[Federal Register Volume 74, Number 183 (Wednesday, September 23, 2009)]
[Proposed Rules]
[Pages 48450-48467]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-22805]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R06-OAR-2005-TX-0025; FRL-8958-8]


Approval and Promulgation of Implementation Plans; Texas; 
Revisions to the New Source Review (NSR) State Implementation Plan 
(SIP); Modification of Existing Qualified Facilities Program and 
General Definitions

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: EPA is proposing disapproval of revisions to the SIP submitted 
by the State of Texas that relate to the Modification of Existing 
Qualified Facilities (the Texas Qualified Facilities State Program or 
the Program). EPA proposes disapproval of the Texas Qualified 
Facilities State Program because it does not meet the Minor NSR SIP 
requirements nor does it meet the NSR SIP requirements for a substitute 
Major NSR SIP revision.
    EPA also proposes to take action on revisions to the SIP submitted 
by Texas for definitions severable from the definitions in the 
Qualified Facilities submittals. EPA proposes to take action on some of 
the submitted severable definitions (General Definitions). We propose 
to approve three definitions, grandfathered facility, maximum allowable 
emission rate table (MAERT), and new facility. We propose to disapprove 
the definition for best available control technology (BACT) and two 
subparagraphs, A and B, and paragraph G under the definition for 
modification of existing facility. We propose to make an administrative 
correction to the SIP-approved definition of facility, and take no 
action on the addition to the SIP-approved definition of federally 
enforceable because it relates to a Federal program that is implemented 
separately from the SIP. Third, EPA is proposing to take no action on a 
provision not in the Texas SIP that includes, among other things, a 
trading provision containing a cross-reference that no longer is in 
Texas' rules; EPA will act upon all of it in a separate notice.
    We are proposing action under section 110, part C, and part D of 
the Federal Clean Air Act (the Act or CAA). EPA is taking comments on 
this proposal and intends to take a final action.

DATES: Comments must be received on or before November 23, 2009.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-R06-
OAR-2005-TX-0025, 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 ``6PD'' (Multimedia) and select 
``Air'' before submitting comments.
     E-mail: Mr. Stanley M. Spruiell at 
spruiell.stanley@epa.gov.
     Fax: Mr. Stanley M. Spruiell, Air Permits Section (6PD-R), 
at fax number 214-665-7263.
     Mail: Mr. Stanley M. Spruiell, Air Permits Section (6PD-
R), Environmental Protection Agency, 1445 Ross Avenue, Suite 1200, 
Dallas, Texas 75202-2733.
     Hand or Courier Delivery: Mr. Stanley M. Spruiell, 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 8:00 a.m. and 4:00 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-
2005-TX-0025. 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 
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 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 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

[[Page 48451]]

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 
in http://www.regulations.gov or in hard copy at the Air Permits 
Section (6PD-R), Air Branch, Multimedia Planning and Permitting 
Division, 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 submittals, which are part of the EPA docket, are also 
available for public inspection at the State Air Agency 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: Mr. Stanley M. Spruiell, Air Permits 
Section (6PD-R), Environmental Protection Agency, Region 6, 1445 Ross 
Avenue, Suite 700, Dallas, Texas 75202-2733, telephone (214) 665-7212; 
fax number 214-665-7263; e-mail address spruiell.stanley@epa.gov.

SUPPLEMENTARY INFORMATION: Throughout this document, the following 
terms have the meanings described below:
     ``We,'' ``us,'' and ``our'' refer to EPA.
     ``Act'' or ``CAA'' means Federal Clean Air Act.
     ``40 CFR'' means Title 40 of the Code of Federal 
Regulations--Protection of Environment.
     ``SIP'' means State Implementation Plan as established 
under section 110 of the Act.
     ``NSR'' means new source review, a phrase intended to 
encompass the statutory and regulatory programs that regulate the 
construction and modification of stationary sources as provided under 
CAA section 110(a)(2)(C), CAA Title I, parts C and D, and 40 CFR 51.160 
through 51.166.
     ``Minor NSR'' means NSR established under section 110 of 
the Act and 40 CFR 51.160.
     ``Major NSR'' means any new or modified source that is 
subject to NNSR and/or PSD.
     ``NNSR'' means nonattainment NSR established under Title 
I, section 110 and part D of the Act and 40 CFR 51.165.
     ``PSD'' means prevention of significant deterioration of 
air quality established under Title I, section 110 and part C of the 
Act and 40 CFR 51.166.
     ``Program'' means the SIP revision submittals from the 
TCEQ concerning the Texas Qualified Facilities State Program.
     ``NAAQS'' means any national ambient air quality standard 
established under 40 CFR part 50.
     ``TSD'' means the Technical Support Document for this 
action.

Table of Contents

I. What Action is EPA Proposing?
II. What are the Other Relevant Proposed Actions on the Texas 
Permitting SIP Revision Submittals?
III. What has the State Submitted?
IV. Is the Texas Qualified Facilities State Program a Submittal for 
a Major or Minor NSR SIP Revision?
    A. Description of the Submitted Program
    B. Is the Submitted Program Clearly a Minor NSR SIP Revision?
V. What is EPA's Evaluation of the Submitted Texas Qualified 
Facilities State Program as a Substitute Major NSR SIP Revision?
    A. What are the Requirements for EPA's Review of a Submitted 
Major NSR SIP Revision?
    B. Does the Submitted Program Prohibit Circumvention of Major 
NSR?
    C. Does the Submitted Program Meet the Major NSR Applicability 
Determination Criteria?
    D. Does the Submitted Program Meet the CAA and Major NSR SIP 
Requirements for a Major Modification?
    E. Does the Submitted Program Meet Section 110(l) of the Act for 
a Major NSR SIP Revision?
VI. What is EPA's Evaluation of the Submitted Texas Qualified 
Facilities State Program as a Minor NSR SIP Revision?
    A. Does the Submitted Program meet the Minor NSR SIP 
Requirements for Noninterference with the Major NSR SIP 
Requirements?
    B. Does the Submitted Program meet the Request for an Exemption 
or a Relaxation from the Minor NSR SIP Requirements?
    C. What is EPA's Summary of whether the Submitted Program Meets 
the Requirements for a Minor NSR SIP Revision?
VII. What is EPA's Evaluation of the Submitted General Definitions?
    A. Which Submitted General Definitions Meet the NSR SIP 
Requirements?
    B. Which Submitted General Definitions do not Meet the NSR SIP 
Requirements?
    C. What is the Administrative Correction Related to the 
Submitted General Definition of ``facility?''
    D. Why are we not Taking any Action on the Severable Submitted 
Portion of the Definition of Federally Enforceable?
VIII. Why is EPA Proposing to Take No Action on a Severable 
Submitted Provision?
IX. Proposed Action
X. Statutory and Executive Order Reviews

I. What Action is EPA Proposing?

    We are proposing to disapprove the Texas Qualified Facilities State 
Program, as submitted by Texas in Title 30 of the Texas Administrative 
Code (30 TAC) at 30 TAC Chapter 116--Control of Air Pollution by 
Permits for New Construction or Modification. This includes the 
following regulations under Chapter 116: 30 TAC 116.116 (e), 30 TAC 
116.117, 30 TAC 116.118, and the definitions in 30 TAC 116.10 for 
qualified facility, actual emissions, allowable emissions, and 
modification of existing facility at (E) for qualified facilities, as 
not meeting the Act and EPA's NSR regulations. It is EPA's position 
that none of these identified elements for the submitted Qualified 
Facilities State Program is severable from each other.
    First, we are proposing to disapprove the submitted Texas Qualified 
Facilities State Program as not meeting the requirements for a 
substitute Major NSR SIP revision. Our grounds for proposing 
disapproval as a substitute Major NSR SIP revision include the 
following:
     It is not clearly limited to Minor NSR thereby allowing 
major modifications to occur without a Major NSR permit;
     It has no regulatory provisions clearly prohibiting the 
use of this Program from circumventing the Major NSR SIP requirements 
thereby allowing changes at existing facilities to avoid the 
requirement to obtain preconstruction permit authorizations for 
projects that would otherwise require a Major NSR preconstruction 
permit;
     It does not require that first an applicability 
determination be made whether the modification is subject to Major NSR 
thereby exempting new major stationary sources and major

[[Page 48452]]

modifications from the EPA Major NSR SIP requirements;
     It does not include a demonstration from the TCEQ showing 
how the use of ``modification'' is at least as stringent as the 
definition of ``modification'' in the EPA Major NSR SIP program;
     It does not include the requirement to make Major NSR 
applicability determinations based on actual emissions and on emissions 
increases and decreases (netting) that occur within a major stationary 
source;
     It fails to meet the statutory and regulatory requirements 
for a SIP revision;
     It is not consistent with applicable statutory and 
regulatory requirements as interpreted in EPA policy and guidance on 
SIP revisions; and
     It fails to ensure protection of the national ambient air 
quality standards (NAAQS), and noninterference with the Texas SIP 
control strategies and reasonable further progress (RFP).
    We are proposing to disapprove the submitted Program as not meeting 
the Minor NSR SIP requirements. It is not clearly limited to Minor NSR. 
It has no regulatory provisions clearly prohibiting the use of this 
Program from circumventing the Major NSR SIP requirements. This Program 
does not require that first an applicability determination be made 
whether the modification is subject to Major NSR.
    In addition to the failures to protect Major NSR SIP requirements, 
EPA cannot find that the submitted Program, as a Minor NSR SIP program, 
will ensure protection of the NAAQS, and noninterference with the Texas 
SIP control strategies and RFP. We are proposing to disapprove this 
Program as a Minor NSR SIP revision because it does not meet certain 
provisions of the Act and EPA's Minor NSR SIP requirements. Our grounds 
for proposing disapproval as a Minor NSR SIP revision include the 
following:
     It is not clearly limited to Minor NSR thereby allowing 
major modifications to occur without a Major NSR permit;
     It has no regulatory provisions clearly prohibiting the 
use of this Program from circumventing the Major NSR SIP requirements 
thereby allowing sources to avoid the requirement to obtain 
preconstruction permit authorizations for projects that would otherwise 
require a Major NSR preconstruction permit;
     It does not require that first an applicability 
determination be made whether the modification is subject to Major NSR 
thereby exempting new major stationary sources and major modifications 
from the EPA Major NSR SIP requirements;
     It fails to meet the statutory and regulatory requirements 
for a SIP revision;
     It is not consistent with applicable statutory and 
regulatory requirements as interpreted in EPA policy and guidance on 
SIP revisions;
     It is not an enforceable Minor NSR permitting program;
     It lacks safeguards to ensure that the changes will not 
violate a Texas control strategy and would not interfere with 
attainment and maintenance of a NAAQS;
     It fails to demonstrate that the requested relaxation to 
the Texas Minor NSR SIP will not interfere with any applicable 
requirement concerning attainment and RFP, or any other applicable 
requirement of the Act.
    Secondly, in a proposed action separate from the above action on 
the submitted Texas Qualified Facilities State Program, we are 
proposing to disapprove severable definitions as submitted by Texas for 
``best available control technology (BACT)'' and subparagraphs (A) and 
(B) addressing insignificant increases and subparagraph (G) of 
``modification of existing facility,'' as not meeting the Act and EPA's 
NSR regulations. We are proposing to approve the severable definitions 
as submitted for ``grandfathered facility,'' ``new facility'' and 
``maximum allowable emission rate table (MAERT).'' We are proposing to 
take no action on the submitted severable new subparagraph relating to 
the SIP definition of ``federally enforceable'' because it is outside 
the scope of the SIP and the submitted severable provision in 30 TAC 
116.116(f) concerning trading for which we will take action later in a 
separate notice. It is EPA's position that these definitions are 
separate from those in the submitted Texas Qualified Facilities State 
Program; moreover, each is severable from each other but for 
subparagraphs (A) and (B) in the definition for ``modification of 
existing facility.'' Subparagraphs (A) and (B) in ``modification of 
existing facility'' are not severable from each other. The submitted 
definition for ``best available control technology'' is not severable, 
however, from another action appearing in today's Federal Register. See 
sections IV through VIII for further information.
    We have evaluated the submitted Texas Qualified Facilities State 
Program. Based upon our evaluation, we have concluded that the portions 
of the submitted SIP revisions specifically applicable to the Program 
do not meet the requirements of the Act and 40 CFR part 51. All these 
portions of the submittals for the Program are not severable and 
therefore are not approvable.
    We have evaluated other (but not all) additional definitions in the 
submitted General Definitions that are not part of the submitted Texas 
Qualified Facilities State Program. Based upon our evaluation, we have 
concluded that some of the evaluated definitions do not meet the 
Federal requirements and therefore, are not approvable whereas other 
evaluated definitions meet the Federal requirements and are approvable. 
Each definition that we evaluated in the submitted General Definitions 
(that is not identified above as part of the Program) is severable from 
each other but for the subparagraphs (A) and (B) identified above.
    As authorized in sections 110(k)(3) and 301(a) of the Act, where 
portions of the State submittals are severable, EPA may approve the 
portions of the submittals that meet the requirements of the Act, take 
no action on certain portions of the submittals,\1\ and disapprove the 
portions of the submittals that do not meet the requirements of the 
Act. When the deficient provisions are not severable from all of the 
submitted provisions, EPA must propose disapproval of the submittals, 
consistent with sections 301(a) and 110(k)(3) of the Act. The submitted 
provisions work together to form the Texas Qualified Facilities State 
Program and are not severable from each other. Therefore, EPA is 
proposing disapproval of the submitted Program. The submitted 
provisions for the General Definitions that EPA evaluated do not work 
together and are severable from each other. Therefore, EPA is proposing 
to disapprove the submitted definition for BACT and subparagraphs (A) 
and (B) (that are not severable from each other), and subparagraph (G) 
in the definition for modification of existing facility. The submitted 
definition for BACT is not severable from another action proposed in 
today's Federal Register. See section II and footnote 2 for additional 
information.
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    \1\ In this action, we are taking no action on a submitted 
revision to a definition that is outside the scope of the SIP and a 
submitted revision to a regulatory provision that is currently 
undergoing review for appropriate action.
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    Under section 179(a) of the CAA, final disapproval of a submittal 
that addresses a mandatory requirement of the Act starts a sanctions 
clock and a Federal Implementation Plan (FIP) clock. The provisions in 
these submittals relating to the Texas Qualified Facilities State 
Program and the General Definitions were not

[[Page 48453]]

submitted to meet a mandatory requirement of the Act. Therefore, if EPA 
takes final action to disapprove the submitted Texas Qualified 
Facilities State Program or to disapprove either the submitted 
definition for BACT or subparagraphs (A) and (B) or subparagraph (G) in 
the submitted definition of modification of existing facility in the 
General Definitions, no sanctions and FIP clocks will be triggered.

II. What Are the Other Relevant Proposed Actions on the Texas 
Permitting SIP Revision Submittals?

    This proposed action should be read in conjunction with two other 
proposed actions appearing elsewhere in today's Federal Register, (1) 
proposed action on the Texas NSR SIP, including PSD, NNSR for the 1997 
8-Hour Ozone Standard, NSR Reform, and a Minor NSR Standard Permit (NSR 
SIP); \2\ and (2) proposed action on the Texas NSR SIP, Flexible 
Permits. On November 26, 2008, EPA proposed limited approval/limited 
disapproval of the Texas submittals relating to public participation 
for air permits of new and modified facilities (73 FR 72001). EPA 
believes these actions should be read in conjunction with each other 
because the permits issued under these State programs are the vehicles 
for regulating a significant universe of the air emissions from sources 
in Texas and thus directly impact the ability of the State to achieve 
and maintain attainment of the NAAQS and to protect the health of the 
communities where these sources are located. Our proposal is based upon 
our interpretation of the Texas preconstruction permitting program, 
which is outlined in each notice and accompanying technical support 
document (TSD). Those interested in any one of these actions are 
encouraged to review and comment on the other proposed actions as well.
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    \2\ In that proposed action, the submitted definition of BACT is 
not severable from the proposed action on the PSD SIP revision 
submittals. EPA may choose to take final action on the definition of 
BACT in the final action on the NSR SIP rather than on the Qualified 
Facilities or the General Definitions final action. EPA is obligated 
to take final action on the submitted definitions in the General 
Definitions for those identified as part of the Texas Qualified 
Facilities State Program, the Texas Flexible Permits Program, Public 
Participation, Permit Renewals (there will be a proposed action 
published at a later date), and this BACT definition as part of the 
NSR SIP.
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    EPA intends to take final action on the State's Public 
Participation SIP revision submittals in November 2009. EPA intends to 
take final action on the submitted Texas Qualified Facilities State 
Program by March 31, 2010, the submitted Texas Flexible Permits State 
Program by June 30, 2010, and the NSR SIP on August 31, 2010. These 
dates are expected to be mandated under a Consent Decree (see, Notice 
of Proposed Consent Decree and Proposed Settlement Agreement, 74 FR 
38015, July 30, 2009).
    After review of public comment, we may take action to finalize the 
approvable portions of the submittals and the disapprovable portions of 
the submittals in separate actions; wherever severable, we may take 
final action on some portions in a separate action.

III. What Has the State Submitted?

    This notice provides a summary of our evaluation of Texas' March 
13, 1996, SIP revision submittal, as replaced by severable portions in 
the July 22, 1998 SIP revision submittal; and as revised by severable 
portions in the September 11, 2000; July 31, 2002, and September 4, 
2002, SIP revision submittals. We provide our reasoning in general 
terms in this preamble, but provide a more detailed analysis in the TSD 
that has been prepared for this proposed rulemaking. Because we are 
proposing to disapprove this submitted Program based on the 
inconsistencies and deficiencies discussed herein, we have not 
attempted to review and discuss all of the issues that would need to be 
addressed for approval of this submitted Program as a Major NSR SIP 
revision.

A. Qualified Facilities State Program Submittals

    On March 13, 1996, Texas submitted revisions affecting 30 TAC 
Chapter 116--Control of Air Pollution by Permits for New Construction 
or Modification. These revisions include adding a new (e) to 30 TAC 
116.116--Changes to Facilities, concerning Qualified Facilities, a new 
30 TAC 116.117--Documentation and Notification of Changes at Qualified 
Facilities, a new 116.118--Pre-Change Qualification, a new definition 
relating to modifications of existing Qualified Facilities in 30 TAC 
116.10, and new definitions in 30 TAC 116.10 for ``qualified 
facility,'' ``actual emissions,'' and ``allowable emissions.'' On July 
22, 1998, Texas submitted severable revisions that included the repeal 
of the contents of the 1996 submittal. Among other things, the 1998 
submittal included a new 30 TAC 116.10, General Definitions, ``actual 
emissions'' at (1), ``allowable emissions'' at (2), ``modification of 
existing facility'' at (9)(F), and ``qualified facility'' at (16), a 
new 30 TAC 116.116(e), a new 30 TAC 116.117, and a new 30 TAC 116.118. 
On September 11, 2000, Texas submitted a revision in 30 TAC 116.10 to 
the definition of ``allowable emissions'' and a revision to 
subparagraph (e)(5)(B) of 30 TAC 116.116. On September 4, 2002, TCEQ 
submitted a revision to 30 TAC 116.10 that included the renumbering of 
the definitions.

General Definitions Submittals

    On March 13, 1996, Texas submitted revisions to 30 TAC 116.10--
General Definitions. This submittal included, among other definitions, 
new state regulatory definitions for ``BACT,'' ``facility,'' 
``grandfathered facility,'' ``maximum allowable emission rate table 
(MAERT),'' ``modification of existing facility'' at subparagraphs (A), 
(B), and (G), and ``new facility.'' On July 22, 1998, Texas submitted 
severable revisions that included, among other things, repeal of the 
1996 submitted definitions. Texas adopted a new 30 TAC 116.10--General 
Definitions, that included among other definitions, new definitions for 
``BACT,'' ``facility,'' ``grandfathered facility,'' ``maximum allowable 
emission rate table (MAERT),'' ``modification of existing facility,'' 
and ``new facility.'' On September 11, 2000, Texas submitted a new 
definition for ``federally enforceable.'' On July 31, 2002, Texas 
submitted a revision to the definition of ``facility.'' On September 4, 
2002, Texas submitted a revision to add two new definitions in 30 TAC 
116.10 and renumber the other definitions to accommodate the new 
definitions.
    On September 18, 2002 (67 FR 58697), EPA approved the definition of 
``federally enforceable,'' introductory paragraph and (A) through (E), 
as submitted July 22, 1998. On September 6, 2006 (71 FR 52698), EPA 
approved the definition ``facility'' as submitted July 22 1998. On 
August 28, 2007 (72 FR 49198), EPA approved the two new definitions 
submitted on September 4, 2002, and the renumbering of existing SIP 
approved definitions. EPA's August 28, 2007, action also included a 
typographical error that inadvertently removed the definition of 
``facility'' that was previously approved September 6, 2006, as part of 
the Texas SIP.

Summary of the Submittals Addressed in This Proposed Action

    The table below summarizes the changes that are in the SIP revision 
submittals. A summary of EPA's evaluation of each section and the basis 
for this proposal is discussed in sections IV through VIII of this 
preamble. The

[[Page 48454]]

TSD includes a detailed evaluation of the submittals.

                     Table 1--Summary of Each SIP Submittal That Is Affected by This Action
----------------------------------------------------------------------------------------------------------------
                                                          Submittal       Description of
            Section                      Title              dates             change           Proposed action
----------------------------------------------------------------------------------------------------------------
                                        30 TAC 116.10 General Definitions
----------------------------------------------------------------------------------------------------------------
30 TAC 116.10(1)...............  Definition of             03/13/1996  Added new definition  Disapproval.
                                  ``actual
                                  emissions''.
                                                           07/22/1998  Repealed and a new
                                                                        definition
                                                                        submitted as
                                                                        paragraph (1).
30 TAC 116.10(2)...............  Definition of             03/13/1996  Added new definition  Disapproval.
                                  ``allowable
                                  emissions''.
                                                           07/22/1998  Repealed and a new
                                                                        definition
                                                                        submitted as
                                                                        paragraph (2).
                                                           09/11/2000  Revised paragraphs
                                                                        (2)(A) through (D).
30 TAC 116.10(3)...............  Definition of             03/13/1996  Added new definition  Disapproval.
                                  ``BACT''.
                                                           07/22/1998  Repealed and a new
                                                                        definition
                                                                        submitted as
                                                                        paragraph (3).
30 TAC 116.10(6)...............  Definition of             03/13/1996  Added new definition  Administrative
                                  ``facility''.                                               correction to
                                                                                              clarify the
                                                                                              definition of
                                                                                              ``facility'' is in
                                                                                              the SIP.
                                                           07/22/1998  Repealed and a new
                                                                        definition
                                                                        submitted as
                                                                        paragraph (4).
                                                                       Approved 09/06/06
                                                                        (71 FR 52698).
                                                           09/04/2002  Redesignated to
                                                                        paragraph (6).
                                                                       Inadvertently
                                                                        identified as non-
                                                                        SIP provision in 08/
                                                                        28/07 SIP revision.
30 TAC 116.10(7)...............  Definition of               09/11/00  New subparagraph      No action.
                                  ``Federally                           (5)(F).
                                  enforceable''.
                                                             09/04/02  Subparagraph (5)(F)
                                                                        redesignated to
                                                                        subparagraph
                                                                        (7)(F).
                                                                       Implements section
                                                                        112(g) of Act.
30 TAC 116.10(8)...............  Definition of             03/13/1996  Added new definition  Approval.
                                  ``grandfathered
                                  facility''.
                                                           07/22/1998  Repealed and a new
                                                                        definition
                                                                        submitted as
                                                                        paragraph (6).
                                                           07/31/2002  Revised definition.
                                                           09/04/2002  Redesignated to
                                                                        paragraph (8).
30 TAC 116.10(10)..............  Definition of             03/13/1996  Added new definition  Approval,
                                  ``maximum allowable
                                  emission rate
                                  table''.
                                                           07/22/1998  Repealed and a new
                                                                        definition
                                                                        submitted as
                                                                        paragraph (8).
                                                           09/04/2002  Redesignated to
                                                                        paragraph (10).
30 TAC 116.10(11)..............  Definition of             03/13/1996  Added new definition  Disapproval of (A),
                                  ``modification of                                           (B), (E), and (G).
                                  existing facility''.
                                                           07/22/1998  Repealed and a new
                                                                        definition
                                                                        submitted as
                                                                        paragraph (9).
                                                           09/11/2000  Revised paragraph
                                                                        (9).
                                                           09/04/2002  Redesignated to
                                                                        paragraph (11).
30 TAC 116.10(12)..............  Definition of ``new       03/13/1996  Added new definition  Approval.
                                  facility''.
                                                           07/22/1998  Repealed and a new
                                                                        definition
                                                                        submitted as
                                                                        paragraph (10).
                                                           09/04/2002  Redesignated to
                                                                        paragraph (12).
30 TAC 116.10(16)..............  Definition of             03/13/1996  Added new definition  Disapproval.
                                  ``qualified
                                  facility''.
                                                           07/22/1998  Repealed and a new
                                                                        definition
                                                                        submitted as
                                                                        paragraph (14).
                                                           09/04/2002  Redesignated to
                                                                        paragraph (16).
30 TAC 116.116.................  Changes to                03/13/1996  Added subsection (e)  Disapproval.
                                  Facilities.
                                                           07/22/1998  Repealed and a new    Disapproval.
                                                                        116.116 (e)
                                                                        submitted.
30 TAC 116.117.................  Documentation and         03/13/1996  Added new section...  Disapproval.
                                  Notification of
                                  Changes to
                                  Qualified
                                  Facilities.
                                                           07/22/1998  Repealed and a new
                                                                        116.117
                                                                        resubmitted.
30 TAC 116.118.................  Pre-Change                03/13/1996  Added new section...  Disapproval.
                                  Qualification.
                                                           07/22/1998  Repealed and a new
                                                                        116.118 submitted.
----------------------------------------------------------------------------------------------------------------


[[Page 48455]]

IV. Is the Texas Qualified Facilities State Program Submittal for a 
Major or Minor NSR SIP Revision?

A. Description of the Submitted Program

    This part of today's action describes the Qualified Facilities 
State Program submitted by Texas to EPA for approval into the State's 
SIP. The submitted Program adds an exemption under State law allowing a 
change to an existing facility that is ``qualified,'' to net out of the 
NSR SIP permitting requirements.
    First, EPA wishes to acknowledge that its interpretation of the 
Texas law and the Texas NSR SIP inclines it to the legal position that 
the State uses a ``dual definition'' for the term ``facility.'' It is 
our understanding of State law, that a ``facility'' can be an 
``emissions unit,'' i.e., any part of a stationary source that emits or 
may have the potential to emit any air contaminant. A ``facility'' also 
can be a piece of equipment, which is smaller than an ``emissions 
unit.'' A ``facility'' can be a ``major stationary source'' as defined 
by Federal law. A ``facility'' under State law can be more than one 
``major stationary source.'' It can include every emissions point on a 
company site, without limiting these emissions points to only those 
belonging to the same industrial grouping (SIC code). EPA encourages 
comment on whether its understanding of Texas law is correct for the 
definition of ``facility.'' If a commenter does not believe this legal 
position is correct, we encourage the commenter to submit any 
applicable case law, Texas legislative history, etc., that can further 
our legal understanding of the State's meaning of the term 
``facility.'' The State legal meaning of the term ``facility'' is 
critical to EPA's understanding of the Texas permitting program, both 
minor and major. We also are requesting comment on the meaning of ``a 
TCEQ air quality account number.'' This too is critical to our legal 
positions discussed today in this notice.
    The SIP revision submittals establish the criteria by which a 
physical change in, or change in the method of operation of, an 
existing minor or major Qualified Facility is not a modification and 
does not trigger the permitting requirements for a case-by-case NSR SIP 
permit, amendment, or alteration, or coverage under a minor NSR SIP 
permit by rule or standard permit. They also include the criteria for 
becoming a Qualified Facility, the permitting process required for a 
Qualified Facility, and the methods for determining the net effect of 
emission increases and decreases, compound interchanges,\3\ and 
intraplant trading of emissions (i.e., relying upon emission reductions 
from other existing Qualified Facilities in the applicability netting 
analysis).
---------------------------------------------------------------------------

    \3\ Section 382.003(2) of the TCAA defines ``air contaminant'' 
as ``particulate matter, radioactive matter, dust, fumes, gas, mist, 
smoke, vapor, or odor, including any combination of those items, 
produced by processes other than natural.'' SB 1126 did not revise 
this statutory term. TCEQ interpreted the legislative intent to 
allow individual compounds to be interchanged with other compounds 
in the same air contaminant category. Submitted 30 TAC 
116.116(e)(3)(F) defines an ``air contaminant category'' as ``a 
group of related compounds, such as VOCs, particulate matter, 
nitrogen oxides, and sulfur compounds.'' An example is if the owner 
or operator wishes to make a change that will increase emissions of 
heptane, a VOC. The reductions relied upon in the applicability 
netting analysis will be acetone, another VOC. TCEQ has established 
an ``interchange'' methodology to ensure that compounds within the 
VOCs air contaminant category, as interchanged, will have an 
equivalent impact on the air quality.
---------------------------------------------------------------------------

    Under the submittals, a facility \4\ is designated as a Qualified 
Facility if either of the following criteria is met:
---------------------------------------------------------------------------

    \4\ ``Facility'' is defined in the SIP-approved 30 TAC 116.10(6) 
as ``A discrete or identifiable structure, device, item, equipment, 
or enclosure that constitutes or contains a stationary source, 
including appurtenances other than emission control equipment. A 
mine, quarry, well test, or road is not a facility.'' In this 
action, we are also proposing an administrative correction to 
clarify that the definition of ``facility'' is in the SIP. See 
section VII.C.
---------------------------------------------------------------------------

    (1) The existing facility was issued a case-by-case Major or Minor 
NSR SIP permit or permit amendment, or was covered under a Minor NSR 
SIP permit by rule, within 10 years before the change occurs. See 
submittals at 30 TAC 116.10(11)(E)(i).
    (2) The existing facility was issued a case-by case Major or Minor 
NSR permit or permit amendment, or was covered under a Minor NSR SIP 
permit by rule, for the voluntarily installed additional air pollution 
control methods (see submittals at 30 TAC 116.116(e)(6)), within 10 
years before the change occurs (see submittals at 30 TAC 116.10(1)). We 
request comment on whether our interpretation of the regulatory 
language is correct that a permit is required for a facility to be a 
Qualified Facility. This interpretation is critical to our position on 
whether all Qualified Facilities have undergone an ambient air quality 
analysis, as required before issuance of any Minor or Major NSR SIP 
permit in Texas.
    Under the second criterion, the additional air pollution controls 
methods must be at least as effective as the Minor NSR BACT \5\ that 
would have been required in a case-by-case Minor NSR SIP permit or 
permit amendment at the time the additional control methods were 
applied. An emissions limitation is established based upon the 
application of Minor NSR SIP BACT, which is reflected as an allowable 
emission rate in a permit. See the submittals at 30 TAC 
116.116(e)(6)(A) and (B) and page 148 of the 1996 SIP revision 
submittal. The permit under the second criterion must have been issued 
within 10 years before the change occurs. See the submittals at 30 TAC 
116.10(1) and (11)(E). The Texas legislature envisioned this second 
criterion as a ``carrot'' to encourage grandfathered facilities \6\ to 
apply for a permit to become qualified and thereby be able to 
participate in the netting. See e.g., submittals at 30 TAC 
116.10(2)(C). At the time of the State's adoption of this submitted 
Program, the State did not have the statutory authority to impose 
controls on or require permits for grandfathered facilities.
---------------------------------------------------------------------------

    \5\ Texas adopted a revised NSR State rule on July 27, 1972, to 
add the requirement that a proposed new facility and proposed 
modification utilize at least best available control technology 
(BACT), with consideration to the technical practicability and 
economical reasonableness of reducing or eliminating the emissions 
from the facility. EPA approved the revised 603.16 into the Texas 
SIP, presently codified in the Texas SIP at 30 TAC 116.111(a)(2)(C). 
The Federal definition for PSD BACT is part of the Texas SIP as 
codified in the SIP at 30 TAC 116.160(a). (This current SIP rule 
citation was adopted by the State on October 10, 2001, and EPA 
approved this recodified SIP rule citation on July 22, 2004 (69 FR 
43752).) EPA approved the Texas PSD program SIP revision submittals, 
including the State's incorporation by reference of the Federal 
definition of BACT, in 1992. See proposal and final approval of the 
Texas PSD SIP at 54 FR 52823 (December 22, 1989) and 57 FR 28093 
(June 24, 1992). EPA specifically found that the SIP BACT 
requirement (now codified in the Texas SIP at 30 TAC 
116.111(a)(2)(C)) did not meet the Federal PSD BACT definition. To 
meet the PSD SIP Federal requirements, Texas chose to incorporate by 
reference, the Federal PSD BACT definition, and submit it for 
approval by EPA as part of the Texas PSD SIP. Upon EPA's approval of 
the Texas PSD SIP submittals, both EPA and Texas interpreted the SIP 
BACT provision now codified in the SIP at 30 TAC 116.111(a)(2)(C) as 
being a minor NSR SIP requirement for minor NSR permits.
    \6\ Grandfathered facilities are facilities that were once 
exempt from most State air permitting requirements because the 
facilities predated the 1971 Texas Clean Air Act that required 
preconstruction review and operating permits for construction of any 
new source and modification of any existing source that may emit air 
contaminants into the atmosphere of the State.
---------------------------------------------------------------------------

    The submitted Program applies only to Qualified Facilities with the 
same TCEQ air quality account number.\7\ See submittals at 30 TAC 
116.116(e)(2). The first step in determining whether there is a 
modification subject to NSR review

[[Page 48456]]

is to evaluate the type of proposed change. The change cannot be an 
increase in emissions of any air contaminant not previously emitted. 
See submittals at 30 TAC 116.116(e)(1)(B). The change cannot be any 
physical change to the existing permitted Major or Minor Qualified 
Facility that creates a discrete or identifiable structure, device, 
item, equipment, or enclosure, which constitutes or contains a 
stationary source. See submittals at 30 TAC 116.116(e)(5)(A). If the 
change is not either of these types of change, next one evaluates 
whether the change's increased emissions will be above the most 
stringent of the Qualified Facility's permitted emissions rate or an 
applicable state or federal rule. There is no modification subject to 
NSR review if the change does not cause an increase in emissions above 
the Facility's most stringent applicable emissions rate (imposed by NSR 
SIP permit or applicable state or federal rule). See the submittals at 
30 TAC 116.116(e)(3) and 30 TAC 116.116(e)(1)(A)-(B). In no way can a 
Qualified Facility's existing most stringent applicable emissions rate 
be lessened by using this submitted Program. See submittals at 30 TAC 
116.116(e)(8).
---------------------------------------------------------------------------

    \7\ ``Account'' for NSR purposes is defined in 30 TAC 101.1(1), 
second sentence, as ``any combination of sources under common 
ownership or control and located on one or more contiguous 
properties, or properties contiguous except for intervening roads, 
railroads, rights-of way, waterways, or similar divisions.'' This 
definition was approved as part of the Texas SIP (March 30, 2005 (70 
FR 16129)).
---------------------------------------------------------------------------

    If the change will cause an increase in emissions above the 
Qualified Facility's most stringent applicable emissions rate (imposed 
by NSR SIP permit or applicable state or federal rule), then the holder 
of the permit may perform an applicability netting analysis. The 
applicability netting analysis considers emissions increases from the 
change and reductions from the Qualified Facility making the change and 
reductions from any other existing permitted minor or major Qualified 
Facility at the same air quality account number. These reductions 
relied upon in the applicability netting analysis must be surplus to 
each Qualified Facility's most stringent applicable emissions rate 
(imposed by NSR SIP permit or applicable state or federal rule). See 
the submittals at 30 TAC 116.116(e)(2) -(3) and 30 TAC 116.10(2). See 
also Texas NSR SIP-codified rule at 30 TAC 116.115(b)(2)(I)(ii).
    No emissions increases are considered from the other participating 
existing permitted minor or major permitted Qualified Facilities. If 
the sum of the increase in emissions from the projected change and an 
equivalent decrease in emissions from the Qualified Facility making the 
change is zero, i.e., no net increases, the change is not a 
modification and is not subject to the NSR permitting requirements. See 
submittals at 30 TAC 116.116(e)(3). If the sum is above zero, then the 
holder of the permit that is making the change can use the netting 
process to offset the change by an equivalent decrease at other 
participating Qualified Facilities. Id. If the sum is zero, i.e., no 
net increases, the change is not a modification and not subject to NSR 
permitting requirements. Id. If the sum is above zero, i.e., net 
increases, the change is a modification subject to NSR permitting 
requirements. See submittals at 30 TAC 116.116(e)(1(A).

B. Is the Submitted Program Clearly a Minor NSR SIP Revision?

    Our evaluation of Texas' submitted SIP revisions is guided by 
whether the submitted Qualified Facilities State Program applies to 
Major NSR or Minor NSR, or both. From our review of the record with the 
SIP revision submissions and other correspondence and TCEQ guidance, we 
believe that Texas intends its Qualified Facilities State Program to 
apply only to minor modifications at minor and major existing Qualified 
Facilities. See e.g., 20 Tex. Reg. 8306 (October 10, 1995), 21 Tex. 
Reg. 1579 (1996), the 1996 SIP revision submittal particularly at pages 
141, 142, 143, 148, 153, 154 of 215 pages, December 2000 Guidance for 
Air Quality, Qualified Changes under Senate Bill 1126, Air Permits 
Division, TCEQ (see particularly pages 3, 20), and TCAA Section 
382.003(9), introductory paragraph and (A)-(G). As a matter of fact, 
EPA sent a comment letter to Texas during its public comment period and 
EPA said in its 1995 letter that Texas had adequately satisfied our 
concern that its Qualified Facilities State Program, as proposed, would 
not circumvent or supersede any Major NSR SIP requirements. Since we 
sent the 1995 letter, however, the State legislators have revised the 
Texas Clean Air Act (TCAA) significantly.
    For the submitted Program, the TCAA definition for ``modification 
of existing facility'' at Section 382.003, Health and Safety Code, was 
revised by Senate Bill 1126 of the 1995 74th Texas Legislature. The 
statutory definition was revised to add, among other things, subsection 
at (E), a new category for when a physical change in, or change in the 
method of operation of, an existing major or minor NSR Qualified 
Facility is not a modification subject to the NSR SIP permitting 
requirements.\8\ It provides that increases in emissions are not a 
modification if the increases occur at an existing permitted Qualified 
Facility and there are sufficient emission reductions from it and other 
participating existing permitted Qualified Facilities, to offset the 
increase.
---------------------------------------------------------------------------

    \8\ At the time of this 1995 statutory revision to the 
definition of ``modification of existing facility,'' the consensus 
legal interpretation of this definition was that it applied only to 
minor modifications, not major modifications.
---------------------------------------------------------------------------

    The Legislature in 1995 also changed the factors for determining 
whether a modification occurs by adding a new subsection (b) to TCAA 
Section 382.0512. In all situations but for modifications of existing 
Qualified Facilities, in determining whether a proposed change at an 
existing facility is a modification, there can be no consideration of 
the effect on emissions of any pollution control method applied to the 
source and no consideration of any decreases in emissions from other 
sources, including the source proposing to make the change. See TCAA 
Section 382.0512 (a), introductory paragraph, and (1)-(2). The 
legislative intent was to allow under the Qualified Facilities State 
Program, consideration of any pollution control method applied to the 
Qualified Facility (see the submittals at 30 TAC 116.116(e) (2)) and 
any decreases in emissions from other Qualified Facilities in 
determining if an increase in emissions had occurred by a change made 
at a Qualified Facility, i.e., a netting analysis now was allowed to 
net out of minor NSR permitting requirements. Additionally, 
grandfathered facilities could voluntarily install emission controls, 
obtain a permit reflecting the highest achievable actual emissions rate 
after the installation of the emission controls, and participate in 
this new Program. See SB 1126 Bill Analysis, April 10, 1995.
    In 1999, the Texas legislature made extensive revisions to the 
TCAA. Relevant to today's proposed action is the legislature's adding 
an explicit statutory prohibition against the use of an Exemption or 
Permit by Rule or a Standard Permit for major modifications. See 
sections 382.05196 and .057. These 1999 legislative actions required a 
new legal review of the statutory definition for ``modification of 
existing facility'' to see if it was still limited to minor 
modifications. It is EPA's interpretation that the 1999 legislative 
changes made this statutory definition ambiguous.
    The statutory definition on its face does not prohibit the use of 
the Program for a major modification as defined by the CAA and EPA's 
Major NSR SIP regulations. This Texas statutory definition has never 
been explicitly revised to prohibit major modifications. There are no 
prohibitions against using the submitted Program for major 
modifications, as there now are for the minor NSR SIP permits/
exemptions by rule and standard permits. There are no

[[Page 48457]]

statutory provisions in the TCAA that clearly limit modifications under 
the submitted Program to minor modifications.
    Similarly, the regulatory provisions submitted by Texas do not 
prohibit the use of the submitted Program for major modifications of 
existing minor and major stationary sources. The submitted rules do not 
limit the use of the Program to Minor NSR. The Program does not contain 
any emissions limitations, applicability statement, or regulatory 
provision restricting the modification to minor as do the Texas Minor 
NSR SIP rules for Permits by Rule in Chapter 106 and Standard Permits 
in Chapter 116, Subchapter F.\9\ Moreover, unlike the Minor NSR SIP 
rules for Standard Permits in 30 TAC 116.610(b) and Permits by Rule in 
30 TAC 106.4(a)(4), the submitted rules do not require that a major 
modification, as defined in the Major NSR SIP regulations, must meet 
the Major NSR permitting requirements.
---------------------------------------------------------------------------

    \9\ The Texas SIP does not include the State Pollution Control 
Project Standard Permit. In a separate action in today's Federal 
Register, EPA is proposing action on this individual standard 
permit. Please see the proposal notice concerning the Texas NSR SIP 
submittals for PSD, NNSR for the 1997 8-hour ozone NAAQS, NSR 
Reform, and a Standard Permit. Those interested in this other action 
are encouraged to review and comment on it as well.
---------------------------------------------------------------------------

    Although there are recordkeeping requirements in the Program at new 
30 TAC 116.117(a)(4) requiring owners and operators to maintain 
documentation containing sufficient information as may be necessary to 
demonstrate that the project will comply with the Federal CAA, Title I, 
parts C and D, these are the same general provisions as those in the 
Minor NSR SIP Permits by Rule, Minor NSR SIP Standard Permits, and the 
general provisions of the SIP at 30 TAC 116.111 (a) (2)(H) and (I) for 
Minor and Major NSR SIP permits. These recordkeeping requirements, 
although necessary for NSR SIP approvability, cannot substitute for a 
clear and enforceable provision that limits applicability in the 
submitted Program to Minor NSR and to minor modifications only.
    If Texas truly intends for the submitted Qualified Facilities State 
Program to apply only to Minor NSR, at a minimum, Texas must amend its 
rules to include additional provisions that clearly limit this 
Program's applicability to Minor NSR as it did in the Texas Minor NSR 
SIP at 30 TAC Chapter 106 for Permits by Rule and 30 TAC Chapter 116 
Subchapter F for Standard Permits.
    The submittals contain no applicability statement or regulatory 
provision that limits applicability to minor modifications. Without a 
clear statement of the applicability of the Program, the Program as 
submitted is confusing to the public, regulated sources, government 
agencies, or a court, because it can be interpreted as an alternative 
to evaluating the new modification as a major modification under Major 
NSR requirements. The Program fails to limit clearly its use to only 
the Texas Minor NSR SIP requirements. Because of the overbroad nature 
of the regulatory language in the State's SIP revision submittal and 
the lack of any Texas statutory prohibitions, we propose to find that 
the State has failed to limit its submitted Program only to Minor NSR.
    Consequently, we are compelled to evaluate this submitted Program 
as being a substitute for the Texas Major NSR SIP. Accordingly, as 
discussed below in Section V, we evaluated whether the submitted 
Program meets the requirements for a Major NSR SIP revision, the 
general requirements for regulating construction of any stationary 
sources contained in Section 110(a)(2)(C) of the CAA, and the 
applicable statutory and regulatory requirements for an approvable SIP 
revision. Below is a summary of our evaluation of the submitted Program 
as a Substitute Major NSR SIP revision submittal. Section VI contains a 
summary of our evaluation of the submitted Program as a Minor NSR SIP 
revision submittal.

V. What is EPA's Evaluation of the Submitted Texas Qualified Facilities 
State Program as a Substitute Major NSR SIP Revision?

A. What Are the Requirements for EPA's Review of a Submitted Major NSR 
SIP Revision?

    Before EPA's 1980 revised Major NSR SIP regulations, 45 FR 52676 
(August 7, 1980), States were required to adopt and submit a Major NSR 
SIP revision where the State's provisions and definitions were 
identical to or individually more stringent than the Federal rules. 
Under EPA's 1980 revised Major NSR SIP regulations, States could submit 
provisions in a Major NSR SIP revision different from those in EPA's 
Major NSR rules, as long as the State provision was equivalent to a 
rule identified by EPA as appropriate for a ``different but 
equivalent'' State rule. If a State chose to submit definitions that 
were not verbatim, the State was required to demonstrate any different 
definition has the effect of being as least as stringent. (Emphasis 
added.) See 45 FR 52676, at 52687. The demonstration requirement was 
explicitly expanded to include not just different definitions but also 
different programs in the EPA's revised Major NSR regulations, as 
promulgated on December 31, 2002 (67 FR 80186) and reconsidered with 
minor changes on November 7, 2003 (68 FR 63021). Therefore, to be 
approved as meeting the 2002 revised Major NSR SIP requirements, a 
State submitting a customized Major NSR SIP revision must demonstrate 
why its program and definitions are in fact at least as stringent as 
the Major NSR revised base program. (Emphasis added). See 67 FR 80186, 
at 80241.
    Moreover, because there is an existing Texas Major NSR SIP, the 
submitted Program must meet the requirements in section 110(l) where 
EPA may not approve a SIP revision if it will interfere with any 
applicable requirement concerning attainment and reasonable further 
progress or any other applicable requirement of the Act. Furthermore, 
any submitted SIP revision must meet the applicable SIP regulatory 
requirements and the requirements for SIP elements in section 110 of 
the Act, and be consistent with EPA SIP policy and guidance. These can 
include, among other things, enforceability, compliance assurance, 
replicability of an element in the program, accountability, test 
methods, whether the submitted rules are vague. There are four 
fundamental principles for the relationship between the SIP and any 
implementing instruments, e.g., Major NSR permits. These four 
principles as applied to the review of a Major or Minor NSR SIP 
revision include: (1) The baseline emissions from a permitted source be 
quantifiable; (2) the NSR program be enforceable by specifying clear, 
unambiguous, and measurable requirements, including a legal means for 
ensuring the sources are in compliance with the NSR program, and 
providing means to determine compliance; (3) the NSR program's measures 
be replicable by including sufficiently specific and objective 
provisions so that two independent entities applying the permit 
program's procedures would obtain the same result; and (4) the Major 
NSR permit program be accountable, including means to track emissions 
at sources resulting from the issuance of permits and permit 
amendments. See EPA's April 16, 1992, ``General Preamble for the 
Implementation of Title I of the Clean Air Act Amendments of 1990'' (57 
FR 13498) (``General Preamble''). In particular, there is a specific 
discussion illustrating the principles and elements of SIPs that apply 
to sources in implementing a SIP's control strategies

[[Page 48458]]

beginning on page 13567 of the General Preamble.

B. Does the Submitted Program Prohibit Circumvention of Major NSR?

    There are no express regulatory provisions in the submitted Program 
similar to the Texas Minor NSR SIP provisions for Minor NSR Permits by 
Rule and Minor NSR Standard Permits that prohibit circumvention of the 
Major NSR requirements. See 30 TAC 106.4(b) and 30 TAC 116.610(c). Both 
the SIP-codified Chapter 106, Subchapter A for Permits by Rule and the 
SIP-codified Chapter 116, Subchapter F for Standard Permits, contain 
clear regulatory applicability requirements limiting their use to Minor 
NSR, clear regulatory requirements prohibiting their use for any 
project that constitutes a major modification subject to Major NSR, and 
clear regulatory provisions prohibiting the use of these Minor NSR 
permits from circumventing Major NSR. There are no similar regulatory 
applicability requirements, regulatory provisions prohibiting the use 
for Major NSR, and no regulatory provisions prohibiting circumvention 
of Major NSR, in the submitted Qualified Facilities State Program's 
rules and definitions.
    There is no express provision clearly requiring that this submitted 
Program cannot be used to circumvent the requirements of Major NSR. We 
are proposing to find that the State failed to demonstrate that the 
submitted Program prevents the circumvention of Major NSR. Therefore, 
we are proposing to disapprove the Program as not meeting the Major NSR 
SIP requirements to prevent circumvention of Major NSR.

C. Does the Submitted Program Meet the Major NSR Applicability 
Determination Criteria?

    Because there is no express provision in the TCAA and/or in the 
submitted Program clearly limiting this Program to Minor NSR, and there 
is no explicit provision prohibiting circumvention of the Major NSR SIP 
requirements, we must evaluate the submitted Program with respect to 
the criteria for Major stationary source NSR applicability 
determinations. This includes the absence of a requirement to evaluate 
if a project triggers Major NSR pursuant to the applicability criteria 
of the applicable regulations.
    We do not find any provisions in the submitted Program that require 
a Major NSR applicability determination for changes. The submitted 
Program's rules and definitions are not clear on their face that first 
one must determine the threshold question of whether the change is a 
major stationary source or a major modification subject to Major NSR. 
The modifications that would be authorized under the submitted Program 
can include major modifications. The change that could be a major 
modification, including PSD BACT or NNSR LAER, could bypass the Major 
NSR SIP requirements, in the absence of an express requirement to 
perform the Major NSR SIP applicability review.
    The submitted Program fails to require that the applicability of 
the Major NSR requirements be evaluated prior to considering whether 
making a change can be authorized to use the Program. We are proposing 
to find that the State failed to demonstrate that the Program requires 
an evaluation of Major source NSR applicability based on the currently 
approved SIP provisions or upon the current federal rules. Therefore, 
we are proposing to disapprove the Program as not meeting the Major NSR 
SIP requirements that require the Major NSR applicability requirements 
be met.

D. Does the Submitted Program Meet the CAA and Major NSR SIP 
Requirements for a Major Modification?

    In evaluating Major NSR SIP revision submittals impacting ``major 
modifications,'' that differ from EPA's, our review is primarily guided 
by section 111(a)(4) of the Act that describes when a ``source'' is to 
be considered modified: ``The term `modification' means any physical 
change in, or change in the method of operation of, a stationary source 
which increases the amount of any air pollutant emitted by such source 
or which results in the emission of any air pollutant not previously 
emitted.'' Texas did not submit any demonstration showing how its use 
of the definition ``modification'' was at least as stringent as the 
definition of ``modification'' in EPA's revised Major NSR SIP rules.
    In conducting our review, we particularly were mindful of the 
United States Court of Appeals for the District of Columbia Circuit 
regarding the scope and requirements of Section 111(a)(4) for 
determining whether a change is a ``major modification.'' See e.g., New 
York v. EPA, 413 F.3d 3 (D.C. Cir. 2005) (``New York I'') (evaluating 
EPA's 2002 revised major NSR rules and interpreting Section 111(a)(4)). 
As discussed below, there are a number of principles associated with 
Section 111(a)(4) that the Program appears to violate. Moreover, the 
State failed to submit a demonstration showing how its use of 
``modification'' is at least as stringent as the definition of 
``modification'' in EPA's revised Major NSR SIP rules.
1. Does the Submitted Program require an evaluation of Emission 
Increases from the Major Stationary Source?
    As noted above, Section 111(a)(4) requires an evaluation of whether 
a project has resulted in an increase in emissions from ``such 
source.'' Under this requirement, an evaluation of whether a physical 
change has resulted in an emission increase must be evaluated based on 
whether the project resulted in an emission increase across the major 
stationary source, not by an evaluation of increases outside the major 
stationary source or a subset of units at the major stationary source. 
See Alabama Power v. Costle, 636 F.2d 323, 401-403 (D.C. Cir. 1980) 
(holding that Agency appropriately allowed consideration of emission 
increases across the stationary source); Asarco v. EPA, 578 F.2d 320 
(D.C. Cir. 1978) (holding that EPA inappropriately allowed a 
determination if a modification had occurred based on emission 
decreases from outside of the facility).\10\ We are concerned that the 
submitted Program in certain circumstances, may allow an emission 
increase to be avoided by taking into account emission decreases 
outside of the major stationary source and, in other circumstances, 
allow an evaluation of emissions of a subset of units at a major 
stationary source.
---------------------------------------------------------------------------

    \10\ While the court's analysis regarding the scope of what 
constitutes a source in these two cases was rejected by the Supreme 
Court in Chevron that decision did not call into question the 
holding that once the EPA has defined what constitutes a ``source'' 
(facility for Major Stationary Source) that this is the unit of 
analysis for applicability. See Chevron U.S.A. Inc. v. NRDC, 467 
U.S. 837 (1984).
    Given the plain language of Section 111, EPA agrees that the 
appropriate unit of analysis for determining if there is an emission 
increase is the ``source'' as section 111(a)(4) provides that a 
modification occurs if the project ``increases the amount * * * 
emitted by such source.''
---------------------------------------------------------------------------

    First, we are concerned that the submitted Program violates the 
requirements of the Act and the Major NSR SIP rules, because 
applicability can be determined based on decreases outside of the major 
stationary source. The submitted Program allows for netting reductions 
to come from outside a major stationary source, as defined by the Major 
NSR rules. It allows existing permitted Qualified Facilities at the 
same air quality account site, to participate in the applicability 
netting analysis for another Qualified Facility on the company site 
that is making the change. The Texas SIP defines an ``account'' to 
include an entire company site, which could include more than one plant 
and certainly more than one major stationary source. SIP rule 30 TAC 
101.1(1), second sentence. Accordingly,

[[Page 48459]]

under the Program, the netting analysis can include multiple 
participating major stationary sources \11\, and if there is no net 
emission increase, Major NSR preconstruction review is not triggered.
---------------------------------------------------------------------------

    \11\ The Federal regulations define a stationary source as, 
among other things, all of the pollutant emitting activities that 
belong to the same industrial grouping. An industrial grouping is 
defined based on the Standard Industrial Classification (SIC code). 
See, e.g. 40 CFR 51.166(b)(5) and (6). If a stationary source has 
the potential to emit or actually emits at certain specified levels 
then the stationary source is a ``major stationary source'' for 
purposes of major NSR applicability. See Id. at 166(b)(1). By not 
limiting an ``account'' to pollutant-emitting activities within the 
same SIC code, an account can include pollutant-emitting activity 
that includes one or more major stationary sources. While under 
certain circumstances it may be appropriate to lump units/facilities 
from differing SIC codes into a single stationary source, this is 
generally based on an interdependence of the various units. Texas's 
rule does not require such interdependence.
---------------------------------------------------------------------------

    The submitted SIP revisions may allow a major stationary source to 
net a significant emissions increase against a decrease occurring 
outside the major stationary source, from facilities on the account's 
site that are participating in the netting analysis by contributing 
offsetting emission reductions. This approach is not consistent with 
the Court's findings in Alabama Power and Asarco, and it does not meet 
the CAA's definition of modification and the Major NSR SIP 
requirements.
    Second, we are concerned that the submitted Program may allow an 
emission increase to be determined based on an evaluation of a subset 
of facilities within a major stationary source. There are no regulatory 
provisions addressing how one meets the applicable Major NSR netting 
requirements at a site when the unit making the change and the 
participating units contributing emission reductions are not all of the 
facilities within a major stationary source. Under the submitted 
Program, not all emission points, units, facilities, major stationary 
sources, minor modifications at the site or their increases in 
emissions are required to be evaluated in the applicability netting 
analysis. In essence, neither the submitted regulations nor the 
supporting documentation from Texas explain how emissions increases are 
calculated (both the significant emissions increase from a project, and 
a significant net emissions increase over the contemporaneous period) 
for the entire major stationary source if the major stationary source 
is subject to two different permitting regulations, the Qualified 
Facilities regulations and the Major NSR SIP regulations. As a result, 
the regulated community may apply these regulations inconsistently and 
in a way that fails to evaluate emissions changes at the entire major 
stationary source correctly as required by the Major NSR SIP 
regulations. This approach is not consistent with the Court's finding 
in Alabama Power, and it does not meet the CAA's definition of 
modification and the Major NSR SIP requirements.
    Therefore, we propose to find that the State has failed to 
demonstrate the approaches are consistent with the Court's findings in 
Alabama Power and Asarco, meet the Act, and include the necessary 
replicability and accountability for approval as a SIP revision. 
Therefore, we are proposing to disapprove the submitted Program as not 
meeting the Major NSR SIP requirements that require an evaluation of 
emission increases from the major stationary source.
2. Does the Submitted Program require the Use of Actual Emissions, 
rather than Allowables?
    Under Section 111(a)(4) of the Act since the 1977 CAA Amendments, a 
comparison of existing actual emissions before the change and projected 
actual (or potential emissions) after the change in question is 
required. See New York I at 38-40. Therefore, to determine whether a 
change at a unit will be subject to Major NSR requires an evaluation 
that, after netting, an actual to projected actual test or an actual to 
potential emissions test (or alternatively a PAL based on actual 
emissions) be used. See 40 CFR 51.165(f) and 51.166(w). EPA lacks the 
authority to approve any submitted Program that does not meet this 
statutory requirement. We therefore are proposing disapproval because 
the submitted Program would authorize existing allowable, rather than 
actual emissions to be used to determine applicability in violation of 
the Act and the Major NSR SIP requirements.
    Our concerns arise regarding the requirement that an increase in 
emissions must be measured based on actual emissions, not permitted or 
potential. Under the submitted Program, the project's increases in 
emissions are calculated based upon its projected allowable emissions. 
The baseline uses the permitted allowable emission rate (lowered by any 
applicable state or federal requirement) if the Facility qualified 
under option 1. Otherwise, the baseline uses the permitted actual 
emission rate (minus any applicable state or federal requirement). See 
30 TAC 116.10(2). In the applicability netting analysis, the baseline 
for all the other participating minor and major existing Qualified 
Facilities is calculated in the same way. The emission reductions are 
calculated similarly, i.e., reductions beyond the permitted allowable 
or actual emission rates (minus the applicable state and federal 
requirements). Thus, this submitted Program allows an evaluation using 
allowable, not actual emissions as the baseline to calculate the 
project's proposed emission increase and for many of the netting 
emission reductions, thereby in many cases possibly circumventing the 
major modification applicability requirements under the Major NSR 
rules, rules that are based upon using actual emissions to calculate 
baseline emissions. Baseline actual emissions are required in the Major 
NSR SIP requirements for major source netting as the starting point 
from which the amount of creditable emission increases or decreases is 
determined.
    We propose to find that the State's procedures do not meet the CAA 
and EPA's Major NSR SIP requirements that emissions increases from 
facility changes must be measured in terms of changes from existing 
baseline actual emissions, rather than allowable emissions.

E. Does the Submitted Program Meet Section 110(l) of the Act for a 
Major NSR SIP Revision?

    Section 110(l) of the Act prohibits EPA from approving any revision 
of a SIP if the revision would interfere with any applicable 
requirement concerning attainment and RFP, or any other applicable 
requirement of the Act.
    The State did not provide any demonstration showing how the 
submitted Program would not interfere with any applicable requirement 
concerning attainment and reasonable further progress, or meet any 
other CAA requirement.

VI. What Is EPA's Evaluation of the Submitted Texas Qualified 
Facilities State Program as a Minor NSR SIP Revision?

    Section 110(a)(2)(C) of the Act requires that States have Minor NSR 
SIP permitting programs as well as Major NSR SIP permitting programs 
under part C (PSD) and part D (nonattainment NSR) of Title I. 40 CFR 
51.160-51.163 contain the Minor NSR SIP regulatory requirements and 
provide that a Minor NSR SIP must include legally enforceable 
procedures enabling the State to determine whether construction or 
modification would violate a control strategy or interfere with 
attainment or maintenance of a NAAQS. 40 CFR 51.160(e) provides that 
States may exempt certain sources from regulation based on the type and 
size of the facility

[[Page 48460]]

and requires that ``the plan must discuss the basis for determining 
which facilities will be subject to review.''
    At a minimum, a minor NSR SIP revision must include the requirement 
for minor sources and modifications to undergo public review, be 
subject to enforceable emissions limits, monitoring, recordkeeping, and 
reporting requirements, and inspection and enforcement provisions. 
Additionally, the State must demonstrate that the Minor NSR SIP 
revision does not violate a control strategy or interfere with 
attainment or maintenance of a NAAQS.

A. Does the Submitted Program Meet the Minor NSR SIP Requirements for 
Noninterference With the Major NSR SIP Requirements?

    There are no statutory and/or regulatory provisions that clearly 
prohibit the use of the Program for major modifications. Nor are there 
any statutory and/or regulatory provisions clearly limiting the use of 
the Program to minor modifications. There are no provisions that 
prohibit the use of the Program for major modifications of existing 
major stationary sources and minor sources. There are no regulatory 
applicability requirements limiting use of the Program to Minor NSR and 
no regulatory requirements prohibiting using it for Major NSR. There is 
no express provision in the submittals requiring that this Program 
cannot be used to circumvent the requirements of Major NSR. There are 
no statutory and/or regulatory provisions clearly prohibiting 
circumvention of Major NSR. The Program further fails to require that 
the applicability of the Major NSR requirements be evaluated prior to 
considering whether the making of a change can be netted out from the 
Minor NSR SIP requirements. The regulatory provisions in the submitted 
Program fail to require that first one must determine the threshold 
question of whether the change is a major stationary source or a major 
modification subject to Major NSR, based upon an actual emissions 
baseline. See section V and the TSD for additional discussion and 
information.
    Therefore, EPA is proposing to find that the submitted Program 
fails to prevent noninterference with the Texas Major NSR SIP 
requirements. We are proposing to disapprove the submitted Program as 
not meeting the Minor NSR SIP requirements to ensure that the Major NSR 
SIP requirements continue to be met.

B. Does the Submitted Program Meet the Request for an Exemption or a 
Relaxation From the Minor NSR SIP Requirements?

    As noted above, EPA may approve an exemption to a State's Minor NSR 
SIP if certain statutory requirements are met. But any such exemption 
must be consistent with the requirement at 40 CFR 51.160(a)-(b) that a 
plan contain legally enforceable procedures to ensure that the 
construction or modification of a source will not result in a violation 
of applicable portions of a control strategy or interfere with NAAQS 
attainment. Consequently, EPA may approve exempting certain sources and 
modifications from obtaining a Minor NSR permit as part of a State's 
Minor NSR SIP, if the Act and regulations are met and the State shows 
that the sources will have only a de minimis effect.
    Moreover, the approvability of a State's proposed de minimis 
threshold is not determined solely by mechanically comparing it with 
other thresholds approved for other states. The legal test for whether 
a plan's threshold can be approved is whether it is consistent with the 
need for a plan to include legally enforceable procedures to ensure 
that the State will not permit a source that will violate the control 
strategy or interfere with NAAQS attainment. That is a requirement that 
all minor source thresholds must meet.
    The submitted Program could be considered an exemption from Minor 
NSR. It is a netting program allowing certain changes to net out of 
being subject to Minor NSR. These certain changes without the netting 
would be Minor NSR modifications subject to Minor NSR. To be approvable 
as an exemption from the Texas Minor NSR SIP, the State must 
demonstrate that this exemption will not permit changes that will 
violate the Texas control strategies or interfere with NAAQS 
attainment.
    Furthermore, EPA does view the submitted Program as a SIP 
relaxation. In order to approve a SIP relaxation, EPA must find 
pursuant to section 110(l) that the SIP relaxation does not interfere 
with any applicable requirements concerning attainment and reasonable 
further progress, or any other applicable requirement of the Act.
1. Noninterference With the NAAQS and State Control Strategies by the 
Existing Qualified Facilities
    The Minor NSR and Major NSR existing Qualified Facilities, no 
matter by which of the two options they chose to become qualified, will 
have a Minor or Major NSR SIP permit. A Minor and Major NSR SIP permit 
under the Texas NSR SIP requirements includes an air quality analysis, 
i.e., a demonstration there will be no adverse impact on the NAAQS. 
Each of the Minor or Major NSR SIP permits for the existing Qualified 
Facilities will include emissions limitations based on the chosen 
control technology, with a determination that the permitted Qualified 
Facility will not interfere with attainment and maintenance of the 
NAAQS or violate any State control strategies. As noted above in IV.A, 
we request comment on whether our interpretation of the State's 
regulatory language is correct that a permit is required for a facility 
to be a Qualified Facility.
2. Ensuring Noninterference With the NAAQS and State Control Strategies 
by the Netting Reductions
    We propose to find that because the participating Qualified 
Facilities are permitted through an existing SIP approved process, the 
allowable level established in that permit assures that the Qualified 
Facility can operate up to that level of emissions without interfering 
with attainment and maintenance of the NAAQS and not violating any 
State control strategy, as required by the Texas NSR SIP. The next step 
requires EPA to evaluate whether the Minor NSR applicability netting 
analysis itself includes sufficient safeguards to protect the NAAQS and 
State control strategies. For aid in evaluating this submitted 
applicability netting analysis as a Minor NSR SIP revision submittal, 
EPA used the fundamental principles of the Major NSR SIP netting 
requirements as a yardstick for appropriate comparison since their 
intent is to prevent violations of the NAAQS and State control 
strategies.
    Before the netting analysis comes into play, there must be a 
physical or operational change at the Qualified Facility. The change 
must result in an emissions increase above the authorized allowable 
(the most stringent of the SIP permit, permit amendment, standard 
permit, or permit by rule or any applicable state or federal 
requirement) at that Qualified Facility. Under the Texas Minor NSR SIP, 
the change must cause an increase in the emission rate of any source, 
change the method of control of emissions, or cause a change in the 
character of the emissions. See SIP-codified rule at 30 TAC 
116.116(b)(1)(A)--(C). If any of these three changes are to occur, the 
owner or operator must obtain a Minor or Major NSR SIP permit amendment 
or coverage under a Minor NSR SIP permit by rule. Therefore, the Texas 
Minor NSR SIP

[[Page 48461]]

relies upon allowable emissions, i.e., the most stringent emissions 
rate for a facility, as required by the most stringent of the SIP 
permit or any applicable state or federal requirement, to determine 
whether a modification has occurred.\12\
---------------------------------------------------------------------------

    \12\ The Texas Minor NSR SIP requires that the holder of any 
type of Minor NSR SIP permit must meet its representations in its 
permit application or registered certification. The registered 
certification applies to the Minor NSR SIP standard permits and 
permits by rule. The permit application refers to the Minor NSR SIP 
case-by-case permit or amendment. The operating hours, operating 
procedures, capacity, etc., must be included in the permit 
application or registered certification. They become conditions from 
which it is unlawful to vary. See, e.g., SIP-codified rules at 30 
TAC 116.116(a)-(d) and 30 TAC 106.6.
---------------------------------------------------------------------------

    Once the Minor NSR netting comes into play, we compared the 
fundamental principles of Major NSR netting to the submitted Minor NSR 
netting program. We did this because these fundamental principles were 
established to ensure there would be no interference with the NAAQS and 
control strategies by using the Major NSR netting. The Major NSR 
netting program includes the following: (1) An identified 
contemporaneous period, (2) the reductions must be contemporaneous and 
creditable, (3) the reductions must be of the same pollutant as the 
change, (4) the reductions must be real, (5) the reductions must be 
permanent, and (6) the reductions must be quantifiable. See the 
definition of ``net emissions increase at 40 CFR 51.165(a)(1)(vi) and 
51.166(b)(3). To be considered creditable, the reduction's old level of 
emissions must exceed the new level of emissions, the reduction must be 
enforceable as a practical matter at and after the time the actual 
change begins, and the reduction must have approximately the same 
qualitative significance for public health and welfare as that 
attributed to the increase from the particular change.
    Major NSR netting is based upon all contemporaneous increases and 
decreases at the same major stationary source. The submitted Program's 
netting is not based upon all contemporaneous increases at the same 
major stationary source and not all decreases at the same major 
stationary source. We propose, however, to find that such an approach 
satisfies the minimum requirements for an approvable Minor NSR netting 
program as long as the ambient air is protected in the trading.
    The reductions in the Program's netting are based upon the most 
stringent of the permitted emissions rate (which includes the highest 
achievable actual emission rate) or any applicable state or federal 
rule. Therefore, this Program's netting is not based totally on changes 
in actual emissions. We are proposing to find that this still is 
acceptable as a Minor NSR netting program as long as the ambient air is 
protected in the trading.
    It is not clear in the submitted rules when the equivalent 
decreases in emissions must have occurred, other than it is clear that 
they must occur before the change occurs. The intent of the State was 
that there would be no look back period, i.e., no window or 
contemporaneous period. The State discusses in the SIP revision 
submittals and in its Texas Register that any relied-upon reductions 
must occur simultaneously at the time of the increase. See 21 Tex. Reg. 
1573 (February 27, 1996). It wanted to ensure that there would not be 
any net reductions associated with this Program available to be used 
later in a demonstration of attainment or reasonable further progress 
in the Texas SIP. See page 154 of the 1996 SIP revision submittal. In 
this vein, it did not want a netting window; the State saw a netting 
window as an unnecessary complication for this Program. Therefore, the 
State's clear intent was that each time there is a proposed change 
wishing to use the Program's netting, the holder of the permit is 
required to perform a new, separate netting analysis to demonstrate 
that a net increase has not occurred.
    Each project was to require a separate demonstration that a net 
increase has not occurred. As each project requires a separate 
demonstration, the decrease can be used only for that project. For an 
additional separate project, the reductions must occur at the time of 
that additional project which will need to obtain additional reductions 
to net out. This should prevent double counting of the netting 
reductions. EPA specifically solicits comment on this point of double 
counting.
    Although the State's intent is clear, EPA cannot find any 
provisions in the Program that address this, much less require there be 
a separate netting analysis performed for each proposed change. 
Therefore, the State at a minimum, must revise its rule at 30 TAC 
116.116(e) to explicitly require that each proposed change requires a 
new, separate netting analysis.
    Concerning the fifth principle that the reductions must be 
permanent, we cannot find any provision in the submitted rules that 
specifically addresses this. Texas should include a prohibition against 
future increases at the Qualified Facility, or include regulatory 
language that assures that any future increase at a Qualified Facility 
at which a previous netting reduction occurred is analyzed in totality 
to assure that the NAAQS remains protected from the original increase. 
For example, we are concerned that if Qualified Facility ``A'' relies 
on decreases from Qualified Facility ``B,'' Qualified Facility ``B'' 
could undertake a future change and increase emissions above its new 
allowable level. Although under the State's program, Qualified Facility 
``B'' would have to seek emission reductions from another Qualified 
Facility before increasing emissions and there is no net change in 
emissions from the account site, we remain concerned that reductions 
from a third qualified facility may not be sufficient to offset 
potential air quality impacts from the original change at Qualified 
Facility ``A.'' In other words, the submitted rules do not prohibit a 
shift in emissions from Qualified Facility ``A'' to ``B'' and then to 
``C,'' or otherwise assure that the ambient air quality remains 
protected with regards to the original change at Qualified Facility 
``A.'' Consequently, the State at a minimum must revise its rules to 
require that the reductions be permanent.
    The reductions must be of the same pollutant as the change. See 
submitted 116.116(e)(3). We propose to find that the State has gone 
beyond this fundamental principle and established an interchange 
requirement at submitted 30 TAC 116.116(e)(3) for determining whether 
the interchange of different compounds within the same air contaminant 
category will result in an equivalent decrease in emissions, e.g., one 
VOC for another VOC. The emission rates for each different compound 
must be adjusted using a ratio of the effects screening levels of the 
compounds. See 30 TAC 116.116(e)(3)(B) through (E). TCEQ has 
established an ``interchange'' methodology to ensure that compounds 
within for example the VOC air contaminant category, as interchanged, 
will have an equivalent impact on the air quality.
    We also propose to find that the reductions also meet the principle 
for being quantifiable by the submitted 30 TAC 116.10(1) and (2) that 
describe how to calculate the reductions but nonetheless, we request 
comment on whether these regulatory provisions provide clear direction 
on the appropriate calculation procedures.
    As an example of the quantifiability of the reductions, if the 
reductions come from a Qualified Facility under a Minor NSR permit by 
rule, its allowable emissions are the most stringent of the emissions 
rate allowed in the SIP rules for Minor NSR permits by rule, the 
emissions rate specified in a particular

[[Page 48462]]

permit by rule, or the maximum emissions rate represented in the 
required certified registration. The Texas Minor NSR SIP provides that 
the holder of a Minor NSR permit by rule may submit a certified 
registration that includes in it maximum emissions rates (lower than 
the rates allowed in the SIP rule) and includes a certification that 
the maximum emissions rates listed on the registration reflect the 
maximum for operation of the facility. Additionally, the lowest 
computed emissions rate must be reduced again by the application of any 
applicable (promulgated since the issuance of the permit) state or 
federal requirement. This means that not only are the reductions 
quantifiable but the first prong for creditability is met. The 
reduction's old level of emissions exceeds the new level of emissions.
    Notwithstanding our proposed finding that the submitted Program 
satisfies the basic criteria that emissions reductions be quantifiable, 
we request comment on one additional aspect of the netting calculation 
procedures. The submitted rules provide that a Qualified Facility nets 
its emissions increase on the same basis as its allowable emissions 
limitation. See 30 TAC 116.116(e)(3)(A). For example, we are concerned 
that if a Qualified Facility took a decrease in its hourly rate that it 
could offset that emissions decrease by increasing its hours of 
operation; if such an increase were not prohibited the decrease is 
effectively negated. We request comment on whether netting on such a 
basis is sufficiently quantifiable, and whether any additional 
provisions are necessary to assure that the entire emissions increase 
is properly netted against reductions from the other Qualified 
Facility.
    The State also has established a methodology whenever there is a 
different location of emissions because of the intraplant trading. For 
example, where the netting has the effect of moving emissions closer to 
the plant property line than the Qualified Facility to be changed, 
there is a pre-notification process to analyze whether there could be 
an increase in off-site impacts. We propose to find that this will 
ensure the reductions have approximately the same qualitative 
significance for public health and welfare, the third prong for 
creditability of the reductions. See submitted 116.117(b)(5).
    Nonetheless, EPA has some concern on the protection of the ambient 
air quality and proposes to find that the netting provisions are 
inadequate to assure protection of the ambient air quality. 
Specifically, the State must add language to its Program's rule at 30 
TAC 116.116(e) that explicitly requires the netting process assures 
protection of the NAAQS by providing that the netting must result in 
the same air quality benefit. We are requiring this because although 
the State's intent is clear the netting process must have this result, 
there is no corresponding explicit requirement in the Program's rules. 
The State could also consider whether in nonattainment and near-
nonattainment areas, the rules should require that the netting must not 
result in an adverse air quality impact. Secondly, even though the 
State's intent is clear, to ensure that the NAAQS are protected, the 
State must add language to its Program's rule at 30 TAC 116.117, 
requiring the owner or operator to maintain the information and 
analysis showing how it concluded that there will be no adverse impact 
on ambient air quality before undertaking the change.
3. Minor NSR SIP Enforceability Requirements
    Section 110(a)(2)(A) of the Act requires that a SIP revision 
include enforceable emission limitations and other means, as may be 
necessary or appropriate to meet the Act's requirements. This includes 
the requirement that minor modifications have enforceable emissions 
limits. The Program is not clear that each Qualified Facility involved 
in the netting transaction must submit a permit application and obtain 
a permit revision reflecting all of the changes made to reduce 
emissions (relied upon in the netting analysis) as well as reflecting 
the change itself that increased emissions.
    The Texas NSR SIP rule at 30 TAC 116.111(a)(1) is clear that in 
order to be granted a case-by-case Minor or Major NSR SIP permit or 
permit amendment, an application must be submitted that includes a 
complete Form PI-1. For coverage under a Minor NSR permit by rule or 
standard permit, there is an applicable permit with an emissions 
limitation.
    The Program's rules at 30 TAC 116.116(e)(4) and 116.117(b)(1)-(3) 
are not clear that it is a permit application or registration that must 
be submitted and that a revised permit must be issued by the TCEQ to 
reflect the changes made by all of the participating Qualified 
Facilities. It is not clear that the referenced notification of change, 
Form PI-E, is a permit application. There is no discussion of when the 
TCEQ issues the revised permit. See the submittals at 30 TAC 
116.117(b).
    If the change would affect the Special Conditions in the Permit for 
any participating Qualified Facility, notification must be made prior 
to the change and approval is required by the TCEQ. This requirement 
also is not clear, however, that a permit application is required. Nor 
is it clear when the TCEQ is required to issue the revised permit.
    EPA acknowledges that 116.117(b)(1) through (3) reference a PI-E 
Form and this name is similar to the Form PI-1 referenced in the SIP 
rules, which is the TCEQ standard permit application form. 
Nevertheless, the Program's rules refer to the submittal of this Form 
PI-E as if it were a reporting or notification requirement, not as the 
submittal of a form to the TCEQ that begins the permit revision 
process.
    There are no provisions in 30 TAC 116.117(b) requiring a permit 
application be submitted to the TCEQ. There also are no provisions in 
30 TAC 116.117(b) clearly indicating TCEQ must issue a revised permit 
for the changes made by all of the participating Qualified Facilities. 
At a minimum, the State must revise its rules to make it clear that a 
permit application must be submitted by each participating Qualified 
Facility and the changes made by the participating Qualified Facilities 
are reflected in revised permits issued by the TCEQ.
4. Potential Impact of Time Lag Upon Protection of the NAAQS
    EPA also is concerned about the lapse of time before each Qualified 
Facility's permit is revised. The Qualified Facility making the change 
without relying upon any reductions outside of it, must submit the 
request by August 1 of each year, showing the changes made during the 
preceding annual period of July 1-June 30. We believe that this is too 
long of a lag time between submitting the permit applications and TCEQ 
revising them downward to reflect the relied-upon emission reductions 
or the change being made. This lag time can lead to the State not 
knowing within an appropriate timeframe that the change violated the 
NAAQS and/or State control strategies or that the relied-upon 
reductions for whatever reason did not ensure protection of the NAAQS 
and the control strategies. The State also may not find out about such 
problems until after the source(s) has made the changes and incurred 
significant associated expenses. Therefore, we are proposing that this 
time should be no longer than six months, rather than a year, but 
nonetheless we request comment on whether six months is an acceptable 
lapse of time to ensure noninterference with the NAAQS and control 
strategies.
    In summary, there is no explicit requirement that a permit 
application must be submitted for the change and

[[Page 48463]]

for any relied-upon emissions reductions in the netting analysis 
thereby making the new Program unenforceable. There is too long a lag 
time before a revised permit is issued in certain circumstances that 
can lead to a violation of a NAAQS, RFP, or control strategy without 
the TCEQ becoming aware of it in a timely manner. There is not 
sufficient information before EPA to make a determination that the 
exempted changes from the Minor NSR requirements will have only a de 
minimis effect and that the requested SIP revision relaxation does not 
interfere with any applicable requirements concerning attainment and 
reasonable further progress, or any other applicable requirement of the 
Act, as required by section 110(l).\13\
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    \13\ The State may be able to provide additional information 
during the public comment period showing how the exemption meets all 
the requirements of the Act, including enforceability, protecting 
all NAAQS, RFP, and control strategies. For example, there may be 
information enabling a reliable estimate of the exempted changes 
over the life thus far of the Program, e.g., the average percentage 
of participating Qualified Facilities that require a preconstruction 
review because of their permit's conditions. This percentage may be 
a high percentage of the participating universe, and the State could 
provide documentation of how many of these pre-notification changes 
it reviews and authorizes as a revised permit, within the 45 days. 
This could be broken down into the tpy of exempted changes. EPA also 
notes that under the submitted Program's rules, the change cannot be 
a physical change that creates a discrete or identifiable structure, 
device, item, equipment, or enclosure, that constitutes or contains 
a stationary source. Texas may be able to provide information that 
this prohibition reduces the numbers and types of changes that are 
authorized under the submitted Program. There also could be 
available information illustrating the changes before netting, are 
truly de minimis for a minor NSR SIP program, taking into account 
the nonattainment and near-nonattainment areas within the State of 
Texas. The State will need to provide a thorough account of future 
growth potential. Modeling may be required to show the expected 
impacts on ambient air quality (particularly for sources in complex 
terrain areas). EPA is willing to work with the State on what is an 
approvable enforceable permitting limitations process and what is an 
approvable exemption for this Texas Qualified Facilities State 
Program.
---------------------------------------------------------------------------

C. What Is EPA's Summary of Whether the Submitted Program Meets the 
Requirements for a Minor NSR SIP Revision?

    The Program is not clearly limited to Minor NSR and does not 
prevent circumvention of the Major NSR SIP requirements. The submitted 
Program does not require that first one must determine whether a change 
is subject to Major NSR and actual emissions are used for determining 
whether a change is subject to Major NSR. The Program lacks 
requirements necessary for enforcement of the applicable emissions 
limitations, including a permit application and issuance process. 
Overall, the Program fails to include sufficient enforceable safeguards 
to ensure that the NAAQS and control strategies are protected. 
Furthermore, there is no information to determine whether the Program's 
exemption from the Texas Minor NSR SIP would not violate the NAAQS or 
the State's control strategies and whether the SIP relaxation would not 
interfere with NAAQS attainment, reasonable further progress, or 
otherwise meet any other requirement of the Act.
    Therefore, we are proposing to disapprove the submitted Qualified 
Facilities State Program as not meeting sections 110(a)(2)(C) and 
110(l) of the Act and 40 CFR 51.160.

II. What Is EPA's Evaluation of the Submitted General Definitions?

A. Which Submitted General Definitions Meet the NSR SIP Requirements?

    We are proposing to approve the following provisions of the SIP 
submittals as meeting 40 CFR Part 51 and the CAA.
    30 TAC 116.10(8)--``grandfathered facility.''
    This submitted definition is approvable because it defines which 
facilities are exempt from the NSR requirements, i.e., those that were 
constructed or modified before the date that TCEQ began permitting new 
and modified facilities, which was August 30, 1971. This submitted 
definition is independent of and severable from the other submitted 
definitions. We are proposing to approve this submitted definition as 
meeting the Federal requirements.
    30 TAC 116.10(10)--``maximum allowable emissions rate table 
(MAERT).''
    The submitted definition is approvable because it is the same as 
the SIP-codified 30 TAC 116.115(b)(2)(G). This submitted definition is 
independent of and severable from the other submitted definitions. We 
are proposing to approve this submitted definition as meeting the 
Federal SIP requirements.
    30 TAC 116.10(12)--``new facility.''
    This submitted definition is approvable because it establishes the 
date of August 30, 1971 for when facilities that commence construction 
or modification must obtain preconstruction authorization. This 
submitted definition is independent of and severable from the other 
submitted definitions. We are proposing to approve this submitted 
definition as meeting the Federal requirements.

B. Which Submitted General Definitions Do Not Meet the NSR SIP 
Requirements?

    30 TAC 116.10(3)--``BACT.''
    The submittals include a new regulatory definition for ``BACT,'' 
defining it as BACT with consideration given to the technical 
practicability and economical reasonableness of reducing or eliminating 
emissions. TCEQ revised its January 1972 permitting rules, then 
Regulation VI at rule 603.16, on July 27, 1972, to add the requirement 
that a proposed new facility and proposed modification utilize BACT, 
with consideration to the technical practicability and economical 
reasonableness of reducing or eliminating the emissions from the 
facility. EPA approved the revised 603.16 into the Texas SIP, presently 
codified in the Texas SIP at 30 TAC 116.111(a)(2)(C).
    It is not clear whether EPA approved this State BACT requirement as 
part of the Texas NSR SIP on July 6, 1977 (42 FR 34517) or August 13, 
1982 (47 FR 35193). Approval of the original 1972 Texas SIP on May 31, 
1972 (37 FR 10896) included State SIP submittals of January 28, 
February 25, May 2, and May 3, 1972. Since the State revised its rules 
to add the BACT requirement after May 3, 1972, EPA could not have 
approved this Texas BACT requirement as part of the original 1972 SIP.
    EPA's approval on July 6, 1977 included action on the State SIP 
revision submittals of 1973, 1974, 1975, and 1977 revisions to Section 
X: The Permit System. The 1973 SIP revision submittal that included the 
1973 revised Section X discussed the application forms and included 
copies of them. Revised Section X also describes the permit review 
process and states that the ``review will answer the following 
questions.'' The list of seven questions includes the following and 
tracks the State's July 27, 1972 rules:
    A. Will the new facility or the modification comply with all Rules 
and Regulations and the intent of the TCAA?
    B. Will the new facility or the modification prevent the 
maintenance or attainment of the NAAQS?
    C. Will the new facility or the modification cause significant 
deterioration of existing ambient air quality in an area?
    D. Will the new facility or modifications have provisions for 
measuring the emission of significant air contaminants?
    E. Will the new facility or modification be located in accordance 
with proper land use planning?
    F. Will the new facility or modification utilize the best available

[[Page 48464]]

control technology with consideration to the technical practicability 
and economic reasonableness of reducing or eliminating the emissions 
resulting from the facility?
    G. Will the design criteria for the new facility or modification 
achieve the performance specified in the application?
    The 1982 SIP approval included action on Texas SIP revision 
submittals of May 9, 1975, October 13, 1978, April 13, 1979, and July 
20, 1981. These submittals included revisions to the July 27, 1972 
Regulation VI, as revised March 27, 1975, August 15, 1975, February 12, 
1978, March 6, 1979, November 25, 1979, August 20, 1980, and April 16, 
1981. The 1981 rules as submitted and approved by EPA in this 1982 
rulemaking recodified the minor NSR and NNSR SIP requirements from 
Regulation VI into a new Chapter 116. Regardless of which year, it is 
clear that the State BACT requirement was approved as part of the Texas 
NSR SIP, either in 1977 or 1982.
    The Federal definition for BACT for PSD is part of the Texas SIP as 
codified in the SIP at 30 TAC 116.160(a). (This current SIP rule 
citation was adopted by the State on October 10, 2001, and EPA approved 
this recodified SIP rule citation on July 22, 2004 (69 FR 43752).) EPA 
approved the Texas PSD program SIP revision submittals, including the 
State's incorporation by reference of the Federal definition of BACT, 
in 1992. See proposal and final approval of the Texas PSD SIP at 54 FR 
52823 (December 22, 1989) and 57 FR 28093 (June 24, 1992). EPA 
specifically found that the SIP BACT requirement (now codified in the 
Texas SIP at 30 TAC 116.111 (a)(2)(C)) did not meet the Federal PSD 
BACT definition. To meet the PSD SIP Federal requirements, Texas chose 
to incorporate by reference the Federal PSD BACT definition and submit 
it for SIP approval by EPA. Upon EPA's approval of the Texas PSD SIP 
submittals, both EPA and Texas interpreted the SIP BACT provision, now 
codified in the SIP at 30 TAC 116.111(a)(2)(C), as a minor NSR SIP 
requirement for minor NSR permits.
    As discussed earlier in section I.B of this preamble, in another 
Federal Register notice, EPA is proposing disapproval of the Texas NSR 
SIP submittals for PSD, NNSR for the 1997 8-hour ozone NAAQS, NSR 
Reform, and a Standard Permit. One of the bases for proposed 
disapproval of the PSD SIP revision submittals is that Texas has 
removed from its state rules the Federal PSD definition of BACT. Those 
interested in this proposed action are encouraged to review and comment 
on it.
    While we continue to approve the inclusion of Texas' minor NSR BACT 
requirement in the Texas SIP to establish emissions limitations or 
operational restrictions requirements for minor NSR permits, Texas must 
revise the submitted BACT definition at 30 TAC 116.10(3) to clearly 
apply only in the minor NSR SIP and only for minor sources and minor 
modifications.
    30 TAC 116.10(11)(A) and 30 TAC 116.10(11)(B)--Insignificant 
increases are not a modification requiring a permit.
    The submittals include a new regulatory definition for 
``Modification of existing facility'' in which insignificant increases 
of emissions are not modifications requiring a permit. Pursuant to the 
TCAA of 1971, Texas was required to establish a NSR program. The TCAA 
required that any person intending to construct a new facility or 
modify a facility that may emit air contaminants first apply for an air 
quality permit, which must be granted before that person could begin 
construction or make any changes. On the other hand, the TCAA allowed 
Texas to ``exempt'' certain facilities or types of facilities from the 
permitting requirements if it found that the facilities or types of 
facilities ``would not make a significant contribution of air 
contaminants to the atmosphere.'' The 1971 TCAA, however, did not 
authorize Texas to set a threshold in its NSR program below which no 
preconstruction authorization was required. The TCAA required Texas to 
regulate all new emissions. To complicate matters further, the 
statutory definition for what was a modification of an existing 
facility excluded ``insignificant increases'' of emissions.
    To reconcile the statutory provision requiring regulation of new 
emissions, the statutory provision requiring permits for construction 
and modifications causing new emissions, the statutory definition 
excluding new (insignificant) emissions from obtaining a permit to 
construct or modify, and yet implement the exemption from permitting 
authority, Texas adopted rules that allowed it to make determinations 
whether construction of, or modification to, a facility or type of 
facilities, would make a significant contribution of emissions. If the 
Agency determined that the emissions from construction of, or 
modification to, a facility or type would be insignificant, i.e., not 
significant (contribution), it issued an exemption for a facility or a 
type of facilities. These ``exempted'' facilities or types of 
facilities were ``insignificant'' sources of emissions. EPA approved 
into the Texas SIP on May 31, 1972 (37 FR 10896) the TCAA provisions 
described above, particularly the TCAA provision that excluded the 
increase of ``insignificant emissions'' from being a modification, and 
the regulations in Rules 606 and 607 (EPA later approved their 
recodification into Chapter 116, and they now are codified in the Texas 
SIP at 30 TAC Chapter 106), allowing the State to issue so-called 
``exemptions'' and to maintain a List of the Exemptions. Consequently, 
any exemption issued by Texas automatically became part of the Texas 
SIP. Any new facility or modification was subject to federal 
enforcement action if it failed to have an exemption before it began to 
construct or make any changes. It was subject to federal enforcement if 
it violated the terms and conditions of any applicable exemption(s).
    Although not approved as part of the Texas SIP, Texas in 1985 
adopted through rulemaking the SIP Exemptions contained in the SIP List 
of Standard Exemptions, and adopted general requirements for the 
issuance of Exemptions. As part of this 1985 State rulemaking, the 
State added emission limitations for the first time defining by Texas 
regulation the minimum level of emissions above which there would be a 
``significant contribution'' requiring a NSR permit rather than an 
Exemption. Moreover, under the State's rules, no proposed new facility 
or modification under any Exemption could be a major source or major 
modification subject to NNSR and PSD. Later the State moved these 
Exemption State rules of general requirements and the State-codified 
Exemptions from Chapter 116 to a new Chapter 106, entitled Exemptions. 
In early 2000, the State renamed Chapter 106 to Permits by Rule, 
because the TCAA was revised in 1999 to allow the State to establish 
standard permits for similar facilities and to adopt permits by rule or 
exempt sources by rule if it determines the increased emissions will 
not make a significant contribution of air contaminants to the 
atmosphere. EPA approved the general requirements for Permits by Rule 
in Subchapter A of Chapter 106 on November 14, 2003 (68 FR 64543), as 
meeting the NSR requirements for a minor NSR SIP program. EPA 
recognized that each State-codified Permit by Rule in the remaining 
Subchapters of Chapter 106 was already part of the SIP since each was 
an Exemption previously issued by the State under the SIP Exemption 
requirements. See page 64545.
    The following provisions of the TCAA are not part of the Texas SIP 
and Texas

[[Page 48465]]

has not submitted them for approval by EPA into the SIP. Under section 
382.05196 of the TCAA enacted in 1999, the Commission may not adopt a 
Permit by Rule authorizing any facility defined as a ``major facility'' 
under any applicable preconstruction permitting requirements of the 
Federal CAA or regulations adopted under that Act. Under section 
382.057 of the TCAA, the Commission may not adopt any Exemption by Rule 
or Standard Permit for any modification of an existing facility defined 
as a ``major modification'' under any applicable preconstruction 
permitting requirements of the Federal CAA or regulations adopted under 
that Act.
    The TCAA seems to be clear that a Permit by Rule, Standard Permit, 
or an Exemption by Rule cannot be used for a major source or major 
modification. EPA is aware that in the past the State has reasonably 
interpreted and applied the SIP term ``insignificant'' for allowing 
only minor modifications and minor sources. Because of the history of 
the two agencies' interpretations, ordinarily the State's submittal of 
its relevant 1999 statutory provisions for approval into the SIP would 
prove sufficient to support that modifications under the submitted 30 
TAC 116.10(11)(A) and (B) would apply only to minor modifications and 
minor sources. There is information; however, e.g., the State's 
adoption of a Permit by Rule for Startup, Shutdown, and Maintenance 
Emissions that belies the EPA being able to rely upon such a submittal 
of the relevant statutory provisions. This type of Permit by Rule 
cannot be construed to apply only to minor modifications and 
construction of minor sources. A submittal by the State of the 
applicable statutory sections for EPA to approve as part of the Texas 
SIP no longer seems sufficient in view of the issuance of this 
particular Permit by Rule.
    There is another ground for proposing disapproval of the two 
portions of the submitted definition ``modification of existing 
facility.'' The public, the regulated community, and governmental 
agencies consistently over the years have not had a clear and common 
understanding of the term, ``insignificant'' and its inter-relationship 
with the SIP rules for Standard Permits and Permits by Rule, in which 
``insignificant increases'' are delineated. Very few people even are 
aware of the history of the TCAA, the State's interpretation and 
implementation of the TCAA over more than three decades, EPA's history 
of the Texas SIP approvals over more than three decades, and EPA's 
legal interpretations over three decades of the State's implementing 
regulations. If the public, the regulated community, and governmental 
agencies do not share, a clear and common understanding of the term, 
``insignificant,'' the submittals will not perform according to what we 
believe is the original intent.
    With the State's issuance of the Startup, Shutdown, and Maintenance 
Permit by Rule that is not clearly limited to minor modifications and 
the continued expressions by the public, regulated entities, and 
government entities on the lack of clarity in the submittals' language 
of (A) and (B), EPA is proposing to disapprove the submittals for 30 
TAC 116.10(11)(A) and (B) because they are vague and unenforceable.
    30 TAC 116.10(11)(G).
    The submittals provide that changes at certain natural gas 
processing, treating, or compression facilities are not modifications 
if the change does not result in an annual emissions rate of any air 
contaminant in excess of the volume emitted at the maximum design 
capacity for grandfathered facilities. The ``annual emissions rate'' is 
the same as the ``volume emitted at the maximum design capacity''; 
therefore, this would provide an exemption for these sources from 
permit review for any emission increases at these facilities. 40 CFR 
51.160(e) allows States to identify facilities which will be subject to 
review under their minor NSR program and requires the minor NSR SIP to 
discuss the basis for determining which facilities will be subject to 
review.
    The submittals, however, do not contain an applicability statement 
or regulatory provision limiting this type of change to minor NSR. 
There is no explanation of the reason for exempting this type of change 
from the permitting SIP requirements. Without the submittal by the 
State of an analysis describing how this exemption does not negate the 
major NSR SIP requirements and meets the minor NSR SIP requirements in 
40 CFR 51.160 and the Act's anti-backsliding requirements in section 
110(l), EPA proposes to disapprove this submitted definition.

C. What Is the Administrative Correction Related to the Submitted 
General Definition of ``Facility?''

    This definition was initially submitted March 13, 1996, and 
revisions submitted July 22, 1998. On September 6, 2006 (71 FR 52698), 
EPA approved the definition of ``Facility,'' as codified at 30 TAC 
116.10(4) in the July 22, 1998, submittal. In a SIP revision submitted 
September 4, 2002, Texas revised 30 TAC 116.10 to add two new 
definitions and to renumber several existing definitions to accommodate 
the new definitions. In that revision, the definition of ``facility'' 
was renumbered from 30 TAC 116.10(4) to 30 TAC 116.10(6). On August 28, 
2007 (72 FR 49198), EPA approved portions of the revisions to 30 TAC 
116.10 to add the two new definitions and to approve the renumbering of 
the previously approved definitions. However, EPA's August 28, 2007, 
approval included a typographical error that identified 30 TAC 
116.10(6) ``facility'' as not being in the SIP. The definition of 
``facility'' is severable from the other submitted definitions. 
Accordingly, in this action, EPA proposes to correct the typographical 
error in 72 FR 49198 to clarify that the definition of ``facility'' as 
codified at 30 TAC 116.10(6) was approved as part of the Texas SIP in 
2006 and remains part of the Texas SIP.

D. Why Are We Not Taking Any Action on the Severable Submitted Portion 
of the Definition of Federally Enforceable?

    30 TAC 116.10(7)(F)--``federally enforceable.''
    The submitted paragraph (F) in the definition of ``federally 
enforceable'' identifies as federally enforceable requirements, any 
permit requirements established under Subchapter C \14\ of Chapter 116. 
This paragraph implements the CAA section 112(g) program. This program 
is implemented separately from the SIP and is outside the scope of the 
SIP; therefore, we are proposing to take no action. See 67 FR 58699-
58700 (September 18, 2002) for further information on why we are 
proposing no action on this provision. Paragraphs (A) through (E) in 
the definition of ``federally enforceable'' remain part of the Texas 
SIP, as codified at 30 TAC 116.10(7). EPA approved them on September 
18, 2002 (67 FR 58697).
---------------------------------------------------------------------------

    \14\ In a SIP revision submitted February 1, 2006, the 
provisions on Subchapter C were redesignated to a new Subchapter E. 
EPA intends to take action on the new Subchapter E later in a 
separate action.
---------------------------------------------------------------------------

VIII. Why is EPA Proposing To Take No Action on a Severable Submitted 
Provision?

    This submitted added provision to 30 TAC 116.116(f) is not in the 
SIP and it addresses the use of discrete emission reduction credits. It 
includes a cross-reference to a State rule that no longer exists. 
Moreover, both the State and the Texas SIP contain the Emissions 
Trading and Banking rules in Subchapter H of Chapter 116. To date, 
Texas has not submitted a SIP revision revising this cross-reference 
appropriately. EPA proposes to take no action today on the submitted 30 
TAC

[[Page 48466]]

116.116(f) and intends to take action later in a separate action.

IX. Proposed Action

    EPA is proposing disapproval of revisions to the SIP submitted by 
the State of Texas that relate to the Modification of Qualified 
Facilities, identified in the Tables in Section III of this preamble. 
These affected provisions include regulatory provisions and definitions 
and a severable portion of the definition at (E) ``modification of 
existing facility,'' under Texas' General Definitions in Chapter 116, 
Control of Air Pollution by Permits for New Construction or 
Modification. EPA is proposing to find that these submitted provisions 
and definitions in the submittals affecting the Texas Qualified 
Facilities State Program are not severable from each other.
    EPA is proposing disapproval of the submitted Texas Qualified 
Facilities State Program, as a substitute major NSR SIP revision, 
because it does not meet the Act and EPA's regulations. We also are 
proposing disapproval of the submitted Qualified Facilities Texas State 
Program as a minor NSR SIP revision because it does not meet the Act 
and EPA's regulations.
    EPA also proposes to take action on revisions to the SIP submitted 
by Texas that relate to the General Definitions in Chapter 116. EPA 
proposes to approve three of these severable submitted definitions, 
``grandfathered facility,'' ``maximum allowable emissions rate table 
(MAERT),'' and ``new facility.'' We propose to disapprove the severable 
submitted definition, ``best available control technology (BACT)'' and 
to disapprove two severable portions, subparagraphs (A) and (B), in the 
submitted definition of ``modification of existing facility,'' and the 
severable portion subparagraph (G) in the submitted definition of 
``modification of existing facility.'' The subparagraphs (A) and (B) 
are not severable from each other. EPA proposes to make an 
administrative correction to the severable submittal for the SIP-
approved definition of ``facility.'' EPA proposes to take no action on 
the severable submitted subparagraph (F) for the SIP-approved severable 
definition of ``federally enforceable'' because the submitted paragraph 
relates to a Federal program that is implemented separately from the 
SIP. In addition, EPA is proposing to take no action on the severable 
submitted portion of a provision that includes, among other things, a 
trading provision containing a cross-reference that no longer is in 
Texas' rules; EPA will act upon it later in a separate notice.
    We will accept comments on this proposal for the next 60 days. 
After review of public comment, we will take final action on the SIP 
revision submittals that are identified herein.
    EPA will take final action on the State's Public Participation SIP 
revision submittal in November 2009. EPA intends to take final action 
on the submitted Texas Qualified Facilities State Program by March 31, 
2010, the submitted Texas Flexible Permits State Program by June 30, 
2010, and the NSR SIP by August 31, 2010. These dates are expected to 
be mandated under a Consent Decree, currently under public comment 
(see, Notice of Proposed Consent Decree and Proposed Settlement 
Agreement, 74 FR 38015, July 30, 2009). Sources are reminded that they 
remain subject to the requirements of the Federally-approved Texas SIP 
and subject to potential enforcement for violations of the SIP (See 
EPA's Revised Guidance on Enforcement During Pending SIP Revisions, 
dated March 1, 1991).

X. Statutory and Executive Order Reviews

A. Executive Order 12866, Regulatory Planning and Review

    This action is not a ``significant regulatory action'' under the 
terms of Executive Order 12866 (58 FR 51735, October 4, 1993) and is 
therefore not subject to review under the Executive Order.

B. Paperwork Reduction Act

    This action does not impose an information collection burden under 
the provisions of the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. 
because this proposed SIP disapproval under section 110 and subchapter 
I, part D of the Clean Air Act will not in-and-of itself create any new 
information collection burdens but simply disapproves certain State 
requirements for inclusion into the SIP. Burden is defined at 5 CFR 
1320.3(b).

C. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) generally requires an agency 
to conduct a regulatory flexibility analysis of any rule subject to 
notice and comment rulemaking requirements unless the agency certifies 
that the rule will not have a significant economic impact on a 
substantial number of small entities. Small entities include small 
businesses, small not-for-profit enterprises, and small governmental 
jurisdictions. For purposes of assessing the impacts of today's rule on 
small entities, small entity is defined as: (1) A small business as 
defined by the Small Business Administration's (SBA) regulations at 13 
CFR 121.201; (2) a small governmental jurisdiction that is a government 
of a city, county, town, school district or special district with a 
population of less than 50,000; and (3) a small organization that is 
any not-for-profit enterprise which is independently owned and operated 
and is not dominant in its field.
    After considering the economic impacts of today's proposed rule on 
small entities, I certify that this action will not have a significant 
impact on a substantial number of small entities. This rule does not 
impose any requirements or create impacts on small entities. This 
proposed SIP disapproval under section 110 and subchapter I, part D of 
the Clean Air Act will not in-and-of itself create any new requirements 
but simply disapproves certain State requirements for inclusion into 
the SIP. Accordingly, it affords no opportunity for EPA to fashion for 
small entities less burdensome compliance or reporting requirements or 
timetables or exemptions from all or part of the rule. The fact that 
the Clean Air Act prescribes that various consequences (e.g., higher 
offset requirements) may or will flow from this disapproval does not 
mean that EPA either can or must conduct a regulatory flexibility 
analysis for this action. Therefore, this action will not have a 
significant economic impact on a substantial number of small entities.
    We continue to be interested in the potential impacts of this 
proposed rule on small entities and welcome comments on issues related 
to such impacts.

D. Unfunded Mandates Reform Act

    This action contains no Federal mandates under the provisions of 
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), 2 U.S.C. 
1531-1538 ``for State, local, or tribal governments or the private 
sector.'' EPA has determined that the proposed disapproval action does 
not include a Federal mandate that may result in estimated costs of 
$100 million or more to either State, local, or tribal governments in 
the aggregate, or to the private sector. This action proposes to 
disapprove pre-existing requirements under State or local law, and 
imposes no new requirements. Accordingly, no additional costs to State, 
local, or tribal governments, or to the private sector, result from 
this action.

E. Executive Order 13132, Federalism

    Executive Order 13132, entitled ``Federalism'' (64 FR 43255, August 
10,

[[Page 48467]]

1999), requires EPA to develop an accountable process to ensure 
``meaningful and timely input by State and local officials in the 
development of regulatory policies that have federalism implications.'' 
``Policies that have federalism implications'' is defined in the 
Executive Order to include regulations that 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.''
    This action does not have federalism implications. It will 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, because it merely disapproves 
certain State requirements for inclusion into the SIP and does not 
alter the relationship or the distribution of power and 
responsibilities established in the Clean Air Act. Thus, Executive 
Order 13132 does not apply to this action.

F. Executive Order 13175, Coordination With Indian Tribal Governments

    This action does not have tribal implications, as specified in 
Executive Order 13175 (59 FR 22951, November 9, 2000), because the SIP 
EPA is proposing to disapprove would not 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. Thus, 
Executive Order 13175 does not apply to this action.

G. Executive Order 13045, Protection of Children From Environmental 
Health Risks and Safety Risks

    EPA interprets Executive Order 13045 (62 FR 19885, April 23, 1997) 
as applying only to those regulatory actions that concern health or 
safety risks, such that the analysis required under section 5-501 of 
the Executive Order has the potential to influence the regulation. This 
action is not subject to Executive Order 13045 because it because it is 
not an economically significant regulatory action based on health or 
safety risks subject to Executive Order 13045 (62 FR 19885, April 23, 
1997). This proposed SIP disapproval under section 110 and subchapter 
I, part D of the Clean Air Act will not in-and-of itself create any new 
regulations but simply disapproves certain State requirements for 
inclusion into the SIP.

H. Executive Order 13211, Actions That Significantly Affect Energy 
Supply, Distribution, or Use

    This proposed rule is not subject to Executive Order 13211 (66 FR 
28355, May 22, 2001) because it is not a significant regulatory action 
under Executive Order 12866.

I. National Technology Transfer and Advancement Act

    Section 12(d) of the National Technology Transfer and Advancement 
Act of 1995 (``NTTAA''), Public Law No. 104-113, section 12(d) (15 
U.S.C. 272 note) directs EPA to use voluntary consensus standards in 
its regulatory activities unless to do so would be inconsistent with 
applicable law or otherwise impractical. Voluntary consensus standards 
are technical standards (e.g., materials specifications, test methods, 
sampling procedures, and business practices) that are developed or 
adopted by voluntary consensus standards bodies. NTTAA directs EPA to 
provide Congress, through OMB, explanations when the Agency decides not 
to use available and applicable voluntary consensus standards.
    The EPA believes that this action is not subject to requirements of 
Section 12(d) of NTTAA because application of those requirements would 
be inconsistent with the Clean Air Act.

J. Executive Order 12898: Federal Actions To Address Environmental 
Justice in Minority Populations and Low-Income Populations

    Executive Order 12898 (59 FR 7629 (Feb. 16, 1994)) establishes 
federal executive policy on environmental justice. Its main provision 
directs federal agencies, to the greatest extent practicable and 
permitted by law, to make environmental justice part of their mission 
by identifying and addressing, as appropriate, disproportionately high 
and adverse human health or environmental effects of their programs, 
policies, and activities on minority populations and low-income 
populations in the United States.
    EPA lacks the discretionary authority to address environmental 
justice in this proposed action. In reviewing SIP submissions, EPA's 
role is to approve or disapprove state choices, based on the criteria 
of the Clean Air Act. Accordingly, this action merely proposes to 
disapprove certain State requirements for inclusion into the SIP under 
section 110 and subchapter I, part D of the Clean Air Act and will not 
in-and-of itself create any new requirements. Accordingly, it 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.

List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, Carbon Monoxide, 
Intergovernmental relations, Lead, Nitrogen dioxide, Ozone, Particulate 
matter, Reporting and recordkeeping requirements, Sulfur oxides, 
Volatile organic compounds.

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

    Dated: September 8, 2009.
Lawrence E. Starfield,
Acting Regional Administrator, Region 6.
[FR Doc. E9-22805 Filed 9-22-09; 8:45 am]
BILLING CODE 6560-50-P