30 TAC §106.512
The Texas Natural Resource Conservation Commission (commission)
proposes an amendment to §106.512, Stationary Engines and Turbines. The
commission proposes this amendment to Chapter 106, Permits by Rule, Subchapter
W, Turbines and Engines, to preclude registration under §106.512 of engines
or turbines used to generate electricity upon issuance of a standard permit
for small electric generating units. However, the amendment exempts from this
requirement engine or turbine-driven generators used to provide power for
the operation of facilities registered under the Air Quality Standard Permit
for Concrete Batch Plants or satisfying the conditions for facilities permitted
by rule under Chapter 106, Subchapter E, Aggregate and Pavement.
BACKGROUND AND SUMMARY OF THE FACTUAL BASIS FOR THE PROPOSED RULES
The Public Utility Commission (PUC) of Texas anticipates that small electric
generating units may become an attractive option for electric customers as
an alternative to central station generating units as a primary source of
electricity due to electric restructuring and electric reliability concerns.
These "distributed generation" units, sited at or near a load that will use
all or most of the electricity generated, can export electricity to the electrical
grid. The commission believes that these units, if used for this purpose,
must adhere to emission limitations and standards comparable to recently permitted
or constructed central station generating units. Otherwise, increased use
of small electric generating units may undermine the emission reductions achieved
with recently permitted combined cycle power plants.
Therefore, the commission is developing a standard permit for small electric
generating units which it expects to issue in early 2001. It will contain
emission limitations comparable to those which apply to recently permitted
or constructed central station generating units. The standard permit is being
developed in accordance with Chapter 116, Control of Air Pollution by Permits
for New Construction or Modification. In accordance with §116.603, the
public will have an opportunity to comment on the content of the standard
permit.
Currently, any owner or operator of a small electric generating unit may
register to operate under §106.512. However, the emission limitations
in §106.512 are less stringent than those applicable to recently permitted
or constructed central station generating units. For the reasons discussed
previously, the commission does not believe that the emission limitations
contained in §106.512 are sufficient to allow small electric generating
units to operate as distributed generation units. Therefore, the commission
is proposing to amend §106.512 so that these units would be required
to operate under the standard permit once it is issued or obtain pre-construction
authorization under Chapter 116, Subchapter B, New Source Review Permits.
SECTION BY SECTION DISCUSSION
The proposed amendment to §106.512 would preclude registrations under
this section (previously Standard Exemption 6) for engines or turbines used
to generate electricity once a standard permit for small electric generating
units is issued. The rule would make an exception for engine or turbine-driven
generators used to provide power for the operation of facilities registered
under the Air Quality Standard Permit for Concrete Batch Plants, or satisfying
the conditions for facilities permitted by rule under Chapter 106, Subchapter
E. The proposed revision is necessary to ensure that increased use of small
electric generating units will not undermine the emission reductions achieved
with recently permitted combined cycle power plants.
FISCAL NOTE: COSTS TO STATE AND LOCAL GOVERNMENT
John Davis, Technical Specialist with Strategic Planning and Appropriations,
determined that for each year of the first five-year period the proposed amendment
is in effect, there will be fiscal implications which are not anticipated
to be significant for units of state or local government as a result of administration
or enforcement of the proposed amendment. Units of state and local government
that purchase new or modify affected small electric generating units (up to
and including ten megawatts of generating capacity) will have to pay a $450
standard permit registration fee or a minimum $450 application fee to construct
and operate the affected equipment in Texas. There will be no fiscal impacts
to units of state or local government that do not buy new or modify electric
generating equipment currently registered under the §106.512 permit by
rule.
The proposed amendment is intended to preclude registration under the permit
by rule of newly purchased or modified small internal combustion engines or
turbines that are configured to generate electricity. These units are currently
required to be permitted but qualify for the permit by rule. After amendment,
there would be two permit choices for these facilities: a new source review
permit or a standard permit that is being developed by the commission which
should become effective in 2001.
The units anticipated to be affected by this rulemaking may be used on
a standby or backup basis by hospitals, the telecommunications industry, the
transportation industry, small independent power producers, and suppliers
to the power grid. Generators providing only emergency backup power are not
affected by this rulemaking. There are approximately 1,000 small internal
combustion engines and turbines that are currently being used to generate
electricity in Texas, some of which are owned and operated by units of state
and local government. These pieces of equipment are currently required to
be permitted but qualify for the permit by rule. If units of state and local
government modify these sources or purchase new equipment affected by the
proposed amendment, they would have to apply for a new source review or standard
permit prior to operating the new equipment.
In order to receive the standard permit, an applicant must provide the
required information along with a $450 registration fee. Registrations under
the standard permit will not require public notice and will take approximately
45 days to process. The new source review permit, which is a more involved
and costlier process, usually requires six to nine months to process. The
average minimum application fee for these units is $450; however, there is
a public notice requirement that would cost an applicant an average of $3,000.
Additional expenses include approximately $300 for facility signs and potentially
expensive air dispersion modeling if required, which could cost over $10,000.
The commission estimates that if given the choice between a standard and new
source review permit, units of state and local government that are required
to have their facilities permitted will choose to pursue the standard permit
because it is less expensive, not as complicated, and is processed quicker.
PUBLIC BENEFITS AND COSTS
Mr. Davis also determined for each of the first five years the proposed
amendment is in effect, the public benefit anticipated as a result of implementing
the proposed amendment will be that new or modified small electric generating
units will have to comply with stricter emissions limitations than currently
required which should result in improved air quality.
The proposed amendment is intended to preclude registration under the §106.512
permit by rule of newly purchased or modified small internal combustion engines
or turbines that are configured to generate electricity. These units are currently
required to be permitted but qualify for the permit by rule. There would be
two permit choices for these facilities: the new source review permit or a
standard permit that is being developed by the commission which will become
effective in 2001.
There are approximately 1,000 small internal combustion engines and turbines
that are currently being used to generate electricity in Texas, some of which
are owned and operated by individuals and businesses. These pieces of equipment
are currently required to be permitted but qualify for the permit by rule.
If individuals and businesses modify these sources or purchase new equipment
affected by the proposed amendment, they would have to apply for a new source
review permit or standard permit prior to construction and operation of the
new or modified equipment.
In order to receive the standard permit, an applicant must provide the
required information along with a $450 registration fee. Registrations under
the standard permit will not require public notice and will take approximately
45 days to process. The new source review permit, which is a more involved
and costlier process, usually requires six to nine months to process. The
average minimum permit application fee for these units is $450; however, there
is a public notice requirement that would cost an applicant an average of
$3,000. Additional expenses include approximately $300 for facility signs
and potentially expensive air dispersion modeling if required, which could
cost over $10,000. The commission estimates that given the choice between
a standard and new source review permit, individuals and businesses that are
required to have their facilities permitted will choose to pursue the standard
permit because it is less expensive, not as complicated, and is processed
quicker. There will be no cost to individuals or businesses, due to implementation
of the proposed amendment, if they do not buy new or modify existing equipment
currently registered under the permit by rule.
SMALL BUSINESS AND MICRO-BUSINESS ASSESSMENT
There will be adverse economic effects to small or micro-businesses which
purchase new or modify certain small electrical generating units as a result
of the implementation of the proposed amendment; however, the commission does
not anticipate the effects to be significant. The proposed amendment would
preclude registration under the §106.512 permit by rule of newly purchased
or modified small internal combustion engines or turbines that are configured
to generate electricity. There will be no adverse fiscal implications to small
and micro-businesses which do not own or do not modify certain small electrical
generating units.
There are approximately 1,000 small internal combustion engines and turbines
that are currently being used to generate electricity in Texas, some of which
are owned and operated by small or micro-businesses. If individuals and businesses
modify these sources or purchase new equipment affected by the proposed amendment,
they would have to apply for a new source review permit or standard permit
prior to construction and operation. The registration fee for a standard permit,
and the average minimum permit application fee for a new source review permit,
is $450; however, the new source review permit has additional costs and requirements
including: public notification which costs an average of $3,000; facility
signs which cost approximately $300; and air dispersion modeling, if required,
which could cost over $10,000. The commission estimates that given the choice
between a standard and new source review permit, small or micro-businesses
that are required to have their facilities permitted will choose to pursue
the standard permit because it is less expensive, not as complicated, and
is processed quicker. There will be no cost to small or micro-businesses,
due to implementation of the proposed amendment, if they do not buy new or
modify existing equipment currently registered under the §106.512 permit
by rule.
DRAFT REGULATORY IMPACT ANALYSIS DETERMINATION
The commission reviewed the proposed rulemaking in light of the regulatory
analysis requirements of Texas Government Code, §2001.0225. The commission
determined that this proposed amendment to §106.512 does not meet the
definition of a "major environmental rule" as defined in Texas Government
Code, §2001.0225. "Major environmental rule" means a rule, the specific
intent of which is to protect the environment or reduce risks to human health
from environmental exposure, and that may adversely affect in a material way
the economy, a sector of the economy, productivity, competition, jobs, the
environment, or the public health and safety of the state or a sector of the
state. Although the specific intent of the rule is to protect the environment
or reduce risks to human health from environmental exposure, the proposed
amendment to §106.512 will not have an adverse material impact. The adverse
impact is not material because the owners or operators of sources which meet
the requirements of this rule will be subject only to a regulatory cost of
a registration fee of $450, rather than also subject to additional costs associated
with the other permitting option for these sources (a new source review permit),
such as the cost of notice and air dispersion modeling, which may cost $3,000
and $10,000, respectively. Therefore, this amendment does not constitute a
"major environmental rule." In addition, Texas Government Code, §2001.0225,
only applies to a major environmental rule, the result of which is to: 1)
exceed a standard set by federal law, unless the rule is specifically required
by state law; 2) exceed an express requirement of state law, unless the rule
is specifically required by federal law; 3) exceed a requirement of a delegation
agreement or contract between the state and an agency or representative of
the federal government to implement a state and federal program; or 4) adopt
a rule solely under the general powers of the agency instead of under a specific
state law. This rulemaking is not subject to the regulatory analysis provisions
of §2001.0225(b), because the proposed amendment does not meet any of
the four applicability requirements. Specifically, the amendment will eliminate
the opportunity for registrations under this section for engines or turbines
used to generate electricity upon the issuance of a standard permit for small
electric generating units, except for engine or turbine-driven generators
used to provide power for the operation of facilities registered in the Air
Quality Standard Permit for Concrete Batch Plants or satisfying the conditions
for facilities permitted by rule under Chapter 106, Subchapter E. The commission
does not believe that the emission limitations contained in §106.512
are sufficient to allow small electric generating units to operate as distributed
generation units. Distributed generation is the concept that small electric
generating units, placed near a load that will use all or most of the electricity
generated, have the ability to export electricity to the electrical grid.
This rulemaking is being coordinated with the development of a standard permit
for small electric generating units in accordance with Chapter 116. This new
standard permit will contain emission limitations comparable to those which
apply to recently permitted or constructed central station generating units.
The rulemaking was not developed solely under the general powers of the
agency, but was specifically developed under Texas Clean Air Act (TCAA), §§382.011,
382.017, 382.051 and 382.05196.
The commission invites public comment on the draft regulatory impact analysis
determination.
TAKINGS IMPACT ASSESSMENT
The commission evaluated the proposed rulemaking and performed a preliminary
analysis of whether the proposed rule constitutes a taking under Texas Government
Code, Chapter 2007. The following is a summary of that analysis. The specific
purpose of the proposed rule is to ensure that emissions from the new use
of small electric generating units for distributed generation do not undermine
the emission reductions achieved with recently permitted combined cycle power
plants. This would be accomplished by eliminating the opportunity for registrations
under §106.512 for engines or turbines used to generate electricity upon
the issuance of a standard permit for small electric generating units, except
for engine or turbine-driven generators used to provide power for the operation
of facilities registered in the Air Quality Standard Permit for Concrete Batch
Plants or satisfying the conditions for facilities permitted by rule under
Chapter 106, Subchapter E. This rulemaking is being coordinated with the development
of a standard permit for small electric generating units in accordance with
Chapter 116. The standard permit will contain emission limitations comparable
to those which apply to recently permitted or constructed central station
generating units. Promulgation and enforcement of these proposed rules would
be neither a statutory nor a constitutional taking of private real property.
Specifically, the subject proposed regulations do not affect a landowner's
rights in private real property because this rulemaking does not burden (constitutionally),
nor restrict or limit the owner's right to property and reduce its value by
25% or more beyond that which would otherwise exist in the absence of the
regulations. This amendment is intended to provide notice that upon issuance
of the standard permit for small electric generating units, registrations
under this permit by rule will no longer be accepted by the commission. The
amendment does not impact existing authorizations under this permit by rule.
Consequently, this proposed amendment does not meet the definition of a taking
under Texas Government Code, §2007.002(5). Therefore, this proposed revision
is reasonably taken to fulfill requirements of state law to control the quality
of the state's air and will not constitute a taking under Texas Government
Code, Chapter 2007.
CONSISTENCY WITH THE COASTAL MANAGEMENT PROGRAM
The commission reviewed the proposed rulemaking and found that the proposal
is a rulemaking identified in Coastal Coordination Act Implementation Rules,
31 TAC §505.11, or will affect an action/authorization identified in
Coastal Coordination Act Implementation Rules, 31 TAC §505.11, and will,
therefore, require that applicable goals and policies of the Coastal Management
Program (CMP) be considered during the rulemaking process.
The commission prepared a preliminary consistency determination for the
proposed rules under 31 TAC §505.22 and found the proposed rulemaking
is consistent with the applicable CMP goals and policies. The following is
a summary of that determination. The CMP goal applicable to the proposed rulemaking
is 31 TAC §501.12(1). This goal requires the protection, preservation,
restoration, and enhancement of the diversity, quality, quantity, functions,
and values of coastal natural resource areas. The CMP policy applicable to
the proposed rulemaking is 31 TAC §501.14(q), concerning policies for
specific activities and coastal natural resource areas. This policy requires
commission rules under Texas Health and Safety Code, Chapter 382, governing
emissions of air pollutants, to comply with the regulations in 40 Code of
Federal Regulations (CFR), adopted under the Clean Air Act, 42 United States
Code, §§7401 et seq., to protect and enhance air quality in the
coastal areas so as to protect coastal natural resource areas and promote
public health, safety, and welfare. The proposed amendment will state that,
upon issuance of a standard permit for small electric generating units, registrations
under §106.512 for engines or turbines used to generate electricity will
no longer be accepted, except for engine or turbine-driven generators used
to provide power for the operation of facilities registered under the Air
Quality Standard Permit for Concrete Batch Plants or satisfying the conditions
for facilities permitted by rule under Chapter 106, Subchapter E. The proposed
amendment is consistent with the previously stated goals and policies of the
CMP. The standard permit for small electric generating units being developed
by the commission contains emission limitations more stringent than those
contained in §106.512. The commission seeks public comment on the consistency
of the proposed rule amendment with applicable CMP goals and policies.
ANNOUNCEMENT OF HEARING
A public hearing on this proposal will be held in Austin on January 23,
2001, at 10:00 a.m. at the Texas Natural Resource Conservation Commission
Complex in Building F, Room 2210, located at 12100 Park 35 Circle. The hearing
will be structured for the receipt of oral or written comments by interested
persons. Individuals may present oral statements when called upon in order
of registration. There will be no open discussion during the hearing; however,
an agency staff member will be available to discuss the proposal 30 minutes
prior to the hearing and will answer questions before and after the hearing.
Persons with disabilities who have special communication or other accommodation
needs who are planning to attend the hearing should contact the Office of
Environmental Policy, Analysis, and Assessment at (512) 239-4900. Requests
should be made as far in advance as possible.
SUBMITTAL OF COMMENTS
Comments may be submitted to Joyce Spencer, MC 205, Office of Environmental
Policy, Analysis, and Assessment, Texas Natural Resource Conservation Commission,
P.O. Box 13087, Austin, Texas 78711-3087, or faxed to (512) 239-4808. All
comments should reference Rule Log Number 2000-050-106-AI. Comments must be
received by 5:00 p.m., February 5, 2001. For further information, please contact
Jill Burditt, Policy and Regulations Division, at (512) 239-0560 or Robby
Abarca, Air Permits Division, at (512) 239-6378.
STATUTORY AUTHORITY
The amendment is proposed under Texas Health and Safety Code, TCAA, §382.011,
which authorizes the commission to control the quality of the state's air; §382.017,
which provides the commission the authority to adopt rules consistent with
the policy and purposes of the TCAA; §382.051, which authorizes the commission
to issue permits; and §382.05196, which authorizes the commission to
adopt permits by rule for certain types of facilities.
The proposed amendment implements TCAA, §382.011, General Powers and
Duties; §382.017, Rules; §382.051, Permitting Authority of Commission;
Rules; and §382.05196, Permits By Rule.
§106.512.Stationary Engines and Turbines.
Gas or liquid fuel-fired stationary internal combustion reciprocating
engines or gas turbines that operate in compliance with the following conditions
of this section are permitted by rule.
(1)-(6)
(No change.)
(7)
Upon issuance of a standard permit for
small electric generating units, registrations under this section for engines
or turbines used to generate electricity will no longer be accepted, except
for engine or turbine-driven generators used to provide power for the operation
of facilities registered under the Air Quality Standard Permit for Concrete
Batch Plants or satisfying the conditions for facilities permitted by rule
under Subchapter E of this chapter (relating to Aggregate and Pavement).
This agency hereby certifies that the proposal has been
reviewed by legal counsel and found to be within the agency's legal authority
to adopt.
Filed with the Office of
the Secretary of State, on December 21, 2000.
TRD-200008885
Margaret Hoffman
Director, Environmental Law Division
Texas Natural Resource Conservation Commission
Earliest possible date of adoption: February 4, 2001
For further information, please call: (512) 239-5017