Approval and Promulgation of Air Quality State Implementation Plans (SIP); Texas Mass Emissions Cap and Trade Program

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Note: EPA no longer updates this information, but it may be useful as a reference or resource.

[Federal Register: November 14, 2001 (Volume 66, Number 220)]
[Rules and Regulations]
[Page 57252-57261]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr14no01-15]

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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 52
[TX-133-1-7543; FRL-7092-3]

Approval and Promulgation of Air Quality State Implementation
Plans (SIP); Texas Mass Emissions Cap and Trade Program

AGENCY: Environmental Protection Agency (EPA).
ACTION: Final Rule.

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SUMMARY: The EPA is approving the Texas Mass Emissions Cap and Trade
(MECT) program as a revision to the Texas State Implementation Plan
(SIP). The program was submitted on December 22, 2000. The MECT program
will contribute to attainment of the 1-hour ozone National Ambient Air
Quality Standard (NAAQS) in the HGA ozone nonattainment area. The EPA
is approving these revisions to the Texas SIP to regulate emissions of
NO_X in accordance with the requirements of the Federal Clean
Air Act (the Act).
The EPA proposed approval of the Texas MECT program on July 23,
2001 on the condition that Texas resolve eight issues. The State
revised the MECT rule to adequately address the EPA issues identified
in the proposed rulemaking and submitted these revisions to EPA as a
SIP revision which EPA is approving in this action by parallel
processing. Comments were received on the proposed rulemaking from
Environmental Defense, Inc. on September 22, 2001, from Baker and Botts
L.L.P. representing the Business Coalition for Clean Air Appeal Group
on August 13, 2001, and from Reliant Energy, Inc. on August 13, 2001.
The major comments regarded the use of credits from other trading
programs for MECT compliance, inflation of the cap, undermining of the
attainment demonstration, emissions monitoring and program evaluations.
After reviewing the comments and the State response to the eight issues
raised in the proposed rulemaking, EPA has concluded that the Texas
MECT program fully satisfies all relevant guidance and the Clean Air
Act.

DATES: This final rule is effective on December 14, 2001.

ADDRESSES: Copies of the documents relevant to this action are
available for public inspection during normal business hours at the
following locations. Persons interested in examining these documents
should make an appointment with the appropriate office at least 24
hours before the visiting day. Environmental Protection Agency, Region
6, Air Planning Section (6PD-L), 1445 Ross Avenue, Suite 700, Dallas,
Texas 75202-2733. Texas Natural Resource Conservation Commission, 12100
Park 35 Circle, Austin, Texas 78753.

FOR FURTHER INFORMATION CONTACT: Merrit H. Nicewander, Air Planning
Section (6PD-L), EPA Region 6, 1445 Ross Avenue, Dallas, Texas 75202-
2733, telephone (214) 665-7519. (nicewander.merrit@epa.gov)

SUPPLEMENTARY INFORMATION: This supplemental information section is
organized as follows:

I. What action is EPA taking?
II. What did EPA propose?
III. What comments did EPA receive?
IV. How did Texas respond to prerequisites for approval?
V. What are EPA's responses to comments?
VI. Administrative requirements
Throughout this document ``we,'' ``us,'' and ``our'' means EPA.

I. What action Is EPA Taking?

We are granting final approval of the nitrogen oxides (
NO_X) Mass Emissions Cap and Trade program for the Houston/
Galveston (HGA) one-hour ozone nonattainment area. The rule was adopted
and submitted as a SIP revision by letters of the Governor dated
December 22, 2000 and June 15, 2001. We proposed approval of the
program at 66 FR 38231 on July 23, 2001 through parallel processing.
Other than changes as referenced in the proposed approval, there were
no significant changes between the version proposed on July 23, 2001
and the version submitted on October 4, 2001. On September 26, 2001 the
State adopted as final rules amendments to 30 TAC Chapter 101 which
were proposed on May 30, 2001 with certain revisions. On October 4,
2001 Texas Governor Rick Perry submitted a letter requesting EPA to
process the September 26, 2001 final rule amendments to 30 TAC, Chapter
101, as a revision to the MECT SIP. The MECT rule is one element of the
control strategy for the HGA nonattainment area to comply with the
requirements of the Clean Air Act (CAA) and achieve attainment for
ozone.
The HGA ozone nonattainment area is required to attain the one-hour
ozone standard of 0.12 parts per million (ppm) by November 15, 2007.
The area will need to reduce nitrogen oxides ( NO_X) to reach
attainment with the one-hour standard. The MECT emissions banking rule
was evaluated as an integral component of the HGA control strategy to
reduce NO_X emissions. The rule submitted by the TNRCC is the
Mass Emission Cap & Trade Program (30 Texas Administrative Code (TAC)
Chapter 101, Subchapter H, Division 3). The MECT regulation is found at
sections 101.350 through 101.363. As noted in our proposed approval, we
are not approving sections 101.353(a)(3)(B) and (D). With the MECT rule
revisions submitted on October 4, 2001, the State adopted definitions
found at 30 TAC Section 101.1. These revisions to definitions were
proposed on June 15, 2001. No comments were received on this section.
We are also granting final approval of 30 TAC 101.1.
The MECT program is mandatory for stationary facilities that emit
NO_X in the HGA ozone nonattainment area (at sites that have
a collective design capacity of 10 tons per year or more) and which are
subject to the TNRCC NO_X rules as found at 30 TAC Chapter
117. NO_X is a precursor gas that reacts with volatile
organic compounds (VOCs) in the presence of sunlight to form ground-
level ozone. The program sets a cap on NO_X emissions
beginning on January 1, 2002 with a final reduction to the cap
occurring in 2007. Facilities are required to meet NO_X
allowances on an annual basis. Facilities may purchase, bank or sell
their allowances. The program has a provision to allow a facility to
use emission reduction credits (ERCs), discrete emission reduction
credits (DERCs) and mobile discrete emission reduction credits (MDERCs)
in lieu of allowances if they are generated in the HGA area.\1\
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\1\ As discussed subsequently in this notice, we are not acting
on 30 TAC Chapter 101, Subchapter H, Division 4 and neither DERCs
nor MDERCs can be utilized in the MECT program prior to our approval
of the rule unless approved as a site-specific SIP revision.
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II. What Did EPA Propose?

EPA proposed to approve the Texas Mass Emission Cap and Trade
program provided that TNRCC took eight specific steps. The EPA proposed
approval of the MECT program was based upon the prerequisites that
TNRCC must: (1) Specify the number of days of violation if an annual
cap is exceeded, (2) revise the rule to require that deviation from
monitoring protocols be approved by both the TNRCC Executive Director
and EPA, (3) provide public access to production data necessary to
calculate emissions, (4) provide for missing data provisions when
monitoring equipment is not functioning properly, (5) clarify that
allowances used for offsets will be obtained for the life of the new
source, (6) commit to require notification of the

[[Page 57253]]

Metropolitan Planning Organization (MPO) when MDERCs are used in the
MECT program, (7) demonstrate that Alternative Emission Limitations
(AELs) will not increase the allowances for a facility, and (8) revise
the rule relating to the executive director discretion to deviate from
allocation procedures in ``extenuating circumstances'' by either
demonstrating that the allocations would not be inconsistent with the
attainment demonstration and would comply with the Act, or by modifying
the rule to eliminate executive director discretion or require EPA
approval of allocations issued pursuant to the subsection.

III. What Comments Did EPA Receive?

EPA received one comment letter during the public comment period
that closed on August 22, 2001. Environmental Defense submitted seven
comments in a letter dated August 22, 2001. Two respondents to the HGA
attainment demonstration SIP stated that their comments made on
September 25, 2000 to TNRCC during the public comment period for the
final State MECT rule were to be included by reference. The two
respondents were Reliant Energy, Inc. (REI) and Baker and Botts L.L.P.
on behalf of The Business Coalition for Clean Air Appeal Group (BCCA).
BCCA and REI both in comments on our proposed approval of the
attainment demonstration SIP incorporated by reference their comments
submitted in response to the State's proposed MECT rule.
Environmental Defense commented that EPA must not defer action on
the use of DERCs and MDERCs for MECT compliance. ED commented that EPA
should not approve the MECT program as long as it allows the use of
MDERCs in lieu of allowances. ED further stated that EPA may not
approve the MECT without squarely addressing the issue of whether
MDERCs can be used for MECT compliance.
ED questioned EPA's deferral of the decision to separately act on
the MDERC rules (30 TAC 101 Subchapter H Division 4). However, they did
indicate that it is an entirely separate question whether the MDERC
portions of TNRCC's rules are approvable on their own (and used for
purposes other than MECT compliance). ED questioned if EPA ultimately
decides at some future date that it cannot approve the use of MDERCs
for MECT compliance, after having approved the MECT program in this
rulemaking, what the effect would be on the approval of the MECT,
whether the approval of the MECT would become a disapproval, what the
effect of disapproval would be on the proposed approval of the
attainment demonstration, and whether a final approval of the
attainment demonstration SIP would become a disapproval.
ED further commented that the use of DERCs and MDERCs will
undermine the MECT program by allowing sources in the MECT program to
use MDERCs, whereby actual emissions during any given control period
could exceed the overall MECT cap without contemporaneous reductions
having occurred to offset the excess emissions. ED further felt that
allowing the use of MDERCs for MECT compliance was improper as there is
a lack of a credible baseline to establish whether a reduction that
might have been surplus at the time an MDERC was generated continues to
be surplus at the time of use. ED commented that predicting results in
the integrity element of quantifiable is compromised because it is
impossible to predict for any control period what the balance between
the generation and use of MDERCs for MECT compliance, and there is an
issue of uncertainty in the integrity element of quantifiable by using
reductions from one type of source at another type of source. Using
emission reductions that generated MDERCs are not permanent ED
commented because they took place at some point in the past. Finally,
trading between economic incentive programs (EIPs) by allowing sources
subject to the requirements of the mass cap and trade program to use
credits generated by sources outside of the cap as a compliance option
should not be allowed.
ED also commented that the method for determining the allocation of
allowances to new sources creates an opportunity to inflate the cap and
that additional allowances will further undermine the attainment
demonstration. It further commented that requirements for emissions
monitoring are inadequate, initial program evaluations should occur
earlier than three years after program inception, and there appears to
be a discrepancy in the amount of emissions that constitute an
allowance.
Comments on the MECT rule were made in commenting on the attainment
demonstration SIP by the BCCA and REI by reference to their comments to
the TNRCC during the public comment period for the final State MECT
rule.
BCCA commented that the MECT program should be strengthened by
feasible reduction levels, and a five-year phase-in period. It
additionally commented that the cap allocation methodology should be
strengthened in a number of respects. The NO_X reductions
required by the MECT rule are not technically or economically feasible,
the phase-in time-frame should be for five years, the baseline activity
level should be derived from a 12-month average, cap reductions should
be weighted toward the target year, there is no reasoned justification
for the rate of emission reductions, allowances should be allocated for
30 future years, not year-by-year, the additional definitions
``Account'' and ``NO_X Cap Plant'' should be incorporated,
allocations should be fixed despite equipment shutdowns or changes, an
opt-in mechanism should be incorporated for non-emission standards for
the attainment demonstration (ESAD) sources, modified, as well as new,
sources should be granted allocations at permitted levels, and the
allocation methodology should be simplified. They feel that open-market
credits should be fully incorporated, that ERCs should be creditable to
allowances, and the 10% assessment should be dropped for credit use in
the program. Further comments indicated that daily and 30-day limits
should be dropped for sources participating in the MECT program, and an
emission cap should be employed to meet new source review requirements.
They commented that the true-up period should be extended to April 1,
allowances should be divisible in tenth tons, enhanced monitoring
should await the target year, VOC credits should be creditable against
NO_X allocations upon an appropriate demonstration, and the
Economic Incentive Program should be expanded and strengthened.
REI comments indicated generally that it supports a market-based
cap and trade program as achieving overall NO_X reductions at
the least cost. It contends that a viable cap and trade program depends
on feasible reduction levels and that allowances should be allocated
for a stream of years, not every year. Open Market Credits should be
fully incorporated to preserve investments made to achieve early
reductions, it commented. The cap and trade program should incorporate
Plant-wide Applicability Limits to satisfy New Source Review
requirements for changes in NO_X emissions. In addition, REI
commented that the true-up date for the annual cap compliance should be
extended to conform to the annual inventory deadline, daily and 30-day
limits should be dropped for sources participating in the cap and
trade, and VOC reductions should be creditable against NO_X
allocations upon an appropriate demonstration.
Our response to these comments is included in Section V of this
notice.

[[Page 57254]]

IV. How Did Texas Respond to Prerequisites for Approval?

As indicated by the responses below, Texas has satisfied all of
EPA's prerequisites to approval.
Prerequisite: Our proposed approval requested the State to clarify
in response to comments that the State has authority to impose
penalties where every day of a long term violation is a separate
violation.
Response: The State in the preamble to the final MECT rule
responded that EPA's interpretation of these statutes is correct; each
day of noncompliance is a separate violation. Thus, every day that the
annual cap is exceeded may be considered as a separate violation.
Prerequisite: Our proposed approval requested the State amend the
rules to provide that any use of monitoring protocols other than those
specified in Chapter 117 will be approved by EPA.
Response: The State amended section 101.354(a) by adding language
clarifying that established protocols in 30 TAC Chapter 117 must be
used when quantifying actual emissions for facilities subject to the
cap and trade program. The authority of the Executive Director to
approve monitoring protocols other than those specified has been
eliminated. The authority to quantify actual emissions by means other
than those specified in 30 TAC 117 is now limited by section 101.353(b)
to circumstances where required monitoring and testing data is missing
or unavailable. (See subsequent response relating to missing data.)
Prerequisite: Our proposed approval requested the State to clarify
in response to comments that the confidentiality provisions will not
prevent public disclosure of activity level data necessary to determine
emissions under the cap program. We also requested that any exemptions
from disclosure be noted in the annual compliance report.
Response: The State clarified that emissions data cannot be held
confidential. The State clarification indicated that the Office of the
Attorney General makes such a determination in specific cases. Attorney
General Opinion No. H-539 (February 26, 1975) ruled that emissions data
supplied to the state may not be treated as confidential. Emissions
data has been interpreted to include information on the nature and
amount of emissions from a facility. The State agreed to include any
notice of exemptions from disclosure in the annual report.
Prerequisite: Our proposed approval requested the State amend the
rules to specify missing data provisions as described in EIP guidance
Sec. 5.2(c).
Response: The State added a new section 101.354(b) that provides a
procedure which may be followed to determine actual emissions in the
event the data required under section 101.354(a) is missing or
unavailable. The procedure establishes the order of missing data
methods that must be used as follows: continuous monitoring; periodic
monitoring; stack or vent testing data; manufacturer's emissions data;
and EPA Compilation of Air Emission Factors (AP-42). These methods must
be demonstrated to most accurately represent actual emissions.
Prerequisite: Our proposed approval requested the State to clarify
that emissions offsets must be obtained for the life of the NSR source.
Response: The State agreed in the preamble to the final MECT rule
that offsets must be provided by the owner or operator of a facility
for the life of that facility. The State also agreed in the preamble
that, in order for reductions from a facility which is subject to the
cap and trade program to be used as offsets, the owner or operator must
permanently retire the rights to the allowances associated with that
facility. This, in effect, generates ongoing credits which can be used
as offsets for the life of a facility. The State wished to clarify that
Chapter 101 does not address permitting, and NSR permits issued under
Chapter 116 that involve offsets must be issued with the requirement
that offsets be obtained for the life of the permitted facility. This
requirement is found in Sec. 116.150, New Major Source or Major
Modification in Ozone Nonattainment Areas. The banking rules do not
modify or supersede that requirement. Chapter 101 does require that new
facilities which are subject to Division 3 obtain allowances on an
annual basis equal to their actual NO_X emissions in addition
to obtaining offsets for the ratio portion of their allowable
emissions. The State also wished to clarify that allowances which are
obtained by these new facilities are not issued by the State, but are
obtained from the existing number of allowances available to existing
facilities. The total number of allowances under the cap would remain
finite.
Prerequisite: Our proposed approval requested the State to provide
notification of MDERC generation to the metropolitan planning
organization (MPO).
Response: The State agreed in the preamble to the final MECT rule
that MPOs should be made aware of MERC and MDERC generation projects
because of the necessity to avoid double counting reductions that may
be banked and also used for SIP credit under other programs.
Prerequisite: Our proposed approval requested the State to
demonstrate how existing rule provisions will prevent the issuance of
Alternate Emission Limits (AELs) that could increase a NO_X
emissions cap.
Response: The State responded in the preamble to the final MECT
rule that the cap and trade program uses ESADs as listed in sections
117.106 and 117.206, Emissions Specifications for Attainment
Demonstrations, and 117.475, Emissions Specifications, when calculating
the number of allowances to allocate. AELs may not be used or requested
in lieu of ESADs as specified in 117.106(e) (3)-(4) and 117.206(f)(4).
There is no provision in the State rules to allow for a variance from
the Chapter 117 requirements. The State recognizes that facilities with
a capacity factor of 0.0383 have an ESAD of 0.060 lb NO_X/
MMBtu regardless of facility type, as allowed in sections
117.106(c)(4), 117.206(c)(17), or 117.475(c)(6). This ESAD is not an
``AEL'' but simply an assigned ESAD for facilities that are rarely
utilized.
Prerequisite: Our proposed approval requested the State to modify,
or make demonstrations relating to, subsection 101.353(g), stated that
in ``extenuating circumstances'' the TNRCC executive director may
deviate from the requirements for determining the amount of allowances
to be issued to a facility. The FR notice said the state must either
(1) demonstrate that the allocations that could be issued pursuant to
that subsection would not be inconsistent with the attainment
demonstration and would comply with the CAA, or (2) modify the rule to
eliminate executive director discretion or require EPA approval of
allocations issued pursuant to the subsection.
Response: The State revised section 101.353 of the rule by stating
that the owner or operator of a facility may, due to extenuating
circumstances, request up to two additional calendar years to establish
a baseline period more representative of normal operation as determined
by the executive director. The State response is consistent with the
NSR definition of actual emissions which allows for an alternate period
when the baseline period does not reflect normal operations. EPA's
objection relating to Executive Director discretion has been resolved.

V. What Are EPA's Responses to Comments?

Environmental Defense Comment 1

Comment: EPA must not defer action on the use of DERCs and MDERCs
for

[[Page 57255]]

MECT compliance. EPA should not approve the MECT program as long as it
allows the use of MDERCs in lieu of allowances. EPA may not approve the
MECT without squarely addressing the issue of whether MDERCs can be
used for MECT compliance.
Response: The Clean Air Act does not prohibit EPA from determining
at a later date whether or not DERCS or MDERCs may be utilized in the
MECT program. The DERC and MDERC rules (30 TAC Chapter 101 Division 4)
are separate and independent from the MECT rules since, unlike the MECT
rules, the DERC and MDERC rules were not submitted by the state for
emission credit in the attainment demonstration. In addition, the use
of DERCs or MDERCs in the MECT program is not necessary for that
program to achieve emission reductions needed for attainment, or for
that program to comply with other applicable Clean Air Act
requirements. The purpose of utilizing DERCs or MDERCs in the MECT
program is to provide sources with a voluntary compliance option.
As we stated in the Federal Register Notice proposing action on the
MECT rules, DERCS and MDERCs may not be used for compliance with the
MECT rules unless the DERC and MDERC rules are approved by EPA for
inclusion into the SIP. In addition, a source-specific SIP revision may
be utilized to seek EPA approval for the use of DERCs or MDERCs in the
MECT program on a case-by-case basis.
The DERC and MDERC rules, and any individual trades, will be fully
evaluated for approvability as a SIP revision when EPA proposes action
on them. This evaluation will determine whether or not those rules or
trades comply with all applicable Clean Air Act requirements,
considering the interaction of the use of DERCs or MDERCs with existing
SIP provisions, including the MECT program. The public will be provided
an opportunity to comment on the approvability of the DERC and MDERC
rules and any individual trades as a SIP revision at the time EPA
proposes action on those rules or trades.
If at some future date, EPA determines that the DERC or MDERC rules
or an individual trade cannot be approved, MECT facilities would not
have the flexibility of using such credits for compliance. Such
facilities would, however, still have to achieve all emission
reductions required by the MECT program, all other provisions of the
MECT program would continue to function, and approval of the MECT
program--and the SIP--would remain in effect.
Comment: If EPA ultimately decides at some future date that it can
not approve the use of MDERCs for MECT compliance, after having
approved the MECT program in this rulemaking, what would be the effect
on the approval of the MECT?
Response: As stated above, if at some future date, the MDERC rule
cannot be approved, the MECT program could not use MDERCs for
compliance with the allowance cap. The use of MDERCs for MECT
compliance is for source flexibility. Should the MDERC program be
determined to not be approveable at some point in the future, the MECT
facilities would no longer have the flexibility of using MDERCs for
compliance. All other provisions of the MECT program would continue to
function as they were designed, and the approval of the MECT program
would not be affected.
Comment: Would the approval become a disapproval?
Response: As stated above, the approval of the MECT program and the
SIP would remain in effect.
Comment: What would be the effect of converting the MECT approval
to a disapproval on the proposed approval of the attainment
demonstration?
Response: Since there would be no conversion of the MECT approval
to a disapproval, there would be no effect on the proposed approval of
the attainment demonstration. As indicated above, should the MDERC
program be disapproved, the MECT program would be required to achieve
the required compliance with the allowance cap, but without source
flexibility of using MDERCs for cap compliance.
Comment: Since EPA has already stated that it cannot finalize
approval of the attainment demonstration SIP until (among other things)
it has finalized action on the NO_X MECT program since it is
relied upon in the attainment demonstration, then would a final
approval of the attainment demonstration SIP thus become a disapproval
if EPA later disapproves the MECT program?
Response: Again, as stated above, once the MECT program and the
attainment demonstration are SIP approved, a subsequent disapproval of
the MDERC program would not change the approval status of the
attainment demonstration. The emission reductions relied upon by the
implementation of the control technology measures contained in the MECT
would be achieved without the source flexibility of MDERC use as
provided for in the MDERC rule.

Environmental Defense Comment 2

Comment: ED made a number of comments specific to the DERC and
MDERC rules as they relate to the MECT. Generally, ED commented that
the use of DERCs and MDERCs will undermine the MECT program by allowing
sources in the MECT program to use MDERCs, whereby actual emissions
during any given control period could exceed the overall MECT cap
without contemporaneous reductions having occurred to offset the excess
emissions. ED further felt that allowing the use of MDERCs for MECT
compliance was improper as there is a lack of a credible baseline to
establish whether a reduction that might have been surplus at the time
an MDERC was generated continues to be surplus at the time of use. ED
commented that predicting results in the integrity element of
quantifiable is compromised because it is impossible to predict for any
control period what the balance will be between the generation and use
of MDERCs for MECT compliance, and there is an issue of uncertainty in
the integrity element of quantifiable by using reductions from one type
of source at another type of source. Using emission reductions that
generated MDERCs are not permanent, ED commented, because they took
place at some point in the past. Finally, trading between economic
incentive programs (EIPs) by allowing sources subject to the
requirements of the mass cap and trade program to use credits generated
by sources outside of the cap as a compliance option should not be
allowed.
Response: These issues do not arise unless EPA approves a SIP
revision allowing the use of DERCs or MDERCs in the MECT program. EPA
is not at this time taking action on the DERC or MDERC rules, or any
individual DERC or MDERC trades.
As we stated in the Federal Register Notice proposing action on the
MECT rules, DERCS and MDERCs may not be used for compliance with the
MECT rules unless the DERC and MDERC rules are approved by EPA for
inclusion into the SIP. In addition, a source-specific SIP revision may
be utilized to seek EPA approval for the use of DERCs or MDERCs in the
MECT program on a case-by-case basis.
The DERC and MDERC rules, and any individual trades, will be fully
evaluated for approvability as a SIP revision when EPA proposes action
on them. This evaluation will determine whether those rules or trades
comply with all applicable Clean Air Act requirements, considering the

[[Page 57256]]

interaction of the use of DERCs or MDERCs with existing SIP provisions,
including the MECT program. The public will be provided an opportunity
to comment on the approvability of the DERC and MDERC rules and any
individual trades as a SIP revision at the time EPA purposes action on
those rules or trades.
EPA will respond to these comments at the time the agency acts on a
SIP revision including the DERC and MDERC rules, or any individual
trades, if they are submitted in connection with such action.
Until EPA completes its evaluation of the DERC and MDERC rules or
an individual trade, the agency has no basis to take final action
disapproving the use of DERCs or MDERCs in the MECT program. The
acquisition and use of credits generated under one (EIP) to meet the
requirements of another EIP is not prohibited by the Clean Air Act, and
is specifically contemplated by the EPA EIP guidance document,
Improving Air Quality with Economic Incentive Programs (EPA-452/R-01-
001) January 2001, as long as certain criteria are met.

Environmental Defense Comment 3

Comment: Environmental Defense's third comment was that the method
for determining the allocation of allowances to new sources creates an
opportunity to inflate the cap. ED commented that the number of
allowances issued to certain new sources lacking a historic emissions
baseline will be based on allowable emissions for two years, but only
until an actual emission baseline is established. ED contended that
these new sources have the incentive to maximize production and/or
emissions to establish a baseline that is close to the allowable
emissions limit. ED commented that once the artificially high baseline
is established, the source can return to normal production and/or
emission levels and be left with a windfall of surplus allowances that
it would then be free to trade to other sources in the MECT program. ED
contended that EPA's review of the MECT program fails to address this
possibility.
ED commented that new sources without an established, actual
baseline can be viewed as sources that are not covered, because their
emissions baselines have not yet been established. ED was concerned
that the increment between actual emissions during normal operating
conditions and the permit allowables represents a pool of excess
allowances that can be captured by these new sources. If new sources
can successfully capture this windfall, the overall emissions budget
for the MECT program will end up higher than it otherwise would have
been.
Response: The attainment demonstration modeling inventory for new
sources without a historical baseline consisted of the allowable
emissions for these sources. These sources were included in the
allowance cap at their allowable level. The State's attainment
demonstration for HGA used this level of emissions. Accordingly. we
have no basis to challenge this part of the method for allocating
allowances. Further, the establishment of a baseline for these sources
at actual emission levels below their allowables will reduce or shrink
the cap.

Environmental Defense Comment 4

Comment: Environmental Defense's fourth comment was that additional
allowances issued under MECT section 101.353(g) will further undermine
the attainment demonstration. ED contended that the TNRCC issuance of
additional allowances would further undermine the SIP. ED states that
they are uncertain how TNRCC can demonstrate that additional
allocations ``are not inconsistent with the attainment demonstration.''
Section 101.353(g) in the December 2000 regulation stated that ``in
extenuating circumstances, the executive director may deviate from the
requirements of this section to determine the amount of allowances
allocated to a facility.''
Response: The State revised section 101.353(g) in the October 4,
2001 submittal. The final rule states that ``(t)he owner or operator of
a facility may, due to extenuating circumstances, request up to two
additional calendar years to establish a baseline period more
representative of normal operation as determined by the executive
director.'' This revision of the regulation for determination of
baseline emissions is consistent with the new source review definition
of actual emissions and actual baseline emissions used to determine
surplus emission reductions from other trading programs.

Environmental Defense Comment 5

Comment: Environmental Defense's fifth comment was that the
requirements for emissions monitoring are inadequate. ED commented that
EPA fails to provide any factual basis for its conclusion that TNRCC's
selection of emission measurement protocols are adequate. ED stated
that they can find no evidence of the TNRCC's adoption of specific
monitoring requirements in Chapter 117 to ensure compliance with the
MECT. Instead, it appears to ED that monitoring consists of whatever
methods were already in place prior to the adoption of ESADs in Chapter
117. ED commented that the creation of a cap and trade program should
be accompanied by additional monitoring requirements to ensure the
program's success. ED commented that the TNRCC should require
monitoring requirements no less stringent than those of the Acid Rain
Program and the NO_X SIP Call.
The MECT rules at section 101.354(a) describe the method for
determining how many allowances will be deducted from a compliance
account. This deduction should be based, to the maximum extent
possible, on the measured mass of NO_X emissions and should
require Texas to measure and track mass emissions instead of emissions
rates and activity levels, the product of which is only a surrogate for
mass emissions. Measuring mass emissions will improve the transparency
and environmental integrity of the MECT program.
Response: The State submitted the monitoring requirements of
Chapter 117 to fulfill the monitoring protocol requirements of the
MECT. For electric utility facilities the Chapter 117 monitoring
requirements consist of the continuous emission monitoring requirements
of the Acid Rain program at 40 CFR part 75 and 40 CFR part 60 Appendix
A. Thus the MECT monitoring requirements are the same as those in the
Acid Rain program and NO_X SIP Call. The State has estimated
that approximately 90% of the total allowances in the MECT program are
allocated to sources that are required to have CEMs. EPA can find no
basis for the ED statement that the MECT monitoring requirements are
less stringent than those of the Acid Rain Program and the
NO_X SIP Call.

Environmental Defense Comment 6

Comment: Environmental Defense's sixth comment was that the initial
program evaluations should occur earlier than three years after program
inception. ED was pleased that the TNRCC included an explicit
requirement to perform an audit of the program after three years to
ensure that it is achieving the target NO_X emission
reduction throughout the control period. The EPA and TNRCC should
emphasize that this audit may result in the imposition of additional
restrictions (weekly or monthly caps, geographic trading restrictions,
e.g.) to ensure the program's integrity. This would encourage capped
sources to account for this possibility up front when making
investments, trading, or banking decisions. The FR notice refers to the
EIP guidance expectation that annual

[[Page 57257]]

evaluation of the program is appropriate for at least two years, until
the projected emissions have been adequately confirmed (66 FR 38237).
Despite this expectation, EPA concluded that MECT program meets the
expectations of the EIP guidance, even though TNRCC's audit will only
occur triennially. This conclusion is unjustified.
Response: Although the MECT audit will occur triennially as
required by the MECT regulation, a review will be conducted in 2002 as
a result of the settlement reached in BCCA Appeal Group v. Texas
Natural Resource Conservation Commission, No. GN1-00210 (250th Dist.
Ct.)(filed on January 19, 2001). The attainment demonstration SIP
requires a mid course correction evaluation in 2004. The degree of
control technology and implementation schedules are an integral part of
both of these audits. EPA believes that with these two audits in 2002
and 2004 plus the triennial MECT audits, the audit frequency is
adequate to help assure that the reductions will lead to attainment.
The EPA EIP guidance, which in any event is not binding, did not assume
the additional audits requested above.

Environmental Defense Comment 7

Comment: Environmental Defense's seventh comment was that there
appears to be a discrepancy in the amount of emissions that constitute
an allowance. According to section 101.352(g) allowances will be
allocated, transferred, or used in tenths of tons. On the other hand,
the equations for calculating the number of allowances to be deposited
into an account at section 101.353(a) and the allowances to be deducted
from an account at section 101.354(a) appear to yield allowances in
tons. There is thus an error of a factor of ten in the calculations
that needs to be corrected.
Response: The MECT rule defines one MECT allowance to equal one ton
of NO_X emissions. The level of accuracy in section
101.352(g) for allocation, transfer or use is in tenths of tons which
is consistent with the requirements of sections 101.353(a) and
101.354(a). As in a bank account, the currency denomination is in
dollars but the account itself is debited and credited in dollar
amounts with an accuracy of two decimal places, i.e. dollars and cents.
Thus, there is not an error of a factor of ten but rather an accuracy
of allowances to one decimal place.
EPA responses to BCCA and REI comments made on September 25, 2000,
are as follows:
Comment: BCCA commented that the proposed NO_X reductions
intended to be implemented under MECT rule are not technologically or
economically feasible and will not result in an economic incentive
under the cap and trade rule because there will be insufficient surplus
allowances. The cap and trade system should be based on current
California point source controls, which are the most stringent achieved
in practice.
Response: This comment is not relevant to our decision whether to
approve the MECT rule. We are not authorized to review control
requirements for their economic or technological feasibility. In any
event, the State made no changes to the MECT rule in response to these
comments. EPA notes, however, that combined use of combustion
modification and flue gas controls on the majority of large combustion
units result in point source NO_X reductions in the range of
90%. Combustion modification capabilities and flue gas controls are
well documented in the EPA Alternative Control Technology (ACT)
documents, the NO_X control literature, and papers presented
at numerous meetings of research and trade organizations for industry,
NO_X control vendors, constructors, and the government. These
documents report combustion-based reductions from minimal to over 90%,
and flue gas controls in the range of 75% to 95%. We agree with the
State that both combustion modifications and flue gas cleanup are
established technologies. We agree with the State that the market-based
approach embodied in the adopted rules give nearly complete freedom on
how to achieve the goals and based on experience from California, will
stimulate the development of new and innovative reduction technologies
and strategies.
Comment: BCCA commented that the rule should afford a five-year
phase-in period. In the proposed rule the final, target allocations
would be issued in 2005 and remain fixed thereafter. In other words,
the necessary controls must be in place by year-end 2004 in order to
meet the target allocations under the Proposal. This timeframe is
neither practical nor feasible. The Proposal should be amended to
incorporate a five-year phase-in period, beginning in 2002 and ending
in 2007.
Response: The State revised the rules submitted on December 22,
2000 and October 4, 2001 based on these comments. The State accepted
the notion that phasing in compliance with these rules is critical to
the success of the program for many reasons including availability of
equipment needed to make reductions as well as the need to satisfy the
SIP requirement that reductions are made as soon as practicable. The
new schedule contained in section 101.353 will ensure that
NO_X emission from stationary facilities will be reduced to a
level necessary to reach attainment.
Comment: BCCA commented that a consecutive 12-month period would
more accurately reflect activity levels and would reduce requests for
case-by-case reviews. The TNRCC had proposed the use of an entire 3-
year average (1997-1999) to determine baseline activity level. BCCA
believes that a 12 month baseline activity period will dramatically
reduce the number and complexity of petitions for case-by-case review.
Response: We recognize that the baseline period utilized to
establish the cap should be representative of normal source operations.
The State took the view that the 1997, 1998, and 1999 period is the
most recent and should best represent the emissions of facilities
currently in operation. The State did not revise the rule based upon
this comment. The State's view is reasonable and we see no basis to
disapprove based on the commenter's concerns.
Comment: Both BCCA and REI commented that there is no reasoned
justification for the rate of NO_X emission reductions in
one-third increments and this rate of reduction is not needed to meet
rate-of-progress requirements.
Response: The State revised the rules submitted on December 22,
2000 and October 4, 2001 based on these comments. Phasing in compliance
with these rules is critical to the success of the program.
Availability of equipment needed to make reductions must be balanced
with the SIP requirement that reductions are made as soon as
practicable. We concluded that a less rapid reduction of NO_X
from affected facilities influenced by equipment availability can be
phased in between 2002 and 2007. The State revised the rule with a new
schedule contained in section 101.353. We agree with the State that the
new schedule will ensure that NO_X emission from stationary
facilities will be reduced on the appropriate time frame to a level
necessary to reach attainment.
Comment: Both REI and BCCA commented that allowances should be
allocated for a stream of 30 years or more rather than allocated yearly
to allow for more fluid trading and a defined period, greater than one
year, of over-control or under-control for participating sites. This
methodology would also simplify allocations.

[[Page 57258]]

Response: The State made no revisions to the rule based upon this
comment. The State seemed to adopt the view that the allocation of
allowances on an annual basis, with an annual compliance report by the
State to EPA and the public, is necessary to record and track a
successful cap and trade program. The provision for audits and
necessary corrective action every three years can best be accomplished
by the annual allocation of allowances. The State responded that
allocation of allowances on a yearly basis enhances the ability to plan
and anticipate effects on air quality and that it also provides an
enforcement mechanism for facilities whose actual emissions exceed the
allowances in their compliance account through the reduction of
subsequent yearly allocations. As the State noted, nothing would
prohibit facilities from entering private agreements for the sale of
future allocations or rights to allocations. We see no basis to
disapprove based on the commentor's concerns.
Comment: BCCA commented that the term ``source'' is used to denote
an overall site over the ten-ton applicability trigger but is also used
to denote a single emitting unit. BCCA and REI commented that sources
not subject to emission specification for attainment demonstration
(ESAD) rates under the SIP that can make cost effective reductions
should have the option to participate in the cap and trade program and
its allowances allocated in the same manner for current ESAD sources.
Response: The State adopted a rule revision on May 23, 2001 which
clarified that the applicability of the cap and trade program is
determined by the collective emissions at a site and that the ten-ton
per year applicability requirement does not apply to individual
facilities. The rule revision was effective on June 13, 2001. The State
did not create a new definition of `` NO_X Cap Plant'' as
requested by this comment. We agree with the State that facilities not
subject to the cap and trade program may eventually be able to trade
with MECT facilities under the current rule without compromising the
attainment demonstration.
Comment: BCCA commented that the State should clarify that target
allocation based on 1997-1999 activity will not change despite
shutdowns, replacements or changes to equipment.
Response: The State revised the rules submitted on October 4, 2001
by adding section 101.353(h) which clarifies that allowances will not
change despite subsequent reductions in activity levels assuming the
allowances are based on historical activity levels. These subsequent
reductions in activity levels could result from shutdowns,
replacements, or changes to equipment. We believe that the
clarification by the State in response to this comment maintains the
integrity of the program.
Comment: BCCA commented that an opt-in mechanism should be
incorporated for non-ESAD sources. An opt-in provision for sources not
subject to ESAD rates under the SIP would provide an effective
incentive to accomplish surplus reductions.
Response: The rule provides for surplus reductions accomplished by
non-ESAD sources to be traded for allowances for each compliance
period. Such trades would provide the non-ESAD source with the same
economic incentive to obtain surplus emission reductions as if the
source had the ability to elect to be in the program. Any such trades
would require reductions beyond what was relied upon in the attainment
demonstration and could contain DERCs or MDERCs after we act on the
DERC and MDERC rules.
Comment: BCCA and REI commented that the rule allows sources newly
authorized by permit application or permit by rule to receive
allowances based on their permitted or actual activity levels. BCCA and
REI support this concept but commented that newly modified sources
should be treated identically.
Response: The State revised the rules submitted on December 22,
2000 based on this comment at section 101.353(a) to refer to new and
modified facilities. By ``modified facilities'' the State referred to
the modification itself. For example if an existing facility is
modified to double its capacity in 1998, the emissions from the
original facility will be allocated in the same way as facilities
existing before 1997. The increase in emission allowable associated
with the modification will be treated as a facility which did not exist
before 1997. We agree with the State approach to the extent that the
attainment demonstration modeling included the actual emissions for the
facility, and that for modified facilities that have not begun normal
operations, the emissions relied upon in the attainment demonstration
are the allowable emissions.
Comment: BCCA commented that the allocation methodology should be
simplified. The allocation methodology language in proposed Section
101.353 is overly complicated and confusing. The methodology is based
on a complete re-allocation in each of the initial four years, and is
structured to revisit allocations for new sources several times. As
noted in an earlier comment, the methodology should allow all
allocations for 2002 through 2032 to be issued in a single action
before program commencement.
Response: The State made no revisions to the rule based upon this
comment. The State appeared to accept the view that the allocation of
allowances on an annual basis, with an annual compliance report by the
State to EPA and the public, is necessary to record and track a
successful cap and trade program. The provision for audits and
necessary corrective action every three years can best be accomplished
by the annual allocation of allowances. The ability to plan and
anticipate effects on air quality and to provide an enforcement
mechanism for facilities whose actual emissions exceed the allowances
in their compliance account through the reduction of subsequent yearly
allocations are necessary elements of the program. We see no basis to
disapprove based on the commentor's concerns. The allocation
methodology is sufficient to achieve the program objectives and we are
concerned that any further simplification could lead to a compromise of
the program objectives.
Comment: BCCA and REI commented that emission reduction credits
should be convertible to allowances and the rule lacks reasoned
justification why this is not allowed. By definition all recognized
emission credits are real, quantifiable, and surplus to the SIP.
Response: The State revised the rule submitted on October 4, 2001
by adding a new section 101.356(h) which provides that ERCs may be
converted into a yearly allocation of allowances if the ERCs were
generated prior to December 1, 2000 and were evaluated and included in
the HGA attainment demonstration. We proposed to approve and are in
this action approving this revision to the rule. We agree that these
ERCs, if converted into a stream of allowances would not increase
emissions beyond those levels modeled that demonstrated compliance with
the NAAQS for ozone.
Comment: REI and BCCA commented that the existing discrete emission
reduction credit trading rules require a 10% environmental contribution
and a 5% compliance margin. This requirement has been extended to the
use of DERCs in lieu of allowances. They stated that there is not a
reasoned justification for this requirement and that it is not
necessary to meet a region wide cap.
Response: The State revised section 101.356 of the rule submitted
on October 4, 2001 based on this comment. Although EPA has not yet
acted on

[[Page 57259]]

those rules, we note that the requirement of retiring an additional 10%
of DERCs and MDERCs for an environmental contribution and an additional
5% for a compliance margin is not required when using DERCs and MDERCs
in lieu of allowances under the HGA cap and trade program. In any
event, in today's action, we are not taking action on the DERC/MDERC
rules.
Comment: REI and BCCA objected to the daily and monthly
NO_X limits for utility sources in addition to the annual
MECT cap. These limits render the cap and trade flexibility
meaningless.
Response: The 30-day average system cap emission limit functions as
a flexible but controlling limit which ensures that a specified
emission level is achieved during a typical peak ozone season day. The
State's actions are consistent with the view that the much less
stringent daily maximum limit ensures that the 30-day average is not
manipulated to allow higher NO_X emissions on a single day
when ozone may be a problem. We see no basis to disapprove based on the
commentor's concerns.
Comment: REI and BCCA commented that the rule should be modified to
allow compliance with an emission cap to satisfy both nonattainment new
source review and prevention of significant deterioration.
Response: The nonattainment new source review and prevention of
significant deterioration permitting are requirements of the Act. We
agree with the State that any facility having major increases of
NO_X should undergo a nonattainment/prevention of significant
deterioration review to ensure it is meeting BACT or LAER as
applicable, regardless of whether the facility operates under the cap.
Comment: REI and BCCA believe that one month is an inadequate
period to calculate a control period's emissions and compare those
emissions to cap and trade activity for the control period to balance
the account. They recommend April 1 of the succeeding year as the
deadline for reconciling accounts.
Response: The facilities have one month for trading allowances
after December 31 of the compliance year. Allowance trades must be
approved by the State within thirty days. Section 359 of the rule
requires a facility to submit the allowance compliance report by March
31. This reporting parallels the State's emission inventory reporting
guidelines and we agree with the State that the rule need not be
revised. We see no basis to disapprove based on the commentor's
concerns.
Comment: REI and BCCA commented that the requirement to trade
allowances in whole tons lacks reasoned justification. The number of
allowances is rounded up or down whichever provides the holder or buyer
less credit. Some credits have been traded with a value of $80,000 per
ton and rounding can result in the taking of considerable value. They
recommend that trading occur in one-tenth tons. This is consistent with
ERC trading. During the years of target allowances, rounding down can
result in zero allowances.
Response: The State revised section 101.350(1) by the submission of
October 4, 2001 to divide allowances into tenths of a ton. The rounding
methodology was not changed from the normal mathematical rounding
procedures. However, by allocating, transferring, and using allowances
in tenths of tons, the impact of rounding will be reduced. We agree
with the State that the incorporation of rounding allowances to a tenth
of a ton will provide a more realistic and workable program.
Comment: REI and BCCA commented that the installation of enhanced
monitoring equipment should be delayed until the cap and trade target
allocation year of 2005, and there is no reasoned justification for
advancing the monitoring requirement to 2001, well ahead of the
substantive reductions needed for attainment.
Response: The State revised the rules submitted on December 22,
2000 in response to this comment to take into account the
practicalities identified by the comments. Both PEMS and CEMS vendors
indicated that the number of monitors required in one year would strain
their abilities to provide the equipment. The owners identified clear
benefits of installing the monitors in conjunction with the control
equipment. We agree with the State that since the rules have been
revised to require that the monitors will be phased over a four-year
period, at the earlier of installing emission controls or December 31,
2004, this phase-in will achieve the end result benefits of specified
emissions reduction by 2005. Because the first reduction period has
been extended to 2004, the greater uncertainty about NO_X
emissions in the first two years of the program (compared to monitors
in place by 2002) will be of less consequence. Phasing in CEMS/PEMS
with the emission control equipment is a more rational and cost
effective approach and remains consistent with attainment needs.
Comment: REI and BCCA commented that the rule should contain a
provision allowing volatile organic compound reductions in the place of
NO_X allowances where the VOC reductions are demonstrated to
reduce ozone an equal amount.
Response: The State modified section 101.356 of the rule submitted
on December 22, 2001 based on the comment. EPA is not taking action on
the DERC or MDERC rules. Generally, however, EPA agrees that if a
demonstration has been made and approved by the executive director and
the EPA to show that the use of VOC DERCs or MDERCs is equivalent to
the use of NO_X allowances in reducing ozone then we support
the State allowing VOC use in place of a NO_X reduction.
Comment: BCCA supports an additional incentive program that would
provide funds for use by a wide range of source categories to assist
compliance with SIP required reductions. Such a fund would be
competitive and, if funded by private sources, would provide
appropriate credit or benefit to the parties providing the funding. The
plan should incorporate broad executive director authority to approve
credits on a case-by-case basis.
Response: The State's actions are consistent with the view that the
establishment of a private fund for pollution control projects is
outside the scope of the adopted rules and will be left to the
discretion of affected industries. This comment is not relevant for
EPA's action on this SIP submittal.

VI. Administrative Requirements

Under Executive Order 12866 (58 FR 51735, October 4, 1993), this
action is not a ``significant regulatory action'' and therefore is not
subject to review by the Office of Management and Budget. For this
reason, this action is also not subject to Executive Order 13211,
``Actions Concerning Regulations That Significantly Affect Energy
Supply, Distribution, or Use'' (66 FR 28355, May 22, 2001). This action
merely approves state law as meeting federal requirements and imposes
no additional requirements beyond those imposed by state law.
Accordingly, the Administrator certifies that this rule will not have a
significant economic impact on a substantial number of small entities
under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.). Because
this rule approves pre-existing requirements under state law and does
not impose any additional enforceable duty beyond that required by
state law, it does not contain any unfunded mandate or significantly or
uniquely affect small governments, as described in the Unfunded
Mandates Reform Act of 1995 (Public Law 104-4). For the same reason,
this rule also does not

[[Page 57260]]

significantly or uniquely affect the communities of tribal governments,
as specified by Executive Order 13084 (63 FR 27655, May 10, 1998). This
rule 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 (64 FR 43255, August
10, 1999), because it merely approves a state rule implementing a
federal standard, and does not alter the relationship or the
distribution of power and responsibilities established in the Clean Air
Act. This rule also is not subject to Executive Order 13045 (62 FR
19885, April 23, 1997), because it is not economically significant.
In reviewing SIP submissions, EPA's role is to approve state
choices, provided that they meet the criteria of the Clean Air Act. In
this context, in the absence of a prior existing requirement for the
State to use voluntary consensus standards (VCS), EPA has no authority
to disapprove a SIP submission for failure to use VCS. It would thus be
inconsistent with applicable law for EPA, when it reviews a SIP
submission, to use VCS in place of a SIP submission that otherwise
satisfies the provisions of the Clean Air Act. Thus, the requirements
of section 12(d) of the National Technology Transfer and Advancement
Act of 1995 (15 U.S.C. 272 note) do not apply. The rule does not
involve special consideration of environmental justice related issues
as required by Executive Order 12898 (59 FR 7629, February 16, 1994).
As required by section 3 of Executive Order 12988 (61 FR 4729, February
7, 1996), in issuing this rule, EPA has taken the necessary steps to
eliminate drafting errors and ambiguity, minimize potential litigation,
and provide a clear legal standard for affected conduct. The EPA has
complied with Executive Order 12630 (53 FR 8859, March 15, 1988) by
examining the takings implications of the rule in accordance with the
``Attorney General's Supplemental Guidelines for the Evaluation of Risk
and Avoidance of Unanticipated Takings.'' This rule does not impose an
information collection burden under the provisions of the Paperwork
Reduction Act of 1995 (44 U.S.C. 3501 et seq.).

List of Subjects in 40 CFR Part 52

Environmental protection, Air pollution control, Hydrocarbons,
Incorporation by reference, Intergovernmental relations, Nitrogen
dioxide, Ozone, Reporting and recordkeeping requirements.

Dated: October 15, 2001.
Gregg A. Cooke,
Regional Administrator, Region 6.

Part 52, chapter I, title 40 of the Code of Federal Regulations is
amended as follows:

PART 52--[AMENDED]

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

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

Subpart SS--Texas

2. In Sec. 52.2270 the table in paragraph (c) is amended under
Chapter 101 by:
a. Revising the heading immediately above the entry for section
101.1 to read ``Chapter 101--General Air Quality Rules'' followed on a
separate line by the heading ``Subchapter A--General Rules.''
b. Revising the entry for section 101.1.
c. At the end of Chapter 101 following the entry for ``Section 101.
Rule 19'' by adding new heading ``Subchapter H--Emissions Banking and
Trading'' followed on a separate line by the heading ``Division 3--Mass
Emissions Cap and Trade Program'' followed by individual entries for
Sections 101.350, 101.351, 101.352, 101.353, 101.354, 101.356, 101.358,
101.359, 101.360, and 101.363.
The revisions and additions read as follows:

Sec. 52.2270 Identification of plan.

* * * * *
(c) * * *

EPA Approved Regulations in the Texas SIP
----------------------------------------------------------------------------------------------------------------
State
approval/ EPA
State citation Title/Subject submittal approval Explanation
date date
----------------------------------------------------------------------------------------------------------------
Chapter 101--General Air Quality Rules,
----------------------------------------------------------------------------------------------------------------
Subchapter A--General Rules
----------------------------------------------------------------------------------------------------------------
Section 101.1...................... Definitions.......... 09/26/2001 11/14/01
[Insert
[Federal
Register
citation]

* * * * * *
*
----------------------------------------------------------------------------------------------------------------
Subchapter H--Emissions Banking and Trading
----------------------------------------------------------------------------------------------------------------
Division 3--Mass Emissions Cap and Trade Program
----------------------------------------------------------------------------------------------------------------
Section 101.350.................... Definitions.......... 09/26/2001 11/14/2001
[Insert
Federal
Register
citation.]
Section 101.351.................... Applicability........ 05/23/2001 11/14/2001
[Insert
Federal
Register
citation.]
Section 101.352.................... General Provisions... 09/26/2001 11/14/2001

[[Page 57261]]

Section 101.353.................... Allocation of 09/26/2001 11/14/2001 Subsections
allowances. [Insert 101.353(a)(3)(B)
Federal 101.353(a)(3)(D) NOT IN
Register SIP.
citation.]
Section 101.354.................... Allowance deductions. 09/26/2001 11/14/2001
[Insert
Federal
Register
citation.]
Section 101.356.................... Allowance Banking and 09/26/2001 11/14/2001
Trading. [Insert
Federal
Register
citation.]
Section 101.358.................... Emissions Monitoring 12/09/2000 11/14/2001
and Compliance [Insert
Demonstration. Federal
Register
citation.]
Section 101.359.................... Reporting............ 12/09/2000 11/14/2001
[Insert
Federal
Register
citation.]
Section 101.360.................... Level of activity 09/26/2001 11/14/2001
certification. [Insert
Federal
Register
citation.]
Section 101.363.................... Program audits and 09/26/2001 11/04/2001
reports. [Insert
Federal
Register
citation.]

* * * * * *
*
----------------------------------------------------------------------------------------------------------------

[FR Doc. 01-27586 Filed 11-13-01; 8:45 am]
BILLING CODE 6560-50-P

Notices For
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Approval and Promulgation of Air Quality State Implementation Plans (SIP); Texas Mass Emissions Cap and Trade Program

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