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: 

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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 TAC Chapter 116, Control of Air Pollution 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 program for the 

Houston/Galveston (HGA) ozone nonattainment area by clarifying that any source of emissions 

of nitrogen oxides (NOX) in the HGA area that uses permits by rule or flexible, standard, or 

general permits must obtain allowances for those emissions if the facility, or group of facilities, 

has a collective design capacity to emit ten tons or more of NO., per year and is subject to an 

emission standard in 30 TAC Chapter 117 and by allowing the use of NOX allowances to meet 

the correlating portion of emissions offset requirements. 

A public hearing certification, a complete record of the public hearing, and the accompanying 

order are also enclosed. I look forward to your expeditious approval of this SIP revision . 

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 to the adoption of this revision, a public hearing was held pursuant to 40 CFR, §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 

Chfef Clerk 

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 ; new 116 .176 ; and corresponding revisions 

to the State Implementation Plan. The proposed amended sections would supplement the cap and trade 

program proposed 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 30 TAC Chapter 

117, Control of Air Pollution from Nitrogen 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

NOTIFICATION AND

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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advance as possible. 

Carm~ents maY be submltted to Lola Brown. AAC 

Office of ErMronrentat Policy, AnaNsis . e, 

Assessrnent. Texas Natural Resource Cvraarvat 

m ttt4ulorL PA P Austh, TOM 7,871 Ca . Box 13097 

3067, or by fax to ( 512) Z39-1808. A1i oomrr W ts 

reference Rule Loo Number 20007047-116-Al, 

must be ra caNad by 50 a.m , Nov e rriber 2 0. ~001 . 

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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 NO. 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 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 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 law and 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 

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 allow the HGA nonattainment area to attin the NAAQS for ozone. 

Promulgation and enforcement of the rules will not burden private real property. The proposed 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 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 ai; quality standards established under federal law 

as NAAQS. Consequently, the exemption which applies 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 

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 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 proposed 

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 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 new NO. air emissions. 

Interested persons may submit comments on the onsistency of 

the proposed rules with the CMP during the public comment period . 

EFFECT ON SITES SUBJECT TO 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 TAC 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 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 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 . 

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 Number 2000-047-116-Al. 

Comments must be received by 5:00 p.m., November 20, 2000. 

For further information, please contact Matthew R. Baker at (512) 

239-1091 or Beecher Cameron at (512) 239-1495 . 

25 TexReg 10452 October 20, 2000 Texas Register 
6,000 emission sources in the HGA that 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 program is 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 revenue through 

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 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 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 program to 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 program for the HGA area . 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 sec- bill that exempted proposed rules from the 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 USC does 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 and an 

mission routinely proposes and adopts SIP rules. The commission bases these actions on the presumption that the legislature 

agency or representative of the federal government to implement 

a state and federal program; or 4.) adopt a rule solely under 

understands this federal scheme. If each rule proposed for incluthe general powers of the agency instead of under a specific sion in the SIP was 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 the legislature is 

presumption 

state 

ambient air quality standard (NAAQS) set by the EPA under the a d that d 

Understand 

sbased onl information 

the 

by 

sses, 

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 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 

on 

__. .._ . . ._a .~,. ., .,. . .~o,l n damakinn 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 from developing a program that 

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 S13 633 was 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 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 

nIPSS 

PROPOSED RULES October 20, 2000 25 TexReg 10451 
SUBCHAPTER B. NEW SOURCE REVIEW 

PERMITS 

DIVISION 1 . PERMIT APPLICATION 

30 TAC §116.111, §116.115 

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. 

§116.111 . 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 .) 

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 .) 

§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 .) 

ili 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 Etnissions Cap and Trade Program) . 

(D)- (I) (No change.) 

(c) (No change .) 

This agency hereby certifies that the proposal has been reviewed 

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

Filed with the Office of the Secretary of State, on October 9, 

2000 . 

TRD-200006932 

Margaret Hoffman 

Director, Environmental Law Division 

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 

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. 

§11 6.1 76. Use of Mass Cap Allowances for Offsets. 

Any allowances required to comply with the mass emission cap under 

Chapte r 101 Subchapter ti, Division 3 of this title (relathng to Mass 

Emissions Cap and Trade Program) may be used to meet the conelat 

in portion of the emission offset requirements needed to comply with 

$116 150 of this title (relattnQ to New Maior Source or Major Modifi 

cation in Ozone Nonattainment Areas) . 

This agency hereby certifies that the proposal has been reviewed 

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

Filed with the Office of the Secretary of State, on October 9, 

2000. 

TRD-200006933 

Margaret Hoffman 

Director, Environmental Law Division 

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 

30 TAC §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 10453 
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 subinitted under the same 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 C of this title (relating to 

National Emissions Standards for Hazardous Air Pollutants for Source 

Categories (FCAA_ §112, 40 CFR 63)) ; and [:] 

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 . 

The appropriate air program regional office of the 

commission and any other air pollution control program having jurisdiction 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 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 . 

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). 

('jD) A particular standard permit may modify start-up 

notification requirements . 

(6)-(10) (No change .) 

This agency hereby certifies that the proposal has been reviewed 

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

Filed with the Office of the Secretary of State, on October 9, 

2000. 

TRD-200006934 

Margaret Hoffman 

Director, Environmental Law Division 

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 Permit Application. 

Any application for a new flexible permit or flexible permit amendment 

must include a completed Form PI-1 General Application. The Form 

PI-1 must be signed by an authorized representative of the applicant. 

The Form PI-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 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. 

[¢1-2-)] 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; 

permit ; 

(B) identify each facility to be included in the flexible 

(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 ernission rate calculations based on the expected maximum 

capacity and the proposed control technology ; 

(E) for each individual emission limitation, identify the 

EPN and provide emission rate calculations based on the expected maximum capacity and the proposed control technology. 

25 TexReg 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 compliance with all emission caps at expected maximum production 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 . 

The appropriate regional office of the commission 

and any local program having jurisdiction 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 . 

Prior to beginning operations of the facilities authorized by the permit the permit holder shall identify to t he 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). 

2000. 

(4)-(10) (No change .) 

(d) (No change .) 

This agency hereby certifies that the proposal has been reviewed 

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

Filed with the Office of the Secretary of State, on October 9, 

TRD-200006935 

Margaret Hoffman 

Director, Environmental Law Division 

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 the follow, 

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 proposed for repeal 

be examined in the offices of 

the Texas Commission on Law Enforcement Officer Standan 

ucation or in the Texas Register office, Room 245, James 

Building, 1019 Brazos 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 the Commission's mission. 

Dr. D.C . Jim Dozier, Executive Director of 

determined that for the first five-year per 

in effect, there will be no fiscal implicatio 

cal government as a result of administer 

are no fiscal implications caused by rep 

Chapter 211 and readopting them in the 

Dr. Dozier also has determined 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 a clearer 

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 of Documen 

§211.7. Place and Nature 

§211.9. Contested Cases 

§211 .10. Proposal for De 

§211.15 . License Action. 

§211.16. Notice. 

Appeal. 

License Ho 

Public Info 

Contemplat 

Fees and P 

Issuance o 

Date of Li 

Date of A, 

Meeting 

Underc 

Licens 

Execu 

f Hearings. 

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 log this section. There 

aling the provisions of 

revised Chapter 211 . 

ach year of the first five 

benefit anticipated as a 

is the elimination of obon of the rules relating to 

nderstanding of the rules. 

esses and no anticipated 

i duals who are required to 

itted to Dr. D.C . Jim Dozier, 

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 Delayed Documents. 

ensing, Certification, or Acknowledgment. 

~pointment . 

ates and Procedures. 

'ver Records. 

Renewal. 

on of Orders Showing Action Taken at Commission 

of Care. 

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

R. B. "Ralph" Marquez, Commissioner 

John M. Baker, Commissioner 

Jeffrey A. Saitas, Executive Director 

TEXAS NATURAL RESOURCE CONSERVATION COMMISSION 

Protecting Texas by Reducing and Preventing Pollution 

NOTICE OF PUBLIC HEARING BY THE 

TEXAS NATURAL RESOURCE CONSERVATION COMMISSION 

ON PROPOSED REVISIONS TO 

30 TAC CHAPTERS 106 AND 116 

AND THE STATE IMPLEMENTATION PLAN 

The Texas Natural Resource Conservation Commission (commission) will conduct a public hearing to 

receive testimony concerning revisions to 30 TAC Chapters 106, and 116 and to the State Implementation 

Plan (SIP) under the requirements of Texas 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 Protection Agency regulations concerning SIPs. The revisions to Chapter 116 are proposed 

as revisions to the SIP. 

On August 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 program would 

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 program for the 

HGA area . The proposal would amend the appropriate sections in Chapters 106 and 116 to state that the 

cap and trade program applies 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 allow the 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, 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 . 

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 5:00 p.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 of Air 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 .6 10, 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) . 

BACKGROUND AND SUMMARY OF THE FACTUAL BASIS FOR THE PROPOSED RULES 

On August 9, 2000 the commission proposed rules, which were published in the August 25, 2000 issue 

of the Texas Register (25 TexReg 8137), that would establish a system of 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 system is 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 .176 would allow permit 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, New Major Source or 

Major Modification in Ozone Nonattainment Areas, to use allowances to meet the correlating portion of 

the emission offsets . 

The proposed new § 116.6 1 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 TO STATE 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 allow a 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 program for the HGA area . The proposed mass emissions cap and trade 

program would 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 HGA area 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 from other sources. Additionally, the amendments also allow the use of allowances 

to satisfy the correlating portion of the emission offsets required for federal nonattainment NSR 

requirements . Offsets are emission reductions from other sources that counteract the increase releases 

from the 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 HGA that may be 

affected by the proposed rulemaking . The allowance trading provision of the mass emissions cap and 

trade program is 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 program will 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 program by 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 allow the 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 HGA will be 

owned and operated by individuals and businesses . The allowance trading provision of the mass 

emissions cap and trade program is 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 AND MICRO-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 new or 

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 program by requiring new or modified NO,, sources, 
Texas Natural Resource Conservation Commission Page 7 

Chapter 116 - Control of Air 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 allow the 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 program is 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 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 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 program to 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 program for the HGA area. 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 of Air 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 §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 
Texas Natural Resource Conservation Commission Page 10 Chapter 116 - Control of Air Pollution by Permits for New Construction or Modification 

Rule Log No . 2000-047-116-AI 

flexibility does not relieve a state from developing a program that 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 

would seldom apply, 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 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 of Air 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 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 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 law and 

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 allow the 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 law as 

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 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 proposed 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 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 new NO,, air emissions . Interested persons may submit comments on the consistency of 

the proposed rules with the CMP during the public comment period . 

EFFECT ON SITES SUBJECT TO THE 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 30 TAC 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 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 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 of Air 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, MC 206, 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 Matthew R. 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 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) (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 of Air 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 of Air 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 of Air 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 program regional office of the commission and any 

other air pollution control program having 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 Form PI-1 General Application . The Form PI-1 must be signed by an authorized 

representative of the applicant . The Form PI-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 maximum capacity 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 maximum capacity 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 maximum production 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 

having jurisdiction 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) (No change .) 

(d) (No change.) 
WRITTEN AND 

ORAL TESTIMONY
INDEX OF WRITTEN TESTIMONY 

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 of Environmental Policy, Analysis, & Assessment 

MC 206 

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 of the Houston Sierra Club (HSC) regarding 30 TAC 106.4, 116.111, 116.115, 

116.176, 116.610, 116.615, 116.711, & 116.715, which deal with emissions banking, trading, mass cap, 

and trade allocations . 

The HSC is 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 TNRCC in 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 TNRCC has 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 of 09/24/2000, about the Houston-Galveston Non-attainment 

Area Ozone SIP and in the comments of Brandt 1Vlannchen to Matthew Baker dated 02/24/2000. We will 

outline these concerns here and enclose a copy of the two sets of comments as part of our official 

comments. 

Environmental justice inequalities are our first concern. The People of the State of Texas who live near air 

pollution sources that use emission trading to their benefit, so reductions of pollutants do not have to occur 

at the plant site, will be forced to breathe air pollution that is hazardous to their health. Air pollution will 

reduce the length of lives, kill, injure, or make living less pleasant, desirable, and worthwhile for people 

who live near these plants. People's property will be devalued and will be worth less due to air pollution 

levels that are dangerous to health The health, welfare, and environment of residents that live next to these 

plants will be degraded. This is not fair or legal since TNRCC is charged with the task of protecting all 

people from health, welfare, and environment impacts . 

Companies should be required to be good neighbors in our State . Compames must work with the 

communities they exist in to reduce their air pollution maximally and ensure levels do not harm people and 

the environment . Companies must be required to take the responsibility and be good corporate citizens, be 

part of the community, and not set their needs apart from those of the community. Buying good will 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 to avoid doing their fair share to reduce emissions in the location 

where their plant is located and where it has air pollution impacts . By allowing such actions TNRCC does 

not level the playing field with equivalent, real, reductions for all sources where they are located. 

The emissions trading proposal in the SIP allows the use of credits from other counties, states, or nations . 

This is not appropriate and the changes proposed here will allow this to occur by setting up a mechanism 

where this can occur for all types of permit approval . We are opposed to this . TNRCC has 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 SIP a mechanism to allow trading of one pollutant for another. We fear this allowance will be abused 

in the future and allow trading of one pollutant that is totally unrelated for another pollutant The changes 

proposed by these rules allow this type of emissions trading to occur. We oppose this . 

The unfairness of emissions trading is demonstrated by the lack of power, money, and the right social class that most people have who live near plants . Usually, such trades occur in working class or poverty stricken 

areas, where people of color live or those with little power to politically fight such actions. 

In a severe ozone non-attainment area it seems beyond belief that emissions trading would be allowed. The 

Houston-Galveston Area needs all the reductions it can get, within its ozone non-attainment boundaries, to have a chance of meeting the ozone standard by 2007. 

In reality what occurs in 2005 will determine whether the Houston-Galveston SIP will succeed. The 

present federal ozone standard requires that the fourth ozone exceedance over the standard constitutes the first violation of the standard Once the Houston-Galveston Area exceeds the ozone standard four times in 

2005 we will not be able to legally, meet the ozone standard by 2007. In addition, many of the 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. TNRCC has 

repeated the mistakes of the State of Texas in 1979, 1982, and 1987 when minimalist emission reductions 

were also made. We are in no danger of over controlling VOC and NOx emissions to reduce ozone. 

Overall, the HSC, at this time, opposes all of the changes in this proposal. We believe the best ozone 

control strategy is to reduce all NOx & VOC sources as much as possible. We can then meet the old ozone 

standard of 0.12 ppm, maintain that standard when it is reached, and make reductions that will reduce 

emissions to meet the new ozone standard of 0.08ppm over an 8 hr. period. 

Until we can meet the health based standard consistently we believe it is premature to allow 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 carrying capacity of our airshed to clean 

itself. We need to reduce emissions accordingly. For 30 years we have exceeded our airshed's ability to 

clean the air. It is long past time that we correct this situation and restore pure, clean air to the public and 

protect the People's health, welfare, and environment 

We appreciate this opportunity to comment Thank you. 

Sincerely, 

Brandt Mannchen 

Houston Sierra Club 

Air Quality 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 

Heather Evans 

Office of Environmental Policy, Analysis & Assessment MC 206 

P. 0. Box 13087 

Austin, Texas 78711-2087 

Dear Heather, 

Enclosed 

Plan (SIP) 

are 

for 

the 

the 

comments 

Control 

of the Houston Sierra Club regarding the Revisions to the State Implementation 

Demonstration 

of Ozone Air Pollution, post 1999 Rate of Progress and Attainment 

proposed rules for 

SIP for the Houston/Galveston Ozone Nonatiainment Area. Appendices A-L. and all 

request a copy of the 

reduction 

final 

of nitrogen oxides (NOx) and volatile organic compounds (VOC's). We 

will be given before voting 

document, the responses to comments, and the SIP packet that the Commission on the SIP. 

INTRODUCTION AND SUMMp,Ry 

standard 

Our summary 

by 2007

of this 

. The 

entire effort is that it is woefully inadequate for showing attainment of the ozone 

why we have numerous 

Houston/Cralveston Area (HGA) is exceeding its airshed carrying rapacity . This is 

standard. 

unacceptably high ozone readings that are above the human health based ozone 

This 

emulsion 

proposal 

fuel, 

advocates 

etc.), 

using technologies that are not proven in the field (air conditioner coatings, 

ffeatm ; furnaces). 

allows some large industrial sources to have minimal reductions (kilns and heat 

equipment and construction), 

advocates shifts in times when certain uses can occur that are not enforceable (lawn 

» mph speed limit), 

has loopholes in standards that defeat the purpose of the rules (construction, 

other than modeling to 

does not contain a modeling run that shows attainment of the ozone standard, allows 

(weight of evidence), 

show compliance with the standard that is allowed no where else in the country 

a transportation 

models for attainment without knowing the effect each rule adopted will have, allows 

emissions inventory, 

emissions 

and has 

budget which is based on an inaccurate travel demand model, has an incomplete no ozone maintenance plan . 

TIvRCC 

stringent 

wants 

While 

citizens 

stating 

and 

that 

the EPA to believe this half baked effort equates to a proposed SIP that is 

SIP proposal and not allow 

control measures are "potential° TNRCC wants to make major changes to this 

SIP is submitted to EPA. 

the public a full 30 days to me iew and comment on these changes before the 

to hear. TNRCC apparently 

TNRCC criticizes the public by saying solutions and not gripes are what it wants 

not, in 30 years, brought the 

has forgotten who pays its budget. Apparently, TNRCC has forgotten it has citizens of Houston clean air. That dog won't hunt! 

To 

1.000's 

begin 

of 

these 

tons . 

comments 

All grandfathered 

we have two solutions that will reduce NOx & VOC emissions by 100's and 

available control technology; specific 

facilities must be permitted and required to have, at a minimum, best 

record keeping requirements, 

monitoring requirements for NOx and VOC emissions, stringent 

procedures to ensure the 

cumulative effects modeling of air emissions, and operation and maintenance proper operation of processes and control equipment. 

"When we trv to pick out anything bv itself, we find it hitched to everything else in the universe ." John ajuir 
In 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 EPA oversight and citizen review 

and comment, and then implemented by each major source of 25 tpy or more of NOt and VOC. This plan, 

along with a focused enforcement effort with the best engineers and investigators at TNRCC and local air 

pollution agencies, investigating significant upset and other releases, will reduce emissions cons:.derably . 

The HGA can reach attainment . But TNRCC's minimalist incremental, policy will not get us where ye 

want to be. «'e do not want to wait another 30 years for clean air. 'INRCC must be more concerned a~ bout 

people dying prematurely, getting sick unnecessarily, having their Quality of Like and welfare being 

reduced, and having their environment degraded, than worrying about issuing air permits faster and 

worrying about the health and welfare of industry. Then and only then will we make true progress and 

once again breathe clean air in Houston. 

REVISIONS TO THE SIP FOR THE CONTROL OF OZONE AIR POLLUTION, POST-1999 RATE-0FPROGRESS AND ATTAINMENT DEMONSTRATION SIP FOR THE HOUSTON/GALVESTON 

OZONE NONATTAINMENT AREA, INSPECTION/MAINTENANCE SIP FOR THE 

HOUSTON/GALVESTON OZONE NONATTAINMENT AREA, 08/09/2000 

1) Page I-1, there is no ozone maintenance plan . One is required to ensure that once attainment has been 

achieved that it is maintained. 

2) Page 1-3, this plan is 6 years late . The U. S. Environmental Protection Agency (EPA) has illegally 

allowed the delayed submittal of an attainment SIP. We request EPA ensure this SIP meets all 

requirements of the Federal Clean Air Act and if it does not that the sanctions clock be started. 

3) Page 1-4, it is interesting that TNRCC admits that the 1995 plan did not achieve attainment by saying, 

"This submittal included modeling demonstrating ro ess totivard attainment". Not attainment, but 

progress toward. 

4) Page I-6. the Houston Sierra Club requests from TNRCC a copy of this '~voluntary regional initiative 

to reduce vehicle trips," that the Houston-Galveston Area Council (HGAC) is implementing. This 

document must be in this SIP if TNRCC plans to take credit for any emission reductions due to its 

implementation . - 

5) , Page 1-9, 150 ppm 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 of the Houston-Galveston Area (HGA). The 

predominant winds in the HGA are south, south southeast, or southeast BPA is east and northeast of 

HGA. If TNRCC will look at the wind roses on its website it Rill see that predominantly easterly 

winds are more frequent during the year than westerly winds. HGA does send emissions to BPA some 

of the time but BPA sends HGA emissions more of the time. Be honest . 

7) Page 1-11, this SIP is not complete because all the rules are not proposed which will 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 TNRCC states it will 

not make such a decision until it submits the SIP at the end of December . TNRCC was required by 

EPA to submit this proposed SIP with ail control-strategies modeled and documented. 

8) Page I-11, the SIP is not complete because the motor vehicle emissions budget (MVEB) will be 

recalculated and the public will get almost no opportunity to comment on this except for the few 

minutes at the Commission meeting when the SIP is approved for submittal to EPA. The public must 

have another opportunity, with at least 30 days of review and comment period, to look at the entire 

SIP, in its final form. Otherwise you are cheating the public from reviewing the entire SIP and having 
any reasonable chance to influence changes in the SIP. This is what TNRCC did for the November SIP and the Gap SIP: Significant changes will be made but the public is locked out of meaningful participation. HGAC is using a discredited and inaccurate. IviVEB and an inaccurate travel demand model to allow it to declare conformity . TNRCC and EPA are allowing this to occur with improper oversight and direction. How is it that the transportation part of the SIP can use a MVEB that is not approved by EPA and is not the same one that is in this SIP? Without the proper budget TNRCC cannot model accurately and cannot determine what the emissions are from motor vehicles . See the enclosed documents regarding HGAC the TIP, and the MTP as part of our comments. These documents outline the flaws and inadequacies of the HGAC transportation portion of this SIP. 

9) Page 1-12, Weight of Evidence (WOE) is not appropriate for the HGA, BPA, and Dallas-Fort Worth Areas (DFW). EPA and the Clean Air Act require a demonstration of ozone attainment using a grid type model. WOE is illegal under EPA's own rules and the Clean Air Act. Further, EPA is allowing a WOE calculation method that is unique to the HGA SIP and is not allowed any-where else in the U. S. Two other WOE methods do not work in the HGA so a third, untried method, has been allowed. WOE consists of shaving the peaks by averaging ozone exceedance values and modeling values so that some type of calculation can be made to supposedly show attainment This is Voo Doo Science at its worst. We oppose any WOE attainment demonstration. 

10) Page 1-12, we disagree with the statement that there is a "shortage of readily available control options." See the comments of Brandt Mannchen, O1/31/2000 for the GAP SIP, and 08/02/1999 for the November 1999 SIP. There are many control strategy options available. TNRCC does not have the political will to require their use. 

11) Page 1-12, the stakeholders referred to repeatedly are not representative of the diversity of the HGA community. TNRCC ignores that little or no input comes from unions, people with asthma and respiratory ailments, doctors and others in the medical profession, university and other 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 the greater HGA community. The TNRCC allows HGAC to hold meetings during work days when most of the public cannot attend . TNRCC allows HGAC to hold meetings at its offices instead of going into the community. TNRCC must have a representative citizens' advisory committee that meets in the evenings and weekends in different communities in the HGA and whose meetings are advertised in newspapers, on radio, and TV 

even if ads have to be bought. Right now TNRCC ensures that a small group of the public has access, knoas about, & participates in meetings. This is shameful. 

12) Page I-13, TNRCC claims the SIP will ensure the HGA reaches attainment by 2007. But TNRCC does not state that by 2005, if 4 or more violations of the 0.12 ppm ozone standard occur that the HGA -will not be in attainment TNRCC has most NOx and VOC reductions 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. TNRCC has been told for 10 yrs to front end load emission reductions . TNRCC has failed to listen to good advice and is back in loading reductions . This is a failed strategy 

as was seen in 1979, 1982 and 1987 SIP's and attainment dates. TNRCC continues this failed policy and guarantees the public must breathe dirty, life threatening air for many years to come. 

13) Page 1-1, TNRCC now says the 1995 NOx waiver was based on episodes "which marginall y exhibited model performance in accordance with EPA modeling performance standards." At the time TNRCC did not broadcast this obvious fact and ignored those who brought it up. TNRCC presented to EPA the 

case that the modeling was convincing of dis-benefits for NOx control by allowing more ozone formation. Funny, how TNRCC now claims the modeling was marginal but at the time defended its results. Will the same occur in several years about the modeling in this attainment SIP? 

14) Page 1-2, TNRCC does not commit to control NOx and VOC emissions outside the 8 county ozone 

nonattainment area . This is foolish and will ensure transport continues to play an important role in the inability of the HGA to reach attainment 
15) Pages 1-3 & I-11, TNRCC only says it will "list and quantify potential control measures to meet the 

shortfall of NOx reductions needed for attainment" Once again TNRCC will not make a commitment 

to control strategies but hedges its bets saying it will keep its options open_ Unfortunately, EPA allows 

this worst kind of non-commitment and makes little or no effort to stop it Shame on EPA! 

16) Page 3-1, TNRCC still only focuses on one ozone episode to model. There are several kinds of ozone 

meteorological episodes that must be modeled. But TNRCC ignores 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. 

TNRCC ensures attainment will not occur because the different ozone formation scenarios are not 

modeled for attainment 

17) Pages 3-3 & 3-4, TNRCC uses old land use data. This ensures that biogenic emissions are overstated 

and urbanization changes which affect meteorology and area source, mobile source, and industrial 

emissions are understated This ensures the emissions inventory (EI) is inaccurate . Forest losses due 

to sprawl, clearcutting and other lagging, and pasture development are not accurately portrayed. 

18) Page 3-4, TNRCC arbitrarily 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 VOC El is so inaccurate that 

this accounts for the problems. You cannot arbitrarily changes important modeling factors without 

adequate documentation, justification, and proof for the changes. TNRCC is ignoring this and going 

ahead anyway. It appears that any changes are OK if TNRCC can justify them as getting it closer to 

attainment, whether they are correct or not and whether TNRCC has 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. TNRCC ignores this and continues to claim it can 

justify attainment when it has no modeling that will show this. 

20) Pages 3-7 & 3-8, TNRCC accepts 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 HGAC that they do not perform back«ard 

forecasting audits. This ensures we continue to perpetuate the mistakes of the 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, TNRCC underestimates emissions and defines away the NOr gap. The Houston Sierra Club 

has observed that when TNRCC is faced with an SIP deadline that it miraculously finds less pollution 

and therefore less emissions to clean-up. After the SIP is approved TNRCC tends to find more 

emissions for its EI's. This happened in 1982 and is happening -with this SIP. TNRCC is playing fast 

and loose with emission estimates. 

22) Page 3-9, TNRCC never states what percent compliance for Stage I in Eastern Counties is expected. 

Who will able provide enough investigators to cover this huge area and ensure that compliance occurs? 

There is absolutely no discussion about enforcement personnel, enforcement resources. and what the 

present situation is for getting investigations accomplished in a reasonable period of time, both by 

TNRCC and the local air pollution programs. Where will all the needed additional investigators con:' 

from if TNRCC is not willing to commit to full enforcement? 

23) Page 3-10, if heavy highway and municipal/utility construction are required to service employment ai . : 

population centers and these generate large amounts of emissions themselves or enable other sources to 

g e nerate large amounts of emissions why is TNRCC and local governments allowing these pollution 

generating 0 activities? 

24) Page 3-10, if TNRCC does not know how much population, employment, change in population, and 

change in employment account for construction and growth then TNRCC is admitting that it is not able 
inaccurate 

to estimate 

in 

emissions 

the 

from growth in the HGA. This means the EI and its distribution will be modeling. This ensures inaccurate model results. 

25) Page 

it has 

3-12, 

projected

TNRCC 

. In the 

has ignored data that documents SUV use in HGA may be much greater than what 

HGA TRNCC uses a 4.5% 

DFtiy SIP the SUV proportion of the motor vehicle population is 11%. In the 

population as DFW. 

figure . TNRCC must justify why the HGA does not use a similar SUV 

requirements . 

You are insuring inaccurate Et MVEB, modeling results, and control strategy 

26) Pages 

SIP. This 

3-13 

is 

& 

a 

3-14, 

significant 

TNRCC failed in time to complete the newly permitted source adjustments for this 

TNRCC ensures that 

El problem. With no newly permitted sources in 8 nonattainment counties 

never get an opportunity 

accurate emission reductions cannot be determined In addition, the public Rill 

adjustments are 

to review these figures and respond for 30 days. The permitted source 

permits by rule 

only for pernnitted facilities and TNRCC ignores the cumulative impacts of many 

is compromised

facilities

. 

. Again the accuracy of the EL which is the foundation of accurate modeling, 

27) Page 

emissions 

3-14, 

should 

biogenic emissions are not accurately accounted for because of Overestimates. Biogenic be less than shown because 

addition, TNRCC did large areas are cleared, developed, and logged. In 

change. _ These changes 

not change the base case regarding biogenic emissions when in fact the El did need to be reflected and the biogenic El must be accurate . 

28) 

enforceable 

Pages 3-15 cYZ 

commitments

3-16, the voluntary 

. 

mobile emission reduction program is illegal because there are no 

to implement them. 

In Appendix K, all the VMEP's are illegal because there is no commitment 

implement this project

HGAC states for every one of the VMEP's that it will "make a best faith effort to ." This is not an enforceable commitment. 

29) Page 3-15, modeling, with the CAM-X2 does not show attainment of the standard. 

30) Page 

Therefore 

3-16, 

the 

TNRCC admits that there has been no model run with the specific rules proposed. 

is done with the 

public 

rules 

will not have time to review and comment on the results of the model run when it 

reduction and 

before the SIP is sent to the EPA TNRCC simply assumes a 90% NOx 

states, "the modeled 

does not document this actually will occur with the rules proposed. In fact TNRCC 

TNRCC again has no 

ozone 

SIP 

concentrations (and resulting gap) must be considered approximate." So 

TNRCC has missed 

that that the public can review and comment on ~;ith accurate modeling. the deadline again 

sanctions clock is 

How many second chances will EPA give ZNRCC before the started? 

31) Page 3-17, strategy H2 is flawed. This strategy, when modeled, does not show attainment3 2) Page 3-18, modeling does not show attainment 

are made the public When changes are made and additional modeling runs 

The WOE method used 

will not get 3- days to review and comment on the final version of the model run. 

legitimate . This is 

in HGA is not used anywhere else in the U. S. This is not science and not 

TNRCC should be 

a 

ashamed 

unproven method which averages out the peaks to reduce NOx reductions needed. 

Citizens of Texas. 

of its avoidance of responsibility by not providing clean air for the 

33) Page 

complete 

3-19, 

modeling 

INRCC 

run 

claims a reduction in the gap of from 118 tpd to 78 tpd but is not able to show a 

they come from. 

with all controls to demonstrate what the reductions really mean and where 

able to review and 

TNRCC admits that the gap may change again so it ensures the public will not be comment on the SIP for 30 days before it sends the SIP to EPA We object! 

34) Page 

review 

3-10, 

and 

TNRCC 

comment 

is 

for 

revising the point source El which the public will not have the opportunity to 

December. 

30 days before a decision is made and the document is sent to EPA in 
35) Pages 54, 5-7,5-10, .& 5-13 the public RU not be able to review and comment on the changes in the 

iViVEB for 30 days and have a public hearing with adequate advertising about it before the SIP is 

submitted in December . Table 5.1-1, on page 5-2, shows area and non-road sources of NOx increase 

in 2002 and other tables show similar increases until 2007 when miraculously all emissions drop. 

There is no documentation to show how effective each control strategy will b? (% emissions 

reduction) . TNRCC is counting on reductions that will not occur. 

36) Page 6=1, the VMEP is not legally enforceable and no specific commitment is made. All HGAC says 

is it will make a good faith effort to implement proposed VEMP's which can change depending on 

what local political entities. This does not ensure that reductions will be achieved. 

37) Page 64, the accelerated purchase of Tier 2l3 diesel trucks should start May 2002 and 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 

which commits documents how effective the 55 mph speed limit will be and what level of enforcement 

is needed and will be given. 

39) Page 6-5, airport ground service equipment phase in needs to start in 2002 and not 2003. This ensures 

quicker emission reductions. 

=10) Page 6-6, there is no explanation of how energy efficiency for buildings will be enforced and how 

emission reductions will be calculated from energy 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, TNRCC does not say how it will enforce TCM implementation From 1996-1999 over 100 

miles of bicycle lanes were not built . This TCM failure has not been addressed by HGAC and there is 

no mention of how these emission reductions will be recouped in the MTP or TIP for the year 2000. 

42) Page 6-6, TNRCC, for the VOC Rule Changes, recalculates existing rules and says there are more 

emission reductions than calculated before. TNRCC does not document the reality of these 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 8 counties . All 8 

counties need to implement this I/M program by 2002. We need emission reductions as fast and large 

as possible . TNRCC persists in back end loading emission reductions instead of front end loading. 

This back end loading of emission reductions is a failed strategy as shown by failure to reach the 

ozone standard in 1987. TACB, now TNRCC, did the same back end loading and compliance was not 

achieved. 

44) Page 6-12, TNRCC has not revealed the results of its additional airplane monitoring research with 

Baylor University . Some information about this research was in the Gap SIP. But TNRCC revealed 

that the data for many monitoring trips bad not been analyzed and was not available. The public has 

the right to see the results of these monitoring trips along with an analysis by TNRCC of what they 

mean for transboundary air pollution. 

45) Page 6-16, there is a lot of ORV activity in Sam Houston National Forest and a lot of ATV use in rural 

areas in the HGA. There are significant emissions generated by these vehicles and they need to be 

estimated accurately. 

46) Page 6-18, if TNRCC cannot show compliance by 2005 then the HGA will not reach the ozone 

standard . The standard does not allow more than 3 violations over any 3 year period. Most of 

TNRCC's reductions come after or during 2005 . TNRCC is setting up the HGA for nonattainment 

before the 2007 attainment deadline. . 
47) Page 

in the 

6-26, 

HGA

the TNRCC must reveal how well the voluntary emission trip reduction program has done . 

48) Page 

will 

6-27, TNRCC needs to explain the smoking vehicle program in detail . How does it work, how adequate enforcement resources be available, and how much emissions will be reduced. 

49) Page 6-27, the Houston Sierra Club is very concerned about AERCO. The entire emissions banking, 

address

credit, and trading program is based on environmental justice inequalities that 'INRCC does not 

sources

. We believe there should be a level playing field with equivalent, real, reductions for all 

their own 

. Some sources should not be allowed to get out of their personal responsibility for reducing emissions by buying emission credits. This concerns us greatly and TNRCC has not addressed these concerns. 

50) Page 6-28 & 6-38, we are concerned about 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 the future anyway. The voluntary nature of the program does 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 emissions are hurting the public's health5 1) Page 6-30, TNRCC has not estimated the additional emissions that Shoal Point (Megaport), Bayport, Grand Parkway, and secondary development will produce and what their effects are on ozone attainment. 

52) Page 7-1, this strategy of back loading emission reductions will fail . It did so in 1987 and it will now. TNRCC is doing the public a disservice by conducting its business of protecting public health in this manner. 

CO\NMNTS ON APPENDICES 

1) Agpe ndix A 

a. Using 1992 data for landings and take-offs provides a very inaccurate picture of emissions from ground 

TNRCC 

support equipment use. Use of Houston airports has increased tremendously since 1992. 

data. 

must recalculate the emissions from ground equipment and aircraft using the most recent 

b. TNRCC

be 

.should not assume 100% electrification since some emission generating equipment may exempted by ZNRCC. TNRCC takes maximum credits when there is a good chance that maximum reductions will not occur. This is not being conservative in estimaring emission reductions . 

2) A"-=dix B 

a. It is not clear, on page B-13, whether contractors/subcontractors with the highest surrogate rankings, who were surveyed, will have the same equipment and ratio of equipment as those not surveyed including small companies. It is of concern on page B-14 that 24% of the equipment lacked basic information like make/model and hors,,-power ratings. On page B-15 it is troubling that 31 .6% of engine specific estimates for activity were not available. We are not as confident as TNRCC that the assumption that there was no_ signi$cant contribution to equipment activity in the 8 County area from sources outside the region, B-17, is accurate . We do not believe it is good to limit 

activity

a survey to two contractors, on page B-18, because they are responsible for 70.1% of the . Tlhs means that there is a good likelihood that TNRCC wiil not correctly estimate the 
activities of the other contractors because no survey was done and because thev are smaller than 

-- the contractors surveyed. On page B-21, it is of concern that engine specific horsepower was 

obtained for only 50% of the surveyed equipment while activity estimates were obtained for 63% 

of the equipment. On page B-23, only 57% engine specific horsepower data was available and 

only 17% activity data was availabIc. On page B-24, only 28.5% of the total appraised value for 

equipment was obtained . Finally, on page B-42, it is stated that the areal distribution of 

construction activity may have shifted outward from downtown Houston in the recent past . All of 

these problems cumulatively makes us concerned that this emissions estimate is not accurate and 

TNRCC is relying too much on this information for its off-road emissions inventory. 

3) Appendix C 

a. TNRCC has not included emissions from the Texas City Megaport also known as Shoal Point 

We were told at the 09/1212000 HGAC TIP/MI'Pmeeting, by a Texas City Megaport supporter, 

that 7,000 trucks/day would be generated by the Megaport and this facility would also utilize the 

Grand Parkway. TNRCC must look at all emissions generated from such large projects . 

4) Appendix D 

a. We have no comments on this Appendix. 

5) Appendix 

a. 

6) 

TNRCC continues to estimate biogenic emissions without current land use information. 

Anecdotally, the Houston Sierra Club has watched the 1-35 and 1-59 corridors develop. We have 

seen urbanization take place around Lake Conroe, Sam Houston National Forest, and just south of 

Cleveland, Texas. We know much forest is lost to development every year, is lost to pastureland 

every year, is fragmented every year, is cut over so it is understocked. TNRCC needs to ground 

truth land use data using the most up-to-date, yearly, aerial photos to determine land use and 

biogenic and other ernission estimates. 

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 not accomplishable . In 

addition, the number of enforcement personnel in the field and the rate of compliance must be 

taken into consideration. TNRCC is living in a dream world if it thinks its rules will be 100% 

effective in reducing emissions. 

8) Azfyendix H 

a. TNRCC must calculate emissions from permits by rule (PBR). PBR will, cumulatively, generate a 

lot of emissions. Both VOC and NOx must be estimated with PBR Estimates need to take into 

account sources that emit at least 10 tpy or more. Currently, with this study, TNRCC ignores 

sources with 24.99 tpy of emissions or less. There is no indication that upset, maintenance, startup, and shutdown emissions are accounted for in these calculations. These types of emissions can 

be a significant portion of total emissions. It is troubling that TNRCC did not even have time to 

include -these emissions in this SIP and modeling effort. TNRCC needs to use more foresight in 

planning SIP activities . - 

9) Appendix I 
a. How will TNRCC ensure that all TCM's are implemented and are effective? From 1996-1999 over 100 miles of bicycle projects were not built Yet TNRCC did nothing to ensure these TCM's were accomplished. If park and ride lots for HOV's are mostly empty, how successful are they? If the City, County, and Metro are considering allowing single person vehicles on HOV's, how effective will they be? If the County is planning to construct a tollroad right next to the SW Freeway where a railroad right-of-way is, how successful will mass transit be? 

10) Anpendi.x J 

a. How does TNRCC expect to enforce idling rules for large trucks when it does not have, and neither do the local air pollution control programs, enough enforcement personnel, currently, to do present investigations in a timely fashion? What about idling at banks, drug stores, restaurants, and other drive throughs? Why does not TNRCC also be ban this extended idling? If a vehicle from another area or state is given a ticket, how will TNRCC ensure that compliance occurs? On page J-4, TNRCC assumes 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 opposed to including emission reduction estimates from the voluntary mobile emissions reduction program (VEND) in this SIP. These strategies are not firm commitments and HGAC and TNRCC can change them at any time . We want control strategies that really reduce emissions and not some promise to try to voluntarily reduce emissions. For instance, the assumption 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 can find which will be the oldest and most polluting vehicles . In addition, in many cases the actual miles traveled in these cars and the actual emissions coming from the car will not be known so we may be counting emission reductions that never occurred. Allowing HGAC to say they will make a "best faith effort to implement this project" for all the VMEp's is tantamount to saying there is no commitment for these emission reductions . There is no enforceability here. We oppose the school year change as "Voo Doo Science." During the summer many of teenagers and their 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 September we may actually just shift ozone violations more toward September or June or July . This approach does not ensure emissions will actually be less . TNRCC has no surplus investigators to ensure that smoking vehicles come in and test out of cycle. If Transtar works and speeds up vehicles won't TNRCC be increasing NOx emissions since speeds will be higher and vehicles will generate more NOx emissions? The assumption that the average work trip distance, one-way, is 30 miles is a vast overestimate . TNRCC overestimates emission reductions. This is not an honest accounting of vehicle trip lengths. 

b. We oppose emission credit and trading program with mass caps as they are currently set-up . Such programs are not set-up to take into account environmental justice issues . Those who live closest to industry are forced to continue to breathe harmful air that should have been cleaned up. Maximum reductions are needed from every source to level the playing field so everyone abides by the same rules. This program is set-up to allow industry off the hook TNRCC uses unsubstantiated and overestimated fi~uzes of 6-10 billion dollars of capital costs to reduce NOx from large point sources. Industry consistently has overestimated clean air compliance costs. By allowing emissions trading not every industry will be doing its fair share to reduce emissions. Emission trading programs are zero sum games that do not result in cleaner air but allow those who should be reducing emissions to avoid or delay reductions . 

12) Appendix L 

a. All tables are in two pieces and you cannot determine which information goes together . The tables are useless for comparing different control strategies . 
CON11V1ENTS ON PROPOSED NOY AND VOC RULES 

1) Rules 101 .300-101 .374 

a. On page 6 of this 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 EPA emission factors to determine how much emission reductions 

are allowed from a scrapped vehicle. If T'NRCC is going to have a scrappage program it must 

require that two vital bits of information be known. First, an I/M test be conducted to get the 

actual emissions generated by the vehicle. Second, the actual mileage the vehicle has traveled 

over the past year. Without these bits of information any program is worthless and will 

overestimate emission reductions and thus endanger the accuracy of the emissions budget and 

inventory. 

c. Under 101.29, we oppose allowing the trading of emission credits achieved in the county, state, or 

nation . This ensures environmental justice inequities will continue as TNRCC forces people to 

breathe dirty air that is harmful to their health- welfare, and environment while not reducing, 

emissions that should be eliminated. 

d. We are opposed to providing "additional flexibilities" and allowing substitutes for "some of the 

measures considered here" as stated on page 9. Flexibility is TNRCC's code word for weakening 

of standards and making, emission reductions industry friendly and less strict than needed . By 

being indeterminate TNRCC is failing to make the commitment required in an SIP attainment 

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 measure ernissions is required . 

f We oppose using the 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 in a nonattainment area allowing emission credits and trading when we are 

producing air that is hazardous to humans. 

h. Under 101.302(e)(1) & (2), we oppose allowing credits from another county, state, or nation- Are 

we to the point where we reduce pollution in Mexico rather than doing the job ourselves. We also 

oppose allowing credits and trading between nonattaiuunent areas. Each airshed must adhere to its 

carrying capacity and must make its own reductions . We must not foist off on another airshed the 

responsibility to reduce emissions. 

i . Under 101.353, we oppose allowing the Executive Director to deviate from these rules to 

determine the amount of allowances to be allocated to a source . Does this mean that based on the 

size and political power of a company that the Executive Director may rule in its favor and award 

more credits than this rule allows? 

j . Under 101 .372(a), TNRCC is allowing the camel's nose under the tent by saying reduction of one 

pollutant can be substituted for reduction of a different Pollutant. Different pollutants should be 
reduced individually unless there is scientific information to show they should be reduced 

together . They should never be traded . This ensures that TNRCC will allow unhealthy levels of 

one pollutant while reducing another one when both need to be reduced. We oppose this 

abdication of responsibility . 

k. Under 101.372(e)(2), we oppose allowing DEC's generated in an ozone nonatiainment area to be 

used in a county or area that is attainment or unclassified. Emission reductions must come from 

the airshed where the reductions are needed and the unhealthy air exists . Under 101 .372(e)(5), we 

oppose allowing DEC's from other 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 you force 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 . A permit must not be allowed to be an instrument of flexibility when dealing with 

emission of air pollutants . Why should Tlv'RCC allow a company to exceed its allowable 

emissions in a permit? What is a permit worth if it can be exceeded and therefore potentially 

cause health problems? 

2) Rules 110 .10-1 10.19 

a. Under 110.12(a), we oppose the experimental ozone reduction that comes from coating an air 

conditioner with supposed ozone reducing coating. This is not proven technology and there is no 

way to determine, if it does work, what its ozone reduction potential will be in years to come. 

TNRCC must no predicate its ozone reduction control strategies on control technologies that are not 

proven. We need absolute NOx and VOC reductions and not hopeful reductions . This is "Voo Doo 

Technology" and these are "Voo Doo Rules"! A 50% ozone reduction is not best available control 

technology and certainly is not lowest achieveable emissions reduction technology. Certification 

under 110.14 is not sufficient . The ThIRCC must have tests submitted and must ensure the tests 

have been conducted correctly. Otherwise shyster companies will state sell units that do not meet 

testing and control requirements. We see a big possibility of rip-off artists entering the field with 

these rules. Under 110.15(2)(A), the highest ozone ppb level used for testing is not high enough. 

The HGA gets 0.250 ppm ozone. This technology should reduce ozone levels down to below 0.12 

ppm or it is worthless. If under 110.17, air conditioning manufacturers can show the technology 

does not exist how will TNRCC make up the emissions that will not be reduced? The SIP is silent 

about this . If this 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 and get 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 conjunction with 

a test of the 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 state wide so that the maximum reduction of ozone precursors and their transboundary air pollution will occur. All eight counties listed must begin stricter 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 one can cheat and get diesel fuel that 

has more than 15 ppm sulfur from counties that do not have to comply with these rules. By 

making the rules state wide TNRCC ensures that the maximum reduction of ozone precursors and 

their transboundary air pollution occurs . 

5) Rules 114.322-114.329 
a. We support requiring low sulfur gasoline (15 ppm or less) in the HGA. If TNRCC really believes 

-- that "air pollution knows no boundaries" it will require this rule apply to the entire state so there 

can be no cheating by people filling up in counties where low sulfur gasoline is not offered. This 

will ensure transboundary air pollution is minimized as much as possible . This maximizes all 

ozone non-attainment areas' chances of coming into compliance with the Clean Air Act 

Amendments. 

.. 6) Rules 114 .330-114 .339 

a. TNRCC states these rules will apply to on-road heavy duty diesel engines registered in HGA and 

non-road heavy duty diesel engines that are primarily operated in the HGA. TIr7RCC needs to 

define what "primarily" means regarding use in the HGA and reveal this information to the public. 

b. According to TNRCC only preliminary lab results are available for diesel emulsion additives. We 

am concerned that TNRCC is using control strategies that are unproven and will not get the 

anticipated reductions . TNRCC must not propose strategies that are unproven just to get paper 

emission reductions for the SIP. Doing this so EPA will approve the document and then having 

these strategies fail will mean needed NOx and VOC reductions do not occur. We are opposed to 

use of control strategies for this attainment SIP which are experimental . Future use of these 

technologies, when they are proven is fine. We want real emission reductions and not ones 

predicated on the hope the control technology will work in the real world. This SIP needs 

reductions that are real, Rill occur, and are measureable. 

c. For rule 114.331 we want a smaller throughput figure . TNRCC should use 10,000 gallons, which 

is the limit used for Stage I & II controls for motor vehicle fuel dispensing facilities . 

a. Rules 114 .421-114 .429 

a. This proposal should apply to the 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 are very concerned TNRCC is 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 using unproven control strategies TNRCC endangers actual NOx reductions since 

there is more likelihood an unproven technology will fail versus a proven one. This will allow 

TNRCC to get phantom NOac reductions. This is unfair to citizens who are force to breathe the air 

and damage their heaItl~ welfare, and environment. 

b. If this rule is approved the definition for heavy duty non-road engine should be changed so the 

horsepower rating starts at 100 hp. The definition of "primarily operated" must be cha-;ed to use 

of the engine for 30 days/year and not 60 days/year. We need to maximize emission reductions 

and minimize emission exemptions. 

c. We are opposed to any generation of emission credits as allowed under 114.445. Emissions 

trading and credit program ensure that environmental justice will not occur and people will be 

forced to breathe air tha? is M!ll~ned when 'INRCC should be ma..~amally reducing air emissions. If 

TNRCC passes this proposal it should apply to the entire state to maximally reduce transboundary 

air pollution. 

a. Rules 114 .452-114.459 
a. 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 formation potential because we have a seabreezeJland circulation which takes emissions away and then turns them around and pushes them back 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 blowers which besides causing air pollution also create noise pollution and w-ater pollution. Many users of leaf blowers blow organic debris down the storm sewer. This will load up streams with organic matter that a~ill cause oxygen depletion and fish kills. TNRCC can require that all or some lawn equipment be electric instead of gasoline fired. This rule is virtually unenforceable since TNRCC and local air pollution agencies do not have the investigators to ensure that the rules are enforced. 

10) Rules 114 .460-114 .469 

a. We oppose 114.462(d) which allows emissions credits and trading . See above for problems this causes . We request this proposal also apply to Hooks Airport since it is the largest private airport in the area and there is a need to reduce emissions from such a large source . 

11) Rules 114 .470-114.479 

a. We oppose the use of any emissions credits and trading for this rule . See above for reasons why emissions trading and credit programs cause problems. The TNRCC has not explained or planned for how investigators will be trained and how it will enforce the requirements of these rules. 

b. Under 114.476, records should be maintained for 5 years. This the length of time TNRCC uses for compliance history. These two requirements should coincide and not conflict . 

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 occur at a different time period . With the seabreeze/land circulation the emissions will continue to cause ozone formation- The rules are fiuther weakened by allowing concrete using activity to be exempt. Since concrete using activity is one of the largest, if not the largest, sources of emissions from construction equipment the effectiveness of these rules will be destroyed by this exemption. 

13) Rules 114.500-114.509 

a. TNRCC does not state how it will enforce these rules. There are not enough investigators available to give serious enforcement effort to these rules. These rules exempt passenger vehicles which should not be allowed to idle at drive through banks, pharmacies, and similar businesses . The definition of idling, under 114.500, allows someone to sit in drive, since they will be in gear, and idle . All someone has to do to avoid prosecution is put the vehicle in gear and let their engine run. If these rules are going to be effective they must be state wide to maximally reduce transboundary air pollution_ The gross vehicle weight should not be limited to 14,000 lbs . It should go as low as 8,0001bs to apply to as many vehicles as possible . We oppose 114.507(a)(6). Vehicles should not be able to escape this rule because they are defrosting windshields. This is a large loophole . 

14) Rules 115.122-1 15.129 

a. These rules must be state aide so maximum reduction of precursors and their transbo pollution will occur. 

13) Rules 113.161-1 13.169 
a. These rules must, be state wide so the maximum reduction of precursors and their transboundary air 

-- pollution will occur. 

16) Rules 115.211-115 .216 

a. These rules must be state wide so maximum reduction of precursors and their transboundary air 

pollution will occur. 

17) Rule 115.240 

a. These rules must be state wide so maximum reduction of precursors and their transboundary air 

pollution will occur. 

18) Rule 115 .430 

a. These rules must be state wide so maximum reduction of precursors and their transboundary air 

pollution will occur. 

19) Rules 115.449 

a. These rules must be state wide so maximum reduction of precursors and their transboundary air 

pollution will occur. 

20) Rule 115 .950 

a. We are opposed to emissions credit and trading programs. These prog-ams ensure that 

environmental justice inequities will 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 when the reductions from Tier I and Tier II are added together. For instance, for Utility 

Boilers, Tier I reductions are 97.6 tpd while Tier II reductions are 172 tpd which equals 269.6 tpd. 

But the Tier II reductions is only 184 tp( . TNRCC must do a better job of putting tables together 

and explaining what is on the table. 

b. The definition of low annual capacity needs to be lowered. Currently. this term uses BTU's used 

in a year for large boilers and 850 hrs for turbines or stationary internal combustion engines. The 

BTU's used in a year should be reduced from 2.2 and 2.8 times ten to the eleventh to 1.0 times ten 

to the eleventh and 500 hrs. This way the NOY rules will apply to 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 apply to all NOx sources that emit 

10 tpy or more. This maximizes NOx reductions and gives the HGA an equivalent reduction to the 

Los Angeles area ., which has controls on sources that emit this amount of NOx pollution in a year . 

b. Under 117.106(c) & (d), the NIB slip allowed should be lower than 10 ppm. It should be 5-7 ppm 

since this is best available control technology. We nerd to the best for HGA to protect the 

population from particulate pollution and smog formation. . 

c. Under 117 .107, emissions averaging should be abolished TNRCC nerds to go for the maximum 

NOx reduction from each unit and not allow some 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 Once a unit has shutdown it should not be used as if it were still operating and give a company an advantage so it does not have to control its other units ma.,arnally for NOx. 

e. Under 117.114(a) & (c), units without CEMS or PEMS must be required to verify their emissions after any modification . By allowing such units to forego verification when the modifications are supposed to lower NOx emissions TNRCC does not find out whether the modification actually reduces NOx emissions and if so by how much. This information is crucial for emissions inventory updates and to ensure compliance with TNRCC rules. 

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 hours for gas turbines and stationary internal combustion engines be lowered to 500 to 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 NOx emissions 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 reduction for incinerators is low. These units must reduce NOx 80-90%. 

g

. Under 117.210, we oppose system raps because they allow units to not maximally reduce their NOx emisisons . We need every NOx reduction we can get to reduce ozone as well as particulate air pollution and protect the health, welfare, and environment of the 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 inventory is necessary as well as monitoring to ensure that reductions claimed have actually occurred . 

i . The emission limits for the Beaumont/Port Arthur Nonattainmeni Area for Electric Generating Utilities and all industrial, commercial, and institutional sources of NOx should be the same at those for the HGA. Since the two nonattainment areas are so close together and since they both receive tiansboundarv air pollution from each other and since they both send transboundary air pollution to DFW and other areas of Texas where ozone values are high they both need equivalent reductions. . 

25) Rules 117.471-1 17.479 
a. Under 117.479, we oppose not requiring emission testings for units with no CEM/PEM when 

- modifications occur that reduce emissions. TNRCC needs 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 Houston Sierra 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 Employers for Environmental Ethics (PEER) which documents emissions 

trading is flawed. In addition we submit comments from earlier this year by Brandt Mannchen 

which detail problems with emissions trading. Some of the problems involve environmental 

justice issues . People who live in areas where industries do not have to reduce their emissions 

because they 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. 

HGA is the most severe ozone nonattainment area in the country. To achieve the ozone standard 

TNRCC needs every NOx reduction it can get. Instead TNRCC allows some companies to escape 

their responsibility by using credits that are bought so they do not have to reduce their fair share of 

air pollution. 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. TNRCC is not allowing this to occur. 

CONCLUSION 

The TNRCC must revise the SIP and demonstrate by modeling that ozone attainment can occur. If 

TNRCC cannot do this with a modeling run and no WOE it must take a time out and gather the information 

and conduct the research so it can develop a modeling run that legitimately shows attainment instead of 

using illegal Voo Doo 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 reach attainment and will continue to expos°. 

millions of people to unhealthy ozone that will shorten their lives, decrease their welfare and Quality of 

Life, and damage their environment. Do the right thing!!! 

Sincerely, 

Brandt Mannchen 

Air Quality Task Force 

Conservation Committee 

Houston Sierra Club 

5115 Maple 

Bellaire, Texas 77401 

H713-664-5962, W713-640-4-313 
February 24, 2000 

Matthew Baker 

Office ofPermitting, Remediation, and Registration 

Emissions Banking 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 the public across the state in public meetings so there 

can be discussion, review, and comment. I was fortunate to find out about this proposal from a friend 

who was asked to attend the stakeholders meeting by someone else. It seems TNRCC has a very 

limited list of who it considers stakeholders . If TNRCC is going to seriously consider such a drastic 

change from the current SIP process then the public must be given the opportunity, on the ground floor, 

to learn about 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 

SIP process TNRCC will already have made the decision to go forward with EBTP. The public will be 

left out in the cold . I request TNRCC extend the comment period to the end of March and have a series 

of public meetings in the Houston-Galveston, Beaumont-Port Arthur, Dallas-Fort Worth, Austin, San 

Antonio, and Tyler-Longview non-attainment or near non-attainment areas, at a minimum. I also 

request TNRCC send out a notice to all persons who recently attended the Houston-Galveston, DallasFort Worth, and Beaumont-Port Arthur SIP public hearings. I request TNRCC put 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 of particular 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 TNRCC needs 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 

and then a series of public meetings held to fully engage the public in determining if this is what it wants. 

Unfortunately the assumption is that EBTP will occur and the only question is where and how large the 

areas will be where inter pollutant trading will be allowed. Leaving the citizens out of the decision 

making process and making their comments superfluous is not the way to deal with those who are your 

bosses . 

3) I am concerned EBTP undermines moral arguments that pollution must be reduced for the health of the 

general public . By allowing a company to avoid its societal responsibility of cleaning up its waste so it 

does not affect its neighbors or the community TINRCC strengthens arguments that there is a "right to 

pollute." TIvZtCC must make clear that there is no right to pollute and only use EBTP, if at all, in the 

most limited circumstances. 

-t) By advocating EBTP TLNRCC also undermines the principle that 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 we 
ensure there is a level economic playing field. By allowing some companies to pay for the right to 

pollute we allow them to poison the air for a few bits of silver. This is not fair environmentally, 

economically, or socially. 

5) Another concern about EBTP is who will be left to breathe the filtfi and,who will get cleaner air. This is 

an environmental justice concern as well as one of fairness . The companies that are willing to buy the 

ability to pollute will subject their neighbors to additional air pollution which will harm health, shorten 

life, or kill people as well as harm the welfare, property, and environment ofthe community. TNRCC 

is aiding companies in their ability to get away with such crimes . Usually those who are 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 precisely what is required of a company and can readily monitor actions. Caps are more difficult 

to understand and assess because they 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 alike and performance can be easily tracked and compliance determined : When 

deadlines are vague about when emission reductions are due then 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 £BTP then they will assume compliance and genuine compliance will not be assessed . 

7) Reductions predicated on yearly cuts in emissions are not how companies actually operate. Usually a 

company will set a deadline of several years out because it takes time to allocate the money, conduct 

engineering, hire consulting firms or others to help with the project, and finally construct the project. 

Having a reduced amount of emissions each year as a target is not a real world way to 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 if we get 4 ozone exceedances in 2005 

we will already have exceeded the standard and it will not be possible to demonstrate attainrnent by 

2007. Such a complicated program does not lend itself to short timeframes . That is why command and 

control makes so much sense because in short timeframes it is easy to understand and the target is very 

plain to see. We can by rule decide what the reductions are from each source and then give a certain 

time to come into compliance . Cap and trade is too ephemeral to understand and implement quickly. 

9) It is obvious that this is a ploy by Tl\tRCC to buy time and delay reductions as much as possible in the 

hope that Governor Bush will be elected President and he will or Congress will change the Clean Air 

Act to weaken deadlines and sanction requirements . I oppose this type of cynical posturing. We need 

to go for clean air as fast and as hard as we can. No quarter! 

10) Any strategy used to reduce emissions must be based on actual emissions monitoring . I oppose using 

P£Ms because they do not measure actual emissions. They cannot tell you what is actually coming out 

of a 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 our emis5ions inventory (£I) so it is more accurate. 

11) Why is TNRCC allowing the source to determine its own annual emissions rate? This should be the job 

of the TNRCC. Do we really want to trust those who will benefit the most from cheating on emissions? 

That is Eke giving a car thief the keys to your car and asking him to watch it for you. We do not need 

paper or phantom reductions like have been found in the Toxic Release Inventory. We need real data 

with excellent auditing and oversight from the TNRCC. How are we going to get this expert auditing 

when inspectors are already overloaded with work and are not trained well? iV1y guess is T\'RCC will 

rely on self-policing which will allow cheating to occur. I object . 
12) I do not support banking emissions. By banking emissions we allow a company to pollute at that 

facility at a later time or sell the air pollution to someone else so they can pollute when they should be 

cleaning up. - This is wrong and is not fair for those who have to breathe the additional air pollution. 

Once emissions ai-e eliminated they must not be allowed to be emitted later at the same facility or 

somewhere else. By making air pollution a commodity we allow people to feel they have a right to 

pollute. Citizens have never said they favor giving a company the rigltt to pollute and certainly have 

never been asked by TNRCC about this. I oppose selling excess allocations. 

13) It is not clear what will happen to a company that misses a pollution reduction deadline with a cap and 

trade. It seems to me it will take several years to get the reductions needed to catch-up with the annual 

reduction. It is much simply to say by a particular date there will only be so much pollution allowed or 

no pollution will be allowed. You need the firm deadline and specific limits that command and control 

give to get people to take their responsibility seriously. 

14) The use of EBTP is rife with pollution estimation problems . Who will verify independently that the 

company's emission estimates and reductions indeed have occurred and are correct? I can see a 

problem occur like Title V where permit engineers are taking the company's word and inspectors are 

finding major problems in the field. The problem 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 the enforcement of this program down to the regions and will starve the regions for 

personnel and adequate resources to do the job right. 

15) If TNRCC is going to rely on EIs to determine allocations 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 TNRCC has not 

gone out and audited stringently companies to see how TNRCCs estimates based on actual plant visits 

match the companies' . The same problem will occur with EIs in the EBTP. 

16) TNRCC keeps 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 the right thing and will not use its vaunted "case-by-case" analysis to allow some companies to 

get away without reducing their fair share. No where in this proposal do I see any significant emphasis 

on quality assurance, auditing, and methods to stop and detect cheating . 

17) TNRCC states that for a Subregion, a disadvantage is that it does not encourage reductions in areas 

surrounding nonattaiment areas. This is false. Right now TNRCC is requiring reductions in all of East 

Texas based on the problem of transport to assist the Dallas-Fort Worth, Houston-Cralveston, and 

Beaumont-Port Arthur nonattainment areas. In addition, TNRCC has the authority to reduce emissions 

in areas outside nonattainment areas to help the nonattainment areas come into compliance . 

IS) TNRCC is trying to use modeling demonstrations to show that EBTP will work. T\'RCC has spent 

almost 10 years modeling and still is not able to get a model run that shows complete attainment . 

Models are a method to obfuscate the truth and confuse the public . The information used in models is 

usually not accurate enough to be depended on to give a good approximation of the 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 any trading 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 from pollution reductions in Austin but will breathe less 

filth if the reduction occurs in Houston. This type of all 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-)w pollution in one part of 

East Texas and provide for less pollution in another part . If TNRCC is really serious then it needs to 

have 90% NOx & VOC reductions from all major sources in all of East Texas. Only by maximizing 
controls will we approach attainment of the present ozone standard, provide for maintenance of the 

standard after we attain it, and start to reduce emissions for attainment of the more stringent 8 hour 

standard. We do not have excess ecnissions and are in no danger of.overcontrolling . I have heard that 

argument for over 20 years in Houston and it is a myth. I am. oppood to a MegaRegion. 

21) I find it amazing that TNRCC talks about choosing a baseline that may make it easier for industry so 

they do not have to reduceeumissions as much: The EIs mentioned, are inaccurate and because of their 

inaccuracy they cannot be used for EBTP. The TNRCC must 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 to take the risk of gross underestimation or 

overestimation of emissions. 

22) TNRCC suggests that Title V compliance assurance monitoring can be used to ensure accurate 

emissions. Title V has very little real monitoring that will give you a good idea of how the quality 

assurance ofthe EBTP is faring. Title V compliance assurance monitoring is a false hope for 

monitoring and auditing accuracy. ' 

2;) Why should we reward any polluter for early emission reductions? These companies are after all 

putting poisons into the air and it is their social duty and responsibility to reduce emissions so their 

neighbors and community are not hurt. 

24) I am opposed to pooled emission reductions because the agency 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 do we want more polluters to come when we cannot 

control the existing pollution? This makes no sense. There is a limits to growth and if not 

acknowledged and followed the public subsidizes industry with its health . 

25) Ti`F1KCC states compliance is reduced 30-50% with EBTP. I request a copy of the document that this 

figure is based on. It is easy to see where this will lead . TNRCC will promise the Governor and the 

Legislature that it can do more with less and will 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 of this program including training inspectors and trying to 

get them familiar with how to enforce EBTP . It will be very difficult to 0 gain program familiarity fast 

enough to ensure the reductions are achieve 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) TNRCC has no penalty program it will implement if cheating is found. What will happen to a company 

that cheats? Will it be fined? Will it be taken to court? Will it be required to come into compliance 

sooner? Will it have to publicly apologize to citizens? What are the disincentives for cheating? 

28) There is no assessment, analysis, and evaluation of the implications if this program fails for all 

nonattainment areas. Will sanctions then have to be leveled? . Command and control is proven . This 

program is not. 
from 

I request TNTRCC reject EBTp because it will confuse citizens and inspectors, subsidize industry profits 

ozone 

citizens' heatth, welfare and environment, and will not get the emission reductions needed to reach 

over 

attainment for alI of East Texas. Th1RCC is using this strategy as a delaying tactic and is bending backwards to reward industry when the citizens are the ones who need relief. I oppose this program. 

Sincerely, 

Brandt Mannchen 

5115 Maple 

Bellaire, Texas 77401 

H713-664-5962, W713-640-4313 
tfco 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 

MC 205 

Office of Environmental Policy, Analysis, and Assessment 

Texas Natural Resource Conservation Commission 

P. 0. Box 13087 

Austin, Texas 78711-3087 

t'~tCt1Vr--U 

F1pV 2 7 2000 

^FFICE OF ENVfRONMENTAI 

:NIICY, ANALYSIS & ASSESSMENT 

RE: EPA Comments on TNRCC Rule Log Number 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 TAC shall be required to obtain NO,, emission allowances prior to operation. 

Attached are our comments on the proposed rules. The major item of concern identified 

by Region 6 relates to the definition of "facility" in relation to the proposed rules. The rules 

should clearly state that the term "facility" is consistent with the TNRCC definition found at 

§ 116.12(4). This definition of facility 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 upon the 

use of allowances for all NO,, emissions at facilities with total NOx emissions greater than ten tpy. 

A second item of concern 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 can be 

interpreted that these small sources do not need to obtain allowances. If they are not required to 

obtain allowances, the annual emissions from the facility could exceed the mass cap and trade 

allowances which would compromise the entire attainment demonstration. 

This concern was raised in our previous comments regarding the mass cap and trade rule. 

The total allowances of the mass cap and trade system should be consistent with the emission 

Internet Address (URL) . http ://www.epa .gov 

Recycled/Recyclable *Printed with Vegetable 00 Based Inks on Recycled Paper (Minimum 251/6 Postconsumer) 
reductions relied upon to demonstrate attainment. If individual sources of emissions less than ten 

tpy were included in the controlled sources at a facility in the 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 with you. If you have any questions, please call Tom Diggs at (214) 665-31024. 

Sincerely yours, 

Becky Weber 

Associate Director 

Attachment : EPA Region 6 Comments 

cc : Tom Diggs, 6PD-L 

Jole Luehrs, 6PD-R 
EPA Region 6 Comments on 

Supplement to HGA NOx Cap & Trade for Permits by Rule 

TNRCC Rule Log Number 2000-047-116-AI 

November 20, 2000 

BACKGROUND 

TNRCC proposed a NO. Cap & Trade rule for the Houston Galveston Area (HGA) one hour 

ozone nonattainment area which was published in the Texas Register on August 25, 2000. An 

allowance would equal one ton of 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 system is to limit NO. emissions of individual stationary 

sources in HGA so that a regional maximum or cap of emissions 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 of allowances in the HGA region may not exceed the 

predetermined cap. 

The proposal, TNRCC Rule 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 106 of 

30 TAC may be required to obtain NOX emission 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. if they are subject to the mass cap and trade program. 

TNRCC defines 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. A mine, quarry, well test, or road 

is not a facility." 

TNRCC defines "building, structure, facility, or installation" in § 116.12(4) as "All of the 

pollutant-emitting activities which belong to the same industrial grouping, are located in 

one or more contiguous or adjacent properties, and are under the control of the same 

person (or persons under common control) except the activities of any vessel. 

Pollutant-emitting activities shall be considered as part of the 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 of a facility 

used in this section is equivalent to the definition of facility in § 116.12(4) . Since § 116.10(4) 
defines facility as "a discrete . . . structure . . . that constitutes or contains . . . a stationary 

source . . . . this definition could be 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 clarified to clearly indicate that facility means all pollutant-emitting activities that are 

part of the same industrial grouping in a two-digit SIC category on contiguous or adjacent 

properties and under common control. This would make the definition of facility in this section 

consistent with the definition of facility in §116,12(4). Not only the permit by rule emission 

sources but the entire facility as defined in § 116.12(4) should obtain the allowances . 

Since a facility with allowable emissions of 10 tons 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 EPA approved modeled after control strategy in the attainment 

demonstration included individual emission sources with emissions less than 10 tpy. In this case, 

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

included in the cap. By having a definition of facility that excludes these sources from obtaining 

allowances compromises the attainment demonstration. 

For instance, if all sources at the facility had allowable NO. emissions of 8 tpy and a proposed 

Permits by Rule source had emissions of 9 tpy, the facility would be required by § 106.4(a)(8) to 

obtain 17 allowances assuming a definition of facility consistent with §116.12(4) . An 

interpretation of the definition of facility consistent with § 116.10(4) would require only 9 tpy 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 of facilities shall obtain 

allowances for NO, to operate if they are subject to the mass cap and trade program. This 

requirement to obtain allowances should apply to each and every emission source at the facility. 

This section should be clarified to clearly indicate that facility means all pollutant-emitting 

activities that are part of the same industrial grouping in a two-digit SIC category on contiguous 

or adjacent properties and under common control. This would make the definition of facility in 

this section consistent with the definition of facility in §116.12(4) . Not only the permitted 

emission sources but the entire facility as defined in § 116.12(4) should obtain the allowances. 

The concern is that the EPA approved modeled after control strategy in the attainment 

demonstration included individual emission sources with emissions 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 in the cap. By having a definition of facility 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 of the facilities authorized by the 

permit the permit holder shall identify the source or sources of allowances of NO. to comply with 

the requirements of the mass cap and trade program. This requirement to identify allowances 

should apply to each and every emission source at the facility. This section should be clarified to 

clearly indicate that facility means all pollutant-emitting activities that are part of the same 

industrial grouping in a two-digit SIC category on contiguous or adjacent properties and under 

common control. This would make the definition of facility in this section consistent with the 

definition of facility 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 EPA approved modeled after control strategy in the attainment 

demonstration included individual emission sources with emissions less than 10 tpy. In this case, 

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

included in the cap. By having a definition of facility 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 of the 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 of the phrase "correlating portion" with respect to emission 

offset requirements . The term "correlating portion" should be defined. 

The Clean Air Act (CAA) § 173(c)(1) regarding offsets states that "The owner or operator of a 

new or modified major stationary source may comply with any offset requirement in effect under 

this part for increased emissions of any air pollutant only by obtaining emission reductions of 

such air pollutant from the same source or other sources in the same nonattainment area . . . 

Such emission reductions shall be, by the time a new or modified source commences operation, 

in effect and enforceable and shall assure that the total tonnage of increased emissions of the air 

pollutant from the new or modified source shall be offset by an equal or greater reduction, as 

applicable, in the actual emissions of such air pollutant from the same or other sources in the 

area." § 173(c)(2) further states that the Emission reductions otherwise required by this Act 

shall not be creditable as emissions reductions for purposes of any such offset requirement. 
It is understood that the mass cap and trade program represents RACT for sources in the Houston 

nonattainment area. The RACT emission limitation for all NOx sources at facilities with emissions 

equal to or greater than 10 tpy is represented by the mass cap of NO. allowances . Within the 

Houston ozone nonattainment area any new source must obtain NO. offsets of 1 .3 :1 as defined in 

the CAA at §173(c)(1). 

Since the mass cap and trade allowances have been relied upon in the attainment demonstration 

for Houston, the CAA requires 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 and trade 

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 of the 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 of the offsets may come from additional allowances or from surplus 

emission reduction credits in the 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 from the bank 

if the facility (contiguous property, common control and two digit SIC code) has ten or more tpy 

of NO,, 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 130 tpy of ERCs from the bank assuming there are no internal offsets . In order to remain 

surplus at the time of use the 130 tpy of ERCs must have been reductions below the mass cap and 

trade limitation and thus would have 130 allowances associated with them In this example the 

mass cap would be reduced by 30 Ipy due to the offset requirements. 

However, the new source could obtain 30 tpy of ERCs from the bank and obtain the 100 tpy 

offset requirement from allowances of other facilities. Under this scenario, the mass cap would 

remain unchanged. 

In the scenarios above, the new source must meet the requirements of obtaining 1 .3 :1 offsets but 

may or may not reduce the total allowance cap depending upon the source of the offsets . By 

obtaining offsets from small facilities not subject to the mass cap and trade rule or the ERC bank, 

the new source would not reduce the total cap of allowances . If the new source obtained all 
5 

130% of the required offsets from the allowances, the cap would permanently reduce by an 

amount equal to 30% of the 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 of facilities or account 

must obtain allowances for NOX to operate . This section should be clarified to clearly indicate 

that facility means all pollutant-emitting activities that are part of the same industrial grouping in a 

two-digit SIC category on contiguous or adjacent properties and under common control . This 

would make the definition of facility in this section consistent with the definition of facility 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 EPA approved modeled after control strategy in the attainment 

demonstration included individual emission sources with emissions less than 10 tpy. In this case, 

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

included in the cap. By having a definition of facility that excludes these sources from obtaining 

allowances compromises the attainment demonstration. 

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

Section 116.615(6)(C) states that prior to beginning operations of facilities authorized by the 

general permit, identification of sources of allowances to meet the requirements of the mass cap 

and trade program is required . This section should be clarified to clearly indicate that facility 

means all pollutant-emitting activities that are part of the same industrial grouping in a two-digit 

SIC category on contiguous or adjacent properties and under common control. This would make 

the definition of facility in this section consistent with the definition of facility 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) states that a project which meets the requirements for a flexible permit 

subject to the mass cap and trade program, the proposed facility, group of facilities or account 

must obtain allowances of NOx to operate . This section should be clarified to clearly indicate that 

facility means all pollutant-emitting activities that are part of the same industrial grouping in a 

two-digit SIC category on contiguous or adjacent properties and under common controL This 

would make the definition of facility in this section consistent with the definition of facility 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 EPA approved modeled after control strategy in the attainment 

demonstration included individual emission sources with emissions less than 10 tpy. In this case, 
the reductions from these sources have been relied upon in showing attainment and should be 

included in the cap. By having a definition of facility that excludes these sources from obtaining 

allowances compromises the attainment demonstration. 

Flexible Permits - General and Special Conditions §116.715(c)(3)(C) 

Section 116.715(c)(3)(C) states that prior to beginning operations of facilities authorized by the 

flexible permit, identification of sources of allowances to meet the requirements of the mass cap 

and trade program is required. This section should be clarified to clearly indicate that facility 

means all pollutant-emitting activities that are part of the same industrial grouping in a two digit 

SIC category on contiguous or adjacent properties and under common control. This would make 

the definition of facility in this section consistent with the definition of facility in § 116.12(4) . Not 

only the proposed emission source but the entire § 116.12(4) facility should obtain the allowances . 
INDEX OF 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 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 system of 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 

system is to limit emissions of NO,, from individual 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, New Major Source or 

Major Modification in Ozone Nonattainment Areas, to use allowances to meet the correlating portion of 

the emission offsets . 

The new § 116.6 1 0(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 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 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 program to operate and that they must identify a source or 

sources of allowances prior to operation . In addition, the amendments to Chapter 116 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 adopted sections state that applicants of new or modified facilities in HGA are to comply 

with Chapter 101, Subchapter H, Division 3 . These adopted sections do not expand the cap and trade 

program for 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 law since 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 from developing a program that 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 seldom apply, 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 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 HGA ozone 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 HGA ozone nonattainment area and 

help bring HGA into compliance with the air quality standards established under federal 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 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 law and 

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 law as 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 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 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 new NO, air emissions . 

EFFECT ON SITES SUBJECT TO THE 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 from the 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 term in 

proposed §106.4(a)(8) . The EPA questioned whether the term was 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 from all 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 program only 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 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 program in 30 TAC Chapter 101, 

Subchapter H, Division 3 to meet the correlating portion of emission offset requirements needed to 

comply with §116 .150, New Major 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' from another facility participating under the 

cap. The net effect will be a zero sum gain 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 from a 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 know about 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 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 stated that the emission cap and trade program will 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 program will be an overall NO,, reduction of approximately 90% from stationary 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 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 program in 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 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 . 

13 
STAFF

RECOMMENDATIONS
CHAPTER 116: CONTROL OF AIR POLLUTION BY 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 Form PI-1 General Application signed by an authorized representative 

of the applicant. All additional support information specified on the form must be provided before the 

application is complete; 

(2) information which demonstrates that all of the following are met. 

(A) Protection of public 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 

1 
shall consider any possible adverse short-term or long-term side effects that an air contaminant or 

nuisance odor from the 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 from the facility . 

(D) New Source Performance Standards (NSPS) . The emissions from the 

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 from the 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) NESHAP for source categories. The emissions from the 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 from a 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 

from the commission, the executive director or designated representative may exempt the relocation of 

such facility from the 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 new location 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 program regional 

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 allow representative 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 from the 

commission or any air pollution control program having 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) Maximum allowable emission rates. The total emissions of air 

contaminants from any 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 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 review under: 

(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 New Major 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 from the 

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 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 (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 new major source, or major modification 

under the new source review requirements 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 from the 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 from such representations if the change will affect that person's right to 

claim a standard permit under this section . Any change in condition such that a person is no longer 

eligible to claim a 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 30 days 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 program regional office of the commission and any 

other air pollution control program having 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) 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 

program having jurisdiction 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 

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 

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 . A copy 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 program having 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 program having jurisdiction 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 Form PI-1 General Application . The Form PI-1 must be signed by an authorized 

representative of the applicant . The Form PI-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 from the 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-term or long-term side effects that an 

air contaminant or nuisance odor from the facility, group of facilities, or account may have on the 

individuals attending these school facilities . 

(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 from the 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 from each affected 

facility as defined in 40 Code of Federal Regulations (CFR), Part 60 will meet at least the requirements 

of any applicable NSPS as listed under Title 40 CFR Part 60, promulgated by the EPA under authority 

granted under the FCAA, §111, as amended . 

(5) National Emission Standards for Hazardous Air Pollutants (NESHAPS). The 

emissions from each 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 from each 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 Review Permits) . 

(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 from the facility, group of facilities, or account. 

(11) Federal standards of review for constructed or reconstructed major sources of 

hazardous air pollutants . If the proposed source is an affected source (as defined in §116.15(1) of this 

title (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 maximum capacity and the proposed control technology ; 

(E) for each individual emission limitation, identify the EPN and provide 

emission rate calculations based on the expected maximum capacity 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 maximum production 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 from the 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 

having jurisdiction 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. A copy 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 from the commission or any air pollution control program having 

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) Maximum allowable 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 

ORDER ADOPTING AMENDMENTS TO RULES 

AND REVISIONS TO THE 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 30 TAC 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 program adopted 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 30 days prior to 

the dates of the hearings. The public hearing was held in Houston on November 16, 2000 . 

The Commission circulated hearing notices of its intended action to the 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 new and 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 of testimony includes the names of all interested groups or associations 

offering comment on the proposed new and 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 verbatim in 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 new and 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 SIP pursuant to the Federal Clean Air Act, §110, codified at 42 U.S. Code 

Ann . §§7410 - 7671q, as amended . 

This Order constitutes the Order of the Commission required by the 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 : MAR 2 1

2 00 1 TEXAS NATURAL RESOURCE 

CONSERVATION COMMISSION 
Margaret Hoffman 

Director, Environmental Law Division 

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 106.4 is adopted without changes tothe 

proposed text as published in the October 20, 2000 issue of the 

Texas Register (25 TexReg 10445) and will not be republished. 

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 established a system of 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 from individual facilities 

in HGA so 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 supplements the emission cap and trade program 

(26 TexReg 283), by specifying that facilities or groups of facilities 

using authorizations under Chapter 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 new paragraph, §106.4(a)(8), stating that 

a facility or group of facilities must obtain allowances prior to operation if the facility or group of facilities is subject to the NO 

emission cap and trade program (26 TexReg 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 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 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, per year in HGA to 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 prior to operation . The amendment does 

not expand the applicability of the cap and trade program . The 

amendment to Chapter 106 does 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 order for HGA to meet the ozone national 

ambient air quality standard (NAAQS) set by the United States 

Environmental Protection Agency (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 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 air quality 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 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 from developing a program that meets the requirements 

of §7410. Thus, while specific measures are not generally required, the emission reductions are required . States are not 

26 TexReg 2396 March 23, 2001 Texas Register 
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 would seldom apply, 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 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 

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 HGA ozone nonattainment 

area and help bring HGA into compliance with the air quality 

standards established under federal 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 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 law and 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 allow the 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, §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 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 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 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 new NO, 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 26 TexReg 2397 
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 from the 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 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 term was 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 or greater than 

the total actual NO emissions from all 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 116 should have been part of the Houston SIP proposal that went through public hearings in September 

2000. Sierra-Houston stated that very few people 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 

of the 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 program will 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 program will be an overall 

NO reduction of appoximately 90% from stationary facilities in 

the ~HGA nonattainment 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 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, and will not result in increased emissions based 

on the location of the facility. 

Sierra-Houston opposed the cap and trade program in general 

and stated that requiring emission reductions at all facilities will 

result in the greatest reduction of ozone. Sierra-Houston also 

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 stationry 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 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 from stationary facilities need to be in full effect by 2007 and not 2005 to demonstrate 

attainment. 

STATUTORY AUTHORITY 

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 that the adoption has been reviewed 

by legal counsel and found to be a valid exercise of the agency's 

legal authority. 

Filed with the Office of the Secretary of State on 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 

26 TexReg 2398 March 23, 2001 Texas Register 
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 

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 system of 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 system is 

to limit emissions of NO_ from individual facilities in HGA so 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 HGA area 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 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, New Major 

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 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 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 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 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 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 adopted 

sections state that applicants of new or modified facilities in 

HGA are to comply with Chapter 101, Subchapter H, Division 

3. These adopted sections do not expand the cap and trade 

program for 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 

ADOPTED RULES March 23, 2001 26 TexReg 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 

USC allows states to develop their own programs, this flexibility 

does not relieve a state from developing a program that 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 would seldom apply, 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 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 

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 HGA ozone nonattainment 

area and help bring HGA into compliance with the air quality 

standards established under federal 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 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 law and 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 allow the 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 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 rulemaking is to implement a NO. strategy which is necessary for 

the HGA area to meet the air uality standards established under federal law as 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 

26 TexReg 2400 March 23, 2001 Texas Register 
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 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 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 

new NO, air emissions . 

EFFECT ON SITES SUBJECT TO THE 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. 

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 from the 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 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 term was 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 or greater than 

the total actual NO. emissions from all 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. 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 program only 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 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 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 program in 30 

TAC Chapter 101, Subchapter H, Division 3 to meet the correlating portion of emission offset requirements needed to comply 

with §116.150, New Major Source or Major Modification 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 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' from 

another facility participating under the cap. The net effect will be 

a zero sum gain 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 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 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. Sierra- Houston stated that very few people 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 

ADOPTED RULES March 23, 2001 26 TexReg 2401 
of the 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 stated that the emission cap and trade program 

will 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 program will be an overall 

NO. reduction of approximately 90% from stationary facilities in 

the HGA nonattainment 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 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 program in 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 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. 

SUBCHAPTER B. NEW SOURCE REVIEW 

PERMITS 

DIVISION 1 . PERMIT APPLICATION 

30 TAC §116.111, §116.115 

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 

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 a permit, amendment, or special permit amendment, the application must include: 

(1) a completed Form PI-1 General Application signed by 

an authorized representative of the applicant. All additional support 

information specified on the form must be provided before the application is complete ; 

(2) information which demonstrates that all of the following are met. 

(A) Protection of public 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 from the 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 from the facility . 

(D) New Source Performance Standards (NSPS). The 

emissions from the 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 from the 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) NESHAP for source categories . The emissions 

from the 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, 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 

26 TexReg 2402 March 23, 2001 Texas Register 
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 nonattainment review. 

(1) 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 from a 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: 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 from the 

commission, the executive director or designated representative may 

exempt the relocation of such facility from the 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 new 

location 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; 

(u) discontinues construction for more than 18 consecutive 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 of the event . 

(C) Start-up notification . 

(i) The permit holder shall notify the appropriate air 

program regional 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 allow representative 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. 

(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. 

(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 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 ; 

ADOPTED RULES March 23, 2001 26 TexReg 2403 
(fii) make the records available at the request of personnel from the commission or any air pollution control program having 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) Maximum allowable emission rates . The total 

emissions of air contaminants from any 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 of this title (relating to 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 TCAA and the conditions precedent to the 

granting of the permit . 

(H) 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 maybe 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 

(ff) 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: 

ment; or 

der: 

(i) result in a significant impact on the air environ- 

(H) cause the facility to become subject to review un- 

(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). 

This agency hereby certifies that the adoption has been reviewed 

by legal counsel and found to be a valid exercise of the agency's 

legal authority. 

Filed with the Office of the Secretary of State on March 9, 2001 . 

TRD-200101431 

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 

DIVISION 7. . EMISSION REDUCTIONS: 

OFFSETS 

30 TAC §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 . 

This agency hereby certifies that the adoption has been reviewed 

by legal counsel and found to be a valid exercise of the agency's 

legal authority. 

Filed with the Office of the Secretary of State on March 9, 2001 . 

TRD-200101432 

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 

SUBCHAPTER F. STANDARD PERMITS 

30 TAC §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 

26 TexReg 2404 March 23, 2001 Texas Register 
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 the adoption has been reviewed 

by legal counsel and found to be a valid exercise of the agency's 

legal authority. 

Filed with the Office of the Secretary of State on 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 

For further 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 the adoption has been reviewed 

by legal counsel and found to be a valid exercise of the agency's 

legal authority. 

Filed with the Office of the Secretary of State on March 9, 2001 . 

TRD-200101434 

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 328. WAS11J MINIMIZATION AND 

RECYCLING 

SUBCHAPTER F. M vAGEMENT OF USED 

OR SCRAP TIRES 

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 for scrap tire sit 

outchanges as published in t 

Texas Register (25 TexReg 1 

BACKGROUND AND SUM 

FOR THE ADOPTED RULE 

The cross-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 330 waste tire subch 

placed into Chapter 328 during 

cessed. Changes to Chapter 

Chapter 37 project team did 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 because the amendment c 

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 328 to §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 37 was 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 from environmenot 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 

ation were 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 

ADOPTED RULES March 23, 2001 26 TexReg 2405