Air Plan Approval; Texas; New Source Review Updates for Project Emissions Accounting

<RULE> ENVIRONMENTAL PROTECTION AGENCY <CFR>40 CFR Part 52</CFR> <DEPDOC>[EPA-R06-OAR-2021-0480; FRL-10676-03-R6]</DEPDOC> <SUBJECT>Air Plan Approval; Texas; New Source Review Updates for Project Emissions Accounting</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Environmental Protection Agency (EPA). <HD SOURCE="HED">ACTION:</HD> Final rule. <SUM> <HD SOURCE="HED">SUMMARY:</HD> Pursuant to the Federal Clean Air Act (CAA or the Act), the Environmental Protection Agency (EPA) is approving portions of a revision to the Texas State Implementation Plan (SIP) submitted by the Texas Commission on Environmental Quality (TCEQ) on July 9, 2021. The revision includes updates to the Texas Prevention of Significant Deterioration (PSD) and Nonattainment New Source Review (NNSR) permitting programs to incorporate Federal New Source Review (NSR) regulations for Project Emissions Accounting (PEA). </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> This rule is effective on June 18, 2025. </EFFDATE> <HD SOURCE="HED">ADDRESSES:</HD> The EPA has established a docket for this action under Docket ID No. EPA-R06-OAR-2021-0480. All documents in the docket are listed on the <E T="03">https://www.regulations.gov</E> website. Although listed in the index, some information is not publicly available, <E T="03">e.g.,</E> Confidential Business Information or other information whose disclosure is restricted by statute. Certain other material, such as copyrighted material, is not placed on the internet. Publicly available docket materials are available electronically through <E T="03">https://www.regulations.gov.</E> <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> Adina Wiley, EPA Region 6 Office, Air Permits Section (ARPE), 214-665-2115, <E T="03">wiley.adina@epa.gov.</E> Please call or email the contact listed above if you need alternative access to material indexed but not provided in the docket. </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> Throughout this document “we,” “us,” and “our” means the EPA. <HD SOURCE="HD1">I. Background</HD> The EPA finalized the PEA Rule on November 24, 2020 (85 FR 74890) to clarify permitting requirements for existing major stationary sources. An existing major stationary source proposing a physical change or a change in the method of operation ( <E T="03">i.e.,</E> a “project”) must determine whether that project is a major modification subject to major NSR preconstruction permitting requirements by following a two-step applicability test. The first step is to determine if the proposed project would result in a “significant emission increase” of a regulated NSR pollutant (Step 1). If there is, the second step is to determine if the project would also result in a “significant net emission increase” of that pollutant (Step 2). The PEA Rule maintained this two-step applicability test while clarifying that both increases and decreases in emissions resulting from a proposed project can be considered in Step 1 of the NSR major modification applicability test. <SU>1</SU> <FTREF/> More specifically, the PEA Rule made this clarification in language addressing the “hybrid test” for projects that involve a combination of new and existing units by replacing the phrase “sum of the increases” with the phrase “sum of the difference.”  <SU>2</SU> <FTREF/> The PEA Rule also explained that the revised term “sum of the difference,” would apply to “all emissions units” instead of “for each emissions unit” to better account for projects that involve multiple types of emission units. <SU>3</SU> <FTREF/> Finally, the PEA Rule added regulatory text to clarify that the term “sum of the difference” as used in the referenced paragraphs shall include both increases and decreases in emissions as calculated in accordance with those paragraphs. <SU>4</SU> <FTREF/> <FTNT> <SU>1</SU>  85 FR 74893 (November 24, 2020). </FTNT> <FTNT> <SU>2</SU>   <E T="03">Id.</E> at 74894. </FTNT> <FTNT> <SU>3</SU>   <E T="03">Id.</E> </FTNT> <FTNT> <SU>4</SU>   <E T="03">Id.</E> </FTNT> When the EPA finalized changes in the PEA Rule, the Agency responded to adverse comments received on the changes as proposed. Since that time, two petitions for judicial review of the PEA Rule were filed in the United States Court of Appeals for the District of Columbia Circuit (D.C. Circuit). <SU>5</SU> <FTREF/> However, this does not impede finalization of separate actions, including this rulemaking approving revisions to the Texas PSD and NNSR regulations. <FTNT> <SU>5</SU>   <E T="03">See Environmental Defense Fund</E> v. <E T="03">EPA,</E> 21-1039 (D.C. Cir.); <E T="03">State of New Jersey</E> v. <E T="03">EPA,</E> 21-1033 (D.C. Cir. 2021). </FTNT> On March 6, 2023, the EPA proposed approval of portions of the July 9, 2021, Texas SIP submittal to update the PSD and NNSR permitting programs to provide for project emissions accounting (88 FR 13572). <SU>6</SU> <FTREF/> Based on relevant adverse comments, the EPA supplemented our proposed approval on October 11, 2024 (89 FR 82560), with respect to the EPA's evaluation of the Texas SIP submittal and the anti-backsliding requirements of the CAA sections 110(l) and 193. <FTNT> <SU>6</SU>  EPA notes that the July 9, 2021, Texas SIP submittal also included revisions to, and repeal of, other provisions within 30 Texas Administrative Code Chapter 116 that were not relevant to Project Emissions Accounting. The EPA took separate action to finalize those revisions in the <E T="04">Federal Register</E> at 88 FR 57882, August 24, 2023. See also the rulemaking docket EPA-R06-OAR-2022-0307. </FTNT> <HD SOURCE="HD1">II. Response to Comments</HD> Comments on the EPA's March 6, 2023, proposed rulemaking were due by April 5, 2023. We received supportive comment letters from the TCEQ on April 4, 2023, and from Baker Botts L.L.P. on behalf of the Texas Industry Project on April 5, 2023. We appreciate the commenters' support and will not further address these comments. We also received a comment letter and supplemental documents dated April 5, 2023, from Air Law for All submitted on behalf of the Center for Biological Diversity, Sierra Club Environmental Law Program, Natural Resources Defense Council, Environmental Integrity Project, Powell Environmental Law LLC, Air Law for All Ltd., and Environmental Defense Fund. The comment letter opposes approval of the changes in the July 9, 2021, Texas SIP to provide for project emissions accounting in the Texas PSD and NNSR permitting program. Comments on the October 11, 2024 (89 FR 82560), supplemental proposed approval were due by November 12, 2024. We received supportive comments from an anonymous commenter dated October 15, 2024, and the Texas Chemistry Council dated November 12, 2024; we appreciate the commenters' support and will not further address these comments. The TCEQ also submitted supportive comments on November 12, 2024, with specific clarifications to the EPA's evaluation of the minor NSR mechanisms approved in the Texas SIP. <E T="03">Comment 1:</E> The Commenter states that “[e]ven under EPA's 2020 [PEA] rule, EPA cannot approve [Texas's] plan revision without a requirement that a project consist of `substantially related' activities.” The Commenter suggests that the July 9, 2021, submission fails to include a requirement that projects consist of substantially related activities. The Commenter states that the EPA relies on its January 15, 2009, rulemaking  <SU>7</SU> <FTREF/> (hereafter referred to as the 2009 NSR Aggregation Action, or the 2009 Action) in the PEA Rule to interpret “major NSR regulations as requiring that a project consist of `substantially related' activities.” The Commenter asserts that the EPA cannot approve Texas's SIP revision without requiring the State to revise its SIP to conform with the EPA's interpretation of the 2009 action referenced in the PEA Rule. The Commenter further asserts that this requirement must be made part of the SIP so that it can be enforced by EPA and citizens pursuant to CAA sections 113 and 304. In the background section of its comments, the Commenter also states that this concern is “primarily a matter for the D.C. Circuit Court of Appeals,” where the PEA Rule is currently being challenged. <FTNT> <SU>7</SU>   <E T="03">See</E> 74 FR 2376. </FTNT> <E T="03">Response 1:</E> The EPA requires NNSR and PSD SIP revisions to meet or exceed the minimum requirements codified at 40 CFR 51.165 and 51.166, respectively. The Texas SIP is approved as meeting the minimum PSD and NNSR program requirements. <SU>8</SU> <FTREF/> <FTNT> <SU>8</SU>   <E T="03">See</E> the approved Texas SIP at 40 CFR 52.2270. </FTNT> The Commenter focuses not on whether Texas’s proposed PSD and NNSR SIP revisions comply with the EPA’s minimum standards for PSD and NNSR plans codified at 40 CFR 51.165 and 51.166. Rather, the comments are directed at the substance of the PEA Rule itself. The Commenter, for example, explicitly takes the position that “EPA’s 2020 Rule is unlawful.” The time for submitting comments on the PEA Rule was when the EPA notified the public that it was considering adopting that rule and requested the public's input. <SU>9</SU> <FTREF/> The Commenter did not submit comments on the PEA Rule and the EPA thus views the comments as untimely comments on the PEA Rule itself. <SU>10</SU> <FTREF/> The EPA addressed concerns regarding project aggregation in response to comments by other parties in that rulemaking action. <E T="03">See</E> 85 FR 74890, 74898-900 (November 24, 2020). As noted by the Commenter, these concerns are “primarily a matter for the D.C. Circuit Court of Appeals,” where the PEA Rule is currently being challenged by States and organizations other than the Commenter. <FTN ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 24k characters. 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