58112 Federal Register / Vol. 70, No. 192 / Wednesday, October 5, 2005 / Proposed Rules 

§ 39.13 [Amended] 

2. The FAA amends § 39.13 by adding 

the following new airworthiness 

directive (AD): 

DG Flugzeugbau GmbH and Glaser-Dirks 

Flugzeugbau GmbH: Docket No. FAA–

2005–22157; Directorate Identifier 2005–

CE–44–AD. 

When Is the Last Date I Can Submit 

Comments on This Proposed AD? 

(a) We must receive comments on this 

proposed airworthiness directive (AD) by 

November 9, 2005. 

What Other ADs Are Affected by This 

Action? 

(b) None. 

What Sailplanes Are Affected by This AD? 

(c) This AD affects the following sailplane 

models and serial numbers that are 

certificated in any category: 

Model Serial numbers 

DG–100 .................................................................................................... All Serial Numbers. 

DG–400 .................................................................................................... All Serial Numbers. 

DG–500 Elan Series ................................................................................. All Serial Numbers Through 5E23. 

DG–500M ................................................................................................. All Serial Numbers Through 5E23. 

What Is the Unsafe Condition Presented in 

This AD? 

(d) This AD is the result of mandatory 

continuing airworthiness information (MCAI) 

issued by the airworthiness authority for 

Germany. The actions specified in this AD 

are intended to prevent the universal bearing 

of the lower rudder mounting from slipping 

out of the bearing support. The universal 

bearing slipping out could result in the 

rudder separating from its support. This 

failure could lead to loss of sailplane control 

during flight operations. 

What Must I Do To Address This Problem? 

(e) To address this problem, you must do 

the following: 

Actions Compliance Procedures 

(1) Modify or replace the complete rudder 

mounting assembly.

Within the next 25 hours time-in-service (TIS) 

after the effective date of this AD, unless already done.

Follow DG Flugzeugbau GmbH Technical 

Note No. 301/23 issue 2, 323/14 issue 2, 

348/18 issue 2, 359/21 issue 2, 370/9 issue 

2, 826/44 issue 2, 843/21 issue 2, 866/10 

issue 2, dated June 11, 2004, amended 

July 7, 2004 

(2) Ensure that the securing washer, castellated 

nut, and split pins are installed as specified 

by the DG Flugzeugbau GmbH Technical 

Note No. 301/23 issue 2, 323/14 issue 2, 

348/18 issue 2, 359/21 issue 2, 370/9 issue 

2, 826/44 issue 2, 843/21 issue 2, 866/10 

issue 2, dated June 11, 2004, amended July 

7, 2004.

Before further flight after the modification or 

replacement of the complete rudder mounting assembly required by paragraph (e)(1) 

of this AD.

Follow DG Flugzeugbau GmbH Technical 

Note No. 301/23 issue 2, 323/14 issue 2, 

348/18 issue 2, 359/21 issue 2, 370/9 issue 

2, 826/44 issue 2, 843/21 issue 2, 866/10 

issue 2, dated June 11, 2004, amended 

July 7, 2004. 

Note: Until the actions of this AD are done, 

the FAA strongly recommends that an FAAcertified mechanic perform a daily pre-flight 

inspection to check the position of the outer 

bearing ring following the requirements of 

DG Flugzeugbau GmbH Technical Note No. 

301/23 issue 2, 323/14 issue 2, 348/18 issue 

2, 359/21 issue 2, 370/9 issue 2, 826/44 issue 

2, 843/21 issue 2, 866/10 issue 2, dated June 

11, 2004, amended July 7, 2004. If the bearing 

is displaced, we recommend that you 

discontinue flight operations until you 

modify or replace the complete rudder mount 

assembly and ensure that the securing 

washer, castellated nut, and new split pins 

are installed. 

May I Request an Alternative Method of 

Compliance? 

(f) You may request a different method of 

compliance or a different compliance time 

for this AD by following the procedures in 14 

CFR 39.19. Unless FAA authorizes otherwise, 

send your request to your principal 

inspector. The principal inspector may add 

comments and will send your request to the 

Manager, Standards Office, Small Airplane 

Directorate, FAA. For information on any 

already approved alternative methods of 

compliance, contact Gregory Davison, 

Aerospace Engineer, FAA, Small Airplane 

Directorate, ACE–112, Room 301, 901 Locust, 

Kansas City, Missouri 64106; telephone: 816–

329–4130; facsimile: 816–329–4090. 

Is There Other Information That Relates to 

This Subject? 

(g) German AD Number D–2004–348R1, 

dated September 16, 2004, also addresses the 

subject of this AD. 

May I Get Copies of the Documents 

Referenced in This AD? 

(h) To get copies of the documents 

referenced in this AD, contact DG 

Flugzeugbau, Postbox 41 20, D–76625 

Bruchsal, Federal Republic of Germany; 

telephone: 011–49 7257–890; facsimile: 011–

49 7257–8922. To view the AD docket, go to 

the Docket Management Facility; U.S. 

Department of Transportation, 400 Seventh 

Street, SW., Nassif Building, Room PL–401, 

Washington, DC, or on the Internet at http:// 

dms.dot.gov. This is docket number FAA–

2005–22157; Directorate Identifier 2005–CE–

44–AD. 

Issued in Kansas City, Missouri, on 

September 28, 2005. 

David R. Showers, 

Acting Manager, Small Airplane Directorate, 

Aircraft Certification Service. 

[FR Doc. 05–19935 Filed 10–4–05; 8:45 am] 

BILLING CODE 4910–13–P 

ENVIRONMENTAL PROTECTION 

AGENCY 

40 CFR Part 52 

[R06–OAR–2005–TX–0023; FRL–7981–3] 

Approval and Promulgation of Air 

Quality Implementation Plans; Texas; 

Emissions Banking and Trading 

Revisions for the Mass Emissions Cap 

and Trade Program for the Houston/ 

Galveston/Brazoria Ozone 

Nonattainment Area 

AGENCY: Environmental Protection 

Agency (EPA). 

ACTION: Proposed rule. 

SUMMARY: EPA is proposing to approve 

revisions to the Texas State 

Implementation Plan (SIP) concerning 

the Mass Emissions Cap and Trade 

(MECT) program for emissions of 

nitrogen oxides (NOX) in the Houston/ 

Galveston/Brazoria (HGB) ozone 

nonattainment area. Additionally, EPA 

is proposing approval of several 

subsections of Chapter 116 of the Texas 

Administrative Code (TAC) (Control of 

Air Pollution by Permits for New 

Federal Register / Vol. 70, No. 192 / Wednesday, October 5, 2005 / Proposed Rules 58113 

Construction or Modification) that 

provide cross-references to the MECT 

Program. 

DATES: Comments must be received on 

or before November 4, 2005. 

ADDRESSES: Submit your comments, 

identified by Regional Materials in 

EDocket (RME) ID No. R06–OAR–2005–

TX–0023, by one of the following 

methods: 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the on-line 

instructions for submitting comments. 

• Agency Web site: http:// 

docket.epa.gov/rmepub/ RME, EPA’s 

electronic public docket and comment 

system, is EPA’s preferred method for 

receiving comments. Once in the 

system, select ‘‘quick search,’’ then key 

in the appropriate RME Docket 

identification number. Follow the online instructions for submitting 

comments. 

• U.S. EPA Region 6 ‘‘Contact Us’’

Web site: http://epa.gov/region6/ 

r6coment.htm. Please click on ‘‘6PD’’

(Multimedia) and select ‘‘Air’’ before 

submitting comments. 

• E-mail: Mr. David Neleigh at 

neleigh.david@epa.gov. Please also cc 

the person listed in the FOR FURTHER

INFORMATION CONTACT section below. 

• Fax: Mr. David Neleigh, Chief, Air 

Permitting Section (6PD–R), at fax 

number 214–665–6762. 

• Mail: Mr. David Neleigh, Chief, Air 

Permitting Section (6PD–R), 

Environmental Protection Agency, 1445 

Ross Avenue, Suite 1200, Dallas, Texas 

75202–2733. 

• Hand or Courier Delivery: Mr. 

David Neleigh, Chief, Air Permitting 

Section (6PD–R), Environmental 

Protection Agency, 1445 Ross Avenue, 

Suite 1200, Dallas, Texas 75202–2733. 

Such deliveries are accepted only 

between the hours of 8 a.m. and 4 p.m. 

weekdays except for legal holidays. 

Special arrangements should be made 

for deliveries of boxed information. 

Instructions: Direct your comments to 

RME ID No. R06–OAR–2005–TX–0023. 

EPA’s policy is that all comments 

received will be included in the public 

file without change, and may be made 

available online at http:// 

docket.epa.gov/rmepub/, including any 

personal information provided, unless 

the comment includes information 

claimed to be Confidential Business 

Information (CBI) or other information 

the disclosure of which is restricted by 

statute. Do not submit information 

through RME, regulations.gov, or e-mail 

if you believe that it is CBI or otherwise 

protected from disclosure. The EPA 

RME Web site and the Federal 

regulations.gov are ‘‘anonymous access’’

systems, which means EPA will not 

know your identity or contact 

information unless you provide it in the 

body of your comment. If you send an 

e-mail comment directly to EPA without 

going through RME or regulations.gov, 

your e-mail address will be 

automatically captured and included as 

part of the comment that is placed in the 

public file and made available on the 

Internet. If you submit an electronic 

comment, EPA recommends that you 

include your name and other contact 

information in the body of your 

comment and with any disk or CD–ROM 

you submit. If EPA cannot read your 

comment due to technical difficulties 

and cannot contact you for clarification, 

EPA may not be able to consider your 

comment. Electronic files should avoid 

the use of special characters, any form 

of encryption, and be free of any defects 

or viruses. Guidance on preparing 

comments is given in the 

SUPPLEMENTARY INFORMATION section of 

this document under the General 

Information heading. 

Docket: All documents in the 

electronic docket are listed in the RME 

index at http://docket.epa.gov/rmepub/. 

Although listed in the index, some 

information is not publicly available, 

i.e., CBI or other information the 

disclosure of which is restricted by 

statute. Certain other material, such as 

copyrighted material, is not placed on 

the Internet and will be publicly 

available only in hard copy form. 

Publicly available docket materials are 

available either electronically in RME or 

in the official file, which is available at 

the Air Permitting Section (6PD–R), 

Environmental Protection Agency, 1445 

Ross Avenue, Suite 700, Dallas, Texas 

75202–2733. The file will be made 

available by appointment for public 

inspection in the Region 6 FOIA Review 

Room between the hours of 8:30 a.m. 

and 4:30 p.m. weekdays except for legal 

holidays. Contact the person listed in 

the FOR FURTHER INFORMATION CONTACT

paragraph below to make an 

appointment. If possible, please make 

the appointment at least two working 

days in advance of your visit. There will 

be a 15 cent per page fee for making 

photocopies of documents. On the day 

of the visit, please check in at the EPA 

Region 6 reception area at 1445 Ross 

Avenue, Suite 700, Dallas, Texas. 

The State submittal is also available 

for public inspection at the State Air 

Agency listed below during official 

business hours by appointment: Texas 

Commission on Environmental Quality, 

Office of Air Quality, 12124 Park 35 

Circle, Austin, Texas 78753. 

FOR FURTHER INFORMATION CONTACT: Ms. 

Adina Wiley, Air Permitting Section 

(6PD–R), Environmental Protection 

Agency, Region 6, 1445 Ross Avenue, 

Suite 700, Dallas, Texas 75202–2733, 

telephone (214) 665–2115; fax number 

214–665–6762; e-mail address 

wiley.adina@epa.gov. 

SUPPLEMENTARY INFORMATION: 

Throughout this document wherever 

‘‘we,’’ ‘‘us,’’ or ‘‘our’’ is used, we mean 

the EPA. 

Outline 

I. Mass Emissions Cap and Trade Program 

A. What is EPA proposing to approve? 

B. Summary of MECT program revisions 

1. What is the MECT program that has been 

Federally approved into the Texas SIP? 

2. How has TCEQ revised the MECT 

program? 

C. EPA’s Analysis 

1. How did EPA review the MECT program 

revisions? 

2. What criteria did EPA use to analyze the 

MECT program revisions? 

3. What is EPA’s evaluation of the changes 

related to the switch from 90 percent 

control to 80 percent control of NOX

emissions from industrial sources? 

4. What is EPA’s evaluation of the changes 

in applicability in the MECT program? 

5. What is EPA’s evaluation of the use of 

DERCs and MDERCs in the MECT 

program? 

6. What is EPA’s analysis of the other 

revisions to the MECT program? 

7. What is EPA’s analysis of the Chapter 

116 rule language? 

8. What is EPA’s analysis of the MECT 

program with respect to section 110(l) of 

the Clean Air Act? 

D. Conclusion 

II. General Information 

III. Statutory and Executive Order Reviews 

I. Mass Emissions Cap and Trade 

Program 

A. What is EPA proposing to approve? 

The EPA is proposing to approve 

revisions to the MECT program for NOX

emissions in the HGB ozone 

nonattainment area (consisting of 

Brazoria, Chambers, Fort Bend, 

Galveston, Harris, Liberty, Montgomery, 

and Waller counties) published at Texas 

Administrative Code (TAC) Title 30, 

Chapter 101 General Air Quality Rules, 

Subchapter H, Division 3, sections 

101.350–101.354, 101.356–101.360, and 

101.363. EPA is also proposing approval 

of the subsections in 30 TAC Chapter 

116, Control of Air Pollution by Permits 

for New Construction or Modification, 

which provide cross-references to the 

MECT program. The sections of Chapter 

116 we are proposing to approve are 

sections 116.111(a)(2)(L), 

116.115(b)(2)(C)(iii), 116.176, 

116.610(a)(6), and 116.615(5)(C). These 

revisions were provided in SIP revisions 

58114 Federal Register / Vol. 70, No. 192 / Wednesday, October 5, 2005 / Proposed Rules 

submitted to EPA on April 12, 2001; 

January 31, 2003; and December 6, 2004. 

The revisions make the following 

changes to the MECT: 

• The revisions make changes 

necessary to accomplish the shift in 

attainment strategy from 90 percent 

control of industrial sources to 80 

percent control in the HGB area. For a 

further discussion of this change in 

control strategy, please see the 

supporting record for our separate 

action on the attainment demonstration 

(RME Docket R06–OAR–2005–TX–

0018). 

• The revisions expand the 

applicability of the MECT to additional 

sources. 

• The revisions provide for the use of 

discrete emission reduction credits 

(DERCs) and mobile source DERCs 

(MDERCs) in lieu of MECT allowances, 

subject to our separate action on the 

Discrete Emission Credit Banking and 

Trading program as explained below. 

• The revisions include a variety of 

minor changes to correct grammar and 

reorganize the rule text for readability. 

• The revisions to the Texas 

Commission on Environmental 

Quality’s (TCEQ’s) Chapter 116 

permitting rules incorporate crossreferences to the MECT program in 

Chapter 101. 

The MECT program is a significant 

element of the control strategy for the 

HGB area to comply with the Clean Air 

Act (CAA) requirements to achieve the 

ozone attainment standard. As such, the 

revisions to the MECT and the 

corresponding sections in Chapter 116 

must be evaluated as an integral 

component of the HGB control strategy 

to reduce NOX emissions. We are 

proposing approval of these revisions to 

the rules that establish the MECT 

program, but because of the relationship 

of the rules to the attainment 

demonstration, we will not finalize 

approval of the rules until the revisions 

to the attainment demonstration are 

approved. Further revisions allowing 

DERC and MDERC use in the MECT 

program will not be fully approved until 

the rules for DERC and MDERC 

generation and use have been approved. 

The rules for DERC and MDERC use and 

generation and the attainment 

demonstration are being considered in 

separate Federal Register notices. If our 

separate actions on the DERC program 

and the attainment demonstration 

cannot be finally approved, the MECT 

program will continue to operate as 

outlined in our November 14, 2001, 

final approval of the program (66 FR 

57252). 

B. Summary of MECT program revisions 

1. What is the MECT program that has 

been Federally approved into the Texas 

SIP? 

The MECT program was adopted as a 

State regulation on December 6, 2000. 

The program is mandatory for stationary 

facilities that emit NOX in the HGB area 

which are subject to emission 

specifications in TCEQ NOX rules at 30 

TAC Chapter 117.106, 117.206 and 

117.475, and which are located at a site 

where they have a collective design 

capacity to emit 10 tons per year or 

more of NOX. The program sets a cap on 

NOX emissions beginning January 1, 

2002, with a final reduction to the cap 

occurring in 2007. Facilities are 

required to meet NOX allowances on an 

annual basis. An allowance is the 

authorization to emit one ton of NOX

during a control period; a control period 

is the calendar year. Facilities may 

purchase, bank or sell their allowances. 

The amount of NOX allowances is 

determined by a formula which uses 

emission rates established in 30 TAC 

Chapter 117. These emission rates and 

resulting emission reductions were 

relied on in the HGB attainment 

demonstration submitted in 2000. The 

rules at that time were to reduce overall 

industrial NOX emissions by 

approximately 90 percent. The MECT 

program has a provision to allow a 

facility to use emission reduction 

credits (ERCs) generated through the 

TCEQ Emission Credit Banking and 

Trading program to permanently 

increase the allowances for the 

individual facility subject to the MECT 

if the credits were generated for NOX in 

the HGB area before December 1, 2000. 

The MECT also has a provision to allow 

a facility to use DERCs and MDERCs 

generated through the TCEQ Discrete 

Emission Credit Banking and Trading 

program in lieu of allowances if they are 

generated in the HGB area. EPA 

published a final rule approving the 

MECT program (except for the use of 

DERCs and MDERCs in the MECT, 

which we deferred acting on until our 

action on the DERC program) on 

November 14, 2001 (66 FR 57252). 

Texas has subsequently revised the 

MECT program in SIP submittals dated 

July 15, 2002, January 31, 2003, and 

December 6, 2004. 

2. How has TCEQ revised the MECT 

program? 

The TCEQ submitted a MECT revision 

to EPA on July 15, 2002, establishing a 

new section 101.357, to allow the use of 

emission reductions generated through 

the Texas Emission Reduction Program 

as MECT allowances. EPA is not 

reviewing or proposing to act on this 

revision to the MECT program in this 

document. 

Today’s action does address several 

revisions to the MECT that TCEQ 

submitted to EPA on January 31, 2003, 

and December 6, 2004. These revisions 

made changes to support the shift from 

90 percent control of industrial sources 

to 80 percent control in the HGB ozone 

nonattainment area, expanded the 

applicability of the MECT, updated and 

revised the provision of the MECT 

allowing for the use of DERCs and 

MDERCs in lieu of MECT allowances, 

and included a variety of nonsubstantive changes to correct grammar 

and reorganize the rule text for 

readability. 

The shift from 90 percent to 80 

percent control of industrial sources in 

the HGB nonattainment area is one of a 

number of changes made in Texas’ midcourse review of the HGB ozone 

attainment plan. The current plan was 

approved on November 14, 2001, and 

called for approximately a 90 percent 

control of industrial NOX emissions. As 

a result of a review of the modeling and 

data, including an intensive summer 

study in 2000, TCEQ has revised the 

plan to decrease the importance of NOX

reductions and to add controls on 

highly-reactive volatile organic 

compounds. The MECT, in section 

101.353, has been revised to support the 

shift in attainment strategy from 

approximately 90 percent to 

approximately 80 percent NOX

reductions. 

To determine the approvability of the 

change from 90 percent to 80 percent, 

EPA must consider its impact on the 

area’s attainment plan, and whether it is 

consistent with section 110(l) of the 

Clean Air Act. We are examining these 

questions in our separate action on the 

revisions to the HGB attainment 

demonstration, which is being 

processed concurrently with this action. 

EPA will not take final action on the 

changes to the MECT related to the 

change from 90 percent to 80 percent 

until final approval of the attainment 

demonstration is published. Please note 

that although the MECT was developed 

as part of the one-hour ozone attainment 

demonstration, and EPA has revoked 

the one-hour ozone standard, the MECT 

remains a necessary component of the 

SIP under EPA’s anti-backsliding 

provisions of the Phase I rule (40 CFR 

51.905(a)(1)). For a further discussion 

and review of how the anti-backsliding 

provisions are being met and other 

issues related to the change in ozone 

attainment strategy from 90 percent to 

80 percent NOX control, please see the 

supporting record for our separate 

Federal Register / Vol. 70, No. 192 / Wednesday, October 5, 2005 / Proposed Rules 58115 

action on the attainment demonstration 

(RME Docket R06–OAR–2005–TX–

0018). 

The next revisions we are addressing 

in this action involve the expansion of 

the applicability of the MECT to cover 

all facilities in the HGB ozone 

nonattainment area that are either at a 

site that meets the definition of major 

source at 30 TAC section 117.10, or at 

a site where they collectively have an 

uncontrolled design capacity to emit ten 

tons or more of NOX per year. 

Additionally, once a source has become 

classified as a major source the source 

will always be subject to the MECT. 

The final substantive revision to the 

MECT that we are considering in this 

action involves the sections of the 

MECT providing for the use of DERCs 

and MDERCs in lieu of MECT 

allowances. Under the Texas Discrete 

Emission Credit Banking and Trading 

program (referred to as the DERC 

program), a source can generate shortterm emission credits by reducing its 

emissions. Reductions from stationary 

sources are generated as discrete 

emission reduction credits (DERCs), and 

reductions from mobile sources are 

generated as mobile discrete emission 

reduction credits (MDERCs). DERCs and 

MDERCs are quantified, banked and 

traded in terms of mass (tons) and may 

be generated and used statewide. 

Sources can certify reductions of all 

criteria pollutants, with the exception of 

lead, but the MECT rules only allow 

NOX and VOC DERCs and MDERCs to 

be used in lieu of MECT allowances. 

The EPA and the TCEQ Executive 

Director must approve a demonstration 

that the use of VOC DERCs or MDERCs 

would be equivalent to the use of NOX

allowances in reducing ozone. In our 

November 14, 2001, Federal Register 

action, EPA deferred acting on these 

provisions until we proposed action on 

the DERC program. EPA is now 

considering action on the DERC 

program in a separate action (RME 

Docket R06–OAR–2005–TX–0029). 

TCEQ’s revisions to section 101.356 of 

the MECT establish limits on the 

quantity of DERCs that can be used in 

a given control period and on the 

quantities that TCEQ can allow a given 

source to use for demonstrating 

compliance. The use of DERCs and 

MDERCs in the MECT program will not 

be Federally approved until the 

approval of both the revisions to section 

101.356 being reviewed here and of the 

DERC program generally, which is being 

reviewed in a separate action. 

C. EPA’s Analysis 

1. How did EPA review and evaluate the 

MECT program revisions? 

Generally, SIP rules must be 

enforceable and must not relax existing 

requirements. See Clean Air Act 

sections 110(a), 110(l), and 193. 

A guidance document that we used to 

define evaluation criteria is ‘‘Improving 

Air Quality with Economic Incentive 

Programs’’ (EPA–452/R–01–001, January 

2001) (EIP Guidance). This guidance 

applies to discretionary EIPs adopted to 

attain national ambient air quality 

standards (NAAQS) for criteria 

pollutants, but the EIP Guidance is not 

EPA’s final action on discretionary EIPs. 

Final action as to any such EIP occurs 

when EPA acts on it after its submission 

as a SIP revision. Because the EIP 

Guidance is non-binding and does not 

represent final agency action, EPA is 

using the guidance as an initial screen 

to determine whether potential 

approvability issues arise. A more 

detailed review of the MECT revisions 

as compared to the EIP Guidance is in 

the Technical Support Document (TSD) 

for the TCEQ Mass Emissions Cap and 

Trade Program for the HGB 

Nonattainment Area. The TSD is 

available at the location given in the 

ADDRESSES section of this document. 

2. What criteria did EPA use to analyze 

the MECT program revisions? 

As described in detail in the EIP 

Guidance, EPA has identified three 

fundamental principles that apply to all 

EIPs: integrity, equity, and 

environmental benefit. The integrity 

principle provides that emission 

reductions in EIPs must be surplus, 

enforceable, quantifiable, and 

permanent. The equity principle 

consists of both general equity and 

environmental justice. The third 

principle provides that all EIPs should 

show environmental benefit, whether 

through faster attainment, more rapid 

reductions, or greater emission 

reductions. In our previous approval 

action, EPA evaluated the MECT against 

these three principles, specific concerns 

applicable to multi-source cap-and-trade 

programs, and applicable CAA 

requirements. See 66 FR 38231 (July 23, 

2001); 66 FR 57252 (Nov. 14, 2001). In 

the current action, to evaluate the MECT 

revisions EPA conducted a line-item 

comparison of the Federally approved 

and newly adopted state rule language. 

This comparison included a discussion 

of applicable EIP Guidance provisions 

and CAA requirements. Our complete 

analysis of the MECT revisions is 

contained in the TSD for this action. 

3. What is EPA’s evaluation of the 

changes related to the switch from 90 

percent control to 80 percent control of 

NOX emissions from industrial sources? 

To support the shift from a 90 percent 

to an 80 percent NOX control strategy, 

TCEQ revised the MECT at section 

101.353 to include new emission 

reduction factors for the allocation of 

allowances. The changes to the 

reduction factors are based on the 

corresponding changes to the HGB 

attainment demonstration. The analysis 

behind the new reduction factors is 

evaluated in the TSD reviewing the 

revisions to the attainment 

demonstration (RME Docket R06–OAR–

2005–TX–0018). EPA will not finally 

approve these changes until the 

attainment demonstration revisions 

including the relaxation of NOX control 

to 80 percent are approved. Comments 

on the appropriateness of the changes 

from 90 to 80 percent should be directed 

to the attainment demonstration docket. 

4. What is EPA’s evaluation of the 

changes in applicability in the MECT 

program? 

The revisions to MECT applicability 

at sections 101.350 and 101.351 are 

approvable because they are not 

inconsistent with the CAA and because 

they strengthen the SIP in two ways. 

First, applicability is now based on the 

uncontrolled design capacity. By basing 

the inclusion of facilities on the 

uncontrolled design capacity, TCEQ has 

strengthened the cap by preventing 

sources from installing control 

equipment to remain outside of the cap. 

Second, TCEQ has established that once 

a source is subject to the MECT it will 

always be subject to the MECT. 

Combined, these revisions will help 

ensure that the intended emission 

reductions will occur and also establish 

a more viable allowance trading market 

by increasing and maintaining the 

number of sources subject to the MECT. 

5. What is EPA’s evaluation of the use 

of DERCs and MDERCs in the MECT 

program? 

In our initial MECT approval (66 FR 

57252, Nov. 14, 2001), EPA deferred 

action on the use of DERCs and 

MDERCs for compliance with the MECT 

until our action on the DERC rule. In 

addition to the original MECT 

submission, TCEQ has submitted 

revisions to section 101.356 twice since 

EPA’s approval of the MECT program. 

In this document and the corresponding 

TSD, we are reviewing and proposing to 

approve the use of DERCs and MDERCs 

in TCEQ’s MECT program for the HGB 

area. We will review and act on TCEQ’s 

58116 Federal Register / Vol. 70, No. 192 / Wednesday, October 5, 2005 / Proposed Rules 

rules for generation and use of DERCs 

and MDERCs in a separate action (RME 

Docket R06–OAR–2005–TX–0029). The 

use of DERCs and MDERCs in the MECT 

program will not be Federally approved 

until the approval of both the revisions 

to section 101.356 being reviewed here 

and the DERC program in 30 TAC 

Chapter 101, Subchapter H, Division 4 

being reviewed in a separate action. 

Here, EPA is only taking specific 

comment on the use of DERCs and 

MDERCs as allowances in the MECT 

program. Under the Texas program, 

DERCs and MDERCs can be used for a 

variety of other purposes. Comments on 

the generation of DERCs or MDERCs or 

on the use of DERCs or MDERCs for 

purposes other than as MECT 

allowances should be directed to the 

docket on the DERC rule (RME Docket 

R06–OAR–2005–TX–0029). 

The DERC and MDERC program is 

what EPA describes as an open market 

trading (OMT) program. Section 4.1 of 

the EIP Guidance explains that certain 

types of EIPs may not be combined 

because their characteristics and 

requirements are incompatible. By way 

of example, it states that an OMT 

program and a multi-source cap-andtrade program are incompatible and 

thus should not be combined. Therefore, 

the fact that the MECT program 

provides for the use of DERCs and 

MDERCs in lieu of allowances at section 

101.356(h), with corresponding 

provisions in the DERC rule at section 

101.376(b), is contrary to the statement 

in the EIP Guidance. 

The EIP Guidance discourages the use 

of OMT credits in a multi-source capand-trade program based on concerns 

that the use of OMT credits in the cap 

program could potentially undermine 

the integrity of the cap, thus preventing 

the goals that the cap was established to 

achieve. EPA is concerned that 

including OMT credits in a cap-andtrade system could lead to: 

• The possibility that more OMT 

credits will be used in a given year than 

are generated; 

• The possibility that sources will 

shift production from one source to 

another, generating credits at the 

reduced source while no real net benefit 

in air quality is achieved; and 

• The possibility that reductions at 

unregulated sources will not be real 

reductions and that they will be used to 

offset increases at regulated sources. 

When a program includes elements 

that are not consistent with the 

approaches outlined in our guidance, 

EPA may still approve the rule if it is 

consistent with CAA requirements and 

the rationales underlying the provisions 

in EPA guidance. In this case, we must 

determine whether the use of OMT 

credits (DERCs or MDERCs) in lieu of 

allowances will, because of the above 

concerns, undermine the goal of the 

MECT program, which is attainment of 

the one-hour ozone standard in the HGB 

area. EPA should also consider whether 

there are adequate safeguards to ensure 

that the additional flexibility provided 

by the interplay between the DERC and 

MECT programs will not undermine the 

HGB rate or progress (ROP) plan and 

attainment demonstration. We approved 

the HGB ROP plan on February 14, 2005 

(70 FR 07407). The HGB area met its 

ROP target by a wide margin (over 100 

tons per day) so the institution of DERCs 

in the MECT would not be expected to 

interfere with ROP. 

The reduction in industrial NOX

emissions relied on in the attainment 

demonstration is achieved by the MECT 

program, which provides a finite cap on 

NOX emissions. Beginning in 2005, the 

amount of allowances (the authorization 

to emit one ton of NOX during a control 

period, which is the calendar year) 

under the cap decreases to the final cap 

level in 2007. The final 2007 cap level 

was established based on photochemical 

modeling and other evidence as 

necessary for the area to meet the onehour ozone standard. Even after the 

change from 90 percent to 80 percent 

NOX control strategy, the final MECT 

level is among the most stringent levels 

of NOX controls on industrial emissions 

in the United States. 

Because of the stringency of the 

needed NOX controls, Texas linked the 

DERC and MECT programs, in an effort 

to provide additional flexibility to sites 

subject to the program while 

encouraging the development and use of 

cleaner technologies to reduce NOX

emissions from sources not covered by 

the cap-and-trade program. Only DERCs 

and MDERCs generated in the HGB area 

are available for use in lieu of 

allowances. 

At the time the MECT rules were 

developed, the number of DERCs 

available for use in the HGB area totaled 

over 37,000 tons (all generated by 

stationary sources; no MDERCs had 

been generated). Additionally, sources 

had the ability to make early reductions 

and continue banking DERCs until the 

January 1, 2002, implementation date of 

the MECT. After implementation of the 

MECT, sources subject to the cap no 

longer had the ability to generate DERCs 

because those reductions would take the 

form of unused allowances. The 

potential for capped sites to hold these 

banked DERCs for use in 2005 and 

beyond was significant enough to 

negatively impact the HGB ROP plan 

and attainment demonstration. To guard 

against more DERCs being used in a 

given year than are being generated, 

which might affect the goal of 

attainment, Texas included the 

following provisions in the MECT rule 

limiting the use of NOX DERCs in lieu 

of allowances. 

First, beginning in 2005, annual use of 

DERCs within the MECT is limited to 

10,000 DERCs collectively for all sites 

within the HGB area. This provision 

eliminates the potential for sites subject 

to the MECT to use a large quantity of 

DERCs in a single year and negatively 

impact the HGB ROP plan and 

attainment demonstration. All requests 

to use DERCs (or MDERCs) in the MECT 

must be made by October 1 of the 

control period for which the DERCs (or 

MDERCs) would be used. In terms of the 

10,000 DERC limit, TCEQ will approve 

requests to use DERCs in the amount of 

250 tons or less for a given control 

period. After October 1, when all 

requests to use DERCs have been 

received, TCEQ determines how to 

respond to any requests to use DERCs in 

an amount exceeding 250 tons. TCEQ 

may reduce any such request so that the 

total amount of all DERCs used 

collectively does not exceed 10,000. If 

all the requests to use DERCs in a given 

control period are less than the 10,000 

limit, TCEQ will then address requests 

for more than 250 tons. For these 

requests, TCEQ determines the number 

of remaining DERCs under the 10,000 

limit that were not approved in the 

requests of 250 tons or less. These extra 

DERCs may be apportioned based on the 

percentage of DERCs in excess of 250 

requested for use by those sites relative 

to the total amount of extra DERCs 

available. 

Second, depending on when the 

DERCs were generated, the MECT rule 

requires the use of DERCs at specified 

ratios. Beginning in 2005, DERCs 

generated before January 1, 2005, are 

required to be used at a ratio of four 

DERCs to one allowance. The ratio of 

DERCs to allowances increases to a 10 

to 1 ratio for DERCs generated before 

2005 and used in the 2007, or 

subsequent, control periods. By way of 

example, if DERC usage equaling the 

full 10,000 limit is approved for use in 

the 2007 control period, the overall cap 

would be increased by 1,000 

allowances. Any DERCs generated after 

January 1, 2005, are available for use 

within the MECT at a one to one ratio, 

but are still included in the 10,000 

DERC collective limit. We believe these 

ratios guard against the possibility that 

the availability of historic reductions 

would permit the use of more DERCs in 

a year than are generated, which could 

Federal Register / Vol. 70, No. 192 / Wednesday, October 5, 2005 / Proposed Rules 58117 

interfere with attainment or reasonable 

further progress. 

As a further safeguard against the 

possibility of undermining the 

attainment demonstration by allowing 

the use of more DERCs in any given year 

than are generated, TCEQ added an 

additional 2.7 tons per day into the 

attainment model beyond the emissions 

that would be allowed based on source 

allocations. This additional 2.7 tons per 

day represents the maximum amount of 

pre-2005 DERCs available for use in the 

attainment year 2007. To arrive at this 

number, TCEQ divided the 10,000 DERC 

limit by 10 to yield a total of 2.7 tons 

per day that could be reintroduced into 

the cap. DERCs generated after 2005 by 

sources outside of the cap could not be 

quantified as those reductions would be 

generated through voluntary measures. 

TCEQ therefore assumed that all DERCs 

that would be used in the 2007 control 

period were pre-2005 DERCs. Including 

these added emissions in the attainment 

modeling is analogous to cap-and-trade 

programs that set aside a percentage of 

the modeled emissions for new source 

growth or other purposes. 

The MECT program also provides that 

MDERCs can be used in lieu of 

allowances at a ratio of one MDERC to 

one allowance. MDERCs are not 

included in the 10,000 DERCs limit in 

any given control period. TCEQ 

incorporated MDERCs into the MECT to 

provide incentives for mobile 

reductions. Although there is no set 

limit for MDERC usage under the MECT, 

from our experience with open market 

trading programs, we can reasonably 

predict that a relatively small quantity 

of MDERCs will be generated. 

Consistent with our prediction, we note 

that only 60 tons of MDERCs have been 

banked as of August 1, 2005. 

TCEQ has also committed to making 

certain revisions to the DERC program 

to ensure that the DERCs used are real, 

surplus, and consistent with the 

assumptions in the attainment 

demonstration. These revisions will 

include: 

• Prohibiting the generation of DERCs 

from permanent shutdowns (See RME 

Docket R06–OAR–2005–TX–0029); 

• Ensuring that reductions can only 

come from process changes or the 

installation of control equipment that 

result in less emissions per unit of 

production, thus preventing reductions 

from production shifting as a method of 

DERC generation; 

• Clarifying the provisions that allow 

for public comment and EPA approval 

of quantification protocols to ensure 

that the reductions used for DERC 

generation are quantifiable. 

A more complete description of the 

criteria for DERC generation is included 

in the supporting documents for the 

DERC rule. 

Additionally, section 101.363 requires 

TCEQ to audit the MECT program every 

three years. If the use of DERCs or 

MDERCs is shown to negatively impact 

attainment, TCEQ will remove this 

flexibility from the program. 

With the restrictions outlined above, 

we believe that permitting the use of 

DERCs and MDERCs in lieu of 

allowances provides additional 

flexibility in compliance with the MECT 

program without undermining the goal 

of attaining the one-hour ozone standard 

in the HGB area. EPA also believes that 

the restrictions placed on the use of 

DERCs and MDERCs in the MECT will 

prevent such use from damaging the 

integrity of the MECT program and the 

HGB attainment demonstration. Because 

the basis for the use of DERCs and 

MDERCs in the MECT is, in part, the 

modeling and attainment demonstration 

for the HGB area, EPA cannot grant a 

final approval of this provision of the 

MECT program until EPA issues a final 

approval of the attainment modeling 

provided as a mid-course review SIP 

revision. The attainment demonstration 

and DERC program are being 

concurrently proposed for approval 

(RME Dockets R06–OAR–2005–TX–

0018 and R06–OAR–2005–TX–0029). 

6. What is EPA’s Analysis of the Other 

Revisions to the MECT Program? 

The additional revisions to the MECT 

at sections 101.352, 101.354, 101.359, 

and 101.360 are also approvable because 

they are consistent with the EIP 

Guidance and meet the requirements of 

section 110(l) of the Clean Air Act as 

explained below. In section 101.352(b), 

the TCEQ changed the date for the trueup period from February 1st following 

the control period to March 1st, 

beginning with the first control period 

of January 1, 2003. This revision 

corrected a typographical error in the 

Federally approved MECT that ended 

the true-up period on February 1st and 

determined compliance with the cap on 

March 1st. Section 7.4 of the EIP 

Guidance also recommends a true-up 

period of 60 days for control periods up 

to a year. The revision to section 

101.352(e) further refines the group of 

facilities that can use MECT allowances 

for the correlating one to one portion of 

NSR offsets as only new or modified 

facilities that are not considered existing 

facilities under section 101.350(e). The 

majority of the revisions to section 

101.354 are corrections to grammar and 

section numbering. The new section 

101.354(e) is a measure to strengthen 

the SIP by discouraging demand 

shifting. If a facility subject to the MECT 

shifts production or activity to a facility 

not subject to the MECT, the TCEQ will 

deduct allowances from the MECT 

facility equal to the increase in 

emissions that resulted from the 

demand shifting. The revisions to 

section 101.359 establish expanded 

reporting requirements for facilities 

subject to the MECT and provide for the 

imposition of penalties on facilities that 

miss reporting deadlines. The revisions 

to section 101.360 provide more detail 

on the requirements for level of activity 

reporting. Our full review of these 

revisions can be found in the TSD. 

7. What is EPA’s Analysis of the Chapter 

116 Rule Language? 

The new subsections of Chapter 116, 

sections 116.111(a)(2)(L), 

116.115(b)(2)(C)(iii), 116.176, 

116.610(a)(6), and 116.615(5)(C), 

submitted by TCEQ on April 12, 2001, 

are approvable. These subsections 

establish the permitting requirements 

for the facilities subject to the MECT. 

Collectively, these subsections reinforce 

the requirements of the MECT program 

by stating that facilities must possess 

allowances before operation and that an 

owner or operator of a new facility must 

identify the source of allowances it will 

rely on in the permit. 

8. What is EPA’s Analysis of the MECT 

Program With Respect to Section 110(l) 

of the Clean Air Act? 

Section 110(l) of the Clean Air Act 

states: 

Each revision to an implementation plan 

submitted by a State under this Act shall be 

adopted by such State after reasonable notice 

and public hearing. The Administrator shall 

not approve a revision of a plan if the 

revision would interfere with any applicable 

requirement concerning attainment and 

reasonable further progress (as defined in 

section 171), or any other applicable 

requirement of this Act. 

As a general matter, the satisfaction of 

the environmental benefit principle and 

the other integrity principles applicable 

to trading programs will tend to 

demonstrate that a trading program will 

be consistent with section 110(l). Here, 

however, as previously noted, the 

revisions to the MECT are a part of a 

revised ozone attainment strategy for the 

HGB area. In addition, we are reviewing 

the limited use of DERCs in the MECT. 

The revised strategy’s reduced level of 

industrial NOX control and the effect of 

the use of DERCs in the MECT are being 

evaluated separately in the HGB 

attainment demonstration for the 1-hour 

ozone standard. The section 110(l) 

analysis for our action on the MECT 

58118 Federal Register / Vol. 70, No. 192 / Wednesday, October 5, 2005 / Proposed Rules 

therefore relies on the analysis 

conducted for the HGB attainment 

demonstration. 

D. Conclusion 

EPA reviewed the MECT program 

revisions with respect to the 

expectations of the EIP Guidance 

document and the requirements of the 

Clean Air Act. EPA has concluded after 

review and analysis that the revisions to 

the MECT program are approvable. EPA 

is proposing to approve the revisions to 

sections 101.350–354, and 101.360 

submitted by TCEQ on January 31, 2003, 

for rule log number 2002–044–101–AI; 

and the revisions to sections 101.356 

and 101.359 submitted by TCEQ on 

December 6, 2004, for rule log number 

2003–064–101–AI. EPA has also 

reviewed the subsections in 30 TAC 

Chapter 116 which provide crossreferences to the MECT program, and 

has concluded that these subsections are 

necessary for the implementation of the 

MECT program. We are proposing to 

approve sections 116.111(a)(2)(L), 

116.115(b)(2)(C)(iii), 116.176, 

116.610(a)(6), and 116.615(5)(C) 

submitted by TCEQ on April 12, 2001, 

for rule log number 2000–047–116–AI. 

We will not take final action on these 

rules, however, until we finally approve 

the attainment demonstration. In 

addition, revisions allowing DERC use 

in the MECT program will not be fully 

approved until the rules for DERC 

generation and use have been approved. 

The rules for DERC generation and use 

and the attainment demonstration are 

being considered in separate actions. 

II. General Information 

A. Tips for Preparing Your Comments 

When submitting comments, 

remember to: 

1. Identify the rulemaking by File ID 

number and other identifying 

information (subject heading, Federal 

Register date and page number). 

2. Follow directions—The agency may 

ask you to respond to specific questions 

or organize comments by referencing a 

Code of Federal Regulations (CFR) part 

or section number. 

3. Explain why you agree or disagree; 

suggest alternatives and substitute 

language for your requested changes. 

4. Describe any assumptions and 

provide any technical information and/ 

or data that you used. 

5. If you estimate potential costs or 

burdens, explain how you arrived at 

your estimate in sufficient detail to 

allow for it to be reproduced. 

6. Provide specific examples to 

illustrate your concerns, and suggest 

alternatives. 

7. Explain your views as clearly as 

possible, avoiding the use of profanity 

or personal threats. 

8. Make sure to submit your 

comments by the comment period 

deadline identified. 

B. Submitting Confidential Business 

Information (CBI) 

Do not submit this information to EPA 

through regulations.gov or e-mail. 

Clearly mark the part or all of the 

information that you claim to be CBI. 

For CBI information in a disk or CD 

ROM that you mail to EPA, mark the 

outside of the disk or CD ROM as CBI 

and then identify electronically within 

the disk or CD ROM the specific 

information that is claimed as CBI). In 

addition to one complete version of the 

comment that includes information 

claimed as CBI, a copy of the comment 

that does not contain the information 

claimed as CBI must be submitted for 

inclusion in the official file. Information 

so marked will not be disclosed except 

in accordance with procedures set forth 

in 40 CFR part 2. 

III. Statutory and Executive Order 

Reviews 

Under Executive Order 12866 (58 FR 

51735, October 4, 1993), this proposed 

action is not a ‘‘significant regulatory 

action’’ and therefore is not subject to 

review by the Office of Management and 

Budget. For this reason, this action is 

also not subject to Executive Order 

13211, ‘‘Actions Concerning Regulations 

That Significantly Affect Energy Supply, 

Distribution, or Use’’ (66 FR 28355, May 

22, 2001). This proposed action merely 

proposes to approve state law as 

meeting Federal requirements and 

imposes no additional requirements 

beyond those imposed by state law. 

Accordingly, the Administrator certifies 

that this proposed rule will not have a 

significant economic impact on a 

substantial number of small entities 

under the Regulatory Flexibility Act (5 

U.S.C. 601 et seq.). Because this rule 

proposes to approve pre-existing 

requirements under state law and does 

not impose any additional enforceable 

duty beyond that required by state law, 

it does not contain any unfunded 

mandate or significantly or uniquely 

affect small governments, as described 

in the Unfunded Mandates Reform Act 

of 1995 (Public Law 104–4). 

This proposed rule also does not have 

tribal implications because it will not 

have a substantial direct effect on one or 

more Indian tribes, on the relationship 

between the Federal Government and 

Indian tribes, or on the distribution of 

power and responsibilities between the 

Federal Government and Indian tribes, 

as specified by Executive Order 13175 

(65 FR 67249, November 9, 2000). This 

action also does not have Federalism 

implications because it does not have 

substantial direct effects on the States, 

on the relationship between the national 

government and the States, or on the 

distribution of power and 

responsibilities among the various 

levels of government, as specified in 

Executive Order 13132 (64 FR 43255, 

August 10, 1999). This action merely 

proposes to approve a state rule 

implementing a Federal standard, and 

does not alter the relationship or the 

distribution of power and 

responsibilities established in the Clean 

Air Act. This proposed rule also is not 

subject to Executive Order 13045 

‘‘Protection of Children from 

Environmental Health Risks and Safety 

Risks’’ (62 FR 19885, April 23, 1997), 

because it is not economically 

significant. 

In reviewing SIP submissions, EPA’s 

role is to approve state choices, 

provided that they meet the criteria of 

the Clean Air Act. In this context, in the 

absence of a prior existing requirement 

for the State to use voluntary consensus 

standards (VCS), EPA has no authority 

to disapprove a SIP submission for 

failure to use VCS. It would thus be 

inconsistent with applicable law for 

EPA, when it reviews a SIP submission, 

to use VCS in place of a SIP submission 

that otherwise satisfies the provisions of 

the Clean Air Act. Thus, the 

requirements of section 12(d) of the 

National Technology Transfer and 

Advancement Act of 1995 (15 U.S.C. 

272 note) do not apply. This proposed 

rule does not impose an information 

collection burden under the provisions 

of the Paperwork Reduction Act of 1995 

(44 U.S.C. 3501 et seq.). 

List of Subjects in 40 CFR Part 52 

Environmental protection, Air 

pollution control, Intergovernmental 

relations, Nitrogen oxides, Ozone, 

Reporting and recordkeeping 

requirements, Volatile organic 

compounds. 

Authority: 42 U.S.C. 7401 et seq. 

Dated: September 27, 2005. 

Richard E. Greene, 

Regional Administrator, Region 6. 

[FR Doc. 05–19995 Filed 10–4–05; 8:45 am] 

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