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Texas SIP: 30 TAC 101.390-101.403. Highly-Reactive Volatile Organic Compound Emissions Cap and Trade Program; SIP effective 2006-10-06

Regulatory Text: 
Texas Chapter 101 - General Air Quality Rules

SUBCHAPTER H:  EMISSIONS BANKING AND TRADING

DIVISION 6:  HIGHLY-REACTIVE VOLATILE ORGANIC COMPOUND EMISSIONS CAP AND TRADE PROGRAM
Approved by EPA September 6, 2006 (71 FR 52659) effective October 6, 2006 (TXd78).

Outline:
§101.390.  Definitions. G-77, TXd78
§101.391.  Applicability. G-77, TXd78
§101.392.  Exemptions. G-77, TXd78
§101.393.  General Provisions. TXd78
§101.394.  Allocation of Allowances. G-77, TXd78
§101.396.  Allowance Deductions. G-77, TXd78
§101.399.  Allowance Banking and Trading. G-77, TXd78
§101.400.  Reporting. G-77, TXd78
§101.401.  Level of Activity Certification. G-77, TXd78
§101.403.  Program Audits and Reports. G-77, TXd78


§101.390.  Definitions.
As adopted by TCEQ December 1, 2004 effective December 23, 2004 (G-77).
Approved by EPA September 6, 2006 (71 FR 52659) effective October 6, 2006 (TXd78).

     The following words and terms, when used in this division, have the following meanings, unless the context clearly indicates otherwise.

          (1)  Allowance - The authorization to emit one ton of highly-reactive volatile organic compounds, expressed in tenths of a ton, during a control period.

          (2)  Authorized account representative - The responsible person who is authorized in writing to transfer and otherwise manage allowances for the site.

          (3)  Banked allowance - An allowance that is not used to reconcile emissions in the designated year of allocation, but is carried forward for up to one year and noted as banked in the compliance account or broker account.

          (4)  Broker - A person that is not required to participate in the requirements of this division, but that opens an account under this division for the purpose of banking and trading allowances.

          (5)  Broker account - The account where allowances held by a broker are recorded. Allowances held in a broker account may not be used to satisfy compliance requirements for this division.

          (6)  Compliance account - The account in which allowances held by a site are recorded for the purposes of meeting the requirements of this division.

          (7)  Level of activity - The amount of highly-reactive volatile organic compounds, as defined in §115.10 of this title (relating to Definitions), in pounds produced as an intermediate, by-product, or final product or used by a process unit during a given period of time, but excluding any recycled highly-reactive volatile organic compounds internal to the process unit.

Adopted December 1, 2004, Effective December 23, 2004 (G-77).
***end tx101.390***G-77***EPA-R06-OAR-2005-TX-0033***TX039***TXd78***h32***


§101.391.  Applicability.
As adopted by TCEQ December 1, 2004 effective December 23, 2004 (G-77).
Approved by EPA September 6, 2006 (71 FR 52659) effective October 6, 2006 (TXd78).

     This division applies to each site, as defined in §122.10 of this title (relating to General Definitions), in the Houston/Galveston/Brazoria ozone nonattainment area, as defined in §115.10 of this title (relating to Definitions), that is subject to Chapter 115, Subchapter H, Division 1 of this title (relating to Vent Gas Control) or Division 2 of this title (relating to Cooling Tower Heat Exchange Systems).  Covered facilities include vent gas streams, flares, and cooling tower heat exchange systems that emit highly-reactive volatile organic compounds, as defined in §115.10 of this title (relating to Definitions), and that are located at a site subject to Chapter 115, Subchapter H of this title (relating to Highly-Reactive Volatile Organic Compounds).  For the purpose of compliance with Chapter 115, Subchapter H, Division 1 or Division 2 of this title, each site that meets the applicability requirements of this section, or elects to opt-in to this division under §101.392(b) of this title (relating to Exemptions), shall always be subject to this division.

Adopted December 1, 2004, Effective December 23, 2004 (G-77).
***end tx101.391***G-77***EPA-R06-OAR-2005-TX-0033***TX039***TXd78***h32***


§101.392.  Exemptions.
As adopted by TCEQ December 1, 2004 effective December 23, 2004 (G-77).
Approved by EPA September 6, 2006 (71 FR 52659) effective October 6, 2006 (TXd78).

     (a)  Sites in the Houston/Galveston/Brazoria ozone nonattainment area that have the potential to emit, as defined in §116.12 of this title (relating to Nonattainment Review Definitions), ten tons per year or less of highly-reactive volatile organic compounds from all covered facilities at the site are exempt from the requirements of this division.

     (b)  Sites exempt from this division under subsection (a) of this section may elect to opt-in to the requirements of this division by notifying the executive director in writing by April 30, 2005.

     (c)  All sites in the Houston/Galveston/Brazoria ozone nonattainment area, excluding Harris County, are exempt from the requirements of this division except for §101.401 of this title (relating to Level of Activity Certification).  The commission may revoke this exemption upon public notice of this revocation.  If the exemption is revoked, sites subject to this division located in the Houston/Galveston/Brazoria ozone nonattainment area, excluding Harris County, must comply by January 1, 2007, or within 180 days of public notice, whichever is later.

Adopted December 1, 2004, Effective December 23, 2004 (G-77).
***end tx101.392***G-77***EPA-R06-OAR-2005-TX-0033***TX039***TXd78***h32***


§101.393.  General Provisions.
As adopted by TCEQ December 1, 2004 effective December 23, 2004 (G-77).
Approved by EPA September 6, 2006 (71 FR 52659) effective October 6, 2006 (TXd78).

     (a)  Allowances may be used only for the purposes described in this division and may not be used to meet or exceed the emission limitations authorized under Chapter 116, Subchapter B of this title (relating to New Source Review Permits), or any other applicable rule or law.

     (b)  The initial control period is January 1, 2007, through December 31, 2007.  Each control period after December 31, 2007, shall begin January 1 and end December 31 of each year.  No later than March 1 after each control period, a site subject to this division must hold a quantity of allowances in its compliance account that is equal to or greater than the total highly-reactive volatile organic compound emissions from the covered facilities located at the site during the control period.

     (c)  Allowances may not be used to satisfy netting requirements under Chapter 116, Subchapter B, Divisions 5 and 6 of this title (relating to Nonattainment Review; and Prevention of Significant Deterioration Review).

     (d)  Allowances may be used simultaneously to satisfy the requirements of this division and the one-to-one portion of the offset requirements for new or modified covered facilities, subject to federal nonattainment new source review requirements as provided in Chapter 116, Subchapter B, Division 7 of this title (relating to Emission Reductions:  Offsets).

     (e)  An allowance does not constitute a security or a property right.

     (f)  All allowances will be allocated, transferred, deducted, or used in tenths of tons.  The number of allowances will be rounded down to the nearest tenth of a ton when determining excess allowances and rounded up to the nearest tenth of a ton when determining allowances used.

     (g)  Each site shall have only one compliance account.

     (h)  The commission will maintain a registry of compliance accounts and broker accounts.  The registry will not contain proprietary information.

Adopted December 1, 2004, Effective December 23, 2004 (G-77).
***end tx101.393***G-77***EPA-R06-OAR-2005-TX-0033***TX039***TXd78***h32***


§101.394.  Allocation of Allowances.
As adopted by TCEQ December 1, 2004 effective December 23, 2004 (G-77).
Approved by EPA September 6, 2006 (71 FR 52659) effective October 6, 2006 (TXd78).

     (a)  On January 1, 2007, the executive director will deposit allowances into compliance accounts as follows.

          (1)  For sites located in Harris County that are not eligible to receive allowances under subsection (c) of this section, allowances for the emissions of one or more of the highly-reactive volatile organic compounds (HRVOC) as defined in §115.10 of this title (relating to Definitions), will be determined using the equation in the following figure.

Figure: 30 TAC §101.394(a)(1)

           LA
S = -------------------  x  AC1
     Sum i = 1 to n{LAi}


Where:

S = the greater of 5.0 tons or the allocation for the site.

i = each site located in Harris County and subject to this division.

n = the total number of sites subject to this division.

LA = the level of activity baseline for a site, calculated as the annual level of activity for any 12 consecutive months during the period of 2000 - 2004 for the site, as certified by the executive director.

AC1 = 3,106.3 tons per year of highly-reactive volatile organic compounds less the total amount allocated to those sites receiving a minimum of 5.0 tons.


          (2)  For sites located in Brazoria, Chambers, Fort Bend, Galveston, Liberty, Montgomery, and Waller Counties that are not eligible to receive allowances under subsection (c) of this section, allowances for emissions of ethylene and propylene for each site will be determined using the equation in the following figure.

Figure: 30 TAC §101.394(a)(2)

           LA
S = ----------------------  x  AC2 
    Sum i = 1 to n (LAi)

Where:

S = the greater of 5.0 tons or the allocation for the site.

i = each site located in Brazoria, Chambers, Fort Bend, Galveston, Liberty, Montgomery, and Waller Counties and subject to this division.

n = the total number of sites subject to this division.

LA = the level of activity baseline for a site, calculated as the annual level of activity for any 12 consecutive months during the period of 2000 - 2004 for the site, as certified by the executive director.

AC2 = 4,390.8 tons per year of highly-reactive volatile organic compounds less the total amount allocated to those sites receiving a minimum of 5.0 tons.


     (b)  The level of activity of a site shall be determined by summing the levels of activity from the chosen 12 consecutive month period for each process unit, as defined in §115.10 of this title, located at the site that produce one or more HRVOCs as an intermediate, by-product, or final product or that use one or more HRVOCs as a raw material or intermediate to produce a product.

     (c)  The owner or operator of a site that is subject to this division, but that does not include a process unit that produces or uses an HRVOC, shall apply by January 30, 2005, to the executive director for an allocation based on HRVOC throughput or storage capacity for any 12 consecutive months during the period of 2000 through 2004.

          (1)  The executive director may equitably allocate up to 10% of the total HRVOC allocations for Harris County to all such sites located in Harris County;

          (2)  For sites located in Brazoria, Chambers, Fort Bend, Galveston, Liberty, Montgomery, and Waller Counties, the executive director may allocate up to 10% of the total HRVOC emissions allocated for those counties to all such sites located in Brazoria, Chambers, Fort Bend, Galveston, Liberty, Montgomery, and Waller Counties.

          (3)  The executive director shall distribute all allowances not allocated under this subsection proportionally to those sites receiving allocations under subsections (a) and (b) of this section.

     (d)  Sites subject to the requirements of this division or electing to opt-in to the requirements of this division that receive an HRVOC allocation of less than 5.0 tons based on the allocation methodologies under subsection (a) or (c) of this section shall be eligible to receive a minimum allocation of 5.0 tons of HRVOC allowances per year.

     (e)  If the total actual HRVOC emissions from the covered facilities at a site during a control period exceed the amount of allowances in the compliance account for the site on March 1 following the control period, allowances for the next control period shall be reduced by an amount equal to the emissions exceeding the allowances in the compliance account plus 10% of the exceedance.  This allocation reduction does not preclude the executive director from initiating an enforcement action.  If a compliance account does not hold sufficient allowances to accommodate the reduction, the executive director may issue a notice of deficiency to the owner or operator.  The owner or operator shall purchase or transfer allowances sufficient to accommodate the reduction within 30 days of issuance of the notice of deficiency from the executive director.

     (f)  Allowances will be allocated by the executive director, who will deposit allowances into each compliance account:

          (1)  initially, by January 1, 2007; and

          (2)  subsequently, by January 1 of each following year.

     (g)  The executive director may adjust the deposits for any control period to reflect new or existing state implementation plan requirements.

     (h)  The executive director may add or deduct allowances from compliance accounts based on the review of reports required under §101.400 of this title (relating to Reporting).

Adopted December 1, 2004, Effective December 23, 2004 (G-77).
***end tx101.394***G-77***EPA-R06-OAR-2005-TX-0033***TX039***TXd78***h32***


§101.396.  Allowance Deductions.
As adopted by TCEQ December 1, 2004 effective December 23, 2004 (G-77).
Approved by EPA September 6, 2006 (71 FR 52659) effective October 6, 2006 (TXd78).

     (a)  On March 31 of each year after a control period, allowances representing the total highly-reactive volatile organic compounds (HRVOC) emissions from the covered facilities at a site during the previous control period will be deducted from the compliance account for the site.  The amount of HRVOC emissions will be based upon the monitoring and testing protocols established in §115.725 and §115.764 of this title (relating to Monitoring and Testing Requirements), as appropriate.

     (b)  The amount of HRVOC emissions from covered facilities shall be calculated for each hour of the year and summed to determine the annual emissions for compliance.  For emissions from emissions events subject to the requirements of §101.201 of this title (relating to Emissions Event Reporting and Recordkeeping Requirements) or emissions from scheduled maintenance, startup, or shutdown activities subject to the requirements of §101.211 of this title (relating to Scheduled Maintenance, Startup, and Shutdown Reporting and Recordkeeping Requirements); the hourly emissions to be included in the summation shall not exceed the short-term limit of §115.722(c) and §115.761(c) of this title (relating to Site-wide Cap and Control Requirements; and Site-wide Cap).

     (c)  If the monitoring and testing data referenced in subsection (a) of this section does not exist or is unavailable, the site may determine its HRVOC emissions for that period of time using the following methods and in the following order:  continuous monitoring data; periodic monitoring data; testing data; data from manufacturers; and engineering calculations.  When determining the amount of HRVOC emissions under this subsection, the site shall include a justification for using the substitute method or methods in lieu of the methods referenced in subsection (a) of this section.

     (d)  When deducting allowances from the compliance account of a site for a control period, the executive director will deduct the allowances beginning with the most recently allocated allowances before deducting banked allowances.

Adopted December 1, 2004, Effective December 23, 2004 (G-77).
***end tx101.396***G-77***EPA-R06-OAR-2005-TX-0033***TX039***TXd78***h32***


§101.399.  Allowance Banking and Trading.
As adopted by TCEQ December 1, 2004 effective December 23, 2004 (G-77).
Approved by EPA September 6, 2006 (71 FR 52659) effective October 6, 2006 (TXd78).

     (a)  Allowances allocated for a control period that are not used for compliance in that control period may be banked for use in demonstrating compliance for the next control period or transferred.

     (b)  Allowances that have not expired or been used may be transferred at any time during a control period, except as provided in this section.

          (1)  The person desiring to transfer the allowances shall apply for approval of the transaction to the executive director by submitting a completed Form ECT-2, Application for Transfer of Allowances.

          (2)  The ECT-2 form must include the purchase price per allowance proposed to be paid, except for transactions between sites under common ownership or control.

          (3)  All information regarding the quantity and purchase price of the allowances will be immediately made available to the public.

          (4)  If the executive director approves the application, the executive director will send a letter to the seller and purchaser reflecting the transaction.  The transaction is final upon issuance of the letter.

     (c)  A person receiving allowances on an annual basis may permanently transfer ownership of current and future allowances to any person in accordance with the following requirements.

          (1)  The person desiring to transfer the allowances shall apply for approval of the transaction to the executive director by submitting a completed Form ECT-4, Application for Permanent Transfer of Allowance Ownership.

          (2)  The ECT-4 form must include the purchase price per allowance proposed to be paid, except for transactions between sites under common ownership or control.

          (3)  All information regarding the quantity and purchase price of the allowances will be immediately made available to the public.

          (4)  If the executive director approves the application, the executive director will send a letter to the seller and purchaser reflecting the transaction.  The transaction is final upon issuance of the letter.

     (d)  A person may transfer allowances that are scheduled to be allocated in a future control period but have not yet been deposited into an account.

          (1)  The person desiring to transfer the allowances shall apply for approval of the transaction to the executive director by submitting a completed Form ECT-5, Application for Transfer of Individual Future Year Allowances.

          (2)  The ECT-5 form must include the purchase price per allowance proposed to be paid, except for transactions between sites under common ownership or control.

          (3)  All information regarding the quantity and purchase price of the allowances will be immediately made available to the public.

          (4)  If the executive director approves the application, the executive director will send a letter to the seller and purchaser reflecting the transaction.  The transaction is final upon issuance of the letter.

     (e)  Allowances generated from sites located in counties other than Harris County may not be used at sites located in Harris County.  Allowances generated from sites located in Harris County may not be used at sites located in counties other than Harris County.

     (f)  Only authorized account representatives may transfer allowances.

     (g)  Allowances subject to an approved transaction will be deposited into the purchaser's broker or compliance account within 30 days of receipt of a completed transfer application.

     (h)  Volatile organic compound emission reduction credits (ERC) certified in accordance with Division 1 of this subchapter (relating to Emission Credit Banking and Trading) may be converted to a yearly highly-reactive volatile organic compound (HRVOC) allocation.

          (1)  Qualified volatile organic compound (VOC) ERCs must be generated:

               (A)  from a reduction at a site located in the Houston/Galveston/Brazoria nonattainment area;

               (B)  from a reduction strategy implemented after December 31, 2004; and

               (C)  from a reduction in VOC species other than those defined as HRVOCs under §115.10 of this title (relating to Definitions).

          (2)  VOC reductions due to the installation of best available control technology do not qualify for conversion under this subsection.

          (3)  In addition to the requirements of Division 1 of this subchapter, a qualified VOC ERC must meet the following requirements:

               (A)  the ERC must be quantifiable, real, surplus, enforceable, and permanent as required in §101.302 of this title (relating to General Provisions) at the time the ERC is converted;

               (B)  the baseline emissions to which the VOC reduction is compared must consist of the average actual emissions for any two consecutive calendar years preceding the emission reduction strategy and that include or follow the most recent year of emission inventory used in the state implementation plan;

               (C)  the quantification of VOC reductions must be performed using the monitoring and testing methods required under §115.725 or §115.764 of this title (relating to Monitoring and Testing Requirements) and subject to the recordkeeping and reporting requirements under §115.726 and §115.766 of this title (relating to Recordkeeping and Reporting Requirements);

               (D)  the ERC must not have expired; and

               (E)  the owner of the ERC shall have prior approval from the executive director to convert the ERC to an HRVOC allocation.

          (4)  VOC ERCs must be converted to HRVOC allowances at a ratio calculated using the equation in the following figure.



Figure: 30 TAC §101.399(h)(4)

       1
A = ------- Sum (RiEi)
     11.57

Where:

A = yearly allocation of highly-reactive volatile organic compound allowances.

Ri = the reactivity of each speciated volatile organic compound reduced as specified in California Code of Regulations, Title 17, Chapter 1, §94700, concerning MIR Values for Compounds, as amended.

Ei = the actual emissions reduced, in tons per year, of each speciated volatile organic compound.


          (5)  For each site eligible to receive allowances under §101.394(a) or (c) of this title (relating to Allocation of Allowances), additional HRVOC allowances received from the conversion of VOC ERCs under this subsection must be limited to a quantity not to exceed more than 5% of the site’s initial HRVOC allocation.

          (6)  In addition to paragraph (5) of this subsection, sites subject to this division may receive an HRVOC allocation from the conversion of VOC ERCs under this subsection equivalent to any HRVOC emissions increases from new or modified covered facilities not in operation prior to January 2, 2004, and that were included in an application for a permit under Chapter 116 of this title (relating to Control of Air Pollution by Permits for New Construction or Modification) that was deemed administratively complete by the executive director within one year of the effective date of this rule.

Adopted December 1, 2004, Effective December 23, 2004 (G-77).
***end tx101.399***G-77***EPA-R06-OAR-2005-TX-0033***TX039***TXd78***h32***


§101.400.  Reporting.
As adopted by TCEQ December 1, 2004 effective December 23, 2004 (G-77).
Approved by EPA September 6, 2006 (71 FR 52659) effective October 6, 2006 (TXd78).

     (a)  No later than March 31 after each control period, each site shall submit a completed Form ECT-1H, Highly-Reactive Volatile Organic Compound (HRVOC) Emissions Cap and Trade Annual Compliance Report, to the executive director, which shall include the following:

          (1)  the total amount of actual HRVOC emissions from covered facilities at the site during the preceding control period;

          (2)  the method or methods used to determine the actual HRVOC emissions, including, but not limited to, monitoring protocol and results, calculation methodologies, and emission factors; and

          (3)  a summary of all final transactions for the preceding control period.

     (b)  For sites failing to submit an ECT-1H form by the required deadline in subsection (a) of this section, the executive director may withhold approval of any proposed trades from that site involving allowances allocated for the control period for which the ECT-1H form is due or to be allocated in subsequent control periods.

Adopted December 1, 2004, Effective December 23, 2004 (G-77).
***end tx101.400***G-77***EPA-R06-OAR-2005-TX-0033***TX039***TXd78***h32***


§101.401.  Level of Activity Certification.
As adopted by TCEQ December 1, 2004 effective December 23, 2004 (G-77).
Approved by EPA September 6, 2006 (71 FR 52659) effective October 6, 2006 (TXd78).

     (a)  No later than April 30, 2005, the owner or operator of each site subject to this division shall submit to the executive director a completed Form ECT-3H, Highly-Reactive Volatile Organic Compound Emissions Cap and Trade Level of Activity Certification Form.

     (b)  For each process unit subject to this division, the owner or operator shall certify in the ECT-3H form the level of activity for the selected 12 consecutive months during the period of 2000 through 2004.

     (c)  The owner or operator shall attach to the ECT-3H form information and documentation necessary to support the proposed level of activity baseline.

     (d)  The owner or operator of the site may mark any portion of the ECT-3H form, or supporting information and documentation, as confidential under Texas Health and Safety Code, §382.041.

     (e)  In conjunction with submission of the ECT-3H form, the owner or operator of the site subject to this division shall provide enforceable documentation of the maximum allowable emission rate of highly-reactive volatile organic compounds from facilities located at that site.

Adopted December 1, 2004, Effective December 23, 2004 (G-77).
***end tx101.401***G-77***EPA-R06-OAR-2005-TX-0033***TX039***TXd78***h32***


§101.403.  Program Audits and Reports.
As adopted by TCEQ December 1, 2004 effective December 23, 2004 (G-77).
Approved by EPA September 6, 2006 (71 FR 52659) effective October 6, 2006 (TXd78).

     (a)  No later than three years after the effective date of this division, and every three years thereafter, the executive director will audit this program.

          (1)  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 executive director may choose to include.

          (2)  The executive director will recommend measures to remedy any problems identified in the audit.  The trading of allowances may be limited or discontinued by the executive director in part or in whole and in any manner, with commission approval, as a remedy for problems identified in the program audit.

          (3)  The audit data and results will be completed and submitted to the United States Environmental Protection Agency and made available for public inspection within six months after the audit begins.

     (b)  No later than June 30, following the end of each control period, the executive director shall develop and make available to the general public and the United States Environmental Protection Agency, a report that includes:

          (1)  number of allowances allocated to each compliance account;

          (2)  total number of allowances allocated under this division;

          (3)  number of actual highly-reactive volatile organic compound allowances subtracted from each compliance account based on the actual highly-reactive volatile organic compound emissions from the site; and

          (4)  a summary of all trades completed under this division.

Adopted December 1, 2004, Effective December 23, 2004 (G-77).
***end tx101.403***G-77***EPA-R06-OAR-2005-TX-0033***TX039***TXd78***h32***
*************end texas chapter 101 subchapter h division 6***TXd78***h32***