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 

Federal Register / Vol. 70, No. 192 / Wednesday, October 5, 2005 / Proposed Rules 58147 

other reductions from outside the area of 

use? 

8. What is EPA’s analysis of the crossreferenced rule language? 

9. What is EPA’s analysis of the ERC 

program with respect to section 110(l) of the 

Clean Air Act? 

D. Conclusion 

II. General Information 

III. Statutory and Executive Order Reviews 

I. Emission Credit Banking and Trading 

Program 

A. What action is EPA proposing? 

EPA is proposing approval of the 

Emission Credit Banking and Trading 

program, also referred to as the 

Emission Reduction Credit (ERC) 

program, enacted at Texas 

Administrative Code (TAC) Title 30, 

Chapter 101 General Air Quality Rules, 

Subchapter H, Division 1, sections 

101.300–101.304, 101.306, 101.309, and 

101.311. Also in this document, EPA is 

proposing approval of section 115.950 

in 30 TAC Chapter 115, Control of Air 

Pollution from Volatile Organic 

Compounds, which cross-references the 

ERC program. EPA is also proposing 

approval of the definition of ‘‘facility’’

published at 30 TAC Chapter 116, 

Control of Air Pollution by Permits for 

New Construction or Modification, 

Subchapter A, section 116.10(4). These 

revisions were provided in SIP revisions 

dated July 22, 1998; December 20, 2000; 

July 15, 2002; January 31, 2003, and 

December 06, 2004. 

B. Summary of the Emission Credit 

Banking and Trading program 

1. How does the ERC program work? 

In the ERC program, a source 

generates emission credits (ECs) from 

voluntary reductions that are surplus to 

any applicable local, state, and/or 

federal requirements. Emission credit is 

a generic term that encompasses 

reductions from stationary sources, 

emission reduction credits (ERCs), and 

reductions from mobile sources, mobile 

emission reduction credits (MERCs). 

Reduction strategies generating ECs are 

required to be permanent and will be 

made enforceable by a signed 

commitment from the generating 

facility. The source can then use these 

ECs later, or trade them to another 

source to use later. ECs can be used as 

an alternative means of compliance with 

the reduction requirements of 30 TAC 

Chapters 114, 115, and 117 (relating to 

Control of Air Pollution from Motor 

Vehicles; Control of Air Pollution from 

Volatile Organic Compounds; and 

Control of Air Pollution from Nitrogen 

Compounds), as offsets for 

Nonattainment New Source Review 

permits, or as annual allocations under 

the Mass Emission Cap and Trade 

Program (30 TAC Chapter 101, 

Subchapter H, Division 3, section 

101.356). Once applied to a facility for 

use, an EC is valid for the life of that 

facility. 

Eligible EC generator categories 

include facilities (including area 

sources); mobile sources; or any facility, 

including area sources, or mobile 

sources associated with actions by 

Federal agencies under 30 TAC 101.30 

(relating to Conformity of General 

Federal Actions to SIPs). The ERC rule, 

at 30 TAC section 101.300(13), 

incorporates the definition of ‘‘facility’’

at 30 TAC section 116.10: ‘‘a discrete or 

identifiable structure, device, item, 

equipment, or enclosure that constitutes 

or contains a stationary source 

including appurtenances other than 

emission control equipment.’’ ERCs and 

MERCs must be reviewed by the state to 

determine if they are creditable and 

certified by the TCEQ Executive 

Director before inclusion in the TCEQ 

ERC Registry. Additionally, ERCs and 

MERCs must be shown to be surplus at 

the time of use before being applied to 

a use strategy. 

Under the ERC rules, reductions of 

criteria pollutants, excluding lead, or of 

precursors of criteria pollutants for 

which an area is designated 

nonattainment, may qualify as ECs. 

Reductions of one pollutant may not be 

used to meet the reduction requirements 

for another pollutant, unless urban 

airshed modeling demonstrates that one 

ozone precursor may be substituted for 

another subject to approval by the TCEQ 

Executive Director and the EPA. Or, as 

provided in the ERC rules, if the facility 

generating the emission reductions is 

located outside the United States, one 

pollutant may be substituted for another 

if the substitution results in a greater 

health benefit and is of equal or greater 

benefit to the overall air quality of the 

area as determined by the TCEQ 

Executive Director. Additionally, the 

substitution must be from the reduction 

of an air contaminant for which the area 

has been designated as nonattainment or 

which leads to the formation of a 

criteria pollutant for which an area has 

been designated as nonattainment, and 

must be for any air contaminant for 

which the area has been designated as 

nonattainment or leads to the formation 

of a criteria pollutant for which the area 

has been designated as nonattainment. 

The user of the ECs generated outside 

the United States must demonstrate that 

the use of the reduction does not cause 

localized health impacts, as determined 

by the TCEQ Executive Director; submit 

all supporting information for 

calculations and modeling, and any 

additional information requested by the 

Executive Director; and must be located 

within 100 kilometers of the Texas—

Mexico border. An EC must be used in 

the nonattainment area in which it is 

generated unless the user has obtained 

prior written approval of the Executive 

Director and EPA. This approval 

requirement would, of course, apply to 

all transactions involving reductions 

made outside of the United States. 

Except for ECs generated outside of the 

United States, only emission reductions 

generated in nonattainment areas can be 

certified. Please see section I.C.7 for a 

discussion of issues associated with 

international trading. 

In this action, when we refer to this 

program as ‘‘the ERC rule’’ or ‘‘the ERC 

program’’ we are speaking of the entire 

Emission Credit Banking and Trading 

program, which encompasses both ERCs 

and MERCs. 

2. What is the history of the ERC 

program? 

The ERC rules establish a type of 

Economic Incentive Program (EIP). This 

program provides flexibility for sources 

in complying with certain State and 

Federal requirements. The ERC program 

was first adopted by the State at 30 TAC 

section 101.29 on December 23, 1997, 

for use with volatile organic compound 

(VOC) and nitrogen oxides (NOX) 

requirements in ozone nonattainment 

areas. Effective January 18, 2001, section 

101.29 was repealed and Chapter 101, 

Subchapter H, Divisions 1, 3, and 4 

were created for the ERC, Mass 

Emissions Cap and Trade (MECT) in the 

Houston/Galveston/Brazoria (HGB) 

ozone nonattainment area, and Discrete 

Emission Credit Banking and Trading 

(DERC) programs, respectively. The 

submittal effective April 14, 2002, 

amended the geographic scope of the 

ERC program to include provisions for 

reductions generated outside the United 

States at section101.302. The submittal 

effective January 17, 2003, completely 

reorganized the ERC and DERC program 

rules into more standardized formats 

parallel to each other, with a rule 

structure that followed a process of 

recognizing, quantifying, and certifying 

reductions as credits while explaining 

the guidelines for trading and using 

creditable reductions. This submittal 

amended sections 101.300, 101.301, 

101.302, 101.303, 101.304, 101.306, 

101.309, and 101.311. The most recent 

submittal of December 06, 2004, 

amended sections 101.300, 101.302, 

101.303, 101.304, and 101.311; 

expanding the ERC program to cover 

reductions of criteria pollutants 

(excluding lead) or precursors of criteria 

pollutants for which an area is 

58148 Federal Register / Vol. 70, No. 192 / Wednesday, October 5, 2005 / Proposed Rules 

designated nonattainment. The ERC 

program adoption and the subsequent 

revisions were submitted to EPA for 

approval into the SIP; however, this 

proposed approval is the first time we 

have acted on this program. In doing so 

we are acting on the original submission 

and all subsequent revisions through the 

December 06, 2004, submittal. 

C. EPA’s Analysis 

1. How did EPA review and evaluate the 

ERC program? 

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 economic 

incentive programs (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 ERC Program as 

compared to the EIP Guidance is in the 

Technical Support Document (TSD) for 

the TCEQ Emission Credit Banking and 

Trading Program. The TSD is available 

as specified in the section of this 

document identified as ADDRESSES. 

2. What criteria did EPA use to analyze 

the ERC program? 

Fundamental principles that apply to 

all EIPs are integrity (meaning that 

credits are based on emission reductions 

that are surplus, enforceable, 

quantifiable, and permanent), equity, 

and environmental benefit. These 

fundamental principles can apply to an 

EIP in its entirety (the programmatic 

level) or to individual sources (the 

source-specific level). EPA evaluated 

the ERC EIP against these three 

fundamental principles and applicable 

Clean Air Act requirements. Our 

complete analysis of the ERC program 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. Each 

element applies to the ERC EIP at the 

programmatic and source-specific level. 

Integrity Element One—Surplus. The 

element of surplus as it applies to the 

ERC program provides that 

programmatic emission reductions are 

surplus as long as they are not otherwise 

relied on 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. In addition to 

the programmatic concerns, if emission 

reductions are to be surplus at a sourcespecific level then the creation of the 

reductions cannot be required by a 

consent decree. Emission reductions 

measured by sources on a prospective 

basis are surplus if the projected 

baseline emissions from the source or 

group of sources are properly accounted 

for in the applicable inventory or by 

using an acceptable baseline. 

The ERC program satisfies the surplus 

criteria at both the programmatic and 

source-specific levels. For reductions to 

be certified as either ERCs or MERCs, 

the reduction must be enforceable, 

permanent, quantifiable, real, and 

surplus at the time of generation and 

use according to section 101.302(c). 

Surplus is defined in the ERC program 

at section 101.300(30) to be an emission 

reduction that is not otherwise required 

of a facility or mobile source by any 

local, state, or federal law, regulation, or 

agreed order and has not been otherwise 

relied upon in the SIP. Additionally, 

mobile sources must have been 

included in the attainment 

demonstration baseline emissions 

inventory as specified in section 

101.302(c)(2)(E). Section 101.303(b) 

specifies that the baseline for ERC 

generation may not exceed the quantity 

of emissions reported in the most recent 

year of emissions inventory used in the 

SIP. Also, for reductions being certified 

for use as new source review (NSR) 

offsets, the baseline emissions may not 

exceed the quantity of emissions 

reported in the emissions inventory 

used in the SIP in place at the time the 

reduction strategy was implemented. 

Integrity Element Two—Enforceable. 

Emission reductions use, generation, 

and other required actions in the EIP are 

enforceable on a programmatic basis if 

they are independently verifiable, 

define program violations, and identify 

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 in accordance 

with other EPA guidance on practical 

enforceability. At the source-specific 

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. In 

addition to addressing the enforcement 

concerns discussed above, trading EIPs 

must incorporate provisions for 

assessing liability, provisions to assess 

penalties against participating sources, 

and provisions for sources with Title V 

permits. 

The ERC program submittal satisfies 

the enforceable element of the integrity 

principle. ERCs will be made 

enforceable: 

• By amending or altering a New 

Source Review permit to reflect the 

emission reduction and set a new 

maximum allowable emission limit; 

• By voiding an NSR permit, when a 

facility has been shut down; 

• For any facility authorized by 

standard permit, standard exemption, or 

permit by rule, by certifying the 

emission reduction and the new 

maximum allowable emission limit on a 

PI–8 Form, Special Certification Form 

for Exemptions and Standard Permits, 

or other form deemed equivalent by the 

executive director; 

• For any facility not required to have 

a permit authorization by permit, 

standard permit, standard exemption, or 

permit by rule, by certifying the 

emission reduction and the new 

maximum allowable emission limit on 

an OPC–RE1 Form, Certified 

Registration of Emissions Form for 

Potential to Emit, or other form 

considered equivalent by the TCEQ 

Executive Director, or by obtaining an 

agreed order setting a new maximum 

allowable emission limit. 

The enforceability of MERCs is 

addressed at section 101.304(e)(4), 

where MERCs will be made enforceable 

by obtaining an agreed order that sets a 

new maximum allowable mobile source 

emission limit. 

The monitoring and testing protocols 

established in 30 TAC Chapters 115 and 

117 are adequate for independent 

verifications of emission reductions 

certified as ERCs or MERCs and for 

demonstrating practicable 

enforceability. Citizens’ access to all 

emissions-related information is 

addressed in section 101.302(h), which 

provides that all information submitted 

with notices, reports, and trades 

regarding the nature, quantity, and sales 

Federal Register / Vol. 70, No. 192 / Wednesday, October 5, 2005 / Proposed Rules 58149 

price of emissions associated with the 

use, generation, and transfer of an ERC 

or MERC is public information and may 

not be submitted as confidential. The 

rule also requires that all 

nonconfidential notices and information 

regarding the generation, availability, 

use, and transfer of ERCs and MERCs 

shall be immediately made available to 

the public. 

Penalties, corrective action, and 

citizen lawsuits are not addressed in the 

ERC rules, but are in separate laws and 

regulations. In particular, Texas Water 

Code section 7.051 provides for the 

assessment of administrative penalties 

by the TCEQ, and section 7.032 

provides for injunctive relief by the 

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 that TCEQ has 

adequate legal authority to enforce its 

ERC program. Once we approve the ERC 

rule into the SIP, EPA will be able to 

enforce it under section 113 of the Clean 

Air Act. Recordkeeping requirements 

specific to the ERC rule are set forth at 

section 101.302(g). 

For the above reasons, and as further 

explained in the TSD, EPA has 

concluded that the ERC program is 

consistent with Clean Air Act 

requirements and EIP 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 emission 

reductions occurring during the 

implementation of the program, and 

replicate the calculations. All EIPs 

should incorporate provisions for 

predicting results, addressing 

uncertainty, approving quantification 

protocols, and emission quantification 

methods. 

The ERC program meets the 

quantifiable criteria, because its rules 

require that reductions certified as ERCs 

or MERCs be quantifiable, which is 

defined as an emission reduction that 

can be measured or estimated with 

confidence using replicable 

methodology. As protocols for making 

these determinations, the ERC program 

refers to the emission quantification 

requirements of 30 TAC Chapter 115 

and Chapter 117. These monitoring 

requirements are reliable and replicable 

and have previously been approved by 

EPA. Generators/users wanting to use 

other quantification protocols must 

follow the quantification requirements 

at section 101.302(d)(1)(C), which 

include a requirement for EPA adequacy 

review of such alternate protocols. 

Under this section, if a facility or mobile 

source wishes to use a quantification 

protocol that has not been approved by 

EPA, the protocol must go through a 30 

day public comment period. The TCEQ 

will make the protocol available on the 

agency’s website during the public 

comment period. The TCEQ then 

submits the protocol and any comments 

received to the EPA for a 45 day 

adequacy review. During this 45 day 

period, EPA can approve or disapprove 

the protocol through a letter to the 

TCEQ. Outside of the 45 day time 

period, the EPA will propose a 

disapproval in the Federal Register if 

appropriate. After EPA has proposed a 

disapproval in the Federal Register, the 

quantification protocol will not be 

accepted for use. 

Integrity Element Four—Permanent. 

To satisfy the permanence element of 

the integrity principle, a compliance 

flexibility EIP must ensure that no 

emission increases occur over the time 

defined in the SIP. On a source-specific 

basis, the permanence expectations are 

met if the sources participating in the 

EIP commit to action or achieve 

reductions for a future period of time as 

defined in the EIP. 

The ERC program meets the 

permanence expectation at both the 

programmatic and source-specific 

levels. The rules at sections 101.303(d) 

and 101.304(e) describe the certification 

procedures to ensure that ERCs and 

MERCs generated are permanent so that 

the reduction will be effective for the 

life of the source. 

4. Does the ERC program 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. EPA 

published a final rule approving the 

HGB Mass Emissions Cap and Trade 

(MECT) program on November 14, 2001 

(66 FR 57252). With this action, EPA 

approved the use of ERCs within the 

MECT at§ 101.356(h). Subsequent 

revisions to the MECT rules submitted 

on January 31, 2003, and December 6, 

2004, have reorganized the MECT rules 

such that the provisions for ERC usage 

are now found at § 101.356(i), but the 

substance of the provision for ERC use 

in the MECT is the same as the version 

EPA approved. 

The MECT program was adopted by 

Texas in December 2000 as a 

compliance mechanism for the stringent 

NOX control requirements adopted 

under rules contained in the December 

2000 revision to the HGB SIP. In 

addition to providing flexibility in 

complying with the NOX control 

requirements, the MECT also provides a 

finite cap on NOX emissions at a level 

demonstrated as necessary for the HGB 

area to attain the NAAQS for ozone. The 

amount of allowances (the authorization 

to emit one ton of NOX) under the cap 

gradually decreases beginning in 2002 

to the final cap level in 2007. The final 

2007 cap level was developed through 

the Control Case modeling that included 

a controlled 2007 future case pointsource emissions inventory along with 

the addition of emissions from NOX

increases permitted after 1997 and 

increases in NOX emissions attributable 

to the use of banked discrete emission 

credits and ERCs. 

Emission reduction credits may be 

converted into a yearly allocation of 

allowances under the MECT at the rate 

of one ERC to one allowance per year 

only if the ERCs were generated before 

December 1, 2000, and provided that: 

1. The ERC is quantifiable, real, 

surplus, enforceable, and permanent as 

required in § 101.302 at the time the 

ERC is converted; 

2. The ERC was generated in the HGB 

area; 

3. The ERC was generated from a 

reduction in NOX; 

4. The ERC has not expired; and 

5. The owner of the ERC has prior 

approval from the TCEQ Executive 

Director. 

These ERCs, all generated before 

December 1, 2000, total 1.7 tons per day 

of additional NOX emissions that have 

been included in the attainment 

demonstration by TCEQ. 

TCEQ has also included a provision 

for ERC usage in the Highly-Reactive 

VOC Emissions Cap and Trade (HECT) 

program, submitted to EPA on 

December 17, 2004. The HECT is a 

mandatory cap on emissions of 

ethylene, propylene, 1,3-butadiene, and 

all isomers of butenes for covered 

facilities, at a site subject to 30 TAC 

Chapter 115, Subchapter H. The HECT 

has a provision to allow a facility to 

convert credits of less-reactive VOCs 

generated through the ERC rule into a 

yearly HRVOC allocation. ERCs eligible 

for this conversion must be generated: 

1. From a reduction at a site in the 

HGB area; 

58150 Federal Register / Vol. 70, No. 192 / Wednesday, October 5, 2005 / Proposed Rules 

2. From a reduction strategy 

implemented after December 31, 2004; 

and 

3. From a reduction in VOC species 

other than those defined as HRVOCs 

under 30 TAC Chapter 115.10. 

VOC reductions from the installation 

of best available control technology do 

not qualify for conversion into HRVOC 

allocations. Additionally, the ERCs must 

be real, quantifiable, surplus, 

enforceable, and permanent as specified 

in the ERC rule at § 101.302 at the time 

the ERC is converted. The conversion of 

less-reactive VOC ERCs into HRVOC 

allowances is limited to 5 percent of the 

site’s initial HRVOC allocation and is 

based on the Maximum Incremental 

Reactivity (MIR) Scale. 

EPA will evaluate the HECT and the 

generation of ERCs based on reactivity 

in a separate rulemaking (RME Dockets 

R06–OAR–2005–TX–0018 and R06–

OAR–2005–TX–0033). The ERC rule 

does not specifically state that ERCs can 

be used in the HECT, but addresses this 

cross-over at section 101.306(a)(7) 

where ERCs can be used for compliance 

with other requirements as allowable 

within the guidelines of local, state, and 

federal laws. TCEQ has informed EPA in 

a letter dated September 8, 2005, that it 

will revise the language in 

section101.306 to specify that ERCs may 

be used within the HECT program as an 

annual allocation of allowances as 

provided under 30 TAC section 101.399. 

The combination of the ERC and 

MECT and the ERC and HECT programs 

not only caps the NOX or HRVOC 

emissions in the HGB area at a level 

demonstrated as necessary for 

attainment of the ozone standard, but 

also attempts to provide flexibility 

while ensuring protection of the HGB 

SIP. 

5. What is EPA’s analysis of the 

fundamental principle of equity? 

The equity principle is composed of 

two elements—general equity and 

environmental justice. 

Equity Element One—General Equity. 

General equity means that an EIP 

ensures that all segments of the 

population are protected from public 

health problems and no segment of the 

population receives a disproportionate 

share of a program’s disbenefits. 

The ERC program satisfies the general 

equity element. Consideration of health 

impacts from emission credit use is 

included throughout the ERC rule. A 

facility wishing to use reductions of one 

pollutant to meet the reduction 

requirement of another pollutant must 

use urban airshed modeling to obtain 

TCEQ and EPA approval. If the facility 

generating the reductions is located 

outside the United States, the 

substitution must result in a greater 

health benefit and be of equal or greater 

benefit to the overall air quality of the 

area. EPA approval is necessary any 

time a reduction from outside the 

nonattainment area is requested for use. 

We expect that such review would 

occur through a SIP revision. 

Stakeholder involvement and public 

participation is an additional measure to 

ensure adequate protection from 

disproportionate impacts. The public 

information requirements in section 

101.302(h) and the information that 

must be submitted to the TCEQ for 

inclusion in the credit registry on the 

use and banking of ECs in sections 

101.306 and 101.309 demonstrates the 

importance of public participation in 

the ERC program. 

Equity Element Two—Environmental 

Justice. The environmental justice 

element applies if an EIP covers VOCs 

and could disproportionately impact 

communities populated by racial 

minorities, people with low incomes, or 

Tribes. EIPs that include hazardous air 

pollutants (HAPs) must also address the 

concerns described in Appendix 16.2 of 

the EIP Guidance (the ‘‘HAP 

Framework’’), which discusses how to 

prevent and/or mitigate impacts from 

trades involving HAPs, the need to 

make sufficient information available 

for meaningful review and participation, 

public participation, and periodic 

program evaluations. 

Because the ERC program allows for 

the generation and use of ECs from 

VOCs and/or HAPs, we evaluate it with 

respect to the environmental justice 

element, including the HAP Framework. 

We conclude that the ERC program 

meets our expectations for 

environmental justice. First, as outlined 

above under General Equity, the ERC 

program provides for public 

participation. Second, the program 

satisfies the HAP Framework. It 

addresses the HAP Framework issues 

through the ERC audit program, under 

which TCEQ may discontinue trading of 

ECs as a remedy for problems in a 

localized area of concern; in public 

information requirements and the 

requirements for the credit registry on 

the use and banking of ECs; and through 

public participation requirements. 

TCEQ held four public hearings in the 

course of developing the program, and 

maintains a list of stakeholders who 

receive copies of all TCEQ rulemaking 

actions for comment and participation 

in development. Also, during 

implementation of the ERC program, the 

public has the opportunity to participate 

in the approval process for alternate 

quantification protocols, and in the 

periodic audit of the ERC program 

required by the rule. 

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 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 

ECs 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 TARA 

Effects Evaluation procedures. 

6. What is EPA’s analysis of the 

fundamental principle of environmental 

benefit? 

All EIPs must be environmentally 

beneficial, as demonstrated through 

achieving more rapid emission 

reductions or faster attainment than 

would have occurred without the EIP. 

The ERC program satisfies the 

environmental benefit principle by 

requiring a user of ECs to retire 10 

percent more credits than are needed. 

Additionally, the approved EC 

generation strategies also provide an 

environmental benefit by achieving 

more rapid emission reductions than 

would have occurred without the ERC 

program. The approved EC generation 

strategies include permanent facility 

shutdowns that results in a loss of 

capability to produce emissions; the 

installation and operation of pollution 

control equipment that reduces 

emissions below the level required of 

the facility; a change in the 

manufacturing process that reduces 

emissions below the level required of 

the facility; a permanent curtailment in 

production that reduces the facility’s 

capability to produce emissions; or 

pollution prevention projects that 

produce surplus emission reductions. 

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

international emission reductions and 

other reductions from outside the area 

of use? 

Certain geographic restrictions apply 

to EC generation and use. These 

restrictions are found at section 

Federal Register / Vol. 70, No. 192 / Wednesday, October 5, 2005 / Proposed Rules 58151 

101.302(f). Generally, only emission 

reductions generated in nonattainment 

areas can be certified. As a threshold 

requirement, an emission reduction 

must be used in the nonattainment area 

in which it is generated unless the user 

has obtained prior written approval of 

the TCEQ Executive Director and EPA. 

In addition to this written approval, one 

of the following must occur: 

• A demonstration must be approved 

by the Executive Director and EPA that 

shows that the emission reductions 

achieved in another county, State, or 

nation provide an improvement to air 

quality in the county of use; or 

• The emission credit was generated 

in a nonattainment area that has an 

equal or higher nonattainment 

classification than the nonattainment 

area of use, and a demonstration has 

been approved by the Executive Director 

and EPA to show that the emissions 

from the nonattainment area where the 

emission credit is generated contribute 

to a violation of the NAAQS in the 

nonattainment area of use; or 

• A facility using emission reductions 

generated outside the United States that 

have been determined by the Executive 

Director to be real, permanent, 

enforceable, quantifiable, and surplus to 

any applicable international, Federal, 

State, or local law and the result would 

provide a greater health benefit to the 

area as determined by the Executive 

Director; and the facility demonstrates 

that the use of the reduction does not 

cause localized health impacts; submits 

all supporting information for 

calculations and modeling and any 

additional information requested; and is 

located within 100 km of the TexasMexico border. 

Although the threshold EPA approval 

requirement of section 101.302(f) 

ensures that EPA approval is necessary 

for any of the above types of trades, 

TCEQ has agreed to clarify the language 

in section 101.302(f) so that EPA 

approval is more clearly required for all 

transactions involving emission 

reductions generated in another state or 

nation, as well as those transactions 

from one nonattainment area to another 

or from attainment counties into 

nonattainment areas. 

EPA has addressed the possibility of 

cross-jurisdictional trades, such as those 

in section 101.302, in Appendix 16.16 

of the Economic Incentive Program 

Guidance. Satisfaction of the provisions 

of Appendix 16.16 is necessary to 

ensure that cross-jurisdictional trades 

are consistent with the fundamental 

integrity, equity, and environmental 

benefit principles described in the EIP 

guidance. The EPA review and approval 

authority contained in section 

101.302(f) will be the mechanism by 

which EPA ensures that inappropriate 

trades do not take place. In particular, 

EPA intends to require a further SIP 

revision (either a detailed trading 

program, such as an interstate MOU, or 

a trade-specific submission) before 

approving any international trades, 

interstate trades, or intrastate trades that 

involve reductions from beyond the 

nonattainment area. 

International trades present an 

especially difficult case. For instance, 

currently there is no approvable 

mechanism for demonstrating that 

reductions made in another country are 

surplus or enforceable. Nonetheless, 

emission reductions in other countries 

could potentially offer substantial air 

quality benefits in the United States. In 

approving the ERCs rule, EPA is 

recognizing the concept of international 

trading and describing a framework (i.e., 

the submission of a SIP revision 

demonstrating among other things the 

validity and enforceability of foreign 

reductions) for such trading, in the 

event that a suitable and approvable 

mechanism is ever developed for 

resolving concerns including 

enforceability and surplus. Until such a 

mechanism is developed and approved 

by EPA, however, EPA will not approve 

international trades under the ERCs 

rule. 

8. What is EPA’s analysis of the crossreferenced rule language? 

The revisions to section 115.950, 

submitted by TCEQ on December 20, 

2000, are approvable. This subsection 

cross-references the use strategies for 

ERCs and MERCs in section 101.306, 

which we are proposing to approve. 

The definition of ‘‘facility’’ published 

at 30 TAC Chapter 116, Control of Air 

Pollution by Permits for New 

Construction, Subchapter A, section 

116.10(4), submitted by TCEQ on July 

22, 1998, is approvable. This definition 

is approvable as defining what is a 

‘‘facility’’ for purposes of permitting 

under Chapter 116. This satisfies the 

provisions of 40 CFR—51.160(e) by 

identifying the types of facilities, 

building, structures, or installations 

which will be subject to review. 

9. What is EPA’s analysis of the ERC 

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. 

Thus, under section 110(l), this SIP 

revision must not interfere with 

attainment or reasonable further 

progress or any other applicable 

requirement of the 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 

do no worse than maintain existing air 

quality. Accordingly, EPA has 

determined that discretionary EIPs that 

are consistent with the EIP Guidance are 

consistent with section 110(l): 

Congress did not address specific 

requirements for EIPs in the CAA. Consistent 

with our mandate, the EPA has interpreted 

what an EIP should contain in order to meet 

the requirements of the CAA. This document 

is a guidance document that sets forth EPA’s 

non-binding policy for EIPs. This document 

does not represent final EPA action on the 

requirements for EIPs. Rather, this document 

identifies several different types of economic 

incentive programs, and proposes elements 

for each type that, if met, EPA currently 

believes would assure that the program 

would meet the applicable CAA provisions. 

The guidance phrases these elements in the 

imperative B that is, using the terms ‘‘must’’

or ‘‘shall’’. This is done only to signify that 

EPA would propose to approve a SIP 

submittal of a program containing the 

indicated elements on grounds that under 

section 110(l) of the CAA, the SIP revision 

does not interfere with any applicable 

requirement concerning attainment, 

reasonable further progress, or any other 

applicable requirement. 

(EIP Guidance, section 1.9.) Thus, if 

the ERC program is consistent with the 

EIP Guidance it will satisfy section 

110(l). As explained throughout this 

document, we have determined that the 

ERC rule is consistent with the EIP 

Guidance. To further support this 

determination, we will discuss the rule 

in connection with specific locations 

and criteria pollutants. 

As a preliminary matter, we note that 

a user of ECs must retire 10 percent 

more credits than are needed, which 

provides a built-in source of reductions 

under this program that would not 

occur without it. Further, emission 

reductions used to generate ECs are 

permanent, enforceable, and ongoing in 

nature, so that the environment will 

always experience the reduction. 

We have also considered whether 

emissions increases resulting from the 

use of ECs have the potential to interfere 

with attainment. Because of the ongoing 

nature of the reductions that can 

generate an EC, an emissions increase 

58152 Federal Register / Vol. 70, No. 192 / Wednesday, October 5, 2005 / Proposed Rules 

resulting from a traded credit will 

always be associated with a 

contemporaneous, and 10 percent 

greater, emissions decrease. One ozone 

precursor may also be used to meet the 

requirements for reductions of another 

precursor (a facility could use NOX

reductions to satisfy a VOC requirement 

or vice versa), subject to an urban 

airshed modeling demonstration and 

TCEQ Executive Director and EPA 

approval. In very limited cases, the rule 

allows for such interpollutant trading 

across the U.S.-Mexico border without 

specifically requiring urban airshed 

modeling, but any such trades would be 

subject to the EPA approval process 

described below. There remains, 

however, the question of whether 

geographic separation between the 

location of the reduction and increase 

from any given EC might interfere with 

attainment. We believe this problem 

will not occur with the ERC rule, 

because in the usual case reductions 

and associated increases will occur in 

the same nonattainment area. The rule 

does contain provisions for the use in a 

nonattainment area of reductions from 

outside that nonattainment area, but 

such use is subject to TCEQ Executive 

Director and EPA approval. EPA intends 

to address any such requests through a 

SIP revision, which would require a 

demonstration of consistency with 

section 110(l). TCEQ will also conduct 

an audit of the ERC program every three 

years. The audit will specifically 

evaluate the impact of EC generation 

and use on the State’s attainment 

demonstration. If problems are 

identified, the TCEQ Executive Director 

may suspend or discontinue the trading 

of ECs as a remedy. 

We believe that the structure of the 

ERC rule as discussed above is sufficient 

to ensure that the rule is consistent with 

section 110(l), but we have further 

considered the potential impact as to 

specific pollutants. Under the Texas 

program, ECs can only be generated for 

criteria pollutants (except lead) and 

precursors of criteria pollutants for 

which an area is designated 

nonattainment. 

First, as to ozone, attainment 

demonstrations under the 8-hour 

standard currently in effect are not yet 

due. The only 8-hour ozone 

nonattainment areas in Texas at present 

are the Beaumont/Port Arthur (BPA), 

Dallas/Fort Worth (DFW), and HGB 8- 

hour ozone nonattainment areas. (El 

Paso was designated as serious under 

the revoked 1-hour ozone standard, but 

was designated as attainment for 8-hour 

ozone, with an obligation to submit a 

maintenance plan.) Until 8-hour 

attainment demonstrations are due, EPA 

believes that preservation of the status 

quo air quality while new plans are 

being developed will prevent 

interference with the States’ obligations 

to develop timely attainment 

demonstrations and reasonable further 

progress plans and to attain as 

expeditiously as practicable. 

Accordingly, for 8-hour ozone 

nonattainment areas in Texas, EPA 

believes that a demonstration that this 

rule will not worsen existing air quality 

is sufficient. We conclude that the 

environmental benefit provided by the 

ERC program, as discussed above, is 

sufficient to demonstrate that this rule 

will not worsen existing air quality. 

We note in addition that as to the 

HGB nonattainment area in particular, a 

fuller discussion of the section 110(l) 

analysis appears in EPA’s evaluation of 

the HGB attainment demonstration 

submitted for the 1-hour ozone standard 

(RME Docket R06–OAR–2005–TX–

0018). That rulemaking contains EPA’s 

proposed determination that the area 

will attain the 1-hour ozone standard 

and that the current attainment strategy 

does not interfere with attainment of the 

8-hour standard in the HGB area. In 

addition, EPA has already approved 

TCEQ’s 1-hour reasonable further 

progress plan for HGB (70 FR 07407, 

February 14, 2005). 

As to other criteria pollutants, El Paso 

is classified as nonattainment for carbon 

monoxide (CO) but has monitored 

attainment for approximately the past 

five years and is expected to submit a 

request for redesignation by the end of 

2005. Also, El Paso is classified as 

nonattainment for particulate matter 

with a diameter of 10 micrometers and 

smaller (PM10). We therefore consider 

whether the generation and use of ECs 

could interfere with attainment or 

reasonable further progress under the 

PM10 or CO standards. Because no ECs 

of any type have yet been generated in 

El Paso, any use of ECs there will 

require either the generation of ECs 

through reductions in that area, or the 

approval of ECs from elsewhere. In the 

first case, the reductions would have to 

occur before the associated increases 

from use of the ECs, and as already 

noted the reductions would have to 

exceed the increases by ten percent. In 

the second case, use of ECs from 

elsewhere would have to be based on a 

determination that such use would 

provide a benefit in the nonattainment 

area (and subject to EPA review through 

the SIP revision process, as noted 

above). In either case, therefore, we 

conclude that the use of ECs in El Paso 

will not interfere with attainment and 

reasonable further progress. 

As to all other criteria pollutants, all 

areas of Texas are currently in 

attainment. ECs may only be generated 

and used for nonattainment pollutants 

in nonattainment areas, and so there 

will be no EC trades involving areas in 

attainment for the pollutant in question. 

We conclude that this rule should not 

interfere with attainment as to these 

other criteria pollutants. The reductions 

of NOX in the BPA, DFW, and HGB 

nonattainment areas could include 

reductions in NO2, a separate criteria 

pollutant from ozone. These potential 

NO2 reductions will not interfere with 

attainment of the NO2 NAAQS. 

We have also considered whether 

potential uses of ECs are contrary to 

section 110(l) by allowing sources to 

exceed limits in their CAA Title V 

permits, which are ‘‘applicable 

requirements’’ under the Act. For the 

following reasons, we conclude that the 

rule does not violate section 110(l) in 

this respect. First, EPA has addressed 

the interface of Title V permits and 

trading programs in the EIP guidance, 

which provides: 

If a facility that has a title V operating 

permit wishes to participate in your 

approved EIP, you must modify the facility’s 

operating permit to include the detailed 

compliance provisions necessary to assure 

compliance with the EIP. Thus, the permit 

becomes a valuable tool to ensure the source 

meets the requirements of the EIP. 

Once the permit includes terms and 

conditions necessary to implement the EIP 

(as described below), the source may 

typically make individual trades under the 

EIP without the need for future formal permit 

revisions. This is true because most trading 

activity under such a permit would already 

be addressed and allowed by the specific 

terms and conditions of the permit and such 

trading would not normally conflict with the 

permit. This is the principle expressed by 

section 70.6(a)(8) of the CFR, which states 

that permit revisions are not required for 

trading program changes that are ‘‘provided 

for’’ in the permit. 

(EIP Guidance, Appendix 16.8). Texas 

has modified its Title V permit template 

so as to address the permissible use of 

ECs to meet Title V permit 

requirements. As further explained in 

the TSD for this action, we find that the 

Texas permit language satisfies the 

concerns identified in Appendix 16.8. 

In reaching this conclusion, we also 

considered that a Title V permit is not 

itself a source of substantive limits. 

Rather, it incorporates applicable 

requirements under other permits and 

programs. In Texas, as elsewhere, many 

of the allowable emission levels in T5 

permits are determined through New 

Source Performance Standards (NSPS), 

Best Available Control Technology 

(BACT), Lowest Achievable Emission 

Federal Register / Vol. 70, No. 192 / Wednesday, October 5, 2005 / Proposed Rules 58153 

Rate (LAER), or National Emission 

Standards for Hazardous Air Pollutants 

(NESHAPs). The ERC rule does not 

authorize the use of ECs for compliance 

with any of these programs. The rule 

does allow ECs to be used for 

compliance with Reasonably Available 

Control Technology (RACT) standards, 

in accordance with EPA’s guidance. 

Specifically, the guidance provides that 

‘‘[i]f your EIP allows sources to avoid 

direct application of RACT technology, 

your EIP must ensure that the level of 

emission reductions resulting from 

implementation of the EIP will be equal 

to those reductions expected from the 

direct application of RACT.’’ EIP 

Guidance, Appendix 16.7. The Texas 

program ensures consistency with that 

element of the EIP guidance through the 

requirement that a user of ECs must 

retire 10 percent more credits than are 

needed. Accordingly, any use of ECs for 

RACT compliance will have been 

preceded by a ten percent greater 

reduction. 

For the above reasons, and based also 

on the analysis in the HGB rulemaking, 

we conclude that the Texas ERC rule 

represents an environmental 

improvement on the status quo, and 

does not interfere with attainment, 

reasonable further progress, or any other 

requirement of the Act. TCEQ will need 

to evaluate EC generation and use for 

the BPA and DFW nonattainment areas 

in the appropriate attainment 

demonstrations and reasonable further 

progress plans, and in any future plans 

developed for El Paso. 

D. Conclusion 

EPA reviewed the ERC program 

revisions with respect to the concerns 

discussed in the EIP Guidance and the 

requirements of the Clean Air Act. We 

conclude that the ERC program is 

approvable, and propose to approve the 

revisions to sections 101.301, 101.306, 

and 101.309 submitted by TCEQ on 

January 31, 2003, for rule log number 

2002–044–101–AI, and the revisions to 

sections 101.300, 101.302–101.304, and 

101.311 submitted by TCEQ on 

December 6, 2004, for rule log number 

2003–064–101–AI. 

We have also reviewed the subsection 

in 30 TAC Chapter 115, which crossreferences the ERC program, and have 

concluded that this subsection is 

approvable. We are proposing to 

approve the revisions to section 115.950 

submitted by TCEQ on December 20, 

2000, for rule log number 1998–089–

101–AI. Because this section involves 

the use of discrete emission credits and 

emission credits for compliance, the use 

of discrete emission credits for 

compliance with Chapter 115 is not 

approved until the Discrete Emission 

Credit Banking and Trading program 

has been approved. The rules for 

discrete emission credit generation and 

use are being considered in a separate 

Federal Register action. 

EPA has also reviewed the definition 

of facility provided in 30 TAC Chapter 

116, and has concluded that this 

subsection is approvable. We are 

proposing to approve section 116.10(4) 

submitted by TCEQ on July 22, 1998, for 

rule log number 98001–116–AI. 

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 (Pub. L. 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 

58154 Federal Register / Vol. 70, No. 192 / Wednesday, October 5, 2005 / Proposed Rules 

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 dioxide, 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. 05–19997 Filed 10–4–05; 8:45 am] 

BILLING CODE 6560–50–P 

ENVIRONMENTAL PROTECTION 

AGENCY 

40 CFR Part 52 

[R06–OAR–2005–TX–0029; FRL–7980–7] 

Approval and Promulgation of Air 

Quality Implementation Plans; Texas; 

Discrete Emission Credit Banking and 

Trading Program 

AGENCY: Environmental Protection 

Agency (EPA). 

ACTION: Proposed rule. 

SUMMARY: EPA is proposing to 

conditionally approve revisions to the 

Texas State Implementation Plan (SIP) 

concerning the Discrete Emission Credit 

Banking and Trading Program. 

Additionally, we are proposing approval 

of a subsection of Chapter 115 of the 

Texas Administrative Code (TAC), 

Control of Air Pollution from Volatile 

Organic Compounds, which crossreferences the Discrete Emission Credit 

Banking and Trading Program. We are 

also proposing approval of a subsection 

of 30 TAC Chapter 116, Control of Air 

Pollution by Permits for New 

Construction or Modification, which 

provides a definition referred to in the 

Discrete 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–0029, by one of the following 

methods: 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the on-line 

instructions for submitting comments. 

• Agency Website: 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 am and 4 pm 

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–0029. 

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 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 whose 

disclosure 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,