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Texas' Air Permitting Program: Notice to the Regulated Community

Notice to the regulated community regarding Public Participation, Flexible Permits, Qualified Facilities, and New Source Review (NSR) Reform.

As indicated in the Texas Commission on Environmental Quality's (TCEQ) October 23, 2009 letter Adobe Acrobat PDF Document to Ms. Gina McCarthy, Assistant Administrator for the Office of Air and Radiation at the Environmental Protection Agency (EPA), the TCEQ is providing this notification to the regulated community.

Federal Register Notices

In the last year, EPA has published four Federal Register notices relating to the following aspects of Texas' air permitting programs:

Public Participation

The first notice was published on November 26, 2008 and addresses State Implementation Plan (SIP) revisions to TCEQ's public participation rules for new and modified sources submitted to EPA for approval on December 15, 1995, July 22, 1998 and October 25, 1999 ("revised rules") Adobe Acrobat PDF Document. In its notice, EPA proposed "simultaneous limited approval and limited disapproval of revisions to the applicable implementation plan for the State of Texas." The TCEQ submitted comments on January 27, 2009 Adobe Acrobat PDF Document

EPA determined that TCEQ's revised rules contain some provisions that meet or exceed federal requirements while other provisions are not consistent with federal requirements and therefore are not fully approvable. EPA's primary concerns with TCEQ's submission are discussed in section IV of the November 26, 2008 preamble under the following headings: Minor NSR Public Participation; Projects Subject to Prevention of Significant Deterioration (PSD); Project for a Plantwide Applicability Limit (PAL) and Project for a Flexible Permit.

TCEQ has agreed to initiate rulemaking to address EPA's public participation concerns and is currently scheduled to propose rules at its December 9, 2009 Agenda. TCEQ will include provisions in its proposed rule to address EPA's Minor NSR notice concerns. Importantly, TCEQ rules currently require notice of draft PSD permit applications, opportunity to request a meeting and preparation of a response to comment prior to approval of a permit application.

Updated June 16, 2010: The TCEQ adopted revisions to Chapters 39 (Public Notice) Exit the TCEQ, 55 (Requests for Reconsideration and Contested Case Hearing; Public Comment) Exit the TCEQ, and 116 (Control of Air Pollution by Permits for New Construction or Modification) Exit the TCEQ on June 24, 2010.

These revisions will give the public more opportunities to participate in the permitting process. Among other changes, minor sources subject to Chapter 39 will be required to publish a second public notice, with some exceptions. These new rule requirements will be effective for applications received on or after June 24, 2010.

Flexible Permits, Qualified Facilities and NSR Reform

EPA published three Federal Register notices regarding TCEQ's Flexible Permits Adobe Acrobat PDF Document, Qualified Facilities Adobe Acrobat PDF Document, NSR Reform Adobe Acrobat PDF Document rules on September 23, 2009. The deadline to comment is November 23, 2009. TCEQ is currently drafting comments on the proposed Federal Register notices; it will make its comments available on its website once finalized and submitted to EPA.

As background, TCEQ submitted the initial Flexible Permit rules to EPA for SIP approval on November 29, 1994; Qualified Facilities on March 13, 1996; and NSR Reform on June 10, 2005 and February 1, 2006. In all three instances, EPA has proposed to disapprove the above rules, in general, because they do not meet the Federal Clean Air Act (FCAA) and EPA's NSR regulations. Of particular concern to EPA is whether the use of Flexible Permits and changes at Qualified Facilities circumvents Major NSR SIP requirements. The TCEQ reiterates that these programs currently include a federal applicability review and will make this explicit in rule; there is no federal circumvention. As set forth in TCEQ's October 23, 2009 letter to EPA, the current schedule for proposing rules on Qualified Facilities, Flexible Permits and NSR Reform is March 30th, May 19th and August of 2010 respectively. Please note that the proposed flexible permit rulemaking will be considered on June 16, 2010, rather than May 19th.

Update: The commission proposed revisions to the flexible permit rules on June 16, 2010 Adobe Acrobat PDF Document.

The proposed rulemaking schedule coincides with the deadlines for EPA final action set forth in the Consent Decree and Settlement Agreement resolving the lawsuit brought by the Business Coalition for Clean Air (BCCA) Appeal Group, et al. Notice of the Propose Consent Decree and Settlement Agreement may be viewed at 74 Fed. Reg. 38, 015 (July 30, 2009); a Joint Motion to Enter Consent Decree and Stay was filed on October 16, 2009.

In addition, the TCEQ is currently scheduled to propose rules to address the definition of PSD Best Available Control Technology (BACT) at its January 13, 2010 Agenda. It should be noted that TCEQ review of PSD applications currently includes a federally-equivalent BACT review for all applications triggering PSD review. The Commission is scheduled to consider adoption of the PSD BACT rulemaking at its June 2, 2010 agenda.

Update: The commission adopted the PSD BACT rulemaking on June 2, 2010 Adobe Acrobat PDF Document.

Federal Enforcability

On September 25, 2007, EPA issued Fair Notice letters to Flexible Permit holders advising that permits issued under . . . flexible permit rules reflect Texas state requirements and not necessarily . . . federally-applicable requirements Adobe Acrobat PDF Document. Accordingly, EPA has indicated that Flexible Permit holders "must continue to comply with applicable federal requirements, including those in the Texas SIP." Please note that FAQs are included in EPA's letter. Similarly, because pending Qualified Facilities rules are not SIP approved, changes sought under this program reflect Texas state requirements.

Pending TCEQ Actions; Potential Enforcement

Until such time as TCEQ adopts rules, submits them to EPA for SIP review and receives EPA SIP approval, any action taken on pending applications which are implicated in Federal Register notices may result in additional permitting requirements or enforcement in the future because of the uncertainty of EPA action on the proposed Federal Register disapproval notices. The TCEQ is working expeditiously to address the Federal Register notices to resolve federal enforceability concerns. Also see; EPA's comments regarding qualified facility changes and flexible permits in Section I of EPA's Detailed Response dated Nov. 12, 2009 Adobe Acrobat PDF Document.

November 23, 2009 Update

TCEQ responses to EPA Federal Register notices relating to the following aspects of Texas' air permitting programs: Flexible Permits, Qualified Facilities, and NSR Reform.

May 17, 2010 Update

Please be advised that the rules implementing the Qualified Facility (QF) program have been disapproved by EPA effective May 14, 2010 Adobe Acrobat PDF Document. While this type of authorization is still available for use under state law, it should be understood that as long as the program is not part of the approved Texas state implementation plan, EPA views QF changes made, since the inception of the program, are not federally enforceable.

July 16, 2010 Update

As first announced by EPA on June 30, 2010, please be advised that the rules implementing the Flexible Permitting program have been disapproved by EPA effective August 16, 2010 Adobe Acrobat PDF Document. While this type of authorization is still available for use under state law, it should be understood that as long as the program is not part of the approved Texas state implementation plan, EPA does not view flexible permits as federally enforceable.

On July 6, 2010 Adobe Acrobat PDF Document, the Executive Director of the TCEQ corresponded with EPA Region 6 to outline options for companies voluntarily choosing to "de-flex" from a flexible permit to a State Implementation Plan-approved New Source Review permit within TCEQ's existing regulatory framework.

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