
[Federal Register Volume 82, Number 90 (Thursday, May 11, 2017)]
[Rules and Regulations]
[Pages 21919-21927]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-09472]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R06-OAR-2015-0585; FRL-9960-22-Region 6]


Approval and Promulgation of Implementation Plans; Texas; 
Revisions to Emissions Banking and Trading Programs and Compliance 
Flexibility

AGENCY: Environmental Protection Agency (EPA).

ACTION: Direct final rule.

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SUMMARY: Pursuant to the Federal Clean Air Act (CAA or Act), the 
Environmental Protection Agency (EPA) is approving revisions to the 
Texas State Implementation Plan (SIP) Emissions Banking and Trading 
Programs submitted on July 15, 2002; December 22, 2008; April 6, 2010; 
May 14, 2013; and August 14, 2015. Specifically, we are approving 
revisions to the Texas Emission Credit, Mass Emissions Cap and Trade, 
Discrete Emission Credit, and Highly Reactive Volatile Organic Compound 
Emissions Cap and Trade Programs such that the Texas SIP will include 
the current state program regulations promulgated and implemented in 
Texas. We are also approving compliance flexibility provisions for 
stationary sources using the Texas Emission Reduction Plan submitted on 
July 15, 2002; May 30, 2007; and July 10, 2015.

DATES: This rule is effective on July 10, 2017 without further notice, 
unless the EPA receives relevant adverse comment by June 12, 2017. If 
the EPA receives such comment, the EPA will publish a timely withdrawal 
in the Federal Register informing the public that this rule will not 
take effect.

ADDRESSES: Submit your comments, identified by Docket No. EPA-R06-OAR-
2015-0585, at http://www.regulations.gov or via email to 
wiley.adina@epa.gov. Follow the online instructions for submitting 
comments. Once submitted, comments cannot be edited or removed from 
Regulations.gov. The EPA may publish any comment received to its public 
docket. Do not submit electronically any information you consider to be 
Confidential Business Information (CBI) or other information whose 
disclosure is restricted by statute. Multimedia submissions (audio, 
video, etc.) must be accompanied by a written comment. The written 
comment is considered the official comment and should include 
discussion of all points you wish to make. The EPA will generally not 
consider comments or comment contents located outside of the primary 
submission (i.e. on the web, cloud, or other file sharing system). For 
additional submission methods, please contact Adina Wiley, 214-665-
2115, wiley.adina@epa.gov. For the full EPA public comment policy, 
information about CBI or multimedia submissions, and general guidance 
on making effective comments, please visit http://www2.epa.gov/dockets/commenting-epa-dockets.
    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).

FOR FURTHER INFORMATION CONTACT: Adina Wiley, 214-665-2115, 
wiley.adina@epa.gov. To inspect the hard copy materials, please 
schedule an appointment with Ms. Adina Wiley or Mr. Bill Deese at 214-
665-7253.

[[Page 21920]]


SUPPLEMENTARY INFORMATION: Throughout this document ``we,'' ``us,'' and 
``our'' means the EPA.

I. Background

A. CAA and SIPs

    Section 110 of the CAA requires states to develop and submit to the 
EPA a SIP to ensure that state air quality meets the National Ambient 
Air Quality Standards (NAAQS). These ambient standards currently 
address six criteria pollutants: Carbon monoxide, nitrogen dioxide, 
ozone, lead, particulate matter, and sulfur dioxide. Each federally-
approved SIP protects air quality primarily by addressing air pollution 
at its point of origin through air pollution regulations and control 
strategies. The EPA approved SIP regulations and control strategies are 
federally enforceable.
    The Texas SIP includes several discretionary emissions trading 
programs developed consistent with the EPA's Economic Incentive Program 
Guidance, that are designed to promote flexibility and innovation in 
complying with State and Federal air emission requirements established 
in the SIP and the SIP-approved air permitting programs.\1\ This direct 
final action will address the revisions to the Texas Emission Credit 
(EC), Mass Emissions Cap and Trade (MECT), Discrete Emission Credit 
(DEC), and Highly Reactive Volatile Organic Compound Emissions Cap and 
Trade (HECT) programs that were submitted to the EPA on July 15, 2002; 
December 22, 2008; April 6, 2010; May 14, 2013; and August 14, 2015, 
where the EPA has not yet taken an action on such revisions. This 
direct final action also addresses another method for compliance 
flexibility for stationary sources using the Texas Emission Reduction 
Plan (TERP) as submitted to the EPA on July 15, 2002; May 30, 2007; and 
July 10, 2015. Where the TCEQ also adopted and submitted revisions to 
other parts of the Texas SIP, those revisions have been addressed in 
separate rulemakings. Please see the Technical Support Documents 
accompanying this rulemaking for an identification of the specific 
sections impacted by this direct final rulemaking.
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    \1\ ``Improving Air Quality with Economic Incentive Programs'' 
(EIP Guidance) (EPA-452/R-01-001, January 2001) is the EPA guidance 
document for reviewing and approving discretionary EIP submittals. 
The EIP Guidance applies to the establishment of a discretionary EIP 
for attaining or maintaining the national ambient air quality 
standards (NAAQS) for criteria pollutants. The EIP Guidance 
supersedes and takes precedence over the discretionary EIP guidance 
provided in prior documents such as the 1994 EIP (April 7, 1994, 59 
FR 16690, 40 CFR part 51, subpart U) and the guidance in the 
emission trading policy statement (ETPS) (December 4, 1986, 51 FR 
43813).
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B. Overview of the Texas Emissions Banking and Trading Programs

1. The Emission Credit (EC) Program
    The EC Program enacted at 30 Texas Administrative Code (TAC) 
Chapter 101, Subchapter H, Division 1 allows owners or operators of a 
facility or mobile source to generate emission credits by reducing 
emissions of criteria pollutants or their precursors, with the 
exception of lead, below any applicable regulations or requirements. 
Emission credits are generated and banked in terms of rate (tons per 
year). Emission credits, or ECs, encompass reductions generated and 
banked from stationary sources as emission reduction credits (ERCs) or 
generated and banked from mobile sources as mobile emission reduction 
credits (MERCs). The ECs from the bank have traditionally been used as 
offsets for the permitting of major new or modified facilities in 
nonattainment areas. ECs have also been banked and traded for 
alternative compliance with Reasonably Available Control Technology 
(RACT) requirements. The EPA initially approved the EC program on 
September 6, 2006 (71 FR 52698) with updates approved on May 18, 2010 
(75 FR 27647).
    On June 5, 2015, the TCEQ adopted revisions to the EC Program, 
including renaming the program to the Emission Credit Program and 
revising provisions for mobile and area source credit generation. The 
June 5, 2015, revisions to the EC Program were submitted to the EPA as 
a SIP revision on August 14, 2015.
2. The Mass Emissions Cap and Trade (MECT) Program
    The MECT Program enacted at 30 TAC Chapter 101, Subchapter H, 
Division 3 is mandatory under the Texas SIP for stationary facilities 
that emit oxides of nitrogen (NOX) in the Houston/Galveston/
Brazoria (HGB) ozone nonattainment area which are subject to emission 
specifications in the TCEQ NOX rules at 30 TAC Sections 
117.310, 117.1210, and 117.2010; and which are located as a site where 
they collectively have an uncontrolled design capacity to emit 10 tons 
per year or more of NOX. The program sets a cap on 
NOX emissions beginning January 1, 2002, with a final 
reduction to the cap occurring in 2007. Facilities are required to meet 
NOX allowances on an annual basis. Facilities may purchase, 
bank, or sell their allowances. The EPA published a final rule 
approving the MECT program on November 14, 2001 (66 FR 57252). The EPA 
has acted on several updates to the MECT program since our initial 
program approval. See prior EPA actions on September 6, 2006 (71 FR 
52698); July 16, 2009 (74 FR 34503); January 2, 2014 (79 FR 57).
    TCEQ adopted additional revisions to the MECT on June 5, 2015, and 
submitted these revisions to the EPA as a SIP revision on August 14, 
2015. The revisions make general updates to the MECT and clarify the 
use of allowances for Nonattainment New Source Review (NNSR) offsets. 
This rulemaking addresses all revisions to the MECT submitted on August 
14, 2015.
3. The Discrete Emission Credit (DEC) Program
    The DEC Program enacted at 30 TAC Chapter 101, Subchapter H, 
Division 4 allows an owner or operator of a facility or mobile source 
to generate discrete emission credits by reducing emissions of criteria 
pollutants or their precursors, with the exception of lead, below any 
applicable regulation or requirement. Discrete emission credits (DECs) 
are quantified, banked and traded in terms of mass (tons), not a rate 
as is the case with ECs. DECs may be generated from stationary sources 
and banked as discrete emission reduction credits (DERCs) or may be 
generated from mobile sources and banked as mobile discrete emission 
reduction credits (MDERCs). Traditionally DECs have been used for 
Reasonably Available Control Technology (RACT) compliance for (Volatile 
Organic Compounds) VOCs and NOX; DECs can also be used to 
offset new major sources or major modifications to existing sources in 
nonattainment areas. The EPA initially approved the DEC Program on 
September 6, 2006, with updates approved on May 18, 2010 (75 FR 27644).
    TCEQ has adopted and submitted revisions to the DEC Program on 
December 22, 2008 and May 14, 2013 to address the use of DERCs in the 
Dallas-Fort Worth (DFW) ozone nonattainment area. Additional revisions 
to the DEC program adopted on June 5, 2015, and submitted August 14, 
2015, rename the program to the Discrete Emission Credit Program, 
further revise the provisions specific to DERC use in DFW, and address 
the generation of area and mobile source credits. The EPA is addressing 
all pending revisions to the DEC Program in this action.

[[Page 21921]]

4. The Highly Reactive Volatile Organic Compound (HRVOC) Emissions Cap 
and Trade (HECT) Program
    The HECT Program enacted at 30 TAC Chapter 101, Subchapter H, 
Division 6 is mandatory for covered facilities including vent gas 
streams, flares, and cooling tower heat exchange systems that emit 
HRVOCs, as defined in 30 TAC Section 115.10, and that are located at a 
site subject to Chapter 115, Subchapter H. The EPA published final 
approval of the HECT program on September 6, 2006 (71 FR 52659).
    Since our initial approval of the HECT program, the TCEQ adopted 
revisions on March 10, 2010, in conjunction with the development of the 
HGB 1997 eight-hour ozone attainment demonstration; these HECT 
amendments were submitted as revisions to the Texas SIP on April 6, 
2010. On January 2, 2014, the EPA approved the majority of these HECT 
amendments in concert with our final approval of the HGB attainment 
demonstration for the 1997 eight-hour ozone standard (79 FR 57). Note 
that we did not take action on the submitted revision to 30 TAC Section 
101.396(b) at the request of the state.
    The TCEQ adopted revisions to the HECT program on June 5, 2015, and 
submitted these revisions to the SIP on August 14, 2015. The submitted 
revisions clarify the use of HECT allowances as NNSR offsets, update 
the equations for allowance allocations, update provisions for changing 
site ownership, and revise provisions to clarify data substation for 
reporting.
    This rulemaking addresses the remaining revision to 30 TAC Section 
101.396(b) from the April 6, 2010 submittal and all revisions to the 
HECT submitted on August 14, 2015.

C. Compliance Flexibility With the Texas Emission Reduction Plan (TERP)

    The TERP, implemented with provisions in 30 TAC Chapter 114, 
Subchapter K, is a SIP-approved program that provides financial 
incentives for reducing emissions from mobile sources. Examples of TERP 
grant projects include financial subsidies to upgrade/retrofit diesel 
exhaust systems in school buses and replacing heavy-duty and light-duty 
on-road diesel vehicles with alternative fuel and hybrid vehicles. TCEQ 
adopted new revisions to promote compliance flexibility for stationary 
sources subject to NOX control requirements either under the 
MECT or under the requirements of 30 TAC Chapter 117 by requiring 
partial compliance with the stationary source obligation while 
simultaneously funding mobile emission reductions achieved through the 
TERP for a set period of time. The compliance flexibility provisions 
for sources subject to the MECT were initially adopted on March 13, 
2002 and submitted as SIP revisions on July 15, 2002 as new 30 TAC 
Section 101.357; no changes have been made since this initial adoption 
and submittal. The compliance flexibility provisions for sources 
subject to the NOX control requirements in Chapter 117 were 
initially adopted on March 13, 2002 and submitted as a SIP revision on 
July 15, 2002 as 30 TAC Section117.571. TCEQ has revised this section 
twice since its initial adoption. Revisions adopted May 23, 2007, and 
submitted as a SIP revision on May 30, 2007, recodified and revised the 
provisions as 30 TAC Section 117.9810. The TCEQ adopted further 
revisions to 30 TAC Section 117.9810 on June 3, 2015, and submitted 
these provisions as a SIP revision on July 10, 2015; this section now 
only applies to DFW area sources that seek to use emission reductions 
generated from TERP to meet NOX emission control 
requirements.

II. The EPA's Evaluation

    The TSDs for this action include a detailed analysis of the 
revisions submitted for EPA's consideration. In many instances the 
revisions are minor or non-substantive in nature and do not change the 
intent of the original SIP-approved program. Following is a summary of 
our analysis for those revisions that we view as substantive revisions 
to our initial SIP-approvals.

A. Revisions to the MECT and HECT for Using Allowances as NNSR Offsets

    In the August 14, 2015 submittal, the TCEQ expanded the MECT 
program at 30 TAC Section 101.352 and the HECT Program at 30 TAC 
Section 101.393, such that MECT allowances can be used for the entirety 
of the NNSR NOX offset obligation and HECT allowances can be 
used for the entirety of the NNSR VOC offset obligation, rather than 
just the 1:1 portion of the offset, as long as the use is authorized in 
a NNSR permit issued under the SIP-approved NNSR program at 30 TAC 
Chapter 116, Subchapter B. The TCEQ adopted and submitted additional 
clarifications to both the MECT and HECT Program regulations that 
clarify the applicable offset obligation will be met by a permanent 
stream of allowances and not through the use of a banked, or vintage 
allowance or an allowance allocated based on allowable emissions. The 
owner or operator of the facility must have the necessary allowances in 
the respective compliance account 30 days prior to operation. The TCEQ 
will set-aside the portion of allowances for the 1:1 offset obligation; 
the owner/operator is required to set aside additional allowances if 
there is a short fall in the offset obligation due to allowance 
devaluation. The TCEQ will also permanently retire the allowances used 
for the environmental benefit portion of the offset obligation (the 
greater than 1:1 portion of the offset obligation). The TCEQ also 
provides the mechanism under the MECT or HECT Programs where the owner 
or operator can request the release of allowances if an alternative 
means of compliance with the offset obligation is approved. The TCEQ 
will not retroactively release allowances and the portion of allowances 
retired for the environmental benefit contribution will not be 
released.
    The requirements for NNSR offsets are established under section 
173(c) of the CAA. Section 173(c)(1) provides that an owner or operator 
of a stationary source may comply with any offset requirement by 
obtaining emission reductions of the air pollutant from the same source 
or other sources in the same nonattainment area. Emission reductions 
used for offsets must be in effect and enforceable by the time the new 
or modified source commences operation and ensure that the total 
tonnage of increased emissions of the air pollutant shall be offset by 
the equal or greater reduction in actual emissions. Sections 
173(c)(1)(A) and (B) provide exceptions to the location of the 
offsetting emission reductions by providing that reductions may be 
achieved in another nonattainment area if the area is of an equal or 
higher nonattainment classification and emissions from the other area 
contribute to a violation of the NAAQS in the nonattainment area where 
the source will be located. Section 173(c)(2) provides that emission 
reductions required elsewhere under the Act will not be creditable as 
emission reductions for purposes of NNSR offsets. The EPA regulations 
pertaining to NNSR offset requirements are found at 40 CFR 
51.165(a)(3).
    The EPA has provided specific guidance for the interactions between 
multi-source emission cap and trade programs and the NNSR permitting 
program in our EIP Guidance under sections 6.3(d) and Appendix 16.14. 
Together, these sections provide that reductions from an EIP can be 
used for NNSR purposes provided that the emission reductions 
independently meet the relevant NNSR requirements in the CAA and in 
EPA's regulations and guidance. Further, major sources and 
modifications may not be exempted

[[Page 21922]]

from NSR requirements and the reductions under the EIP may not be used 
for netting unless they occur contemporaneously with use and occur at 
the same source as the emission increase. The EIP Guidance reiterates 
that reductions used for NNSR offsets must be federally enforceable and 
satisfy the requirements of CAA section 173(c).
    The revisions to the MECT and HECT offset provisions continue to 
satisfy the offset requirements under CAA Section 173(c). First as to 
location, an owner/operator with a NOX offset obligation in 
the HGB area could use the MECT allowances to satisfy the offset 
obligation since the allowances are provided in the HGB ozone 
nonattainment area. Similarly, an owner/operator with a VOC offset 
obligation in the HGB area could use the HECT allowances to satisfy the 
offset obligation since the allowances are provided in the HGB ozone 
nonattainment area. The use of allowances for the entirety of the 
offset obligation is not restricted by the CAA, nor is it restricted 
under the EPA's EIP at Appendix 16.14. The MECT and HECT revisions 
specify that the allowances must be obtained 30 days prior to 
commencement of operation, ensuring that the requirements under CAA 
section 173(c)(1) regarding timing are satisfied. A source from outside 
the HGB ozone nonattainment area could theoretically use MECT 
allowances for NOX offset compliance or HECT allowances for 
VOC offset compliance, provided that the HGB ozone nonattainment area 
is of equal or greater nonattainment designation and that the source 
could demonstrate emissions from HGB contribute to a NAAQS violation in 
the other nonattainment area of use. The EPA believes that the 
possibility of the use of MECT or HECT allowances for an offset 
obligation outside of the HGB area will be extremely limited because 
any source trying to use MECT or HECT allowances outside of the HGB 
would be obligated to make the above-referenced demonstrations under 
CAA section 173(c)(1)(A) and (B) to ensure that the CAA is satisfied. 
Finally, the MECT and HECT caps and the pending revisions to the MECT 
and HECT programs are not required by the CAA; therefore, MECT or HECT 
allowances would be creditable for offset purposes under CAA section 
173(c)(2).
    The revisions to the MECT and HECT also satisfy the NNSR offset 
criteria established in EPA's EIP Guidance, Appendix 16.14. The use of 
MECT or HECT allowances for netting out of NNSR requirements is 
prohibited under the SIP-approved program requirements. Ultimately, by 
using a permanent stream of allowances to satisfy the entirety of the 
NNSR offset obligation, the overall MECT or HECT cap will be reduced. 
Therefore, the air shed will be protected while still providing for 
future growth consistent with the goals of the CAA and the NNSR 
program.

B. Revisions to How DERCs Are Used as NNSR Offsets

    The August 14, 2015 submitted revisions to the DEC Program included 
revisions on how DERCs can be used as NNSR offsets and how this usage 
is accounted for in the applicable NNSR permit. The current SIP-
approved language requires that if DECs are to be used for the offset 
obligation in an NNSR permit, the applicable permit will include an 
enforceable requirement that the facility obtain at least one 
additional year of DECs for offsets before continuing operation; this 
creates a rolling requirement for the owner/operator of the stationary 
source to obtain and request approval for the use of DECs each year 
under an NNSR permit. In the August 14, 2015 submittal, the TCEQ 
revised the regulations so that the prior language applies only to the 
use of MDERCs as NNSR offsets. For DERCs, the user must complete an 
application form to use DERCs at least 90 days before operation and at 
least 90 days before continuing operation for any period that was not 
included in the initial application. This change has been made to 
reflect that users of DERCs for offsets are generally obtaining 
sufficient DERCs to cover several years of operation, if not the 
entirety of the expected lifetime of the source, before commencing 
construction. In those situations, the prior SIP-approved language 
created an undue burden on the owner or operator to annually submit 
paperwork when the DERCs had already been obtained and approved for 
use. Under the revised regulations, the enforceable commitment to 
obtain sufficient DERCs is the NNSR permit requirement that emissions 
must be offset prior to the commencement of operation. If the owner or 
operator is using DERCs for the offset obligation they still must 
obtain the DERCs in advance of operation and have those DERCs approved 
for use by the TCEQ Executive Director. While the submitted revisions 
change the method in which users of DERCs as NNSR offsets request 
approval of such use from the TCEQ, the underlying premise of using 
DERCs as NNSR offsets is unchanged. The change in methodology is 
consistent with the offset requirements of the CAA at 173(c)(1) that 
require the offsets to be in effect and enforceable by the time the 
source commences operation.

C. Use of DERCs in the DFW Ozone Nonattainment Area

    On December 22, 2008, the TCEQ submitted revisions to the Texas SIP 
Narrative and the state's Emissions Banking and Trading Rules at 30 TAC 
Sections 101.376 and 101.379 to address the use of DERCs in the DFW 
nonattainment area with respect to the 1997 eight-hour ozone NAAQS. The 
submitted regulations created an enforceable mechanism to restrict the 
use of DERCs in the DFW eight-hour ozone nonattainment area through the 
establishment of the DFW DERC limit. The DFW DERC limit was calculated 
as a ton per day limit based on the TCEQ's photochemical modeling 
demonstration, emission reductions from fleet turnover that were not 
used to satisfy attainment SIP contingency measures and DERCs generated 
and not used after the inception of the DFW DERC limit.
    The TCEQ submitted the DFW attainment demonstration for the 2008 
ozone NAAQS on July 10, 2015, with updates submitted on August 5, 2016. 
As part of these revisions, the TCEQ reevaluated the DERC usage 
limitations for the DFW area. The TCEQ determined that the previously 
adopted and submitted DFW DERC limit calculation was unsustainable. The 
July 10, 2015 submittal included sensitivity analyses that modeled a 
fixed 17.0 tpd limit and enabled the DFW area to reach attainment. The 
TCEQ submitted the revised DFW DERC limit and associated revisions to 
the DERC regulations in the August 14, 2015 submittal.
    In addition to the limit on DERC usage in DFW, the TCEQ adopted and 
submitted an exemption from this limit in the December 22, 2008 with 
updates submitted on May 14, 2013. This exemption is specific to DERCs 
used in the DFW area in response to an emergency situation declared by 
the Electric Reliability Council of Texas (ERCOT) where the safety or 
reliability of the Texas electric grid is compromised or threatened. 
The EPA finds this exemption approvable because the TCEQ Executive 
Director can only approve these requests if all other requirements for 
DERC usage are satisfied. The DERC usage requirements are protective of 
the NAAQS by requiring the TCEQ Executive Director to consider the 
locations requested for DERC usage and determine whether the requested 
use would cause or contribute to a violation of the NAAQS through ozone 
spike formation.

[[Page 21923]]

    The EPA is taking action now to evaluate and approve the revisions 
to the DEC regulations themselves that adopt and implement the DERC 
usage limit for the DFW ozone nonattainment area as submitted on 
December 22, 2008, and revised in the May 14, 2013 and August 14, 2015 
submittals. The EPA believes it is appropriate to approve the 
regulations to restrict DERC usage in the DFW nonattainment area. We 
support the use of a fixed daily limit as provided in the sensitivity 
analyses of the DFW Attainment Demonstration for the 2008 ozone NAAQS 
because of the clarity provided to the sources using DERCs and the TCEQ 
in implementing the usage restrictions. We find that the adopted 
revisions for the DFW DERC limit are sufficient to restrict DERC usage 
consistent with the levels modeled by the TCEQ in the DFW Attainment 
Demonstration for the 2008 ozone NAAQS. While this direct final action 
approves the regulations for the DFW DERC limit, we are not evaluating 
the DFW Attainment Demonstration at this time.

D. Analysis of Compliance Flexibility With TERP

    Site owners or operators subject to the MECT in HGB or the Chapter 
117 NOX requirements for DFW \2\ have an obligation to meet 
certain NOX emission limits. Site owners or operators unable 
to meet these emission limitations and desiring to use TERP emission 
reductions for compliance relief, can petition the TCEQ Executive 
Director for a determination of technical infeasibility. The 
regulations state that an owner or operator should demonstrate that 
they cannot comply with the entirety of the NOX obligation 
at the current time, but rather can comply with 80% of their 
obligation. The owner or operator must further demonstrate that the 
source will be in full compliance with the NOX obligation 
within 5 years of the compliance deadline. In determining whether to 
grant the petition for technical infeasibility, the TCEQ Executive 
Director will consider at a minimum: Current technology, adaptability 
of technology to a specific source, age and projected useful life of 
the source and cost benefits at the time of application. If the TCEQ 
Executive Director agrees with the petition for technical 
infeasibility, the site owner or operator can defer 20% of their 
NOX compliance obligation by paying into the TERP fund at a 
cost of $75,000 per ton of NOX emissions; not to exceed 25 
tons per year or 0.5 tons per day on a site-wide basis. The TCEQ uses 
this money to fund TERP projects to benefit the community where the 
site using the emissions reductions is located. Because the cost per 
ton of NOX ($75,000 per ton) is much greater than the cost 
effectiveness of TERP programs (an average of $6,165 per ton from the 
beginning of TERP in 2002 through August 31, 2015) \3\ it is expected 
that this provision will allow for much greater emission reductions and 
much greater environmental benefit than would otherwise be obtained.
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    \2\ The compliance flexibility provisions under 30 TAC Section 
117.9810 can be used by DFW area sources subject to the requirements 
at 30 TAC Sections 117.405 (reasonably available control 
technology), 117.410 (major sources), or 117.1310 (electric 
generating sources).
    \3\ March 22, 2016 email from Steve Dayton, TCEQ, to Clovis 
Steib, EPA Region 6.
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E. Analysis Under Section 110(l) of the CAA

    Our analysis indicates that the July 15, 2002; December 22, 2008; 
April 6, 2010; May 14, 2013, and August 14, 2015 submitted revisions to 
the Texas EC, MECT, DEC, and HECT Programs were adopted and submitted 
as revisions to the Texas SIP after reasonable notice and public 
hearing. The Texas EC and DEC programs are SIP approved programs that 
provide for compliance flexibility and generation and use of emission 
credits in the SIP-approved NNSR permitting program. The Texas MECT and 
HECT are necessary components of the HGB nonattainment requirements. 
The submitted revisions to the EC, MECT, DEC and HECT clarify and 
update the existing programs--these submitted revisions do not change 
the fundamental premise or structure of the programs. Therefore, we 
find that the revisions to the EC, MECT, DEC and HECT will not 
interfere with attainment, reasonable further progress or any other 
applicable requirements of the Act.
    The revisions to the MECT adopted on March 13, 2002, and submitted 
on July 15, 2002, establish a new provision under the MECT allowing for 
compliance flexibility with MECT requirements by using TERP projects. 
Similarly, the compliance flexibility provisions for Chapter 117 
NOX obligations in DFW initially submitted on July 15, 2002 
and revised on May 30, 2007, and July 14, 2015, establish the ability 
for a source to comply with NOX obligations by funding TERP 
projects. The EPA believes that the compliance flexibility afforded 
under 30 TAC Sections 101.357 and 117.9810 is approvable and, if used, 
would result in an equal or greater reduction of NOX 
emissions in the respective airshed from a combination of stationary 
and mobile sources. Therefore, these compliance flexibility provisions 
will not interfere with any applicable requirement concerning 
attainment and reasonable further progress, or any other applicable 
requirement of this CAA.

III. Final Action

    We are approving through a direct final action the submitted 
revisions to the Texas Emissions Banking and Trading Programs from July 
15, 2002; December 22, 2008; April 6, 2010; May 14, 2013; and August 
14, 2015. The EPA has determined that these revisions are approvable 
because the submitted rules were adopted and submitted in accordance 
with the CAA and are necessary to update functionality of the SIP-
approved trading programs and are consistent with the CAA and the EPA's 
policy and guidance on emissions trading. Therefore, under section 110 
of the Act, the EPA is approving the following revisions to the Texas 
SIP:
     Revisions to the 30 TAC Chapter 101, Subchapter H, 
Division 1 Title submitted August 14, 2015;
     Revisions to 30 TAC Section 101.300 adopted on June 3, 
2015 and submitted August 14, 2015;
     Revisions to 30 TAC Section 101.301 adopted on June 3, 
2015 and submitted August 14, 2015;
     Revisions to 30 TAC Section 101.302 adopted on June 3, 
2015 and submitted August 14, 2015;
     Revisions to 30 TAC Section 101.303 adopted on June 3, 
2015 and submitted August 14, 2015;
     Revisions to 30 TAC Section 101.306 adopted on June 3, 
2015 and submitted August 14, 2015;
     Revisions to 30 TAC Section 101.309 adopted on June 3, 
2015 and submitted August 14, 2015;
     Revisions to 30 TAC Section 101.350 adopted on June 3, 
2015 and submitted August 14, 2015;
     Revisions to 30 TAC Section 101.351 adopted on June 3, 
2015 and submitted August 14, 2015;
     Revisions to 30 TAC Section 101.352 adopted on June 3, 
2015 and submitted August 14, 2015;
     Revisions to 30 TAC Section 101.353 adopted on June 3, 
2015 and submitted August 14, 2015;
     Revisions to 30 TAC Section 101.354 adopted on June 3, 
2015 and submitted August 14, 2015;
     Revisions to 30 TAC Section 101.356 adopted on June 3, 
2015 and submitted August 14, 2015;
     New 30 TAC Section 101.357 adopted on March 13, 2002 and 
submitted July 15, 2002;

[[Page 21924]]

     Repeal of 30 TAC Section 101.358 adopted on June 3, 2015 
and submitted August 14, 2015;
     Revisions to 30 TAC Section 101.359 adopted on June 3, 
2015 and submitted August 14, 2015;
     Revisions to 30 TAC Section 101.360 adopted on June 3, 
2015 and submitted August 14, 2015.
     Revisions to the 30 TAC Chapter 101, Subchapter H, 
Division 4 Title submitted August 14, 2015;
     Revisions to 30 TAC Section 101.370 adopted on June 3, 
2015 and submitted August 14, 2015;
     Revisions to 30 TAC Section 101.371 adopted on June 3, 
2015 and submitted August 14, 2015;
     Revisions to 30 TAC Section 101.372 adopted on June 3, 
2015 and submitted August 14, 2015;
     Revisions to 30 TAC Section 101.373 adopted on June 3, 
2015 and submitted August 14, 2015;
     Revisions to 30 TAC Section 101.376 adopted on December 
10, 2008 and submitted December 22, 2008;
     Revisions to 30 TAC Section 101.376 adopted on June 3, 
2015 and submitted August 14, 2015;
     Revisions to 30 TAC Section 101.378 adopted on June 3, 
2015 and submitted August 14, 2015;
     Revisions to 30 TAC Section 101.379 adopted on December 
10, 2008 and submitted December 22, 2008;
     Revisions to 30 TAC Section 101.379 adopted on April 10, 
2013 and submitted May 14, 2013;
     Revisions to 30 TAC Section 101.379 adopted on June 3, 
2015 and submitted August 14, 2015;
     Revisions to the 30 TAC Chapter 101, Subchapter H, 
Division 6 Title submitted August 14, 2015;
     Revisions to 30 TAC Section 101.390 adopted on June 3, 
2015 and submitted August 14, 2015;
     Revisions to 30 TAC Section 101.391 adopted on June 3, 
2015 and submitted August 14, 2015;
     Revisions to 30 TAC Section 101.392 adopted on June 3, 
2015 and submitted August 14, 2015;
     Revisions to 30 TAC Section 101.393 adopted on June 3, 
2015 and submitted August 14, 2015;
     Revisions to 30 TAC Section 101.394 adopted on June 3, 
2015 and submitted August 14, 2015;
     Revisions to 30 TAC Section 101.396(b) adopted on March 
10, 2010 and submitted on April 6, 2010;
     Revisions to 30 TAC Section 101.396 adopted on June 3, 
2015 and submitted August 14, 2015;
     Revisions to 30 TAC Section 101.399 adopted on June 3, 
2015 and submitted August 14, 2015; and
     Revisions to 30 TAC Section 101.400 adopted on June 3, 
2015 and submitted August 14, 2015.
    The EPA has also determined that the revisions to the 
NOX requirements under 30 TAC Chapter 117 submitted on July 
15, 2002; May 30, 2007; and July 10, 2015 allowing for compliance 
flexibility using the TERP are approvable and were adopted and 
submitted in accordance with the CAA. Therefore, under section 110 of 
the Act, the EPA is approving the following revisions to the Texas SIP:
     Revisions to 30 TAC Section 117.571 adopted on March 13, 
2002, and submitted July 15, 2002;
     The recodification of 30 TAC Section 117.571 as new 30 TAC 
Section 117.9810 adopted on May 23, 2007, and submitted on May 30, 
2007; and
     Revisions to 30 TAC Section 117.9810 adopted on June 3, 
2015, and submitted on July 10, 2015.
    Additionally, we are making a non-substantive revision and a 
ministerial correction to the table in 40 CFR 52.2270(c). The EPA is 
making a non-substantive revision at 40 CFR 52.2270(c) to remove a 
duplicative entry for 30 TAC Section 117.9800--Use of Emission Credits 
for Compliance. The EPA initially approved this section as submitted by 
the State on April 6, 2012, on July 31, 2014 (79 FR 44300). We then 
approved revisions to this section submitted by the State on July 3, 
2015, on April 13, 2016 (81 FR 21750), but did not remove the initial 
entry of our approval from the table. Additionally, we are making a 
ministerial correction to reflect that 30 TAC Section 117.410(c), 
(pertaining to carbon monoxide and ammonia emissions), is not in the 
EPA-approved Texas SIP. Our April 13, 2016 final action on the Texas 
SIP did not properly update the CFR table to show a recodification of 
subsections in 30 TAC Section 117.410 (81 FR 21750). The EPA is also 
revising the table in 40 CFR 52.2270(e) for Nonregulatory and Quasi-
Regulatory Measures to reflect our final action on the DERC SIP 
Narrative adopted on December 10, 2008 and submitted on December 22, 
2008 by the State.
    The EPA is publishing this rule without prior proposal because we 
view this as a non-controversial amendment and anticipate no adverse 
comments. However, in the proposed rules section of this Federal 
Register publication, we are publishing a separate document that will 
serve as the proposal to approve the SIP revision if relevant adverse 
comments are received. This rule will be effective on July 10, 2017 
without further notice unless we receive relevant adverse comment by 
June 12, 2017. If we receive relevant adverse comments, we will publish 
a timely withdrawal in the Federal Register informing the public that 
the rule will not take effect. We will address all public comments in a 
subsequent final rule based on the proposed rule. We will not institute 
a second comment period on this action. Any parties interested in 
commenting must do so now. Please note that if we receive relevant 
adverse comment on an amendment, paragraph, or section of this rule and 
if that provision may be severed from the remainder of the rule, we may 
adopt as final those provisions of the rule that are not the subject of 
an adverse comment.

IV. Incorporation by Reference

    In this rule, we are finalizing regulatory text that includes 
incorporation by reference. In accordance with the requirements of 1 
CFR 51.5, we are finalizing the incorporation by reference of the 
revisions to the Texas regulations as described in the Final Action 
section above. We have made, and will continue to make, these documents 
generally available electronically through www.regulations.gov and/or 
in hard copy at the EPA Region 6 office.

V. Statutory and Executive Order Reviews

    Under the CAA, the Administrator is required to approve a SIP 
submission that complies with the provisions of the Act and applicable 
Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in 
reviewing SIP submissions, the EPA's role is to approve state choices, 
provided that they meet the criteria of the CAA. Accordingly, this 
action merely approves state law as meeting Federal requirements and 
does not impose additional requirements beyond those imposed by state 
law. For that reason, this action:
     Is not a ``significant regulatory action'' subject to 
review by the Office of Management and Budget under Executive Orders 
12866 (58 FR 51735, October 4, 1993) and 13563 (76 FR 3821, January 21, 
2011);
     Does not impose an information collection burden under the 
provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq.);
     Is certified as not having a significant economic impact 
on a substantial number of small entities under the Regulatory 
Flexibility Act (5 U.S.C. 601 et seq.);
     Does not contain any unfunded mandate or significantly or 
uniquely affect small governments, as described in the Unfunded 
Mandates Reform Act of 1995 (Pub. L. 104-4);

[[Page 21925]]

     Does not have Federalism implications as specified in 
Executive Order 13132 (64 FR 43255, August 10, 1999);
     Is not an economically significant regulatory action based 
on health or safety risks subject to Executive Order 13045 (62 FR 
19885, April 23, 1997);
     Is not a significant regulatory action subject to 
Executive Order 13211 (66 FR 28355, May 22, 2001);
     Is not subject to requirements of section 12(d) of the 
National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 
note) because application of those requirements would be inconsistent 
with the CAA; and
     Does not provide EPA with the discretionary authority to 
address, as appropriate, disproportionate human health or environmental 
effects, using practicable and legally permissible methods, under 
Executive Order 12898 (59 FR 7629, February 16, 1994).
    In addition, the SIP is not approved to apply on any Indian 
reservation land or in any other area where EPA or an Indian tribe has 
demonstrated that a tribe has jurisdiction. In those areas of Indian 
country, the rule does not have tribal implications and will not impose 
substantial direct costs on tribal governments or preempt tribal law as 
specified by Executive Order 13175 (65 FR 67249, November 9, 2000).
    The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the 
Small Business Regulatory Enforcement Fairness Act of 1996, generally 
provides that before a rule may take effect, the agency promulgating 
the rule must submit a rule report, which includes a copy of the rule, 
to each House of the Congress and to the Comptroller General of the 
United States. The EPA will submit a report containing this rule and 
other required information to the U.S. Senate, the U.S. House of 
Representatives, and the Comptroller General of the United States prior 
to publication of the rule in the Federal Register. A major rule cannot 
take effect until 60 days after it is published in the Federal 
Register. This action is not a ``major rule'' as defined by 5 U.S.C. 
804(2).
    Under section 307(b)(1) of the CAA, petitions for judicial review 
of this action must be filed in the United States Court of Appeals for 
the appropriate circuit by July 10, 2017. Filing a petition for 
reconsideration by the Administrator of this final rule does not affect 
the finality of this rule for the purposes of judicial review nor does 
it extend the time within which a petition for judicial review may be 
filed, and shall not postpone the effectiveness of such rule or action. 
This action may not be challenged later in proceedings to enforce its 
requirements. (See section 307(b)(2).)

List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, Carbon monoxide, 
Incorporation by reference, Intergovernmental relations, Lead, Nitrogen 
oxide, Ozone, Reporting and recordkeeping requirements, Sulfur oxides, 
Volatile organic compounds.

    Samuel Coleman was designated the Acting Regional Administrator on 
April 27, 2017, through the order of succession outlined in Regional 
Order R6-1110.1, a copy of which is included in the docket for this 
action.

    Dated: April 27, 2017.
Samuel Coleman,
Acting Regional Administrator, Region 6.

    40 CFR part 52 is amended as follows:

PART 52--APPROVAL AND PROMULGATION OF IMPLEMENTATION PLANS

0
1. The authority citation for part 52 continues to read as follows:

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

Subpart SS--Texas

0
2. In Sec.  52.2270:
0
a. In paragraph (c), the table titled ``EPA Approved Regulations in the 
Texas SIP'' is amended by:
0
i. Revising the centered headings for Divisions 1, 4 and 6 under 
Chapter 101, Subchapter H and the entries for Sections 101.300-101.303, 
101.306, 101.309, 101.350-101.354, 101.356, 101.359, 101.360, 101.370-
101.373, 101.376, 101.378, 101.379, 101.390-101.394, 101.396, 101.399, 
101.400, and 117.410;
0
ii. Removing the entry for Section 101.358 and the second entry for 
Section 117.9800; and
0
iii. Adding in numerical order entries for Sections 101.357 and 
117.9810.
0
b. In paragraph (e), the second table titled ``EPA Approved 
Nonregulatory Provisions and Quasi-Regulatory Measures in the Texas 
SIP'' is amended by adding the entry ``Discrete Emissions Reduction 
Credits (DERC) SIP'' at the end.
    The revisions and additions read as follows:


Sec.  52.2270   Identification of plan.

* * * * *
    (c) * * *

                                    EPA-Approved Regulations in the Texas SIP
----------------------------------------------------------------------------------------------------------------
                                                             State
                                                           approval/
          State citation              Title/subject        submittal     EPA approval date       Explanation
                                                             date
----------------------------------------------------------------------------------------------------------------
 
                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------
                                     Chapter 101--General Air Quality Rules
----------------------------------------------------------------------------------------------------------------
 
                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------
                                   Subchapter H--Emissions Banking and Trading
----------------------------------------------------------------------------------------------------------------
                                       Division 1--Emission Credit Program
----------------------------------------------------------------------------------------------------------------
Section 101.300..................  Definitions........        6/3/2015  5/11/2017, [Insert   ...................
                                                                         Federal Register
                                                                         citation].
Section 101.301..................  Purpose............        6/3/2015  5/11/2017, [Insert   ...................
                                                                         Federal Register
                                                                         citation].
Section 101.302..................  General Provisions.        6/3/2015  5/11/2017, [Insert   ...................
                                                                         Federal Register
                                                                         citation].

[[Page 21926]]

 
Section 101.303..................  Emission Reduction         6/3/2015  5/11/2017, [Insert   ...................
                                    Credit Generation                    Federal Register
                                    and Certification.                   citation].
 
                                                  * * * * * * *
Section 101.306..................  Emission Credit Use        6/3/2015  5/11/2017, [Insert   ...................
                                                                         Federal Register
                                                                         citation].
Section 101.309..................  Emission Credit            6/3/2015  5/11/2017, [Insert   ...................
                                    Banking and                          Federal Register
                                    Trading.                             citation].
 
                                                  * * * * * * *
Section 101.350..................  Definitions........        6/3/2015  5/11/2017, [Insert   ...................
                                                                         Federal Register
                                                                         citation].
Section 101.351..................  Applicability......        6/3/2015  5/11/2017, [Insert   ...................
                                                                         Federal Register
                                                                         citation].
Section 101.352..................  General Provisions.        6/3/2015  5/11/2017, [Insert   ...................
                                                                         Federal Register
                                                                         citation].
Section 101.353..................  Allocation of              6/3/2015  5/11/2017, [Insert   ...................
                                    Allowances.                          Federal Register
                                                                         citation].
Section 101.354..................  Allowance                  6/3/2015  5/11/2017, [Insert   ...................
                                    Deductions.                          Federal Register
                                                                         citation].
Section 101.356..................  Allowance Banking          6/3/2015  5/11/2017, [Insert   ...................
                                    and Trading.                         Federal Register
                                                                         citation].
Section 101.357..................  Use of Emission           3/13/2002  5/11/2017, [Insert   ...................
                                    Reductions                           Federal Register
                                    Generated from the                   citation].
                                    Texas Emissions
                                    Reduction Plan
                                    (TERP).
Section 101.359..................  Reporting..........        6/3/2015  5/11/2017, [Insert   ...................
                                                                         Federal Register
                                                                         citation].
Section 101.360..................  Level of Activity          6/3/2015  5/11/2017, [Insert   ...................
                                    Certification.                       Federal Register
                                                                         citation].
 
                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------
                                  Division 4--Discrete Emission Credit Program
----------------------------------------------------------------------------------------------------------------
Section 101.370..................  Definitions........        6/3/2015  5/11/2017, [Insert   ...................
                                                                         Federal Register
                                                                         citation].
Section 101.371..................  Purpose............        6/3/2015  5/11/2017, [Insert   ...................
                                                                         Federal Register
                                                                         citation].
Section 101.372..................  General Provisions.        6/3/2015  5/11/2017, [Insert   ...................
                                                                         Federal Register
                                                                         citation].
Section 101.373..................  Discrete Emission          6/3/2015  5/11/2017, [Insert   ...................
                                    Reduction Credit                     Federal Register
                                    Generation and                       citation].
                                    Certification.
 
                                                  * * * * * * *
Section 101.376..................  Discrete Emission          6/3/2015  5/11/2017, [Insert   ...................
                                    Credit Use.                          Federal Register
                                                                         citation].
Section 101.378..................  Discrete Emission          6/3/2015  5/11/2017, [Insert   ...................
                                    Credit Banking and                   Federal Register
                                    Trading.                             citation].
Section 101.379..................  Program Audits and         6/3/2015  5/11/2017, [Insert   ...................
                                    Reports.                             Federal Register
                                                                         citation].
----------------------------------------------------------------------------------------------------------------
              Division 6--Highly Reactive Volatile Organic Compound Emissions Cap and Trade Program
----------------------------------------------------------------------------------------------------------------
Section 101.390..................  Definitions........        6/3/2015  5/11/2017, [Insert   ...................
                                                                         Federal Register
                                                                         citation].
Section 101.391..................  Applicability......        6/3/2015  5/11/2017, [Insert   ...................
                                                                         Federal Register
                                                                         citation].
Section 101.392..................  Exemptions.........        6/3/2015  5/11/2017, [Insert   ...................
                                                                         Federal Register
                                                                         citation].
Section 101.393..................  General Provisions.        6/3/2015  5/11/2017, [Insert   ...................
                                                                         Federal Register
                                                                         citation].
Section 101.394..................  Allocation of              6/3/2015  5/11/2017, [Insert   ...................
                                    Allowances.                          Federal Register
                                                                         citation].
Section 101.396..................  Allowance                  6/3/2015  5/11/2017, [Insert   ...................
                                    Deductions.                          Federal Register
                                                                         citation].

[[Page 21927]]

 
Section 101.399..................  Allowance Banking          6/3/2015  5/11/2017, [Insert   ...................
                                    and Trading.                         Federal Register
                                                                         citation].
Section 101.400..................  Reporting..........        6/3/2015  5/11/2017, [Insert   ...................
                                                                         Federal Register
                                                                         citation].
 
                                                  * * * * * * *
Section 117.410..................  Emission                   6/3/2015  4/13/2016, 81 FR     117.410(c) NOT in
                                    Specifications for                   21750.               SIP.
                                    Eight-Hour
                                    Attainment
                                    Demonstration
                                    Reporting.
 
                                                  * * * * * * *
Section 117.9810.................  Use of Emission            6/3/2015  5/11/2017, [Insert   ...................
                                    Reductions                           Federal Register
                                    Generated from the                   citation].
                                    Texas Emissions
                                    Reduction Plan
                                    (TERP).
 
                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------

* * * * *
    (e) * * *
* * * * *

              EPA-Approved Nonregulatory Provisions and Quasi-Regulatory Measures in the Texas SIP
----------------------------------------------------------------------------------------------------------------
                                                             State
                                        Applicable        submittal/
      Name of SIP provision           geographic or        effective     EPA approval date         Comments
                                    nonattainment area       date
----------------------------------------------------------------------------------------------------------------
 
                                                  * * * * * * *
Discrete Emissions Reduction       Collin, Dallas,          12/10/2008  5/11/2017, [Insert   ...................
 Credits (DERC) SIP.                Denton, Ellis,                       Federal Register
                                    Johnson, Kaufman,                    citation].
                                    Parker, Rockwall
                                    and Tarrant
                                    Counties, TX.
----------------------------------------------------------------------------------------------------------------

* * * * *
[FR Doc. 2017-09472 Filed 5-10-17; 8:45 am]
 BILLING CODE 6560-50-P


