Document ID: EPA-R06-OAR-2010-0510-0001
Agency: epa
Document Type: Notice
Title: TX107.01 Audit Program for Texas Flexible Permit Holders. 4 pages n6h
Posted Date: 2010-06-17T04:00Z

[Federal Register: June 17, 2010 (Volume 75, Number 116)]
[Notices]               
[Page 34445-34448]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr17jn10-62]                         

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ENVIRONMENTAL PROTECTION AGENCY

[EPA-R06-OAR-2010-0510; FRL-9163-7]

 
Audit Program for Texas Flexible Permit Holders

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice of Clean Air Act voluntary compliance audit program for 
flexible permit holders in the State of Texas; request for public 
comment.

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SUMMARY: EPA is offering holders of Texas flexible air permits an 
opportunity to participate in a voluntary compliance audit program 
(hereinafter ``Audit Program'') that is intended to expeditiously 
identify the Federally-enforceable Clean Air Act (CAA) unit specific 
emission limitations, operating parameter requirements, and monitoring, 
reporting, and recordkeeping (MMR) requirements for determining 
compliance for all units covered by a facility's flexible permit. EPA 
believes that the program will generate environmental benefits for the 
public in Texas as well as a measure of regulatory stability for 
holders of Texas flexible permits. EPA is requesting informal comment 
on the Audit Program. EPA will respond generally to comments received 
and reserves its right to make modifications to implementation of the 
Audit Program at its discretion, as warranted.

DATES: All comments should be submitted by July 2, 2010. Executed audit 
agreements may be submitted no later than October 15, 2010.

ADDRESSES: Submit comments on the Audit Program, identified by Docket 
ID No. EPA-R06-OAR-2010-0510, by one of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the on-line instructions for submitting comments.
     U.S. EPA Region 6 ``Contact Us'' Web site: http://epa.gov/
region6/r6coment.htm. Please click on ``6EN'' (Enforcement) and select 
``CAA Enforcement'' before submitting comments.
     E-mail: Mr. John Jones at jones.john-l@epa.gov.
     Fax.: Mr. John Jones, Air Enforcement Section (6EN-AA), at 
fax number (214) 665-3177.
     Mail: Mr. John Jones, Air Enforcement Section (6EN-AA), 
Environmental Protection Agency, 1445 Ross Avenue, Suite 1200, Dallas, 
Texas 75202-2733.
     Hand or Courier Delivery: Mr. John Jones, Air Enforcement 
Section (6EN-AA), Environmental Protection Agency, 1445 Ross Avenue, 
Suite 1200, Dallas, Texas 75202-2733. Such deliveries are accepted only 
between the hours of 8:00 a.m. and 4:00 p.m. weekdays, except for legal 
holidays.
    Instructions: Direct comments to Docket ID No. EPA-R06-OAR-2010-
0510.
    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 comment includes 
information claimed to be Confidential Business Information (CBI) or 
other information whose disclosure is restricted by statute. Do not 
submit information that you consider to be CBI or otherwise protected 
through http://www.regulations.gov or e-mail. The http://
www.regulations.gov Web site is an ``anonymous access'' system, which 
means EPA will not know your identity or contact information unless you 
provide it in the body of your submittal. In an effort to consolidate 
comments received, EPA prefers that information be submitted via http:/
/www.regulations.gov. If you send a submittal by e-mail directly to EPA 
without going through http://www.regulations.gov, your e-mail address 
will be automatically captured and included as part of the submittal 
that is placed in the public docket and made available on the Internet. 
Electronic files should avoid the use of special characters, any form 
of encryption, and 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 
whose disclosure 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 
at http://www.regulations.gov or in hard copy at the Air Enforcement 
Section (6EN-AA), 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 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, 75202-2733.

FOR FURTHER INFORMATION CONTACT: For information on the Audit Program 
for Texas flexible permit holders, please contact Mr. John Jones, Air 
Enforcement

[[Page 34446]]

Section (6EN-AA), Environmental Protection Agency, Region 6, 1445 Ross 
Avenue, Suite 700, Dallas, Texas 75202-2733, telephone (214) 665-7233; 
fax number (214) 665-3177; e-mail address jones.john-l@epa.gov.

SUPPLEMENTARY INFORMATION:

Audit Program Overview

    Texas flexible permits have never been incorporated into the 
Federally approved State Implementation Plan (``SIP''), and thus, only 
contain applicable State permit requirements. Flexible permits are not 
the appropriate mechanisms for embodying Federal requirements, and are 
not independently Federally-enforceable. On September 25, 2007, EPA 
sent notice letters to all facilities that were issued a flexible 
permit informing them that flexible permits were pertinent only to 
Texas State air permit requirements and that facilities were 
``obligated to comply with the Federal requirements applicable to 
(their) plant, in addition to any particular requirements of (their) 
flexible permit.'' Moreover, on September 23, 2009, EPA proposed the 
disapproval of the Texas flexible permit program as an amendment to the 
Texas SIP because it does not meet Federal Nonattainment New Source 
Review or Prevention of Significant Deterioration (hereafter 
collectively referred to as ``NSR'') requirements. EPA followed that 
proposal with several objections to Title V permits that relied on 
flexible permits to encompass Federal NSR requirements because the 
terms of the Texas flexible permit are not incorporated into the 
Federally approved Texas SIP.
    Under the Audit Program, participants would need to commission a 
comprehensive third-party audit to determine all Federally applicable 
unit-specific limitations and requirements and to evaluate the Federal 
CAA compliance status of emission units covered under the facility's 
Texas flexible permit.
    The third-party auditor would identify for each emission unit 
regulated under the source's flexible permit all current Federally 
applicable CAA requirements, including: (1) Emission limitations/
standards; (2) operational limitations/special conditions; (3) MRR 
requirements; and (4) specific references for all Federal requirements 
identified (e.g., permit number, specific Maximum Achievable Control 
Technology, State Implementation Plan citation). The auditor will also 
need to review and assess the adequacy of the current flexible permit 
MRR requirements to evaluate compliance with Federally enforceable 
unit-specific emission limitations. Where deficiencies exist, the 
auditor will provide recommendations for more effective or supplemental 
MRR.
    To the extent that it is determined that a source is not in 
compliance with NSR requirements with respect to a particular emission 
unit, the auditor will include an evaluation of the current (2010) 
Lowest Achievable Emissions Rate or Best Available Control Technology 
(hereinafter collectively referred to as ``LAER/BACT'') for that 
emissions unit and will recommend an applicable LAER/BACT limit for 
that emissions unit. Identification of non-compliance with NSR 
requirements through the Audit Program may require further discussion 
with EPA regarding a path forward for bringing that emission unit into 
permanent, consistent compliance with the CAA and appropriate 
resolution of civil penalties.
    The primary deliverable from the third-party audit will be a 
detailed audit report that describes the audit process and its 
conclusions, including clearly organized summary tables of all 
applicable CAA requirements for each emissions unit that will provide 
the basis for necessary permitting revisions by the Texas Commission on 
Environmental Quality (TCEQ). In addition to identifying all applicable 
unit specific emission limitations, special conditions, operating 
parameters, and MMR requirements, the auditor will evaluate the CAA 
compliance status of the emissions units included under the Texas 
flexible permit.
    The audit participant will then have an opportunity to comment on 
the results of the third-party audit, and to propose to EPA alternative 
emission unit requirements. The parties may elect to negotiate emission 
unit requirements in the post-audit period.
    The emission unit requirements agreed upon during the post-audit 
negotiation with EPA would be memorialized in a Consent Agreement and 
Final Order (``CAFO'') with EPA. The CAFO would set forth the agreed 
upon emission unit requirements and would require their inclusion in an 
amended Title V permit and appropriate Federally-enforceable non-Title 
V permits (e.g., NSR, Texas SIP permits).
    As part of the Audit Program, the audit participant will also agree 
to work with its surrounding community to develop community project(s) 
focused on improving, protecting, mitigating, and/or reducing community 
risks to public health or the environment that could have been caused 
by potential violations by the audit participant. The details of the 
community projects will be fully described in the CAFO memorializing 
the results of the audit.
    Participation in the Audit Program is purely voluntary, and this is 
not a rulemaking by the Agency. Interested parties are required to 
submit an executed audit agreement to enroll in this program. 
Participants choosing to enroll in the Audit Program will be required 
to meet the specific requirements of the third-party audit set forth in 
this Notice and memorialized in an audit agreement signed by the audit 
participant and EPA. It is important to emphasize that although 
participation in this Audit Program is voluntary, participants who 
successfully complete the program will receive appropriate covenants in 
resolution of non-compliance.
    Persons who have not secured independently Federally-enforceable 
construction and/or operating permits for all CAA applicable 
requirements, through participation in this program or through other 
appropriate mechanisms, may be the subject of Federal enforcement 
action. Nothing in this notice should be read to preclude EPA from 
taking enforcement action where it determines such action is 
appropriate to address non-compliance.

Texas Flexible Permit Program History

    In the period from 1996 through 2002, the State of Texas proposed a 
series of modifications to its Federal CAA SIP intended to make its 
flexible permit program part of the SIP. The flexible permit program, 
currently codified at 30 TAC 116.710, allows groups of emission sources 
to be clustered together and issued permit limitations as if they were 
a single emission source.
    EPA has never approved the Texas flexible permit program for 
inclusion in the SIP. On September 25, 2007, EPA issued a letter to all 
flexible permit holders making the following points:
     Permits issued under the Texas flexible permit rules 
reflect Texas State requirements and not necessarily the Federally-
applicable requirements.
     Texas flexible permit holders are obligated to comply with 
the applicable Federal requirements (e.g., New Source Performance 
Standards (NSPS), National Emission Standards for Hazardous Air 
Pollutants (NESHAP), Prevention of Significant Deterioration (PSD), and 
Non-attainment New Source Review (NNSR), terms and conditions of 
permits approved under the Federally approved Texas SIP).
     EPA would consider enforcement against sources for failure 
to comply with applicable Federal requirements on a case-by-case basis, 
including against emission sources that were modified or

[[Page 34447]]

constructed without the issuance of a Federally-enforceable permit.
    As of the date of this notice, EPA has yet to issue a final 
approval or disapproval of the Texas flexible permit program. 
Nonetheless, we offer the Audit Program at this time as a vehicle for 
flexible permit holders wishing to proactively address the status of 
emission units operating under the Texas flexible permit program. The 
Audit Program is entirely voluntary and does not pre-judge the ongoing 
EPA review of the Texas flexible permit program.

Audit Program Implementation

    Participants in the Audit Program shall conduct an independent 
third-party audit of all emission units covered by the source's Texas 
flexible permit to identify each emission unit's CAA compliance status, 
and to identify/re-establish all of an emission unit's Federally 
applicable requirements as discussed under the Audit Program Overview. 
The final CAFO will require that the facility submit applications for 
Title V and appropriate Federally-enforceable non-Title V permits to 
the State of Texas in order to memorialize the requirements derived 
from the audit process for each emission unit.
    The Audit Program shall be implemented in the following steps:
    (1) Submittal of an executed audit agreement by the audit 
participant. This agreement will memorialize the specific requirements 
of the independent third-party audit, as well as the company's 
commitment to work with its community to develop a community 
project(s). EPA will have 15 days to object to the third-party auditor 
selected by an audit participant. Any EPA objections shall be based on 
concerns regarding the independence of the auditor. Executed audit 
agreements under the Audit Program will be received for a period of 120 
days after publication in the Federal Register.
    (2) Audit participant and community development of significant 
community project(s). During the performance of the audit, the audit 
participant shall work with the community surrounding the facility to 
develop community projects(s). Within 180 days of signing the audit 
agreement, the audit participant will submit to EPA a final community 
project proposal for approval. The community project proposal shall 
include a detailed description of the project(s) and a schedule for 
project(s) implementation (projects must be completed within one year 
of the CAFO date), a clear discussion of air nexus, and a discussion of 
the community involvement and outreach conducted as the project was 
developed.
    (3) Completion of audit report. No later than, 160 days after the 
effective date of the audit agreement, the independent third-party 
auditor shall submit an audit report to the audit participant and EPA. 
This report will include an analysis of the CAA compliance status of 
all emission units covered by the audit participant's Texas flexible 
permit as well as a table containing all of the applicable emission 
unit requirements for each unit. For the purpose of providing 
transparency to the community on the audit process, the Auditor will 
work with the audit participant to prepare a version of the audit 
report with any CBI removed. The non-CBI versions of the audit reports 
will be made available to the public by EPA.
    (4) Audit participant's comments regarding the audit report. Not 
later than 250 days after the effective date of the audit agreement, 
the audit participant shall submit its comments, if any, regarding the 
audit report to EPA. The audit participant may specifically address its 
concerns regarding the CAA compliance determinations and the emission 
unit requirements identified in the audit report. For purposes of 
providing transparency to the community on the audit process, the audit 
participant will also prepare a version of the comments on the audit 
report with any CBI removed. The audit participant's comments regarding 
the audit reports will be made available to the public by EPA.
    (5) Resolution of NSR non-compliance. One of the major objectives 
of the third-party auditor will be the evaluation of the changes and 
modifications made during the period of the Texas flexible permit for 
compliance with applicable Federal NSR requirements. Identification of 
non-compliance with the NSR program may require the installation of 
LAER/BACT and will require further discussion with EPA regarding a path 
forward for bringing non-compliant emission units into permanent, 
consistent compliance and appropriate resolution of civil penalties.
    (6) Filing of a Consent Agreement and Final Order (CAFO) with the 
Region 6 Judicial Officer. The CAFO would memorialize the audit 
participant's commitment to seek the inclusion of agreed upon emission 
unit requirements in its Title V permit and appropriate Federally-
enforceable non-Title V permits. No later than 30 days after the 
effective date of the CAFO, the audit participant will apply to the 
appropriate permitting authority for a modification of its existing 
Title V permit to include emission unit requirements (as defined in the 
model audit agreement below), a compliance plan, a compliance 
certification, and, if warranted, a compliance schedule as outlined in 
30 TAC 122 Sec.  132(e)(4). In addition, the audit participant shall 
apply for modifications or for new non-Title V permits memorializing 
the emission unit requirements set forth in the CAFO. The resolution of 
emission unit requirements for some flexible permit emission units, but 
not all, will not be allowed under this program. For agreeing to 
evaluate and address (where necessary) non-compliance at all emission 
units covered by its flexible permit, a source will receive a covenant-
not-to-sue regarding civil liability for possible past violations of 
the CAA provided that CAA compliant emission unit specific requirements 
are incorporate into a Federally-enforceable permit. The audit 
participant may be subject to civil penalties where it is determined 
that there was non-compliance with NSR.
    The proposed CAFO shall be made available for public comment for a 
period of 30 days. EPA will consider any public comments, and as 
appropriate seek to work with the audit participant to revise the CAFO 
based on such public comments. After the end of the CAFO public comment 
period and after any revisions are made, EPA will seek finalization of 
the CAFO by the Region 6 Judicial Officer. The Agency reserves its 
right to modify the CAFO. The offering of the CAFO for public comment 
does not explicitly create an obligation for EPA response or inclusion 
of such comments in the final CAFO or elsewhere, nor does this create 
any rights for public objection to the final CAFO.
    The required text of the audit agreement is available for download 
in either a Word version file or as a portable document format (pdf) 
file at http://www.regulations.gov. The text of the audit agreement is 
not subject to negotiation. However, EPA may refine the text of the 
audit agreement upon receiving feedback during public comment and 
provide an updated agreement in the docket within 45 days following the 
close of public comment. Entities wishing to participate shall submit: 
An executed copy of the audit agreement with specific site details 
filled into the provided blanks; a list of emission units covered under 
its Texas flexible permit; a copy of its current Texas flexible permit, 
and all permits that applied to the facility prior to the issuance of 
the Texas flexible permit.

[[Page 34448]]

    Conclusion: The above represents a short summary of the Audit 
Program. The Texas Flexible Permit Audit Agreement is available in the 
public docket for this notice at http://www.regulations.gov, and 
represents the full requirements of the program.
    EPA is proposing the Audit Program to ensure that Texas flexible 
permit holders have a path forward to secure compliance with the 
requirements of the CAA. As EPA has stated that Texas flexible permits 
are not independently Federally-enforceable permits, industry 
representatives have expressed concern regarding the legal 
ramifications of operating facilities and making facility changes at 
facilities that do not have independently Federally-enforceable 
permits. Representatives of citizens living in areas near facilities 
regulated under flexible permits are concerned that in some instances 
flexible permits allow facilities to emit more harmful pollution than 
would be allowed under Federal law. We believe the Audit Program has 
the potential to result in beneficial reductions in the levels of air 
pollutants being emitted by flexible permit holders as well as 
providing industry a regulatory framework for continuing operations 
until independently Federally-enforceable permitting authorizations can 
be obtained.

    Dated: June 10, 2010.
Al Armendariz,
Regional Administrator, Region 6.
[FR Doc. 2010-14653 Filed 6-16-10; 8:45 am]
BILLING CODE 6560-50-P