper data forms and procedures . All sampling and testing procedures must be approved by the executive director and coordinated with the appropriate regional office of the commission. The flexible permit holder is also responsible for 25

### providing sampling facilities and conducting the sampling operations or contracting with an independent

sampling consultant .

(5) Equivalency of methods. It shall be the responsibility of the flexible permit holder to demonstrate or otherwise justify the equivalency of emission control methods, sampling or other emission testing methods, and monitoring methods proposed as alternatives to methods indicated in the conditions of the flexible permit . Alternative methods shall be applied for in writing and must be reviewed and approved by the executive director prior to their use in fulfilling any requirements of the permit .

. (6) Recordkeeping. Acopy of the flexible permit along with information and data sufficient to demonstrate continuous compliance with the emission caps and individual emission limitations contained in the flexible permit shall be maintained in a file at the plant site and made available at the request of personnel fromthe commission or any air pollution control programhaving jurisdiction. For facilities that normally operate unattended, this information shall be maintained at the nearest staffed location within Texas specified by the permit holder in the permit application. This information may include, but is not limited to, emission cap and individual emission limitation calculations based on a 12-month rolling basis and production records and operating hours . Additional recordkeeping requirements may be specified in special conditions attached to the flexible permit . Information in the file shall be retained for at least two years following the date that the information or data is obtained.

(7) Maximumallowable emission rates. A flexible permit covers only those sources of emissions and those air contaminants listed in the table entitled "Emission Sources, Emissions Caps and 26

### Individual Emission Limitations" attached to the flexible permit . Flexible permitted sources are limited

to the emission limits and other conditions specified in the table attached to the flexible permit .

(8) Emission cap readjustment . If a schedule to install additional controls is included in the flexible permit and a facility subject to such a schedule is taken out of service, the emission cap contained in the flexible permit will be readjusted for the period the unit is out of service to a level as if no schedule had been established . Unless a special provision specifies the method of readjustment of the emission cap, a permit alteration shall be obtained .

(9) Maintenance of emission control . The facilities covered by the flexible permit shall not be operated unless all air pollution emission capture and abatement equipment is maintained in good working order and operating properly during normal facility operations. Notification for upsets and maintenance shall be made in accordance with §101 .6 and §101 .7 of this title (relating to Upset Reporting and Recordkeeping Requirements ; and Maintenance, Startup and Shutdown Reporting, Recordkeeping, and Operational Requirements) .

(10) Compliance with rules. Acceptance of a flexible permit by a permit applicant constitutes an acknowledgment and agreement that the holder will comply with all Rules, Regulations, and Orders of the commission issued in conformity with the TCAA and the conditions precedent to the granting of the permit . If more than one state or federal rule or regulation or flexible permit condition are applicable, then the most stringent limit or condition shall govern and be the standard by which compliance shall be demonstrated . Acceptance includes consent to the entrance of commission employees and agents into the permitted premises at reasonable times to investigate conditions relating to the emission or concentration of air contaminants, including compliance with the flexible permit . 27

### (d) There may be additional special conditions attached to a flexible permit upon issuance or

amendment of the permit . Such conditions in a flexible permit may be more restrictive than the requirements of this title.

## TEXAS NATURAL RESOURCE CONSERVATION COMMISSION

ORDERADOPTINGAMENDMENTS TO RULES AND REVISIONS TOTHE STATE IMPLEMENTATION PLAN

Docket No. 2000-0968-RUL On March 7, 2001, the Texas Natural Resource Conservation Commission (Commission), during a public meeting, considered amendments to 30TAC Chapter 116, Control of Air Pollution by Permits for New

Construction or Modification, concerning §§116.111, 116.115, 116.176, 116.610, 116.615, 116.711, and 116.715; and revisions to the State Implementation Plan (SIP) . These amendments supplement the emission cap and trade programadopted for the Houston/Galveston ozone nonattainment area (HGA) for nitrogen oxides by requiring owners or operators of new sources of air contaminants to obtain emission allowances under the cap and trade program prior to operation of the new source. These rules are necessary for the HGA nonattainment area to be able to demonstrate attainment with the national ambient air quality standard for ozone. Under Tex. Health &Safety Code Ann. §§382.011, 382.012, and 382.023 (Vernon Supp. 2000), 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. Pursuant to Tex . Health & Safety Code Ann. §382.017 (Vernon Supp. 2000), Tex. Gov't Code Chapter 2001 (Vernon 2000), and 40 Code of Federal Regulations §51 .102, and after proper notice, the Commission conducted a public hearing to consider the proposed new and amended rules and revisions to the SIP. Proper notice included prominent advertisement in the areas affected at least 30days prior to the dates of the hearings. The public hearing was held in Houston on November 16, 2000. The Commissioncirculated hearing notices of its intended action tothe public, including interested persons, the Regional Administrator of the U.S. 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 newand amended rules and SIP revisions, either orally or in writing at the hearing or during the comment period . Prior to the scheduled hearings copies of the proposed new and amended rules and SIP revisions were available for public inspection at the Commission's central office and regional office in Houston. Data, views and recommendations of interested persons regarding the proposed new and amended rules and SIP revisions were submitted to the Commission staff during the comment period, and were considered by the Commission staff as reflected in the analysis of testimony appended to this Order . The Commission finds that the analysis oftestimony includes the names of all interested groups or associations offering comment on the proposed newand amended rules and the SIP revisions and their position concerning the same.

### IT IS THEREFORE ORDERED BY THE COMMISSION that the new and amended rules and revisions to the SIP appended to this Order are hereby adopted. These rules and the preamble to the adopted rules and the revisions to the SIP are incorporated by reference in this Order as if set forth at length verbatimin this Order. Legal counsel has reviewed and certified that these rules, as adopted, are a valid exercise of the Commission's legal authority. The certification is incorporated by reference in this Order as if set forth verbatim . 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 newand amended rules and revisions to the SIP, to the Governor of Texas for submittal to the Regional Administrator of EPA as a proposed revision to the Texas SIPpursuant tothe Federal CleanAirAct, §110, codified at 42 U.S. Code Ann. §§7410- 7671q, as amended . 

### This Order constitutes the Order of the Commission required by the Texas 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: M

AR 2 1 2001 TEXAS NATURAL RESOURCE CONSERVATION COMMISSIONMargaret Hoffman

Director, Environmental LawDivision Texas Natural Resource Conservation Commission Effective date: April 1, 2001 Proposal publication date: September 22, 2000 For further information, please call : (512) 239-6087 

### CHAPTER 106

. PERMITS BY RULE SUBCHAPTER A

. GENERAL REQUIREMENTS 30 TAC§106

.4 The Texas Natural Resource Conservation Commission (commission) adopts an amendmentto§106.4, Requirements for Permitting by Rule. Section 106 .4is adopted without changestothe proposed text as published in theOctober 20, 2000 issue of the Texas Register (25 TexReg 10445) and will not be republished. BACKGROUND AND SUMMARY OF THE FACTUAL BASIS FORTHE ADOPTEDRULES On December 6, 2000 the commission adopted rules, which were published in the January 12, 2001 issue ofthe Texas Register (26TexReg 283), that established a systemof allocation and trading of emission allowances for nitrogen oxides (NO,) in the Houston/Galveston (HGA) nonattainment area. An allowance is equal to one ton of NO . emissions and facilities are required to obtain a sufficient numer of allowances that are equal to or exceed its actual emissions for a calendar year. The purpose of this system is to limit emissions of NO fromindividual facilities in HGAso that a regional maximum, or cap, of emissions is not exceeded. The NO emission limitations apply to existing and new stationary facilities. Individual facilities may buy or sell allowances, but the total number of allowances in the HGAregion may not exceed the predetermined cap. This adoption supplements the emission capandtrade program (26TexReg 283), by specifying that facilities or groups of facilities using authorizations underChapter 106, Permits by Rule, will be required to obtain NO

. emission allowances prior to operation if the facilities being auhorized are subject to the cap and trade program . SECTION BY SECTION DISCUSSION This adoption adds a newparagraph, §106.4(a)(8), stating that a facility or group offacilities must obtain allowances prior to operation if the facility or group of facilities is subject to the NO emission cap and trade program(26TexReg 283) . This adoptiori does not extend the applicability of the cap and trade program but clarifies that the program would also be applicable to certain facilities authorized under Chapter 106. FINAL REGULATORY IMPACT ANALYSIS DETERMINATION The commission reviewed the adopted rulemaking in light of the regulatory analysis requirements of Texas Government Code, §2001 .0225

. The commission determined that this amendment to Chapter 106 does not meet the definition of a "major environmental rule" as defined in Texas Government Code, §2001 .0225. "Major environmental rule" means a rule, the specific intent of which, is to protect the environment or reduce risks to human health fromenvironmental exposure, and that may adversely affect in a material waythe economy, a sector of the economy, productivity, competition, jobs, the environment, or the public health and safety of the state or a sector of the state. The commission adopts this amendment to achieve administrative consistency with amendments to Chapter 101 adopted on December 6, 2000 (26 TexReg 283) . In the Chapter 101 rulemaking, the commission requires facilities which have the design capacity to emit ten tons or more of NO, peryear in HGAto hold allowances equal to, or greater than their actual NO emissions under a cap and trade program . This adopted amendment to Chapter 106 clarifies that an applicant subject to Chapter 101, Subchapter H, Division 3, must obtain allowances priorto operation. The amendment does not expand the applicability of the cap and trade program . The amendment to Chapter 106does not adversely affect in a material way the economy, a sector of the economy, productivity, competition,jobs, the environment, or the public health and safety of the state or a sector of the state; therefore, this amended section does not constitute a major environmental rule. In addition, Texas Government Code, §2001 .0225, only applies to a major environmental rule, the result of which is to: 1 .) exceed a standard set by federal law, unless the rule is specifically required by state law

; 2.) exceed an express requirement of state law, unless the rule is specifically required by federal law ; 3.) exceed a requirement of a delegation agreement or contract between the state and an agency or representative of the federal government to implement a state and federal program ; or 4 .) adopt a rule solely under the general powers of the agency instead of under a specific state law

. This rulemaking is not subject to the regulatory analysis provisions of §2001 .0225(b), because the rule does not meet any of the four applicability requirements. Specifically, the emission banking and trading requirements within this rulemaking are an element of the control strategy for the HGA SIP which is necessary in orderfor HGAto meet the ozone national ambient air quality standard (NAAQS) set by the United States Environmental Protection Agency (EPA) underthe Federal Clean Air Act (FCAA), §109 (42 United States Code (USC), §7409) . Additional elements of this control strategy were adopted by the commission on December 6, 2000 . These rules do not exceed an express standard set by federal law since they implement requirements of the FCAA . Provisions of 42 USC, §7410, require states to adopt a state implementation plan (SIP) which provides for "implementation, maintenance, and enforcement" of the primary NAAQS in each airquality control region of the state . While §7410 does not require specific programs, methods, or reductions in order to meet the standard, SIPs must include "enforceable emission limitations and other control measures, means or techniques (including economic incentives such as fees, marketable permits, and auctions of emissions rights), as well as schedules and timetables for compliance as may be necessary or appropriate to meet the applicable requirements ofthis chapter," (meaning Chapter 85, Air Pollution Prevention and Control) . It is true that 42 USC does require some specific measures for SIP purposes, like the inspection and maintenance program, but those programs are the exception, not the rule, in the SIPstructure of 42 USC

. The provisions of 42 USC recognize that states are in the best position to determine what programs and controls are necessary or appropriate in order to meet the NAAQS. This flexibility allows states, affected industry, and the public, to collaborate on the best methods for attaining the NAAQS for the specific regions in the state . Even though 42 USCallows states to develop their own programs, this flexibility does not relieve a state from developing a programthat meets the requirements of §7410

. Thus, while specific measures are not generally required, the emission reductions are required. States are not



### 26TexReg 2396 March 23, 2001 Texas Registerfree to ignore the requirements of §7410 and must develop programs to assure that the nonattainment areas of the state will be brought into attainment on schedule. ' The requirement to provide a fiscal analysis of proposed regulations in the Texas Government Code was amended by Senate Bill (SB) 633 during the 75th Legislative Session, 1999. The intent of SB 633 was to require agencies to conduct a regulatory impact analysis (RIA) of extraordinary rules. These are identified in the statutory language as major environmental rules that will have a material adverse impact and will exceed a requirement of state law, federal law, or a delegated federal program, or are adopted solely under the general powers of the agency. With the understanding that this requirement would seldomapply, the commission provided a cost estimate for SB 633 that concluded "based on an assessment of rules adopted by the agency in the past, it is not anticipated that the bill will have significant fiscal implications for the agency due to its limited application:" The commission also noted that the number of rules that would require assessment under the provisions of the bill was not large. This conclusion was based, in part, on the criteria set forth in the bill that exempted proposed rules from the full analysis unless the rule was a major environmental rule that exceeds a federal law . As previously discussed, 42 USC does not require specific programs, methods, or reductions in order to meet the NAAQS; thus, states must develop programs foreach nonattainment area to ensure that area will meet the attainment deadlines. Because of the ongoing need to address nonattainment issues, the commission routinely proposes and adopts SIP rules. The commission bases these actions on the presumption that the legislature understands this federal scheme. If each rule proposed for inclusion in the SIPwas considered to be a major environmental rule that exceeds federal law, then every SIP rule would require the full RIA contemplated by SB 633. This conclusion is inconsistent with the conclusions reached by the commission in its cost estimate and by the Legislative Budget Board (LBB) in its fiscal notes. It is a rule of statutory interpretation that the legislature is presumed to understand the fiscal impacts of the bills it passes, and that presumption is based on information provided by state agencies and the LBB, the commission believes that the intent of SB633was only to require the full RIAforrules thatare extraordinary in nature. While the SIP rules will have a broad impact, that impactis no greater than is necessary or appropriate to meetthe requirements of the FCAA. Forthese reasons, rules proposed for inclusion in the SIPfall under the exception in Texas Government Code, §2001 .0225(a), because they are required by federal law . The commission performed photochemical grid modeling which predicts that NO emission reductions, such as those required by these rules, will result in reductions in ozone formation in the HGA ozone nonattainment area. This rulemaking does not exceed an express requirement of state law . This rulemaking is intended to obtain NO . emission reductions which will result in reductions in ozone fomation in the HGAozone nonattainment area and help bring HGA into compliance with the air quality standards established under federal lawas NAAQS for ozone. The rulemaking does not exceed a standard set by federal law, exceed an express requirement of state law (unless specifically required by federal law), or exceed a requirement of a delegation agreement. The rulemaking was not developed solely under the general powers of the agency, but was specifically developed to meet the NAAQS established under federal lawand authorized under Texas Clean Air Act (TCAA), §§382.011, 382.012, and 382.017, as well as under 42 USC, §7410(a)(2)(A) . TAKINGS IMPACT ASSESSMENT The commission evaluated this rulemaking action and performed an analysis of whether the rules are subject to Texas Government Code, Chapter 2007. The following is a summary of that analysis. This amendment is adopted as part of a strategy to reduce and permanently cap emissions of NO . to a level which would allowthe HGA nonattainment area to atain the NAAQS for ozone. Promulgation and enforcement of the amendment will not burden private real property . The amendment does 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 a governmental action. Additionally, the allowances that are the subject of this amendment are not property rights. Consequently, the amendment does not meet the definition of a takings under Texas Government Code, §2007.002(5) . Although the amendment does not directly prevent a nuisance or prevent an immediate threat to life or property, it does prevent a real and substantial threat to public health and safety, and partially fulfill a federal mandate under the USC, §7410 . Specifically, the emission limitations within this adoption were developed in order to meet the ozone NAAQS set by the EPA under the USC, §7409 . States are primarily responsible for ensuring attainment and maintenance of the NAAQS once the EPA has established them . Under the USC, §7410and related provisions, states must submit, for approval by the EPA, SIPs that provide for the attainment and maintenance of NAAQS through control programs directed to sources of the pollutants involved. Therefore, the purpose of the rulemaking is to implement a NO_ strategy which is necessary for the HGA area to meet the air quality standards established underfederal law as NAAQS

. Consequently, the exemption which applies to this rule is that of an action reasonably taken to fulfill an obligation mandated by federal law . Therefore, this revision will not constitute a takings under Texas Government Code, Chapter 2007. CONSISTENCY WITH THE COASTAL MANAGEMENT PROGRAM The commission determined the rulemaking relates to an action or actions subject to the Texas Coastal Management Plan (CMP) in accordance with the Coastal Coordination Act of 1991, as amended (Texas Natural Resource Code, §§33.201 et seq.), and the commission's rules in 30 TAC Chapter 281, Subchapter B, concerning Consistency with the Texas Coastal Management Program

. As required by 30 TAC §505.11(b)(2) and 30 TAC §281 .45(a)(3), relating to actions and rules subject to the CMP, commission rules governing air pollutant emissions must be consistent with the applicable goals and policies of the CMP The commission reviewed this action for consistency with the CMP goals and policies in accordance with the regulations of the Coastal Coordination Council and determined the amendment is consistentwith the applicable CMPgoal expressed in 31 TAC §501 .12(1) of protecting and preserving the quality and values of coastal natural resource areas, and the policy in 31 TAC §501 .14(q), which requires the commission protect air quality in coastal areas. The amendment states that applicants for permits by rule for new

or modified facilities in HGA must comply with Chapter 101, Subchapter H, Division 3 . The amendment does not authorize any newNO, air emissions. EFFECT ON SITES SUBJECT TO THE FEDERAL OPERATING PERMITS PROGRAM The amendment to §106.4, is not considered an applicable .requirement under 30 TAC Chapter 122, thus this change would not require a revision to an affected facility's federal operating permit. 

### ADOPTED RULES March 23, 200I 26TexReg 2397HEARINGANDCOMMENTERS

The commission held a public hearing in Houston on November 16, 2000. No comments were received at the hearing, but the commission received written comments from the EPA and the Sierra Club Houston Regional Group (Sierra-Houston) during the public comment period which closed on November 20, 2000. The EPArequested clarifications on several points of the proposal, and Sierra-Houston opposed the proposal . ANALYSIS OF TESTIMONY The EPA commented that the commission should clarify the application and definition of "facility." The definition of "facility" in §116.10(4) should be consistent with the intended use of the same termin proposed §106.4(a)(8) . The EPAquestioned whether the termwas intended to mean that only the emission point that was authorized under the permit by rule would be required to obtain allowances or would all emission points of the same industrial grouping on contiguous or adjacent property, under common ownership or control, be required to obtain allowances. The rules were not revised based on this comment. The intent of proposed §106

.4(a)(8) is to notify the owner(s) seeking to authorize a facility or group of facilities under a permit by rule that if those facilities are subjectto the cap and trade program, sufficient allowances will need to be obtained equal to or greaterthan the total actual NO emissions fromall facilities subject to Chapter 117 at the site. All facilities at a site that are subject to Chapter 117 and that collectively have a design capacity of ten tons of NO . emissions per year or greater will be required to obtain allownces. The term "facility" is defined in TCAA, §382.003(6) . Sierra-Houston commented that the proposed amendments in Chapters 101, 106, and 116should have been part of the HoustonSIPproposal that went through public hearings in September 2000 . Sierra-Houston stated that very few people would know about the proposals because therewas no publicity surrounding them, and that the proposals are far reaching. The rules were not revised based on this comment . This amendment is directly related to the NO cap and trade program, but could not be proposed and adopted on the same schedule. One ofthe affected sections in this adoption was open under another rulemaking related to the implementation of SB 766 from the 1999 session of the Texas Legislature when the cap and trade rules were proposed. The SB 766 implementation and the cap and trade rules were proceeding under fixed but different schedules due to statutory and federal deadlines. Under the Administrative Procedures Act (APA), the commission must wait until a section undergoing amendment is completed and effective before that section may be opened again for amendment . This rulemaking was proposed and published consistent with the APA requirements. Sierra-Houston commented that the emission cap and trade programwill result in no emission reductions in plants close to poor and minority neighborhoods. The rules were not revised based on this comment. The effect of implementing the NO

. cap and trade programwill be an overall NO reduction of appoximately 90%from stationary facilities in the ~HGA nonattainment area. Facilities subject to the cap and trade programwill be required to reduce actual emissions to a level equal to or lower than their individual cap, or purchase allowances from another facility participating under the cap and trade program

. This trading will result in a zero net effect on the level of the cap, andwill not result in increased emissions based on the location of the facility. Sierra-Houston opposed the cap and trade programin general and stated that requiring emission reductions at all facilities will result in the greatest reduction of ozone. Sierra-Houston also stated that manyemission controls will not berequired until 2005, which will reduce the chances of the HGAarea obtaining the ozone standard by 2007. The rules were not revised based on this comment. The overall NO . cap was set at an annual level believed necessary for stationry facilities in orderfor the HGAnonattainment area to reach attainment by 2007. Thus, compliance with the cap will achieve the necessary reduction from the stationarysource category . For facilities not wishing to make reductions to meet their individual cap, additional allowances will need to be obtained fromanother facility or facilities. Because these purchased allowances will be obtained from a facility participating in the cap and trade program, this results in an equal reduction fromthe seller. There is no net increase in the numberof allowances. In addition, the cap is being initially set at historical emission levels and will reduce over time with the final reduction taking place in 2007. Based on the existing SIP, the reductions necessary fromstationary facilities need to be in full effect by 2007 and not2005to demonstrate attainment. STATUTORYAUTHORITY The amendment is adopted under the Texas Health and Safety Code, TCAA, §382.011, which authorizes the commission to control the quality of the state's air ; §382.012, which authorizes the commission to develop a plan for control of the state's air ; §382.017, which provides the commission the authority to adopt rules consistent with the policy and purposes of the TCAA; §382.05196, which authorizes the commission to adopt permits by rule for types of facilities which will not make a significant contribution of air contaminants to the atmosphere; and USC, §7410(a)(2)(A), which requires SIPs to include enforceable emission limitations and other control measures or techniques, including economic incentives such as fees, marketable permits, and auction of emission rights. This agency hereby certifies thatthe adoption has been reviewed by legal counsel and found to be a valid exercise ofthe agency's legal authority. Filed with the Office of the Secretary of State on March 9, 2001 . TRD-200101430 Margaret Hoffman Director, Environmental Law Division Texas Natural Resource Conservation Commission Effective date: March 29, 2001 Proposal publication date: October 20, 2000 For further information, please call : (512) 239-0348 

### CHAPTER 116

. CONTROL OF AIR POLLUTION BY PERMITS FOR NEW CONSTRUCTION OR MODIFICATION The Texas Natural Resource Conservation Commission (commission) adopts amendments to §116.111, General Application; §116.115, General and Special Conditions; §116.610, Applicability; §116.615, General Conditions; §116.711, Flexible Permit 

### 26TexReg 2398 March 23, 2001 Texas RegisterApplication; and §116.715, General and Special Conditions

.

The commission also adopts new §116 .176, Use of Mass Cap Allowances for Offsets. Sections 116.111 and 116.115 are adopted with changes to the proposed text as published in the October 20, 2000 issue of the Texas Register (25 TexReg 10449) . Sections 116.176, 116.610, 116.615, 116.711, and 116.715 are adopted without changes and will not be republished. These amended and new sections will be submitted to the United States Environmental Protection Agency (EPA) as revisions to the state implementation plan (SIP) . BACKGROUND AND SUMMARY OF THE FACTUAL BASIS FOR THE ADOPTED RULES On December 6, 2000 the commission adopted rules, which were published in the January 12, 2001 issue of the Texas Register (26 TexReg 283), that establishes a systemof allocation and trading of emission allowances for nitrogen oxides (NO,) in the HoustonlGalveston (HGA) nonattainment area. An allowance is equal to one ton of NO emissions and facilities are required to obtain a sufficient number of allowances equal to or exceeding its emissions for a calendar year. The purpose of this systemis to limit emissions of NO_ fromindividual facilities in HGAso that a regional maximum, or cap, of emissions is not exceeded. The NO emission limitations apply to existing and new stationary facilities. Individual facilities may buy or sell allowances, but the total number of allowances in the HGA region may not exceed the predetermined cap . This adoption requires that applicants for permits authorized under 30 TAC Chapter 116 in the HGAarea acknowledge, in the permit application, the requirement to obtain allowances prior to operation. This adoption also requires that the applicant, priorto commencing operations, identify a source of allowances. SECTION BY SECTION DISCUSSION The new §116.111(a)(2)(L) requires permit applicants under Chapter 116, Subchapter B, Division 1, Permit Application, to acknowledge they must obtain allowances to operate . The commission has deleted the reference to the effective date (March 21, 1999) in §116.111(b)(1) because that date is no longer correct . The new §116.115(b)(2)(C)(iii) adds language to the general conditions of NewSource Review (NSR) permits, specifying that facilities, groups of facilities, or accounts subject to Chapter 101, Subchapter H, Division 3, concerning Mass Emissions Cap and Trade Program (26 TexReg 283), must identify the source or sources of allowances to be used for compliance. The commission has amended §116.115(c)(2)(A)(ii) to state the correct title of Chapter 106 as Permits by Rule . The new§116.176 allows permit applicants for facilities subject to Chapter 101, Subchapter H, Division 3, that are required to submit NO offsets in accordance with §116.150, NewMajor Source or Major Modification in Ozone Nonattainment Areas, to use allowances to meet the correlating portion of the emission offsets. The new

§116.610(a)(6) requires permit applicants under Chapter 116, Subchapter F, Standard Permits, to acknowledge they must obtain allowances to operate. The new

§116.615(5)(C) adds language to the general conditions ofstandard permits specifying that facilities, groups offacilities or accounts subject to Chapter 101, Subchapter H, Division 3, must identify the source or sources of allowances to be used for compliance. The new §116.711(12) requires permitapplicants underChapter 116, Subchapter G, Flexible Permits, to acknowledge that they must obtain allowances to operate. The new §116.715(c)(3)(C) adds language to the general conditions of flexible permits specifying that facilities, groups of facilities, or accounts subject to Chapter 101, Subchapter H, Division 3, must identify the source or sources of allowances to be used for compliance. FINAL REGULATORY IMPACT ANALYSIS DETERMINATION The commission reviewed the adopted rulemaking in light of the regulatory analysis requirements of Texas Government Code, §2001 .0225. The commission determined that these amendments to Chapter 116 do not meet the definition of a "major environmental rule" as defined in Texas Government Code, §2001 .0225. "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, a sector of the economy, productivity, competition, jobs, the environment, or the public health and safety of the state or a sector of the state. The commission adopts these amendments to achieve administrative consistency with amendments to Chapter 101, adopted on December 6, 2000 (26 TexReg 283) . The Chapter 101 amendments require facilities or groups of facilities in the HGAarea, which have a collective design capacity to emit NO in amounts greater than or equal to ten tons per year, to hold sufficient allowances equal to or greater than their actual NO emissions under a cap and trade program . These amendments require a permit applicant subject to Chapter 101, Subchapter H, Division 3, to acknowledge that they are required to obtain allowances to comply with the cap and trade program to operate and that they must identify a source or sources of allowances prior to operation. In addition, the amendments to Chapter 116 allowapplicants of new major sources and major modifications to use allowances for the correlating portion of any offsets required under §116 .150, NewMajor Source or Major Modification in Ozone Nonattainment Areas. These adopted sections state that applicants of newor modified facilities in HGA are to comply with Chapter 101, Subchapter H, Division 3. These adopted sections do not expand the cap and trade programfor the HGAarea. The amendments to Chapter 116 do not adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, or the public health and safety of the state or a sector of the state; therefore, these amended and newsections do not constitute a major environmental rule. In addition, Texas Government Code, §2001 .0225, only applies to a major environmental rule, the result of which is to: 1 .) exceed a standard set by federal law, unless the rule is specifically required by state law ; 2 .) exceed an express requirement of state law, unless the rule is specifically required by federal law ; 3.) exceed a requirement of a delegation agreement or contract between the state and an agency orrepresentative ofthe federal government to implement a state and federal program ; or 4 .) adopt a rule solely under the general powers of the agency instead of under a specific state law . This rulemaking is not subject to the regulatory analysis provisions of §2001 .0225(b), because the adopted rules do not meet any of the four applicability requirements. Specifically, the emission banking and trading requirements within this rulemaking are an element of the control strategy for the HGA SIP which is necessary in orderfor HGAto meet the ozone national ambient air quality standard (NAAQS) set by the EPA under the Federal Clean Air Act (FCAA), §109 (42 United States Code 

### ADOPTEDRULES March 23, 2001 26TexReg 2399(USC), §7409) . Additional elements of this control strategy

were adopted by the commission on December 6, 2000. These rules do not exceed an express standard set by federal law since they implement requirements of the FCAA . Provisions of 42 USC, §7410, require states to adopt a SIP which provides for "implementation, maintenance, and enforcement" of the primary NAAQS in each air quality control region of the state . While §7410 does not require specific programs, methods, or reductions in order to meet the standard, state SIPs must include "enforceable emission limitations and other control measures, means or techniques (including economic incentives such as fees, marketable permits, and auctions of emissions rights), as well as schedules and timetables for compliance as may be necessary or appropriate to meet the applicable requirements of this chapter," (meaning Chapter 85, Air Pollution Prevention and Control) . It is true that 42 USC does require some specific measures for SIP purposes, like the inspection and maintenance program, but those programs are the exception, not the rule, in the SIP structure of 42 USC . The provisions of 42 USC recognize that states are in the best position to determine what programs and controls are necessary or appropriate in order to meet the NAAQS. This flexibility allows states, affected industry and the public, to collaborate on the best methods for attaining the NAAQS for the specific regions in the state. Even though 42 USCallows states to develop their own programs, this flexibility does not relieve a state fromdeveloping a programthat meets the requirements of §7410. Thus, while specific measures are not generally required, the emission reductions are required. States are not free to ignore the requirements of §7410 and must develop programs to assure that the nonattainment areas of the state will be brought into attainment on schedule. The requirement to provide a fiscal analysis of proposed regulations in the Texas Government Code was amended by Senate Bill (SB) 633 during the 75th Legislative Session, 1999. The intent of SB 633 was to require agencies to conduct a regulatory impact analysis (RIA) ofextraordinaryrules. These are identified in the statutory language as major environmental rules that will have a material adverse impact and will exceed a requirement of state law, federal law, or a delegated federal program, or are adopted solely under the general powers of the agency. With the understanding thatthis requirement would seldom apply, the commission provided a cost estimate for SB 633that concluded "based on an assessment of rules adopted by the agency in the past, it is not anticipated that the bill will have significant fiscal implications for the agency due to its limited application." The commission also noted that the number of rules that would require assessment under the provisions of the bill was not large. This conclusion was based, in part, on the criteria set forth in the bill that exempted proposed rules from the full analysis unless the rule was a major environmental rule that exceeds a federal law . As previously discussed, 42 USC does not require specific programs, methods, or reductions in order to meet the NAAQS; thus, states must develop programs for each nonattainment area to ensure that area will meet the attainment deadlines. Because of the ongoing need to address nonattainment issues, the commission routinely proposes and adopts SIP rules. The commission bases these actions on the presumption that the legislature understands this federal scheme. If each rule proposed for inclusion in the SIPwas considered to be a major environmental rule that exceeds federal law, then every SIP rule would require the full RIA contemplated by SB 633 . This conclusion is inconsistent with the conclusions reached by the commission in its cost estimate and by the Legislative Budget Board (LBB) in its fiscal notes. It is a rule of statutory interpretation that the legislature is presumed to understand the fiscal impacts of the bills it passes, and that presumption is based on information provided by state agencies and the LBB, the commission believes that the intent of SB633was only to require the full RIAfor rules that are extraordinary in nature. While the SIP rules will have a broad impact, that impact is no greaterthan is necessary or appropriate to meet the requirements of the FCAA

. Forthese reasons, rules proposed for inclusion in the SIPfall underthe exception in Texas Government Code, §2001 .0225(a), because they are required by federal law . The commission performed photochemical grid modeling which predicts that NO emission reductions, such as those required by these rules, will result in reductions in ozone formation in the HGA ozone nonattainment area. This rulemaking does not exceed an express requirement of state law . This rulemaking is intended to obtain NO . emission reductions which will result in reductions in ozone fomation in the HGAozone nonattainment area and help bring HGA into compliance with the air quality standards established under federal lawas NAAQS for ozone. The rulemaking does not exceed a standard set by federal law, exceed an express requirement of state law (unless specifically required by federal law), or exceed a requirement of a delegation agreement. The rulemaking was not developed solely under the general powers of the agency, but was specifically developed to meet the NAAQS established under federal lawand authorized under Texas Clean Air Act (TCAA), §§382.011, 382 .012, and 382.017, as well as under 42 USC, §7410(a)(2)(A) . TAKINGS IMPACT ASSESSMENT The commission evaluated this rulemaking action and performed an analysis of whether the rules are subject to Texas Government Code, Chapter 2007. The following is a summary of that analysis. These amendments are adopted as part of a strategy to reduce and permanently cap emissions of NO . to a level which would allowthe HGA nonattainment area to atain the NAAQS for ozone. Promulgation and enforcement of the rules will not burden private real property. The amendments do 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 a governmental action. Additionally, the allowances that are the subject of these rules are not property rights. Consequently, these amendments do not meet the definition of a takings under Texas Government Code, §2007.002(5) . Although the rule revisions do not directly prevent a nuisance or prevent an immediate threat to life or property, they do prevent a real and substantial threat to public health and safety, and partially fulfill a federal mandate under the USC, §7410 . Specifically, the emission limitations within this adoption were developed in order to meet the ozone NAAQS set by the EPAunder the USC, §7409. States are primarily responsible for ensuring attainment and maintenance of the NAAQS once the EPA has established them . Under the USC, §7410 and related provisions, states must submit, for approval bythe EPA, SIPs that provide forthe attainment and maintenance of NAAQS through control programs directed to sources of the pollutants involved. Therefore, the purpose of the rulemaking is to implement a NO . strategy which is necessary for the HGAarea to meet the air uality standards established under federal lawas NAAQS. Consequently, the exemption which applies to these rules is that of an action reasonably taken to fulfill an obligation mandated by federal law . Therefore, these revisions do not constitute a takings under Texas Government Code, Chapter 2007. CONSISTENCY WITH THE COASTAL MANAGEMENT PROGRAM 

### 26TexReg 2400 March 23, 2001 Texas RegisterThe commission determined the adopted rulemaking relates to

an action or actions subject to the Texas Coastal Management Plan (CMP) in accordance with the Coastal Coordination Act of 1991, as amended (Texas Natural Resource Code, §§33.201 et seq.), and the commission's rules in 30 TAC Chapter 281, Subchapter B, concerning Consistency with the Texas Coastal Management Program . As required by 30 TAC §505 .11(b)(2) and 30TAC §281 .45(a)(3), relating to actions and rules subject to the CMP, commission rules governing air pollutant emissions must be consistent with the applicable goals and policies of the CMP . The commission reviewed this action for consistency with the CMP goals and policies in accordance with the regulations of the Coastal Coordination Council and determined the rules are consistent with the applicable CMP goal expressed in 31 TAC§501 .12(1) of protecting and preserving the quality and values of coastal natural resource areas, and the policy in 31 TAC §501 .14(q), which requires the commission protect air quality in coastal areas. The amendments state that applicants for permits of newor modified facilities in HGA must comply with Chapter 101, Subchapter H, Division 3. These rules do not authorize any newNO, air emissions. EFFECT ONSITES SUBJECTTOTHE FEDERAL OPERATING PERMITS PROGRAM The amendments to §§116 .111, 116.115, 116.610, 116 .615, 116.711, and 116.715 are not considered applicable requirements under 30 TAC Chapter 122, thus these changes do not require revisions to the affected facilities' operating permit . The new§116

.176 is considered an applicable requirement under 30 TAC Chapter 122, thus owners or operators subject to the Federal Operating Permits Program must, consistent with the revision process in Chapter 122, revise their operating permit to include the new§116.176 requirements for each emission unit affected by the revisions to §116 .176 at their site. HEARINGAND COMMENTERS The commission held a public hearing in Houston on November 16, 2000. No comments were received at the hearing, but the commission received written comments from the EPA and the Sierra Club Houston Regional Group (Sierra-Houston) during the public comment period which closed on November 20, 2000. The EPArequested clarifications on several points of the proposal, and Sierra- Houston opposed the proposal . ANALYSIS OF TESTIMONY The EPA commented that the commission should clarify the application and definition of "facility." The definition of "facility" in §116 .10(4) should be consistent with the intended use of the same term in proposed §106.4(a)(8) . The EPA questioned whether the termwas intended to mean that only the emission point that was authorized under the permit by rule would be required to obtain allowances or would all emission points of the same industrial grouping on contiguous or adjacent property, under common ownership or control, be required to obtain allowances. The rules were not revised based on this comment . The intent of proposed §106.4(a)(8) is to notify the owner(s) seeking to authorize a facility or group of facilities under a permit by rule that if those facilities are subject to the cap and trade program, sufficient allowances will need to be obtained equal to orgreaterthan the total actual NO

. emissions fromall facilities subject to Chapter 117 at the site. ll facilities at a site that are subject to Chapter 117 and that collectively have a design capacity of ten tons of NO

. emissions per year or greater will be required to obtain allownces. Theterm"facility" is defined in TCAA, §382.003(6) . The EPA made the identical comment about the use of the term "facility" in the proposed §116.111(a)(2)(L), §116.115(b)(2)(C)(iii), §116.610(a)(6), §116.615(6)(C), §116.711(12), and §116 .715(c)(3)(C)

. The use of the term "facility" in these sections should be clarified to mean that a facility includes all emission points in the same industrial classification on contiguous or adjacent property and under common ownership or control . The rules were not revised based on this comment . The industrial classification is relevant to the cap and trade programonly if that classification includes facilities subject to Chapter 117. The intent of this rulemaking is to ensure that facilities authorized by Chapter 116 have sufficient allowances to operate. A facility or group of facilities at a site becomes subject to the cap and trade program iftheyare subjectto Chapter 117 and collectively have a design capacity of ten tons of NO . emissions per year or greater. Any additional facilities authorizd at that site will also be subject . The term

"facility" is defined in TCAA, §382.003(6) . The EPA commented that the commission should clarify the intent of §116.176

. The section allows the use of allowances required to comply with the emission cap and trade programin 30 TAC Chapter 101, Subchapter H, Division 3 to meet the correlating portion of emission offset requirements needed to comply with §116.150, New

MajorSource or MajorModification in Ozone Nonattainment Area. The EPA stated that the use of emission reduction credits (ERCs) is appropriate to meet offsets as ERCs are surplus and permanent . Allowances are renewed every year and are therefore not appropriate for use as offsets. The rules were not revised based on this comment . The FCAA requires that offsets be provided and that those offsets provide a net air quality benefit. The adopted cap and trade rules set the cap at a level necessary for stationary facilities as part of a comprehensive SIPfor the HGAnonattainment area to reach attainment by 2007. Because no new or modified facility, subject to the NO, requirements of Chapter 117 and which is located at a site where such a facility or group of facilities has a collective design capacity of ten tons per year or more, will be allocated newallowances, any allowance they use will be 'surplus' from another facility participating under the cap . The net effect will be a zero sumgain on the number of allowances in the cap . This reflects the 'correlating portion' of the offset requirement . Because all newand modified facilities (as described above) will be required to obtain allowances from a facility already participating in the cap, it is ensured that NO, emissions will be reduced to levels necessary for attainment. ven though further reduction will not be necessary since the cap has been set at a level to reach attainment, the rules will still require that an additional 30%a of offsets be retired for compliance with the FCAA. This reduction will be an added benefit tothe environment and will reduce emissions even beyond those levels necessary. Sierra-Houston commented that the proposed amendments in Chapters 101, 106, and 116 should have been part of the HGA SIP proposal that went through public hearings in September 2000. Sierra- Houston stated that very fewpeople would know about the proposals because there was no publicity surrounding them, and that the proposals are far reaching. . The rules were not revised based on this comment. This amendment is directly related to the NO . cap and trade program, but could not be proposed and adopted on the same schedule. One 

### ADOPTEDRULES March 23, 2001 26TexReg 2401of theaffected sections in this adoption wasopen under another

rulemaking related to the implementation of SB 766 from the 1999 session of the Texas Legislature when the cap and trade rules were proposed. TheSB 766 implementation and the cap andtrade rules were proceeding underfixed butdifferentschedules due to statutory and federal deadlines . Under the Administrative Procedures Act (APA), the commission must wait until a section undergoing amendment is completed and effective before that section may be opened again for amendment. This rulemaking was proposed and published consistent with theAPA requirements. Sierra-Houston stated that the emission cap andtrade program will result in no emission reductions in plants close to poor and minority neighborhoods. The rules were notrevised based on this comment . The effect of implementing the NO cap and trade programwill be an overall NO . reduction of approximately 90%fromstationary facilities in the HGA nonattainment area. Facilities subject to the cap and trade programwill be required to reduce actual emissions to a level equal to or lower than their individual cap, or purchase allowances from another facility participating under the cap and trade program

. This trading will result in a net zero effect on the level of the cap, and will not result in increased emissions based on the location of the specific facility. Sierra-Houston opposed the cap and trade programin general and stated that requiring emission reductions at all facilities will result in the greatest reduction of ozone . Sierra-Houston stated that many emission controls will not be required until 2005,which will reduce the chances of the HGA area obtaining the ozone standard by 2007. The rules were not revised based on this comment. The overall NO

. cap was set at an annual level believed necessary for statioary facilities in orderfor the HGA nonattainment area to reach attainment by 2007. Thus, compliance with the cap will achieve the necessary reduction from the stationarysource category For facilities not wishing to make reductions to meet their individual cap, additional allowances will need to be obtained from another facility or facilities. Because these purchased allowances will be obtained from a facility participating in the cap and trade program, this results in an equal reduction from the seller. There is no net increase in the number of allowances. In addition, the cap is being initially set at historical emission levels and will reduce over time with the final reduction taking place in 2007. Based on the existing SIP, the reductions necessary fromstationary facilities need to be in full effect by 2007 and not 2005to demonstrate attainment. 

### SUBCHAPTER B. NEW SOURCE REVIEW PERMITS DIVISION 1 . PERMIT APPLICATION 30TAC§116

.111, §116

.115 STATUTORYAUTHORITY The amendments are adopted under the Texas Health and Safety Code, TCAA, §382.011, which authorizes the commission to control the quality of the state's air; §382.012, which authorizes the commission to develop a plan for control of the state's air ; §382.017, which provides the commission the authority to adopt rules consistent with the policy and purposes of the TCAA

; §382.051, which authorizes the commission to adopt rules as necessary to comply with changes in federal law or regulations applicable to permits issued under Chapter 382 ; and USC, §7410(a)(2)(A), which requires SIPs to include enforceable emission limitations and other control measures or techniques, including economic incentives such as fees, marketable permits, and auction of emission rights. §116 .111. General Application. (a) In order to be granted apermit, amendment, or special permit amendment, the application must include:

(1) a completed FormPI-1 General Application signed by an authorized representative of the applicant. All additional support information specified on the formmust be provided before the application is complete;

(2) information which demonstrates that all of the following are met . (A) Protection ofpublic health and welfare.

(i) The emissions from the proposed facility will comply with all rules and regulations of the commission and with the intent of the TCAA, including protection of the health and physical property of the people.

(ii) For issuance of a permit for construction or modification of any facility within 3,000 feet of an elementary, junior high/middle, or senior high school, the commission shall consider any possible adverse short-term or long-term side effects that an air contaminant or nuisance odor fromthe facility may have on the individuals attending the school(s).

(B) Measurement of emissions. The proposed facility will have provisions formeasuring the emission ofsignificant air contaminants as determined by the executive director. This may include the installationofsamplingports on exhaust stacks and construction of sampling platforms in accordance withguidelines in the "Texas Natural Resource Conservation Commission (TNRCC) Sampling Procedures Manual ." (C) Best available control technology (BACT) . The proposed facility will utilize BACT, with consideration given to the technical practicability and economic reasonableness of reducing or eliminating the emissions fromthe facility.

(D) New

Source Performance Standards (NSPS) . The emissions fromthe proposed facility will meet the requirements of any applicable NSPS as listed under Title 40 Code of Federal Regulations (CFR) Part 60, promulgated by the EPAunder FCAA, §111, as amended. (E) National Emission Standards for Hazardous Air Pollutants (NESHAP) . The emissions fromthe proposed facility will meet the requirements of any applicable NESHAP, as listed under 40 CFR Part 61, promulgated by EPAunder FCAA, §112, as amended.

(F) NESHAP for source categories. The emissions fromthe proposed facility will meet therequirements ofany applicable maximum achievable control technology standard as listed under 40 CFR Part 63, promulgated by the EPA under FCAA, §112 or as listed under Chapter 113, Subchapter C of this title (relating to National Emissions Standards for Hazardous Air Pollutants for Source Categories (FCAA §112, (40 CFR63)) .

(G) Performance demonstration. The proposed facility will achieve the performance specified in the permit application. The applicant may be required to submit additional engineering data after



### 26TexReg 2402 March 23, 2001 Texas Registera permit has been issued in order to demonstrate further that the proposed facility will achieve the performance specified in the permit application. In addition, dispersion modeling, monitoring, or stack testing may be required.

(H) Nonattainment review . If the proposed facility is located in a nonattainment area, it shall comply with all applicable requirements in this chapter concerning nonattainment review . (1) Prevention of Significant Deterioration (PSD) review . Ifthe proposed facility is located in an attainmentarea, it shall comply with all applicable requirements in this chapter concerning PSD review

. (J) Air dispersion modeling . Computerized air dispersion modeling may be required by the executive director to determine air quality impacts froma proposed new facility or source modification. (K) Hazardous air pollutants. Affected sources (as defined in § 116.15(1) ofthis title (relatingto Section 112(g) Definitions)) for hazardous air pollutants shall comply with all applicable requirements under Subchapter C of this chapter (relating to Hazardous Air Pollutants: Regulations Governing Constructed or Reconstructed Major Sources (FCAA, § 112(g), 40 CFRPart 63)) .

(L) Mass cap andtrade allowances. Ifsubject to Chapter 101, Subchapter H, Division 3, of this title (relating to Mass Emissions Cap and Trade Program), theproposed facility, group offacilities, or account must obtain allowances to operate. (b) In order to be granted a permit, amendment, or specialpermit amendment, the owner or operator must comply with the following notice requirements.

(1) Applications declaredadministratively completebefore September 1, 1999, are subject to the requirements of Chapter 116, Subchapter B, Division 3 (relating to Public Notification and Comment Procedures) .

(2) Applications declared administratively complete on or after September 1, 1999, are subject to the requirements of Chapter 39 ofthis title (relating to Public Notice) and Chapter 55 of this title (relating to Request for Reconsideration and Contested Case Hearings; Public Comment) . Upon request by the owner or operator of a facility which previously has received a permit or special permit fromthe commission, the executive director or designated representative may exempt the relocation of such facility fromthe provisions in Chapter 39ofthis title ifthere is no indication that the operation ofthe facility at the proposed new

location will significantly affect ambient air quality and no indication that operation ofthe facility at the proposed new location will cause a condition ofair pollution. §116 .115 . General andSpecial Conditions. (a) General and special conditions. Permits, special permits, standardpermits, and special exemptions may contain general and special conditions. (b) General conditions. Holders ofpermits, special permits, standard permits, and special exemptions shall comply with the following: (1) the general conditions contained in the permit document ifissued or amended prior to August 16, 1994; or

(2) the following general conditions ifthe permit oramendment is issued or amended on or after August 16, 1994, regardless of whether they are specifically stated within the permit document . (A) Voiding ofpermit. Apermit or permit amendment under this chapter is automatically void if the permit holder does one of the following:

(i) fails to begin construction within 18 months of date of issuance. The executive director may grant a one-time 18-month extension to the date to begin construction;

(u) discontinues construction for more than 18consecutive months prior to completion; or able time. (iil) fails to complete construction within a reason-

(B) Report of construction progress. The permit holder shall report start of construction, construction interruptions exceeding 45 days, and completion of construction. The report shall be given to the appropriate regional office of the commission not later than 15 working days after occurrence ofthe event .

(C) Start-up notification. (i) The permit holdershall notify the appropriate air programregional office ofthe commissionpriorto the commencement of operations of the facilities authorized by the permit . The notification must be made in such a manner as to allowrepresentative of the commission to be present at the commencement ofoperations.

(ii) The permit holder shall provide a separate notification for the commencement ofoperations for each unit of phased construction, which may involve a series of units commencing operations at different times.

(Iii) Prior to operation of the facilities authorized by the permit, the permit holder shall identifyto the Office ofPermitting, Remediation, and Registration the source or sources of allowances to be utilized for compliance with Chapter 101, Subchapter H, Division 3 ofthis title (relating to Mass Emissions Cap and Trade Program) .

(D) Sampling requirements. (i) If sampling is required, the permit holder shall contact the commission's Office ofCompliance and Enforcement prior to sampling to obtain the proper data forms and procedures.

(ii) All sampling and testing procedures must be approved by the executive director and coordinated with the regional representatives of the commission.

(fit) The permit holder is also responsible for providing sampling facilities and conducting the sampling operations or contracting with an independent sampling consultant .

(E) Equivalency of methods. The permit holder must demonstrate or otherwisejustify the equivalency of emission control methods, sampling or other emission testing methods, and monitoring methodsproposed as alternativestomethods indicated in theconditions of the permit . Alternative methods shall be applied for in writing and must be reviewed and approved by the executive director prior to their use in fulfilling any requirements of the permit.

(F) Recordkeeping. The permit holder shall : (i) maintain a copy ofthe permit along with records containing the information and data sufficient to demonstrate compliance withthe permit, includingproduction records andoperating hours;

(ii) keepallrequired records in a file at the plant site. If, however, the facility normally operates unattended, records shall be . maintained at the nearest staffed location within Texas specified in the application; 

### ADOPTEDRULES March 23, 2001 26TexReg 2403(fii) make the records available at the request ofpersonnel from

the commission or any air pollution control programhavingjurisdiction; (iv) comply with any additional recordkeeping requirements specified in special conditions attached to the permit; and

(v) retain information inthe file for atleast twoyears following the date that the information or data is obtained.

(G) Maximum allowable emission rates. The total emissions of air contaminants fromany of the sources of emissions must not exceed the values stated on the table attached to the permit entitled "Emission Sources--Maximum Allowable Emission Rates." (H) Maintenance of emission control . The permitted facilities shall not be operated unless all air pollution emission capture and abatement equipment is maintained in good working order and operating properly during normal facility operations. The permit holder shall provide notification for upsets and maintenance in accordance with § 101 .6 and §101 .7 ofthis title (relatingto Upset Reporting and Recordkeeping Requirements; and Maintenance, Startup and Shutdown Reporting, Recordkeeping, and Operational Requirements) .

(1) Compliance with rules. (i) Acceptance of a permit by an applicant constitutes an acknowledgment and agreement that the permit holder will comply with all rules, regulations, and orders of the commission issued in conformity with the TCAAand the conditions precedent to the granting ofthe permit .

(H) Ifmore than one state or federal rule or regulation or permit condition are applicable, the most stringent limit or condition shall govern and be the standard by which compliance shall be demonstrated. (iii) Acceptance includes consent to the entrance of commission employees and agents into the permitted premises at reasonable times to investigate conditions relating to the emission or concentration of air contaminants, including compliance with the permit . (c) Special conditions. The holders of permits, special permits, standard permits, and special exemptions shall comply with all special conditions contained in the permit document.

(1) Special conditions maybe attached to apermit that are more restrictive than the requirements ofTitle 30ofthe Texas Administrative Code.

(2) Special condition for written approval . (A) The executive director mayrequire as a special condition thatthe permitholder obtain written approval before constructing a source under: (i) a standard permit under Subchapter F of this chapter (relating to Standard Permits) ; or

(ff) anexemption under Chapter 106ofthis title (relating to Permits by Rule) .

(B) Such written approval may be required ifthe executive director specifically finds that an increase ofa particularpollutant could either: ment; or der: (i) result in a significant impact on the air environ-

(H) causethe facility to becomesubjectto review un- (1) Subchapter Cofthis chapter (relating to Hazardous Air Pollutants: Regulations Governing Constructed or Reconstructed Major Sources (FCAA, § 112(g), 40 CFRPart 63)) ; or

(II) the provisions in § 116.150 and §116.151 of this title (relating to Nonattainment Review) and §§ 116.160 - 116 .163 ofthistitle (relating to PreventionofSignificant Deterioration Review) . This agency hereby certifies that theadoption has been reviewed by legal counsel andfoundto be avalid exercise of the agency's legal authority

. Filedwith the Office of theSecretary of State on March 9, 2001 . TRD-200101431 Margaret Hoffman Director, Environmental LawDivision Texas Natural Resource Conservation Commission Effective date: March 29, 2001 Proposal publication date: October 20, 2000 For further information, please call : (512) 239-0348 

### DIVISION 7. . EMISSION REDUCTIONS: OFFSETS 30 TAC§116.176 STATUTORYAUTHORITY The new

section is adopted under the Texas Health and Safety Code, TCAA, §382.011, which authorizes the commission to control the quality of the state's air ; §382.012, which authorizes the commission to develop a plan for control of the state's air ; §382.017, which provides the commission the authority to adopt rules consistent with the policy and purposes of the TCAA; and USC, §7410(a)(2)(A), which requires SIPs to include enforceable emission limitations and other control measures or techniques, including economic incentives such as fees, marketable permits, and auction of emission rights. This agency hereby certifies that theadoption has been reviewed by legal counsel andfound to be avalid exercise of the agency's legal authority

. Filedwith the Office of theSecretary of State on March 9, 2001 . TRD-200101432 Margaret Hoffman Director, Environmental LawDivision Texas Natural Resource Conservation Commission Effective date: March 29, 2001 Proposal publication date: October 20, 2000 Forfurther information, please call : (512) 239-0348 

### SUBCHAPTERF. STANDARD PERMITS 30TAC§116

.610, §116

.615 STATUTORY AUTHORITY The amendments are adopted under the Texas Health and Safety Code, TCAA, §382.011, which authorizes the commission to control the quality of the state's air; §382.012, which authorizes the commission to develop a plan for control of the state's air; §382.017, which provides the commission the 

### 26TexReg 2404 March 23, 2001 Texas Registerauthority to adopt rules consistent with the policy and purposes

of the TCAA; and USC, §7410(a)(2)(A), which requires SIPs to include enforceable emission limitations and other control measures or techniques, including economic incentives such as fees, marketable permits, and auctionof emission rights. This agencyhereby certifies that theadoption has been reviewed by legal counsel andfoundto be a valid exercise of theagency's legal authority

. Filed with the Office of the Secretaryof Stateon March 9, 2001 . TRD-200101433 Margaret Hoffman Director, Environmental Law Division Texas Natural Resource Conservation Commission Effective date: March 29, 2001 Proposal publication date: October 20, 2000 Forfurther information, please call : (512) 239-0348 SUBCHAPTER G

. FLEXIBLE PERMITS 30TAC§116

.711,§116.715 STATUTORY AUTHORITY The amendments are adopted under the Texas Health and Safety Code, TCAA, §382.011, which authorizes the commission to control the quality of the state's air ; §382.012, which authorizes the commission to develop a plan for control of the state's air ; §382

.017, which provides the commission the authority to adopt rules consistent with the policy and purposes of the TCAA; and USC, §7410(a)(2)(A), which requires SIPs to include enforceable emission limitations and other control measures or techniques, including economic incentives such as fees, marketable permits, and auction of emission rights. This agency hereby certifies that theadoption has been reviewed by legal counsel andfoundto be a valid exercise of theagency's legal authority

. Filed with the Office of the Secretaryof State on March 9, 2001 . TRD-200101434 Margaret Hoffman Director, Environmental LawDivision Texas Natural Resource Conservation Commission Effective date: March 29, 2001 Proposal publication date: October 20, 2000 For further information, please call : (512) 239-0348 

### CHAPTER328

. WAS11J MINIMIZATIONAND RECYCLING SUBCHAPTERF. M vAGEMENT OF USED OR SCRAPTIRES 30 TAC§328.71 The Texas Natural Resource mission) adopts an amendm mate for Financial Assurance vision to Chapter 328, Waste chapter F, Closure Cost Esti der to complete cross-referen requirements forscraptire sit outchanges as published in t Texas Register (25TexReg 1 BACKGROUND AND SUM FORTHEADOPTEDRULE Thecross-references in Chap need to be replaced by a refe M, Financial Assurance Requi On February 24, 2000, the Ch consolidation package was a to correct a cross-reference c quirements for waste tire site Chapter 330waste tire subch placed into Chapter 328during cessed. Changes to Chapter Chapter 37 project teamdid no 328.-The cross-reference corre that manage used or scrap tire assurance requirements. The rule amends cross-referenc specific previous cross-referenc and adding the appropriate cr Subchapter M, Financial Assur Tire Sites, to specify all sectio §37.3001, Applicability; §37.3003 cial Assurance Requirements; § Mechanisms; and §37.3031, Sub The commission reviewed the r ulatory analysis requirements o §2001 .0225, and determined that to §2001 .0225 because it does "major environmental rule" as defi Code. Although the intent of the environment or reduce risks to hu taI exposure, the rulemaking does impact becausethe amendmentc does not change regulatory requi not meet the definition of a "major more, the rulemaking does not me requirements listed in §2001 .022 regulatory impact analysis determi The commission evaluated the a formed an assessment of whether a taking under Texas Government following is a summary of that eval specific purpose of the adopted a location of rules relating to financi facilities. Entities that manage used knowing the appropriate location fo financial assurance requirements. onservation Commission (comt to §328.71, Closure Cost EstiThe commission adopts this reinimization and Recycling; Subte for Financial Assurance, in ores regarding financial assurance Section 328.71 is adopted withe December 1, 2000 issue of the 887) and will not be republished. er 328to §37.3001 and §37.3011 ~ ence to Chapter 37, Subchapter ements for Scrap Tire Sites. pter 37 financial assurance rule pted. This package attempted cerning financial assurance rein Chapter 330. However, the pters were being repealed and e time that Chapter 37was pro8 were not made because the conceptualize opening Chapter tion is needed to direct entities to the location of the financial

s in §328.71(g) by deleting the s to §37.3001 and §37.3011 ss-reference to Chapter 37, nce Requirements for Scrap s. These sections include: Definitions; §37.3011, Finan7.3021, Financial Assurance ission of Documents. emaking in light of the regTexas Government Code, he rulemaking is not subject ot meet the definition of a ed in the Texas Government mendment is to protect the an health fromenvironmenot have an adverse material rrects a cross-reference and ments, and therefore does nvironmental rule." Furthert any of the four applicability (a) . No comments on the ationwere received. pted rulemaking and perhe amendment constitutes Code, Chapter 2007. The tion and assessment. The endment is to clarify the I assurance for scrap tire scrap tires will benefit from information relating to the



### ADOPTEDRULES March 23, 2001 26 TexReg 2405