Approval and Promulgation of State Implementation Plans; Texas; Highly Reactive Volatile Organic Compound Emissions Cap and Trade Program for the Houston/Galveston/Brazoria Ozone Nonattainment Area, 52659-52664 [06-7410]
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Federal Register / Vol. 71, No. 172 / Wednesday, September 6, 2006 / Rules and Regulations
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[FR Doc. 06–7409 Filed 9–5–06; 8:45 am]
BILLING CODE 6560–50–P
ENVIRONMENTAL PROTECTION
AGENCY
40 CFR Part 52
[EPA–R06–OAR–2005–TX–0033; FRL–8216–
6]
Approval and Promulgation of State
Implementation Plans; Texas; Highly
Reactive Volatile Organic Compound
Emissions Cap and Trade Program for
the Houston/Galveston/Brazoria Ozone
Nonattainment Area
Environmental Protection
Agency (EPA).
ACTION: Final rule.
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AGENCY:
SUMMARY: EPA is approving revisions to
the Texas State Implementation Plan
concerning the Highly Reactive Volatile
Organic Compound Emissions Cap and
Trade Program for the Houston/
Galveston/Brazoria ozone
nonattainment area.
DATES: This rule is effective on October
6, 2006.
ADDRESSES: EPA has established a
docket for this action under Docket ID
No. EPA–R06–OAR–2005–TX–0033. All
documents in the docket are listed on
the https://www.regulations.gov Web
site. Although listed in the index, some
information is not publicly available,
e.g., CBI or other information whose
disclosure is restricted by statute.
Certain other material, such as
copyrighted material, is not placed on
the Internet and will be publicly
available only in hard copy form.
Publicly available docket materials are
available either electronically through
https://www.regulations.gov or in hard
copy at the Air Permitting 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. There will
be a 15-cent per page fee for making
photocopies of documents. On the day
of the visit, please check in at the EPA
Region 6 reception area at 1445 Ross
Avenue, Suite 700, Dallas, Texas.
The State submittal related to this SIP
revision, and which is part of the EPA
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docket, is 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:
Adina Wiley, Air Permitting Section
(6PD–R), EPA Region 6, 1445 Ross
Avenue, Dallas, Texas 75202–2733,
telephone 214–665–2115,
wiley.adina@epa.gov.
SUPPLEMENTARY INFORMATION:
Throughout this document wherever
‘‘we,’’ ‘‘us,’’ or ‘‘our’’ is used, we mean
EPA.
Outline
I. What action is EPA taking?
II. What is the background for this action?
III. What are EPA’s responses to comments
received on the proposed action?
IV. What does Federal approval of a State
regulation mean to me?
V. Statutory and Executive Order Reviews
52659
approved SIP could be achieved through
a combination of 80 percent reduction
in industrial NOX emissions and
additional targeted control of certain
highly-reactive volatile organic
compounds (HRVOCs). TCEQ has
chosen to revise its attainment strategy
accordingly, decreasing the emphasis on
NOX control and requiring additional
reductions of HRVOCs.
In our proposed approval of the HECT
program, we stated that final action on
the HECT would not occur until we
published final approval of the
attainment demonstration, which is
being processed concurrently with this
approval. For a further discussion of the
attainment demonstration and EPA’s
responses to comments on this action,
please see our action on the attainment
demonstration (EPA–R06–OAR–2005–
TX–0018), which is being published
elsewhere in today’s Federal Register.
I. What action is EPA taking?
EPA is approving the Highly Reactive
Volatile Organic Compound Emissions
Cap and Trade (HECT) Economic
Incentive Program (EIP), published at
Texas Administrative Code (TAC) Title
30, Chapter 101 General Air Quality
Rules, Subchapter H Emissions Banking
and Trading, Division 6, sections
101.390–101.394, 101.396, 101.399–
101.401, and 101.403. These revisions
were adopted by the Texas Commission
on Environmental Quality (TCEQ) on
December 01, 2004, and submitted to
EPA on December 17, 2004, as a
revision to the State Implementation
Plan (SIP). As discussed in our
proposed action at 70 FR 58144, we
conclude that the HECT program is
consistent with section 110(l) of the
Clean Air Act. We proposed approval of
the HECT program as an element of the
Texas SIP for the Houston/Galveston/
Brazoria (HGB) ozone nonattainment
area on October 5, 2005 (70 FR 58138).
III. What are EPA’s responses to
comments received on the proposed
action?
EPA’s responses to comments
submitted by Galveston-Houston
Association for Smog Prevention
(GHASP), Environmental Defense
(Texas Office), the Lone Star Chapter of
the Sierra Club, and Public Citizen
(Texas Office) on November 4, 2005, are
as follows. EPA has summarized the
comments below; the complete
comments can be found in the
administrative record for this action
(EPA–R06–OAR–2005–TX–0033). While
the comments generally discuss VOC
trading programs, we are only
addressing comments specific to
HRVOCs and the HECT. 1
Comment 1: The EPA uses the term
‘‘less-reactive VOC’’, but the TCEQ term
‘‘other VOC’’ (OVOC) is preferable.
Some of the other VOCs are actually
highly reactive on a molar basis, but are
not emitted as widely or in as great a
quantity as the designated HRVOCs.
Response to Comment 1: We agree
that the term ‘‘other VOC’’ (OVOC) will
II. What is the background for this
action?
The HECT program was adopted as a
state regulation on December 1, 2004.
The TCEQ developed the program as
part of its mid-course review of the 1hour ozone attainment plan for the HGB
ozone nonattainment area. The midcourse review showed that ozone
reductions comparable to those
achieved by the 90 percent reduction in
industrial nitrogen oxide (NOX)
emissions and the enforceable
commitments for an additional 42 tons
per day of NOX reductions required in
the November 2001 (66 FR 57160)
1 During the comment period, EPA did not
receive comments regarding environmental justice
and the HECT program. However, during the
finalization process we have reevaluated our
interpretation of the definition of Environmental
Justice as found in Executive Order 12898. In our
proposed approval of the HECT program, we stated
that ‘‘environmental justice concerns arise when a
trading program could result in disproportionate
impacts on communities populated by racial
minorities, people with low incomes, or Tribes.’’
On further review, we believe the following
description is more consistent with E.O. 12898:
‘‘Environmental justice concerns can arise when a
final rule, such as a trading program, could result
in disproportionate burdens on particular
communities, including minority or low income
communities.’’ This revised language does not alter
our determination that the HECT program does not
raise environmental justice concerns.
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more accurately define VOCs that are
not categorized by TCEQ as highlyreactive. We are using the term OVOC
instead of ‘‘less-reactive VOC’’ in our
final actions on the HGB attainment
demonstration and associated
rulemakings.
Comment 2: There are problems with
the inventory of VOC and HRVOC
emissions in the HGB nonattainment
area.
Response to Comment 2: While EPA
acknowledges that there have been past
VOC emission inventory problems from
sources associated with the
petrochemical industry (see our
proposed approval of the revisions to
the HGB attainment demonstration, 70
FR 58119), EPA believes that the
emission inventory developed by TCEQ
for the HGB nonattainment area is an
acceptable approach to characterizing
the emissions in the HGB nonattainment
area. In addition, we are incorporating
by reference our responses to comments
provided in our approval of the
attainment demonstration for the HGB
ozone nonattainment area (EPA–R06–
OAR–2005–TX–0018). Those responses
more specifically address the
commenters’ concerns regarding the
development and use of the imputed
inventory, characterization of other
VOCs in the inventory, and appropriate
emissions monitoring techniques for
flares, fugitive emissions, and upsets.
Also, as will be discussed more fully in
our responses to Comments 3 and 4, the
implementation of the HECT and the
associated monitoring and reporting
requirements will serve to improve the
emissions inventory for HRVOCs in the
HGB nonattainment area.
Comment 3: The VOC and HRVOC
trading programs use unreliable data,
which cannot be replicably measured.
There are problems with current
methods for measurement of HRVOC
and VOC emissions; therefore, the VOC
and HRVOC trading programs do not
meet EPA’s EIP Guidance for
quantification.
Response to Comment 3: EPA
disagrees. The proposed HECT rule, at
70 FR 58138, describes the basis for
EPA’s conclusion that the HECT rule
satisfies the EIP Guidance (‘‘Improving
Air Quality with Economic Incentive
Programs’’ EPA–452/R–01–001, January
2001) criteria on quantifiability, which
are found in Chapter 4 (‘‘Fundamental
Principles of All EIPs’’).
Emissions and emission reductions
attributed to an EIP are quantifiable if
they can be reliably and replicably
measured: the source must be able to
reliably calculate the amount of
emissions and emission reductions from
the EIP strategy, and must be able to
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replicate the calculations. Under the
HECT program, sources address the
element of quantification by using a
quantification protocol that has been
approved by TCEQ and EPA. Both
agencies have important roles in
ensuring these protocols provide
reliable and replicable emission
measurements. The approved
quantification protocols for calculating
annual HRVOC emissions for
compliance with the HECT program are
contained in sections 115.725 and
115.764 of 30 TAC Chapter 115, Control
of Air Pollution from Volatile Organic
Compounds. Additionally, VOC
emission reduction credits (ERCs) that
are eligible for conversion into HECT
allowances must also be quantified
using the monitoring and testing
methods required in sections 115.725
and 115.764 and certified under the
Emission Credit Banking and Trading
program. The monitoring and testing
protocols in sections 115.725 and
115.764 all require continuous
monitoring systems; EPA considers
continuous monitoring systems reliable
and replicable (see Section 5.3(a) of the
EIP Guidance). If the monitoring and
testing data required under sections
115.725 and 115.764 are unavailable,
sources can calculate HRVOC emissions
for HECT compliance during this time
period through continuous monitoring
data, periodic monitoring data, testing
data, data from manufacturers, and
engineering calculations. This
measurement hierarchy agrees with the
emission measurement protocol
hierarchy that EPA recommends in the
EIP Guidance (see Section 5.2(d)).
Comment 4: TCEQ and EPA lack
confidence in current methods for
measuring emissions. This lack of
confidence increases the risks
associated with a market-based trading
program, until the TCEQ is able to
reconcile ambient monitoring with
industry emission inventories. For
example, trading could exacerbate the
challenge of identifying the cause of any
program failures because comparisons
of ambient monitoring trend data to
emission inventory data will require
consideration of the timing and
magnitude of trades.
Response to Comment 4: EPA
disagrees. We have discussed above in
response to Comments 2 and 3 our
conclusion that the methods used for
measuring emissions under the HECT
program are consistent with EPA policy
and guidance, and that the emissions
inventory developed by TCEQ is an
acceptable approach to characterizing
the emissions in the HGB nonattainment
area. Further, to the extent there are
concerns related to differences between
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ambient monitoring data and the HGB
industrial emissions inventory, the
operation of the HECT will serve to
increase rather than decrease the level
of certainty. Specifically, the use of
approved quantification methods
required under the HECT will extend
monitoring to vent gas streams, flares,
and cooling tower heat exchanges
systems that might not have been
adequately monitored before.
Accordingly, accounting for actual
emissions under the HECT—which is
required of each source subject to this
program—should improve the industrial
emissions inventory.
Comment 5: The EPA should find that
it is premature for TCEQ to allow
trading of unquantifiable emissions of
VOCs in the HGB nonattainment area. If
either the source or the recipient
incorrectly estimates the emissions
involved in a trade, the region is at risk
of a net increase in emissions as a result
of the trade. Until refineries and
chemical plants are able to routinely
quantify their VOC emissions, EPA
should not allow trading of these VOC
emissions.
Response to Comment 5: EPA
disagrees that VOC emissions should be
ineligible for trading in the HGB
nonattainment area. EPA believes that
allowing the petrochemical industry to
trade VOC emissions under the HECT
program is appropriate because the
TCEQ has made changes in regulatory
requirements to require that certain
sources of VOC emissions comply with
continuous emissions monitoring
requirements by the end of 2006.
Additionally, as discussed in the EIP
Guidance, we have concluded that cap
and trade programs can be effective
ways to reduce emissions, especially
from large stationary sources. Each trade
is part of a system designed to
significantly reduce emissions of the
pollutants subject to the cap. EPA also
believes that allowing the petrochemical
industry to trade HRVOC emissions
under the HECT program is appropriate
notwithstanding the commenter’s
concern about emissions estimates,
because the HECT program satisfies the
EIP Guidance criteria for quantification.
In the HECT program, sources trading
HECT allowances must quantify their
emissions using the approved protocols
in 30 TAC Chapter 115. The use of
approved protocols ensures that sources
correctly estimate their excess
allowances or the amount of allowances
needed to cover actual emissions.
Additionally, TCEQ included a five
percent safety margin in setting the
overall level of annual emissions
allowed under the HECT, which should
produce a net annual average HRVOC
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emissions decrease in the HGB
nonattainment area below the level set
by the cap.
Comment 6: EPA should not approve
the exclusion of emissions above the
short-term limit from the annual cap if
a trading program is approved.
Response to Comment 6: EPA
disagrees. We requested specific
comment on this feature of the program
because, as noted by us and the
commenters, it departs from past
practices with cap and trade programs.
The commenters made one specific
point in this regard, which we address
in Comment 7. Our response to the more
general comment follows.
A key feature of the HGB attainment
strategy is the two-part approach to
HRVOC emissions. Routine HRVOC
emissions are targeted and reduced
through an annual cap-and-trade
program, while the non-routine
emissions from emission events,
maintenance, start-up and shutdown are
controlled through a short-term limit of
1200 lb/hour. When exceedances of the
short-term limit occur, the hourly
emissions above 1200 lb/hr are not
counted toward compliance with the
annual cap but are still subject to
enforcement as a violation of the shortterm limit. EPA expects that the root
cause of the conditions giving rise to
any particular exceedance of the shortterm limit will be identified and
corrected as expeditiously as
practicable. The source is still required
to use good air pollution control
practices consistent with the applicable
NSPS (40 CFR 60.11(d)) and MACT
standards or other applicable Federal or
State programs.
TCEQ concluded that separating the
two control elements was an
appropriate means of protecting smaller
sources subject to the HECT from
depending on market availability of
allowances or facing enforcement action
if all emissions from an exceptionally
large release exhausted their HECT
allowances. Additionally, this
separation of the annual cap and the
short-term limit establishes a clear
procedure for handling emissions
during non-routine events. We believe
the annual cap in conjunction with the
short-term limit will achieve the goals of
the attainment demonstration as
indicated by TCEQ’s modeling analysis.
Please see our action and TSD on the
attainment demonstration (EPA–R06–
OAR–2005–TX–0018) for further
explanation.
An additional advantage of separating
these two control elements is that
counting all emissions toward the
annual cap could result in a loss of the
incentives and cost-effectiveness
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associated with cap- and trade
programs. In EPA’s experience with cap
and trade programs, some sources will
always overcontrol emissions, which
they in turn will most likely sell to other
sources that cannot achieve such
reductions without making greater
expenditures. Through the functioning
of the cap and trade market, reductions
will tend to be made by the sources able
to make them in the most cost-effective
manner, and therefore the program will
tend to promote the achievement of the
maximum amount of emission
reductions per dollar of resources
expended.
In the HGB area, however, an
additional important factor is present, in
that a significant number of sources
have the potential for large emissions
events or ‘‘spikes.’’ In such
circumstances, if a cap and trade
program counts all emissions towards
the cap, then overcontrolling sources
will tend to retain all of their reductions
as insurance against the possibility of
consuming their entire annual
allowance through an unforeseeable
emissions event. Therefore, eligible
reductions will not be traded as
allowances, which will impair the
market function of the cap and trade
program and thereby weaken its
tendency to cost effectively achieve
emission reductions. The two-part
structure of the Texas program offsets
this disadvantage.
Comment 7: EPA’s analysis suggests
that the HECT program could lead to
results that flout the intent of an EIP. An
example would be a company that
invests in efforts to dramatically reduce
its routine HRVOC emissions below its
annual cap, but fails to invest in efforts
to reduce its risk of a major upset. This
company could be the largest single
emitter of HRVOCs in a year while also
being a major seller of HECT
allowances.
Response to Comment 7: EPA
disagrees. The proposed HECT rule, at
70 FR 58143, describes EPA’s analysis
and our determination that, on balance,
the HECT program is approvable. The
intent of the HECT is to reduce routine
emissions of HRVOCs. The scenario
presented by the commenters actually
supports the design of the HECT, in that
the routine HRVOC emissions have been
controlled because the company has
been able to ‘‘dramatically reduce’’
these emissions below the facility’s
annual allocation level. The emissions
associated with a major upset that are
exempted from the annual cap
(emissions above 1200 lb/hr) would be
violations of the short-term emissions
limit and subject to enforcement. We
believe that this two-part approach to
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control of HRVOC emissions recognizes
the uniqueness of the HGB
nonattainment area and is appropriate
to demonstrate attainment. Additional
information on our analysis of the
attainment demonstration is available in
the rulemaking docket for this action
(EPA–R06–OAR–2005–TX–0018).
As noted in our proposed approval,
the exemption of hourly limit
exceedances from the annual cap is not
provided for in EPA’s EIP Guidance, but
the scenario provided by the
commenters is unlikely to occur. Based
on the final HECT allocation scheme
updated March 20, 2006, the largest
allocation is 441.9 tons. This allocation
is approximately equivalent to 100.9 lb/
hr, assuming the facility will operate
with the allocation as an hourly average
to represent routine emissions.
Therefore, the largest HECT allocation
will be approximately twelve times
smaller than the 1200 lb/hr short-term
limit. For every other source under the
HECT, the disparity would be even
greater. Based on this difference
between the short-term limit and
presumed routine emissions levels, no
source would be able to operate at the
hourly limit for an extended period of
time without pushing its emissions total
close to or above the annual cap—in
which case it would not be able to sell
allowances. Therefore, as discussed in
our proposal, only truly non-routine
emissions will exceed the hourly limit.
Such exceedances are subject to
enforcement as a violation of the 1200
lb/hr limit. Thus, two factors militate
against the existence of the commenters’
hypothetical high-emitting allowance
seller: (1) The improbability of a source
operating for long above the hourly limit
without consuming a large part of its
annual allocation, and (2) the fact that
each time it did exceed the hourly limit,
it could be subject to enforcement.
Because we find that the result cited by
the commenters is unlikely to occur, we
continue to believe that the relative
advantages and disadvantages of the
structure of the HECT program support
approval.
Also, while the structure of the HECT
and the HRVOC rules anticipates that
emission events will not be completely
eradicated, EPA believes that in
combination these programs provide
sufficient disincentives that sources will
sufficiently reduce the frequency and
magnitude of large emission events such
that emission events would not be
expected to impact peak ozone levels.
The University of Texas report
‘‘Variable Industrial VOC Emissions and
Their Impact on Ozone Formation in the
Houston Galveston Area,’’ April 16,
2004, estimated from historic
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information that it is probable that at
least one event will occur annually at a
time and location to impact peak ozone.
TCEQ determined, and EPA concurs,
that it is therefore necessary to reduce
the frequency of emission events so that
emission events do not interfere with
attainment of the 1-hour NAAQS, which
only allows an average of one
exceedance per year. Based on this
study, we believe the hourly emission
limit will achieve this goal. Because
facilities would be expected to take
action to avoid emission events
exceeding the short-term limit of 1200
lbs/hr, we anticipate that the frequency
of such events in the future will be
lower than in the past and on average
less than 1 event per year impacting
peak ozone should be expected. The
University of Texas study also supports
our belief that even if the scenario
presented by the commenters does
actually occur, it is unlikely to impact
attainment of the 1-hour ozone NAAQS.
Comment 8: If EPA approves the
exclusion of emissions above the shortterm cap from the annual cap, it should
at least condition its approval on the
TCEQ adopting a requirement that a
company may not be a net seller of
HECT allowances in the same year that
it makes use of the exclusion.
Response to Comment 8: EPA
disagrees. The condition described by
the commenters is not necessary to
ensure that the HECT functions
properly. As described in our response
to Comment 7 above, it is unlikely that
a source would be a net seller of
allowances and also exempt emissions
above the hourly limit from its annual
cap.
Comment 9: If EPA approves the
HECT program as adopted by the TCEQ,
EPA should commit to independently
auditing the program annually during
its first several years to determine
whether implementation of the rule
meets EIP Guidance.
Response to Comment 9: EPA
disagrees that an independent audit of
the HECT is necessary. As proposed by
EPA (70 FR 58138), the HECT does have
a formal audit provision that provides
sufficient oversight to identify and
address potential areas of concern. The
audit provision is in section 101.403(a)
of the HECT rules and requires TCEQ to
conduct an audit every three years,
beginning in 2007. The audit will
evaluate the impact of the program on
the State’s ozone attainment
demonstration, the availability and cost
of allowances, compliance by the
participants, and any other elements the
TCEQ Executive Director may choose to
include. The TCEQ Executive Director
will recommend measures to remedy
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any problems identified during the
audit, including discontinuing
allowances trading. The audit data and
results must be completed and
submitted to EPA and made available
for public inspection within six months
from the beginning of the audit. EPA
will receive the audit reports and will
have the opportunity through the SIP
process to require any necessary
changes. Additionally, facilities that do
not have enough allowances to cover
their actual HRVOC emissions during a
control period will have their
allowances for the next control period
reduced by an amount equal to the
emissions exceeding the allowances,
plus an additional ten percent of the
exceedance. Also, the TCEQ Executive
Director has the authority to initiate
enforcement actions if necessary to
correct violations of the HECT program.
The HECT audit provisions described
above are consistent with EPA’s
expectations for evaluating the results of
an economic incentive program (EIP), as
outlined in section 5.3(b) of the EIP
Guidance. Section 5.3(b) explains that
an appropriate schedule for program
evaluations is at least every three years,
which coincides with other periodic
reporting requirements such as those
applicable to emission inventory
requirements required by the CAA. EPA
believes that the triennial HECT audit
schedule and the required annual report
(section 101.403(b)) that summarizes all
HECT trades completed in the most
recent control period will be sufficient
to ensure the HECT does not jeopardize
the HGB area’s attainment strategy.
EPA’s response to Texas Industry
Project (TIP) comments made on
November 4, 2005, is as follows:
Comment: TIP supports EPA’s
proposed approval of the HECT program
and urges EPA to finalize its approval as
soon as practicable.
Response: EPA acknowledges the
support of TIP for our approval of the
HECT program.
EPA’s response to comments made by
the BCCA Appeal Group (BCCAAG) on
November 4, 2005, is as follows:
Comment 1: BCCAAG supports EPA’s
proposed approval of the HECT program
and urges EPA to finalize its approval as
soon as practicable.
Comment 2: BCCAAG supports the
establishment of a separate short-term
limit on HRVOC emissions, and the
exclusion of short-term limit
exceedances from the HECT program.
Response to Comment 1 and 2: EPA
acknowledges the support of BCCAAG
for our approval of the HECT program
and the specific feature of the HECT that
allows exceedances of the short-term
limit to be exempt from the HECT.
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We note that BCCAAG also submitted
a set of comments on November 4, 2005,
that were specific to our proposed
action on the revisions to the HGB
attainment demonstration. On page 8 of
this submittal, the commenter
references the HECT, but gives no
additional information relevant to our
rulemaking on the HECT. We are
addressing this separate BCCAAG
submittal in our action on the
attainment demonstration (EPA–R06–
2005–TX–0018).
IV. What does Federal approval of a
State regulation mean to me?
Enforcement of the State regulation
before and after it is incorporated into
the federally approved SIP is primarily
a State function. However, once the
regulation is federally approved, EPA
and the public may take enforcement
action against violators of these
regulations.
V. Statutory and Executive Order
Reviews
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
(Pub. L. 104–4).
This rule also does not have tribal
implications because it will not have a
substantial direct effect on one or more
Indian tribes, on the relationship
between the Federal Government and
Indian tribes, or on the distribution of
power and responsibilities between the
Federal Government and Indian tribes,
as specified by Executive Order 13175
(65 FR 67249, November 9, 2000). This
action also does not have Federalism
implications because it does not have
substantial direct effects on the States,
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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). This action 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
CAA. This rule also is not subject to
Executive Order 13045 ‘‘Protection of
Children from Environmental Health
Risks and Safety Risks’’ (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 CAA. 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 CAA. 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. 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.).
The Congressional Review Act, 5
U.S.C. 801 et seq., as added by the Small
Business Regulatory Enforcement
Fairness Act of 1996, generally provides
that before a rule may take effect, the
agency promulgating the rule must
submit a rule report, which includes a
copy of the rule, to each House of the
Congress and to the Comptroller General
of the United States. EPA will submit a
report containing this rule and other
required information to the U.S. Senate,
the U.S. House of Representatives, and
the Comptroller General of the United
States prior to publication of the rule in
the Federal Register. A major rule
cannot take effect until 60 days after it
is published in the Federal Register.
This action is not a ‘‘major rule’’ as
defined by 5 U.S.C. 804(2).
Under section 307(b)(1) of the CAA,
petitions for judicial review of this
action must be filed in the United States
Court of Appeals for the appropriate
circuit by November 6, 2006. Filing a
petition for reconsideration by the
Administrator of this final rule does not
affect the finality of this rule for the
purposes of judicial review nor does it
extend the time within which a petition
for judicial review may be filed, and
shall not postpone the effectiveness of
such rule or action. This action may not
be challenged later in proceedings to
enforce its requirements. (See section
307(b)(2).)
List of Subjects 40 CFR Part 52
Environmental protection, Air
pollution control, Intergovernmental
relations, Nitrogen oxides, Ozone,
Reporting and recordkeeping
requirements, Volatile organic
compounds.
Dated: August 24, 2006.
Richard E. Greene,
Regional Administrator, Region 6.
I
40 CFR part 52 is amended as follows:
PART 52—[AMENDED]
1. The authority citation for part 52
continues to read as follows:
I
Authority: 42 U.S.C. 7401 et seq.
Subpart SS—Texas
2. The table in § 52.2270(c) entitled
‘‘EPA Approved Regulations in the
Texas SIP’’ is amended under Chapter
101—General Air Quality Rules,
Subchapter H—Emissions Banking and
Trading, by adding in numerical order
a new centered heading ‘‘Division 6—
Highly-Reactive Volatile Organic
Compound Emissions Cap and Trade
Program’’ followed by new entries for
sections 101.390, 101.391, 101.392,
101.393, 101.394, 101.396, 101.399,
101.400, 101.401 and 101.403.
The additions read as follows:
I
§ 52.2270
*
Identification of plan.
*
*
(c) * * *
*
*
EPA-APPROVED REGULATIONS IN THE TEXAS SIP
State citation
State approval/
submittal date
Title/subject
EPA approval date
Explanation
Chapter 101—General Air Quality Rules
*
*
*
*
*
*
*
*
*
Subchapter H—Emissions Banking and Trading
*
*
*
*
*
Division 6—Highly-Reactive Volatile Organic Compound Emissions Cap and Trade Program
Definitions .............................................
12/01/04
Section 101.391 ...................................
Applicability ..........................................
12/01/04
Section 101.392 ...................................
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Section 101.390 ...................................
Exemptions ...........................................
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EPA APPROVED REGULATIONS IN THE TEXAS SIP—Continued
State approval/
submittal date
State citation
Title/subject
Section 101.393 ...................................
General provisions ...............................
12/01/04
Section 101.394 ...................................
Allocation of allowances .......................
12/01/04
Section 101.396 ...................................
Allowance deductions ..........................
12/01/04
Section 101.399 ...................................
Allowance Banking and Trading ..........
12/01/04
Section 101.400 ...................................
Reporting ..............................................
12/01/04
Section 101.401 ...................................
Level of activity certification .................
2/01/04
Section 101.403 ...................................
Program audits and reports .................
12/01/04
*
*
*
[FR Doc. 06–7410 Filed 9–5–06; 8:45 am]
BILLING CODE 6560–50–P
ENVIRONMENTAL PROTECTION
AGENCY
40 CFR Part 52
[EPA–R06–OAR–2005–TX–0023; FRL–8216–
4]
Approval and Promulgation of State
Implementation Plans; Texas;
Revisions for the Mass Emissions Cap
and Trade Program for the Houston/
Galveston/Brazoria Ozone
Nonattainment Area
Environmental Protection
Agency (EPA).
ACTION: Final rule.
sroberts on PROD1PC70 with RULES
AGENCY:
SUMMARY: EPA is approving revisions to
the Texas State Implementation Plan
(SIP) concerning the Mass Emissions
Cap and Trade (MECT) program for
emissions of nitrogen oxides (NOX) in
the Houston/Galveston/Brazoria (HGB)
ozone nonattainment area. Additionally,
VerDate Aug<31>2005
19:14 Sep 05, 2006
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*
This rule is effective on October
6, 2006.
DATES:
EPA has established a
docket for this action under Docket ID
No. EPA–R06–OAR–2005–TX–0023. All
documents in the docket are listed on
the https://www.regulations.gov Web
site. Although listed in the index, some
information is not publicly available,
e.g., CBI or other information whose
disclosure is restricted by statute.
Certain other material, such as
copyrighted material, is not placed on
the Internet and will be publicly
available only in hard copy form.
Publicly available docket materials are
available either electronically through
https://www.regulations.gov or in hard
ADDRESSES:
Frm 00010
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Explanation
[Insert date of FR
publication] [Insert
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where document
begins].
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where document
begins].
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publication] [Insert
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publication] [Insert
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publication] [Insert
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where document
begins].
*
EPA is approving several subsections of
Chapter 116 of the Texas Administrative
Code (TAC) (Control of Air Pollution by
Permits for New Construction or
Modification) that provide crossreferences to the MECT program. EPA is
approving these revisions in accordance
with the requirements of the Federal
Clean Air Act (CAA).
PO 00000
EPA approval date
*
*
copy at the Air Permitting 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. There will
be a 15-cent per page fee for making
photocopies of documents. On the day
of the visit, please check in at the EPA
Region 6 reception area at 1445 Ross
Avenue, Suite 700, Dallas, Texas.
The State submittal related to this SIP
revision, and which is part of the EPA
docket, is 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.
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[Federal Register Volume 71, Number 172 (Wednesday, September 6, 2006)]
[Rules and Regulations]
[Pages 52659-52664]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 06-7410]
-----------------------------------------------------------------------
ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 52
[EPA-R06-OAR-2005-TX-0033; FRL-8216-6]
Approval and Promulgation of State Implementation Plans; Texas;
Highly Reactive Volatile Organic Compound Emissions Cap and Trade
Program for the Houston/Galveston/Brazoria Ozone Nonattainment Area
AGENCY: Environmental Protection Agency (EPA).
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: EPA is approving revisions to the Texas State Implementation
Plan concerning the Highly Reactive Volatile Organic Compound Emissions
Cap and Trade Program for the Houston/Galveston/Brazoria ozone
nonattainment area.
DATES: This rule is effective on October 6, 2006.
ADDRESSES: EPA has established a docket for this action under Docket ID
No. EPA-R06-OAR-2005-TX-0033. All documents in the docket are listed on
the https://www.regulations.gov Web site. Although listed in the index,
some information is not publicly available, e.g., CBI or other
information whose disclosure is restricted by statute. Certain other
material, such as copyrighted material, is not placed on the Internet
and will be publicly available only in hard copy form. Publicly
available docket materials are available either electronically through
https://www.regulations.gov or in hard copy at the Air Permitting
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. There will be a 15-cent per page fee for making photocopies of
documents. On the day of the visit, please check in at the EPA Region 6
reception area at 1445 Ross Avenue, Suite 700, Dallas, Texas.
The State submittal related to this SIP revision, and which is part
of the EPA docket, is 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: Adina Wiley, Air Permitting Section
(6PD-R), EPA Region 6, 1445 Ross Avenue, Dallas, Texas 75202-2733,
telephone 214-665-2115, wiley.adina@epa.gov.
SUPPLEMENTARY INFORMATION: Throughout this document wherever ``we,''
``us,'' or ``our'' is used, we mean EPA.
Outline
I. What action is EPA taking?
II. What is the background for this action?
III. What are EPA's responses to comments received on the proposed
action?
IV. What does Federal approval of a State regulation mean to me?
V. Statutory and Executive Order Reviews
I. What action is EPA taking?
EPA is approving the Highly Reactive Volatile Organic Compound
Emissions Cap and Trade (HECT) Economic Incentive Program (EIP),
published at Texas Administrative Code (TAC) Title 30, Chapter 101
General Air Quality Rules, Subchapter H Emissions Banking and Trading,
Division 6, sections 101.390-101.394, 101.396, 101.399-101.401, and
101.403. These revisions were adopted by the Texas Commission on
Environmental Quality (TCEQ) on December 01, 2004, and submitted to EPA
on December 17, 2004, as a revision to the State Implementation Plan
(SIP). As discussed in our proposed action at 70 FR 58144, we conclude
that the HECT program is consistent with section 110(l) of the Clean
Air Act. We proposed approval of the HECT program as an element of the
Texas SIP for the Houston/Galveston/Brazoria (HGB) ozone nonattainment
area on October 5, 2005 (70 FR 58138).
II. What is the background for this action?
The HECT program was adopted as a state regulation on December 1,
2004. The TCEQ developed the program as part of its mid-course review
of the 1-hour ozone attainment plan for the HGB ozone nonattainment
area. The mid-course review showed that ozone reductions comparable to
those achieved by the 90 percent reduction in industrial nitrogen oxide
(NOX) emissions and the enforceable commitments for an
additional 42 tons per day of NOX reductions required in the
November 2001 (66 FR 57160) approved SIP could be achieved through a
combination of 80 percent reduction in industrial NOX
emissions and additional targeted control of certain highly-reactive
volatile organic compounds (HRVOCs). TCEQ has chosen to revise its
attainment strategy accordingly, decreasing the emphasis on
NOX control and requiring additional reductions of HRVOCs.
In our proposed approval of the HECT program, we stated that final
action on the HECT would not occur until we published final approval of
the attainment demonstration, which is being processed concurrently
with this approval. For a further discussion of the attainment
demonstration and EPA's responses to comments on this action, please
see our action on the attainment demonstration (EPA-R06-OAR-2005-TX-
0018), which is being published elsewhere in today's Federal Register.
III. What are EPA's responses to comments received on the proposed
action?
EPA's responses to comments submitted by Galveston-Houston
Association for Smog Prevention (GHASP), Environmental Defense (Texas
Office), the Lone Star Chapter of the Sierra Club, and Public Citizen
(Texas Office) on November 4, 2005, are as follows. EPA has summarized
the comments below; the complete comments can be found in the
administrative record for this action (EPA-R06-OAR-2005-TX-0033). While
the comments generally discuss VOC trading programs, we are only
addressing comments specific to HRVOCs and the HECT. \1\
---------------------------------------------------------------------------
\1\ During the comment period, EPA did not receive comments
regarding environmental justice and the HECT program. However,
during the finalization process we have reevaluated our
interpretation of the definition of Environmental Justice as found
in Executive Order 12898. In our proposed approval of the HECT
program, we stated that ``environmental justice concerns arise when
a trading program could result in disproportionate impacts on
communities populated by racial minorities, people with low incomes,
or Tribes.'' On further review, we believe the following description
is more consistent with E.O. 12898: ``Environmental justice concerns
can arise when a final rule, such as a trading program, could result
in disproportionate burdens on particular communities, including
minority or low income communities.'' This revised language does not
alter our determination that the HECT program does not raise
environmental justice concerns.
---------------------------------------------------------------------------
Comment 1: The EPA uses the term ``less-reactive VOC'', but the
TCEQ term ``other VOC'' (OVOC) is preferable. Some of the other VOCs
are actually highly reactive on a molar basis, but are not emitted as
widely or in as great a quantity as the designated HRVOCs.
Response to Comment 1: We agree that the term ``other VOC'' (OVOC)
will
[[Page 52660]]
more accurately define VOCs that are not categorized by TCEQ as highly-
reactive. We are using the term OVOC instead of ``less-reactive VOC''
in our final actions on the HGB attainment demonstration and associated
rulemakings.
Comment 2: There are problems with the inventory of VOC and HRVOC
emissions in the HGB nonattainment area.
Response to Comment 2: While EPA acknowledges that there have been
past VOC emission inventory problems from sources associated with the
petrochemical industry (see our proposed approval of the revisions to
the HGB attainment demonstration, 70 FR 58119), EPA believes that the
emission inventory developed by TCEQ for the HGB nonattainment area is
an acceptable approach to characterizing the emissions in the HGB
nonattainment area. In addition, we are incorporating by reference our
responses to comments provided in our approval of the attainment
demonstration for the HGB ozone nonattainment area (EPA-R06-OAR-2005-
TX-0018). Those responses more specifically address the commenters'
concerns regarding the development and use of the imputed inventory,
characterization of other VOCs in the inventory, and appropriate
emissions monitoring techniques for flares, fugitive emissions, and
upsets. Also, as will be discussed more fully in our responses to
Comments 3 and 4, the implementation of the HECT and the associated
monitoring and reporting requirements will serve to improve the
emissions inventory for HRVOCs in the HGB nonattainment area.
Comment 3: The VOC and HRVOC trading programs use unreliable data,
which cannot be replicably measured. There are problems with current
methods for measurement of HRVOC and VOC emissions; therefore, the VOC
and HRVOC trading programs do not meet EPA's EIP Guidance for
quantification.
Response to Comment 3: EPA disagrees. The proposed HECT rule, at 70
FR 58138, describes the basis for EPA's conclusion that the HECT rule
satisfies the EIP Guidance (``Improving Air Quality with Economic
Incentive Programs'' EPA-452/R-01-001, January 2001) criteria on
quantifiability, which are found in Chapter 4 (``Fundamental Principles
of All EIPs'').
Emissions and emission reductions attributed to an EIP are
quantifiable if they can be reliably and replicably measured: the
source must be able to reliably calculate the amount of emissions and
emission reductions from the EIP strategy, and must be able to
replicate the calculations. Under the HECT program, sources address the
element of quantification by using a quantification protocol that has
been approved by TCEQ and EPA. Both agencies have important roles in
ensuring these protocols provide reliable and replicable emission
measurements. The approved quantification protocols for calculating
annual HRVOC emissions for compliance with the HECT program are
contained in sections 115.725 and 115.764 of 30 TAC Chapter 115,
Control of Air Pollution from Volatile Organic Compounds. Additionally,
VOC emission reduction credits (ERCs) that are eligible for conversion
into HECT allowances must also be quantified using the monitoring and
testing methods required in sections 115.725 and 115.764 and certified
under the Emission Credit Banking and Trading program. The monitoring
and testing protocols in sections 115.725 and 115.764 all require
continuous monitoring systems; EPA considers continuous monitoring
systems reliable and replicable (see Section 5.3(a) of the EIP
Guidance). If the monitoring and testing data required under sections
115.725 and 115.764 are unavailable, sources can calculate HRVOC
emissions for HECT compliance during this time period through
continuous monitoring data, periodic monitoring data, testing data,
data from manufacturers, and engineering calculations. This measurement
hierarchy agrees with the emission measurement protocol hierarchy that
EPA recommends in the EIP Guidance (see Section 5.2(d)).
Comment 4: TCEQ and EPA lack confidence in current methods for
measuring emissions. This lack of confidence increases the risks
associated with a market-based trading program, until the TCEQ is able
to reconcile ambient monitoring with industry emission inventories. For
example, trading could exacerbate the challenge of identifying the
cause of any program failures because comparisons of ambient monitoring
trend data to emission inventory data will require consideration of the
timing and magnitude of trades.
Response to Comment 4: EPA disagrees. We have discussed above in
response to Comments 2 and 3 our conclusion that the methods used for
measuring emissions under the HECT program are consistent with EPA
policy and guidance, and that the emissions inventory developed by TCEQ
is an acceptable approach to characterizing the emissions in the HGB
nonattainment area. Further, to the extent there are concerns related
to differences between ambient monitoring data and the HGB industrial
emissions inventory, the operation of the HECT will serve to increase
rather than decrease the level of certainty. Specifically, the use of
approved quantification methods required under the HECT will extend
monitoring to vent gas streams, flares, and cooling tower heat
exchanges systems that might not have been adequately monitored before.
Accordingly, accounting for actual emissions under the HECT--which is
required of each source subject to this program--should improve the
industrial emissions inventory.
Comment 5: The EPA should find that it is premature for TCEQ to
allow trading of unquantifiable emissions of VOCs in the HGB
nonattainment area. If either the source or the recipient incorrectly
estimates the emissions involved in a trade, the region is at risk of a
net increase in emissions as a result of the trade. Until refineries
and chemical plants are able to routinely quantify their VOC emissions,
EPA should not allow trading of these VOC emissions.
Response to Comment 5: EPA disagrees that VOC emissions should be
ineligible for trading in the HGB nonattainment area. EPA believes that
allowing the petrochemical industry to trade VOC emissions under the
HECT program is appropriate because the TCEQ has made changes in
regulatory requirements to require that certain sources of VOC
emissions comply with continuous emissions monitoring requirements by
the end of 2006. Additionally, as discussed in the EIP Guidance, we
have concluded that cap and trade programs can be effective ways to
reduce emissions, especially from large stationary sources. Each trade
is part of a system designed to significantly reduce emissions of the
pollutants subject to the cap. EPA also believes that allowing the
petrochemical industry to trade HRVOC emissions under the HECT program
is appropriate notwithstanding the commenter's concern about emissions
estimates, because the HECT program satisfies the EIP Guidance criteria
for quantification. In the HECT program, sources trading HECT
allowances must quantify their emissions using the approved protocols
in 30 TAC Chapter 115. The use of approved protocols ensures that
sources correctly estimate their excess allowances or the amount of
allowances needed to cover actual emissions. Additionally, TCEQ
included a five percent safety margin in setting the overall level of
annual emissions allowed under the HECT, which should produce a net
annual average HRVOC
[[Page 52661]]
emissions decrease in the HGB nonattainment area below the level set by
the cap.
Comment 6: EPA should not approve the exclusion of emissions above
the short-term limit from the annual cap if a trading program is
approved.
Response to Comment 6: EPA disagrees. We requested specific comment
on this feature of the program because, as noted by us and the
commenters, it departs from past practices with cap and trade programs.
The commenters made one specific point in this regard, which we address
in Comment 7. Our response to the more general comment follows.
A key feature of the HGB attainment strategy is the two-part
approach to HRVOC emissions. Routine HRVOC emissions are targeted and
reduced through an annual cap-and-trade program, while the non-routine
emissions from emission events, maintenance, start-up and shutdown are
controlled through a short-term limit of 1200 lb/hour. When exceedances
of the short-term limit occur, the hourly emissions above 1200 lb/hr
are not counted toward compliance with the annual cap but are still
subject to enforcement as a violation of the short-term limit. EPA
expects that the root cause of the conditions giving rise to any
particular exceedance of the short-term limit will be identified and
corrected as expeditiously as practicable. The source is still required
to use good air pollution control practices consistent with the
applicable NSPS (40 CFR 60.11(d)) and MACT standards or other
applicable Federal or State programs.
TCEQ concluded that separating the two control elements was an
appropriate means of protecting smaller sources subject to the HECT
from depending on market availability of allowances or facing
enforcement action if all emissions from an exceptionally large release
exhausted their HECT allowances. Additionally, this separation of the
annual cap and the short-term limit establishes a clear procedure for
handling emissions during non-routine events. We believe the annual cap
in conjunction with the short-term limit will achieve the goals of the
attainment demonstration as indicated by TCEQ's modeling analysis.
Please see our action and TSD on the attainment demonstration (EPA-R06-
OAR-2005-TX-0018) for further explanation.
An additional advantage of separating these two control elements is
that counting all emissions toward the annual cap could result in a
loss of the incentives and cost-effectiveness associated with cap- and
trade programs. In EPA's experience with cap and trade programs, some
sources will always overcontrol emissions, which they in turn will most
likely sell to other sources that cannot achieve such reductions
without making greater expenditures. Through the functioning of the cap
and trade market, reductions will tend to be made by the sources able
to make them in the most cost-effective manner, and therefore the
program will tend to promote the achievement of the maximum amount of
emission reductions per dollar of resources expended.
In the HGB area, however, an additional important factor is
present, in that a significant number of sources have the potential for
large emissions events or ``spikes.'' In such circumstances, if a cap
and trade program counts all emissions towards the cap, then
overcontrolling sources will tend to retain all of their reductions as
insurance against the possibility of consuming their entire annual
allowance through an unforeseeable emissions event. Therefore, eligible
reductions will not be traded as allowances, which will impair the
market function of the cap and trade program and thereby weaken its
tendency to cost effectively achieve emission reductions. The two-part
structure of the Texas program offsets this disadvantage.
Comment 7: EPA's analysis suggests that the HECT program could lead
to results that flout the intent of an EIP. An example would be a
company that invests in efforts to dramatically reduce its routine
HRVOC emissions below its annual cap, but fails to invest in efforts to
reduce its risk of a major upset. This company could be the largest
single emitter of HRVOCs in a year while also being a major seller of
HECT allowances.
Response to Comment 7: EPA disagrees. The proposed HECT rule, at 70
FR 58143, describes EPA's analysis and our determination that, on
balance, the HECT program is approvable. The intent of the HECT is to
reduce routine emissions of HRVOCs. The scenario presented by the
commenters actually supports the design of the HECT, in that the
routine HRVOC emissions have been controlled because the company has
been able to ``dramatically reduce'' these emissions below the
facility's annual allocation level. The emissions associated with a
major upset that are exempted from the annual cap (emissions above 1200
lb/hr) would be violations of the short-term emissions limit and
subject to enforcement. We believe that this two-part approach to
control of HRVOC emissions recognizes the uniqueness of the HGB
nonattainment area and is appropriate to demonstrate attainment.
Additional information on our analysis of the attainment demonstration
is available in the rulemaking docket for this action (EPA-R06-OAR-
2005-TX-0018).
As noted in our proposed approval, the exemption of hourly limit
exceedances from the annual cap is not provided for in EPA's EIP
Guidance, but the scenario provided by the commenters is unlikely to
occur. Based on the final HECT allocation scheme updated March 20,
2006, the largest allocation is 441.9 tons. This allocation is
approximately equivalent to 100.9 lb/hr, assuming the facility will
operate with the allocation as an hourly average to represent routine
emissions. Therefore, the largest HECT allocation will be approximately
twelve times smaller than the 1200 lb/hr short-term limit. For every
other source under the HECT, the disparity would be even greater. Based
on this difference between the short-term limit and presumed routine
emissions levels, no source would be able to operate at the hourly
limit for an extended period of time without pushing its emissions
total close to or above the annual cap--in which case it would not be
able to sell allowances. Therefore, as discussed in our proposal, only
truly non-routine emissions will exceed the hourly limit. Such
exceedances are subject to enforcement as a violation of the 1200 lb/hr
limit. Thus, two factors militate against the existence of the
commenters' hypothetical high-emitting allowance seller: (1) The
improbability of a source operating for long above the hourly limit
without consuming a large part of its annual allocation, and (2) the
fact that each time it did exceed the hourly limit, it could be subject
to enforcement. Because we find that the result cited by the commenters
is unlikely to occur, we continue to believe that the relative
advantages and disadvantages of the structure of the HECT program
support approval.
Also, while the structure of the HECT and the HRVOC rules
anticipates that emission events will not be completely eradicated, EPA
believes that in combination these programs provide sufficient
disincentives that sources will sufficiently reduce the frequency and
magnitude of large emission events such that emission events would not
be expected to impact peak ozone levels. The University of Texas report
``Variable Industrial VOC Emissions and Their Impact on Ozone Formation
in the Houston Galveston Area,'' April 16, 2004, estimated from
historic
[[Page 52662]]
information that it is probable that at least one event will occur
annually at a time and location to impact peak ozone. TCEQ determined,
and EPA concurs, that it is therefore necessary to reduce the frequency
of emission events so that emission events do not interfere with
attainment of the 1-hour NAAQS, which only allows an average of one
exceedance per year. Based on this study, we believe the hourly
emission limit will achieve this goal. Because facilities would be
expected to take action to avoid emission events exceeding the short-
term limit of 1200 lbs/hr, we anticipate that the frequency of such
events in the future will be lower than in the past and on average less
than 1 event per year impacting peak ozone should be expected. The
University of Texas study also supports our belief that even if the
scenario presented by the commenters does actually occur, it is
unlikely to impact attainment of the 1-hour ozone NAAQS.
Comment 8: If EPA approves the exclusion of emissions above the
short-term cap from the annual cap, it should at least condition its
approval on the TCEQ adopting a requirement that a company may not be a
net seller of HECT allowances in the same year that it makes use of the
exclusion.
Response to Comment 8: EPA disagrees. The condition described by
the commenters is not necessary to ensure that the HECT functions
properly. As described in our response to Comment 7 above, it is
unlikely that a source would be a net seller of allowances and also
exempt emissions above the hourly limit from its annual cap.
Comment 9: If EPA approves the HECT program as adopted by the TCEQ,
EPA should commit to independently auditing the program annually during
its first several years to determine whether implementation of the rule
meets EIP Guidance.
Response to Comment 9: EPA disagrees that an independent audit of
the HECT is necessary. As proposed by EPA (70 FR 58138), the HECT does
have a formal audit provision that provides sufficient oversight to
identify and address potential areas of concern. The audit provision is
in section 101.403(a) of the HECT rules and requires TCEQ to conduct an
audit every three years, beginning in 2007. The audit will evaluate the
impact of the program on the State's ozone attainment demonstration,
the availability and cost of allowances, compliance by the
participants, and any other elements the TCEQ Executive Director may
choose to include. The TCEQ Executive Director will recommend measures
to remedy any problems identified during the audit, including
discontinuing allowances trading. The audit data and results must be
completed and submitted to EPA and made available for public inspection
within six months from the beginning of the audit. EPA will receive the
audit reports and will have the opportunity through the SIP process to
require any necessary changes. Additionally, facilities that do not
have enough allowances to cover their actual HRVOC emissions during a
control period will have their allowances for the next control period
reduced by an amount equal to the emissions exceeding the allowances,
plus an additional ten percent of the exceedance. Also, the TCEQ
Executive Director has the authority to initiate enforcement actions if
necessary to correct violations of the HECT program.
The HECT audit provisions described above are consistent with EPA's
expectations for evaluating the results of an economic incentive
program (EIP), as outlined in section 5.3(b) of the EIP Guidance.
Section 5.3(b) explains that an appropriate schedule for program
evaluations is at least every three years, which coincides with other
periodic reporting requirements such as those applicable to emission
inventory requirements required by the CAA. EPA believes that the
triennial HECT audit schedule and the required annual report (section
101.403(b)) that summarizes all HECT trades completed in the most
recent control period will be sufficient to ensure the HECT does not
jeopardize the HGB area's attainment strategy.
EPA's response to Texas Industry Project (TIP) comments made on
November 4, 2005, is as follows:
Comment: TIP supports EPA's proposed approval of the HECT program
and urges EPA to finalize its approval as soon as practicable.
Response: EPA acknowledges the support of TIP for our approval of
the HECT program.
EPA's response to comments made by the BCCA Appeal Group (BCCAAG)
on November 4, 2005, is as follows:
Comment 1: BCCAAG supports EPA's proposed approval of the HECT
program and urges EPA to finalize its approval as soon as practicable.
Comment 2: BCCAAG supports the establishment of a separate short-
term limit on HRVOC emissions, and the exclusion of short-term limit
exceedances from the HECT program.
Response to Comment 1 and 2: EPA acknowledges the support of BCCAAG
for our approval of the HECT program and the specific feature of the
HECT that allows exceedances of the short-term limit to be exempt from
the HECT.
We note that BCCAAG also submitted a set of comments on November 4,
2005, that were specific to our proposed action on the revisions to the
HGB attainment demonstration. On page 8 of this submittal, the
commenter references the HECT, but gives no additional information
relevant to our rulemaking on the HECT. We are addressing this separate
BCCAAG submittal in our action on the attainment demonstration (EPA-
R06-2005-TX-0018).
IV. What does Federal approval of a State regulation mean to me?
Enforcement of the State regulation before and after it is
incorporated into the federally approved SIP is primarily a State
function. However, once the regulation is federally approved, EPA and
the public may take enforcement action against violators of these
regulations.
V. Statutory and Executive Order Reviews
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 (Pub. L. 104-4).
This rule also does not have tribal implications because it will
not have a substantial direct effect on one or more Indian tribes, on
the relationship between the Federal Government and Indian tribes, or
on the distribution of power and responsibilities between the Federal
Government and Indian tribes, as specified by Executive Order 13175 (65
FR 67249, November 9, 2000). This action also does not have Federalism
implications because it does not have substantial direct effects on the
States,
[[Page 52663]]
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). This action 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 CAA.
This rule also is not subject to Executive Order 13045 ``Protection of
Children from Environmental Health Risks and Safety Risks'' (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 CAA. 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 CAA. 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. 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.).
The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the
Small Business Regulatory Enforcement Fairness Act of 1996, generally
provides that before a rule may take effect, the agency promulgating
the rule must submit a rule report, which includes a copy of the rule,
to each House of the Congress and to the Comptroller General of the
United States. EPA will submit a report containing this rule and other
required information to the U.S. Senate, the U.S. House of
Representatives, and the Comptroller General of the United States prior
to publication of the rule in the Federal Register. A major rule cannot
take effect until 60 days after it is published in the Federal
Register. This action is not a ``major rule'' as defined by 5 U.S.C.
804(2).
Under section 307(b)(1) of the CAA, petitions for judicial review
of this action must be filed in the United States Court of Appeals for
the appropriate circuit by November 6, 2006. Filing a petition for
reconsideration by the Administrator of this final rule does not affect
the finality of this rule for the purposes of judicial review nor does
it extend the time within which a petition for judicial review may be
filed, and shall not postpone the effectiveness of such rule or action.
This action may not be challenged later in proceedings to enforce its
requirements. (See section 307(b)(2).)
List of Subjects 40 CFR Part 52
Environmental protection, Air pollution control, Intergovernmental
relations, Nitrogen oxides, Ozone, Reporting and recordkeeping
requirements, Volatile organic compounds.
Dated: August 24, 2006.
Richard E. Greene,
Regional Administrator, Region 6.
0
40 CFR part 52 is amended as follows:
PART 52--[AMENDED]
0
1. The authority citation for part 52 continues to read as follows:
Authority: 42 U.S.C. 7401 et seq.
Subpart SS--Texas
0
2. The table in Sec. 52.2270(c) entitled ``EPA Approved Regulations in
the Texas SIP'' is amended under Chapter 101--General Air Quality
Rules, Subchapter H--Emissions Banking and Trading, by adding in
numerical order a new centered heading ``Division 6--Highly-Reactive
Volatile Organic Compound Emissions Cap and Trade Program'' followed by
new entries for sections 101.390, 101.391, 101.392, 101.393, 101.394,
101.396, 101.399, 101.400, 101.401 and 101.403.
The additions read as follows:
Sec. 52.2270 Identification of plan.
* * * * *
(c) * * *
EPA-Approved Regulations in the Texas SIP
--------------------------------------------------------------------------------------------------------------------------------------------------------
State approval/
State citation Title/subject submittal date EPA approval date Explanation
--------------------------------------------------------------------------------------------------------------------------------------------------------
Chapter 101--General Air Quality Rules
--------------------------------------------------------------------------------------------------------------------------------------------------------
* * * * * * *
--------------------------------------------------------------------------------------------------------------------------------------------------------
Subchapter H--Emissions Banking and Trading
--------------------------------------------------------------------------------------------------------------------------------------------------------
* * * * * * *
--------------------------------------------------------------------------------------------------------------------------------------------------------
Division 6--Highly-Reactive Volatile Organic Compound Emissions Cap and Trade Program
--------------------------------------------------------------------------------------------------------------------------------------------------------
Section 101.390...................... Definitions................. 12/01/04 [Insert date of FR publication]
[Insert FR page number where
document begins].
Section 101.391...................... Applicability............... 12/01/04 [Insert date of FR publication]
[Insert FR page number where
document begins].
Section 101.392...................... Exemptions.................. 12/01/04 [Insert date of FR publication] ............................
[Insert FR page number where
document begins].
[[Page 52664]]
Section 101.393...................... General provisions.......... 12/01/04 [Insert date of FR publication]
[Insert FR page number where
document begins].
Section 101.394...................... Allocation of allowances.... 12/01/04 [Insert date of FR publication]
[Insert FR page number where
document begins].
Section 101.396...................... Allowance deductions........ 12/01/04 [Insert date of FR publication]
[Insert FR page number where
document begins].
Section 101.399...................... Allowance Banking and 12/01/04 [Insert date of FR publication]
Trading. [Insert FR page number where
document begins].
Section 101.400...................... Reporting................... 12/01/04 [Insert date of FR publication]
[Insert FR page number where
document begins].
Section 101.401...................... Level of activity 2/01/04 [Insert date of FR publication]
certification. [Insert FR page number where
document begins].
Section 101.403...................... Program audits and reports.. 12/01/04 [Insert date of FR publication]
[Insert FR page number where
document begins].
* * * * * * *
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[FR Doc. 06-7410 Filed 9-5-06; 8:45 am]
BILLING CODE 6560-50-P