[Federal Register Volume 70, Number 192 (Wednesday, October 5, 2005)]
[Proposed Rules]
[Pages 58146-58154]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-19997]


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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.

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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:
    <bullet> Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the on-line instructions for submitting comments.
    <bullet> 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 on-line instructions for submitting comments.
    <bullet> 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.
    <bullet> E-mail: Mr. David Neleigh at <a href="/cdn-cgi/l/email-protection#2648434a434f414e084247504f426643564708414950"><span class="__cf_email__" data-cfemail="e38d868f868a848bcd8782958a87a3869382cd848c95">[email protected]</span></a>. Please 
also cc the person listed in the FOR FURTHER INFORMATION CONTACT 
section below.
    <bullet> Fax: Mr. David Neleigh, Chief, Air Permitting Section 
(6PD-R), at fax number 214-665-6762.
    <bullet> Mail: Mr. David Neleigh, Chief, Air Permitting Section 
(6PD-R), Environmental Protection Agency, 1445 Ross Avenue, Suite 1200, 
Dallas, Texas 75202-2733.
    <bullet> 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 <a href="/cdn-cgi/l/email-protection#9becf2f7fee2b5fafff2f5fadbfeebfab5fcf4ed"><span class="__cf_email__" data-cfemail="bdcad4d1d8c493dcd9d4d3dcfdd8cddc93dad2cb">[email protected]</span></a>.

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

[[Page 58147]]

other reductions from outside the area of use?
    8. What is EPA's analysis of the cross-referenced 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 (NO<INF>X</INF>) 
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

[[Page 58148]]

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 source-specific 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:
    <bullet> By amending or altering a New Source Review permit to 
reflect the emission reduction and set a new maximum allowable emission 
limit;
    <bullet> By voiding an NSR permit, when a facility has been shut 
down;
    <bullet> 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;
    <bullet> 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

[[Page 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 atSec.  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 Sec.  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 NO<INF>X</INF> control 
requirements adopted under rules contained in the December 2000 
revision to the HGB SIP. In addition to providing flexibility in 
complying with the NO<INF>X</INF> control requirements, the MECT also 
provides a finite cap on NO<INF>X</INF> 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 
NO<INF>X</INF>) 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 point-source emissions inventory along with the addition of 
emissions from NO<INF>X</INF> increases permitted after 1997 and 
increases in NO<INF>X</INF> 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 Sec.  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 NO<INF>X</INF>;
    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 NO<INF>X</INF> 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;

[[Page 58150]]

    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 Sec.  
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 NO<INF>X</INF> 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 ground-level 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

[[Page 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:
    <bullet> 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
    <bullet> 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
    <bullet> 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 Texas-Mexico 
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 cross-referenced 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

[[Page 58152]]

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 NO<INF>X</INF> 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 (PM<INF>10</INF>). We therefore consider whether the 
generation and use of ECs could interfere with attainment or reasonable 
further progress under the PM<INF>10</INF> 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 
NO<INF>X</INF> in the BPA, DFW, and HGB nonattainment areas could 
include reductions in NO<INF>2</INF>, a separate criteria pollutant 
from ozone. These potential NO<INF>2</INF> reductions will not 
interfere with attainment of the NO<INF>2</INF> 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

[[Page 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 
cross-references 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

[[Page 58154]]

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


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