58138 Federal Register / Vol. 70, No. 192 / Wednesday, October 5, 2005 / Proposed Rules 

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, Carbon monoxide, 

Incorporation by reference, 

Intergovernmental relations, Nitrogen 

dioxide, Ozone, Particulate matter, 

Reporting and recordkeeping 

requirements, Volatile organic 

compounds. 

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

Dated: September 27, 2005. 

Richard Greene, 

Regional Administrator, Region 6. 

[FR Doc. 05–19994 Filed 10–4–05; 8:45 am] 

BILLING CODE 6560–50–P 

ENVIRONMENTAL PROTECTION 

AGENCY 

40 CFR Part 52 

[R06–OAR–2005–TX–0033; FRL–7981–2] 

Approval and Promulgation of Air 

Quality Implementation Plans; Texas; 

Highly Reactive Volatile Organic 

Compound 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 concerning the 

Highly Reactive Volatile Organic 

Compound Emissions Cap and Trade 

Program for the Houston/Galveston/ 

Brazoria ozone nonattainment area. 

These revisions were adopted by the 

Texas Commission on Environmental 

Quality on December 01, 2004, as new 

sections 101.390–101.394, 101.396, 

101.399–101.401, and 101.403, and 

submitted to EPA as a SIP revision on 

December 17, 2004. In related 

rulemakings today, EPA is also 

proposing approval of additional 

revisions to the Texas State 

Implementation Plan. 

DATES: Comments must be received on 

or before November 4, 2005. 

ADDRESSES: Submit your comments, 

identified by Regional Material in 

EDocket (RME) ID No. R06–OAR–2005–

TX–0033, 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–0033. 

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 website 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 am and 

4:30 pm 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 

Federal Register / Vol. 70, No. 192 / Wednesday, October 5, 2005 / Proposed Rules 58139 

214–665–6762; e-mail address 

wiley.adina@epa.gov. 

SUPPLEMENTARY INFORMATION: 

Throughout this document wherever 

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

EPA. 

Outline 

I. Highly Reactive Volatile Organic 

Compound Emissions Cap and Trade 

Program 

A. What action is EPA proposing? 

B. HECT Program Summary 

1. Why did Texas develop the HECT? 

2. How do HRVOCs lead to ozone problems 

in the HGB area? 

3. How is this document related to the HGB 

ozone attainment demonstration? 

4. How does the HECT work? 

C. EPA’s Analysis 

1. How did EPA review and evaluate the 

HECT EIP? 

2. What criteria did EPA use to analyze the 

HECT EIP? 

3. What is EPA’s analysis of the 

fundamental principle of integrity? 

4. What is EPA’s analysis of the 

fundamental principle of equity? 

5. What is EPA’s analysis of the 

fundamental principle of environmental 

benefit? 

6. Does the HECT EIP violate the integrity 

of other programs? 

7. What is EPA’s analysis of the interaction 

between the annual HRVOC cap and the 

short-term HRVOC limit? 

8. What is EPA’s analysis of the HECT EIP 

with respect to section 110(l) of the 

Clean Air Act? 

D. Conclusion 

II. General Information 

III. Statutory and Executive Order Reviews 

I. Highly-Reactive Volatile Organic 

Compound Emissions Cap and Trade 

Program 

A. What action is EPA proposing? 

EPA is proposing approval of the 

Highly Reactive Volatile Organic 

Compound Emissions Cap and Trade 

(HECT) Economic Incentive Program 

(EIP), published at Texas Administrative 

Code (TAC) Title 30, Chapter 101 

General Air Quality Rules, Subchapter 

H, Division 6, Sections 101.390–

101.394, 101.396, 101.399–101.401, and 

101.403. These revisions were 

submitted to EPA on December 17, 

2004. Once approved, the HECT EIP 

will be an element of the Texas State 

Implementation Plan (SIP) for the 

Houston/Galveston/Brazoria (HGB) 

ozone nonattainment area. 

B. HECT Program Summary 

1. Why did Texas develop the HECT? 

The HECT program was adopted as a 

State regulation on December 01, 2004. 

The Texas Commission on 

Environmental Quality (TCEQ) 

developed the program as part of its 

mid-course review of the 1-hour ozone 

attainment plan for the HGB ozone 

nonattainment area. The mid-course 

review showed that ozone reductions 

comparable to those achieved by the 90 

percent reduction in industrial nitrogen 

oxide (NOX) emissions required in the 

November 2001 (66 FR 57160) approved 

SIP could be achieved through a 

combination of 80 percent reduction in 

industrial NOX emissions and 

additional targeted control of certain 

highly-reactive volatile organic 

compounds (HRVOCs). TCEQ has 

chosen to revise its attainment strategy 

accordingly, decreasing the emphasis on 

NOX control and requiring additional 

reductions of HRVOCs. The HECT 

program is part of TCEQ’s plan for 

achieving those additional HRVOC 

reductions. 

2. How do HRVOCs lead to ozone 

problems in the HGB area? 

Ground-level ozone forms when 

volatile organic compounds (VOCs) 

react with NOX compounds in the 

presence of sunlight. Some VOCs react 

more quickly in the photochemical 

reaction than other VOCs; which can 

result in rapid spikes of ozone 

formation. TCEQ has identified a 

number of VOCs in the HGB 

nonattainment area that behave in this 

manner: ethylene; propylene; all 

isomers of butene, alpha-butylene, and 

beta-butylene; and 1,3-butadiene. These 

VOCs are now classified by TCEQ as 

HRVOCs in 30 TAC Chapter 115. 

3. How is this document related to the 

HGB ozone attainment demonstration? 

The HECT program is part of the 

revised Texas plan to reduce ozone 

levels through the reduction of 

HRVOCs. The purpose of this document 

is to explain our proposed action on the 

HECT and why we believe the HECT is 

consistent with the Clean Air Act and 

with our policies on trading programs. 

In this document, we are not reviewing 

the impact on the HGB ozone 

attainment demonstration of the State’s 

request to change from 90 percent to 80 

percent NOX control. We are evaluating 

that change in strategy and its 

relationship to section 110(l) of the 

Clean Air Act in our review of the 

revisions to the overall attainment 

demonstration (RME Docket R06–OAR–

2005–TX–0018). When we take final 

action on the attainment demonstration, 

we will also take final action on the 

HECT, in a separate rule. 

4. How does the HECT work? 

The HECT program is similar to the 

multi-source emissions cap-and-trade 

program described in EPA’s EIP 

Guidance ‘‘Improving Air Quality with 

Economic Incentive Programs’’ (EPA–

452/R–01–001, January 2001). A multisource emissions cap-and-trade program 

is designed to limit the total emissions 

from a certain category or group of 

sources to a level needed for an area to 

attain or maintain a national ambient air 

quality standard (NAAQS) and to allow 

sources flexibility in complying with 

their emission limits. In the HECT, 

TCEQ has established an annual 

HRVOC cap at the level relied on for 

attainment of the NAAQS for 1-hour 

ozone in 2007 in the revised attainment 

demonstration. As noted above, we are 

evaluating the merits of that 

demonstration in a separate rule (RME 

Docket R06–OAR–2005–TX–0018). 

Under the HECT, in Harris County 

TCEQ has defined an HRVOC as one or 

more of the following VOCs: 1,3- 

butadiene; all isomers of butene, alphabutylene, and beta-butylene; ethylene; 

and propylene. In Brazoria, Chambers, 

Fort Bend, Galveston, Liberty, 

Montgomery, and Waller Counties, an 

HRVOC is defined as ethylene and 

propylene. These compounds were 

identified based on their reactivity and 

prevalence in the HGB emissions 

inventory. 

The HECT applies to each site in the 

HGB area that is subject to requirements 

in 30 TAC Chapter 115, Subchapter H, 

Division 1 for Vent Gas Control or 

Division 2 for Cooling Tower Heat 

Exchange Systems. EPA proposed 

approval of these HRVOC controls at 70 

FR 17640, April 07, 2005. The HECT 

rule, at 30 TAC section 101.391, 

incorporates the definition of ‘‘site’’ at 

30 TAC section 122.10: ‘‘the total of all 

stationary sources located on one or 

more contiguous or adjacent properties, 

which are under common control or the 

same person (or persons under common 

control).’’ Any HRVOC-emitting vent 

gas streams, flares, and cooling tower 

heat-exchange systems at these sites will 

be subject to the HECT and considered 

covered facilities. A site can have one 

covered facility or any combination of 

covered facilities. Each site that meets 

these requirements, or elected to opt in 

by April 30, 2005, will always be subject 

to the HECT. 

Sites in the HGB area that have the 

potential to emit ten tons per year or 

less of HRVOCs from all covered 

facilities at the site are exempt from the 

HECT. These exempt sites had the 

opportunity to opt in to the HECT by 

notifying the TCEQ Executive Director 

in writing by April 30, 2005. Two sites 

in the HGB area submitted the opt-in 

notification to the TCEQ. No additional 

exempt sites will be eligible to opt in. 

58140 Federal Register / Vol. 70, No. 192 / Wednesday, October 5, 2005 / Proposed Rules 

Additionally, all sites in Brazoria, 

Chambers, Fort Bend, Galveston, 

Liberty, Montgomery, and Waller 

Counties (the ‘‘seven surrounding 

counties’’) are exempt from all HECT 

requirements other than the Level of 

Activity Certification requirements of 30 

TAC section 101.401. When TCEQ 

proposed the HECT program, industry 

commented that the representations for 

HRVOC emissions in their air permits 

were significantly lower than the 

HRVOC cap that would be imposed on 

the seven county area. Sites in these 

seven surrounding counties agreed to 

take enforceable permit limits on 

propylene and/or ethylene instead of 

participating in the cap and trade 

program. In responding to comments on 

the proposal, TCEQ stated that it would 

only consider retaining the exemption if 

each site with a potential to emit more 

than 10 tpy of HRVOC established 

enforceable limits. The documentation 

establishing such enforceable limits was 

due to TCEQ by April 30, 2005. TCEQ 

will review these Level of Activity 

Certifications for sites in these counties 

to ensure that the enforceable limits 

achieve reductions comparable to those 

that would occur under the cap. Section 

101.392 allows TCEQ to end this 

exemption by issuing public notice of 

its revocation. 

The cap consists of allowances 

allocated by the TCEQ Executive 

Director to each facility in the HECT by 

January 1 of each year, beginning with 

January 1, 2007. Allocations are 

determined based on a site’s 

contribution to overall level of activity 

and the area cap for HRVOCs. An 

allowance is the authorization to emit 

one ton of HRVOC emissions during a 

control period; the control period is the 

calendar year. The initial HECT control 

period begins January 1, 2007. A facility 

can choose to operate at, above, or 

below its allowance budget. A source 

operating below its allowance budget 

can bank or trade its allowances for use 

only in the next control period. A 

source operating above its allowance 

budget must purchase excess 

allowances from another source to 

demonstrate compliance with the cap. 

Beginning March 1, 2008, and no later 

than March 1 following the end of every 

control period, each facility must hold 

a quantity of allowances in its 

compliance account that is equal to or 

greater than the total emissions of 

HRVOCs emitted during the control 

period just ending. If a facility’s actual 

emissions of HRVOCs during a control 

period exceed the amount of allowances 

held in the compliance account on 

March 1, allowances for the next control 

period will be reduced by an amount 

equal to the emissions exceeding the 

allowances in the compliance account, 

plus an additional 10 percent. This 

deduction does not preclude any 

additional enforcement action by the 

TCEQ. Additionally, if the site’s 

compliance account does not contain 

sufficient allowances to cover this 

deduction, the TCEQ Executive Director 

may issue a notice of deficiency to the 

owner or operator. The owner or 

operator will then have 30 days from the 

notice of deficiency to purchase or 

transfer sufficient allowances to cover 

its compliance obligation. The HECT 

includes a provision to allow a facility 

to use emission reduction credits (ERCs) 

of less-reactive VOCs generated under 

the Texas Emission Credit Banking and 

Trading program (the ‘‘ERC rule’’) in 

lieu of HECT allowances if the ERCs are 

generated in the HGB area and the 

generating facility meets additional 

monitoring and reporting requirements. 

The HECT also includes a provision that 

exempts HRVOC emissions that are 

above the short-term HRVOC limit 

established in 30 TAC Chapter 115 from 

being counted towards a site’s annual 

cap. 

C. EPA’s Analysis 

1. How did EPA review and evaluate the 

HECT EIP? 

Generally, SIP rules must be 

enforceable and must not interfere with 

attainment, reasonable further progress 

or any applicable requirement of the 

Clean Air Act. 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 by 

a State as part of a SIP 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 nonbinding 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 HECT program as 

compared to the EIP Guidance is in the 

Technical Support Document (TSD) for 

the TCEQ Highly Reactive Volatile 

Organic Compound 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 HECT EIP? 

As described in detail in the EIP 

Guidance, EPA has identified three 

fundamental principles that apply to all 

EIPs: (1) Integrity (meaning that credits 

are based on emission reductions that 

are surplus, enforceable, quantifiable, 

and permanent), (2) equity, and (3) 

environmental benefit. The fundamental 

principles can apply to an EIP in its 

entirety (the programmatic level) or to 

individual sources (the source-specific 

level). EPA evaluated the HECT EIP 

against these three fundamental 

principles, specific concerns applicable 

to multi-source cap-and-trade programs, 

and applicable Clean Air Act 

requirements. Our complete analysis of 

the HECT EIP is contained in the TSD 

for this action. 

3. What is EPA’s analysis of the 

fundamental principle of integrity? 

The integrity principle consists of the 

qualities of surplus, enforceable, 

quantifiable, and permanent. 

Integrity Element One—Surplus. The 

first element of integrity is to determine 

whether the emissions reductions 

targeted by the EIP are surplus. 

Emission reductions are surplus if they 

are not otherwise relied on by the State 

in any other air quality-related programs 

including: the SIP, SIP-related 

requirements such as transportation 

conformity, other adopted TCEQ 

measures not in the SIP, and Federal 

rules that focus on reducing precursors 

of criteria pollutants such as new source 

performance standards. Additionally, if 

the multi-source emission cap-and-trade 

program is claiming reductions, the 

State must demonstrate that the cap on 

all emissions is below the threshold that 

would have been set for the affected 

sources before the program was 

implemented. The surplus element does 

not apply to the individual sources 

participating in a multi-source emission 

cap-and-trade program because sources 

have the option of making reductions or 

purchasing unused allowances from 

other facilities in the cap-and-trade 

program. 

At the programmatic level, EPA has 

determined that the HECT program 

satisfies the integrity element of surplus. 

TCEQ established the cap on HRVOC 

emissions based on historical activity 

levels, air quality data, and modeling 

completed during the mid-course SIP 

review. To address uncertainty in the 

HRVOC inventory, TCEQ included a 

five percent buffer in the cap. The 

development of the cap level and the 5 

Federal Register / Vol. 70, No. 192 / Wednesday, October 5, 2005 / Proposed Rules 58141 

percent buffer ensures that the cap will 

result in overall HRVOC emission 

reductions in the HGB area. Section 

101.393 of the HECT specifically 

requires that reductions be surplus in a 

programmatic sense, by stating that 

allowances under the HECT may only 

be used for the purposes described in 

the rule. 

The VOC ERCs eligible for conversion 

into HECT allowances must also meet 

the surplus criteria of the ERC rule at 30 

TAC Chapter 101, Subchapter H, 

Division 1. EPA is not evaluating the 

ERC rule in this document. For further 

discussion of how the Division 1 ERCs 

are surplus, please refer to our separate 

action on the ERC Rule at RME Docket 

R06–OAR–2005–TX–0006. 

For the above reasons, and as further 

explained in the TSD, EPA has 

concluded that the HECT is consistent 

with Clean Air Act requirements and 

EPA Guidance expectations for the 

integrity element of surplus. 

Integrity Element Two—Enforceable. 

The generation and use of emission 

reductions and other required actions in 

the EIP are enforceable on a 

programmatic basis if they are 

independently verifiable and if the EIP 

defines program violations and 

identifies those liable for violations. For 

enforceability, both the State and EPA 

should have the ability to apply 

penalties and secure appropriate 

corrective actions where applicable. 

Citizens should also have access to all 

the emissions-related information 

obtained from the source so that citizens 

can file suits against sources for 

violations. Required actions must be 

practicably enforceable. At the sourcespecific level, the source must be liable 

for violations; the liable party must be 

identifiable; and the State, the public, 

and EPA must be able to independently 

verify a source’s compliance. 

Additionally, EIPs that involve trading 

must incorporate provisions for 

assessing liability, provisions to assess 

penalties against participating sources, 

and provisions for sources with Title V 

permits. In multi-source emission capand-trade EIPs, each source owner or 

operator must be responsible for owning 

enough allowances to cover its 

emissions for the given time period and 

for providing clear title to the 

allowances it transfers. 

EPA has determined that the HECT 

program is enforceable. The monitoring 

and testing protocols established in 30 

TAC Chapter 115 are adequate for 

independent verifications of emission 

reductions and for demonstrating 

practicable enforceability. Additionally, 

the VOC ERCs that are eligible for 

conversion into HECT allowances must 

be quantified using the monitoring and 

testing methods under sections 115.725 

or 115.764 and must meet the 

recordkeeping and reporting 

requirements under sections 115.726 

and 115.766. An owner or operator can 

violate the HECT by either not having 

enough allowances to cover its actual 

emission level for a control period or by 

failing to submit an Annual Compliance 

Report on time, as defined at sections 

101.394(e) and 101.400(b). The liable 

party is either the owner or operator of 

a subject facility. Information to be 

made available to the public is 

addressed at sections 101.399(b)(3), 

101.399(c)(3), 101.399(d)(3), 

101.403(a)(3), and 101.403(b). The 

allowance banking and trading 

provisions in section 101.399 also 

provide clear title to the allowances 

transferred. 

Penalties, corrective action, and 

citizen filing of lawsuits are not 

addressed in the HECT rules but are in 

separate State laws and regulations. In 

particular, Texas Water Code section 

7.051 provides for the assessment of 

administrative penalties by TCEQ, and 

section 7.032 provides for injunctive 

relief by TCEQ. The TCEQ enforcement 

rule at 30 TAC section 70.5 incorporates 

remedies found in the state statutes 

(Texas Water Code and the Texas Health 

and Safety Code), and permits referrals 

to EPA for civil, judicial or 

administrative action. It is our 

conclusion the TCEQ has adequate legal 

authority to enforce the HECT program. 

Once we approve the HECT rule into the 

SIP, EPA will be able to enforce it under 

section 113 of the Clean Air Act. 

Recordkeeping requirements specific to 

the HECT program are set forth at 

section 101.400. 

For the above reasons, and as further 

explained in the TSD, EPA has 

concluded that the HECT is consistent 

with Clean Air Act requirements and 

EPA Guidance expectations for the 

integrity element of enforceability. 

Integrity Element Three—

Quantifiable. On a programmatic basis, 

emissions and emission reductions 

attributable to an EIP are quantifiable if 

the source can reliably and replicably 

measure or determine them. The 

generation or use of emission reductions 

by a source or group of sources is 

quantifiable on a source-specific basis if 

the sources can reliably calculate the 

amount of emissions and/or emission 

reductions occurring during the 

implementation of the program, and 

replicate the calculations. Additionally, 

individual sources participating in a 

multi-source emission cap-and-trade 

program must also quantify total 

emissions per unit of time. All EIPs 

should incorporate provisions for 

predicting results, addressing 

uncertainty, approving quantification 

protocols, and emission quantification 

methods. 

EPA has determined that the HECT 

program addresses the necessary 

provisions for quantifiability. Emissions 

and/or emission reductions under the 

HECT follow the monitoring and testing 

protocols in Chapter 115, thus satisfying 

the need to be reliably and replicably 

measured. Sections 115.725 and 115.764 

require sites to install and operate 

continuous monitoring systems. Sources 

subject to the HECT will quantify total 

emissions per unit time by submitting 

the required Annual Compliance Report 

detailing actual HRVOC emissions 

during the control period. 

Integrity Element Four—Permanent. 

To satisfy the permanence element of 

the integrity principle, a compliance 

flexibility EIP must ensure that no 

emission increases (compared to 

emissions if there was no EIP) occur 

over the time defined in the SIP. For a 

programmatic reduction EIP, the 

emissions reductions are permanent if 

the State is able to ensure that the 

reductions occur over the duration of 

the EIP, and for as long as the 

reductions are relied on in the SIP. 

EPA has determined that the HECT 

program meets the definition of a 

compliance flexibility EIP because it 

provides sites with flexibility in meeting 

existing SIP requirements and lowers 

the cost of implementing a SIP. The 

HECT also meets the definition of a 

programmatic reduction EIP because the 

cap is established at a level that will 

achieve emission reductions beyond 

what are currently in the SIP. The HECT 

rules and other elements of the HGB 

attainment demonstration are designed 

to ensure that programmatic reductions 

occur over the duration of the HECT 

program, and for as long as they are 

relied on in the SIP. The TCEQ 

Executive Director will allocate 

allowances (the authorization to emit 

one ton of HRVOC) each year on January 

1, starting January 1, 2007. The integrity 

element of permanence does not apply 

to individual sources participating in 

the HECT because sources have the 

option to make reductions or purchase 

unused allowances from other sources 

program. We conclude that the HECT 

EIP satisfies the integrity element of 

permanence. 

4. What is EPA’s analysis of the 

fundamental principle of equity? 

Equity Element One—General Equity. 

General equity means that an EIP 

ensures that all segments of the 

population are protected from public 

58142 Federal Register / Vol. 70, No. 192 / Wednesday, October 5, 2005 / Proposed Rules 

health problems and no segment of the 

population receives a disproportionate 

share of a program’s disbenefits. 

The HECT EIP is designed to benefit 

all communities in the HGB area. The 

cap in Harris County permanently caps 

emissions of four HRVOCs—ethylene, 

propylene, 1,3-butadiene, and all 

isomers of butenes. Not only will the 

HECT reduce the amount of ozone 

precursors emitted in Harris County, it 

permanently caps emissions of a 

hazardous air pollutant. The enforceable 

limits in the seven surrounding counties 

for ethylene and propylene, which are 

the result of permit limits agreed to 

between TCEQ and the affected sites, 

will also reduce emissions of ozone 

precursors. Additionally, section 

101.394(e) requires an owner or operator 

of a facility that emits more HRVOCs 

than its allowance holding to surrender 

an amount of allowances equal to the 

exceedance plus an additional 10 

percent as an environmental benefit. We 

conclude that the HECT meets the 

requirements for general equity. 

Equity Element Two—Environmental 

Justice. The environmental justice 

element applies if the EIP covers VOCs 

and could disproportionately impact 

communities populated by racial 

minorities, people with low incomes, 

and/or Tribes. EIPs that include 

hazardous air pollutants (HAPs) must 

also satisfy the expectations of 

Appendix 16.2 of the EIP Guidance, 

which addresses prevention and/or 

mitigation of impacts from potential or 

actual trades involving HAPs, ensuring 

that sufficient information is made 

available for meaningful review and 

participation, public participation, and 

periodic program evaluations. 

The HECT is designed to permanently 

cap emissions of four HRVOCs, 

including one HAP (1,3-butadiene). EPA 

has evaluated the HECT with respect to 

the HAP Framework and EIP Guidance 

and determined that the environmental 

justice element of equity has been met. 

Compliance with the HAP Framework 

element for the prevention and/or 

mitigation of localized impacts from 

potential or actual trades involving 

HAPs is demonstrated through the 

HECT audit program established in 

section 101.403. Under this section, the 

TCEQ Executive Director may limit or 

discontinue trading of allowances as a 

remedy for problems resulting from 

trading in a localized area of concern. 

Additionally, the TCEQ Executive 

Director must approve all trades of 

HECT allowances. 

Compliance with the HAP Framework 

element for sufficient information is 

demonstrated further by section 

101.399, which provides that all 

information regarding price and 

quantity of allowances trades must be 

available to the public. Additionally, the 

required annual compliance reports and 

periodic program audits must be 

available to the public. 

The HECT program satisfies the HAP 

Framework element for public 

participation in the development, 

implementation, and evaluation of the 

program. In the development of the 

HECT rules, TCEQ held public hearings 

in Austin, Beaumont, and Houston. 

TCEQ also has an extensive stakeholder 

list of approximately 150 contacts who 

receive copies of all TCEQ rulemaking 

actions for comment and participation 

in development. During the 

implementation of the HECT EIP, the 

public has the opportunity to view the 

Annual Compliance Reports submitted 

by each source and the end of year 

reports prepared by the TCEQ in 

accordance with section 101.403(b). 

Public participation is incorporated into 

the evaluation of the HECT EIP at 

section 101.403(a)(3), which provides 

for public participation in the audit of 

the HECT rule. 

The final element of the HAP 

Framework, program evaluations, is 

satisfied at section 101.403, which 

establishes the HECT audit program. 

The rule requires a program audit every 

three years, with emphasis on the 

impact on attainment and compliance 

by the participants. The audit results 

must be available for public inspection. 

As an added measure that 

demonstrates general equity and 

environmental justice, TCEQ has 

developed the Toxicological Risk 

Assessment (TARA) Effects Evaluation 

Procedure. Under this process, which is 

authorized under section 382.0518(b)(2) 

of the Texas Health and Safety Code, 

TCEQ may not grant a permit to a 

facility and a facility may not begin 

operating unless it is demonstrated that 

emissions will not have an adverse 

impact on public health and welfare. 

This demonstration is accomplished by 

(1) establishing off-property groundlevel-air concentrations of constituents 

resulting from the proposed emissions, 

and (2) evaluating these concentrations 

for the potential to cause adverse health 

or welfare effects. The TARA Effects 

Evaluation is used to evaluate the use of 

HECT allowances in an air permit. The 

TCEQ guidance document ‘‘How to 

Determine the Scope of Modeling and 

Effects Review for Air Permits’’ (RG–

324, Oct. 2001) has a detailed 

discussion of the TARA Effects 

Evaluation procedures. 

5. What is EPA’s analysis of the 

fundamental principle of environmental 

benefit? 

All EIPs must be environmentally 

beneficial. The HECT demonstrates an 

environmental benefit by setting a cap 

on HRVOCs that will help the HGB area 

in achieving attainment of the NAAQS 

as expeditiously as practicable. 

Additionally, the HECT places a cap on 

emissions of a HAP (1,3-butadiene), 

thereby lowering the emissions of this 

toxic chemical in the HGB area. Sources 

that emit more HRVOCs than they have 

allowances will also be required to 

surrender the amount equal to the 

exceedance plus 10 percent as an 

environmental benefit. 

6. Does the HECT EIP violate the 

integrity of other programs? 

In addition to determining the 

programmatic and source-specific 

integrity elements for an EIP, it is 

important to determine whether the EIP 

generates emission reductions in a 

manner consistent with other EIPs 

functioning in the same area. One 

feature of the HECT combines two of the 

State of Texas’ Emissions Banking and 

Trading Programs, in that it allows a 

participating facility to convert 

reductions of less-reactive VOCs, 

generated and banked according to the 

30 TAC Chapter 101, Subchapter H, 

Division 1 Emission Credit Banking and 

Trading rule, into a yearly HECT 

allocation. The site’s owner or operator 

quantifies the VOC emission reduction 

credits (ERCs) by performing the 

expanded monitoring and testing 

methods under 30 TAC sections 115.725 

or 115.764 and using the recordkeeping 

and reporting outlined in 30 TAC 

sections 115.726 and 115.766. ERCs 

eligible for this conversion must be 

generated from a reduction at a site in 

the HGB area; from a reduction strategy 

implemented after December 31, 2004; 

and from a reduction in VOC species 

other than those defined as HRVOCs 

under 30 TAC Chapter 115.10. 

Additionally, the VOC ERCs must be 

real, quantifiable, surplus, enforceable, 

and permanent as specified in the ERC 

rule at section 101.302 at the time the 

ERC is converted. Section 101.399 of the 

HECT specifies that VOC reductions 

from the installation of best available 

control technology do not qualify for 

conversion into HRVOC allocations. 

This restriction on ERC generation is in 

addition to the surplus requirements of 

section 101.302. To satisfy the criteria of 

the ERC program, the reductions must 

be surplus to required local, State, and 

Federal programs such as the 

application of maximum achievable 

Federal Register / Vol. 70, No. 192 / Wednesday, October 5, 2005 / Proposed Rules 58143 

control technology, new source 

performance standards, or lowest 

achievable emission rate. 

The conversion of less-reactive VOC 

ERCs into HRVOC allowances is limited 

to five percent of the site’s initial 

HRVOC allocation, and is based on VOC 

to HRVOC conversion ratios specified 

by the Maximum Incremental Reactivity 

(MIR) scale. The MIR scale is based on 

research by Dr. William Carter and 

others at University of California at 

Riverside, who sought a method of 

quantifying the reactivity differences 

among VOCs (Carter, 1995; Carter et al., 

1995). The MIR is a measure of the 

number of grams of ozone that can be 

formed from one gram of the subject 

VOC, under ideal conditions. To 

determine the relative importance of 

different VOCs from a reactivity 

perspective, reactivity-weighted 

concentrations of specific compounds or 

groups of compounds were calculated. 

Reactivity-weighted concentrations take 

into consideration the substances’

capability to form ozone as well as their 

measured ambient concentrations. 

As further discussed in the TSD for 

this rule and in the attainment 

demonstration TSD, the program feature 

allowing generation of HRVOC 

allowances using reductions in lessreactive VOCs does not prevent 

approval of the program, because the 

expected impact on the attainment 

demonstration is expected to be 

minimal. Texas is making an allowance 

for a small increase in HRVOCs (up to 

5 percent) to be offset with larger 

reductions in less-reactive VOCs. 

Modeling sensitivity analyses were 

performed by the University of Texas 

and documented in a report, titled 

‘‘Survey of Technological and Other 

Measures to Control HRVOC Event 

Emissions.’’ In this report, trades of lessreactive VOCs much larger than would 

be allowed with the 5 percent cap were 

considered. In the sensitivity runs, the 

impacts ranged from a 2.1 ppb increase 

to a 3 ppb decrease in the peak ozone, 

depending on the episode day and the 

assumptions made about the lessreactive chemical that was reduced. The 

researchers looked at the impact of 

adding between 15 and 33 tpd of 

HRVOC to the model while removing 

the requisite amount of less-reactive 

VOCs. Under the rule, capping trades at 

a 5 percent increase in highly-reactive 

VOCs, an increase of less than 2 tpd of 

HRVOCs would be all that could be 

allowed. Therefore, the impact of the 

actual program is expected to be 

minimal. 

In addition, for sources that 

participate in the program, this feature 

will have the advantage of 

implementing additional source 

monitoring on less-reactive VOCs. EPA 

proposed approval of the monitoring 

and testing methods in 30 TAC sections 

115.725 and 115.764 and the 

recordkeeping and reporting 

requirements in 30 TAC sections 

115.726 and 115.766 on April 07, 2005 

(70 FR 17640). Based on the above 

modeling that indicates that this limited 

conversion of less-reactive VOCs will 

have a minimal impact on ozone levels, 

EPA concludes that even with this 

feature, the HECT program provides 

compliance flexibility and a significant 

strengthening of the SIP by contributing 

to reduced ozone levels in the HGB area. 

Our proposed approval does not 

represent a general endorsement of the 

use of the MIR scale for use in SIPs that 

contain EIPs. In this instance, with the 

aforementioned technical support, we 

believe this is an acceptable approach, 

which is consistent with EPA’s recently 

issued ‘‘Interim Guidance on the 

Control of Volatile Organic Compounds 

in Ozone State Implementation Plans’’

(August 25, 2005). EPA will continue to 

investigate how best to incorporate 

reactivity concepts and consider 

changes to existing policy. 

7. What is EPA’s analysis of the 

interaction between the annual HRVOC 

cap and the short-term HRVOC limit? 

Texas has included features in the 

adopted HRVOC rules defining the 

interaction between the annual cap and 

short-term limit (established at 30 TAC 

Chapter 115, Subchapter H) that are 

unique to the HECT. Typically, all 

emissions during the year would be 

counted toward compliance with an 

annual cap. In establishing a cap-andtrade system for the petrochemical 

industry in the HGB area, TCEQ felt it 

necessary to consider the possibility of 

major upsets. TCEQ believed that nonroutine emissions from process upsets, 

while likely to occur, are not predictable 

and therefore could make management 

of emissions under an annual cap 

difficult. Therefore, TCEQ established in 

its rule that emissions above the 1200 

lb/hr short-term limit are not counted 

toward compliance with the annual cap 

but rather are expected to be controlled 

by the short-term limit. TCEQ was 

particularly concerned about the 

potential situation where a single large 

release could force a smaller source to 

shut down for the remainder of the year 

because its allowances had been 

exhausted. 

Although EPA agrees that a forced 

shutdown of smaller sources is possible, 

it believes that many upsets can be 

avoided by a source through the 

development and implementation of 

operation and maintenance plans that 

address start-up, shutdown and 

malfunction of process equipment and 

application of good air pollution control 

practices such as required by 40 CFR 

60.18(d). EPA notes that application of 

these procedures would significantly 

reduce the emissions associated with 

such start-up, shutdown, and 

malfunction events and could avoid the 

need for a forced shutdown. In addition, 

planning and management of emissions 

by the source, including participation in 

the allowance market, should also avoid 

a forced shutdown while ensuring 

compliance with the annual cap. 

Emissions above the short-term limit 

would still be subject to enforcement as 

a violation of the short-term limit, but 

only 1200 lbs would be reported for 

compliance with the annual cap during 

those hours where emissions exceed 

1200 lbs. It is our expectation that the 

root cause of the conditions giving rise 

to the emissions above the short-term 

cap will be identified and corrected. 

Moreover, the source is still required to 

use good air pollution control practices 

consistent with the applicable NSPS (40 

CFR 60.11(d)) and MACT standards or 

other applicable Federal or State 

programs. 

The structure of the Texas HECT 

program, which does not require 

emissions above the short-term limit to 

be counted against the annual cap, is a 

significant departure from past practices 

for cap-and-trade programs such as the 

Title IV Acid Rain program and the 

Houston NOX cap-and-trade program. 

EPA’s EIP Guidance regarding multisource emissions cap-and-trade 

programs indicates that all sources in 

the program must account for all of their 

emissions. See section 7.4 of the EIP 

Guidance. We believe, in this instance, 

that the approach of not counting 

emissions above the short-term limit 

toward the annual cap has both 

advantages and disadvantages as 

discussed below. We are inviting 

comment on the appropriateness of 

approving a program with this structure, 

as we remain concerned about excess 

emissions resulting from poor operation 

or poor maintenance. 

We believe that the structure of the 

HECT rule has the advantage of 

establishing a clear procedure for how 

emissions during non-routine events 

will be handled. For every hour during 

a large emissions event, the source will 

include 1200 lbs toward meeting its 

annual cap. This will avoid disputes 

about the validity of data during large 

emission events, when monitoring may 

be less reliable. The rule clearly defines 

the procedures to be followed during an 

emission event. Sources will have no 

58144 Federal Register / Vol. 70, No. 192 / Wednesday, October 5, 2005 / Proposed Rules 

choice but to ensure that at the end of 

the compliance period they have 

sufficient allowances to cover all of the 

emissions up to the 1200 lb limit, or else 

face deductions from their compliance 

account and other potential penalties. In 

addition, emissions above that level 

would be subject to enforcement under 

the short-term limit. 

On the other hand, the structure of the 

rule has the disadvantage that some of 

the incentive to prevent large releases is 

lost by excluding emissions above the 

short-term limit from the annual cap. In 

addition, some of the incentive for 

reducing the size of large events, when 

they occur, may also be lost. With the 

annual cap-and-trade program’s 

exclusion of emissions above the hourly 

(short-term) limit, it is probable that 

fewer violations of the annual cap will 

occur than if the exclusion had not been 

provided. For sources that would have 

violated the annual cap if emissions 

above the short-term limit were 

considered, it may be harder to promote 

systemic changes at those sources to 

reduce overall emissions. 

Having looked at the advantages and 

disadvantages, we are proposing 

approval of the HECT program. We are 

proposing approval because, even 

though it provides an exclusion for nonroutine emissions above the short-term 

limit from the annual cap, it provides 

new enforceable limits that are an 

improvement on the status quo. We 

believe the annual cap in conjunction 

with the short-term limit will achieve 

the goals of the attainment 

demonstration as indicated by the 

modeling analysis. The annual cap 

should result in the necessary 

reductions in routine emissions and the 

short-term limit should result in a 

reduction in the amount and frequency 

of non-routine emission events. We note 

that the program rules require TCEQ to 

audit the HECT program every three 

years, and facilities have to provide 

compliance reports annually, so it will 

be readily apparent if the goals of the 

HECT program are being achieved. 

We believe the program will achieve 

the necessary reductions in routine 

emissions because the size of the shortterm limit is such that only truly nonroutine emissions will not be counted 

toward the annual cap. Based on 

evaluation of the emission rates that 

were modeled in the January 2003 SIP, 

the 1200 lb/hour limit is expected to be 

about ten times larger than the average 

hourly emission rate at the largest 

sources of HRVOCs. This order of 

magnitude difference between the shortterm limit and the average annual 

hourly emissions ensures that sources 

will not routinely operate near or above 

the short-term limit, thus achieving the 

goal of reducing routine emissions. 

Also, while the structure of the 

HRVOC rules anticipates that emission 

events will not be completely 

eliminated, EPA believes that it 

provides sufficient disincentives that 

sources will sufficiently reduce the 

frequency and magnitude of large 

emissions events such that emission 

events would not be expected to 

frequently impact peak ozone levels. 

The University of Texas report 

‘‘Variable Industrial VOC Emissions and 

Their Impact on Ozone Formation in the 

Houston Galveston Area,’’ April 16, 

2004, estimated from historic 

information that it is probable that at 

least one event will occur annually at a 

time and location to impact peak ozone. 

This indicates that while emission 

events are frequent in the Houston area, 

emission releases at the place and time 

that impact peak ozone do not occur 

nearly as frequently. It is necessary to 

reduce the frequency of emission events 

so that emission events do not interfere 

with attainment of the 1-hour NAAQS, 

which only allows an average of one 

exceedence per year. Based on the 

study, we believe the hourly emission 

limit will achieve this goal. After the 

institution of the short-term limit, EPA 

expects that emissions events impacting 

peak ozone levels will be reduced in 

frequency to fewer than one per year. 

While other events may occur that 

impact ozone levels at other locations 

than where the peak ozone level occurs, 

these events, because they are occurring 

in areas with lower ozone levels, would 

not be expected to impact attainment of 

the 1-hour NAAQS. 

Again, EPA recognizes that the 

approach of providing this partial 

exclusion for emissions above the shortterm limit is a departure from past 

practice and our EIP Guidance. We 

currently believe this approach is only 

warranted in consideration of the HGB 

area’s unique situation that combines an 

extensive petrochemical complex and 

the availability of the extensive data and 

analysis. Consideration of this novel 

approach is warranted to balance the 

need to reduce both routine and upset 

emissions of HRVOC, but also 

recognizes that large upset emissions 

may never be completely eliminated in 

the petrochemical industry. Because of 

the uniqueness of this approach, 

however, we invite comment on of our 

proposed approval of this facet of the 

Texas plan. 

8. What is EPA’s analysis of the HECT 

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). In the 

case of the HECT program, we are 

proposing approval of a new set of 

measures instituting new controls on a 

class of VOCs that are more stringent 

than previous controls on VOCs. The 

HECT rules being proposed for approval 

provide no relief from any previously 

approved VOC rule or any other 

applicable requirement. Therefore, the 

proposed approval of the HECT rules is 

consistent with section 110(l). 

Here, however, as previously noted, 

the revisions to the HECT are a part of 

a revised ozone attainment strategy for 

the HGB area. In addition, we are 

reviewing the limited use of ERCs in the 

HECT. The revised strategy’s reduced 

level of industrial NOX control and the 

effect of the use of ERCs in the HECT 

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 

HECT therefore relies on the analysis 

conducted for the HGB attainment 

demonstration. Based on our analysis of 

the attainment demonstration, we 

conclude that the HECT, in conjunction 

with all other controls in the attainment 

demonstration, satisfies section 110(l). 

D. Conclusion 

EPA reviewed the HECT SIP submittal 

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 HECT EIP is approvable. EPA is 

proposing to approve the new sections 

101.390–101.394, 101.396, 101.399, 

101.401, and 101.403 submitted by 

TCEQ on December 17, 2004, for rule 

log number 2004–0058–101–AI. These 

rules provide new requirements that 

will reduce emissions of HRVOCs in the 

HGB ozone nonattainment area. 

We will not take final action on these 

rules until we finally approve the 

Federal Register / Vol. 70, No. 192 / Wednesday, October 5, 2005 / Proposed Rules 58145 

attainment demonstration. Additionally, 

the HECT program cannot be finally 

approved until the EPA finalizes 

approval of the 30 TAC Chapter 115 

HRVOC rules that provide the 

enforceable monitoring and 

recordkeeping requirements sufficient to 

demonstrate practicable enforceability 

and quantifiability. Provisions allowing 

ERC use in the HECT program will also 

not be fully approved until the rules for 

ERC generation and use have been 

approved. The attainment 

demonstration and the Chapter 115 and 

ERC rules are being considered in 

separate Federal Register notices. 

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 

The Office of Management and Budget 

(OMB) has exempted this regulatory 

action from Executive Order 12866, 

‘‘Regulatory Planning and Review.’’ (58 

FR 51735 (October 4, 1993)). This 

proposed rule is not a ‘‘significant 

energy action’’ as defined in Executive 

Order 13211, ‘‘Actions Concerning 

Regulations That Significantly Affect 

Energy Supply, Distribution, or Use’’ (66 

FR 28355 (May 22, 2001)), because it is 

not likely to have a significant adverse 

effect on the supply, distribution, or use 

of energy. 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, 

EPA has determined that this rule does 

not contain a Federal mandate that may 

result in expenditures of $100 million or 

more for State, local, or tribal 

governments in the aggregate, or on the 

private sector, in any one year. Thus, 

today’s rule is not subject to the 

requirements of sections 202 and 205 of 

the Unfunded Mandates Reform Act of 

1995 (UMRA) (Pub. L. 104–4). In 

addition, EPA has determined that this 

rule contains no regulatory 

requirements that might significantly or 

uniquely affect small governments in 

accordance with section 203 of UMRA. 

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, 

‘‘Consultation and Coordination with 

Indian Tribal Governments’’ (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, ‘‘Federalism’’

(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)). 

EPA interprets Executive Order 13045 

as applying only to those regulatory 

actions that are based on health or safety 

risks, such that the analysis required 

under section 5–501 of the Order has 

the potential to influence the regulation. 

This proposed rule is not subject to 

Executive Order 13045 because it 

approves a state program. 

Section 12 of the National Technology 

Transfer and Advancement Act 

(NTTAA) of 1995 (15 U.S.C. 272 note) 

requires Federal agencies to evaluate 

existing technical standards when 

developing a new regulation. To comply 

with NTTAA, EPA must consider and 

use ‘‘voluntary consensus standards’’

(VCS) if available and applicable when 

developing programs and policies 

unless doing so would be inconsistent 

with applicable law or otherwise 

impractical. In reviewing a SIP 

submission, EPA has no authority under 

the Clean Air Act, in the absence of a 

prior existing requirement for the State 

to use VCS, to disapprove a SIP 

submission for failure to use VCS. Thus, 

it would be inconsistent with applicable 

law for EPA to use VCS in place of a SIP 

submission that otherwise satisfies the 

provisions of the Clean Air Act and 

further consideration of VCS is not 

required. Under the Paperwork 

Reduction Act (PRA) (44 U.S.C. 3501 et 

seq.), OMB must approve all 

‘‘collections of information’’ by EPA. 

The Act defines ‘‘collection of 

information’’ as a requirement for 

‘‘answers to * * * identical reporting or 

recordkeeping requirements imposed on 

ten or more persons.’’ (44 U.S.C. 

3502(3)(A)). This proposed rule does not 

impose an information collection 

burden under the provisions of the PRA. 

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. 

58146 Federal Register / Vol. 70, No. 192 / Wednesday, October 5, 2005 / Proposed Rules 

Dated: September 27, 2005. 

Richard E. Greene, 

Regional Administrator, Region 6. 

[FR Doc. 05–19996 Filed 10–4–05; 8:45 am] 

BILLING CODE 6560–50–P 

ENVIRONMENTAL PROTECTION 

AGENCY 

40 CFR Part 52 

[R06–OAR–2005–TX–0006; FRL–7980–8] 

Approval and Promulgation of Air 

Quality Implementation Plans; Texas; 

Emission Credit Banking and Trading 

Program 

AGENCY: Environmental Protection 

Agency (EPA). 

ACTION: Proposed rule. 

SUMMARY: EPA is proposing to approve 

revisions to the Texas State 

Implementation Plan (SIP) concerning 

the Emission Credit Banking and 

Trading program. Additionally, EPA is 

proposing approval of a section of the 

Texas rules on Control of Air Pollution 

from Volatile Organic Compounds that 

cross-references the Emission Credit 

Banking and Trading program. We are 

also proposing approval of a subsection 

of Chapter 116 of the Texas 

Administrative Code (TAC), Control of 

Air Pollution by Permits for New 

Construction or Modification, which 

provides a definition referred to in the 

Emission Credit Banking and Trading 

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–0006, 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–0006. 

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 

EPA. 

Outline 

I. Emission Credit Banking and Trading 

Program 

A. What action is EPA proposing? 

B. Summary of the Emission Credit 

Banking and Trading program 

1. How does the ERC program work? 

2. What is the history of the ERC program? 

C. EPA’s Analysis 

1. How did EPA review and evaluate the 

ERC program? 

2. What criteria did EPA use to analyze the 

ERC program? 

3. What is EPA’s analysis of the 

fundamental principle of integrity? 

4. Does the ERC program the integrity of 

other programs? 

5. What is EPA’s analysis of the 

fundamental principle of equity? 

6. What is EPA’s analysis of the 

fundamental principle of environmental 

benefit? 

7. What is EPA’s analysis of the use of 

international emission reductions and