[Federal Register Volume 75, Number 222 (Thursday, November 18, 2010)]
[Proposed Rules]
[Pages 70654-70657]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-29146]
[[Page 70654]]
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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 52
[EPA-R06-OAR-2005-TX-0013; FRL-9228-4]
Approval and Promulgation of Air Quality Implementation Plans;
Texas; System Cap Trading Program
AGENCY: Environmental Protection Agency (EPA).
ACTION: Proposed rule.
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SUMMARY: EPA is proposing to disapprove severable portions of two
revisions to the Texas State Implementation Plan (SIP) submitted by the
State of Texas on May 1, 2001, and August 16, 2007, that create and
amend the System Cap Trading (SCT) Program at Title 30 of the Texas
Administrative Code, Chapter 101--General Air Quality Rules, Subchapter
H--Emissions Banking and Trading, Division 5, sections 101.380,
101.382, 101.383, and 101.385. EPA is proposing disapproval of the SCT
program because the program lacks several necessary components for
emissions trading programs as outlined in EPA's Economic Incentive
Program Guidance. This action is being taken under section 110 and
parts C and D of the Federal Clean Air Act (the Act or CAA).
DATES: Comments must be received on or before December 20, 2010.
ADDRESSES: Submit your comments, identified by Docket ID No. EPA-R06-
OAR-2005-TX-0013, by one of the following methods:
(1) http://www.regulations.gov: Follow the on-line instructions for
submitting comments.
(2) E-mail: Mr. Jeff Robinson at [email protected]. Please
also cc the person listed in the FOR FURTHER INFORMATION CONTACT
paragraph below.
(3) U.S. EPA Region 6 ``Contact Us'' Web site: http://epa.gov/region6/r6coment.htm. Please click on ``6PD'' (Multimedia) and select
``Air'' before submitting comments.
(4) Fax: Mr. Jeff Robinson, Chief, Air Permits Section (6PD-R), at
fax number 214-665-6762.
(5) Mail: Mr. Jeff Robinson, Chief, Air Permits Section (6PD-R),
Environmental Protection Agency, 1445 Ross Avenue, Suite 1200, Dallas,
Texas 75202-2733.
(6) Hand or Courier Delivery: Mr. Jeff Robinson, Chief, Air Permits
Section (6PD-R), Environmental Protection Agency, 1445 Ross Avenue,
Suite 1200, Dallas, Texas 75202-2733. Such deliveries are accepted only
between the hours of 8:30 a.m. and 4:30 p.m. weekdays except for legal
holidays. Special arrangements should be made for deliveries of boxed
information.
Instructions: Direct your comments to Docket ID No. EPA-R06-OAR-
2005-TX-0013. 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 e-mail, 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 e-
mail comment directly to EPA without going through http://www.regulations.gov, your e-mail address will be automatically captured
and included as part of the comment that is placed in the public docket
and made available on the Internet. If you submit an electronic
comment, EPA recommends that you include your name and other contact
information in the body of your comment 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: All documents in the docket are listed in the http://www.regulations.gov index. Although listed in the index, some
information is not publicly available, e.g., CBI or other information
the disclosure of which is restricted by statute. Certain other
material, such as copyrighted material, will be publicly available only
in hard copy. Publicly available docket materials are available either
electronically in http://www.regulations.gov or in hard copy at the Air
Permits Section (6PD-R), Environmental Protection Agency, 1445 Ross
Avenue, Suite 700, Dallas, Texas 75202-2733. The file will be made
available by appointment for public inspection in the Region 6 FOIA
Review Room between the hours of 8:30 a.m. and 4:30 p.m. weekdays
except for legal holidays. Contact the person listed in the FOR FURTHER
INFORMATION CONTACT paragraph below to make an appointment. If
possible, please make the appointment at least two working days in
advance of your visit. A 15 cent per page fee will be charged for
making photocopies of documents. On the day of the visit, please check
in at the EPA Region 6 reception area on the seventh floor at 1445 Ross
Avenue, Suite 700, Dallas, Texas.
The State submittals related to this SIP revision, and which are
part of the EPA docket, are also available for public inspection at the
State Air Agency listed below during official business hours by
appointment:
Texas Commission on Environmental Quality, Office of Air Quality,
12124 Park 35 Circle, Austin, Texas 78753.
FOR FURTHER INFORMATION CONTACT: If you have questions concerning
today's proposed rule, please contact Ms. Adina Wiley (6PD-R), Air
Permits Section, Environmental Protection Agency, Region 6, 1445 Ross
Avenue (6PD-R), Suite 1200, Dallas, TX 75202-2733. The telephone number
is (214) 665-2115. Ms. Wiley can also be reached via electronic mail at
[email protected].
SUPPLEMENTARY INFORMATION: Throughout this document wherever, any
reference to ``we,'' ``us,'' or ``our'' is used, we mean EPA.
Table of Contents
I. What action is EPA proposing?
II. What did Texas submit?
III. What is the System Cap Trading Program?
IV. What is EPA's evaluation of the System Cap Trading Program?
V. TCEQ's Planned Withdrawal of the System Cap Trading Program
VI. Proposed Action
VII. Statutory and Executive Order Reviews
I. What action is EPA proposing?
EPA is proposing to disapprove severable portions of two revisions
to the Texas SIP submitted by the State of Texas on May 1, 2001, and
August 16, 2007, specific to the System Cap Trading (SCT) Program.
Specifically, we are proposing to disapprove 30 TAC sections 101.380,
101.382, 101.383, and 101.385 submitted on May 1, 2001; and the
amendments to 30 TAC sections 101.383 and 101.385 submitted on August
16, 2007. Our analysis as presented in this proposed rulemaking action
finds the SCT Program to be inconsistent with EPA's Economic Incentive
Program Guidance, ``Improving Air Quality with Economic Incentive
Programs'' (EPA-452/R-01-001, January 2001) and our past
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approval actions on Texas trading programs.
II. What did Texas submit?
We are proposing to disapprove severable portions of two revisions
to the Texas SIP specific to the SCT Program. The first SIP submission
we are proposing to disapprove was adopted by the Texas Commission on
Environmental Quality (TCEQ) on March 21, 2001, and submitted to EPA on
May 1, 2001, at 30 TAC sections 101.380, 101.382, 101.383, and 101.385.
The second revision upon which we are proposing disapproval was adopted
by the TCEQ on July 25, 2007, and submitted to EPA on August 16, 2007,
at 30 TAC sections 101.383 and 101.385. The May 1, 2001, and August 16,
2007, SIP submittals create and amend the SCT Program.
In addition to the sections identified above as the subject of
today's proposed disapproval, the TCEQ's submissions on May 1, 2001,
and August 16, 2007, also included other provisions for which we are
not proposing action today. Specifically, on May 1, 2001, the TCEQ also
adopted and submitted revisions to 30 TAC Chapter 117, Control of Air
Pollution from Nitrogen Compounds, sections 117.109, 117.110, and
117.139. We are not proposing action today on the revisions to Chapter
117 because these revisions are severable from the SCT Program and EPA
has already taken a separate approval action (see 73 FR 73562 on
December 3, 2008). On August 16, 2007, the TCEQ also adopted and
submitted revisions to the general air quality definitions, the
Emission Credit Banking and Trading Program (referred to as the
Emission Reduction Credit (ERC) Program elsewhere in this document) and
the Discrete Emission Credit Banking and Trading Program (referred to
as the Discrete Emission Reduction Credit (DERC) Program elsewhere in
this document). We are not proposing action today upon revisions to the
general air quality definitions at 30 TAC Chapter 101, Subchapter A,
section 101.1 because the SCT Program does not rely upon them
(therefore the revisions are severable from the SCT Program) and
previous revisions to section 101.1 are still pending for review by
EPA. We are not proposing action today upon the revisions to the ERC
Program at 30 TAC Chapter 101, Subchapter H, Division 1, sections
101.302 and 101.306 because these revisions are severable from the SCT
Program and EPA has already taken a separate approval action (see 75 FR
27647 on May 15, 2010). We are also not proposing action today upon the
revisions to the DERC Program at 30 TAC Chapter 101, Subchapter H,
Division 4, sections 101.372 and 101.376 because these revisions are
severable from the SCT Program and EPA has already taken a separate
approval action (see 75 FR 27644 on May 15, 2010).
A copy of the May 1, 2001, and August 16, 2007, SIP submittals can
be obtained from the Docket, as discussed in the ``Docket'' section
above. A discussion of the specific Texas rule changes that we are
proposing to disapprove is included below.
III. What is the System Cap Trading Program?
The SCT Program was designed by the TCEQ to provide additional
compliance flexibility to source owners and operators subject to the
system caps established in 30 TAC Chapter 117. Under this program,
sources under common ownership or control may be voluntarily grouped
together in a system with a system cap on total emissions from the
sources in the system. The Chapter 117 system caps establish daily,
rolling 30-day average, and annual average emission caps depending upon
the source's location. The Chapter 117 system caps enable participating
sources to transfer emission allowables (the amount greater than zero
that a source owner or operator's allowable emissions exceed the actual
emissions over the applicable averaging time period) from source to
source within the same system, provided the overall cap is not
exceeded. The SCT Program at 30 TAC Chapter 101 provides an additional
layer of compliance flexibility by allowing owners or operators of
units subject to the Chapter 117 system caps to trade surplus emission
allowables (the amount greater than zero that a source owner or
operator's allowable emissions in a system cap emission limit specified
in Chapter 117 is greater than the actual emissions in that system over
the applicable averaging time period) with other system caps within the
same attainment or nonattainment area to exceed the applicable Chapter
117 system cap limits. The SCT Program also streamlined the reporting
requirements for the participating sources by only requiring
notification to the TCEQ after the trades of surplus emission
allowables between system caps were completed. The SCT Program has not
been used by any source since the program was established in March
2001.
IV. What is EPA's evaluation of the System Cap Trading Program?
We reviewed the SCT program with respect to EPA's EIP Guidance
``Improving Air Quality with Economic Incentive Programs'' (EPA-452/R-
01-001, January 2001) (EIP Guidance) (available in the docket for this
rulemaking) and for consistency with our past approval actions on the
Texas SIP-approved trading programs. Our analysis finds that the SCT
Program is not consistent with the EIP Guidance or with our past
actions on Texas trading programs. Namely, the SCT Program fails to:
Satisfy the fundamental element of Surplus at 4.1(a) and
(b) of the EIP Guidance because the participating sources are not
clearly identified, and therefore EPA and the public are unable to
determine that all emission reductions under the SCT program are
surplus. It is essential that a trading program have a clearly
identified group of participating sources to ensure that the reductions
from these sources are surplus to all federal and state requirements,
and to facilitate trading among participating sources to promote a
robust market. Therefore, the SCT Program must clearly identify sources
subject to the program. Currently, 30 TAC section 101.380(2) includes
an incorrect citation and 30 TAC section 101.382 broadly references all
of 30 TAC Chapter 117 instead of identifying the subject sections.
Satisfy the fundamental element of Enforceability at
4.1(a) and (b) of the EIP Guidance because the SCT Program does not
clearly identify violations and outline the penalties for the
participating sources as described in Sections 5.1(c) and 6.1 of the
EIP Guidance. Currently 30 TAC section 101.385 requires a source owner
or operator to notify the TCEQ when a Chapter 117 system cap emission
limit is exceeded as a result of participating in the SCT Program.
However, there are no penalty provisions or other mechanisms to provide
a disincentive for violating the emission limits.
Provide an environmental benefit as described in Sections
5.1(a) and 6.5 of the EIP Guidance.
Provide a program evaluation as described in Section
5.3(b) of the EIP Guidance. Such a program evaluation must occur every
3 years and provide remedies if the trading program does not have the
intended results, per Section 5.3(c) of the EIP Guidance. A program
evaluation or audit is an essential feature of a trading program
because it provides the TCEQ the time and authority to review the
functionality of the program and suggest remedies. Additionally, EPA
has SIP-approved audit provisions in the ERC, Mass Emissions Cap and
Trade (MECT), and DERC programs that specifically require
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the TCEQ to evaluate the impact of the program on the state's ozone
attainment demonstrations and authorizes the TCEQ to suspend trading in
whole or in part if problems are identified. Because the SCT Program
operates in attainment and nonattainment areas, we find that analysis
of the program impacts on the state's ozone attainment demonstrations
is an essential feature that must be included.
Address requirements for monitoring, recordkeeping, and
reporting consistent with Section 5.3(a) of the EIP Guidance.
Provide TCEQ visibility of the trading process or
establish reliable tracking mechanism for emissions trading consistent
with Section 6.5(d) of the EIP Guidance. Participating sources in the
SCT Program only notify the TCEQ after the trades between system caps
occur. The TCEQ must have knowledge and visibility of the trading under
this program to anticipate and respond to issues that result from
trading between system caps.
V. TCEQ's Planned Withdrawal of the System Cap Trading Program
During the preparation of this proposed rule notice, Region 6 staff
had several discussions with TCEQ staff about the SCT program, EPA's
evaluation of it, and the possibility of EPA proposing a conditional
approval of the program under section 110(k)(4) of the Clean Air
Act.\1\ In response, Mr. Mark Vickery, the TCEQ Executive Director,
submitted a letter to EPA Region 6 on November 2, 2010, available in
the docket for this rulemaking. In this letter, the TCEQ stated that
they are unable to address EPA's concerns with the SCT Program through
rulemaking action within the time period specified under section
110(k)(4) of the Clean Air Act. Moreover, TCEQ noted that its review of
the SCT Program indicated no use of the program by affected companies.
Finally, the TCEQ stated that it will seek approval from the
Commissioners to withdraw the SCT Program SIP submittals from EPA's
consideration and complete rulemaking to repeal the rules.
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\1\ Section 110(k)(4) authorizes EPA to approve a plan revision
based on a commitment by a state to adopt specific enforceable
measures by a date certain, but not later than one year after the
date of the conditional approval.
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Notwithstanding TCEQ's planned withdrawal, because that withdrawal
may not occur before December 31, 2010 (when EPA is scheduled to take
final action on these submissions under the consent decree in BCCA
Appeal Group v. EPA, No. 3-08CV1491 (N.D. Tex.)), EPA is proposing
action on these submissions at this time. If the submissions are not
withdrawn, and if the December 31, 2010 deadline remains in place, EPA
will take final action in December 2010.
VI. Proposed Action
EPA is proposing to disapprove severable revisions to the Texas SIP
submitted on May 1, 2001, and August 16, 2007. Specifically from the
May 1, 2001, submittal, EPA is disapproving 30 TAC sections 101.380,
101.382, 101.383, and 101.385 that create the SCT Program. EPA is also
proposing to disapprove provisions revisions to the SCT Program at 30
TAC sections 101.383 and 101.385 as submitted on August 16, 2007. We
note that if TCEQ formally withdraws these two SCT Program SIP
submittals as discussed in the November 2, 2010, letter from TCEQ,
before EPA takes final action we will not need to take final action on
these submissions.
Under section 179(a) of the CAA, final disapproval of a submittal
that addresses a mandatory requirement of the Act starts a sanctions
clock and a Federal Implementation Plan (FIP) clock. The provisions in
May 1, 2001, and August 16, 2007, SIP submittals creating and amending
the SCT Program were not submitted to meet a mandatory requirement of
the Act. Therefore, if EPA takes final action to disapprove the
submitted SCT Program SIP submittals, no sanctions and FIP clocks will
be triggered.
VII. Statutory and Executive Order Reviews
A. Executive Order 12866, Regulatory Planning and Review
This action is not a ``significant regulatory action'' under the
terms of Executive Order 12866 (58 FR 51735, October 4, 1993) and is
therefore not subject to review under the Executive Order.
B. Paperwork Reduction Act
This action does not impose an information collection burden under
the provisions of the Paperwork Reduction Act, 44 U.S.C. 3501 et seq.,
because this proposed SIP disapproval under section 110 and subchapter
I, part D of the Clean Air Act will not in-and-of itself create any new
information collection burdens but simply disapproves certain State
requirements for inclusion into the SIP. Burden is defined at 5 CFR
1320.3(b).
C. Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA) generally requires an agency
to conduct a regulatory flexibility analysis of any rule subject to
notice and comment rulemaking requirements unless the agency certifies
that the rule will not have a significant economic impact on a
substantial number of small entities. Small entities include small
businesses, small not-for-profit enterprises, and small governmental
jurisdictions. For purposes of assessing the impacts of today's rule on
small entities, small entity is defined as: (1) A small business as
defined by the Small Business Administration's (SBA) regulations at 13
CFR 121.201; (2) a small governmental jurisdiction that is a government
of a city, county, town, school district or special district with a
population of less than 50,000; and (3) a small organization that is
any not-for-profit enterprise which is independently owned and operated
and is not dominant in its field.
After considering the economic impacts of today's proposed rule on
small entities, I certify that this action will not have a significant
impact on a substantial number of small entities. This rule does not
impose any requirements or create impacts on small entities. This
proposed SIP disapproval under section 110 and subchapter I, part D of
the Clean Air Act will not in-and-of itself create any new requirements
but simply disapproves certain State requirements for inclusion into
the SIP. Accordingly, it affords no opportunity for EPA to fashion for
small entities less burdensome compliance or reporting requirements or
timetables or exemptions from all or part of the rule. The fact that
the Clean Air Act prescribes that various consequences (e.g., higher
offset requirements) may, or will flow from this disapproval does not
mean that EPA either can or must conduct a regulatory flexibility
analysis for this action. Therefore, this action will not have a
significant economic impact on a substantial number of small entities.
D. Unfunded Mandates Reform Act
This action contains no Federal mandates under the provisions of
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), 2 U.S.C.
1531-1538 ``for State, local, or tribal governments or the private
sector.'' EPA has determined that the proposed disapproval action does
not include a Federal mandate that may result in estimated costs of
$100 million or more to either State, local, or tribal governments in
the aggregate, or to the private sector. This action proposes to
disapprove pre-existing requirements under State or local law, and
imposes no new requirements. Accordingly, no
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additional costs to State, local, or tribal governments, or to the
private sector, result from this action.
E. Executive Order 13132, Federalism
Executive Order 13132, entitled ``Federalism'' (64 FR 43255, August
10, 1999), requires EPA to develop an accountable process to ensure
``meaningful and timely input by State and local officials in the
development of regulatory policies that have federalism implications.''
``Policies that have federalism implications'' is defined in the
Executive Order to include regulations that have ``substantial direct
effects on the States, on the relationship between the national
government and the States, or on the distribution of power and
responsibilities among the various levels of government.''
This action does not have federalism implications. It will not have
substantial direct effects on the States, on the relationship between
the national government and the States, or on the distribution of power
and responsibilities among the various levels of government, as
specified in Executive Order 13132, because it merely disapproves
certain State requirements for inclusion into the SIP and does not
alter the relationship or the distribution of power and
responsibilities established in the Clean Air Act. Thus, Executive
Order 13132 does not apply to this action.
F. Executive Order 13175, Coordination With Indian Tribal Governments
This action does not have tribal implications, as specified in
Executive Order 13175 (59 FR 22951, November 9, 2000), because the SIP
EPA is proposing to disapprove would not apply in Indian country
located in the State, and EPA notes that it will not impose substantial
direct costs on tribal governments or preempt tribal law. Thus,
Executive Order 13175 does not apply to this action.
G. Executive Order 13045, Protection of Children From Environmental
Health Risks and Safety Risks
EPA interprets Executive Order 13045 (62 FR 19885, April 23, 1997)
as applying only to those regulatory actions that concern health or
safety risks, such that the analysis required under section 5-501 of
the Executive Order has the potential to influence the regulation. This
action is not subject to Executive Order 13045 because it is not an
economically significant regulatory action based on health or safety
risks subject to Executive Order 13045 (62 FR 19885, April 23, 1997).
This proposed SIP disapproval under section 110 and subchapter I, part
D of the Clean Air Act will not in-and-of itself create any new
regulations but simply disapproves certain State requirements for
inclusion into the SIP.
H. Executive Order 13211, Actions That Significantly Affect Energy
Supply, Distribution, or Use
This proposed rule is not subject to Executive Order 13211 (66 FR
28355, May 22, 2001) because it is not a significant regulatory action
under Executive Order 12866.
I. National Technology Transfer and Advancement Act
Section 12(d) of the National Technology Transfer and Advancement
Act of 1995 (``NTTAA''), Public Law 104-113, section 12(d) (15 U.S.C.
272 note) directs EPA to use voluntary consensus standards in its
regulatory activities unless to do so would be inconsistent with
applicable law or otherwise impractical. Voluntary consensus standards
are technical standards (e.g., materials specifications, test methods,
sampling procedures, and business practices) that are developed or
adopted by voluntary consensus standards bodies. NTTAA directs EPA to
provide Congress, through OMB, explanations when the Agency decides not
to use available and applicable voluntary consensus standards.
The EPA believes that this action is not subject to requirements of
Section 12(d) of NTTAA because application of those requirements would
be inconsistent with the Clean Air Act.
J. Executive Order 12898: Federal Actions To Address Environmental
Justice in Minority Populations and Low-Income Populations
Executive Order 12898 (59 FR 7629 (Feb. 16, 1994)) establishes
federal executive policy on environmental justice. Its main provision
directs federal agencies, to the greatest extent practicable and
permitted by law, to make environmental justice part of their mission
by identifying and addressing, as appropriate, disproportionately high
and adverse human health or environmental effects of their programs,
policies, and activities on minority populations and low-income
populations in the United States.
EPA lacks the discretionary authority to address environmental
justice in this proposed action. In reviewing SIP submissions, EPA's
role is to approve or disapprove state choices, based on the criteria
of the Clean Air Act. Accordingly, this action merely proposes to
disapprove certain State requirements for inclusion into the SIP under
section 110 and subchapter I, part D of the Clean Air Act and will not
in-and-of itself create any new requirements. Accordingly, it does not
provide EPA with the discretionary authority to address, as
appropriate, disproportionate human health or environmental effects,
using practicable and legally permissible methods, under Executive
Order 12898.
List of Subjects in 40 CFR Part 52
Environmental protection, Air pollution control, Incorporation by
reference, Intergovernmental relations, Nitrogen dioxide, Ozone,
Reporting and recordkeeping requirements.
Authority: 42 U.S.C. 7401 et seq.
Dated: November 10, 2010.
Lawrence E. Starfield,
Acting Regional Administrator, Region 6.
[FR Doc. 2010-29146 Filed 11-17-10; 8:45 am]
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