[Federal Register: July 15, 2010 (Volume 75, Number 135)]
[Rules and Regulations]
[Page 41311-41335]
[DOCID:fr15jy10-16]

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Part III

Environmental Protection Agency

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40 CFR Part 52

Approval and Promulgation of Implementation Plans; Texas; Revisions to
the New Source Review (NSR) State Implementation Plan (SIP); Flexible
Permits; Final Rule

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R06-OAR-2005-TX-0032; FRL-9174-1]

Approval and Promulgation of Implementation Plans; Texas;
Revisions to the New Source Review (NSR) State Implementation Plan
(SIP); Flexible Permits

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: EPA is taking final action to disapprove revisions to the SIP
submitted by the State of Texas that relate to the State's Flexible
Permits Program (the Texas Flexible Permits Program or the Program).
EPA is disapproving the Texas Flexible Permits 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. We are taking
this action under section 110, part C, and part D, of Title I of the
Federal Clean Air Act (the Act or CAA).

DATES: This rule is effective on August 16, 2010.

ADDRESSES: EPA has established a docket for this action under Docket ID
No. EPA-R06-OAR-2005-TX-0032. All documents in the docket are listed on
the www.regulations.gov Web site. Although listed in the index, some
information is not publicly available, e.g., confidential business
information or other information whose disclosure is restricted by
statute. Certain other material, such as copyrighted material, is not
placed on the Internet and will be publicly available only in hard copy
form. Publicly available docket materials are available either
electronically through www.regulations.gov or in hard copy at the Air
Permits Section (6PD-R), Environmental Protection Agency, 1445 Ross
Avenue, Suite 700, Dallas, Texas 75202-2733. The file will be made
available by appointment for public inspection in the Region 6 Freedom
of Information Act 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 record, are also
available for public inspection at the State Air Agency listed below
during official business hours by appointment:
    Texas Commission on Environmental Quality, Office of Air Quality,
12124 Park 35 Circle, Austin, Texas 78753.

FOR FURTHER INFORMATION CONTACT: Mr. Stanley M. Spruiell, Air Permits
Section (6PD-R), Environmental Protection Agency, Region 6, 1445 Ross
Avenue, Suite 700, Dallas, Texas 75202-2733, telephone<PHONE_NUMBER>;
fax number<PHONE_NUMBER>; e-mail address<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION: Throughout this document, the following
terms have the meanings described below:
     ``we,'' ``us,'' and ``our'' refer to EPA.
     ``Act'' and ``CAA'' mean the Federal Clean Air Act.
     ``40 CFR'' means Title 40 of the Code of Federal
Regulations--Protection of the Environment.
     ``SIP'' means State Implementation Plan 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 Title I, section 110(a)(2)(C) and 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.
     ``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.
     ``Major NSR'' means any new or modified source that is
subject to NNSR and/or PSD.
     ``Program'' means the SIP revision submittals from the
TCEQ concerning the Texas Flexible Permits State Program.
     ``TSD'' means the Technical Support Document for this
action.
     ``NAAQS'' means any national ambient air quality standard
established under 40 CFR part 50.
     ``MRR'' means monitoring, reporting, and recordkeeping
requirements.

Table of Contents

I. What action is EPA taking?
II. What is the background?
    A. Summary of Our Proposed Action
    B. Summary of the Submittals Addressed in This Final Action
    C. Other Relevant Actions on the Texas Permitting SIP Revision
Submittals
III. Response to Comments
    A. General Comments
    B. Whether the Flexible Permits Program Is Clearly a Minor, Not
a Major, NSR SIP Revision
    C. Whether the Flexible Permits Program Meets the Requirements
for a Substitute Major NSR SIP Revision
    1. General Comment on Whether the Program is a Substitute Major
NSR SIP Revision
    2. Requirements for Major NSR Applicability Determinations
    3. Circumvention of Major NSR
    4. Use of Allowable Emissions in Major NSR
    5. Retention of Major NSR Permit Terms and Conditions
    6. Protection of the NAAQS Attainment Under Major NSR
    D. Whether the Flexible Permits Program Meets the Requirements
for a Minor NSR SIP Revision
    1. Applicability for a Minor NSR Program
    2. Establishment of the Emission Cap Under Minor NSR
    3. Enforceability of a Minor NSR Program
    4. Revocation of Major NSR Permits Under a Minor NSR Program
    5. Protection of the NAAQS Under a Minor NSR Program
    E. Definition of Account
    F. Public Participation
IV. What are the grounds for this disapproval action of the Texas
Flexible Permits State Program?
    A. The Texas Flexible Permits Program Is Unclear Whether it is
for a Major or Minor NSR SIP Revision
    B. The Texas Flexible Permits Program Is Not Approvable as a
Substitute Major NSR SIP Revision
    C. The Texas Flexible Permits Program Is Not Approvable as a
Minor NSR SIP Revision
    D. The Texas Flexible Permits Program Does Not Meet the NSR
Public Participation Requirements
    E. Definition of ``Account''
V. Final Action
VI. Statutory and Executive Order Reviews

I. What action is EPA taking?

    EPA is taking final action to disapprove the Texas Flexible Permits
State Program, as submitted by Texas on November 29, 1994, as revised
by severable portions of the March 13, 1996, SIP revision submittal,
and severable portions of the July 22, 1998 SIP revision submittal that
repealed and replaced portions of, as well as revised, the 1994
submittal and repealed and replaced all of the 1996 submittal; and as
revised by severable portions of the October 25, 1999; September 11,
2000; April 12, 2001; September 4, 2002; October 4, 2002; and September
25,

2003; SIP revision submittals. These submittals include revisions to
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 116.110(a)(3), 30 TAC Subchapter G-Flexible Permits, the
definitions in 30 TAC 116.13--Flexible Permit Definitions, and the
definition in 30 TAC 116.10(11)(F) of ``modification of existing
facility.'' These State regulations and definitions do not meet the
requirements of the Act and EPA's NSR regulations. EPA has concluded
that none of these identified elements for the submitted Flexible
Permits Program is severable from each other.
    EPA proposed an action for the above SIP revision submittals on
September 23, 2009 (74 FR 48480). We accepted comments from the public
on this proposal from September 23, 2009, until November 23, 2009. A
summary of the comments received and our evaluation thereof is
discussed in section III below. In the proposal and in the Technical
Support Document (TSD), we described our basis for the actions
identified above. The reader should refer to the proposal, the TSD,
section IV of this preamble, and the Response to Comments in section
III of this preamble for additional information relating to our final
action.
    EPA is disapproving the submitted Texas Flexible Permits State
Program as not meeting the requirements for a Minor NSR SIP revision.
Our grounds for disapproval as a Minor NSR SIP revision include the
following:
     The submitted Program has no express regulatory
prohibition clearly limiting its use to Minor NSR and has no regulatory
provision clearly prohibiting the use of this submitted Program from
circumventing the Major NSR SIP requirements, thereby potentially
exempting new major stationary sources and major modifications from the
EPA Major NSR SIP requirements;
     It is not an enforceable NSR permitting program. The
submitted Program lacks requirements necessary for enforcement and
assurance of compliance. There are no specific up-front methodologies
in the Program to be able to determine compliance. It fails to meet the
enforceability requirements as a program or by a holder of a Flexible
Permit, and it cannot assure compliance with the Program or of the
affected source;
     It lacks the necessary more specialized monitoring,
recordkeeping, and reporting (MRR) requirements required for this type
of Minor NSR program, as selected by Texas, to ensure accountability
and provide a means to determine compliance. The submitted Program is
generic concerning the types of monitoring that is required rather than
identifying the employment of specific monitoring approaches, providing
the technical specifications for each of the specific allowable
monitoring systems, and requiring replicable procedures for the
approval of any alternative monitoring system. It also lacks the
replicable procedures that are necessary to ensure that (1) adequate
monitoring is required that would accurately determine emissions under
the Flexible Permit cap, (2) the Program is based upon sound science
and meets generally acceptable scientific procedures for data quality
and manipulation; and (3) the information generated by such system
meets minimum legal requirements for admissibility in a judicial
proceeding to enforce the Flexible Permit;
     It lacks replicable, specific, established implementation
procedures for establishing the emissions cap in a Minor NSR Flexible
Permit;
     It fails to ensure that the terms and conditions of Major
NSR SIP permits are retained. Major stationary sources and major
modifications can use this submitted Program to fundamentally change
the way they comply with specific terms and conditions established in
their Major NSR SIP permits. Holders of Major NSR SIP permits are not
prohibited from using the submitted Program's allowables-based
emissions cap. The Act prohibits the use of an allowables-based cap for
Major NSR SIP permittees;
     It fails to meet the statutory and regulatory requirements
for a Minor NSR SIP revision and is not consistent with EPA policy and
guidance on Minor NSR SIP revisions; and
     Based upon, among other things, the lack of any objective,
replicable methodology for establishing the emission cap, the too broad
director discretion provision regarding whether or not to include MRR
conditions in a Flexible Permit, the lack of sufficient MRR
requirements for this type of permit program, and the lack of
enforceability, EPA lacks sufficient information to determine that the
requested revision to add the new permit option to the Texas Minor NSR
SIP will not interfere with any applicable requirement concerning
attainment and reasonable further progress (RFP), or any other
requirement of the Act.
    We are disapproving the submitted Texas Flexible Permits State
Program as not meeting the requirements for a substitute Major NSR SIP
revision. EPA understands that the TCEQ intended for the submitted
Program to be a Minor NSR program but we are required to review it as a
substitute Major NSR SIP revision because the State should have
included express language stating that, as it did in the two other
Minor NSR SIP alternative permit options (Standard Permits and Permits
by Rule), that the submitted Program is clearly limited to Minor NSR
and prohibits circumvention of Major NSR. Our grounds for disapproval
as a substitute Major NSR SIP revision include the following:
     It is not clearly limited to Minor NSR thereby potentially
exempting new major stationary sources to construct and 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 use a Flexible Permit to avoid the
requirement to obtain preconstruction permit authorizations for
projects that would otherwise require a Major NSR preconstruction
permit;
     It does not include a demonstration from the TCEQ, as
required by 40 CFR 51.165(a)(2)(ii) and 51.166(a)(7)(iv), showing how
the use of ``modification'' is at least as stringent as the definition
of ``modification'' in the EPA Major NSR SIP program and meets the Act;
     It does not include a demonstration from the TCEQ, as
required by 40 CFR 51.165(a)(2)(ii) and 51.166(a)(7)(iv), showing the
submitted Program is at least as stringent as 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;
     To the extent that major stationary sources and major
modifications are exempted from Major NSR, it fails to meet the
statutory and regulatory requirements for a Major NSR SIP revision and
is not consistent with EPA policy and guidance on Major NSR SIP
revisions;
     Because it fails to include, among other things, the
required demonstration from the State showing how the customized Major
NSR SIP revision is in fact as stringent as EPA's Major NSR revised
program, any objective, replicable methodology for calculating the
emissions cap, provides too broad director discretion regarding whether
or not to include monitoring, recordkeeping, and reporting (MRR)

conditions in a Flexible Permit, lacks sufficient MRR requirements for
this type of permit program, and is not enforceable, EPA lacks
sufficient information to make a finding that the submitted Program
will ensure protection of the national ambient air quality standards
(NAAQS), and noninterference with the Texas SIP control strategies and
RFP.
    The provisions in these submittals relating to the Texas Flexible
Permits State Program that include the Chapter 116 regulatory
provisions and the nonseverab1e definitions in the Flexible Permits
Definitions and the General Definitions were not submitted to meet a
mandatory requirement of the Act. Therefore, this final action to
disapprove the submitted Texas Flexible Permits State Program does not
trigger a sanctions or Federal Implementation Plan clock. See CAA
section l79(a).

II. What is the background?

A. Summary of Our Proposed Action

    On September 23, 2009, EPA proposed to disapprove revisions to the
SIP submitted by the State of Texas that relate to the Flexible Permits
Program. These affected provisions include regulatory provisions at 30
TAC 116.110(a)(3) and 30 TAC Subchapter G--Flexible Permits,
definitions in 30 TAC 116.13, Flexible Permits Definitions, and a
nonseverable portion of the definition at subparagraph 116.10(11)(F) of
``modification of existing facility'' under Texas's General Definitions
in Chapter 116, Control of Air Pollution by Permits for New
Construction or Modification. EPA finds that these submitted provisions
and definitions are not severable from each other.

B. Summary of the Submittals Addressed in This Final Action

    Tables 1 and 2 below summarize the changes that are in the SIP
revision submittals. A summary of EPA's evaluation of each section and
the basis for this final action is discussed in sections III through V
of this preamble. The TSD (which is in the docket) includes a detailed
evaluation of the submittals.

                     Table 1--Summary of Each SIP Submittal That Is Affected by This Action
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                                             Date submitted   Date of State
           Title of SIP submittal                to EPA         adoption             Regulations affected
----------------------------------------------------------------------------------------------------------------
Flexible Permits...........................      11/29/1994      11/16/1994   Revision to 30 TAC
                                                                              116.110.
                                                                              Adoption of New 30 TAC
                                                                              116.13 and New Subchapter G, 30
                                                                              TAC 116.710, 116.711, 116.714,
                                                                              116.715, 116.716, 116.717,
                                                                              116.718, 116.720, 116.721,
                                                                              116.722, 115.730, 116.740,
                                                                              116.750, and 116.760.
Qualified Facilities and Modifications to         3/13/1996       2/14/1996   Revision of 30 TAC 116.10
 Existing Facilities.                                                         to add new definition of
                                                                              ``modification of existing
                                                                              facility'' at (F).
NSR Rule Revisions; section 112(g) Rule           7/22/1998       6/17/1998   Repeal and new 30 TAC
 Review for Chapter 116.                                                      116.10(9)(F), 116.13 and
                                                                              116.110(a)(3) adopted.
                                                                              Revisions to Subchapter G,
                                                                              30 TAC 116.710, 116.711, 116.714,
                                                                              116.715, 116.721, 116.730, and
                                                                              116.750.
Public Participation (HB 801)..............      10/25/1999        9/2/1999   Revision to Subchapter G,
                                                                              30 TAC 116.740.
Air Permits (SB-766)--Phase II.............       9/11/2000        8/9/2000   Revisions to Subchapter G,
                                                                              30 TAC 116.710, 116.715, 116.721,
                                                                              116.722, and 116.750.
Emissions Banking and Trading..............       4/12/2001        3/7/2001   Revisions to Subchapter G,
                                                                              30 TAC 116.711 and 116.715.
House Bill 3040: Shipyard Facilities and           9/4/2002       8/21/2002   Revision to 30 TAC 116.10,
 NSR Maintenance Emissions.                                                   redesignating 30 TAC 116.10(9)(F)
                                                                              to 116.10(11)(F).
                                                                              Revisions to Subchapter G,
                                                                              30 TAC 116.711 and 116.715.
Air Fees...................................       10/4/2002       9/25/2002   Revisions to Subchapter G,
                                                                              30 TAC 116.750.
Offset Certification, New Source Review           9/25/2003       8/20/2003   Revision to Subchapter G,
 Permitting Processes and Extensions for                                      30 TAC 116.715.
 Construction.
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                       Table 2--Summary of Each Regulation That Is Affected by This Action
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                                                                         Date adopted
             Section                      Title         Date submitted     by State             Comments
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              Chapter 116--Control of Air Pollution by Permits for New Construction or Modification
                                            Subchapter A--Definitions
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Section 116.10(11)(F)............  General Definitions       3/13/1996       2/14/1996   Revised to add
                                                                                new definition of
                                                                                ``modification of
                                                                                existing facility'' at
                                                                                (F).
                                                             7/22/1998       6/17/1998   Repealed and
                                                                                Adopted new 30 TAC
                                                                                116.10(9)(F).
                                                              9/4/2002       8/21/2002   Redesignated 30
                                                                                TAC 116.10(9)(F) to 30
                                                                                TAC 116.10(11)(F).
Section 116.13...................  Flexible Permit          11/29/1994      11/16/1994   Initial
                                    Definitions.                                         Adoption.
                                                             7/22/1998       6/17/1998   Repealed and
                                                                                Adopted new 30 TAC
                                                                                116.13.
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                                 Subchapter B--New Source Review Permits
                                      Division 1--Permit Application
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Section 116.110..................  Applicability......      11/29/1994      11/16/1994   Revised (a) to
                                                                                add reference to
                                                                                Flexible Permits.
                                                             7/22/1998       6/17/1998   Repealed and
                                                                                adopted a new 30 TAC
                                                                                116.110.

                                                        ..............  ..............   Included
                                                                                reference to Flexible
                                                                                Permits in new 30 TAC
                                                                                116.110(a)(3).
----------------------------------------------------------------------------------------------------------------
                                      Subchapter G--Flexible Permits
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Section 116.710..................  Applicability......      11/29/1994      11/16/1994   Initial
                                                                                adoption.
                                                             7/22/1998       6/17/1998   Revised
                                                                                subsection (a).
                                                        ..............  ..............   Removed
                                                                                subsection (b) and
                                                        ..............  ..............   Redesignated
                                                                                existing subsections
                                                                                (c)-(e) to subsections
                                                                                (b)-(d).
                                                        ..............  ..............   Revised
                                                                                subsections (b)-(d) as
                                                                                redesignated.
                                                             9/11/2000        8/9/2000   Revised
                                                                                subsection (b).
Section 116.711..................  Flexible Permit          11/29/1994      11/16/1994   Initial
                                    Application.                                         adoption.
                                                             7/22/1998       6/17/1998   Revised
                                                                                introductory paragraph
                                                                                and paragraphs (1)-(5);
                                                        ..............  ..............   Added new
                                                                                paragraphs (6) and
                                                                                (11):
                                                        ..............  ..............   Redesignated
                                                                                existing paragraphs (6)-
                                                                                (9) to paragraphs (7)-
                                                                                (10) and existing
                                                                                paragraphs (10)-(11) to
                                                                                paragraphs (12)-(13);
                                                                                and
                                                        ..............  ..............   Revised
                                                                                paragraphs (8)-(10) as
                                                                                redesignated.
                                                             4/12/2001        3/7/2001   Added new
                                                                                paragraph (12); and
                                                        ..............  ..............   Redesignated
                                                                                existing paragraphs
                                                                                (12)-(13) to paragraphs
                                                                                (13)-(14).
                                                              9/4/2002       8/21/2002   Designated
                                                                                existing as subsection
                                                                                (a);
                                                        ..............  ..............   Added new
                                                                                subsection (b); and
                                                        ..............  ..............   Revised
                                                                                paragraphs (a)(8)-(11)
                                                                                as redesignated.
Section 116.714..................  Application Review       11/29/1994      11/16/1994   Initial
                                    Schedule.                                            adoption.
                                                             7/22/1998       6/17/1998   Revised
                                                                                introductory paragraph.
Section 116.715..................  General and Special      11/29/1994      11/16/1994   Initial
                                    Conditions.                                          adoption.
                                                             7/22/1998       6/17/1998   Revised
                                                                                subsection (a), and
                                                                                paragraphs (c)(3)-(6),
                                                                                and (9)-(10).
                                                             9/11/2000        8/9/2000   Revised
                                                                                subsection (a).
                                                             4/12/2001        3/7/2001   Revised
                                                                                paragraph (c)(3).
                                                              9/4/2002       8/21/2002   Revised
                                                                                paragraph (c)(9).
                                                             9/25/2003       8/20/2003   Revised
                                                                                paragraphs (c)(1) and
                                                                                (c)(9).
Section 116.716..................  Emission Caps and        11/29/1994      11/16/1994   Initial
                                    Individual                                           adoption.
                                    Limitations.
Section 116.717..................  Implementation           11/29/1994      11/16/1994   Initial
                                    Schedule for                                         adoption.
                                    Addition Controls.
Section 116.718..................  Significant              11/29/1994      11/16/1994   Initial
                                    Emission Increase.                                   adoption.
Section 116.720..................  Limitation on            11/29/1994      11/16/1994   Initial
                                    Physical and                                         adoption.
                                    Operational
                                    Changes.
Section 116.721..................  Amendments and           11/29/1994      11/16/1994   Initial
                                    Alterations.                                         adoption.
                                                             7/22/1998       6/17/1998   Revised
                                                                                paragraphs (b)(2) and
                                                                                (d)(1)-(2).
                                                             9/11/2000        8/9/2000   Revised
                                                                                subsection (d) and
                                                                                paragraph (d)(1).
Section 116.722..................  Distance                 11/29/1994      11/16/1994   Initial
                                    Limitations.                                         adoption.
                                                             9/11/2000        8/9/2000   Revised
                                                                                introductory paragraph.
Section 116.730..................  Compliance History.      11/29/1994      11/16/1994   Initial
                                                                                adoption.
                                                             7/22/1998       6/17/1998   Revised
                                                                                introductory paragraph.
Section 116.740..................  Public Notice and        11/29/1994      11/16/1994   Initial
                                    Comment.                                             adoption.
                                                             7/22/1998       6/17/1998   Designated
                                                                                existing text as
                                                                                subsection (a); and
                                                        ..............  ..............   Added new
                                                                                subsection (b).
                                                            10/25/1999        9/2/1999   Revised
                                                                                subsections (a)-(b).
Section 116.750..................  Flexible Permit Fee      11/29/1994      11/16/1994   Initial
                                                                                adoption.
                                                             7/22/1998       6/17/1998   Revised
                                                                                subsections (b)-(d).
                                                             9/11/2000        8/9/2000   Revised
                                                                                subsection (d).
                                                             10/4/2002       9/25/2002   Revised
                                                                                subsections (b)-(c).
Section 116.760..................  Flexible Permit          11/29/1994      11/16/1994   Initial
                                    Renewal.                                             adoption.
----------------------------------------------------------------------------------------------------------------

C. Other Relevant Actions on the Texas Permitting SIP Revision
Submittals

    The Settlement Agreement in BCCA Appeal Group v. EPA, Case No.
3:08-cv-01491-N (N.D. Tex), as amended, currently provides that EPA
will take final action on the State's Public Participation SIP revision
submittal by October 29, 2010. EPA intends to take final action on the
submitted NSR SIP by August 31, 2010, as provided in the Consent Decree
entered on January 21, 2010 in BCCA Appeal Group v. EPA, Case No. 3:08-
cv-01491-N (N.D. Tex). EPA published its final action on the Texas
Qualified Facilities Program and its associated General Definitions on
April 14, 2010 (See 75 FR 19467) as provided in the Consent Decree.
    Additionally, EPA acknowledges that TCEQ is developing a proposed
rulemaking package to address EPA's concerns with the current Flexible
Permits rules. We will, of course, consider any rule changes if and
when they are submitted to EPA for review. However, the rules before us
today are those of the current Flexible Permits Program, and we have
concluded that the current Program is not approvable for the reasons
set out in this notice.

III. Response to Comments

    In response to our September 23, 2009, proposal, we received
comments from the following: Baker Botts, L.L.P., on behalf of BCCA
Appeal Group (BCCA); Baker Botts, L.L.P., on behalf of Texas Industrial
Project (TIP); Bracewell & Guiliani, L.L.P., on behalf of the Electric
Reliability Coordinating Council (ERCC); Gulf Coast Lignite Coalition
(GCLC); Office of the Mayor--City of Houston, Texas (City of Houston);
Harris County Public Health and Environmental Services (HCPHES); Sierra
Club--Houston Regional Group (Sierra Club); Sierra Club Membership
Services (including 2,062 individual comment letters) (SCMS); Texas
Chemical Council (TCC); Texas Commission on Environmental Quality
(TCEQ); Members of the Texas House of Representatives; Texas
Association of Business (TAB); Texas Oil and Gas Association (TxOGA);
and University of Texas at Austin School of Law--Environmental Clinic
on behalf of Environmental Integrity Project (the Clinic),
Environmental Defense Fund, Galveston-Houston Association for Smog
Prevention, Public Citizen, Citizens for Environmental Justice, Sierra
Club Lone Star Chapter, Community-In-Power and Development Association,
KIDS for Clean Air, Clean Air Institute of Texas, Sustainable Energy
and Economic Development Coalition, Robertson County: Our Land, Our
Lives, Texas Protecting Our Land, Water and Environment, Citizens for a
Clean Environment, Multi-County Coalition and Citizens Opposing Power
Plants for Clean Air.

A. General Comments

    Comment 1: The following commenters support EPA's decisions to
disapprove the Flexible Permits State Program: HCPHES; several members
of the Texas House of Representatives; the Sierra Club; the City of
Houston, and the Clinic.
    Response: Generally, these comments support EPA's analysis of
Texas's Flexible Permits Program as discussed in detail at 74 FR 48480,
at 48485-48494, and further support EPA's action to disapprove the
Flexible Permits Program submission.
    Comment 2: The SCMS sent numerous similar letters via e-mail that
relate to this action. These comments include 1,789 identical letters
(sent via e-mail), which support EPA's proposed ruling that major
portions of the TCEQ air permitting program do not adhere to the CAA
and should be thrown out. While agreeing that the proposed disapprovals
are a good first step, the commenters state that EPA should take bold
actions such as halting any new air pollution permits being issued by
TCEQ utilizing TCEQ's current illegal policy; creating a moratorium on
the operations of any new coal fired power plants; reviewing all
permits issued since TCEQ adopted its illegal policies and requiring
that these entities resubmit their applications in accordance with the
Federal CAA; and putting stronger rules in place in order to reduce
global-warming emissions and to make sure new laws and rules do not
allow existing coal plants to continue polluting with global warming
emissions.
    The commenters further state that Texas: (1) Has more proposed coal
and petroleum coke fired power plants than any other State in the
Nation; (2) Is number one in carbon emissions; and (3) Is on the list
for the largest increase in emissions over the past five years. Strong
rules are needed to make sure the coal industry is held responsible and
that no permits are issued under TCEQ's illegal permitting process.
Strong regulations are vital to cleaning up the energy industry and
putting Texas on a path to clean energy technology that boosts economic
growth, creates jobs in Texas, and protects the air quality, health,
and communities.
    In addition, SCMS sent 273 similar letters (sent via e-mail) that
contained additional comments that Texas should rely on wind power,
solar energy, and natural gas as clean alternatives to coal. Other
comments expressed general concerns related to: Impacts on global
warming, lack of commitment by TCEQ to protect air quality, the need
for clean energy efficient growth, impacts upon human health,
endangerment of wildlife, impacts on creation of future jobs in Texas,
plus numerous other similar concerns.
    Response: To the extent that the SCMS letters comment on the
proposed disapproval of the Flexible Permits Program, they support
EPA's action to disapprove the Flexible Permits submission. The
remaining comments are outside the scope of our proposed action
relating to the Flexible Permits Program.
    Comment 3: The Clinic comments that EPA should issue an immediate
SIP call for Texas' failure to enforce the current SIP and should
require those facilities operating under a Flexible Permit to apply for
a SIP-approved permit.
    Response: This final rulemaking only addresses the approvability of
the Texas Flexible Permits Program as a SIP revision submittal.
Therefore, comments related to other EPA action are outside the scope
of our proposed action relating to the Flexible Permits Program.
    Comment 4: The ERCC comments that to avoid negative economic
consequences EPA should exercise enforcement discretion statewide for
sources that obtained government authorization in good faith and as
required by TCEQ, the primary permitting authority. EPA should not
require any injunctive relief and should consider penalty only cases.
    Response: EPA enforcement of the CAA in Texas is outside the scope
of our proposed action relating to the Flexible Permits Program.
    Comment 5: TIP, BCCA, TAB, and TxOGA comment that the Federal NSR
SIP regulations recognize the importance of providing operational
flexibility. In 1990, Congress added Title V to the CAA and it
specifies that State Title V programs must include provisions to allow
changes within a permitted facility without requiring a permit revision
if the changes are not modifications under any provision of Title I of
the Act and do not exceed the emissions allowable under the permit
(whether expressed therein as a rate of emissions or in terms of total
emissions). See section 502(b)(10) of the Act. In order to provide
operational flexibility, EPA adopted 40 CFR 70.4(b)(12) which requires
that States establish Title V programs that allow three specific
avenues to establish

operational flexibility, including establishment of federally-
enforceable emission caps in their Title V programs. See 40 CFR
70.4(b)(12)(iii). EPA emphasized the importance of enabling plant sites
to maintain operational flexibility in the preamble of to 40 CFR part
70. See 57 FR 32250, at 32267 (July 21, 1992).
    Response: EPA acknowledges that the Title V Federal program
requirements allow a State to provide for operational flexibility using
the establishment of federally enforceable emissions caps. EPA,
however, must review the submitted Program as a SIP revision submittal
under Title I of the Act, not Title V. We are not disapproving the
submitted Program because it provides for the establishment of
emissions caps. As discussed in the proposal and this final action, EPA
is disapproving the submitted Program for inclusion in the Texas NSR
SIP because it is not enforceable, does not include any replicable
methodology for calculating the emissions caps, provides too broad
director discretion regarding the monitoring, recordkeeping, and
reporting (MRR) requirements, and lacks sufficient MRR requirements.
The submitted Program fails to meet section 110 and parts C and D of
the Act and the requirements of 40 CFR part 51. As stated elsewhere in
the proposal and throughout this final action, we have identified areas
in which the submitted Program does not meet these statutory
requirements. See 74 FR 48480, at 48490, 48491-48492, and 48492-48493;
and sections III.D.3 and IV.C, for further information.
    Comment 6: BCCA, TIP, TAB, and TxOGA comment on several Federal
Flexibility Permitting rules in which EPA promotes permit flexibility.
These include the following:
     Flexible Permit Pilot Study. EPA focused on the importance
of operational flexibility in a decade-long Flexible Permit pilot study
that included flexible emission cap permits in six states and found
that flexible permits worked well and could be used to further both
environmental protection and administrative flexibility. Both States
and EPA recognized the need to respond rapidly to market signals and
demand in today's increasingly global markets while delivering products
faster, at lower cost, and of equal or better quality than their
competitors. EPA recognized that the flexible permits could reduce the
administrative ``friction'' of time, costs, delay, uncertainty, and
risk associated with certain types of operational changes.
     Plantwide Applicability Limits (PALs). EPA recognized the
advantages of emissions caps in permits in promulgating its NSR Reform
in 1996 and 2002. These advantages include the ability to make changes
an emissions cap that do not require a permit for each change so long
as the plant's emissions do not exceed the cap rather than face
piecemeal applicability decisions for each and every contemplated
change. EPA further noted environmental benefits that could result from
PALs because sources participating in a cap-based program strive to
create enough headroom for future expansion by voluntarily controlling
emissions.
     EPA's Proposed Indian Country Rule. In the 2006 proposed
rule for Indian Country, EPA recognized the importance of flexibility
in air permitting programs. EPA intended this rule to be a
representative template of State NSR programs that serve to provide
operational flexibility while leveling the regulatory playing field.
     EPA's Flexible Air Permit Rule. In October 2009, EPA
promulgated the Federal Flexible Air Permit rule, which incorporated
changes to the Title V rules that were intended to clarify and reaffirm
opportunities for accessing operational flexibility under existing
regulations. EPA recognized that State permitting authorities have
discretion to pre-approve minor changes and re-affirms pre-existing
authority for State to craft flexible air permits.
    Response: EPA acknowledges that each of these cap-based permitting
programs has resulted in, or has the potential to result in, increased
operational flexibility and may enable the owner or operator to make
certain changes without the need to apply for and receive a permit for
each individual change whenever the change does not result in emissions
that exceed the cap. However, of the four identified programs, one was
a pilot study and one has not been finalized. The State did not submit
the Flexible Permits Program for consideration by EPA as a PALs NSR SIP
revision. Moreover, the submitted Flexible Permits Program does not
meet the minimum requirements contained in the PALs NSR SIP
regulations, which include procedures for establishing replicable
emission caps, protecting the NAAQS and control strategies, and MRR
requirements sufficient to ensure compliance with the terms and
conditions of the permit that establishes the emissions cap. As we
discussed in the proposal and now through this final action, the
submitted Flexible Program does not meet the requirements for the
establishment of replicable emissions caps and sufficient MRR
requirements. The submitted Program has no specific, only general,
requirements pertaining to MRR. Paragraph (c)(6) of submitted 30 TAC
116.715 generally requires maintenance of data sufficient to
demonstrate continuous compliance with emission caps and individual
emission limits contained in the Flexible Permit. That is all. To
contrast, the submitted Flexible Permit Program lacks the specific
requirements of another cap-base program, the Federal PAL SIP rule. The
Federal PAL SIP rule requires that the program require each PAL permit
to contain enforceable requirements for the monitoring system that
accurately determines plantwide emissions of the PAL pollutant in terms
of mass per unit of time. The PAL SIP rule further provides that the
monitoring system must be based upon sound science and meet generally
acceptable scientific procedures for data quality and manipulation; and
the information generated by such system must meet minimum legal
requirements for admissibility in a judicial proceeding to enforce the
PAL permit. The SIP requirements for an approvable PAL monitoring
system are the employment of one or more of the following approaches:
Mass balance calculations for activities using coatings or solvents,
continuous emission monitoring system, predictive emission monitoring
system, continuous parameter monitoring system, and emission factors,
if approved by the reviewing authority. The PAL SIP rule provides the
technical specifications for each of the allowable monitoring systems
and provides replicable procedures for the approval of any alternative
monitoring system. See 40 CFR 51.165(f)(12) and 51.166(w)(12). The
submitted Flexible Permit Program, in contrast, is generic concerning
the types of monitoring that is required rather than identifying the
employment of specific monitoring approaches, providing the technical
specifications for each of the specific allowable monitoring systems,
and requiring replicable procedures for the approval of any alternative
monitoring system. It also lacks the replicable procedures that are
necessary to ensure that (1) adequate monitoring is required that would
accurately determine emissions under the Flexible Permit cap, (2) the
Program is based upon sound science and meets generally acceptable
scientific procedures for data quality and manipulation; and (3) the
information generated by such system meets minimum legal requirements
for admissibility in a judicial proceeding to enforce the Flexible
Permit.
    The Federal Flexible Air Permit Rule, although it is not a NSR SIP
program but

a Title V program that provides for an alternative NSR SIP approach, is
a cap program but it too requires replicable methodologies and
sufficient MRR requirements. The submitted Program does not contain a
replicable methodology for establishing the emissions cap and
sufficient MRR requirements. See 74 FR 48480, at 48490, 48491-48492,
and 48492-48493; and sections III.D.3 and IV.C, for further
information. Finally, see section III.D.3 (response to comment 4)
concerning MRR for the proposed Indian Country Minor NSR rule.
    Comment 7: GCLC, TIP, BCCA, and TCC comment that EPA ignores the
fact that the Texas Flexible Permit Program has had a significant
impact on improving air quality in Texas. TCEQ commented that
significant emission reductions have been achieved by the submitted
Program through the large number of participating grandfathered
facilities, which resulted in improved air quality based upon the
monitoring data.
    BCCA, TAB, TxOGA, and ERCC comment that the legal standard for
evaluating a SIP revision for approval is whether the submitted
revision mitigates any efforts to attain compliance with a NAAQS. EPA's
failure to assess the single most important factor in the submitted
Program, the promotion of continued air quality improvement, is
inconsistent with case law and the Act and is a deviation from the SIP
consistency process and national policy. EPA should perform a detailed
analysis of approved SIP programs through the United States and
initiate the SIP consistency process within EPA to ensure fairness to
Texas industries.
    Response: We are disapproving the submitted Program because it is
not enforceable, it lacks an objective, replicable methodology for
establishment of the emissions caps, it provides broad director
discretion concerning whether or not to include a MRR condition in a
Flexible Permit, lacks sufficient MRR requirements, is ambiguous
regarding circumvention of Major NSR, and there is not sufficient
information to enable EPA to make a finding that the submitted Program
will protect the NAAQS and control strategies. EPA is required to
review a SIP revision submission for its compliance with the Act and
EPA regulations. CAA 110(k)(3); See also BCCA Appeal Group v. EPA, 355
F 3d. 817, 822 (5th Cir. 2003); Natural Resources Defense Council, Inc.
v. Browner, 57 F.3d 1122, 1123 (D.C Cir. 1995). Also see section III.A
(response to comment 6) for further information.
    Even if the commenters' premises are to be accepted, they fail to
substantiate their claim that the Texas Flexible Permit Program has had
a significant impact on improving air quality in Texas by producing
data showing that any such gains are directly attributable to the
submitted Program, and are not attributable to the SIP-approved control
strategies (both State and Federal programs) or other Federal and State
programs. They provide no explanation or basis for how their numbers
were derived. Moreover, since the submitted Program is not enforceable,
claims of emission reductions are not assured on a continuous basis.
    EPA is not required to initiate the SIP consistency process within
EPA unless the pending SIP revision appears to meet all the
requirements of the Act and EPA's regulations but raises a novel issue.
EPA is disapproving the submitted Program because it fails to meet the
Act and EPA's regulations. Because the submitted Program fails to meet
the requirements for a SIP revision, the SIP consistency process is not
relevant.
    Furthermore, since the commenters thought EPA was acting
inconsistently, they should have identified SIPs that are inconsistent
with our actions and provided technical, factual information, not bare
assertions.
    Comment 8: BCCA and ERCC comment that the concepts embedded in the
Program have been part of the Title V, NSR, and PAL programs for many
years and were upheld as consistent with the Clean Air Act by the U.S.
Supreme Court in Chevron v. NRDC, 467 S.C. 837 (June 25,1984). Texas'
Program is actually more stringent than EPA's interpretation of the NSR
program upheld by the Supreme Court.
    Response: The U.S. Supreme Court found, in the cited case, that the
pertinent legislative history was silent on the precise issue of the
bubble concept as it related to what constituted a major stationary
source and found that EPA should have wide discretion in implementing
the policies of the 1977 amendments. Id at 862. This opinion is not
relevant to EPA's grounds for disapproving the submitted Program. Not
only is it not relevant but none of the concepts cited by the
commenters was before the Court in Chevron. EPA's disapproval is not
based on a per se finding that a preconstruction program based on
emissions caps is unacceptable or more or less stringent than the SIP
requirements. We are disapproving the submitted Program because it is
not enforceable, it lacks a replicable methodology for establishment of
the emissions caps, it provides broad director discretion concerning
whether or not to include a MRR condition in a Flexible Permit, lacks
sufficient MRR requirements, and there is not sufficient information to
enable EPA to make a finding that the submitted Program will protect
the NAAQS and control strategies. See section III.A (response to
comment 6) for further information.

B. Whether the Flexible Permits Program Is Clearly a Minor, not a
Major, NSR SIP Revision

    Comment 1: TCEQ comments that though it has always considered the
Flexible Permit Program to be a Minor NSR program, this fact is not
specifically stated in the rule. TCEQ, nevertheless, asserts that its
implementation of the Program includes a review process that always
determines the applicability of Federal Major NSR, as well as any other
Federal and State requirements. The TCEQ states that it understands
EPA's concerns regarding, among other things, applicability, clarity,
enforceability, replicable procedures, recordkeeping, and compliance
assurance.
    Response: We acknowledge TCEQ's description that it intends to
implement the submitted Program in such a manner that the submitted
Flexible Permit Program does not supersede the duty to comply with the
Texas Major NSR SIP. In contrast to the submitted Program, however, in
its Minor NSR SIP for Permits by Rule and Standard Permits, TCEQ
included additional regulatory language that explicitly prohibits the
use of the Permits by Rule alternative permit program and the Standard
Permits alternative permit program from being used for major stationary
sources and major modifications and explicitly prohibits circumvention
of the Major NSR requirements.\1\ Specifically, the Standard Permits
and Permits by Rule NSR SIP rules explicitly require a Major NSR
applicability determination at 30 TAC 116.610(b) and 30 TAC
106.4(a)(3). In each, the State specifically expressed its intention to
require a Major NSR applicability determination. The Flexible Permits
Program is also an alternative permit program. If the State wishes for
it to be considered as solely a Minor NSR SIP revision submittal, the
TCEQ should have included express language stating that it explicitly

prohibits the use of the Flexible Permit Program from being used for
major stationary sources and major modifications and explicitly
prohibits circumvention of the Major NSR requirements, as it did in the
two other Minor NSR alternative permit options. This submitted Program
lacks such language. While the inclusion of such specific language is
not ordinarily a minimum NSR SIP program element, we conclude that the
inconsistent treatment between the similar types of NSR programs
creates the potential for an unacceptable ambiguity about a permit
holder's obligations to continue to comply with the Major NSR
requirements.
---------------------------------------------------------------------------

    \1\ Although the Texas Minor NSR SIP rules for Permits by Rule
and Standard Permits remain acceptable for a Minor NSR SIP revision,
EPA is conducting a review of each individual Permit by Rule and/or
Standard Permit. EPA is conducting this review to ensure that the
TCEQ is implementing the SIP appropriately and that each such
individual Minor NSR SIP permit protects the NAAQS and control
strategies and is enforceable.
---------------------------------------------------------------------------

    EPA reviews a SIP revision submission for its compliance with the
Act and EPA regulations. CAA 110(k)(3). See also BCCA Appeal Group v.
EPA, 355 F 3d. 817, 822 (5th Cir. 2003); Natural Resources Defense
Council, Inc. v. Browner, 57 F.3d 1122, 1123 (D.C. Cir. 1995). This
includes an analysis of the submitted regulations for their legal
interpretation. The Program's rules are ambiguous and therefore
unapprovable. See 74 FR 48480, at 48485-48487 for further information.
    Comment 2: TCC notes that 30 TAC 116.711 identifies the use of
Flexible Permits as only a Minor NSR option and concludes that TCEQ's
rules therefore do not intend for the Flexible Permits Program to be an
equivalent to a Major NSR program.
    Response: We disagree that 30 TAC 116.711 identifies the use of
Flexible Permits as only a Minor NSR permitting option. Contrary to
commenter's assertion, this rule merely replicates certain general
permitting requirements that are also common to Subchapter B, that also
apply to all Texas Major and Minor NSR SIP permits. There are no
requirements or terms in 30 TAC 116.711 that expressly identify use of
Flexible Permits as only a Minor NSR option. As noted above in section
III.B (response to comment 1), the TCEQ should have included express
additional regulatory language prohibiting the use of the submitted
Program for Major NSR and explicitly prohibiting circumvention of the
Major NSR requirements, as it did in the two other Minor NSR SIP
alternative permit options.

C. Whether the Flexible Permits Program Meets the Requirements for a
Substitute Major NSR SIP Revision

1. General Comment on Whether the Program Is a Substitute Major NSR SIP
Revision
    Comment: TCEQ comments that it did not view the Flexible Permit
Program as a substitute Major NSR SIP revision when it adopted it nor
does it wish for it to be considered as a SIP revision submittal for a
substitute Major NSR SIP revision. It has always viewed the Program as
a Minor NSR program. In its implementation of the Program, TCEQ
comments that it requires a Federal applicability demonstration but
acknowledges that the submitted Program's rules are not clear on this
point. TCEQ states that it will confirm through upcoming rulemaking and
SIP revision that the Program is not a substitute Major NSR SIP
revision.
    Response: EPA appreciates TCEQ's statement that it does not view
its Flexible Permit Program as a substitute Major NSR SIP revision
submittal. However, EPA must review the content of the Program as
submitted for inclusion into the Texas SIP. The submitted Program is
ambiguous when compared to the regulatory structure of existing similar
Texas Minor NSR SIP programs, as it contains no express provision that
clearly limits the Program to Minor NSR and no explicit provision that
prohibits circumvention of the Major NSR SIP requirements. See 74 FR
48480, at 48488 and section III.B (response to comment 1) of this
notice for further information.
2. Requirements for Major NSR Applicability Determinations
    Comment 1: Although TCEQ comments that the Flexible Permit Program
requires that the applicability of Major NSR requirements be evaluated
prior to considering whether the new construction or modification can
be authorized under a Flexible Permit, TCEQ also comments that it
understands EPA's concerns with issues regarding Major NSR
applicability vis a vis the submitted Program, based upon the
application of today's legal requirements. TCEQ undertakes to consider
rulemaking to ensure Major NSR applicability requirements are included
in Flexible Permit reviews, and that the requirements of the
appropriate Major NSR permitting program are met when triggered.
    Response: EPA appreciates TCEQ's understanding that the Program
lacks clarity on the issue of the applicability of Major NSR
requirements and that the State plans to revise its rules to ensure it
is clear that the Major NSR applicability determination requirements
are required before one can use the Program, and that the requirements
of the appropriate Major NSR permitting program are met when triggered.
Nonetheless, EPA must review the content of the Program as submitted
for inclusion into the Texas SIP. The submitted Program's regulations
do not contain any emission limitations, applicability statement, or
regulatory provision restricting the construction or change to Minor
NSR as was included in the SIP rules for Standard Permits and Permits
by Rule. See section III.B (response to comment 1) for additional
information.
    Comment 2: TAB, TxOGA, TIP, and BCCA comment that there are
safeguards in the Texas Flexible Permit rules at 30 TAC 116.711(1),
(8), (9), 116.718, and 116.720 that constrain regulated community from
making major changes without complying with Major NSR requirements.
    Response: The regulations cited by the commenters do not explicitly
require sources to comply with the Major NSR rules. 30 TAC 116.711(1)
provides for protection of public health and welfare and does not
address applicability of Major NSR. 30 TAC 116.711(8) and (9) generally
require compliance with all applicable requirements for nonattainment
and PSD review within that Chapter of the rules. Despite commenters
contentions there are no express terms or requirements within the cited
rules that compel a Major NSR applicability determination. The cited
regulations do not contain any emission limitations, applicability
statement, or regulatory provision restricting the construction or
change to Minor NSR or clearly prohibiting circumvention of Major NSR,
as was included in the SIP rules for Standard Permits and Permits by
Rule. The absence of such provisions in the submitted Flexible Permit
rules creates an unacceptable ambiguity. 30 TAC 116.718 and 116.720 do
not address Major NSR. See section III.B (response to comment 1) for
additional information.
    Comment 3: ERCC comments that the concepts embedded in the Flexible
Permit Program have been a part of the NSR program for many years and
are well-settled law. The fact that the emission rates used in the
calculation of the cap(s) are reflected in a ``bubble'' permit is of no
consequence and is consistent with applicable statutory and regulatory
requirements under the Clean Air Act.
    The submitted Program explicitly requires any new source or major

modification that is applying for a Flexible Permit to go through Major
NSR review and if necessary, have the Flexible Permit altered.
    Response: EPA disagrees with these comments. First, the submitted
Program has not been a part of the Texas NSR SIP ``for many years.''
Therefore, it is not ``well-settled law.'' Furthermore, any source
operating under a Flexible Permit risks potential Federal enforcement
action. Second, it is being disapproved today because of not meeting
the Federal NSR SIP requirements, not because it embeds the concepts of
a cap program. The commenter's comments are also at odds with TCEQ's
comments. TCEQ comments that its Program is intended to be a Minor NSR
SIP program only and not intended to address Major NSR SIP
requirements. In contrast, the commenter describes the submitted
Program as covering major modifications and having a Flexible Permit
(not a Major NSR SIP permit) altered to reflect the Major NSR review.
TCEQ disputes this concept in its comments. See our response to TCEQ's
comments section III.C.3 (response to comment 1).
3. Circumvention of Major NSR
    Comment 1: TCEQ comments that it understands EPA concerns regarding
the ``the lack of specificity'' in its rules but maintains that the
Program does not circumvent Federal Rules. TCEQ maintains that its
implementation of the submitted rules includes Federal applicability
review that includes determination of actual rates, project emission
increases, and net emission increases. It also includes BACT analysis
to establish the cap, NAAQS and increment analysis if PSD is triggered;
and LAER and offsets if Nonattainment Review is triggered. TCEQ states
that its implementation also includes a Federal Major NSR Review which
is conducted parallel with the Minor NSR Review and TCEQ does not allow
applicant to use Flexible Permits to circumvent Major NSR. TCEQ plans
to confirm EPA's concerns in future rulemaking.
    Response: EPA appreciates TCEQ's understanding of its concerns
regarding the ``lack of specificity.'' While it is commendable that
TCEQ may implement the Program in a manner consistent with the Federal
Major NSR requirements, we cannot approve the Program as submitted. See
CAA 110(k)(3). See also BCCA Appeal Group v. EPA, 355 F 3d. 817, 822
(5th Cir. 2003); Natural Resources Defense Council, Inc. v. Browner, 57
F.3d 1122, 1123 (D.C. Cir. 1995). Moreover, relying upon an agency to
continue to implement a program consistently with the Federal
requirements even though not constrained to do so by its rules, makes
EPA, the agency, industry, and the public vulnerable to the agency's
unfettered discretion to change how it implements its program.
    In this instance, there is no express provision in the submitted
Subchapter G similar to the Minor NSR SIP provisions for Minor NSR SIP
Permits by Rule and Standard Permits that prohibit circumvention of the
Major NSR requirements. Both the SIP-codified rules for Permits by Rule
and the SIP-codified rules for Standard Permits contain clear
regulatory provisions prohibiting the use of these Minor NSR permits
from circumventing Major NSR. There are no regulatory provisions
prohibiting circumvention of Major NSR in the submitted Chapter 116,
Subchapter G, for Flexible Permits. See 74 FR 48480, at 48488 and
section III.B (response to comment 1) for further information. The BACT
analysis that TCEQ references for establishing the cap upon a plain
reading of the rules and the associated Texas Registers means the Texas
Minor NSR SIP BACT requirement, not the PSD Major NSR SIP BACT
requirement. The failure to distinguish in the Program's rules that it
is Minor NSR SIP BACT that is used to create the cap contributes to the
confusion of the reach of the Program.
    Comment 2: TCC and ERCC comment that the Flexible Permit Program
does not circumvent Major NSR review. The Program is explicit in that
any new major stationary source or major modification must go through
Major NSR and the Flexible Permit must be altered. See 30 TAC 116.805.
Moreover, the Flexible Permits employ two emissions cap, an initial cap
and a final cap, which combine to ensure that the Major NSR permitting
requirements are not circumvented.
    Response: EPA disagrees with commenters. Unlike the Texas Minor NSR
SIP rules for Permits by Rule and Standard Permits, the submitted
Program's regulations do not contain any express regulatory provision
that prohibits circumvention of the Major NSR requirements. This lack
of such express provisions distinguishes the Flexible Permit Program
and contributes to its nonapprovability. See 74 FR 48480, at 48488, and
section III.B (response to comment 1) of this notice. Furthermore, the
referenced 30 TAC 116.805 does not add an explicit requirement to the
submitted Program. Rather, it applies to a separate class of Existing
Facility Flexible Permits that is severable from the Flexible Permits
Program.
4. Use of Allowable Emissions in Major NSR
    Comment: TCC, TAB, and TxOGA comment that when TCEQ is evaluating
emissions increases on a project level, the Program requires the use of
actual baseline emissions to determine whether a project will result in
an increase that triggers Major NSR applicability. TCC further states
that the application of BACT to facilities subject to the emission cap
results in an allowable that is lower than the pre-change actual
emissions.
    Response: As noted above in the preceding response, EPA must
evaluate the submitted Program based upon the content of the
regulations and associated record that have been submitted and are
currently before EPA for appropriate approval or disapproval action.
The commenters are not clear whether they are referring to PSD BACT or
the Texas Minor NSR SIP BACT. This lack of specificity by industry
contributes to EPA's concerns about whether the submitted Program is
clearly limited to Minor NSR. We recognize that the application of
either type of BACT to facilities subject to the emission cap could
result in allowable emissions that are lower than the pre-change actual
emissions at the initial issuance of a Flexible Permit. However, the
commenter provided no information to show a comparison of actual
emission to potential to emit for changes that occur after the Flexible
Permit is issued to evaluate that the net emission increase is based
upon changes from baseline actual to either projected actual emissions
or potential to emit. In such case, the baseline actual emissions
resulting from such proposed change must be established as provided
under applicable Federal requirements. See 40 CFR 51.165(a)(2)(ii) and
(a)(1)(vi)(A)(2) and 51.166(a)(7)(iv)(c)-(d) and (b)(3)(i)(b).
Accordingly, there are no provisions in the Program that require the
use of actual baseline emissions to determine whether a project will
result in an increase that triggers Major NSR applicability. See 74 FR
48480, at 48489-48490, for further information.
5. Retention of Major NSR Permit Terms and Conditions
    Comment: TAB, ERCC, and TxOGA comment that the submitted Program
requires that conditions of an existing PSD or Nonattainment permit be
carried forward into a Flexible Permit. The submitted Program does not
``void'' the pre-existing Major NSR SIP permits.

    Response: The submitted Program does not explicitly provide that
the holder of a Flexible Permit still be required to continue to comply
with all of the terms and conditions in the pre-existing Major NSR SIP
permits. Federal NSR SIP regulations do not provide for a blanket
elimination of emission limits at individual units. The submitted
Program does not assure the retention of the pre-existing Major NSR SIP
permits' terms and conditions.
    EPA's long-held position is that permits issued under federally
approved PSD, NNSR, and Minor NSR SIP programs must remain in effect
because they are the legal mechanism through which the underlying NSR
requirements (from the Act, Federal regulations, and federally approved
SIP regulations) become applicable, and remain applicable, to
individual sources. NSR programs enable the relevant permitting
authority to impose source-specific NSR terms and conditions in legally
enforceable permits, and provide states, EPA, and citizens with the
authority to enforce these permits. SIP-approved permits impose
continual operational requirements and restrictions upon a source's air
pollution activities and, accordingly, may not expire so long as the
source operates.\2\
---------------------------------------------------------------------------

    \2\ See EPA Letter from John Seitz, Director, Office of Air
Quality Planning and Standards, to Robert Hodanbosi and Charles
Lagges, STAPPA/ALAPCO, dated May 20, 1999.
---------------------------------------------------------------------------

    The lack of enforceability and adequacy of the MRR requirements in
the submitted Program contributes to EPA's concern that not all of the
conditions of a PSD or NNSR SIP permit existing before the issuance of
a Flexible Permit were carried forward into the Flexible Permit fully
and completely. See section III.A (response to comment 6) for further
information. The submitted Program does not meet the requirements of
section 110(a)(2)(A)-(C) of the Act, which requires that SIP revision
submittals be enforceable. Section 116.711(2) of the submitted Program
provides that emissions will be measured ``as determined by the
executive director.'' This broad discretion lacks accountability,
replicability and fails to provide for a full evaluation of the
enforceability of permits issued under the Program. We are concerned
with the broad director discretion whether to include MRR requirements
in a Flexible Permit and the lack of adequacy of the MRR requirements
in the submitted Program.\3\ EPA has interpreted the Act's requirements
for enforceability as specifying that SIP revision submittals must
``specify clear, unambiguous, and measurable requirements.'' See 57 FR
at 13567. There must be legal means in a SIP revision for ensuring
compliance when conditions of an existing PSD or Nonattainment permit
are carried forward in a Flexible Permit. The submitted Program does
not contain sufficient enforceable means. This submitted Program is an
intricate program, thus to be approved as a Major (as well as a Minor)
NSR SIP revision, it requires detailed MRR requirements in order to
ensure, among other things, that a project triggering the Major NSR SIP
requirements is covered under Major NSR or there are adequate means for
ensuring compliance of each affected entity.
---------------------------------------------------------------------------

    \3\ EPA's letter of March 12, 2008, on pages 12 to 13 of the
Enclosure provides some examples of, and concepts on how to
establish replicable recordkeeping, reporting, tracking, and
monitoring requirements up-front in a NSR program without requiring
every director discretion decision to be adopted and submitted to
EPA for approval as a source-specific SIP revision.
---------------------------------------------------------------------------

    Without clear, objective, requirements in the submitted Program for
retaining and distinguishing the Flexible Permits terms and conditions
from the Texas Major NSR SIP permits terms and conditions, the
submitted Program lacks clear, unambiguous, and measurable requirements
necessary for approval as a SIP revision. The submitted Program does
not ensure the retention of the pre-existing Major NSR SIP permits'
terms and conditions.
6. Protection of the NAAQS Attainment Under Major NSR
    Comment: The Clinic comments that the Program represents a
relaxation of the current SIP and is inadequate to assure protection of
the NAAQS, increments, and control strategies.
    Response: Without the required demonstration from the State showing
how the customized Major NSR SIP revision is in fact as stringent as
EPA's Major NSR revised program and without, among other things, an
objective, replicable methodology for establishing the emission cap,
the too broad director discretion provision for whether or not to
include MRR conditions in a Flexible Permit, the lack of sufficient MRR
requirements for this type of permit program, and the lack of
enforceability of the submitted Program, EPA lacks sufficient
information to make a finding that the submitted Program, as a
substitute for a Major NSR SIP program, will ensure protection of the
NAAQS, and noninterference with the Texas SIP control strategies and
RFP, as required by section 110(l) of the Act. See section III.A
(response to comment 6) for further information.

D. Whether the Flexible Permits Program Meets the Requirements for a
Minor NSR SIP Revision

1. Applicability for a Minor NSR Program
    Comment 1: The Clinic comments that the Flexible Permit rules do
not include adequate provisions for ensuring that changes that should
trigger Major NSR are subject to technology and air quality analysis
requirements.
    Response: EPA agrees with this comment. See section III.B
(responses to comments 1 and 2), section III.C.1 (response to comment),
and section III.C.2 (responses to comments 1, 2, and 3), and section
III.C.3 (responses to comments 1 and 2) for further information.
    Comment 2: TCC comments that the Flexible Permit authorization
method used at a source does not exempt any facilities located at a
source from Major NSR permitting requirements. If a source has a
Flexible Permit that does not contain all the facilities located at
that source and a project within the Flexible Permit triggers netting,
all facilities (under the cap and outside the cap) at the source are
evaluated to determine whether a net significant emissions increase at
the source has occurred. If a resulting net emissions increase is
significant, Major NSR is triggered.
    Response: We disagree with this comment. See section III.D.1
(response to comment 1, above) for further information.
    Comment 3: TIP, BCCA, and TCC comment that TCEQ rules provide two
separate ``modification'' definitions. The first is at 30 TAC
116.12(18) for Major NSR applicability. The second is at 30 TAC
116.10(11) for Minor NSR sources and does not limit its scope to
federally regulated pollutants. EPA applies the term ``modification''
differently in the Minor NSR context and the Major NSR context.
Therefore, it also is within Texas's discretion to define the term
differently for purposes of Minor NSR. Citing the EAB in In re
Tennessee Valley Authority, 9 EAD 357,461 (EAB Sept. 15, 2000)
commenters maintain that Texas has the discretion to define the term
differently for purposes of Minor NSR.
    Response: EPA acknowledges that that TCEQ defines the term
``modification'' differently for Major NSR and for Minor NSR. However,
the submitted Program does not specifically state which definition of
modification it uses the one for Major NSR or the one for Minor NSR.
This contributes to making the submitted Program not clear

on its face that the Major NSR applicability requirements must be
evaluated and met when triggered and that the State is required under
its submitted Program to apply the Major NSR applicability concepts
during the technical review of a Flexible Permit. Therefore based upon
the ambiguities in the Program's rules, we disagree that the Flexible
Permit Program is exclusively a Minor NSR program. EPA is required to
review a SIP revision submission for its compliance with the Act and
EPA regulations. This includes an analysis of the submitted regulations
for their legal interpretation. The Program's rules are ambiguous and
therefore do not adequately prohibit use under Major NSR. See section
III.B (response to comment 1) for further information.
2. Establishment of the Emission Cap Under Minor NSR
    Comment: TIP and BCCA comment that the submitted Program's rules do
contain an established and replicable method for determining an
emissions cap. TAB and TxOGA comment that EPA provides no example of
any unsuccessful attempt to replicate an emission cap using the current
TCEQ rules. TAB and TxOGA comment that the submitted Program requires
that each Flexible Permit establish a cap by simple summation of BACT
emission rates. Each Flexible Permit involves the summing of BACT
emission rates. While BACT determinations may vary between specific
types of sources, the use of Federal and State BACT guidance results in
a replicable procedure for establishing caps. In addition, the
authorization under a Flexible Permit has no effect on sources or
pollutants not covered in the Flexible Permit for a particular site.
Both sources and emissions that are not incorporated into a Flexible
Permit are subject to whatever rules or authorizations are in effect or
should be applied to those emissions. An applicant for a Flexible
Permit is required to meet BACT standards as applicable to all
facilities individually contributing to an emission cap. In addition to
an emission cap, a Flexible Permit may also impose individual emission
limits where necessary to ensure satisfaction of off site screening
levels of hazardous air pollutants or NAAQS for criteria pollutants, or
to prevent violation of any Federal permitting requirement.
    Response: The proper scope of review for this SIP revision
submittal does not include a review of the State's individually issued
Flexible Permits to determine whether there are replicable caps in each
permit. Instead, EPA's review is focused on the structure of the
submitted Program, ensuring that it includes legally sufficient
objective and replicable criteria for establishment of the cap in each
Flexible Permit and information submitted by the State to demonstrate
that the program meets the requirements of the Act. Review based on the
submittal, rather than improper implementation, is necessary to ensure
that as structured the submitted Program does not interfere with NAAQS
attainment, the Texas SIP control strategies, and RFP, and is
enforceable pursuant to section 110(a) (2)(A)-(C) of the Act. The
September 23, 1987, Memorandum from J. Craig Potter, Assistant
Administrator for Air and Radiation, and Thomas L. Adams Jr., Assistant
Administrator for Enforcement and Compliance Monitoring, entitled
``Review of State Implementation Plans and Revisions for Enforceability
and Legal Sufficiency'' provides EPA's guidance for interpreting this
provision in the Act. A copy of this document is in the docket at
document ID EPA-R06-OAR-2005-TX-0032-0022.\4\ See also the ``General
Preamble for the Implementation of Title I of the Clean Air Act
Amendments of 1990,'' (GP) 57 FR 13498 at page 13556 (April 10, 1992).
---------------------------------------------------------------------------

    \4\ You can access this document directly at: http://
www.regulations.gov/search/Regs/
home.html#documentDetail?R=0900006480a2bccd.
---------------------------------------------------------------------------

    The submitted Program establishes a cap in a Flexible Permit that
is a summation of BACT requirements (or a more stringent requirement if
applicable). The submitted rules are not clear as to how the State does
the summation. Even the State fails in its comment letter to clarify
whether the cap includes the summation of not only the minor stationary
sources and minor modifications but also the major stationary sources'
and major modifications' emissions limitations. This failure to clarify
the methodology for the establishment of the cap contributes to the
ambiguity of the submitted Program. Specific, objective, and replicable
criteria are to be set forth for determining the emissions cap.
    The commenter states that if a source or emissions are not covered
under a Flexible Permit, then they are subject to whatever rules or
authorizations are in effect or should be applied to those emissions.
EPA is however concerned that it is not clear which facilities are
covered by a Flexible Permit. The submitted Program does not clearly
delineate which emissions are covered by a Flexible Permit. EPA
proposed disapproval because the submittal lacks specific, established,
replicable procedures providing available means to determine
independently how the source or the State will calculate an emission
cap; determine the coverage of a Flexible Permit; establish individual
emissions limitations for each site, a facility on the site, a group of
units on the site; or for one pollutant but not another. Without a
clearly defined replicable process for determining what the process is,
and how the emission cap is adjusted for the addition of new
facilities, the public and EPA cannot independently calculate an
emission cap and reach the same conclusions as the State. Therefore,
the submitted Program is unapprovable. This conclusion was reached
based on our review of the submitted Program pursuant to the CAA.
3. Enforceability of a Minor NSR Program
    Comment 1: TCEQ comments that although the submitted rules do not
specify special conditions that ensure recordkeeping, reporting, and
testing to assure compliance with the Flexible Permit, the State issues
Flexible Permits containing special conditions requiring periodic stack
testing, continuous emissions monitoring, and other parametric
monitoring requirements, along with recordkeeping requirements to
ensure compliance with the Flexible Permit cap and BACT. Because of the
wide variety of industrial source types, TCEQ has carefully drafted its
rules to ensure it has the ability to adequately implement specific and
detailed MRR requirements. TCEQ will address EPA concerns in a
forthcoming rulemaking and SIP revision.
    Response: Although TCEQ plans in a future rulemaking action to add
specific conditions as part of the Program to address MRR requirements,
the submitted Program lacks these requirements. See section III.A
(response to comment 6) for further information. EPA must evaluate the
Program based upon the content of the regulations and associated record
that have been submitted and are currently before EPA for appropriate
approval or disapproval action. Any SIP revision must have adequate
recordkeeping, reporting, testing, and monitoring requirements to
assure there can be compliance with the submitted plan and ensure that
the plan is enforceable, as well as ensure that each affected entity
can be easily identified and that there are means to determine its
compliance. See New York I, 413 F.3d at 33-36. There is further
discussion in the General Preamble about EPA's interpretation of the
Act's requirements for enforceability and that submitted rules must
``specify clear, unambiguous,

and measurable requirements.'' See the GP 57 FR 13498 at page 13567.
    Comment 2: The City of Houston states that it has long opposed the
use of Flexible Permits. Quoting its comments on TCEQ's proposed
renewal of the Flexible Permit issued to a refinery in Houston, it
states that ``[t]he permit terms violate Federal law and are not
federally enforceable. This refinery (and others) could have sought
other SIP-approved permitting.'' The City of Houston also noted that
the structure of the Flexible Permit Program fails to assure compliance
with the Major NSR requirements and that these Flexible Permits are
essentially unenforceable. The City of Houston strongly supports the
EPA's decision to seek the changes necessary in the Flexible Permit
Program to make it federally enforceable, consistent with the CAA and
ensure that emissions are controlled and reduced from the State's
largest sources of pollutants.
    Response: EPA agrees with these comments. Texas has opted for a
program that allows the permit holder to select which new facilities
and/or new modifications to include under the umbrella of a Flexible
Permit. The submitted Program fails to provide clear criteria for
determining what type of MRR requirements are needed and furthermore
leaves the choice to the director, including whether to include any MRR
requirements in a Flexible Permit. See section III.A (response to
comment 6) for further information. Without the appropriate specialized
MRR requirements, it is generally impractical to determine for
instance, which emission points are covered, which modifications of
existing non-covered emission points are covered, etc. Texas also chose
to allow both a cap and an individual emission limitation to apply to
selected units, or just the cap, or just the individual emission
limitation. Without the appropriate MRR requirements, it is generally
impractical to determine if a covered unit is subject to the cap or an
individual emission limitation, if a unit is subject to both the cap
and a limitation, or whether a cap or a limitation applies at what
time. Further, there can be existing units on the site not covered
under the Flexible Permit cap that may be modified, and use the
provisions of the Flexible Permit Program for the modification. Without
replicable implementation procedures for establishing the emission cap
and sufficient MRR requirements, EPA cannot find that the submitted
Program is enforceable, as required by section 110(a)(2)(A) and (C) of
the Act. See 74 FR 48480, at 48492.
    The submitted Program lacks provisions explicitly addressing the
type of MRR requirements that are necessary to ensure that all of the
movement of emissions between the emission points, units, facilities,
plants, etc., still meet the cap for the pollutant, still meet the
individual emissions limitations, and still meet any other applicable
State or Federal requirement. In addition, there are no limits on the
types of sources that can be included in the cap. It is also difficult
to quantify emissions from some units, such as tanks, fugitive
emissions from leaking valves, or wastewater emissions points that can
be included in a Flexible Permit under this Program.
    Without specialized MRR requirements, it is difficult for EPA or
the public to determine which units are covered by a Flexible Permit,
which modifications to non-covered units are covered by a Flexible
Permit, whether a covered unit is subject to the emission cap or an
individual emission limitation, whether a unit is subject to both the
cap and a limitation, or whether a cap or a limitation applies and at
what time.
    Comment 3: TIP, BCCA, TAB, and TxOGA comment that the submitted
Program contains comprehensive and stringent provisions for monitoring,
recordkeeping, and reporting. These are more than adequate to ensure
compliance on the part of permit holders, enforceability by TCEQ, and
protection of public health. See 30 TAC 116.715(c). They require the
regulated community to monitor and submit information sufficient to
safeguard environmental quality.
    Response: EPA disagrees with commenters. The commenters failed to
point to any such specific provisions. The submitted Program lacks
adequate program requirements for the tracking of existing SIP permits'
major and minor NSR terms, limits and conditions, and whether such
requirements are incorporated into a Flexible Permit or they remain
outside the coverage of the Flexible Permit. Minor and Major NSR
permits, as well as Minor NSR SIP Permits by Rule and Standard Permits,
can be incorporated into a Flexible Permit without any program
requirement in place that ensures the SIP permits' terms and conditions
are included in the Flexible Permit. EPA finds that there are not
sufficient provisions requiring the holder of a Flexible Permit to
maintain recordkeeping sufficient to ensure that all terms and
conditions of existing permits (including representations in the
applications for such permits) that are incorporated into the Flexible
Permit continue to be met. Paragraph (c)(6) of submitted 30 TAC 116.715
generally requires maintenance of data sufficient to demonstrate
continuous compliance with emission caps and individual emission limits
contained in the Flexible Permit but lacks the necessary specificity
and replicability needed to ensure the enforceability of the submitted
Program and the protection of the NAAQS and control strategies. See
section III.A (response to comment 6) for further information.
    Comment 4: TIP, BCCA, TAB, and TxOGA note that TCEQ also may impose
additional recordkeeping requirements appropriate for a specific source
covered by a Flexible Permit. The submitted Program's rules contemplate
that additional recordkeeping requirements may be tailored to the type
of source covered by a Flexible Permit. TIP comments that the submitted
Flexible Permits rules are as stringent as EPA's proposed Indian
Country Minor NSR rules. This commenter claims that with respect to
emission events and maintenance, startup, and shutdown emissions (SSM),
the submitted rules go far beyond Federal benchmarks because they
require compliance with 30 TAC 101.201 and 101.211. Section 101.201
includes record-keeping requirements to report all reportable and non-
reportable emissions events within two weeks, which in the view of this
commenter is more stringent than the ``prompt'' reporting requirement
of the proposed Indian Country counterpart. Again citing Section
101.201, commenter claims the record retention requirements of the
submitted Program for records of reportable and non-reportable
emissions events are similar to their proposed Indian Country
counterparts.
    Response: EPA disagrees with this comment. Commenters' reliance
upon the Texas rules for malfunction emissions and maintenance,
startup, and shutdown emissions is misplaced. Section 101.201 concerns
Emissions Event Reporting and Recordkeeping Requirements; and Section
101.211 concerns Scheduled Maintenance, Startup, Shutdown Reporting and
Recordkeeping Requirements. These two referenced sections concern
emission events that are a subset of the universe of air emissions.
Emission events are unauthorized emissions by nature. See 30 TAC
101.1(28). Malfunction related emissions are those unauthorized
emissions that result from

a sudden and unavoidable breakdown of process or control equipment.\5\
---------------------------------------------------------------------------

    \5\ See Footnote 1 of the Attachment to the Memo entitled
``State Implementation Plans: Policy Regarding Excess Emissions
During Malfunctions, Startup, and Shutdown'' (September 1999 Policy)
from Steve Herman and Robert Perciasepe. You can access this
document at: http://epa.gov/ttn/oarpg/t5/memoranda/
exemmpol092099.pdf.
---------------------------------------------------------------------------

    EPA agrees that the submitted Program's rules contemplate that
additional recordkeeping requirements may be required (at the
discretion of the director). Yet as EPA noted in the proposal, the
submitted Program is an intricate program and therefore, for
approvability as a Major or Minor NSR SIP revision, there is a greater
need for detailed MRR requirements to ensure, among other things, there
are adequate means for ensuring compliance by each holder of a Flexible
Permit. Without detailed MRR requirements, the program is
unenforceable. The MRR requirements are needed additionally to ensure
that the issuance of the Flexible Permits does not cause or contribute
to a NAAQS violation, violate the Texas control strategy, or violate
any other CAA requirement. See 74 FR 48480, at 48490. The submitted
Program lacks provisions explicitly addressing the type of MRR
requirements that are necessary to ensure that all of the movement of
emissions between the emission points, units, facilities, plants, etc.,
still meet the cap for the pollutant, still meet the individual
emissions limitations, and still meet any other applicable State or
Federal requirement. In addition, there are no limits on the types of
sources that can be included in the cap. It is also difficult to
quantify emissions from some units, such as tanks, fugitive emissions
from leaking valves, or wastewater emissions points that can be
included in a Flexible Permit under this Program. The underpinnings of
the submitted Program are so complex as to necessitate more detailed
MRR requirements to ensure that the emission cap and/or individual
emissions limitations in the issued Flexible Permits are enforceable.
    Without the appropriate specialized MRR requirements, it is
generally impractical to determine for instance, which emission points
are covered, which modifications of existing non-covered emission
points are covered, etc. See section III.D.3 (response to comment 2)
for further information.
    Commenter's comparison of the submitted Program to EPA's proposed
Indian Country Minor NSR rules is misplaced in the context of this
action. As an initial point, we clearly stated in the proposed rule
that we did not intend for this regulation of national scope to serve
as a model or comparison for development of State Minor NSR programs.
See 71 FR 48695, at 48700 (August 21, 2006). EPA regulations require
that it review a Minor NSR SIP revision to determine if a plan includes
``legally enforceable procedures'' that enable the permitting agency to
determine whether a minor source will cause or contribute to violations
of applicable portions of the control strategy, 40 CFR 51.160(a)(1), or
``interference with a national ambient air quality standard,'' 40 CFR
51.160(a)(2), and to prevent the source from doing so, 40 CFR
51.160(b).
    We believe the reporting requirements we proposed for the Indian
Country Minor NSR rules will ensure protection of the NAAQS and control
strategy. Moreover, the standard of review in this instance is not a
comparison between the MRR provisions in the submitted Program and any
MRR provisions in the proposed Indian Country Minor NSR rules but a
determination whether the submitted Program has sufficient legally
enforceable procedures that enable the permitting agency to determine
whether a minor source will cause or contribute to violations of
applicable portions of the control strategy. As stated above, the
submitted Program lacks provisions explicitly addressing the type of
MRR requirements that are necessary to ensure that all of the movement
of emissions between the emission points, units, facilities, plants,
etc., still meet the cap for the pollutant, still meet the individual
emissions limitations, and still meet any other applicable State or
Federal requirement.
    Comment 5: TIP, BCCA, TAB, and TxOGA also point out that there is a
wide array of additional Texas rules specifying monitoring,
recordkeeping, and reporting requirements. For instance, the Texas
Flexible Permit rules also require compliance with section 101.201,
related to reporting and recordkeeping of malfunction emissions, and
section 101.211, related to reporting of maintenance, startup, and
shutdown emissions. Commenters claim that there are many detailed
monitoring, recordkeeping and reporting requirements that Flexible
Permit holders are subject to and there are indeed very explicit
requirements that adequately document the operations of sources covered
by Flexible Permits.
    Response: EPA disagrees with this comment. The submitted Program
does not have provisions explicitly specifying the monitoring
requirements for this Program.
    Without the appropriate specialized MRR requirements, it is
generally impractical to determine information such as which emission
points are covered, and which modifications of existing non-covered
emission points are covered. See section III.D.3 (response to comment
2) for further information. Without replicable implementation
procedures for establishing the emission cap and sufficient and MRR
requirements, EPA lacks sufficient information to make a finding 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.
    Further, commenters' reliance upon the Texas rules for malfunction
emissions and maintenance, startup, and shutdown emissions is
misplaced. Section 101.201 concerns Emissions Event Reporting and
Recordkeeping Requirements; and Section 101.211 concerns Scheduled
Maintenance, Startup, Shutdown Reporting and Recordkeeping
Requirements. These two referenced sections concern emission events
that are a subset of the universe of air emissions. Emission events are
unauthorized emissions by nature. See 30 TAC 101.1(28). Malfunction
related emissions are those unauthorized emissions that result from a
sudden and unavoidable breakdown of process or control equipment.\6\
EPA's concern with the structure of the Program and its lack of
specific MRR requirements is not with how malfunction and SSM emissions
are treated concerning MRR but with the emissions that are normally
emitted and how one can determine if the emitted emissions are meeting
the Flexible Permit's emission limitations. See section III.A (response
to comment 6) for further information.
---------------------------------------------------------------------------

    \6\ See Footnote 1 of the Attachment to the Memo entitled
``State Implementation Plans: Policy Regarding Excess Emissions
During Malfunctions, Startup, and Shutdown'' (September 1999 Policy)
from Steve Herman and Robert Perciasepe. You can access this
document at: http://epa.gov/ttn/oarpg/t5/memoranda/
exemmpol092099.pdf.
---------------------------------------------------------------------------

    As EPA noted in the proposal, the submitted Program is an intricate
program and therefore, for approvability as a Major or Minor NSR SIP
revision, there is a greater need for detailed MRR requirements whether
to ensure, among other things, that a project triggering the Major NSR
SIP requirements is covered under Major NSR or there are adequate means
for ensuring compliance by each holder of a Flexible Permit. These are
needed additionally to ensure that the issuance of the Flexible Permits
does not cause or contribute to a NAAQS violation, violate the Texas
control strategy, or violate any other CAA

requirement. See 74 FR 48480, at 48490, and section III.D.3 (response
to comment 4) for further information.
    Comment 6: TAB and TxOGA comment that the submitted Flexible Permit
rules provide for the enumeration of special conditions including
requirements for monitoring, testing, recordkeeping, and reporting
(MRR). Commenter also asserts that EPA does not include any analysis
that might lead one to understand what additional specificity or detail
is necessary, or how or why the many detailed requirements in TCEQ's
rules (specifically 30 TAC 101.10, 115.116, 117.801 and 111.111) are
inadequate.
    Response: EPA disagrees with this comment that the Agency has not
provided a reasonable basis for it findings. Appropriate MRR provisions
are necessary to establish how compliance will be determined and be
sufficient to ensure that the NAAQS and control strategies are
protected. There is further discussion in the General Preamble about
EPA's interpretation of the Act's requirements for enforceability and
that submitted rules must ``specify clear, unambiguous, and measurable
requirements.'' See 57 FR at 13567. The Program's rules do not contain
specific enumerated requirements for MRR. It is not legally sufficient
even if the State is issuing individual Flexible Permits with special
conditions requiring MRR. In order for the Program to be approvable as
a SIP revision, the Program itself must contain specific objective,
replicable MRR requirements that ensure compliance with all terms and
conditions of each Flexible Permit issued by the TCEQ. There are no
provisions providing clear criteria for determining what type of MRR
requirements are needed. The Program is too complex to leave the choice
of MRR requirements up to the individual issuance of a Flexible Permit,
and up to the discretion of the Executive Director of the TCEQ. EPA
finds such director discretion provisions are not acceptable for
inclusion in SIPs, unless each director decision is required under the
plan to be submitted to EPA for approval as a single-source SIP
revision. This Program does not contain specific, objective, and
replicable criteria for determining whether the Executive Director's
choice of MRR requirements will be effective in terms of
enforceability, compliance assurance, and ambient impacts. See 74 FR
48480, at 48490, and section III.A (response to comment 6) for further
information.
    Comment 7: TAB and TxOGA comment that EPA does not provide any
example of a permit or permits the review of which led to that
conclusion that absence of certain recordkeeping and reporting made it
difficult to derive information from Flexible Permits. TCC notes that
there is significant difference in the types of sources that apply for
a Flexible Permit; therefore, it is difficult for TCEQ to implement
rulemaking for every type of recordkeeping, monitoring and tracking
requirements that may apply. Attempting to incorporate these variable
components into one comprehensive rule could severely limit TCEQ's
ability to implement adequately these requirements. BCCA comments that
the Flexible Permit rules contemplate that additional recordkeeping
requirements many be tailored to the type of source covered by a
Flexible Permit making them as least as stringent as their Federal
counterparts. BCCA highlights a comparison to the proposed Indian
Country Minor NSR rules to make this point.
    Response: The proper scope of review for this SIP revision
submittal does not include a review of the State's individually issued
Flexible Permits to determine whether there are adequate recordkeeping
and reporting requirements in each permit. These Flexible Permits never
should have been issued since the submitted Program is not part of the
Texas NSR SIP. EPA's review is instead focused on the structure of the
submitted Program, ensuring that it includes legally sufficient
recordkeeping and reporting requirements. This is necessary to ensure
that not only does the submitted Program not interfere with NAAQS
attainment, the Texas SIP control strategies, and RFP, but the proposed
revision is enforceable pursuant to section 110(a))(2)(A)-(C) of the
Act. The September 23, 1987, Memorandum from J. Craig Potter, Assistant
Administrator for Air and Radiation, and Thomas L. Adams Jr., Assistant
Administrator for Enforcement and Compliance Monitoring, entitled
``Review of State Implementation Plans and Revisions for Enforceability
and Legal Sufficiency'' provides EPA's guidance for interpreting this
provision in the Act. See also the General Preamble at page 13566.
Submitted rules that are clear as to who must comply, and explicit in
their applicability to regulated sources are appropriate means for
achieving the statutory enforcement requirement. Specific, objective,
and replicable criteria are to be set forth for determining whether
this new type of NSR permit will be truly equivalent to the other minor
NSR SIP permits in terms of being consistent with the levels specified
in the control strategies, including air quality impacts, etc.
Appropriate testing, recordkeeping, reporting, and monitoring
provisions are necessary to establish how compliance will be determined
and be sufficient to ensure that the NAAQS and PSD increments are
protected. See 74 FR 48480, at 48492. Furthermore, any permitting rule
will apply to a variety of sources (unless it is a permit adopted
specifically for a source category and limited to that affected source
category).
    The submitted Program allows a Flexible Permit holder to
selectively include new facilities and/or new modifications under the
umbrella of a Flexible Permit. Without the appropriate specialized MRR
requirements, it is generally impractical to determine information such
as which emission points are covered, and which modifications of
existing non-covered emission points are covered. See section III.D.3
(response to comment 2) for further information. Submitted 116.711(7)
is an illustration of our concerns. It states that initial compliance
testing with ongoing compliance by engineering calculations ``may be
required.'' This means that under the Program, compliance testing may,
or may not, be required and provides no guidance for when monitoring
will be required. See section III.A (response to comment 6) for further
information.
    The submitted Flexible Permit Program does not compare favorably
with the MRR requirements that are proposed in the proposed Indian
Country Minor NSR rules. The proposed Indian Country Minor NSR Rules
would require the permit to include monitoring sufficient to assure
compliance with any control technology requirements contained in the
permit. Monitoring approaches may include continuous emission
monitoring systems, predictive emission monitoring systems, continuous
parameter monitoring systems, periodic manual logging of monitor
readings, equipment inspections, mass balances, periodic performance
tests, and/or emission factors, as appropriate for the minor source.
None of these monitoring approaches is addressed in the submitted
Program. The proposed Indian County Minor NSR Rules also would require
the permit to include recordkeeping sufficient to assure compliance
with enforceable emission limitations in the permit and require
retention of the records for five years from the date of the record.
The submitted Program lacks this specificity for the recordkeeping
requirements. The proposed Indian County Minor NSR Rules also would
require annual

monitoring reports showing whether the permittee has complied with the
permit emission limitations and prompt reports of deviations from
permit requirements, including those attributable to upset conditions,
probable cause of such deviations, and any corrective or preventative
measures taken. See 71 FR 48695, at 48715-48716 and 48738 (August 21,
2006). Thus even assuming such a comparison represented the proper
scope of review, the MRR provisions of the submitted Program do not
compare favorably to those in the proposed Indian Country Minor NSR
Program. The MRR provisions of the Texas Flexible Permit Program do not
contain this level of MRR or otherwise sufficient MRR provisions given
the features of the Program.
    Comment 8: The Clinic comments that there are no provisions for
ensuring that emission reductions are real, permanent, and enforceable.
    Response: Specific, objective, and replicable criteria are required
to be set forth for determining whether this new type of NSR permit
program will be truly equivalent to the other Minor NSR SIP permit
programs in terms of being consistent with the levels specified in the
control strategies, including air quality impacts, etc. Appropriate MRR
provisions are necessary to establish how compliance will be determined
and be sufficient to ensure that the NAAQS and Texas control strategies
are protected. Without replicable procedures for establishing the
emissions caps, the lack of enforceability, the director discretion
regarding whether or not to require MRR and the lack of sufficient MRR
requirements, EPA cannot be assured that the submitted Program does
indeed produce permanent emission reductions. See section III.A
(response to comment 6) for further information.
    Comment 9: The Clinic comments that the Flexible Permit rules fail
to assure that permits include enforceable limits, as required by the
Clean Air Act. There is no required monitoring or reporting to assure
compliance with the terms and conditions. Likewise, the Flexible Permit
rules fail to require adequate monitoring and reporting for those
emission limits and requirements that are included in the Flexible
Permit. The rules require measurement of emissions ``as determined by
the executive director.'' See submitted 30 TAC 116.711(2). They also
require that unspecified ``information and data sufficient to
demonstrate continuous compliance with the emission caps and individual
emission limitations contained in the flexible permit'' be kept at the
plant site and made available for TCEQ inspection. See submitted 30 TAC
116.715(c)(6). These requirements are clearly insufficient to
demonstrate compliance with emission caps applicable to dozens of
dissimilar emission units. For a program as complex as the Texas
Program, stringent monitoring must not be left up to the discretion of
the Executive Director. Instead, stringent monitoring and reporting
requirements must be required by regulation for all units covered under
a Flexible Permit. Because the Texas Flexible Permit is more complex
than either the PAL or the Green Groups proposal, it should include
monitoring at least as stringent as required by those rules.
    Response: EPA generally agrees with these comments. The submitted
Program does not meet the requirements of section 110(a)(2)(A)-(C) of
the Act, which require that SIP revision submittals be enforceable.\7\
There are no specific up-front methodologies in the submitted Program
to be able to determine compliance. There are no sufficient MRR
provisions in the submitted Program. Accordingly, the Program lacks
requirements necessary for enforcement and assurance of compliance.
There are no specific up-front methodologies in the Program to be able
to determine compliance. It fails to meet the enforceability
requirements as a program or for an affected source, and it cannot
assure compliance with the Program or by the holder of a Flexible
Permit. See 74 FR 48480, at 48490, section III.A (response to comment
6) for further information.
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    \7\ Section 116.711(2) of the submitted Program provides that
emissions will be measured ``as determined by the executive
director.'' This broad discretion lacks accountability,
replicability and fails to provide for a full evaluation of the
enforceability of permits issued under the Program.
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    Instead, MRR requirements appropriate for such a complex Program
must be required by regulation for all units covered under a Flexible
Permit. Whether or not to require MRR requirements in a Flexible Permit
should not be left to director discretion. This complex and intricate
Program, for enforceability purposes, requires sufficient MRR
requirements for each Flexible Permit. In the proposal, we stated that
we are concerned with the adequacy of the MRR requirements in the
submitted Program.\8\ This submitted Program is an intricate program
and therefore, for approvability as a NSR SIP revision, there is a
greater need for detailed MRR requirements whether to ensure that a
project triggering the Major NSR SIP requirements is covered under
Major NSR or to ensure that there are adequate means for ensuring
compliance of each affected entity under both Major and Minor NSR. See
section III.D.3 (response to comment 2) for further information.
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    \8\ EPA's letter of March 12, 2008, on pages 12 to 13 of the
Enclosure provides some examples of, and concepts on how to
establish replicable recordkeeping, reporting, tracking, and
monitoring requirements up-front in a NSR program without requiring
every director discretion decision to be adopted and submitted to
EPA for approval as a source-specific SIP revision.
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    Finally, the commenter stated that because the Texas Flexible
Permit Program is more complex than either the Federal PAL SIP rule or
the Federal Green Groups proposal, it should include monitoring at
least as stringent as required by those rules. EPA is not requiring
that the Program include the specific MRR as required or proposed for
another program. As stated above, to be approvable as a SIP revision,
the Program must contain specific, replicable MRR requirements that
ensure compliance with all terms and conditions of each Flexible Permit
issued by the TCEQ. See section III.C.6 (response to comment 2) for
additional information.
    Comment 10: The Clinic comments that the Program does not assure
that permit terms of pre-existing NSR permits remain as part of the
Flexible Permit and therefore enforceable. The Clinic provided
information on a refinery that had a PSD permit and subsequently
received a Flexible Permit from TCEQ. The PSD permit included emission
limits for two fluid catalytic cracking units (FCCUs). When the
Flexible Permit was issued, these emission limits in the PSD permit
were not included as separate from the limits in the Flexible Permit;
instead, the Flexible Permit included the FCCUs among the units subject
to the emission caps. When the refinery subsequently reported emission
events, it reported only the Flexible Permit and its associated caps as
the applicable limits, rather than the limits from the pre-existing
Major NSR SIP permits.
    Response: The submitted Program lacks adequate program requirements
for whether or not the terms and conditions of pre-existing Major and
Minor SIP permits are incorporated into a Flexible Permit or they
remain outside the coverage of the Flexible Permit. While the comments
on implementation of the submitted Program as related to a particular
source are not relevant to this action, they do highlight EPA's
concerns about why the submitted Program is not approvable. The
submitted Flexible Permit Program also lacks sufficient recordkeeping
provisions to ensure that all terms and conditions of pre-existing
Major and

Minor NSR SIP permits (including representations in the applications
for such permits) that are incorporated into the Flexible Permit
continue to be met. These underlying Major and Minor NSR SIP permits
remain legally enforceable but the lack of specificity in the submitted
Program impacts practical enforceability. See 74 FR 48493, and section
III.A (response to comment 6) and section III.D.3 (response to comment
11, below) for further information.
    Comment 11: A member of the Sierra Club cites to references from
the proposal that relate to the lack of appropriate MRR requirements in
the Program. An individual commenter states that as an air quality
investigator for the City of Houston Bureau of Air Quality Control,
investigating documentation of compliance for a Flexible Permit was
presented an entire roomful of binders, containing emissions
information for different sources under one cap. The company
representative said that this was the documentation of the company's
compliance with the Flexible Permit. Confronted with these practical
difficulties, the commenter was unable to determine the company's
compliance with its Flexible Permit Cap.
    Response: The EPA agrees with these comments. While the comments on
implementation of the submitted Program are not relevant to this
action, they do highlight EPA's concerns about why the submitted
Program is not approvable. The submitted Program lacks provisions
explicitly addressing the type of monitoring requirements that are
necessary to ensure that all of the movement of emissions between the
emission points, units, facilities, plants, etc., still meet the cap
for the pollutant, still meet the individual emissions limitations, and
still meet any other applicable State or Federal requirement. In
addition, there are no limits on the types of sources that can be
included in the cap. It is also difficult to quantify emissions from
some units, such as tanks, fugitive emissions from leaking valves, or
wastewater emissions points that can be included in a Flexible Permit
under this Program. This comment also highlights the lack of adequate
program requirements for the tracking of existing SIP permits' major
and minor NSR terms, limits and conditions, and whether such
requirements are incorporated into a Flexible Permit or they remain
outside the coverage of the Flexible Permit. This further highlights
the lack of MRR sufficient to establish how compliance will be
determined and to ensure that NAAQS and Texas control strategies are
protected. See 74 FR 40480, at 40493, section III.D.3 (responses to
comment 1, 2, 4, 5, 7, and 10, above), and section III.A (response to
comment 6) for further information.
4. Revocation of Major NSR Permits Under a Minor NSR Program
    Comment: The Clinic comments that Flexible Permits are used to
eliminate or amend existing Nonattainment NSR and PSD permit terms
without following SIP required procedures for permit amendments.
    Response: We are disapproving the submitted Program because it is
ambiguous and could be interpreted to allow holders of a Flexible
Permit to make de facto amendments of existing SIP permits, including
changes in the terms and conditions (such as throughput, fuel type,
hours of operation) of minor and major NSR permits, without a
preconstruction review by Texas. While we have recognized that under
certain circumstances changes to PSD permits may be appropriate, such
changes are generally not allowed without a review of the new
circumstances by the permitting authority. As EPA has explained, any
time a change to a permit limit founded in BACT is being considered, a
corresponding reevaluation (or reopening) of the original BACT
determination may be necessary. See, ``Request for Determination on
Best Available Control Technology (BACT) Issues--Ogden Martin Tulsa
Municipal Waste Incinerator Facility,'' from Gary McCutchen, Chief of
OAQPS NSR Section (Nov. 19, 1987). See 74 FR 40480, at 48493 and a copy
of the document is in the docket at document ID EPA-R06-OAR-2005-TX-
0032-0025.\9\
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    \9\ You can access this document directly at: http://
www.regulations.gov/search/Regs/
home.html#documentDetail?R=0900006480a2bd1d.
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5. Protection of the NAAQS Under a Minor NSR Program
    Comment: The Clinic comments that the submitted Flexible Permits
Program is inadequate to assure protection of the NAAQS, increments,
and control strategy.
    Response: Approval of the submitted Program as a Minor NSR SIP
revision requires that it include legally enforceable procedures that
enable the State to determine whether construction or modification by a
holder of a Flexible Permit would violate a control strategy or
interfere with attainment or maintenance of the NAAQS. See 40 CFR
51.160(a)-(b). Without a replicable methodology for establishing the
emissions caps, the lack of enforceability, the director discretion
concerning whether or not to require MRR conditions in a Flexible
Permit, and the lack of sufficient MRR requirements in the submitted
Program, EPA lacks sufficient information to make a finding 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. See 74 FR 48480, at 48490-48492, and section III.A (response
to comment 6) for further information.

E. Definition of Account

    Comment 1: TCEQ does not agree with EPA's understanding of the term
``account'' as applied by TCEQ. TCEQ maintains that it has included in
each of its permitting rules appropriate definitions to meet State and
Federal requirements. TCEQ interprets an ``account'' to include
multiple ``sources.'' Within this rule, it interprets ``sources'' as
being equivalent to multiple ``facilities'' (a facility is a discrete
piece of equipment or source of air contaminants) under Texas Minor
Source definitions. A Flexible Permit cannot cover more than one major
stationary source, as the term is used by EPA and TCEQ for Federal NSR
purposes.
    Response: We appreciate TCEQ's explanation of the terms
``account,'' ``facility'' and ``source'' as it intends them to apply in
the submitted Program. We are pleased to learn that the State does not
intend to allow a Flexible Permit to cover multiple major stationary
sources and that companies complying with a Flexible Permit understand
the continued obligation to comply with the SIP-approved Major NSR
program at all major stationary sources and major modifications.
Nonetheless, we believe that the definitions are not sufficiently
limiting to preclude issuance of a Flexible Permit to multiple major