Document ID: EPA-R06-OAR-2010-0147-0001
Agency: epa
Document Type: Proposed Rule
Title: TX091.12 Approval and Promulgation of Air Quality Implementation Plans: Texas; Revisions to the Emission Credit Banking and Trading Program
Posted Date: 2010-03-30T22:04:43Z

[Federal Register: March 30, 2010 (Volume 75, Number 60)]
[Proposed Rules]               
[Page 15645-15648]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr30mr10-26]                         

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R06-OAR-2010-0147; FRL-9130-4]

 
Approval and Promulgation of Air Quality Implementation Plans; 
Texas; Revisions to the Emission Credit Banking and Trading Program

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: EPA is proposing to approve severable portions of two 
revisions to the Texas State Implementation Plan (SIP) submitted by the 
State of Texas on October 24, 2006, and August 16, 2007. These 
revisions amend existing sections and create a new section in Title 30 
of the Texas Administrative Code (TAC), Chapter 101--General Air 
Quality Rules, Subchapter H--Emissions Banking and Trading, Division 
1--Emission Credit Banking and Trading, referred to elsewhere in this 
notice as the Emission Reduction Credit (ERC) Program. The October 24, 
2006, submittal creates a new section for international emission 
reduction provisions and amends existing sections to further clarify 
procedures for using emission protocols and to update the approved list 
of emission credit uses. The August 16, 2007, submittal amends two 
sections of the ERC program to update cross-references to recently 
recodified 30 TAC Chapter 117 provisions. EPA has determined that these 
SIP revisions comply with the Clean Air Act and EPA regulations, are 
consistent with EPA policies, and will improve air quality. This action 
is being taken under section 110 and parts C and D of the Federal Clean 
Air Act (the Act or CAA).

DATES: Comments must be received on or before April 29, 2010.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-R06-
OAR-2010-0147, by one of the following methods:
    (1) http://www.regulations.gov: Follow the on-line instructions for 
submitting comments.
    (2) E-mail: Mr. Jeff Robinson at robinson.jeffrey@epa.gov. Please 
also cc the person listed in the FOR FURTHER INFORMATION CONTACT 
paragraph below.
    (3) 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.
    (4) Fax: Mr. Jeff Robinson, Chief, Air Permits Section (6PD-R), at 
fax number 214-665-6762.
    (5) Mail: Mr. Jeff Robinson, Chief, Air Permits Section (6PD-R), 
Environmental Protection Agency, 1445 Ross Avenue, Suite 1200, Dallas, 
Texas 75202-2733.
    (6) Hand or Courier Delivery: Mr. Jeff Robinson, Chief, Air Permits 
Section (6PD-R), Environmental Protection Agency, 1445 Ross Avenue, 
Suite 1200, Dallas, Texas 75202-2733. Such deliveries are accepted only 
between the hours of 8:30 a.m. and 4:30 p.m. weekdays except for legal 
holidays. Special arrangements should be made for deliveries of boxed 
information.
    Instructions: Direct your comments to Docket ID No. EPA-R06-OAR-
2010-0147. EPA's policy is that all comments received will be included 
in the public docket without change and may be made available online at 
http://www.regulations.gov, 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 http://www.regulations.gov or e-mail, if you believe that it is 
CBI or otherwise protected from disclosure. The http://
www.regulations.gov Web site is an ``anonymous access'' system, which 
means that 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 http://
www.regulations.gov, your e-mail address will be automatically captured 
and included as part of the comment that is placed in the public docket 
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 along with any disk or CD-ROM 
submitted. 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 and any form of encryption and should be free of any 
defects or viruses. For additional information about EPA's public 
docket, visit the EPA Docket Center homepage at http://www.epa.gov/
epahome/dockets.htm.
    Docket: All documents in the docket are listed in the http://
www.regulations.gov index. Although listed in the index, some 
information is not publicly available, e.g., CBI or other information 
the disclosure of which is restricted by statute. Certain other 
material, such as copyrighted material, will be publicly available only 
in hard copy. Publicly available docket materials are available either 
electronically in http://www.regulations.gov or in hard copy at the Air 
Permits 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. A 15 cent per page fee will be charged for 
making photocopies of documents. On the day of the visit, please check 
in at the EPA Region 6 reception area on the seventh floor at 1445 Ross 
Avenue, Suite 700, Dallas, Texas.
    The State submittal related to this SIP revision, and which is part 
of the EPA docket, 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: If you have questions concerning 
today's proposed rule, please contact Ms. Adina Wiley (6PD-R), Air 
Permits Section, Environmental Protection Agency, Region 6, 1445 Ross 
Avenue (6PD-R), Suite 1200, Dallas, TX 75202-2733. The telephone number 
is (214) 665-2115. Ms. Wiley can also be reached via electronic mail at 
wiley.adina@epa.gov.

SUPPLEMENTARY INFORMATION: Throughout this document wherever, any 
reference to ``we,'' ``us,'' or ``our'' is used, we mean EPA.

Table of Contents

I. What Action Is EPA Taking?
II. What Did Texas Submit?
III. What Is EPA's Evaluation of These SIP Revisions?
IV. Final Action
V. Statutory and Executive Order Reviews

[[Page 15646]]

I. What Action Is EPA Taking?

    We are proposing to approve severable portions of two revisions to 
the Texas SIP submitted by the Texas Commission on Environmental 
Quality (TCEQ) on October 24, 2006, and August 16, 2007, specific to 
the ERC Program. The ERC Program, SIP-approved by EPA on September 6, 
2006, establishes a market-based trading program for the generation and 
use of emission credits (generated and used at a specified emission 
rate, tons per year) to provide flexibility for sources in complying 
with certain State and Federal requirements. The revisions we are 
proposing to approve amend existing sections and create a new section 
in the ERC Program at Title 30 of the Texas Administrative Code (TAC), 
Chapter 101--General Air Quality Rules, Subchapter H--Emissions Banking 
and Trading, Division 1--Emission Credit Banking and Trading. The 
October 24, 2006, submittal creates a new section for international 
emission reduction provisions and amends existing sections to further 
clarify procedures for using emission protocols and to update the 
approved list of emission credit uses. The severable portions of the 
August 16, 2007 submittal that we are proposing to approve non-
substantively revise the ERC Program to correctly update the cross-
references to the stationary source nitrogen oxide (NOX) 
rules found in the Texas SIP at 30 TAC Chapter 117 as a result of the 
non-substantive recodification of Chapter 117 approved by EPA as part 
of the Texas SIP on December 3, 2008 (see 73 FR 73562). Consequently, 
we are proposing to approve the revisions to the Texas SIP at 30 TAC 
sections 101.302(a), 101.302(d)(1)(C)(vi), 101.302(f), and 
101.306(a)(5) and the creation of new section 101.305 submitted on 
October 24, 2006. Additionally, we are proposing to approve revisions 
to the Texas SIP at 30 TAC sections 101.302(d)(1)(A) and 101.306(b)(3) 
submitted on August 16, 2007 by the TCEQ.

II. What Did Texas Submit?

    We are proposing to approve severable portions of two revisions to 
the Texas SIP specific to the ERC Program. The first revision we are 
proposing action on was adopted by the TCEQ on October 4, 2006 and 
submitted to EPA on October 24, 2006. At the same time that TCEQ 
adopted and submitted revisions to the ERC Program, revisions were also 
adopted and submitted for the Discrete Emission Credit Banking and 
Trading Program (referred to elsewhere in this notice as the Discrete 
Emission Reduction Credit (DERC) Program) and the Emissions Banking and 
Trading of Allowances (EBTA) Program. The revisions to the DERC and 
EBTA Programs are specific to separate, distinct trading programs and, 
as such, are severable from the ERC Program revisions. We are not 
proposing to act upon the severable revisions to the DERC Program at 30 
TAC Chapter 101, Subchapter H, Division 4, sections 101.372, 101.373, 
101.375, 101.376 and 101.378. EPA is processing a separate rulemaking 
to address the 2006 and 2007 DERC Program revisions (see EPA-R06-OAR-
2010-0418). EPA has not yet taken action on the EBTA Program at 30 TAC 
Chapter 101, Subchapter H, Division 2 and therefore is not proposing 
action today on the repeal and replacement of section 101.338 and the 
revisions to section 101.339. The second revision upon which we are 
proposing action was adopted by the TCEQ on July 25, 2007, and 
submitted to EPA on August 16, 2007. Also at this time TCEQ adopted and 
submitted revisions to the general air quality definitions, the DERC 
Program, and the System Cap Trading (SCT) Program. We are not acting 
today upon revisions to the general air quality definitions at 30 TAC 
Chapter 101, Subchapter A, section 101.1 because the ERC Program does 
not rely upon them (therefore the revisions are severable from the ERC 
Program) and previous revisions to section 101.1 are still pending for 
review by EPA. We are also not acting today upon the revisions to the 
DERC Program at 30 TAC Chapter 101, Subchapter H, Division 4, sections 
101.372 and 101.376 because these revisions are severable from the ERC 
program and the October 24, 2006, SIP revision is still under EPA 
review. EPA intends to take a separate rulemaking action to address the 
2006 and 2007 DERC Program revisions (see EPA-R06-OAR-2010-0418). EPA 
has not yet taken action on the System Cap Trading Program at 30 TAC 
Chapter 101, Subchapter H, Division 5 and therefore is not acting today 
upon the severable revisions to sections 101.383 and 101.385.
    A copy of the October 24, 2006, and August 16, 2007, SIP submittals 
as well as our Technical Support Document (TSD) can be obtained from 
the Docket, as discussed in the ``Docket'' section above. A discussion 
of the specific Texas rule changes that we are approving is included in 
the TSD and summarized below.

A. October 24, 2006 SIP Submittal

1. 30 TAC Chapter 101, Subchapter H, Division 1, Section 101.302--
General Provisions
    The existing SIP-approved version of section 101.302 was adopted by 
the TCEQ on December 13, 2002, and approved by EPA on September 6, 2006 
(see 71 FR 52698). The revisions to sections 101.302(a) and (f) adopted 
by the TCEQ on October 4, 2006, delete the information pertaining to 
international emission reductions and move these provisions to new 
section 101.305. Additionally, section 101.302(d)(1)(C)(vi) is revised 
to clarify EPA's approval process of the quantification protocols for 
the ERC Program.
2. 30 TAC Chapter 101, Subchapter H, Division 1, Section 101.305--
Emission Reductions Achieved Outside the United States
    On October 4, 2006, TCEQ adopted new section 101.305. This new 
section contains the previously SIP-approved international emission 
reduction provisions from sections 101.302(a) and (f) and updates the 
international provisions consistent with the requirements of Texas 
Senate Bill 784.
3. 30 TAC Chapter 101, Subchapter H, Division 1, Section 101.306--
Emission Credit Use
    The existing SIP-approved version of section 101.306 was adopted by 
the TCEQ on December 13, 2002, and approved by EPA on September 6, 2006 
(see 71 FR 52698). The proposed SIP revision adopted by the TCEQ on 
October 4, 2006, amends section 101.306(a)(5) to update the list of 
approved uses of emission credits to include the use of emission 
credits as allowances in the Highly-Reactive Volatile Organic Compound 
Emission Cap and Trade (HECT) Program at 30 TAC Chapter 101, Subchapter 
H, Division 6.

B. August 16, 2007 SIP Submittal

1. 30 TAC Chapter 101, Subchapter H, Division 1, Section 101.302--
General Provisions
    The revisions to section 101.302 adopted by the TCEQ on July 25, 
2007, further revise the revisions adopted by the TCEQ on October 4, 
2002. The 2007 revisions non-substantively amend section 
101.302(d)(1)(A) to correctly cross-reference the recodified stationary 
source nitrogen oxide (NOX) rules to the Texas SIP at 30 TAC 
Chapter 117.

[[Page 15647]]

2. 30 TAC Chapter 101, Subchapter H, Division 1, Section 101.306--
Emission Credit Use
    The revisions to section 101.306 adopted by the TCEQ on July 25, 
2007, further revise the revisions adopted by the TCEQ on October 4, 
2002. The 2007 revisions non-substantively amend section 101.306(b)(3) 
to correctly cross-reference the recodified stationary source 
NOX rules to the Texas SIP at 30 TAC Chapter 117.

III. What Is EPA's Evaluation of These SIP Revisions?

A. October 24, 2006 SIP Submittal

1. 30 TAC Chapter 101, Subchapter H, Division 1, Section 101.302--
General Provisions
    The October 4, 2006, revisions to sections 101.302(a), 
101.302(d)(1)(C)(vi) and 101.302(f) are approvable. Sections 101.302(a) 
and 101.302(f) were revised to delete the information pertaining to 
international emission reductions and relocate these provisions to new 
section 101.305. This consolidation of the international emission 
reduction provisions improves the clarity of the ERC Program by 
creating a new section specific to international emission reductions. 
Section 101.302(d)(1)(C)(vi) was revised to clarify EPA's role in the 
approval of emission quantification protocols. While the previous SIP-
approved provisions were accurate and consistent with EPA's Economic 
Incentive Program (EIP) Guidance (``Improving Air Quality with Economic 
Incentive Programs'' (EPA-452/R-01-001, January 2001)), the revised 
language has been restructured to more closely follow the provisions 
for approving emission quantification protocols at section 5.2(c) of 
the EIP Guidance.
    The revisions to section 101.302 described above were made pursuant 
to TCEQ's September 8, 2005, commitment letter for the DERC Program 
(included in the docket for this action). In this commitment letter, 
TCEQ committed to revising, among others things, section 101.302 to 
more clearly require EPA approval for international emission reduction 
transactions and to clarify the EPA's role in approving emission 
quantification protocols. Because EPA granted full approval to the ERC 
Program on September 6, 2006, the ERC-specific elements in the DERC 
commitment letter can be decoupled from EPA's analysis of the DERC-
specific elements submitted by TCEQ in response to our conditional 
approval of the DERC Program. Therefore, EPA can propose approval of 
the revisions to section 101.302 without analyzing the remainder of the 
DERC conditional approval commitments.
2. 30 TAC Chapter 101, Subchapter H, Division 1, Section 101.305--
Emission Reductions Achieved Outside the United States
    New section 101.305 adopted on October 4, 2006, is approvable. EPA 
finds that in addition to relocating the SIP-approved international 
emission reduction language from section 101.302, new section 101.305 
has expanded the scope of our original ERC Program approval to allow 
the use of international reductions in lieu of ERCs to occur in 
attainment areas within 100-km of the Texas-Mexico border, consistent 
with the requirements of Texas Senate Bill 784. However, the continued 
requirement at section 101.305 for EPA approval before any such use is 
consistent with the intent of our ERC Program approval on September 6, 
2006. EPA approval continues to be through a case-specific SIP revision 
that must clearly demonstrate through a detailed CAA section 110(l) 
analysis that the use of such international reductions will not 
jeopardize attainment or maintenance of the National Ambient Air 
Quality Standards or any other applicable standards. As noted in our 
September 6, 2006, final approval of the ERC Program ``* * * 
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.'' See 71 
FR 52698, 52699. In approving this revision to the ERC program, EPA is 
continuing to recognize ``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 ERC rule.'' See 71 FR 52698, 52699. Further, it is important 
to note, that even though we are approving the use of international 
reductions in lieu of ERCs along the Texas-Mexico border, the use of 
these reductions must still meet the requirements of the CAA. 
Therefore, the international reductions are not available for use as 
Federal NSR offsets since section 173(c)(1) of the CAA requires that 
offset reductions come from the same nonattainment area as the proposed 
source or modification or another nonattainment area with an equal or 
higher nonattainment classification.
3. 30 TAC Chapter 101, Subchapter H, Division 1, Section 101.306--
Emission Credit Use
    The October 4, 2006, revision to section 101.306(a)(5) is 
approvable. TCEQ correctly updated the list of approved uses of 
emission credits to include the use of emission credits as allowances 
in the HECT. EPA approved the use of emission credits as HECT 
allowances in our September 6, 2006, approval of the HECT (see 71 FR 
52659).
    The revision to section 101.306 described above was also made 
pursuant to TCEQ's September 8, 2005, commitment letter for the DERC 
Program (included in the docket for this action). In this commitment 
letter, TCEQ committed to revising, among others things, section 
101.306 to identify that emission credits could be used as HECT 
allowances. Because EPA granted full approval to the ERC Program on 
September 6, 2006, the ERC-specific elements in the DERC commitment 
letter can be decoupled from EPA's analysis of the DERC-specific 
elements submitted by TCEQ in response to our conditional approval of 
the DERC Program. Therefore, EPA can propose approval of the revisions 
to section 101.306 without analyzing the remainder of the DERC 
conditional approval commitments.

B. August 16, 2007 SIP Submittal

1. 30 TAC Chapter 101, Subchapter H, Division 1, Section 101.302--
General Provisions
    The July 25, 2007, revisions to section 101.302(d)(1)(A) are 
approvable. As demonstrated further in our TSD, these non-substantive 
revisions correctly cross-reference the recodified stationary source 
NOX rules in the Texas SIP at 30 TAC Chapter 117. These non-
substantive revisions do not affect the approved emission 
quantification protocols established for the ERC Program.
2. 30 TAC Chapter 101, Subchapter H, Division 1, Section 101.306--
Emission Credit Use
    The July 25, 2007, revisions to section 101.306(b)(3) are 
approvable. As demonstrated further in our TSD, these non-substantive 
revisions correctly cross-reference the recodified stationary source 
NOX rules in the Texas SIP at 30

[[Page 15648]]

TAC Chapter 117. These non-substantive revisions do not affect the 
emission use calculations established for the ERC Program.

IV. Final Action

    EPA is proposing to approve severable revisions to the Texas SIP 
submitted on October 24, 2006, and August 16, 2007. Specifically from 
the October 24, 2006 submittal, EPA is approving the amendments to 
section 101.302(a) and (f) that move the international emission 
reduction requirements to a new section, the amendments to section 
101.302(d)(1)(C)(vi) that clarify EPA's role in approving emission 
quantification protocols, and the amendment to section 101.306(a)(5) 
that updates the approved uses for ERCs to include the HECT. EPA is 
also proposing to approve provisions for international emission 
reductions at new section 101.305 submitted on October 24, 2006. 
Additionally, we are proposing to approve the following nonsubstantive 
revisions to the Texas SIP submitted on August 16, 2007: revisions to 
sections 101.302(d)(1)(A) and 101.306(b)(3) to update the cross-
references to recently recodified provisions in 30 TAC Chapter 117.
    In a separate rulemaking, EPA is proposing action on the severable 
DERC Program revisions at 30 TAC sections 101.372, 101.373, 101.375, 
101.376, and 101.378 submitted on October 24, 2006, and 30 TAC sections 
101.372 and 101.376 submitted on August 16, 2007 (see EPA-R06-OAR-2010-
0418).
    At this time, EPA is not taking action on the revisions to the 
Emissions Banking and Trading of Allowances Program at 30 TAC sections 
101.338 and 101.339 submitted on October 24, 2006. EPA is also not 
taking action at this time on the revisions to the general air quality 
definitions at 30 TAC Section 101.1 or the revisions to the System Cap 
Trading Program at 30 TAC sections 101.383, and 101.385 submitted on 
August 16, 2007. These severable revisions remain under review by EPA 
and will be addressed in separate actions.

V. Statutory and Executive Order Reviews

    Under the Clean Air Act, the Administrator is required to approve a 
SIP submission that complies with the provisions of the Act and 
applicable Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). 
Thus, in reviewing SIP submissions, EPA's role is to approve State 
choices, provided that they meet the criteria of the Clean Air Act. 
Accordingly, this action merely approves State law as meeting Federal 
requirements and does not impose additional requirements beyond those 
imposed by State law. For that reason, this action:
     Is not a ``significant regulatory action'' subject to 
review by the Office of Management and Budget under Executive Order 
12866 (58 FR 51735, October 4, 1993);
     Does not impose an information collection burden under the 
provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq.);
     Is certified as not having a significant economic impact 
on a substantial number of small entities under the Regulatory 
Flexibility Act (5 U.S.C. 601 et seq.);
     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);
     Does not have Federalism implications as specified in 
Executive Order 13132 (64 FR 43255, August 10, 1999);
     Is not an economically significant regulatory action based 
on health or safety risks subject to Executive Order 13045 (62 FR 
19885, April 23, 1997);
     Is not a significant regulatory action subject to 
Executive Order 13211 (66 FR 28355, May 22, 2001);
     Is not subject to requirements of Section 12(d) of the 
National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 
note) because application of those requirements would be inconsistent 
with the Clean Air Act; and
     Does not provide EPA with the discretionary authority to 
address, as appropriate, disproportionate human health or environmental 
effects, using practicable and legally permissible methods, under 
Executive Order 12898 (59 FR 7629, February 16, 1994).
    In addition, this rule does not have Tribal implications as 
specified by Executive Order 13175 (65 FR 67249, November 9, 2000), 
because the SIP is not approved to apply in Indian country located in 
the State, and EPA notes that it will not impose substantial direct 
costs on Tribal governments or preempt Tribal law.

List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, Intergovernmental 
relations, Nitrogen oxides, Ozone, Reporting and recordkeeping 
requirements, Volatile organic compounds.

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

    Dated: March 18, 2010.
Lawrence E. Starfied,
Acting Regional Administrator, Region 6.
[FR Doc. 2010-6800 Filed 3-29-10; 8:45 am]
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