[Federal Register Volume 79, Number 29 (Wednesday, February 12, 2014)]
[Proposed Rules]
[Pages 8368-8387]
[FR Doc No: 2014-03119]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R06-OAR-2013-0542; FRL-9906-37-Region 6]

Approval and Promulgation of Implementation Plans; Texas;
Revisions to the New Source Review State Implementation Plan; Flexible
Permit Program

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: The Environmental Protection Agency (EPA) is proposing to
conditionally approve revisions to the Texas New Source Review (NSR)
State Implementation Plan (SIP) submitted by the Texas Commission on
Environmental Quality (TCEQ) \1\ and its predecessor, the Texas Natural
Resource Conservation Commission (TNRCC), on November 29, 1994; March
13, 1996; July 22, 1998; October 25, 1999; September 11, 2000; April
12, 2001; July 31, 2002, September 4, 2002; October 4, 2002; September
25, 2003; July 2, 2010; October 5, 2010; and October 21, 2013. These
revisions to the Texas SIP establish the Flexible Permit Program. The
flexible permit program is a minor NSR permit program which functions
as an alternative to the traditional preconstruction permit program
that is authorized in Title 30 of the Texas Administrative Code (30
TAC) Chapter 116, Subchapter B. The flexible permit program is intended
to eliminate the need for owners or operators of participating
facilities to submit an amendment application each time certain types
of operational or physical changes are made at a permitted facility.
EPA is proposing to conditionally approve the Flexible Permit Program
as initially submitted in November 1994 and amended through the October
21, 2013, as consistent with federal requirements for minor NSR
programs. Final approval of the Texas Flexible Permit Program is
contingent upon TCEQ adopting and submitting to EPA an approvable SIP
revision addressing the commitments made by the TCEQ in its October 21,
2013, Flexible Permits Commitment Letter. EPA is proposing this action
under Section 110 and part C of the Clean Air Act (CAA or the Act).
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    \1\ On September 1, 2002, the Texas Legislature (House Bill
2912) formally changed the name of Texas Natural Resource
Conservation Commission to the Texas Commission on Environmental
Quality.

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DATES: Comments must be received on or before March 14, 2014.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-R06-
OAR-2013-0542, by one of the following methods:
     http://www.regulations.gov. Follow the online instructions
for submitting comments.
     Email: Ms. Stephanie Kordzi at<EMAIL_ADDRESS>     Fax: Ms. Stephanie Kordzi, Air Permits Section (6PD-R), at
fax number<PHONE_NUMBER>.
     Mail or delivery: Ms. Stephanie Kordzi, Air Permits
Section (6PD-R), Environmental Protection Agency, 1445 Ross Avenue,
Suite 1200, Dallas, Texas 75202-2733.
    Instructions: Direct your comments to Docket ID No. EPA-R06-OAR-
2013-0542. EPA's policy is that all comments received will be included
in the public docket without change and may be made available online at
http://www.regulations.gov, including any personal information
provided, unless the comment includes information claimed to be
Confidential Business Information (CBI) or other information the
disclosure of which is restricted by statute. Do not submit information
through http://www.regulations.gov or email, if you believe that it is
CBI or otherwise protected from disclosure. The http://www.regulations.gov Web site is an ``anonymous access'' system, which
means that EPA will not know your identity or contact information
unless you provide it in the body of your comment. If you send an email
comment directly to EPA without going through http://www.regulations.gov, your email address will be automatically captured
and included as part of the comment that is placed in the public docket
and made available on the Internet. If you submit an electronic
comment, EPA recommends that you include your name and other contact
information in the body of your comment along with any disk or CD-ROM
submitted. If EPA cannot read your comment due to technical
difficulties and cannot contact you for clarification, EPA may not be
able to consider your comment. Electronic files should avoid the use of
special characters and any form of encryption and should be free of any
defects or

viruses. For additional information about EPA's public docket, visit
the EPA Docket Center homepage at http://www.epa.gov/epahome/dockets.htm.
    Docket: The index to the docket for this action is available
electronically at www.regulations.gov and in hard copy at EPA Region 6,
1445 Ross Avenue, Suite 700, Dallas, Texas. While all documents in the
docket are listed in the index, some information may be publicly
available only at the hard copy location (e.g., copyrighted material),
and some may not be publicly available at either location (e.g., CBI).
To inspect the hard copy materials, please schedule an appointment with
the person listed in the FOR FURTHER INFORMATION CONTACT paragraph
below or Mr. Bill Deese at<PHONE_NUMBER>.

FOR FURTHER INFORMATION CONTACT: Ms. Stephanie Kordzi (6PD-R), Air
Permits Section, Environmental Protection Agency, Region 6, 1445 Ross
Avenue (6PD-R), Suite 1200, Dallas, TX 75202-2733. Telephone (214) 665-
7520, fax<PHONE_NUMBER>, email at<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION: Throughout this document whenever ``we,''
``us,'' or ``our'' is used, we mean EPA.

Table of Contents

I. Background for Our Proposed Action
II. Summary of State SIP Submittals for the Flexible Permit Program
    A. November 29, 1994 Submittal
    B. March 13, 1996 Submittal
    C. July 22, 1998 Submittal
    D. October 25, 1999 Submittal
    E. September 11, 2000 Submittal
    F. April 12, 2001 Submittal
    G. July 31, 2002 Submittal
    H. September 4, 2002 Submittal
    I. October 4, 2002 Submittal
    J. September 25, 2003 Submittal
    K. July 2, 2010 Submittal
    L. October 5, 2010 Submittal
    M. October 21, 2013 Submittal
    N. Overview of the Flexible Permit Program and Establishment of
the Emission Cap
III. What action is EPA proposing?
    A. What is a conditional approval?
    B. What are the commitments?
IV. EPA's Evaluation of the Texas Flexible Permit Program as a Minor
NSR Program
    A. Federal Requirements for Enforceability of the Minor NSR
Program
    1. Identifying the New Facilities and/or Modifications for
Inclusion in a Flexible Permit
    2. Inclusion of Appropriate Monitoring and Recordkeeping
Requirements in Flexible Permits
    3. Additional Elements Specific to Emissions Caps
    4. Provisions To Ensure the Flexible Permit Program Is a Minor
NSR Program
    5. Provisions To Ensure the Flexible Permit Program Demonstrates
Compliance
    B. Federal Requirements for Public Notice of Minor NSR
Permitting
    1. Overview of the Texas Public Participation Process for
Applications for New Flexible Permits and Flexible Permit Amendments
    2. Analysis of the Submitted Public Participation Rules for
Flexible Permits as Minor NSR Requirements
    3. Minor NSR Public Notice Requirements Specific to Two Types of
Minor NSR Flexible Permit Amendment Applications
    i. Identification of the Minor NSR Emission Thresholds and
Affected Source Populations
    ii. Discussion of the ``De minimis'' and ``Insignificant''
Thresholds for Minor NSR Flexible Permit Amendments
    4. How do the Texas Public Notice Provisions for Applications
for New and Amended Flexible Permits address the concerns identified
in EPA's November 26, 2008 Proposed Limited Approval/Limited
Disapproval for Texas public participation?
    5. Proposed Findings Specific to the Texas Public Participation
Provisions for the Flexible Permit Program
    C. Does proposed approval of the Texas Flexible Permit Program
interfere with attainment, reasonable further progress, or any other
applicable requirement of the act?
    D. TCEQ's Interpretive Letter
    E. Summary of EPA's Evaluation of the Flexible Permit Program as
a Minor NSR Program
    V. Proposed Action
    VI. Statutory and Executive Order Reviews

I. Background for 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 Permit
Program. On July 15, 2010, EPA took final action on that proposal
disapproving Texas' Flexible Permit Program. 75 FR 41312. This
disapproval action is the only action taken by EPA on the flexible
permit program. EPA has never taken any other action to approve the
flexible permit program submittals. Below is a summary of our grounds
for initially disapproving the Flexible Permit Program as a Minor NSR
SIP revision. We originally found that:
     It had no express regulatory prohibition clearly limiting
its use to Minor NSR and had no regulatory provision clearly
prohibiting the use of this submitted Program from circumventing the
Major NSR SIP requirements.
     It was not an enforceable NSR program.
     It lacked requirements necessary for enforcement and
assurance of compliance.
     It lacked the necessary more specialized monitoring,
recordkeeping and reporting (MRR) requirements required for this type
of Minor NSR program (a compliance emission cap) to ensure
accountability and provide a means to determine compliance.
     The types of monitoring were not specified in the rule.
     It lacked specific, established implementation procedures
for establishing the emissions cap in a Minor NSR Flexible Permit.
     It did not ensure the terms and conditions of Major NSR
SIP permits are retained. Holders of Major NSR SIP permits were not
prohibited from using the submitted Program's allowable based emissions
cap. The Clean Air Act prohibits the use of an allowable based cap for
Major NSR SIP permittees.
    For a more detailed discussion of our rationale for the disapproval
see 75 FR 41312 (July 15, 2010). Upon finalization of the rule several
parties appealed the decision to the Fifth Circuit Court of Appeals.
    In July and August of 2010 the State of Texas, Texas Oil & Gas
Association, Texas Association of Manufacturers, and Business Coalition
for Clean Air (BCCA) Appeal Group all filed petitions with the Fifth
Circuit Court of Appeals seeking to overturn EPA's disapproval of the
Flexible Permit Program. During the same time period the Environmental
Defense Fund (``EDF'') and Environmental Integrity Project (``EIP'')
moved for leave to intervene in support of EPA's disapproval. Their
request to intervene was granted by the Court. While the challenge was
pending, the state adopted a modified flexible permits regulation, but
did not submit it to EPA.
    On August 13, 2012, the Fifth Circuit Court of Appeals granted the
petitioner's review, vacated our disapproval of the Texas Flexible
Permit Program and remanded the matter back to EPA for further review.
After the Court remanded the Flexible Permit Rule to EPA, the State, in
a letter dated September 12, 2012, requested that we take action on the
original Flexible Permit program submittal package in accordance with
the ruling of the Fifth Circuit Court of Appeals. Following discussions
with EPA, on September 24, 2013, Texas formally adopted and approved
this SIP revision which is comprised of the original submittal that EPA
took its disapproval action on as well as rule additions that EPA
believes are essential to the program's approvability. On October 21,
2013, Texas formally submitted to EPA this proposed revision to the
SIP. EPA is today proposing to conditionally

approve the October 21, 2013, submittal.\2\
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    \2\ This October 21, 2013 submittal, including the Texas Order
dated September 26, 2013, and the accompanying cover letter
(available in the docket for this rulemaking), essentially resubmits
all relevant portions of the prior Flexible Permits submittals and
therefore constitutes the entire Flexible Permit Program.
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II. Summary of State SIP Submittals for the Flexible Permit Program

    The TCEQ has developed and submitted the Flexible Permit Program as
a series of revisions to the Texas minor NSR Permit program. The TCEQ
developed the Flexible Permit Program in 1994 and has adopted several
amendments and submitted these as revisions to the Texas minor NSR SIP
program since that time. As discussed in the Section I Background of
this rulemaking, EPA is proposing conditional approval of the October
21, 2013, SIP revision approved by TCEQ and submitted for EPA review.
The following is a brief summary of each of the SIP revisions
pertaining to the Flexible Permit Program that is subject to our
proposed conditional approval.

A. November 29, 1994 Submittal

    On October 19, 1994, the TNRCC, predecessor to the TCEQ, adopted
revisions to the Texas SIP to establish and implement the Flexible
Permit Program in Texas. The TCEQ adopted the rule for Flexible Permits
at 30 Texas Administrative Code (TAC) Chapter 116, Subchapter G--
Flexible Permits; adding Flexible Permit Definitions at 30 TAC Chapter
116, Subchapter A, Section 116.13--Flexible Permit Definitions; and
revising the Permit Application provisions at 30 TAC Chapter 116,
Subchapter B, Section 116.110(a) to authorize the use of a Flexible
Permit for construction of any new minor facility and minor
modification of any existing facility. Note that some portions of the
November 29, 1994, submittal were later repealed and replaced in the
July 22, 1998, submittal.

B. March 13, 1996 Submittal

    On February 14, 1996, the TNRCC adopted revisions to the Texas SIP
to modify air permit application procedures and evaluation criteria to
provide more operational flexibility to facilities. This submittal
specifically included revisions to the definition of ``modification of
existing facility'' in the General Definitions for Air Permitting at 30
TAC Section 116.10(F) to address modifications under Flexible Permits.
This submittal of 30 TAC Section 116.10(F) for ``modification of
existing facility'' was later repealed and replaced in the July 22,
1998, SIP submittal and is therefore not before EPA for review.

C. July 22, 1998 Submittal

    On June 17, 1998, the TNRCC adopted severable revisions that
included the repeal and replacement of portions of the November 29,
1994, submittal and the entirety of the March 13, 1996 submittal.
Specific to Flexible Permits, the July 22, 1998, submittal included a
new definition of ``modification of existing facility,'' at 30 TAC
Section 116.10(9)(F); repeal of and new Flexible Permit Definitions at
30 TAC Section 116.13 and Section 116.110; and amendments to the 30 TAC
Sections 116.710, 116.711, 116.714, 116.715, 116.721, 116.730, 116.740,
and 116.750. The definitions in section 116.13 were non-substantive. An
operations certification requirement for flexible permits was removed
from 116.110. The amendments to the remaining sections added or
clarified language regarding BACT, compliance with FCAA Section 112(g),
or were non-substantive changes.

D. October 25, 1999 Submittal

    On September 2, 1999, the TNRCC adopted revisions to the Texas SIP
to implement Texas House Bill 801 to establish new procedures for
public participation in environmental permitting. The TNRCC submitted
these amendments as revisions to the Texas SIP in a letter dated
October 25, 1999. The October 25, 1999, submittal included revisions to
the Flexible Permits public participation provisions at 30 TAC Section
116.740.

E. September 11, 2000 Submittal

    On August 9, 2000, the TNRCC adopted amendments to 30 TAC Chapters
101, 106, and 116 to implement the remaining requirements of Senate
Bill 766 from the 76th Legislature. This included amendments to Chapter
116, Subchapter G, 30 TAC Sections 116.710, 116.715, 116.721, 116.722,
and 116.750. The amendments to 30 TAC Chapters 101 and 116 implement
the remaining requirements of Senate Bill 766 from the 76th
Legislature. The amendments tripled emission fees for grandfathered
facilities with emissions in excess of 4,000 tons per year after
September 1, 2001, updated public participation requirements for the
issuance of standard permits, and made nonsubstantive changes to other
related provisions.

F. April 12, 2001 Submittal

    On March 7, 2001, the TNRCC adopted revisions to Subchapter G, 30
TAC Sections 116.711 and 116.715. The amendments supplement the cap and
trade program for the Houston/Galveston (HGA) ozone nonattainment area
by clarifying that any source of emissions of nitrogen oxides
(NOX) in the HGA area that uses certain permits, including
flexible permits, must obtain allowances for those emissions if the
facility, or group of facilities, has a collective design capacity to
emit ten tons or more of NOX per year and is subject to an
emission standard in 30 TAC Section Chapter 117 and by allowing the use
of NOX allowances to meet the correlating portion of
emissions offset requirements.

G. July 31, 2002 Submittal

    On May 22, 2002, the TNRCC adopted amendments to Chapter 39, Public
Notice, and Chapter 116, Control of Air Pollution by Permits for New
Construction or Modification. The adopted changes concern requirements
of procedures for the permitting of grandfathered facilities and an
incentive program for the reduction of emissions of nitrogen oxides for
certain types of facilities.

H. September 4, 2002 Submittal

    On August 21, 2002, the TNRCC adopted revisions re-defining
``modification of existing facility'' from 30 TAC Section 116.10(9)(F)
to 30 TAC Section 116.10(11)(F). The revisions also clarified permit
renewal application content requirements and implemented new compliance
history evaluation requirements for permit renewals.

I. October 4, 2002 Submittal

    On September 25, 2002, the TCEQ adopted amendments to various fee
rules in Chapters 101, 106, and 116 including 116.750, Flexible Permit
Fee, and corresponding revisions to the SIP. The increases were
established to provide sufficient funding to meet the current
appropriation levels for air program activities and to meet operational
funding requirements for the Title V programs of the commission.

J. September 25, 2003 Submittal

    On August 20, 2003, the TCEQ adopted revisions to Subchapter G, 30
TAC Section 116.715. The revisions require emission reductions to be
certified as emission reduction credits under 30 TAC Chapter 101,
Subchapter H, except future internal offsets which will continue to be
certified under Chapter 116.

K. July 2, 2010 Submittal

    On June 2, 2010, the TCEQ adopted amendments to the Texas
regulations concerning Public Notice at 30 TAC Chapter 39; Requests for
Reconsideration and Contested Case Hearings; Public Notice at 30 TAC
Chapter 55; and Control of Air Pollution by Permits for New
Construction or Modification at 30 TAC Chapter 116. This particular
rule package was submitted to EPA on July 2, 2010, after the EPA's
final disapproval of the pending package of proposed SIP revisions
before it, and is not part of the October 21, 2013, submittal, which
included only the program in effect as of September 13, 2003 and select
2010 rule amendments.
    The July 2, 2010 submittal included 30 TAC Sections 39.402(a)(4)
and (a)(5) establishing applicability of public notice provisions for
new Flexible Permits and amendments to Flexible Permits under 30 TAC
Chapter 116.
    On December 13, 2012, EPA proposed to approve the July 2, 2010,
Public Participation SIP Revision. In doing so, EPA severed the
Flexible Permit public participation provisions at 30 TAC Section
39.402(a)(4) and (a)(5). We also indicated it was our intent to address
the revisions to Chapter 39 for Flexible Permits at the time we
proposed action on the Flexible Permit program. On January 6, 2014, EPA
finalized our approval of the July 2, 2010, Public Participation SIP
revision; our final approval severed and did not address the public
participation provisions at 30 TAC Sections 39.402(a)(4) and (a)(5)
specific to Flexible Permits. EPA now finds it appropriate to address
the July 2, 2010, submittal of 30 TAC Section 39.402(a)(4) and (a)(5)
because we are addressing the entirety of the Flexible Permit program
and the revisions of the associated Flexible Permits public
participation provisions at 30 TAC Section 116.740.

L. October 5, 2010 Submittal

    On September 15, 2010, the TCEQ adopted amendments to Section
116.10(9)(E) to change a portion of the definition for ``modification
of existing facility''. Only this specific regulatory definition is
being acted on in this action because it directly affects the flexible
permit rule. The entire submittal package consisted of new and amended
sections prepared in response to EPA's disapproval of the TCEQ rules
that implemented the state's qualified facilities program. The October
5, 2010, submittal came in after the EPA's final disapproval of July
15, 2010, and is not part of the October 21, 2013, submittal, which
included only the program in effect as of September 13, 2003, and
select 2010 rule amendments.

M. October 21, 2013 Submittal

    On September 24, 2013, the TCEQ adopted and approved for submission
to EPA the Flexible Permit Program at 30 TAC Chapter 116, Subchapter G.
The EPA received the formal submission on October 21, 2013. The entire
SIP submittal included the flexible permit rules first adopted by the
TCEQ in November 1994 in Chapter 116, Subchapter G to establish the
flexible permit minor new source review program. Some of the rules were
repealed and readopted in 1998, and various amendments to the rules
that were adopted in 1999-2003. The package also contained revisions as
adopted on December 14, 2010, which included 30 TAC Sections 116.13(3)
and (5); 116.711(2)(M), and paragraphs (iv) and (vii); 116.715(c)(5)(A)
& (B), 116.715(6)(A)(i) and (ii), 116.715(d), except the text ``The
permit shall specify which of the monitoring options under paragraph
(2)(A)-(E) of this subject shall be used to determine compliance for
facilities subject to monitoring under this subsection,''
116.715(d)(1), 116.715(f); 116.716(a), 116.716(c), 116.716(d) and
116.716(e), with repeal of earlier Sections 116.716(d) and 116.716(e).
    Further, the submittal included various provisions that EPA
believes are essential to its approvability. These include: Definitions
for emission cap and individual emission limitation; discussion on
maintaining terms, conditions, and representations of any Subchapter B
permits that will be superseded by or incorporated into the flexible
permit; inclusion of requirements for monitoring and calculations for
demonstration of compliance with emission caps and individual emission
limits; revised requirements for recordkeeping of information and data
sufficient to demonstrate continuous compliance with emission caps and
individual emission limits; requirements that monitoring systems used
to determine compliance with pollutant emissions in terms of mass per
unit of time must be based on sound science and meet generally
acceptable scientific procedures for data quality and manipulation; and
provisions addressing how to develop emission caps based upon
application of current best available control technology at expected
maximum capacity. Further, references to insignificant emission factors
were removed since they are no longer allowed when calculating emission
caps. And finally, new requirements for developing individual emission
limitations in flexible permits were also included which require
permits to identify all facilities subject to either emission caps or
individual emission limits.
    Table 1 below summarizes the changes that are in the SIP revision
submittals. A summary of EPA's evaluation of each Section and the basis
for our proposed conditional approval of the Flexible Permit Program as
a minor NSR permit program is included in this rulemaking. The
accompanying Technical Support Document (TSD) includes a detailed
evaluation of the submittals and our rationale. The TSD may be accessed
online at www.regulations.gov, Docket No. EPA-R06-OAR-2013-0542.

                 Table 1--Summary of Each Flexible Permit SIP Submittal Affected by This Action
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                                                  Date
           Title of SIP submittal             submitted  to   Date of State          Regulations affected
                                                   EPA          adoption
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Flexible Permits...........................      11/29/1994      11/16/1994  Amendment to 30 TAC Section 116.110
                                                                             Adoption of New 30 TAC Section
                                                                              116.13 and New Subchapter G, 30
                                                                              TAC Sections 116.710, 116.711,
                                                                              116.714, 116.715, 116.716,
                                                                              116.717, 116.718, 116.720,
                                                                              116.721, 116.722, 116.730,
                                                                              116.740, 116.750, and 116.760.
Qualified Facilities and Modifications to         3/13/1996       2/14/1996  Amendment of 30 TAC Section 116.10
 Existing Facilities.                                                         to add new definition of
                                                                              ``modification of existing
                                                                              facility'' at (F).

NSR Rule Amendments; section 112(g) Rule          7/22/1998       6/17/1998  Repeal and new 30 TAC Section
 Review for Chapter 116.                                                      116.10(9)(F), 116.13 and
                                                                              116.110(a)(3) adopted.
                                                                             Amendments to Subchapter G, 30 TAC
                                                                              Sections 116.710, 116.711,
                                                                              116.714, 116.715, 116.721,
                                                                              116.730, 116.740 and 116.750.
Public Participation (HB 801)..............      10/25/1999        9/2/1999  Amendment to Subchapter G, 30 TAC
                                                                              Section 116.740.
Air Permits (SB-766)--Phase II.............       9/11/2000        8/9/2000  Amendments to Subchapter G, 30 TAC
                                                                              Sections 116.710, 116.715,
                                                                              116.721, 116.722, and 116.750.
Emissions Banking and Trading..............       4/12/2001        3/7/2001  Amendments to Subchapter G, 30 TAC
                                                                              Sections 116.711 and 116.715.
House Bill 3040: Shipyard Facilities and           9/4/2002       8/21/2002  Amendment to 30 TAC Section 116.10,
 NSR Maintenance Emissions.                                                   re-designating 30 TAC Sections
                                                                              116.10(9)(F) to 116.10(11)(F).
                                                                             Amendments to Subchapter G, 30 TAC
                                                                              Sections 116.711 and 116.715.
Air Fees...................................       10/4/2002       9/25/2002  Amendments to Subchapter G, 30 TAC
                                                                              Section 116.750.
Offset Certification, New Source Review           9/25/2003       8/20/2003  Amendment to Subchapter G, 30 TAC
 Permitting Processes and Extensions for                                      Section 116.715
 Construction.
Public Notice Applicability to Air Quality         7/2/2010        6/2/2010  New Chapter 39.402(a)(4) and (a)(5)
 Permits and Permit Amendments.                                               establishing applicability of the
                                                                              Chapter 39 public notice
                                                                              provisions to applications for new
                                                                              and amended Flexible Permits.
BACT and Qualified Facility Air Permit            10/5/2010       9/15/2010  Amendments to 30 TAC Section
 Program.                                                                     116.10(9)(E) only in this action.
Flexible Permit Program....................      10/21/2013      12/14/2010  Amendments to 30 TAC Sections
                                                                              116.13(3) and (5);
                                                                              116.711(2)(M)(iv) & (vii);
                                                                              116.715(c)(5)(A) & (B),
                                                                              116.715(c)(6)(A), (c)(6)A)(i) and
                                                                              (ii), 116.715(d), except specific
                                                                              text; 116.715(f), excluding
                                                                              715(f)(2)(A), 116.716(a),
                                                                              116.716(c), (c)(1)(A) and (B),
                                                                              116.716(c)(2), 116.716(c)(3),
                                                                              116.716(c)(4), and 116.716(d)[new]
                                                                              and (e) and the repeal of
                                                                              116.716(d).
Grandfathered Facilities...................       5/22/2002  ..............  Withdrawal 30 TAC Sections 116.793-
                                                                              116.802 and 116.804-116.807,
                                                                              adopted May 22, 2002, except
                                                                              Section 116.794(11), 116.795(f)
                                                                              and 116.799(a), which were
                                                                              returned to the Commission by
                                                                              letter from EPA dated June 29,
                                                                              2011; and Section 116.803, adopted
                                                                              August 21, 2002.
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N. Overview of the Flexible Permit Program and Establishment of the
Emission Cap

    The Flexible Permit Program is a minor NSR permitting program
developed to provide additional flexibility to the regulated community.
As is evident in the preceding Section, the Flexible Permit program has
been revised and evolved over time and various sections have been
submitted to EPA for approval but then repealed and withdrawn. To
provide context to our proposed conditional approval we provide the
following summary of the key features of the Texas Flexible Permit
Program, as it exists before us for review and as described in this
preamble. Importantly, Texas has also submitted an interpretive letter,
dated December 9, 2013, discussed more fully below, that gives Texas'
interpretations of provisions of its submittal that, in some cases, EPA
is relying on in this proposal to conditionally approve the package.
For more information about the Program, please see the SIP revisions
submitted by Texas, the interpretive letter, and the accompanying TSD
for this proposed action, which are available in the docket for this
action.
    Pursuant to the submitted Flexible Permit Program, only one
Flexible Permit may be issued for an account site.\3\ See submitted 30
TAC Section 116.710(a)(1). Therefore, a Flexible Permit cannot cover
sources at more than one account. See submitted 30 TAC Section
116.710(a)(4). A person may qualify for a Flexible Permit for
construction of a new facility at the account site. 30 TAC Section
116.110(a)(3) and 30 TAC Section 116.710(a)(1). A person may qualify
for a Flexible Permit for a modification of an existing facility at the
account site. 30 TAC Sections 116.110(a)(3) and 116.710(a)(1). To
ensure that there is no confusion when we use the term ``facility'' in
regard to Texas rules, the EPA is providing the explanation given by
the TCEQ regarding how TCEQ defines the term. TCEQ has explicitly
defined the term ``facility'' in accordance with the definition under
the Texas Health and Safety Code Section 382.003(6) and 30 TAC Section
116.10(6). The TCEQ translates EPA's term of ``emission unit''
(generally) to mean ``facility'' under their rules and provides a
detailed explanation of the term in its formal comments to the EPA on
the EPA's earlier proposed disapproval of the Texas Flexible

Permits Program. The comments are contained in Docket ID No. EPA-R06-
OAR-2005-TX-0032 in www.regulations.gov. Under Major NSR, EPA uses the
term ``emissions unit'' (generally) when referring to part of a
``stationary source''.
---------------------------------------------------------------------------

    \3\ ``Account'' for NSR purposes is defined at 30 TAC Section
101.1(1), second sentence, as ``any combination of sources under
common ownership or control and located on one or more contiguous
properties, or properties contiguous except for intervening roads,
railroads, rights-of-way, waterways, or similar divisions.'' This
definition is approved as part of the Texas SIP (March 30, 2005 (70
FR 16129)).
---------------------------------------------------------------------------

    A Flexible Permit holder may make a change, through a NSR SIP case-
by-case permit amendment (codified in the SIP at 30 TAC Section
116.116(b)) or a Flexible Permit amendment. See submitted 30 TAC
Section 116.710(a)(2). In lieu of either of these two options, the
Flexible Permit holder may qualify to make the change by obtaining
coverage for a minor NSR SIP permit by rule authorization, codified in
the SIP at 30 TAC Section 116.116(d).
    If the holder of a Flexible Permit wishes to construct a new minor
facility at the location where the permit is issued, he may qualify for
a Flexible Permit amendment. See submitted 30 TAC Section
116.710(a)(3). This is analogous to the minor NSR SIP process of using
a minor NSR SIP Permit by Rule or a minor NSR SIP permit, for
authorization to construct a new facility on the site.
    Texas already has an approved NSR SIP under Subchapter B, which
defines a change to an existing facility as one that would cause a
change in the method of control of emissions; a change in the character
of the emissions; or an increase in the emission rate of any air
contaminant. 30 TAC Section 116.116(b)(1). Such a change is required
under the SIP to be authorized under a minor NSR SIP permit amendment.
If the change is a decrease in allowable emissions; or any change from
a representation in an application, general condition, or special
condition in a permit that does not cause a change in the method of
control of emissions; a change in the character of emissions; or an
increase in the emission rate of any air contaminant (30 TAC Section
116.116(c)(1)), the change may be authorized without public
notification requirements through a SIP-approved minor NSR permit
alteration or by obtaining coverage under an existing minor NSR SIP
approved permit by rule or standard permit. 30 TAC Section 116.116(b)
and (d).
    The submitted Program at 30 TAC Section 116.721(a) has the same
first two SIP-approved definitions for a change to an existing
facility: One that would cause either a change in the method of control
of emissions or a change in the character of the emissions. It,
however, has a different definition for the third type of change.
Rather than the change being ``an increase in the emission rate,'' it
is a change that is a ``significant increase in emissions.'' Submitted
30 TAC Section 116.718 defines a ``significant increase in emissions.''
First, the increase in emissions must come from a facility with a
Flexible Permit and second, there is no significant increase if the
increase does not exceed either the emission cap or individual emission
limitation.
    The submitted Flexible Permit program at 30 TAC Chapter 116,
Subchapter G establishes an aggregated emission limit, based upon the
application of available technology that limits emissions, as provided
under the minor NSR SIP and known as best available control technology
(BACT) \4\ at expected maximum capacity (or a different limitation
based on the emission level that would result from the application of a
more stringent required emission control) for each covered facility,
i.e., an emission cap is determined. The cap for a specific criteria
pollutant addresses emissions from each covered facility with its
individually calculated emission rates. The total sum of the covered
facilities' calculated emission rates is the emission cap. In other
words, the emission cap is a limit on the potential to emit (PTE).
---------------------------------------------------------------------------

    \4\ Texas adopted a revised NSR State rule on July 27, 1972, to
add the requirement that a proposed new facility and proposed
modification utilize at least best available control technology
(BACT), with consideration to the technical practicability and
economical reasonableness of reducing or eliminating the emissions
from the facility. EPA approved the revised 603.16 into the Texas
SIP, presently codified in the Texas SIP at 30 TAC Section
116.111(a)(2)(C). For more information, please see the 74 FR 48450
(September 23, 2009), concerning the Texas Qualified Facilities
State Program and the General Definitions. The Texas SIP has been
revised since our initial approval of 30 TAC 116.111(a)(2)(C). The
Texas PSD Program at 30 TAC 116.160(c)(1)(A) incorporates the
Federal PSD BACT definition at 40 CFR 52.21(b)(12). EPA approved the
current Texas PSD program provision on September 15, 2010, as
revised by the July 16, 2010 SIP submittal. See 75 FR 55978. Upon
EPA's September 15, 2010, approval of the Texas PSD SIP submittals,
both EPA and Texas interpreted the SIP BACT provision now codified
in the SIP at 30 TAC Section 116.111(a)(2)(C) as being a minor NSR
SIP requirement for minor NSR permits, and thus applicable to the
Texas Minor NSR Flexible Permits Program.
---------------------------------------------------------------------------

    An emission cap established in a Flexible Permit enables the holder
to have more operational flexibility than would be allowed under SIP-
approved minor NSR Permits, which impose unit-specific mass emission
limits. See submitted 30 TAC Section 116.716. Under the submitted 30
TAC Section 116.716(a), Texas may establish an emission cap for a
specific pollutant by calculating the total emissions for all of the
facilities covered by a Flexible Permit, using the application of minor
NSR SIP BACT at expected maximum capacity for each covered facility.
Nevertheless, where the existing control for a facility is more
stringent than the application of minor NSR SIP BACT, e.g., NSPS,
NESHAPS, or a control strategy rule, then that level of control for
that facility is used in the calculation methodologies for determining
the cap. See submitted 30 TAC Section 116.715(c)(9) and (10).
Alternatively, Texas will also set an individual emission limitation in
the same Flexible Permit for each pollutant covered by an emission cap
for the covered facilities to ensure the protection of human health and
the environment as may be required by a state or federal rule. See
submitted 30 TAC Section 116.716(b).
    In the version of the Flexible Permit program that was the subject
of the July 15, 2010, disapproval, the calculation methodologies for
the cap and the individual emission limitations included allowing for
inclusion of an ``Insignificant Emissions Factor'' (of up to nine
percent) in the summation. However, the package submitted for EPA
approval that we are acting on today revised the definition of emission
cap to omit such a provision. See submitted (and revised with this
action) new 30 TAC Section 116.13(3).
    Under the submitted Flexible Permit Program, a pollutant's cap must
be decreased if one of the facilities (defined by Texas to generally
mean an ``emissions unit'') under the Flexible Permit shuts down for
longer than 6 months. See submitted 30 TAC Section 116.716(f)(1), first
sentence. If a new facility is brought into the Flexible Permit, the
cap must be readjusted to accommodate its calculated emission rates.
See submitted 30 TAC Section 116.716(f)(3). The cap must be adjusted
downward for any facility covered by a Flexible Permit if that facility
becomes subject to any new State or Federal regulation. See submitted
30 TAC Section 116.716(f)(4). A readjustment of the cap required by any
new State or Federal regulation must be made the next time the Flexible
Permit is either amended or altered. If an amendment to a Flexible
Permit is not required to meet the new regulation, the permittee must
submit a request for a permit alteration within sixty days of making
the change, describing how compliance with the new requirement will be
demonstrated. See submitted 30 TAC Section 116.716(f)(4), third
sentence.
    Under submitted 30 TAC Section 116.717, a Flexible Permit may
include an implementation schedule for the installation of additional
controls to meet an emissions cap for a pollutant. The section also
provides that if a schedule to install additional controls is

included in the Flexible Permit and a facility subject to such a
schedule is taken out of service, the emission cap contained in the
Flexible Permit will be readjusted to reflect the period the unit is
out of service. Unless a special provision in the Flexible Permit
specifies the method of readjustment of the emission cap, the facility
must obtain a permit amendment or alteration, as appropriate.

III. What action is EPA proposing?

    The EPA is proposing to conditionally approve the Texas Flexible
Permit Program, as submitted by Texas on October 21, 2013, and as
contained in 30 TAC Chapter 116--Control of Air Pollution by Permits
for New Construction or Modification. This action follows a decision
made by the Fifth Circuit Court on August 3, 2012, which vacated EPA's
previous disapproval and remanded it back to the EPA for further
reconsideration. Texas v. EPA, 690 F.3d 670 (Fifth Cir. 2012). The
present submittal includes the original SIP package dated November 29,
1994, which was addressed by the court, and certain specified revisions
as submitted by TCEQ on October 21, 2013. In addition, the following
regulations under Chapter 116 including 30 TAC Section 116.110(a)(3) on
July 22, 1998, and the definition in 30 TAC Section 116.10(11)(F)
submitted on July 22, 1998, for ``modification of existing facility''
are included as part of this package. EPA is also proposing to
conditionally approve the public participation applicability provisions
at 30 TAC Section 39.402(a)(4) and (a)(5) submitted on July 2, 2010.
    In order to better understand how the submitted program will be
implemented, EPA asked for an interpretive letter from the State
detailing how certain aspects of the program will be operated. Based
upon our evaluation of the submittals and further informed by the
letter, EPA has concluded that the Flexible Permit Program as submitted
October 21, 2013, in conjunction with the conditions included in the
December 9, 2013, commitment letter, does meet the requirements of the
CAA section 110(a) which requires each State to include a Minor NSR
program in its SIP that meets the 40 CFR part 51 Subpart I
requirements, including legally enforceable procedures for a minor NSR
program.\5\
---------------------------------------------------------------------------

    \5\ This submittal does not include the submitted rules for
implementing Section 112(g) of the Clean Air Act that were
identified and returned by the EPA to the TCEQ on June 29, 2011.
This submittal also does not include those rules that were withdrawn
by the TCEQ as identified in the October 21, 2013, submittal cover
letter. EPA's position on section 112(g) of the CAA is that the EPA
does not delegate section 112(g) requirements in our MACT
delegations, nor do we approve them into the SIP. Instead, the State
must certify to EPA that the state program satisfies all applicable
requirements.
---------------------------------------------------------------------------

    Table 2 below summarizes each regulatory citation that is affected
by this action.

                                           Table 2--Summary of Each Regulation That Is Affected by This Action
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                         Date submitted to EPA
            Section                      Title              as SIP amendment      Date adopted by State                      Comments
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                Chapter 39: Public Notice
--------------------------------------------------------------------------------------------------------------------------------------------------------
Section 39.402................  Applicability to Air    July 2, 2010...........  June 2, 2010...........  30 TAC Section 39.402(a)(4) and 39.402(a)(5)
                                 Quality Permits and                                                       specific to flexible permits only.
                                 Permit Amendments.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                  Chapter 116: Control of Air Pollution by Permits for New Construction or Modification
                                                                Subchapter A: Definitions
--------------------------------------------------------------------------------------------------------------------------------------------------------
Section 116.10................  General Definitions...  03/13/1996.............  2/14/1996..............  Definition of ``modification of existing
                                                                                facility'' at 30 TAC Section 116.10(F).
                                                        07/22/1998.............  6/17/1998..............  Definition of ``modification of existing
                                                                                facility'' at 30 TAC Section 116.10(9)(F).
                                                        9/4/2002...............  8/21/2002..............  Redesignation of the Definition of
                                                                                ``modification of existing facility'' from 30
                                                                                TAC Section 116.10(9)(F) to 116.10(11)(F).
                                                        10/5/2010..............  9/15/2010..............  Renumbered definition (9)(E) for
                                                                                ``modification of existing facility''.
Section 116.13................  Flexible Permit         11/29/1994.............  11/16/1994.............  Initial adoption.
                                 Definitions.
                                                        7/22/1998..............  6/17/1998..............  Resubmitted 116.13 definitions for (1)
                                                                                emission cap-emission limit, (2) expected
                                                                                maximum capacity, and (3) individual emission
                                                                                limitation.
                                                        10/21/2013.............  12/14/2010.............   Revised definition of ``emission
                                                                                cap'' at 30 TAC Section 116.13(1).
                                                                                Revised definition of ``individual
                                                                                emission limitation'' at 30 TAC Section
                                                                                116.13(3) and (5). Deleted reference to
                                                                                ``insignificant factor'' formally found in 30
                                                                                TAC Section 116.13.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                         Subchapter B: New Source Review Permits
                                                             Division 1: Permit Application
--------------------------------------------------------------------------------------------------------------------------------------------------------
Section 116.110...............  Applicability.........  11/29/1994.............  11/16/1994.............  30 TAC Section 116.110(a) specific to flexible
                                                                                permits only.
                                                        7/22/1998..............  6/17/1998..............  Revised 30 TAC Section 116.110(a)(3)
                                                                                applicability criteria.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                             Subchapter G: Flexible Permits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Section 116.710...............  Applicability.........  11/29/1994.............  11/16/1994.............  Initial adoption.

                                                        7/22/1998..............  6/17/1998..............  Revised 30 TAC Section 116.710 subsections
                                                                                (a), (b), (c), and (d)--Applicability
                                                                                criteria.
                                                        9/11/2000..............  8/9/2000...............  Resubmittal 30 TAC Section 116.710.
Section 116.711...............  Flexible Permit         11/29/1994.............  11/16/1994.............  Initial adoption.
                                 Application.
                                                        7/22/1998..............  6/17/1998..............  Revised 30 TAC Sections 116.711 (1)-(13)--
                                                                                Flexible permit application requirements.
                                                        4/12/2001..............  3/7/2001...............  Resubmittal 30 TAC Section 116.711.
                                                        9/4/2002...............  8/21/2002..............  Revised 30 TAC Sections 116.711 (8), (9),
                                                                                (10), and (11).
                                                        10/21/2013.............  12/14/2010.............  Revised 30 TAC Section 116.711(2)(M)
                                                                                [introductory text], and paragraphs (iv) and
                                                                                (vii). It was submitted in the package as 30
                                                                                TAC Section 116.711(13)(D) which requires
                                                                                permit applicants to provide a description of
                                                                                EPNs included in emission cap and 30 TAC
                                                                                Section 116.711(13)(E)(vii) which ensures PSD
                                                                                terms and conditions are retained in the
                                                                                flexible permit.
Section 116.714...............  Application Review      11/29/1994.............  11/16/1994.............  Initial adoption.
                                 Schedule.
                                                        7/22/1998..............  6/17/1998..............  Revised 30 TAC Section 116.714.
Section 116.715...............  General and Special     11/29/1994.............  11/16/1994.............  Initial adoption.
                                 Conditions.
                                                        7/22/1998..............  6/17/1998..............  Revised 30 TAC Section 116.715 subsections (a)
                                                                                and (c)(1)-(10)--General conditions applying
                                                                                to all flexible permit holders.
                                                        9/11/2000..............  8/9/2000...............  Revised 30 TAC Section 116.715 subsections (a)-
                                                                                (d).
                                                        4/12/2001..............  3/7/2001...............  Revised 30 TAC Sections 116.715(a) and
                                                                                (c)(3)(A), (c)(3)(B), and (c)(3)C).
                                                        9/4/2002...............  8/21/2002..............  Revised 30 TAC Section 116.715 subsections
                                                                                (c)(1) and (c)(4).
                                                        9/25/2003..............  8/20/2003..............  Revised 30 TAC Section 116.715 subsection
                                                                                (c)(3)(C)(9).
                                                        10/21/2013.............  12/14/2010.............   Revised 30 TAC Sections
                                                                                116.715(c)(5)(A) & (B)--monitoring
                                                                                requirements must be specified in permits for
                                                                                compliance with emission caps.
                                                                                Revised 30 TAC Section
                                                                                116.715(c)(6)(A)(i) & (ii)--recordkeeping for
                                                                                demonstrating emission cap and individual
                                                                                emission limitation calculations.
                                                                                Revised 30 TAC Section 116.715(d)(1)--
                                                                                monitoring must demonstrate compliance based
                                                                                on sound science.
Section 116.716...............  Emission Caps and       11/29/1994.............  11/16/1994.............  Initial adoption.
                                 Individual Emission
                                 Limitations.
                                                        10/21/2013.............  12/14/2010.............  Revised 30 TAC Sections 116.716(a),
                                                                                116.716(c), 116.716(d), and 116.716(e) on
                                                                                establishing an emission cap and individual
                                                                                emission limits.
Section 116.717...............  Implementation          11/29/1994.............  11/16/1994.............  Initial adoption.
                                 Schedule for
                                 Additional Controls.
Section 116.718...............  Significant Emission    11/29/1994.............  11/16/1994.............  Initial adoption.
                                 Increase.
Section 116.720...............  Limitation on Physical  11/29/1994.............  11/16/1994.............  Initial adoption.
                                 and Operational
                                 Changes.
Section 116.721...............  Amendments and          11/29/1994.............  10/19/1994.............  Initial adoption.
                                 Alterations.
                                                        7/22/1998..............  6/17/1998..............  Revised 30 TAC Sections 116.721(a), (b)(2),
                                                                                (d)(1), and (d)(2)--Amendments and
                                                                                alterations for flexible permits.
                                                        9/11/2000..............  8/9/2000...............  Resubmittal 30 TAC Section 116.721.
Section 116.722...............  Distance Limitations..  11/29/1994.............  10/19/1994.............  Initial adoption.
                                                        9/11/2000..............  8/9/2000...............  Revised reference citation in Section.
Section 116.730...............  Compliance History....  11/29/1994.............  10/19/1994.............  Initial adoption
                                                        10/21/2013.............  12/14/2010.............  30 TAC Section 116.730 withdrawn.
Section 116.740...............  Public Notice and       11/29/1994.............  10/19/1994.............  Initial adoption.
                                 Comment.
                                                        7/22/1998..............  6/17/1998..............  Revised Section.
                                                        10/25/1999.............  9/2/1999...............  Revised 30 TAC Section 116.740(a).
                                                        10/21/2013.............  12/14/2010.............   Revised resubmittal.
                                                                                30 TAC Section 116.740(b) withdrawn.
Section 116.750...............  Flexible Permit Fee...  11/29/1994.............  10/19/1994.............  Initial adoption
                                                        7/22/1998..............  6/17/1998..............  Revised 30 TAC Sections 116.750(b)-(d).
                                                        9/11/2000..............  8/9/2000...............  Revised 30 TAC Section 116.750(d).
                                                        10/4/2002..............  9/25/2002..............  Revised 30 TAC Section 116.750(b)-(c).

                                                        10/21/2013.............  12/14/2010.............  Revised resubmittal.
Section 116.760...............  Flexible Permit         11/29/1994.............  10/19/1994.............  Initial adoption.
                                 Renewal.
Section 116.765...............  Compliance Schedule...  10/21/2013.............  12/14/2010.............  Submittal 30 TAC Section 116.765(b) and (c).
--------------------------------------------------------------------------------------------------------------------------------------------------------

A. What is a conditional approval?

    Section 110(k) of the Act governs EPA's actions addressing SIP
submissions. Where EPA finds that a SIP submission is not fully
approvable, we may choose to use a conditional approval as provided
under Section 110(k)(4). In this case EPA may conditionally approve the
plan based on a commitment from the State to adopt specific corrections
to the Flexible Permit Program by a date certain, but no later than 1
year after the approval of the revision. Guidance on the use of
conditional approvals was addressed by EPA in 1992 in a memorandum from
John Calcagni.\6\ This guidance was followed in the development by the
TCEQ of their submittal of October 21, 2013 and was the basis for their
detailed letter of commitment. A copy of TCEQ's letter of commitment
and the Calcagni memo are available in the docket to this rulemaking.
Upon TCEQ fully satisfying their commitment and subsequent final action
by EPA, the Flexible Permit Program for the first time will become a
fully approved federally enforceable requirement in the Texas State
Implementation Plan. The TCEQ, in its letter of December 9, 2013,
committed to adopt by November 30, 2014, certain changes to the rules
contained in the SIP submittal.
---------------------------------------------------------------------------

    \6\ John Calcagni's July 1992, Memorandum, ``Processing of State
Implementation Plan (SIP) Submittals'', to Directors.
---------------------------------------------------------------------------

    Once EPA determines that all the conditions in the commitment
letter have been met, EPA will publish in the Federal Register a
determination that converts the conditional approval to a full approval
and provides a copy of the Flexible Permit Program as revised to meet
the conditions. However, if the State fails to submit a SIP revision
reflecting its December 9, 2013, commitments by November 30, 2014, or
if EPA determines that the submitted SIP revision does not address the
commitments, then in accordance with 110(k)(4) of the CAA, the
conditional approval converts to a disapproval action. In that case,
EPA would issue a letter to the TCEQ converting the conditional
approval of the Flexible Permit Program to disapproval. Because the
Flexible Permit Program is a discretionary variation of the SIP
approved minor program and was not submitted to address a mandatory
requirement of the Act, disapproval of the program would not trigger
sanctions under Section 179(b) or start a Federal Implementation Plan
clock.

B. What are the commitments?

    TCEQ provided a commitment letter on December 9, 2013, to EPA that
provides that the commission will subsequently submit amended rules
that are consistent with the rulemaking requirements of the Texas
Administrative Procedure Act. This action is necessary because some of
the rules were repealed and readopted in 1998, and amendments to the
rules were adopted in the 1999 to 2003 timeframe. The rulemaking would
also include the repeal of text adopted in 2010 but not part of the
submission by the Commission on September 24, 2013. More specifically,
Texas will also make rule changes to ensure that all regulatory
citations in the package are labeled and referenced correctly and
placed in proper sequence. Without the renumbering and referencing
effort, incorrect references in the rules could result in applicable
requirements being overlooked and not being incorporated into Flexible
Permits during their preparation or modification. Further, the rules
could cite to incorrect requirements not applying to the entities
regulated through the Flexible Permit Program. The TCEQ has committed
to providing a SIP submittal by November 30, 2014, that will reformat,
reorganize and renumber the Flexible Permit Program into a cohesive
rule that will ensure that the rules are properly structured within and
according to the rulemaking requirements of the Texas Administrative
Procedure Act and the Texas Administrative Code. It will also include
the repeal of text adopted in 2010 that was not part of the submittal
adopted by the Commission on September 24, 2013. This commitment letter
is available in the docket for this rulemaking. All the necessary
substantive provisions of the flexible permit program were included in
the submissions and the conditions address formatting and style
requirements in state law. The changes that Texas will be making will
not materially alter the submitted program described in this proposal.

IV. EPA's Evaluation of the Texas Flexible Permit Program as a Minor
NSR Program

    The Act at Section 110(a)(2)(C) requires states to develop and
submit to EPA for approval into the state SIP, preconstruction review
programs applicable to new and modified stationary sources of air
pollutants for attainment and nonattainment areas that cover both major
and minor new sources and modifications, collectively referred to as
the New Source Review (NSR) SIP. The CAA NSR SIP program is composed of
three separate programs: Prevention of Significant Deterioration (PSD),
Nonattainment New Source Review (NNSR), and Minor NSR. PSD is
established in part C of title I of the CAA and applies in areas that
meet the National Ambient Air Quality Standards (NAAQS), i.e.,
``attainment areas'', as well as areas where there is insufficient
information to determine if the area meets the NAAQS, i.e.,
``unclassifiable areas.'' The NNSR SIP program is established in part D
of title I of the CAA and applies in areas that are not in attainment
of the NAAQS, i.e., ``nonattainment areas.'' The Minor NSR SIP program
addresses construction or modification activities that do not emit, or
have the potential to emit, more than certain major source thresholds
and thus do not qualify as ``major'' and applies regardless of the
designation of the area in which a source is located.
    EPA regulations governing the criteria that states must satisfy for
EPA approval of the NSR programs as part of the SIP are contained in 40
CFR 51.160-51.166. Regulations specific to minor NSR programs are
contained in 40 CFR 51.160-51.164. In addition, there are several
provisions in 40 CFR Part 51

that apply generally to all SIP revisions. The TCEQ has developed the
Flexible Permit Program as a component of the Texas Minor NSR program;
therefore, we evaluated the Texas Flexible Permit Program as submitted
in October 21, 2013, and the commitment letter against the federal
requirements for minor NSR programs. EPA's evaluation is also informed
by an interpretive letter sent by TCEQ on December 9, 2013, clarifying
certain aspects of the program. In an earlier Federal Register proposed
action, EPA articulated its position on the use of interpretive letters
in evaluating SIPs:

    EPA believes that the use of interpretive letters to clarify
perceived ambiguity in the provisions in a SIP submission is a
permissible and sometimes necessary approach under the CAA. Used
correctly, and with adequate documentation in the Federal Register
and the docket for the underlying rulemaking action, reliance on
interpretive letters can serve a useful purpose and still meet the
enforceability concerns of the Petitioner. Regulated entities,
regulators, and the public can readily ascertain the existence of
interpretive letters relied upon in the EPA's approval that would be
useful to resolve any perceived ambiguity. By virtue of being part
of the stated basis for the EPA's approval of that provision, the
interpretive letters necessarily establish the correct
interpretation of any arguably ambiguous SIP provision. In addition,
reliance on interpretive letters to address concerns about perceived
ambiguity can often be the most efficient and timely way to resolve
concerns about the correct meaning of regulatory provisions. Both
air agencies and the EPA are required to follow time- and resource-
intensive administrative processes in order to develop and evaluate
SIP submissions. It is reasonable for the EPA to exercise its
discretion to use interpretive letters to clarify concerns about the
meaning regulatory provisions, rather than to require air agencies
to reinitiate a complete administrative process merely to resolve
perceived ambiguity in a provision in a SIP submission. In
particular, the EPA considers this an appropriate approach where
reliance on such an interpretive letter allows the air agency and
the EPA to put into place SIP provisions that are necessary to meet
important CAA objectives and for which unnecessary delay would be
counterproductive. (78 FR 12460, 12475, February 22, 2013). Texas'
interpretive letter is in the docket for this action and is
discussed throughout this notice.

    As we stated above, 40 CFR 51.160 establishes the enforceable
procedures that all minor NSR programs must include. We will address
the specific requirements for enforceability in Section A below. 40 CFR
51.161 establishes the public notice requirements for minor NSR
programs. We will address the public notice requirements more fully in
a following Section B. Sections 51.160-51.164 require that a SIP
revision demonstrate that the adopted rules will not interfere with any
applicable requirement concerning attainment and reasonable further
progress, or any other applicable requirement of the CAA. We will
address the specific requirements for permitting activities that ensure
attainment more fully in a following Section C.
    EPA notes that in response to its final disapproval on the Flexible
Permits Rule on July 15, 2010, the TCEQ adopted, on December 14, 2010,
revised Sections of the Texas Administrative Code which resulted in
changes to Chapter 116. In recent discussions with EPA, the State
agreed to submit for our consideration portions of those rules in
conjunction with the prior submittal addressed in EPA's July 15, 2010,
action. A discussion of the portion of the applicable December 14,
2010, rule that was included in the submittal package is also included
in the section A.(1-5) below.

A. Federal Requirements for Enforceability of the Minor NSR Program

    The Federal requirements for enforceability are found in 42 U.S.C.
7410(a)(2)(A) and 42 U.S.C. 7410(a)(2)(C) as interpreted by the EPA
guidance discussed below. The EPA has several regulations that address
all SIPs and SIP revisions. In addition to the generally applicable
rules discussed below, the requirement for enforceability of a minor
NSR program is found at 40 CFR 51.160. This rule specifically requires
the state or local agency to have the authority to prevent the
construction of a facility or modification that will cause a violation
of applicable portions of the control strategy or interfere with
attainment or maintenance of a NAAQS. To accomplish this goal, the
state's minor NSR program must include the means by which the state
agency will review proposed new construction or modification projects
to determine that such projects will not interfere with the control
strategy or cause a violation of a NAAQS. The minor NSR program must
include the following in accordance with 40 CFR 51.160(c):
     The minor NSR program must provide for the submission, by
the owner or operator of the building, facility, structure or
installation to be constructed or modified, such information on the
nature and amounts of emissions to be emitted by it or emitted by
associated mobile sources; and the design, construction and operation
of such facility, building, structure, or installation as may be
necessary to allow the permitting authority to make a determination on
approvability.
     The minor NSR program must provide that approval of any
construction or modification must not affect the responsibility of the
owner or operator to comply with applicable portions of the control
strategy.
     The minor NSR program must include procedures to identify
the types and sizes of facilities, buildings, structures, or
installations which will be subject to review. The minor NSR program
must also discuss the basis for determining which facilities will be
subject to review.
     The minor NSR program must also discuss the air quality
data and the dispersion or other air quality modeling used to make
approval decisions.
    The Court in its Opinion stated that in disapproving the Texas
Flexible Permit Program, the EPA failed to explain or tie
replicability, clarity and, in general, elements of the enforcement
guidance to standards provided for in the CAA. See, 690 F.3d 670, 683-
4. 42 U.S.C. 7410(a)(2) provides that a SIP must include enforceable
emission limitations. It is this CAA requirement that the SIP be
enforceable that provides the legal basis for requiring that a program
meet criteria necessary for enforceability. Enforceability is required
by the Act and without it the EPA, the states, and the citizens who
wish to determine whether or not a regulated entity is in compliance,
and then to enjoin any violations, will find it difficult to take
action to ensure compliance. Being able to enforce permits and rules
adequately provides interested parties the ability to return regulated
entities to compliance. The collection of penalties both penalizes the
offender and provides deterrence of future violations. Without adequate
enforceability, EPA cannot ensure that a program submitted to be
approved into the SIP will be protective of the NAAQS. See, 42 U.S.C.
7410(l). Minor sources have the potential to impact the NAAQS. EPA
acknowledged this in the 1986 rulemaking establishing the current
version of 40 CFR 51.160-164 (the minor source rules). The EPA stated
that ``The very fact that such [minor] sources are subject to review
indicates that it would be appropriate to require that EPA be notified
of permitting actions on such sources [minor] for oversight purposes.
Moreover, a large number of minor sources could have a significant
cumulative effect on air quality.'' See, 51 FR 40656, 40658

November 7, 1986. These sources \7\ have historically included some of
the largest refinery and petrochemical companies in the State. These
large sources very frequently have the need for minor NSR changes to
their permits. The Appendix to the TSD contains a list of companies
provided by the TCEQ on December 18, 2013, that currently have or
historically had coverage under a flexible permit issued prior to the
rules becoming SIP approved.
---------------------------------------------------------------------------

    \7\ These sources include minor sources as well as major sources
seeking minor modifications to their facilities.
---------------------------------------------------------------------------

    In addition to ensuring protection of the NAAQS, enforceability is
required by the Act and in several regulations that are applicable to
minor source programs as well as to all SIPs and SIP revisions. 42
U.S.C. 7410(a)(2) provides that a SIP must include enforceable emission
limitations and control measures, coupled with methods for maintaining
and analyzing data on air quality. EPA's regulations implementing this
provision require that: Each plan must set forth legally enforceable
procedures that enable the State or local agency to determine whether
the construction or modification of a facility, building, structure or
installation, or combination of these will result in (1) A violation of
applicable portions of the control strategy; or (2) Interference with
attainment or maintenance of a national standard in the State in which
the proposed source (or modification) is located or in a neighboring
State. In addition, 42 U.S.C. 7410(a)(2)(C) specifically provides that
a program be established to provide for the enforcement of emission
limitations. While the statute provides for considerably broader
discretion for States to craft minor source programs, it does not in
any way distinguish the requirement for enforceability between major
and minor source programs. Indeed, since (as noted above), very large
major sources obtain many minor source permits for construction and
modification of emissions units, the collection of such permits at such
sources should reflect similar levels of enforceability. Congress
recognized this in establishing the Title V operating permit program,
which collects all permits into a single comprehensive document, and
requires the permitting authority to remedy past flaws related to
permit enforceability. In addition, the following regulatory provisions
lay out the framework for requirements for enforceability in SIPs, and
in particular minor source programs. Certainly the statute makes no
such distinction nor do the regulations. 40 CFR 51.160 provides in
relevant part that each plan must set forth legally enforceable
procedures that enable the State or local agency to determine whether
there is violation of applicable portions of the control strategy. 40
CFR 51.281 provides, in relevant part, that emission limitations and
other measures adopted by the state as rules and regulation must be
enforceable by the State Agency. 40 CFR 51.212(c) provides for an
enforceable test method for each emission limitation. The Court
discussed only the requirements found in 40 CFR 51.160-164, relating
specifically to minor source permitting as applicable in this matter.
However, all SIPs and SIP revisions must also comply with some
additional requirements, found in part 51 such as Subparts F, K, L and
O. Thus, enforceability is a significant element in the Act and our
regulations.
    EPA has, from time to time, also issued guidance that provides the
Agency's interpretation of what it means to be enforceable under the
Act and implementing regulations.
    One of the central documents that sets forth our interpretation is
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.'' \8\ In the memorandum, we explain that
submitted rules that are clearly worded, clear as to who must comply,
and explicit in their applicability to regulated sources are
appropriate means for achieving the statutory enforcement requirement.
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. Attached to this memorandum was an implementation guidance
which included a section entitled ``SIP APPROVABILITY CHECKLIST--
ENFORCEABILITY'' regarding how to specifically evaluate proposed rules
and ensure they are enforceable.
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    \8\ See 57 FR 13498, April 16, 1992. This is the General
Preamble to the 1990 CCA Amendments which was meant to act as
guidance for the State in making revisions to their NSR programs. It
references the above memorandum as establishing the enforceability
criteria for writing rules and permitting. See also Pgs, 13541,
13548.
---------------------------------------------------------------------------

    On November 3, 1993, EPA's John S. Seitz, Director, Office of Air
Quality Planning and Standards, issued a memorandum titled ``Approaches
to Creating Federally-Enforceable Emissions Limits.'' While its purpose
was to give guidance as to how permitting authorities could create
permit programs that would allow sources that would otherwise be major
sources to be considered ``minor'' for the purposes of title V
permitting and various other requirements of the Act, it also further
articulates EPA's interpretation of statutes and regulations as it
relates to creating emissions limits that are legally and practically
enforceable. It is EPA's longstanding interpretation of 42 U.S.C.
7410(a)(2) of the CAA that in general federal enforceability has two
parts: legal enforceability and practical enforceability.
    A requirement is ``legally enforceable'' if some authority (as well
a citizen) has the right to enforce the restriction. Practical
enforceability for a source-specific permit will be achieved if the
permit's provisions specify: (1) A technically accurate limitation and
the portions of the source subject to the limitation; (2) the time
period for the limitation (hourly, daily, monthly, and annual limits
such as rolling annual limits); and (3) the method to determine
compliance, including appropriate monitoring, recordkeeping, and
reporting. For rules and general permits that apply to categories of
sources, practical enforceability additionally requires that the
provisions: (1) Identify the types or categories of sources that are
covered by the rule; (2) where coverage is optional, provide for notice
to the permitting authority of the source's election to be covered by
the rule; and (3) specify the enforcement consequences relevant to the
rule. ``Enforceable as a practical matter'' will be achieved if a
requirement is both legally and practically enforceable.\9\ The above
cited guidance and Federal Register notices demonstrate that EPA has
consistently interpreted enforceable requirements of the CAA in the
manner explained above, i.e., that they must be both legally and
practically enforceable. We believe the Flexible Permit program before
us today meets our interpretation of enforceable under the CAA.
    The provisions from the October 21, 2013 submittal needed to ensure
legal and practical enforceability are discussed in numbers 1-5 below.
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    \9\ See 67 FR 80186, 80190-80191 December 31, 2002.
---------------------------------------------------------------------------

1. Identifying the New Facilities and/or Modifications for Inclusion in
a Flexible Permit
    One key feature of an enforceable minor NSR program is the ability
to

easily identify the facilities and modifications subject to the
program. See, 40 CFR 51.160(e). For the Flexible Permit program, the
establishment and identification of the facilities subject to the
emission cap is crucial to proper implementation of the program. To
provide for legally enforceable emission caps, the TCEQ adopted
amendments to 30 TAC Section 116.711(2)(M) on December 14, 2010, and
included them in the package submitted for EPA approval on October 21,
2013. The submitted package requires permit applicants provide a
complete description of the facilities (with their individually defined
emission point numbers) included in an emissions cap. The package also
allows a permit applicant to establish an emission cap for all
facilities at an account, including every facility at the account, or
to establish an emission cap comprised of a designated group of
facilities at the account. Section 116.716(a) allows permit applicants
full flexibility to designate facilities for inclusion in an emission
cap as they see fit, without restriction on the type or location of the
facility, as long as it (1) complies with the definition of account and
30 TAC Section 116.716(a) as submitted; (2) provides that emission caps
be established for a pollutant for all facilities at an account or a
designated group of facilities at an account. Finally, 30 TAC Section
116.716(c) as submitted, includes text to ensure that the rules include
procedures for establishing an emissions cap. See 35 TexReg 11936-
11941.
2. Inclusion of Appropriate Monitoring and Recordkeeping Requirements
in Flexible Permits
    In addition to establishing the facilities and modifications
subject to the minor NSR program, the SIP must require sufficient
monitoring, recordkeeping, and reporting (MRR) to demonstrate that the
source or modification as permitted will not result in a violation of
the control strategy or an applicable NAAQS and is enforceable. One of
the rationales for our original disapproval was that the program
afforded excessively broad discretion to the director regarding whether
or not to include MRR conditions in a Flexible Permit. See, 75 FR
41312, 413213. Subsequent to the Fifth Circuit's vacatur of our
disapproval of the MRR and director's discretion provisions in the
original Flexible Permit program, EPA, in a separate rulemaking action,
has more clearly articulated the Agency's long standing interpretation
of the CAA as it relates to the use of director discretion in SIPs.
    On February 22, 2013, in a proposed action involving how excess
emissions would be treated in state rules by sources during periods of
startup, shutdown, or malfunction (SSM), EPA extensively discusses the
use of director's discretion in SIPs. For the full discussion of this
issue please see 78 FR 12460, February 22, 2013, and the accompanying
SSM legal memo: ``Memorandum to Docket EPA-HQ-OAR-2012-0322 Statutory,
Regulatory, and Policy Context for this Rulemaking February 4, 2013.''
In these documents EPA articulates the rationale for its longstanding
interpretation that the CAA does not allow ``director's discretion''
provisions in SIPs if they provide unbounded discretion to determine
what requirements apply to sources, in ways that would amount to case-
specific revisions of the SIP without meeting the statutory
requirements of the CAA for SIP revisions. See, 78 FR 12460, 12474.
    The EPA has explained that director's discretion provisions can be
acceptable if such provisions are sufficiently specific, provide for
sufficient public process, and are sufficiently bounded, so that it is
possible to anticipate at the time of the EPA's approval of the SIP
provision how that provision will actually be applied and that the pre-
authorized exercise of director's discretion will not interfere with
other CAA requirements, such as providing for attainment and
maintenance of the NAAQS. See, 78 FR 12460, 12485. In the EPA's
judgment, the revised Flexible Permit Rule before us today is
sufficiently bounded, provides for public participation, protects the
NAAQS, and is enforceable.
    The disapproved package had provided that a source should have
provisions for measuring emissions of air contaminants ``as determined
by the Executive Director,'' and imposed no additional substantive
requirements for such measurements and did not prevent the Director
from exempting the source from any requirements at all. Thus, it did
not comport with the requirements specified in EPA's recent notice. The
revised Flexible Permit Rule, as submitted in October 2013, does not
contain any provision that could constitute or authorize a complete
variance or an exemption from monitoring. The State in its interpretive
letter clearly confirms that its rules do not allow for an exemption
from monitoring requirements. The requirements for monitoring are
general in nature but are sufficiently bounded to be approvable. In
particular, TCEQ adopted amendments to 30 TAC Section 116.715(d)(1) to
satisfy EPA concerns about the exercise of director's discretion.
Section 116.715(d)(1) provides that the ``monitoring system must
accurately determine all emissions of the pollutants in terms of mass
per unit of time. Any monitoring system authorized for use in the
permit must be based on sound science and meet generally acceptable
scientific procedures for data quality and manipulation.'' As explained
in the TCEQ interpretive letter, this monitoring condition clearly
constrains the director's discretion. As such, it is consistent with
the guidelines for director's discretion provisions set forth in the
EPA guidance just described.
    The newly submitted rule tracks very closely with the monitoring
provisions set forth in EPA's major source Plantwide Applicability
Limitation (PAL) provisions in the federal PSD regulations (PAL). EPA's
PSD PAL provisions at 40 CFR 52.21(aa)(12) specify monitoring
requirements for PAL permits and requires that all monitoring systems
authorized for use in a PAL permit must be based on sound science and
meet generally acceptable scientific procedures for data quality and
manipulation.
    Moreover, in our original disapproval for the Flexible Permit
Program, we cited to the PAL rule as an appropriate way to for the
director to establish monitoring requirements.\10\ As noted above, TCEQ
also submitted an interpretive letter clarifying how this provision in
the program operates and demonstrates it is consistent with EPA
requirements. In sum, these provisions effectively impose necessary
substantive requirements on MRR provisions.
---------------------------------------------------------------------------

    \10\ See, 75 FR 41312, 41317.
---------------------------------------------------------------------------

    The newly submitted Flexible Permit Program expands the MRR
provisions to ensure enforceability of the program. 30 TAC Section
116.715(c)(5)(A) requires each flexible permit to specify requirements
for monitoring or demonstrating compliance with emission caps and
individual emission limits in the flexible permit. 30 TAC Section
116.715(c)(5)(B) requires each flexible permit to specify emission
calculation methods for calculating annual and short term emissions for
each pollutant. We find that these provisions of the Flexible Permit
Program were included in the revised SIP submission by the TCEQ on
October 21, 2013, See, 35 TexReg 11938-11939. These provisions
establish that the overall program, and in particular the MRR
provisions, provide for sufficient public process, and are sufficiently

bounded. It is possible to anticipate how the provision will actually
be applied and that the pre-authorized exercise of director's
discretion will not interfere with other CAA requirements. They also
ensure that the limits on director's discretion are legally
enforceable. See 40 CFR 51.160 (requiring that minor source program
include enforceable procedures.).
3. Additional Elements Specific to Emissions Caps
    EPA has also concluded that the program, as submitted, contains
other specialized provisions needed to ensure enforceability. Once the
cap is established the facilities are then able to make changes without
permit revisions provided the emissions are below the established
emissions caps. The TCEQ has consistently defined the flexible permit
program as a new type of minor NSR permit program which functions as an
alternative to the traditional preconstruction permits that are
authorized in Chapter 116, Subchapter B, NSR Permits. The TCEQ states
that flexible permits were designed to exchange flexibility for further
emission reductions without relaxation of unit specific control
requirements. In its submittal, the TCEQ has included provisions in 30
TAC Section 116.715(c)(5)(A) that satisfy the requirements that each
flexible permit specify requirements for monitoring or demonstrating
compliance with emission caps and individual emission limits in the
flexible permit; 30 TAC Section 116.715(c)(5)(B) as submitted satisfies
the requirement that each flexible permit specify emission calculation
methods for calculating annual and short term emissions for each
pollutant; and 30 TAC Section 116.715(d)(1) to satisfy the requirements
concerning accountability/enforceability. Each of these amendments to
the Flexible Permit Program was submitted as a SIP revision by the TCEQ
on October 21, 2013. See, 35 TexReg 11938-11939.
4. Provisions To Ensure the Flexible Permit Program Is a Minor NSR
Program
    Because the Flexible Permit program can be used for both true minor
sources and for minor modifications at existing major sources, the
program must include provisions to ensure that major NSR requirements
are protected and that the Flexible Permit Program cannot be used to
circumvent the requirements of either PSD or NNSR review. The TCEQ
adopted provisions on December 14, 2010, to further clarify the major
NSR permitting programs. The TCEQ adopted amendments to 30 TAC Section
116.711(2)(M)(vii) to specify that the flexible permit application must
identify any terms, conditions, and representations in any Subchapter B
permit which will be superseded by or incorporated under a flexible
permit and provide an analysis of how the conditions and control
requirements of a Subchapter B permit will be carried forward in the
proposed flexible permit. Texas revised 30 TAC Section 116.716(c)(2) to
require facilities subject to lowest achievable emission rate (LAER) in
accordance with Subchapter B, be included in a separate emissions cap
or provided with individual emission limitations. This provision
ensures that sources subject to LAER are fully controlled as required
by federal NSR regulations. Each of these amendments to the Flexible
Permit Program was submitted as a SIP revision by the TCEQ on October
21, 2013. Each of these amendments to the Flexible Permit Program
ensures that the program is for minor NSR actions and that for any
minor amendments to a major source, the source will retain its major
source requirements (i.e., cannot be used to circumvent the major
source requirements). Our evaluation of this issue is also informed by
the Fifth Circuit Court of Appeals decision in Texas v. EPA, 690 F3d
670, (5th Cir 2013) in which the Court overturned our disapproval of
the rule. One of the major rationales of our earlier disapproval was
that the Program might allow major sources to evade Major NSR. The EPA
found that the Flexible Permit 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.'' See, 75 FR 41312,
41,313. The Court dismissed EPA's concern and expressly ruled that this
was a program limited to minor sources only. ``The Flexible Permit
Program does not allow Major NSR evasion because it affirmatively
requires compliance with Major NSR''. Texas v. EPA, 690 F3d 670, 678.
TCEQ included, as part of their October 21, 2013, submittal 30 TAC
Sections 116.711(8)&(9) which require compliance with PSD and
Nonattainment review if it is found that those provisions apply.
5. Provisions To Ensure the Flexible Permit Program Demonstrates
Compliance
    An emissions cap program such as the Flexible Permit Program must
include provisions for calculating compliance on a 12-month rolling
average and against applicable short term limits in order to meet the
requirement of Section 302(k) of the CAA that the source be able to
demonstrate continuous compliance. Appropriate emission calculations
will ensure that permit conditions are protective of the control
strategy and the applicable NAAQS. To provide for this, the TCEQ
submitted amendments to the Flexible Permit Program on October 21,
2013, to 30 TAC Section 116.715(c)(5) to address monitoring,
calculations, and equivalency of methods so that each flexible permit
shall specify requirements for monitoring or demonstrating compliance
with emission caps and individual emission limits in the flexible
permit and revised 30 TAC Section 116.715(c)(6)(A)(i) so that emission
caps and individual emission limitation calculations are based on a 12-
month rolling average and emission caps and individual emission
limitation calculations correspond to any short term emission
limitations.

B. Federal Requirements for Public Notice of Minor NSR Permitting

    The requirements for public notice of minor NSR permitting are
outlined at 40 CFR 51.160 and 51.161. The legally enforceable approval
procedures for Minor NSR programs at 40 CFR 51.160 must require the
permitting authority to provide opportunity for public comment on
information submitted by sources and the agency's analysis of the
effects of the proposed source on ambient air, including its proposed
approval or disapproval. See, 40 CFR 51.161(a). The opportunity for
public comment must include, at a minimum, a 30-day comment period on
the information submitted by the applicant and the permitting
authority's analysis of the effect of the proposed application on air
quality. This information must be noticed by prominent advertisement in
the area affected by the proposed source and available for public
inspection in at least one location in the area affected. See, 40 CFR
51.161(b).
1. Overview of the Texas Public Participation Process for Applications
for New Flexible Permits and Flexible Permit Amendments
    The Texas public participation process covers the variety of air
quality permit applications processed by the TCEQ including
applications for permits for new major sources or modifications subject
to PSD or NNSR requirements and minor NSR permit actions such as
Flexible Permits. EPA has separately reviewed and approved the public
participation process for major sources and modifications subject to
PSD/NNSR requirements, PAL permit

authorizations at existing major sources, new minor sources or minor
amendments, and permit renewals. See our final rule dated January 6,
2014, approving the Texas public participation requirements for these
permit actions as consistent with the requirements of the CAA and 40
CFR 51.160-51.166. See 79 FR 551. In today's action we are only
reviewing the Texas public participation program specific to
applications for new and amended Flexible Permits pursuant to Chapter
116, Subchapter G. The public participation requirements for Flexible
Permits are found at 30 TAC Section 116.740, which requires any
applicant for a new Flexible Permit or amendment to a Flexible Permit
to comply with the requirements established in Chapter 39 related to
Public Notice. Among other Sections that apply to both flexible permit
applications and other applications, Chapter 39 separately applies the
public participation process to applications for new Flexible Permits
at 30 TAC Section 39.402(a)(4) and applications for amendments to a
Flexible Permit at 30 TAC Section 39.402(a)(5). Because the Flexible
Permits program is a minor NSR authorization, our evaluation of the
public participation specific to flexible permits will be based on
minor NSR public participation requirements of 40 CFR 51.161.
    The following process is used to publish notice of an application
for a new Flexible Permit or an amendment to a Flexible Permit.:
    1. Applicant submits air quality permit application for new or
amended Flexible Permit to TCEQ. See 30 TAC Section 116.711.
    2. TCEQ reviews the application and determines whether the
application is administratively complete. During this process, the TCEQ
has 90 days to determine the application is complete or request
additional information. See 30 TAC 116.714, which cross-references the
requirements at30 TAC Section 116.114(a)(1).
    3. Once the application is administratively complete, the applicant
is required to publish the first notice, the Notice of Receipt of
Application and Intent to Obtain Permit (NORI), as applicable. See 30
TAC Section 39.418. The NORI is a unique feature of the Texas Public
Notice Process. The NORI provides information to the public about the
receipt of an application and provides basic information about the
proposed new source or modification such as a description of the
location and the nature of the proposed activity, a description of the
public comment process, and the location where materials will be made
available for review. The NORI does not provide any technical
information, but rather serves as an indicator of future public notices
and actions that may be of interest, enabling the public to anticipate
draft permits. The NORI is required for all new applications for
Flexible Permits at 30 TAC Section 39.402(a)(4) and most applications
for amendments to Flexible Permits at 30 TAC 39.402(a)(5). Note that
certain applications for Flexible Permit amendments are exempted from
the Chapter 39 public notice provisions as discussed in this proposed
action at Section IV.B.3.
    4. TCEQ completes the technical review and makes a preliminary
decision. The TCEQ has 180 days from the date a new Flexible Permit
application is administratively complete, or 150 days from the date a
Flexible Permit amendment application is administratively complete, to
conduct the technical review and make a preliminary decision. See 30
TAC 116.714, which cross-references the requirements at 30 TAC Section
116.114(a)(2).
    5. The applicant is required to publish the second notice, the
Notice of Application and Preliminary Decision (NAPD) when notified by
TCEQ of the preliminary decision. See 30 TAC Section 39.419. The NAPD
notice provides the information and notice to the public consistent
with federal requirements. The NAPD provides details about the
preliminary decision and draft permit and the location where applicable
air quality analyses and other technical materials will be made
available for public review. NAPD is required for all air quality
permit applications for new Flexible Permits and most Flexible Permit
applications subject to the Chapter 39 public notice provisions. Note
that certain applications for Flexible Permit amendments are exempted
from the Chapter 39 public notice provisions as discussed in Section
V.A.3. of the TSD accompanying this proposed action at section IV.B.3.
    6. The TCEQ files the Executive Director's (ED) draft permit and
preliminary decision, the preliminary determination summary and air
quality analysis with the chief clerk and the clerk posts this
information on the TCEQ's Web site. See 30 TAC Section 39.419(e).
    7. The comment period runs for 30 days after the last publication
of the NAPD discussed in Step 5. See 30 TAC Section 55.152(a)(1).
    8. A public meeting is held if the ED determines there is a
substantial or significant degree of public interest; if the meeting is
requested by a member of the legislature representing the general area
of the proposed facility/modification; if a public meeting is otherwise
required by law. See 30 TAC Section 55.154(c).
    9. The ED prepares a response to all comments received. See 30 TAC
Section 55.156(b)(1).
    10. The ED files the response to comments with the chief clerk as
soon as practicable, but not later than 60 days after the end of the
comment period. See 30 Section TAC Section 55.156(b)(3).
    11. The chief clerk will mail or transmit the ED decision and the
RTC to the applicant, any person who submitted comments and any person
on the mailing list for the permit action. See 30 TAC Section
55.156(c).
    12. The ED will take final action on the permit application within
150 days of receipt of a Flexible Permit amendment application or 180
days for a new Flexible Permit application. The TCEQ's one-year clock
is based on the completion of the technical review and the publication
of the NAPD as provided in Step 5. See 30 TAC 116.714, which cross-
references the requirements at 30 TAC Section 116.114(c)(3).
2. Analysis of the Submitted Public Participation Rules for Flexible
Permits as Minor NSR Requirements
    The Texas public participation requirements for Flexible Permit
applications are outlined at 30 TAC Section 39.402 and apply to the
following types of permits.
     New flexible permits under Chapter 116, Subchapter G--30
TAC Section 39.402(a)(4).
     Amendments to flexible permits under Chapter 116,
Subchapter G when the amendment involves:
    (a) A change in character of emissions or release of an air
contaminant not previously authorized under the permit (i.e., change in
control method or an increase in emission rate)--30 TAC Section
39.402(a)(5)(A);
    (b) The total emissions increase from all facilities to be
authorized under the amended Flexible Permit at a facility not affected
by THSC, section 382.020,\11\ exceeds the State's established ``de
minimis'' levels--30 TAC Section 39.402(a)(5)(B);
---------------------------------------------------------------------------

    \11\ THSC, Sec.  382.020 establishes emission control
requirements for selected agricultural facilities such as cotton
gins, corn mills, grain elevators, peanut processing, or rice drying
facilities.
---------------------------------------------------------------------------

    (c) The total emissions increase from all facilities to be
authorized under the amended permit at a facility affected by THSC,
section 382.020, exceeds the State's established ``insignificant''
levels

found in 30 TAC Section 39.402(a)(5)(C); or
    (d) Other minor amendments to Flexible Permits where the Executive
Director determines reasonable likelihood for interest or impact--30
TAC Section 39.402(a)(5)(D)(i)-(iv).
    Despite the thresholds established in 30 TAC Sections
39.402(a)(5)(B) and (C), the TCEQ rules at 30 TAC Section
39.402(a)(5)(D) vest the TCEQ Executive Director with the authority to
require public notice for an otherwise exempt Flexible Permit amendment
if there is (1) reasonable likelihood of significant public interest in
the activity, (2) reasonable likelihood for emissions impact at a
nearby receptor, (3) reasonable likelihood of high nuisance potential
from the operation of the facility, or (4) the application involves a
facility in the lowest classification under Texas Water Code, Sections
5.753 and 5.754 and the Compliance History Rules at 30 TAC Chapter 60.
This type of Director's Discretion is appropriate for a minor source
program because the exercise of that discretion is bounded by the four
criteria identified above, and because the discretion allows the
director to increase requirements rather than to authorize exceptions
to those requirements. See 78 FR at 12585-86 and the discussion above
at IV, A, 2.
    The notice requirements for each type of Flexible Permit
application listed above are generally the same, meaning that an
application for a new Flexible Permit and an application to amend a
Flexible Permit will have the same public notice requirements. The
submitted Texas rules generally provide that all applications for new
Flexible Permits and applications for qualifying Flexible Permit
amendments will go through public notice using the Texas NORI and NAPD
notices. Therefore, the public will receive notice of the application
and have the opportunity to comment on the draft permit and
accompanying technical information. Note that the applicant is legally
responsible for the publication of the NORI and NAPD, using the
specific notice text provided through regulations by the TCEQ. The
applicant is also legally responsible for providing copies of the
public notice documents to the EPA Regional Office, local air pollution
control agencies with jurisdiction in the county, and air pollution
control agencies of nearby states that may be impacted by the proposed
new source or modification. The NORI and NAPD both identify locations
where materials, including the draft permit and all technical materials
supporting the decision, will be made available for public review. The
TCEQ will respond to each comment received when making a final permit
decision. The TCEQ will also provide opportunity for a public meeting
on the permit application if requested. On January 6, 2014, the EPA
approved the Texas Public Participation rule, which includes the
general notice requirements of the NORI and NAPD as consistent with
federal requirements at 40 CFR 51.160 and 51.161. See 79 FR 551. See
docket EPA-R06-OAR-2010-0612 in www. regulations.gov. EPA views the
public participation applicability provisions at 30 TAC Sections
39.402(a)(4) and (a)(5) as integral to the functionality and
implementation of the Texas Flexible Permits Program. As such, it is
inappropriate to give full approval for these public participation
provisions that apply to the Texas Flexible Permits Program until the
underlying program is fully approved. Additionally, fully approving
these public participation provisions without full approval of the
underlying Flexible Permits Program may create confusion for the public
and the regulated community. Therefore, we propose to find it
appropriate to conditionally approve the notice provisions consistent
with our actions on the underlying Flexible Permits Program. In today's
notice we are proposing to conditionally approve the applicability
requirements at 30 TAC Sections 39.402(a)(4) and (a)(5) that require an
applicant to follow the NORI and NAPD processes for applications for
new and amended Flexible Permits.
3. Minor NSR Public Notice Requirements Specific to Two Types of Minor
NSR Flexible Permit Amendment Applications
    As explained above, the submitted Texas public participation
provisions create a tiered program, wherein two certain types of Minor
NSR Flexible Permit amendment applications that have been defined by
TCEQ as ``de minimis'' or ``insignificant'' will not automatically
require public notice. The following outlines the specific thresholds
that qualify as ``de minimis'' or ``insignificant'' under the revised
rules, and the basis for TCEQ's determination.
i. Identification of the Minor NSR Flexible Permits Emission Thresholds
and Affected Source Populations
     Thresholds are only used for Flexible Permit amendment
applications. Applications for new Minor NSR Flexible Permits are
required by these submitted rules to go through the public procedures
of the NORI and NAPD. The applications for amendments to Flexible
Permits are further divided based on the amount of emission increases
at issue and whether the facility is affected by THSC section 382.020.
     THSC section 382.020 applies to agricultural facilities
such as corn mill, cotton gin, feed mill, grain elevator, peanut
processing facility or rice drying facility.
    [cir] 30 TAC Section 39.402(a)(5)(B) provides that if the
application for the amendment of a Flexible Permit is not for an
affected agricultural facility then the public notice provided through
the NORI and NAPD apply, unless the total emissions increase from all
facilities authorized in the Flexible Permit amendment does not exceed
any of the following levels established by the State as ``de minimis''
levels:
    [ssquf] 50 tons per year (TPY) carbon monoxide (CO)
    [ssquf] 10 TPY sulfur dioxide (SO2)
    [ssquf] 0.6 TPY lead (Pb)
    [ssquf] 5 TPY of NOX, volatile organic compounds (VOC),
particulate matter (PM), or any other contaminant except carbon
dioxide, water, nitrogen, methane, ethane, hydrogen, and oxygen.
    [cir] 30 TAC Section 39.402(a)(5)(C) provides that if the amendment
for a Flexible Permit is for an affected agricultural facility, then
the public notice requirements of the NORI and NAPD apply, unless the
total emissions increase from all authorized facilities in the Flexible
Permit amendment does not exceed any of the following thresholds
established by the State as ``insignificant'' thresholds:
    [ssquf] 250 TPY CO or NOX
    [ssquf] 25 TPY of VOC, SO2, PM or any other air
contaminant except carbon dioxide, water, nitrogen, methane, ethane,
hydrogen, and oxygen.
    [ssquf] A new major stationary source or major modification
threshold as defined in 30 TAC Section 116.12 of this title
    [ssquf] A new major stationary source or major modification
threshold, as defined in 40 CFR 52.21 under the PSD requirements
     If the Flexible Permit amendment application includes
proposed emissions increases of any air contaminant above the
identified threshold then the amendment application is required to go
through notice pursuant to Chapter 39 requirements. That means the
Flexible Permit amendment application will go through the NORI and NAPD
publication process.
ii. Discussion of the ``De minimis'' and ``Insignificant'' Thresholds
for Minor NSR Flexible Permit Amendments
    The thresholds established by the State as ``de minimis''
thresholds at 30

TAC Section 39.402(a)(5)(B) apply to all minor NSR Flexible Permit
amendment applications, except those for affected agricultural
facilities. The thresholds selected by the State at 30 TAC Section
39.402(a)(5)(C), and called ``insignificant'' thresholds, apply only to
minor NSR Flexible Permit amendment applications for affected
agricultural facilities.
    Within the scope of the Texas Minor NSR program, the ``de minimis''
and ``insignificant'' thresholds distinguish those minor Flexible
Permit amendment applications that require full review from those that
may not. But, the thresholds do not affect any part of the technical
review of these minor NSR Flexible Permit amendment applications or the
requirement to comply with other requirements such as application of
required control technology, reporting when required to the emissions
inventory, and analysis of monitoring data. Additionally, being below
the ``de minimis'' or ``insignificant'' threshold does not override any
notice or technical requirements for PSD, NNSR or new Minor NSR
Flexible Permit applications.
    In our January 6, 2014, final rulemaking approving Texas public
participation, we found that TCEQ provided an adequate demonstration to
show that their selected ``de minimis'' and ``insignificant''
thresholds for Minor NSR permitting are adequate to meet federal
requirements for Minor NSR. See 79 FR 551. The State's demonstration is
also applicable to the thresholds as they apply to minor amendments to
existing Flexible Permits. TCEQ also provided supplemental information
concerning the Flexible Permit holders' use of these thresholds since
they were adopted by the State.12 13 The supplemental data
are also included in the docket for this rulemaking. Our analysis of
this supplemental information demonstrates that from Fiscal Year 1994
through Fiscal Year 2013, the TCEQ issued only one Flexible Permit to a
facility that would be classified as an agricultural facility under
THSC 382.020. This agricultural facility never applied for a flexible
permit amendment and has subsequently gone through the de-flex process.
Consequently, there are no existing Flexible Permits for affected
agricultural sources; therefore the ``insignificant'' thresholds are
not available for use for any current flexible permit holders.
Additionally, this supplemental information demonstrates that prior to
Texas Fiscal Year 2002, flexible permit amendments issued to non-
agricultural facilities did not go through public notice. Fiscal Year
2002 represents the time period where TCEQ adopted and implemented the
``de minimis'' and ``insignificant'' thresholds. Since the time of
adoption and implementation at the state level of the ``de minimis''
and ``insignificant'' thresholds in Fiscal Year 2002, the TCEQ records
indicate that 326 amendments to flexible permits have been issued. Of
the 326 applications for amendments to Flexible Permits, 135
applications have been required to go through notice due to the
application of the thresholds. Our analysis of this supplemental
information leads us to conclude that the application of the ``de
minimis'' and ``insignificant'' thresholds specific to applications for
Flexible Permit amendments increases the opportunity for public notice
and participation in Texas. In the TSD for this rulemaking, we have
included EPA's full analysis of the State's rationale for these
thresholds and a discussion of the supplemental data provided by TCEQ.
We propose to find this demonstration meets 40 CFR 51.160 and 51.161.
---------------------------------------------------------------------------

    \12\ Email from Janis Hudson, TCEQ to Adina Wiley, EPA titled
``Flexible Permit Amendment Applications'' dated September 11, 2013.
    \13\ Email from Janis Hudson, TCEQ to Adina Wiley, EPA, titled
``Flexible Permit Amendment Applications--Clarification'' dated
October 23, 2013.
---------------------------------------------------------------------------

4. How do the Texas public notice provisions for applications for new
and amended flexible permits address the concerns identified in EPA's
November 26, 2008 proposed limited approval/limited disapproval for
Texas public participation?
    On November 26, 2008, EPA identified two deficiencies in the Texas
public participation rules specific to applications for new Flexible
Permits and amendments to Flexible Permits. See 73 FR 72001, at 72008.
Below we reiterate the deficiencies and discuss how the revised Texas
public participation process for applications for new Flexible Permits
and amendments to Flexible Permits addresses our concerns.
     For initial issuance of a flexible permit to establish a
minor NSR applicability cap or an increase in a flexible permit cap,
the rules do not require 30-day notice and comment on information
submitted by the owner or operator and the agency's analysis of the
effect of the permit on ambient air quality, including the agency's
proposed approval or disapproval as required by 40 CFR 51.161.
    The public participation requirements specific to applications for
new Flexible Permits and amendments to Flexible Permits at 30 TAC
Sections 39.402(a)(4) and (a)(5) address the deficiency identified on
November 26, 2008. All applications for new Flexible Permits are
required at 30 TAC Section 39.402(a)(4) to go through public notice as
specified in Chapter 39; which means that all applications for new
Flexible Permits must publish the NORI pursuant to 30 TAC Section
39.418 and the NAPD pursuant to 30 TAC Section 39.419. The public
notice process for a new Flexible Permit will run through two different
publication dates. The first public notice announces the company has
applied to the TCEQ for a flexible permit. This date is initially
published first using the NORI. The second public notice announces the
release of the draft permit. The entire public notice period runs
through the end of the second 30-day comment period on the draft
permit. The date may be extended through the date of any public meeting
that was scheduled wherein the public can review TCEQ's analysis and
preliminary determination. All applications for amendments to Flexible
Permits are required at 30 TAC Section 39.402(a)(5) to go through
public notice as specified in Chapter 39 using the NORI and NAPD
process if the amendment will exceed the ``de minimis'' or
``insignificant'' thresholds.
     Where PSD and NNSR terms and conditions are modified or
eliminated when the permit is incorporated into a flexible permit, the
rules do not require public participation consistent with 40 CFR 51.161
and 51.166(q).
    As explained in Section IV.A.4 of this proposed rulemaking, the
TCEQ adopted amendments to 30 TAC Section 116.711(2)(M)(vii) to specify
that the flexible permit application must identify any terms,
conditions, and representations in any Subchapter B permit which will
be superseded by or incorporated under a flexible permit and provide an
analysis of how the conditions and control requirements of a Subchapter
B permit will be carried forward in the proposed flexible permit. This
amendment to the Flexible Permit Program was submitted as a SIP
revision by the TCEQ on October 21, 2013, and will ensure that the
Flexible Permit Program is for minor NSR actions only and will not
circumvent the major source requirements.
    Section 30 TAC Section 39.402(a)(4) provides that an application
for a new flexible permit must go through Chapter 39 public notice.
Therefore, where a new flexible permit application will supersede or
incorporate any term, condition, and/or representation of a Subchapter
B permit, this information will be available for review and

comment during the required NORI and NAPD publication for an
application for a new flexible permit. Similarly, 30 TAC Section
39.402(a)(5)(A)-(C) requires that an application for an amendment to a
flexible permit application must go through Chapter 39 public notice if
the amendment is for an air contaminant not previously authorized or
the amendment exceeds the identified ``de minimis'' or
``insignificant'' thresholds. The TCEQ Executive Director also has the
discretion under 30 TAC Section 39.402(a)(5)(D) to require notice for
an application for a Flexible Permit amendment that would not otherwise
be required to provide notice.
5. Proposed Findings Specific to the Texas Public Participation
Provisions for the Flexible Permit Program
    EPA proposes to find that TCEQ's public participation program
requirements specific to applications for new Flexible Permits and
applications for amendments to Flexible Permits at 30 TAC Sections
39.402(a)(4) and (5) satisfy the provisions of 40 CFR 51.160(e) and
51.161. Moreover, we also propose to find that the TCEQ revised rules
for discretionary public notice for new Flexible Permits and
applications for amendments to Flexible Permits are approvable, because
the provisions adequately confine Executive Director discretion by
authorizing the use of discretion under specified criteria that are
consistent with the goals and purposes of the Act to provide an
adequate opportunity for informed public participation. EPA is
proposing to find that the submitted Texas public participation
regulations identifying the applicant as the legally responsible party
also meet the requirements to provide opportunity for public comment
and for information availability at 40 CFR 51.161, because the NORI and
NAPD both identify locations where materials, including the draft
permit and all technical materials supporting the decision will be made
available for public review and the required information is submitted
to EPA.
    Finally, as explained above, we propose to find that the submitted
provisions address all deficiencies specific to public notice for
Flexible Permits that we previously cited in our November 26, 2008,
proposed limited approval/limited disapproval of Texas public notice
requirements. However, EPA views the public participation applicability
provisions at 30 TAC Sections 39.402(a)(4) and (a)(5) as integral to
the functionality and implementation of the Texas Flexible Permits
Program. As such, it is inappropriate to give full approval for these
public participation provisions that apply to the Texas Flexible
Permits Program until the underlying program is fully approved.
Additionally, fully approving these public participation provisions
without full approval of the underlying Flexible Permits Program may
create confusion for the public and the regulated community. Therefore,
we propose to find it appropriate to conditionally approve the notice
provisions consistent with our actions on the underlying Flexible
Permits Program. Accordingly, we propose conditional approval of the
Texas public notice provisions at 30 TAC Sections 39.402(a)(4) and
(a)(5) for applications for new Flexible Permits and applications for
amendments to Flexible Permits as submitted on July 2, 2010.
Additionally, we propose conditional approval of the public
participation requirement in the Flexible Permit Program at 30 TAC
Section 116.740 as initially submitted on November 29, 1994; and
further revised on July 22, 1998; October 25, 1999; and October 21,
2013.

C. Does proposed approval of the Texas Flexible Permit Program
interfere with attainment, reasonable further progress, or any other
applicable requirement of the Act?