ADOPTED RULES An agency may take final action on a section 30 days after a proposal has been published in the Texas Register. The section becomes effective 20 days after the agency files the correct document with the Texas Register, unless a later date is specified or unless a federal statute or regulation requires implementation of the action on shorter notice. If an agency adopts the section without any changes to the proposed text, only the preamble of the notice and statement of legal authority will be published. If an agency adopts the section with changes to the proposed text, the proposal will be republished with the changes. TITLE 16. ECONOMIC REGULATION Part I. Railroad Commission of Texas Chapter 5. Transportation Division Subchapter AA. Rail Safety 16 TAC sec.5.617 The Railroad Commission of Texas adopts an amendment to sec.5.617, concerning safety equipment, without changes to the proposed text as published in the September 6, 1994, issue of the Texas Register (19 TexReg 6975). The amendment brings the rule into compliance with Missouri Pacific Railroad Company vs. Railroad Commission of Texas , 833 F2d 570 (5th Cir. 1987), which held that the rule's requirement that first aid kits and fire extinguishers be maintained on a locomotive is preempted by federal law. The amendment will eliminate portions of the rule which have been held partially invalid, making the railroad rules easier for the public and the railroads to follow and apply. No comments were received regarding the amendment. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on October 24, 1994. TRD-9450023 Mary Ross McDonald Assistant Director, Legal Division, Gas Utilities/LP Gas Railroad Commission of Texas Effective date: November 14, 1994 Proposal publication date: September 6, 1994 For further information, please call: Carrie L. McLarty at (512) 463-7094 Chapter 7. Gas Utilities Division Substantive Rules 16 TAC sec.7.70, sec.7.81 The Railroad Commission of Texas adopts amendments to sec.7.70, concerning minimum safety standards and regulations applicable to natural gas pipeline facilities and natural gas transportation within the state of Texas, and sec.7. 81, relating to the transportation of hazardous liquids within the state, without change to the proposed text as published in the August 30, 1994, issue of the Texas Register (19 TexReg 6819). By these amendments, the commission adopts new rules recently issued by the Department of Transportation in 49 Code of Federal Regulations (CFR) Parts 192, 195, and 199, concerning natural gas and hazardous liquids pipeline safety rules and drug testing regulations. Three new rules adopted by the United States Department of Transportation, which apply to both 49 CFR Parts 192 and 195, concern the updating of standards incorporated by reference, new requirements for operation and maintenance procedural manuals, and the passage of instrumented internal inspection devices. One new federal rule updates existing references to reflect later published editions of those documents which have been incorporated by reference. The new federal requirements for operation and maintenance procedural manuals requires natural gas operators to prepare more detailed manuals and to review and update their manuals each calendar year. This federal rule now also requires both natural gas and hazardous liquids operators to prepare and follow procedures to safeguard personnel from the hazards associated with the unsafe accumulation of vapor or gas in excavated trenches. The last federal rule applying to both 49 CFR Parts 192 and 195 now requires that certain new and replacement pipelines be designed and constructed to accommodate the passage of instrumented internal inspection devices (smart pigs). New rules in 49 CFR Part 192 concern gas detection and monitoring in compressor station buildings and leakage surveys on distribution lines located outside business districts. The first of these rules now requires that each compressor building in a gas pipeline compressor station have a gas detection and alarm system to detect gas and warn persons before the mixture reaches the flammable range. The second of these rules removes the provision allowing the use of vegetation surveys to detect leaks, and requires the use of leak detectors to carry out leakage surveys on distribution lines located outside of business districts. This new federal rule also assures that leakage survey data no more than three years old are used to evaluate lines for corrosion. Two new rules are found in 49 CFR Part 195. The first now requires hydrostatic testing or confirmation of maximum operating pressure of all hazardous liquids pipelines. Previously, the rule applied only to highly volatile liquids, but the new federal rule extends the requirement to all hazardous liquids. The second rule changes miscellaneous hazardous liquid and carbon dioxide pipeline safety standards to provide clarity, eliminate unnecessary or overly burdensome requirements, and to foster economic growth. New federal requirements in 49 CFR Part 199 apply to drug testing. The rules now require operators of gas, hazardous liquids, and carbon dioxide pipelines to implement, maintain, and submit an annual report for their drug testing program, and require the same operators, whose facilities are subject to 49 CFR Parts 192, 193 or 195, to implement alcohol misuse prevention programs for employees who perform safety-sensitive functions. No groups or associations commented in favor of or against the amendments. One public comment regarding these rules was filed. The commenter questioned the adoption by reference of a portion of 49 CFR 192.150, concerning the passage of internal inspection devices, because the federal government is not currently enforcing "on gas or hazardous liquid pipelines the requirement that the entire line section be made piggable if a line pipe, valve, fitting or other line component is replaced." The enforcement of this section has been voluntarily held in abeyance by the Department of Transportation and is now the subject of an appeal. Because the federal government is not enforcing this portion of 49 CFR 192.150, the commenter requests that the commission not adopt this portion of the regulation. In the alternative, the commenter requests that the commission clearly express its intent that in adopting 49 CFR 192.150 it intends not to enforce the portion of the regulation that is not being enforced at the federal level. The commission disagrees with the commenter's position that the commission not adopt that portion of 49 CFR 192.150 which the federal government is not currently enforcing because adopting the rule and holding its enforcement in abeyance is consistent with the federal government's position. In addition, if the federal government ended its voluntary abeyance and began enforcing that portion of 49 CFR 192.150, the commission's enforcement would be delayed by another rulemaking. The commission does, however, agree with the commenter's alternative position, and expresses its intent not to enforce that portion of 49 CFR 192.150 that is not being enforced at the federal level unless and until it is enforced at the federal level. No change to the text of the rule is required. The amendments are adopted under Texas Civil Statues, Article 6053-1, which authorize the commission to adopt safety standards and practices applicable to the transportation of gas and all gas pipeline facilities within Texas to the maximum degrees permissible under, and to take any other requisite action in accordance with, the Natural Gas Pipeline Safety Act of 1968, sec.5(a), 49 United States Code Annotated, sec.1674(a) (West 1968 and Supplement 1994), and the Texas Natural Resources Code, sec.sec.117.001-117.101, which authorizes the commission to regulate the pipeline transportation of hazardous liquids and facilities related thereto under, and to take any other requisite action in accordance with, the Hazardous Liquid Pipeline Safety Act of 1979, sec.205, 49 United States Code Annotated, sec.2004 (West Supplement 1994.) This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on October 24, 1994. TRD-9450040 Mary Ross McDonald Assistant Director, Legal Division, Gas Utilities/LP Gas Railroad Commission of Texas Effective date: November 15, 1994 Proposal publication date: August 30, 1994 For further information, please call: (512) 463-7058 TITLE 22. EXAMINING BOARDS Part VI. Texas State Board of Registration for Professional Engineers Chapter 131. Practice and Procedure Examinations 22 TAC sec.131.103 The Texas State Board of Registration for Professional Engineers adopts an amendment to sec.131.103, concerning engineer-in-training, with changes to the proposed text as published in the May 13, 1994, issue of the Texas Register (19 TexReg 3621). The rule as amended removes language that contradicts the board's intent that an individual must have a degree in engineering or engineering-related science approved by the board in order to be eligible to apply for engineer-in-training certification. An approved degree is defined by the board to be, at the minimum, a bachelor's degree. The rule clarifies the minimum education requirements necessary for certification as an engineer-in-training. No comments were received regarding adoption of the amendment. The amendment is adopted under Texas Civil Statutes, Article 3271a, sec.8(a), which provide the board with the authority to make and enforce all rules and regulations necessary for the performance of its duties. sec.131.103. Engineer-in-Training. Individuals who have an EAC/ABET- accredited engineering degree or a degree in engineering or engineering-related science approved by the board and have successfully passed the fundamentals of engineering examination are eligible to apply for engineer-in-training certification. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on October 25, 1994. TRD-9450050 Charles E. Nemir, P.E. Executive Director Texas State Board of Registration for Professional Engineers Effective date: November 15, 1994 Proposal publication date: May 13, 1994 For further information, please call: (512) 440-7723 TITLE 30. ENVIRONMENTAL QUALITY Part I. Texas Natural Resource Conservation Commission Chapter 101. General Rules 30 TAC sec.101.1, sec.101.29 The Texas Natural Resource Conservation Commission (TNRCC) adopts amendments to sec.101.1 and sec.101.29, concerning Definitions and Emissions Banking, with changes to the proposed text as published in the June 14, 1994, issue of the Texas Register (19 TexReg 4621). The Emissions Banking program is a voluntary emission reduction program designed to provide a source of offsets and additional flexibility for regulated sources. The proposed revisions to Chapter 101 were in response to the need to clarify certain provisions concerning sec.101.29 of this title (relating to Emissions Banking), to eliminate requirements that have been found to be unnecessary, and to conform to sec.114.29 of this title (relating to Accelerated Vehicle Retirement Program). Such conformity includes a definition of mobile source emission reduction credit (MERC), the useful life of a credit, certification procedures for credits, recognition of reductions from the accelerated retirement of high-emitting vehicles as "qualified reductions" for the purposes of sec.101.29 of this title, and authorized uses for the credits. A MERC is defined as the credit obtained from an enforceable, permanent, quantifiable, and surplus (to other federal and state regulations) emission reduction generated by a mobile source as set forth in sec.114.29 of this title or sec.114.11 of this title (relating to Alternative Fuel Requirements for Motor Vehicle Fleets), and which has been banked in accordance with sec.101.29 of this title. The useful life of a MERC is a function of the remaining vehicle miles of the mobile source, as determined in the Accelerated Vehicle Retirement program and Alternative Fuel Requirements for Motor Vehicle Fleets. The Bank expiration date and useful life of a MERC is calculated from the date the MERCs are certified. MERCs will be certified by the TNRCC Emission Bank for any emission reduction which has been registered in accordance with the specific requirements of the Accelerated Vehicle Retirement program (sec.114.29) or the Alternative Fuel Requirements for Motor Vehicle Fleets. A key element of sec.101.29 is the authorized use of MERCs. Under the adopted rule, the following uses are authorized: extending a compliance deadline for up to the life of the credit to the extent allowed in any provision of Chapter 115 of this title (relating to Control of Air Pollution from Volatile Organic Compounds) and sec.117.540 of this title (relating to Phased Reasonably Available Control Technology (RACT)); complying with fleet requirements to the extent allowed in the Alternative Fuel Requirements for Motor Vehicle Fleets; providing offsets for short-term emission increases that require a permit amendment; providing offsets for modifications to an existing source; or providing offsets for a new source at an existing facility. The amendments also "clean up" some of the administrative and procedural aspects of the existing sec.101.29 of this title for clarification and consistency purposes and delete unnecessary provisions. The amendments clarify that all qualified reductions must have occurred after January 1, 1990. They eliminate the distinction between pre-rule and post-rule reductions. Mandatory banking of shutdown credits has been determined to not be required by the United States Environmental Protection Agency (USEPA), as originally understood and has, therefore, been eliminated. A public hearing was held in Austin on July 13, 1994. No oral testimony was presented. Written comments were received from nine commenters: BASF Corporation, City of Dallas, Amoco, USEPA, the Greater Houston Partnership, Houston Lighting and Power, Houston Area Business Coordinating Group, Sierra Club, Browning-Ferris Industries, and the Texas Chemical Council. Following the comment period, the staff determined that the following additional clarifying changes were necessary: clarification of current policy on the use of emission reduction credits (ERCs) for netting purposes and clarification of the generation and use of credits with sources associated with actions of federal agencies under the general conformity rules. Comments in support of the proposal are as follows. General expressions of support for the proposal were submitted by BASF Corporation, Greater Houston Partnership, Houston Lighting and Power, Amoco, and the Texas Chemical Council. Browning-Ferris Industries expressed particular support for the use of MERCs at stationary sources. Staff Response: the staff acknowledges the support. Comments pertaining to MERCs are as follows. The USEPA commented that in sec.101.29(d), the TNRCC should clarify that, for MERCs, the Bank expiration date and the date at which the useful life of the credits end is the same. Staff Response: sec.101.29(d) provides that the useful life of the credit is to be determined in the rules for the Accelerated Vehicle Retirement Program and the Alternative Fuel Requirements for Motor Vehicle Fleets. Staff does not agree that any further clarification is necessary. The USEPA commented that the TNRCC should require that creditable emission reductions from vehicle scrappage must have occurred after the effective date of the Accelerated Vehicle Retirement rule, rather than January 1, 1990. Staff Response: the starting date for creditable reductions from vehicle scrappage has been changed to January 1, 1995, when IM240 tests will first be available. The Sierra Club opposed allowing MERCs to be used to offset industrial emissions from stationary sources, stating that there is no scientific evidence that reduction of mobile emissions occurring over a large area are equivalent in ozone potential to those from a point source in the ozone plume, that the TNRCC does not have modeling to verify such an assertion, and that we should wait until we have such modeling results before adopting a rule allowing this. Staff Response: because of the relatively low volume of credits involved or expected to be involved in this program, modeling is not able to demonstrate any effects of the use of MERCs. If the volume of MERCs increases to a level for which the model is capable of demonstrating the effects of their use, modeling results will be analyzed and appropriate adjustments in the rules will be proposed. Comments pertaining to the use of ERCs as offsets are as follows. The USEPA commented that: any credit for a reduction that occurred after January 1, 1990 must be based on operational data that is consistent with the data used to calculate the actual emissions reported in the 1990 Base Year Emissions Inventory; in no case can the credit be greater than the actual emissions reported in the 1990 Base Year Emissions Inventory; offset use is subject to USEPA's policy concerning the use of shutdown and curtailment credits; particularly, the shutdown must have occurred after November 15, 1990; and ERCs may be used for New Source Review (NSR) offset purposes only in accordance with the TNRCC's NSR regulations. Staff Response: the Banking Rule (sec.101.29) has been subject to USEPA rules and regulations since it was originally proposed and adopted. Nothing in the current proposal alters any USEPA requirements for creditability or conditions on use of credits. To the extent these requirements and conditions existed under the current Banking Rule, they will continue to exist under the proposed amendments. General comments pertaining to the rules are as follows. The USEPA commented that the word "permit" should not be deleted from sec.101.29(f) and (f)(2), stating that reductions done pursuant to permit requirements are not creditable. Staff Response: the TNRCC staff has taken the position that emission reductions required by permit Best Available Control Technology (BACT) review and Health Effects review are creditable. The USEPA commented that sec.101.29(e)(3) should be clarified to apply only to stationary sources. Staff Response: additional wording has been added to make this clarification. Comments pertaining to proposals for future rule revisions are as follows. Several commenters proposed rule revisions beyond the changes proposed initially. The BASF Corporation proposed that the current five-year life of credits for offset purposes should be extended to allow more time for the private sector planning process and that a "safe harbor" provision should be added to protect credits from being discounted by future rulemaking. The City of Dallas proposed that the TNRCC delete sec.101.29(j)(3) regarding depreciation of credits, stating that it is unfair and counterproductive to reduce or eliminate ERCs or MERCs after adopting a future regulation. The Houston Area Business Coordinating Group proposed that the TNRCC authorize use of mobile source emission reduction credits to offset an employer's shortfall in achieving average passenger occupancy goals under the Employer Trip Reduction (ETR) program. Browning-Ferris Industries proposed that the TNRCC consider further issues relating to the use of shutdown credits and encouraged the TNRCC to consider the approach New York has taken in its proposed 6 New York Codes, Rules and Regulations Part 231. Amoco proposed that the TNRCC allow businesses to use scrappage credits as alternative compliance with the ETR program and the Alternative Fuel Requirements for Motor Vehicle Fleets. Staff Response: the staff feels that these suggestions are beyond the scope of this current rule revision proposal, which is intended for clarification purposes and to coordinate with the Accelerated Retirement of Motor Vehicles rule proposal. However, the staff is involved in ongoing review of the Banking Rule and will consider all suggestions for further revisions in future rulemaking proposals. The amendments are adopted under the Texas Clean Air Act (TCAA), Texas Health and Safety Code, sec.382.017, which provides the TNRCC with the authority to adopt rules consistent with the policy and purposes of the TCAA. sec.101.1. Definitions. Unless specifically defined in the Texas Clean Air Act (TCAA) or in the rules of the TNRCC, the terms used by the TNRCC have the meanings commonly ascribed to them in the field of air pollution control. In addition to the terms which are defined by the TCAA, the following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise. Emissions reduction credit (ERC)-Any stationary source emissions reduction which has been banked in accordance with sec.101.29 of this title (relating to Emissions Banking). Mobile source emissions reduction credit (MERC) -The credit obtained from an enforceable, permanent, quantifiable, and surplus (to other federal and state regulations) emissions reduction generated by a mobile source as set forth in sec.114.29 of this title (relating to Accelerated Vehicle Retirement Program) or sec.114.11 of this title (relating to Alternative Fuel Requirements for Motor Vehicle Fleets), and which has been banked in accordance with sec.101.29 of this title. sec.101.29. Emissions Banking. (a) Applicable pollutants. Qualified reductions of volatile organic compounds (VOC) as defined in sec.101.1 of this title (relating to Definitions) and nitrogen oxides (NO [sub]x) shall be eligible for deposit in the Bank. Interpollutant trading, for example, using a NO point=4.52p [sub]x credit to offset a VOC emission is not allowed. (b) (No change.) (c) Eligible source. The following sources are eligible to participate in the emissions banking program for a designated ozone nonattainment area: (1) any stationary source; (2) any area source; (3) any mobile source registered in the designated ozone nonattainment area; and (4) any non-road mobile source or area source associated with actions by federal agencies under the General Conformity Rules. (d) Length of time available. A certified Emissions Reduction Credit (ERC), generated by a stationary source, is available for use to fulfill an offset requirement during the five-year period after the reduction was actually achieved. The banking applicant shall identify the date the reduction was actually achieved. The ERC certificate shall indicate the expiration date for the certified reduction. If an ERC is withdrawn from the bank prior to the five- year expiration and submitted with a complete permit application for use as an offset, the ERC remains usable for the lifetime of the new facility or modification proposed for offset. The length of time a certified Mobile Source Emission Reduction Credit (MERC) is available for use is a function of the remaining vehicle miles of the mobile source, as determined in the Accelerated Vehicle Retirement program and Alternative Fuel Requirements for Motor Vehicle Fleets. The Bank expiration date and useful life of the credit is calculated from the date the MERCs are certified. (e) ERC and MERC certification or registration. (1) (No change.) (2) The MERCs will be certified by the TNRCC Emissions Bank for any emission reduction which has been registered in accordance with the specific requirements of the Accelerated Vehicle Retirement program or the Alternative Fuel Requirements for Motor Vehicle Fleets. (3) When each Bank has a minimum balance of 1,000 tons per year (tpy) of certified ERCs of a given pollutant in a given nonattainment area, the remaining emissions reductions applications will be registered, but not certified. Whenever any Bank balance drops below 700 tpy, registered emissions reductions will be certified in the order they were received, with consideration to the priority provided in paragraph (1) of this subsection, to return the Bank balance to a minimum of 1,000 tpy. This limitation does not apply to MERCs. (4) Emission reduction amounts shall be determined and certified based on actual monitoring results, when available, or otherwise calculated using good engineering practices. The MERCs will be determined and certified using the methodologies provided in the Accelerated Vehicle Retirement program and Alternative Fuel Requirements for Motor Vehicle Fleets. An ERC certificate will be issued by the Executive Director which indicates the amount of certified emissions reduction which is available for use as offsets and the length of time the reduction is eligible for use. A MERC certificate will be issued by the Executive Director which indicates the total amount of certified emission reduction credits, the quantity available on an annual basis, and the date upon which the last annualized emission reduction expires. (f) Qualified reduction. A qualified reduction is a reduction in emissions of an applicable pollutant from an eligible source located in an applicable area, which results in an actual and permanent emissions decrease below that required by applicable state or federal law, regulation, or Agreed Order. Unless otherwise specified, the reduction shall have occurred after January 1, 1990. The reduced emissions level must be federally enforceable for the reduction to qualify. Emissions reductions may come from any eligible sources, including stationary, area, and mobile sources. The Executive Director shall have the authority to inspect and request information to assure that the emissions reduction has been actually achieved. Qualified reductions include, but are not limited, to the following: (1) (No change.) (2) an actual emissions reduction resulting from the installation of a level of control, after January 1, 1990, greater than that which is required by regulation, Agreed Order, or State Implementation Plan provision if the applicant accepts a permit provision specifying a lower level of emissions; (3) an actual emissions reduction resulting from the installation of different processes or equipment, after January 1, 1990, which emit less than the previous processes or equipment that performed the same function if the applicant accepts a permit provision specifying a lower level of emissions; (4) an actual emissions reduction resulting from more effective operation and maintenance of abatement and process equipment, after January 1, 1990, if the applicant accepts a permit provision specifying a lower level of emissions; (5) an actual emissions reduction resulting from a reduction in production rates, or a restriction on hours of operations, after January 1, 1990, if the applicant accepts a permit provision specifying a lower level of emissions, a limit at that production rate, or restricted operating hours; (6) an actual emission reduction resulting from the utilization of vehicles beyond the established emissions standard and/or the fleet percentages as required by the Texas Alternative Fuel Fleet program which has occurred after January 1, 1992; (7) an actual emissions reduction, after January 1, 1995, resulting from the accelerated retirement of high-emitting vehicles; and (8) any other actual emissions reduction which the Executive Director or United States Environmental Protection Agency approves as a qualified reduction. (g) Withdrawal of ERCs. Certified ERCs can be withdrawn only for use within the same designated ozone nonattainment area and for the following purposes: (1) providing offsets for new sources; or (2) providing offsets for modifications to an existing source; (3) providing mitigation offsets for action by federal agencies under the General Conformity Rules; (4) netting by the original applicant. (h) Withdrawal of MERCs. (1) Certified MERCs can be transferred or withdrawn only for use within the same designated ozone nonattainment area and for the following purposes: (A) extending a compliance deadline for up to the life of the credit to the extent allowed in any provision of Chapter 115 of this title (relating to Control of Air Pollution from Volatile Organic Compounds) and sec.117.540 of this title (relating to Phased Reasonably Available Control Technology (RACT)); (B) complying with fleet requirements to the extent allowed by the Alternative Fuel Requirements for Motor Vehicle Fleets; (C) providing offsets for short-term emission increases that require a permit amendment; (D) providing offsets for modifications to an existing source; or (E) providing offsets for a new source at an existing facility. (2) When MERCs are used for the purposes put forth in paragraph (1)(C) -(E) of this subsection, offsets will be required, upon the expiration of the MERCs, through internal emission reductions (netting) or the purchase of additional MERCs or ERCs, or the facility will be required to shut down the emission source. (i) (No change.) (j) Depreciation. The Executive Director is prohibited from depreciating any ERC or MERC, except under the following circumstances: (1) an ERC, not a MERC, will incur an annual 3.0% depreciation on the anniversary of the date the reduction occurred based on the initial ERC value as a demonstration of reasonable further progress toward ozone attainment; (2) the ERC or MERC certificate has expired; or (3) regulatory changes were promulgated after the ERC or MERC certificate has been issued, which would have required reductions from the source that created the qualifying reduction. The credit shall be reduced by the amount affected by the regulatory change. (k) The ERC and MERC use. The use of ERCs and MERCs will be accomplished either through transfers or withdrawals. (1) Transfer. The ERCs and MERCs may be freely transferable, in whole or in part, and may be sold or conveyed in any manner in accordance with the laws of the State of Texas. The Executive Director shall be notified within 30 days of any transfer of the credit to another party. The old certificate shall be submitted to the Executive Director, who shall then issue a new certificate indicating the new owner. In the case of a partial transfer, the Executive Director shall issue a new certificate to the new owner as well as a revised certificate to the current owner reflecting the available credits to each owner. (2) Withdrawal. Only the owner of the certificate is eligible to withdraw deposits from the Bank. Once a certificate has been issued, the ERC or MERC shall be valid for the time period indicated on the certificate, unless the certificate has been depreciated in accordance with subsection (j) of this section. Certified emission reduction credits may be withdrawn from the Bank by the original applicant at any time prior to the expiration of the credit and may be held by the original applicant to be used for netting purposes. ERCs held by the original applicant may not be used for offsets after the expiration of the five-year period following the date of the emission reduction, but may continue to be used for netting under applicable state and federal regulations. The ERCs will be depreciated under subsection (j) of this section during the time they are in the Bank. (l) Program administration. The administration of the emissions banking program includes deposit registration, deposit certification, and ERC and MERC transfer and withdrawal. (1) Deposit registration. A deposit registration of a qualified ERC in the Bank is voluntary. A MERC must be deposited in the Bank before ownership can be transferred or used by the owner as described in subsection (h) of this section. Deposit registrations should be submitted in an approved format to the Executive Director. The Executive Director shall annotate the deposit registration with the date of receipt. If the Executive Director determines that the emissions reduction does not qualify for registration, the applicant shall be notified, within 60 calendar days of receipt of the registration, with a letter which states the reasons for registration denial. (2) Deposit certification. The Executive Director will certify emissions reduction credits in accordance with the guidelines stated in subsection (e) of this section. The applicant shall be notified in writing of the Executive Director's certification decision. If the decision is to grant the ERC or MERC as registered, the ERC or MERC certificate shall be mailed to the owner. If the decision is to grant less credit than the deposit registration or to deny certification, the letter shall state the specific reasons for the decision. The applicant will then have 30 days to respond in writing to the Executive Director. If the Executive Director affirms the certification decision, the applicant may appeal to the TNRCC. The TNRCC, at its option, may hear the appeal directly or may appoint a hearing examiner to obtain evidence from the applicant and staff and provide an advisory opinion to the the TNRCC. Such a hearing shall be conducted in accordance with the rules of evidence, but need not meet all the formal procedures for a contested case hearing. If called, the hearing shall be held within 60 days of the Executive Director's receipt of the applicant appeal. The hearing examiner report shall be submitted to the TNRCC within 30 days of the close of the hearing. (3) The ERC or MERC withdrawal. The owner of an ERC or MERC certificate shall submit an application for withdrawal in a format approved by the Executive Director. The Executive Director shall have 30 calendar days to review the application. Upon notification of approval, the old certificate shall be submitted to the Executive Director as part of the nonattainment review permit application that requires offsets or in accordance with the procedures for other authorized uses of ERCs or MERCS. The Executive Director shall remove the credits from the Bank and issue a new certificate if any reduction credit is remaining. If the Executive Director denies the application, the applicant may appeal to the TNRCC. The appeal will be handled in accordance with the procedures for appeal of decisions affecting deposit applications. (m) Public access. It is the goal of the TNRCC to establish a computerized data base which will allow the public to ascertain the amount of reductions which are registered or banked in each designated ozone nonattainment area. In lieu of a computerized data base, a paper copy of the amount of reductions which are registered or banked will be available at the TNRCC central office and the TNRCC regional office associated with each ozone nonattainment area. The registry shall not contain proprietary information. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's authority. Issued in Austin, Texas, on October 21, 1994. TRD-9450017 Mary Ruth Holder Director, Legal Division Texas Natural Resource Conservation Commission Effective date: November 14, 1994 Proposal publication date: June 14, 1994 For further information, please call: (512) 239-1966 Chapter 114. Control of Air Pollution from Motor Vehicles 30 TAC sec.114.27 The Texas Natural Resource Conservation Commission (TNRCC) adopts new sec.114.27, concerning criteria and procedures for determining Transportation Conformity with the State Implementation Plan (SIP), with changes to the proposed text as published in the July 19, 1994, issue of the Texas Register (19 TexReg 5599). The new section is proposed as a revision to the SIP for the control of those transportation-related pollutants for which an area is designated nonattainment or is subject to a maintenance plan. The pollutants include ozone, carbon monoxide (CO), nitrogen dioxide, particles with an aerodynamic diameter of less than or equal to ten micrometers, and the precursors of those pollutants. Affected nonattainment areas include El Paso, Houston/Galveston, Dallas/Fort Worth, Beaumont/Port Arthur, and Victoria. These revisions are necessary under the Federal Clean Air Act (FCAA) Amendments of 1990 and the subsequent November 24, 1993 transportation conformity rulemaking by the United States Environmental Protection Agency (EPA). The EPA requires that an enforceable rule be established concerning transportation conformity, inclusive of an interagency consultative process between the TNRCC and the transportation planning and development organizations that relate to nonattainment and maintenance areas. The EPA requires that transportation plans, programs, and projects in nonattainment and maintenance areas comply with the SIP's purpose of eliminating or reducing the severity of violations of national ambient air quality standards. This SIP revision and new rule are necessary to implement procedures for determining the conformity of transportation plans, programs, and projects with the SIP, and are necessary to allow EPA to make a finding that the SIP meets the requirements of the FCAA Amendments of 1990 and the final EPA rule on transportation conformity, 40 Code of Federal Regulations (CFR), Part 51. The new rule incorporates by reference the relevant sections of the final EPA rule on transportation conformity, with the exception of the Consultative Procedures, which were developed by the TNRCC in cooperation with the affected parties to this rule. The rule must be submitted to EPA by November 24, 1994. Metropolitan Planning Organizations (MPOs) will be required to improve the flow of information and allow the TNRCC to consult directly with them on draft and final transportation plans, programs, and projects. The SIP revision and rule will outline procedures for ensuring that the Metropolitan Transportation Plan (MTP) and the Transportation Improvement Program (TIP), as well as transportation and transit projects, conform to the SIP. The rule applies to all of the federal, state, and local agencies involved in the review and interchange of information on transportation projects in nonattainment and maintenance areas. The MPOs in Dallas/Fort Worth, Houston/Galveston, El Paso, Beaumont/Port Arthur, and Victoria are affected by this rule, as well as TNRCC, EPA, the Texas Department of Transportation (TxDOT), the Federal Highway Administration (FHWA), the Federal Transit Authority (FTA), local transit authorities, and local air quality agencies. The final EPA rule on transportation conformity, in sec.51.436 and sec.51.438, requires the regional analysis of MTPs and TIPs in ozone and CO areas to include a "build/no build" test that demonstrates nitrogen oxide (NO [sub]x) emissions reductions from the 1990 limits. The TNRCC is currently discussing a suspension of the NO point=4.02p [sub]x demonstration requirement with EPA in accordance with the FCAA Amendments of 1990, sec.182(f), because the most recent air quality modeling indicates that NO point=4.02p [sub]x reductions may not contribute toward achievement of the ozone standard or may not be necessary to demonstrate attainment. In the event that the NO [sub]x demonstration is suspended or eliminated for a nonattainment area, the "build/no build" test for NO [sub]x will be waived during the interim and transition periods. Public hearings to discuss the proposed SIP revision and rule were held as follows: August 15, 1994, in Beaumont; August 16, 1994, in Houston; August 17, 1994, in El Paso; August 18, 1994, in Irving; and August 19, 1994, in Victoria. Testimony was received from five organizations during the comment period which ended August 26, 1994. The Houston-Galveston Area Council (H-GAC), El Paso MPO, and the El Paso City- County Health and Environmental District were supportive of the proposed rule and SIP Revision. Specific comments were made by the Galveston-Houston Association for Smog Prevention (GHASP) and the EPA Region 6 Office as follows. The GHASP stated that sec.114.27(c) does not adequately explain the sections being adopted by reference, nor does it provide adequate background information. The TNRCC staff believes that sec.114.27(c) and the SIP revision provide the requested information and does not agree that the language should be revised. The proposed sec.114.27(c) adopts several sections by reference from 40 CFR, Part 51, Subpart T, which is the final EPA rule on Transportation Conformity, effective November 24, 1993. The entirety of 40 CFR, Part 51 is included in the proposed SIP revision as Appendix A. This material was distributed at public hearings and was available to the public throughout the comment period. Also, sec.114.27(a) and (b) include an explanation of 40 CFR, Part 51 and its requirements. The GHASP stated that TNRCC has granted certain organizations too much authority in the selection of transportation projects, including MPOs, TxDOT, Houston METRO, and private companies. The GHASP is concerned that TNRCC is promoting urban sprawl and undermining the Employer Trip Reduction Program by not halting road improvements. The TNRCC staff believes that the purpose of the Transportation Conformity rule is to set out procedures to determine and ensure that MTPs, TIPs, and projects conform to the SIP, not to redefine the transportation project selection process or to stop specific road projects. The TNRCC staff believes that the rule will increase the communication and consultation between air quality agencies and transportation planning/development agencies regarding individual projects in each nonattainment and maintenance area by including sec.114.27(d) in the rule. No change in the rule appears necessary. The GHASP stated that MPOs should be required to add TNRCC to technical committees in sec.114.27(d)(2)(A)(i). The TNRCC believes that the rule as proposed allows TNRCC full participation on important committees of the MPO in each nonattainment area, including air quality advisory committees and transportation project selection committees. No revision of the language appears to be necessary. The GHASP stated that the definition of regionally significant projects in sec.114.27(d)(2)(A)(iv) should be clarified and should be expanded to address growth in vehicle miles travelled (VMT). The TNRCC believes that regionally significant projects are thoroughly defined by 40 CFR, Part 51, and that the definition is accurately amplified by the proposed rule in sec.114.27(d)(2)(A)(iv). The TNRCC staff believes that the emissions reductions required by the proposed rule adequately account for growth in VMT, pursuant to the FCAA Amendments of 1990, in sec.182(d). The rule language revision appears unnecessary. The GHASP recommended adding language that eliminates transportation funding for projects other than emissions-reduction projects. The GHASP stated that TNRCC must rule directly on the list of regionally significant projects rather than allow MPOs to assume concurrence in the absence of a comment. The TNRCC staff believes that the purpose of the proposed rule is to require a regional emission analysis that accounts for all new emissions, and applies a regional emissions reduction regimen for the total transportation system. The TNRCC believes that the consultation process allows TNRCC adequate opportunity during the development of MTPs, TIPs, and projects to comment on the significance of an individual project, in addition to providing a formal 30-day period to comment on a project's significance. The TNRCC staff believes that the MPO should be able to proceed with project planning if no comments are received. The GHASP stated that the exempt project list required by sec.114.27(d)(2)(A) (v) should not include "growth" projects, and that TNRCC should be allowed to veto projects listed by the MPO as exempt. Section 114.27(c) adopts by reference 40 CFR, Part 51, sec.51.460 and sec.51. 462, regarding exempt projects. The TNRCC staff believes that the exempt projects allowed by the rule are not "growth" projects. Also, the TNRCC staff believes that the rule allows TNRCC an opportunity to dispute an exempt status for any project through the consultation process, through the 30-day comment period identified in sec.114.27(d)(2)(A)(v), and ultimately through the conflict resolution process identified in sec.114.27(d)(4). It appears that it is unnecessary to revise the rule language. The GHASP requested that the words "significantly different" be clarified when referring to an MPO's adoption of significantly different methods and assumptions used in Hot Spot and Regional Emissions Analysis as required by sec.114.27(d)(2)(A)(viii). The rule adopts by reference 40 CFR, Part 51, sec.51.452 and sec.51.454, which identify specific, standardized procedures for preparing Hot-Spot and Regional Emissions Analysis. The TNRCC staff believes that any deviation from these procedures will be identified and rejected in the overall conformity determination when reviewed by the agencies specified in sec.114.27(d)(1)(B). Also, if any procedural modification is proposed by an MPO, sec.114.27(d)(2)(A) (viii) ensures that all air quality agencies are directly notified of the proposal. The TNRCC believes that minor changes in modeling assumptions do not require notification, and that no revision of the language is necessary. The GHASP asked what TNRCC will do if transportation control measures (TCMs) are not fully implemented. Section 114.27(d)(2)(A)(x) cites the existing sec.114.23, the TCM Enforcement rule, effective December 8, 1993, and subsequent revisions. The Transportation Conformity SIP revision includes sec.114.23 as Appendix B, which outlines the actions to be taken by TNRCC and the MPO in the event that a TCM is not fully implemented. The TNRCC staff believes that the inclusion of this citation and appendix provides adequate direction if action is required on a TCM. The GHASP opposed delegation of the activities of the working group established by sec.114.27(d)(3)(C). The GHASP requested evening meetings and public input from environmental groups, bicycle users, consumers groups, transit users, senior citizens, and others interested in transit. Also, the GHASP requested that the working group exclude individuals with a vested interest in transportation projects. The TNRCC staff believes that it is appropriate to retain the right to delegate this activity if another existing group already performs the same or similar function in order to prevent unnecessary duplication. The TNRCC staff believes that the function of the proposed group is to share information and disseminate updates of computer models for CO hot spot analyses and transportation-related regional emissions models-in other words, a technical staff activity. Although the groups suggested by the commenter are welcome to attend, the TNRCC staff believes that because the issues considered are of a technical nature, such staff meetings may not be the best forum for involvement of these groups. The TNRCC staff recognizes the importance of public input from the groups identified by GHASP and encourages their continued participation as members of the air quality and transportation committees at the MPOs in each nonattainment area. It appears that changes to the proposed language are unnecessary. The GHASP stated that the definition of the word "substantial" should be clarified in sec.114.27(d)(3)(D) regarding project changes that trigger new conformity determinations. The TNRCC staff feels that the phrase "...substantial functional, locational, and capacity changes..." in sec.114.27(d)(3)(D) does not require further definition. The intent of this subparagraph is to identify events (other than those specified in sec.51.400 of the EPA rule) that merit a new conformity determination, which primarily refers to major changes in a project's use, location, or size. The TNRCC believes that the subparagraph accomplishes that requirement. The GHASP stated that the 14-day appeal period stipulated in sec.114.27(d)(4) (C) is insufficient. The TNRCC staff believes that sec.114.27(d)(4) allows for a substantial exchange should a dispute arise between the TNRCC and transportation planning organizations, and that the rule allows ample opportunity for TNRCC to raise its concerns. The 14-day appeal period is in addition to a period of meetings between agencies, and represents the time TNRCC is allotted to inform the Governor of a dispute. A language revision appears unnecessary. The GHASP requested that the word "egregious" be deleted from sec.114.27(d) (6). See the last comment from EPA at the end of this preamble. The GHASP opposed the proposed rule, claiming that it is too weak, and that TNRCC does not take responsibility for the SIP process regarding transportation as the law requires. The TNRCC staff believes that the rule and SIP revision satisfy the requirements of the EPA final rule on Transportation Conformity and the FCAA Amendments of 1990, and that the rule and SIP provide for a vigorous and effective consultation process. Specific comments from EPA Region 6, Air Programs Branch, were received as follows. Regarding sec.114.27(b), EPA agreed with TNRCC's adoption of these conformity regulations as a set of Statewide rules, and the first sentence in this subsection clearly outlines this intent. The EPA brought attention to the fact that listing the specific nonattainment areas in the rules will require a SIP revision every time a nonattainment area is added or removed from the list. Therefore, TNRCC may want to consider removing the specific reference to the five nonattainment areas in the last sentence. The TNRCC staff proposes to include each nonattainment and maintenance area in the Transportation Conformity rule and SIP revision, and to execute a SIP revision each time an area is added or deleted to the list of nonattainment or maintenance areas. Therefore, sec.114.27(b) will remain unchanged. The EPA noted that TNRCC is incorporating the remaining sections of the Federal transportation conformity rules by reference; however, the proposed rule is silent about referencing a specific date. The EPA requested clarification as to whether it is TNRCC's intent to incorporate by reference prospective Federal rules under 40 CFR Part 51, Subpart T. The TNRCC does not propose to incorporate by reference prospective Federal rules under 40 CFR, Part 51, Subpart T. Therefore, sec.114.27(c) has been revised to identify the publication date of November 24, 1993, for 40 CFR, Part 51, Subpart T. Regarding sec.114.27(d)(2)(iii), EPA suggested that TNRCC add "...final draft, before adoption and approval of the Board..." in order to clarify the "final draft." The TNRCC must make clear that there is a process for circulating draft documents for comments. The TNRCC staff agrees. Section 114.27(d)(2)(iii) has been revised to add the language "...before adoption and approval by the affected governing body... " with regard to draft final versions of MTPs and TIPs. Regarding sec.114.27(d)(2)(iii), under sec.51.402(c)(7), the MPO is required to distribute the final approved copies of the documents to the consulting agencies. The TNRCC rule does not have this requirement and EPA recommends that sec.114.27(d)(2)(iii) include distribution of the final documents to the agencies in paragraph (1)(B). The TNRCC staff agrees. Language has been added to sec.114.27(d)(2)(iii) that requires the MPO to circulate final approved versions of MTPs and TIPs. Regarding sec.114.27(d)(3)(A), EPA noted that it is not clear how this subparagraph ties to sec.114.27(d)(4), concerning Conflict Resolution. This subparagraph requires that all comments and replies be included in the final document, but it does not provide any course of action if comments are not resolved. The TNRCC staff agrees. Section 114.27(d)(3)(A) has been revised by adding a statement that links this subparagraph to sec.114.27(d)(6), regarding Conflict Resolution. The EPA stated that while TxDOT is one of the primary agencies in planning and developing transportation plans and projects, it did not find any definition of the role and responsibility for this agency. For example, in subsection (d)(3)(A), EPA raised several questions: Should TxDOT be identified due to its role in providing technical support to several of the State's MPOs? Is there any situation in which TxDOT may be in a position where they would have the same responsibilities and roles as the MPOs? If this is the case, EPA suggested that this be clarified throughout the rule. The EPA's past experience with conformity review indicates that TxDOT has been involved with conformity analyses and determinations in some cases. The TNRCC staff agrees. Other than paragraphs where TxDOT is already listed, the rule has been revised to include references to TxDOT wherever it is possible that TxDOT could be involved, e.g., in sec.114.27(d)(2)(A), regarding cooperation with the MPOs; in sec.114.27(d)(3)(D), regarding events that trigger new conformity determinations; and as EPA noted in sec.114.27(d)(3)(A). The EPA noted that pursuant to sec.51.458(c) of their final transportation conformity rule, the required SIP revision shall provide that written commitments to mitigation measures must be obtained from the project sponsor and/or operator prior to a positive conformity determination by the MPO and other recipients of funds designated under Title 23 United States Code (USC) of the Federal Transit Act, the FHWA, or the FTA, and that the project sponsor must comply with such commitments. The EPA stated that the proposed conformity SIP revision does not address this requirement. This is intended to ensure implementation and enforceability of the mitigation measures by TNRCC and EPA. The rule and SIP revision adopt by reference 40 CFR, Part 51, sec.51.458. The TNRCC staff assumes that by including this section verbatim that all aspects of the section are addressed by the rule. Regarding sec.114.27(d)(2)(A)(ix), EPA commented that this clause does not adequately address the requirements of sec.51.402(c)(4) and (5). It does not require the non-FHWA/FTA regionally significant projects, including those by recipients of funds designated under Title 23 USC of the Federal Transit Act, be disclosed to the MPO on a regular basis. The TNRCC staff agrees. Section 114.27(d)(2)(A)(ix) has been revised to more fully address 40 CFR sec.51.402(c)(4) and (5). Regarding sec.114.27(d)(2)(B)(iv), EPA noted that the implementing agencies need to be defined in this clause. The EPA did not find any definition for implementing agencies in the State rule. The rule and SIP revision include 30 TAC Chapter 114, inclusive of sec.114. 23, the TCM Enforcement Rule, both as an appendix to the SIP Revision and as a citation in sec.114.27(d)(2)(B)(iv). The TCM rule defines "implementing agency" as follows: "an entity, transportation provider, organization, agency, or individual responsible for the design, procurement of funds, construction, operation, maintenance, management, monitoring, and, in conjunction with the MPO, compliance with TCMs." The TNRCC staff assumes that the citation in the TCM rule and its inclusion as an appendix in the SIP thereby includes this definition by reference. Regarding sec.114.27(d)(6), EPA commented that the enforceability clause of the proposed rule is unacceptable because the enforcement culpability standard has been set too high. The EPA stated that it must be one of strict liability. The culpability language as proposed raises the level beyond one of strict liability, as is required by the Clean Air Act, and beyond one even of negligence to that of a criminal standard. This cannot be approved by EPA as a SIP revision. Furthermore, EPA stated that the rule is limited to violations of the consultation process. Failure to follow and meet the other parts of the transportation conformity rules must be violations of the SIP also. The TNRCC staff has revised the enforcement clause in sec.114.27(d)(6) in keeping with the EPA comments. The new rule is adopted under the Texas Health and Safety Code, the Texas Clean Air Act (TCAA), sec.382.017, which provides the TNRCC with the authority to adopt rules consistent with the policy and purposes of the TCAA. sec.114.27. Transportation Conformity. (a) Purpose. The purpose of this section is to implement the requirements set forth in 40 Code of Federal Regulations (CFR) Part 51, Subpart T (relating to Conformity to State or Federal Implementation Plans of Transportation Plans, Programs, and Projects Developed, Funded, or Approved Under Title 23 United States Code or the Federal Transit Act), which are the regulations developed by the United States Environmental Protection Agency (EPA) pursuant to the Federal Clean Air Act (FCAA) Amendments of 1990, sec.176(c). It includes policy, criteria, and procedures for demonstrating and assuring conformity of transportation planning activities with the State Implementation Plan (SIP). (b) Applicability. This section applies to transportation-related pollutants for which an area is designated nonattainment or is subject to a maintenance plan. The pollutants include ozone, carbon monoxide, nitrogen dioxide, particles with an aerodynamic diameter of less than or equal to ten micrometers (PM [sub]10), and the precursors of those pollutants. Affected nonattainment or maintenance areas include El Paso, Houston/Galveston, Dallas/Fort Worth, Beaumont/Port Arthur, and Victoria. (c) CFR incorporation. The provisions promulgated in the following listed sections of 40 CFR, Part 51, Subpart T, dated November 24, 1993, are hereby incorporated by reference: sec.sec.51.392, 51.394, 51.398, 51.400, 51.404, 51.406, 51.408, 51. 410, 51.412, 51.414, 41.416, 51.418, 51.420, 51.422, 51.424, 51.426, 51.428, 51.430, 51.432, 51.434, 51.436, 51.438, 51.440, 51.442, 51.444, 51.446, 51.448, 51.450, 51.452, 51.454, 51.456, 51.458, 51.460, 51.462, and 51.464. (d) Consultation. Pursuant to 40 CFR, sec.51.402 regarding consultation, the following procedures shall be undertaken in nonattainment and maintenance areas before making conformity determinations and before adopting applicable SIP revisions. (1) General factors. (A) For the purposes of this subsection, relating to consultation, the affected agencies shall include: (i) EPA; (ii) Federal Highway Administration (FHWA); (iii) Federal Transit Administration (FTA); (iv) Texas Department of Transportation (TxDOT); (v) metropolitan planning organizations (MPOs) in nonattainment or maintenance areas; (vi) local publicly-owned transit services in nonattainment or maintenance areas (the designated recipient of FTA sec.9 funds) ; (vii) Texas Natural Resource Conservation Commission (TNRCC); (viii) local air quality agencies in nonattainment or maintenance areas (recipients of Federal Clean Air Act, sec.105 funds). (B) All correspondence with the affected agencies in subparagraph (A) of this paragraph shall be addressed to the following designated point of contact: (i) MPO: Executive Director or designee; (ii) TNRCC: Executive Director or designee; (iii) TxDOT: Director of Transportation Planning and Programming or designee; (iv) TxDOT: Director of Environmental Affairs Division or designee; (v) FHWA: Administrator of Texas Division or designee; (vi) FTA: Director of Office of Program Development-FTA Region 6, or designee; (vii) EPA: Regional Administrator-EPA Region 6, or designee; (viii) TxDOT District: District Engineer or designee; (ix) local publicly-owned transit services (the designated recipient of FTA sec.9 funds): General Manager or designee; (x) local air quality agencies (recipients of Federal Clean Air Act, sec.105 funds): Director or designee; and (xi) TNRCC Regions in nonattainment or maintenance areas: Regional Director or designee. (2) Roles and responsibilities of affected agencies. (A) The MPO, in cooperation with TxDOT and publicly owned transit services, shall consult with the agencies in paragraph (1)(A) of this subsection in the development of Metropolitan Transportation Plans (MTPs), Transportation Improvement Programs (TIPs), projects, technical analyses, travel demand or other modeling, and data collection. Specifically, the MPOs shall: (i) allow the TNRCC Mobile Source Division Director, or a designated representative, to participate in meetings of technical committees on surface transportation and air quality in each nonattainment and maintenance area in order to consult directly with the particular committee during the development of the transportation plans, programs, and projects; (ii) send information on time and location, an agenda, and supporting materials (including preliminary versions of MTPs and TIPs) for all regularly scheduled meetings on surface transportation or air quality to each of the agencies specified in paragraph (1)(B) of this subsection. Such information shall be provided in accordance with the locally adopted public involvement process as required by 23 CFR, Part 450, sec.450.316(b)(1); (iii) after preparation of final draft versions of MTPs and TIPs, and before adoption and approval by the affected governing body, ensure that the agencies specified in paragraph (1)(B) of this subsection receive a copy, and that they are included in the local area's public participation process as required by the Metropolitan Planning Rule, 23 CFR, sec.450.316(b)(1). Upon approval of MTPs and TIPs, MPOs shall distribute final approved copies of the documents to the agencies specified in paragraph (1)(B) of this subsection; (iv) for the purposes of regional emissions analysis, initiate a consultation process with the affected agencies specified in paragraph (1)(A) of this subsection during the development stage of new or revised MTPs and TIPs to determine which transportation projects should be considered regionally significant and which projects should be considered to have a significant change in design concept and scope from the effective MTP and TIP. Regionally significant projects will include, at a minimum, all facilities classified as principal arterial or higher, or fixed guideway systems or extensions that offer an alternative to regional highway travel. Also, these include minor arterials included in the travel demand modeling process which serve significant interregional and intraregional travel, and connect rural population centers not already served by a principal arterial, or connect with intermodal transportation terminals not already served by a principal arterial. A significant change in design concept and scope is defined as a revision of a project in the MTP or TIP that would significantly affect model speeds, vehicle miles travelled, or network connections. In addition to new facilities, examples may include changes in the number of through lanes or length of project (more than one mile), access control, addition of major intermodal terminal facilities (such as new international bridges, park-and-ride lots, and transfer terminals), addition/deletion of interchanges, or changing between free and toll facilities. When a significant change in the design and scope of a project is proposed, the MPO shall document the rationale for the change and give the affected agencies specified in paragraph (1)(A) of this subsection a 30-day opportunity to comment on their rationale. The MPO shall consider the views of each agency that comments, and respond in writing prior to any final action on these issues. If the MPO receives no comments within 30 days, the MPO may assume concurrence by the agencies specified in paragraph (1) (A) of this subsection; (v) include in the TIP a list of projects exempted from the requirements of a conformity determination pursuant to 40 CFR, Part 51, sec.51.460 and sec.51.462. The MPO shall consult with the affected agencies specified in paragraph (1)(A) of this subsection in determining if a project on the list has potentially adverse emissions for any reason, including whether or not the exempt project will interfere with implementation of an adopted transportation control measure (TCM). The MPO shall respond in writing to all comments within 30 days on final MTP and TIP documents. If no comments are received as part of the public involvement process for the TIP, the MPO may proceed with implementation of the exempt project; (vi) notify the affected agencies specified in paragraph (1)(A) of this subsection in writing of any MTP or TIP revisions or amendments which add or delete the exempt projects identified in 40 CFR, sec.51.460; (vii) as required by 40 CFR, sec.51.424 and sec.51.454 of the final EPA transportation conformity rule, make a preliminary identification of those projects located at sites in PM [sub]10 nonattainment and maintenance areas that require quantitative PM [sub]10 Hot Spot analyses. After these projects have been identified, the MPO shall submit a list of these projects and sufficient data to the agencies specified in paragraph (1)(A) of this subsection for review and comment; (viii) before adoption of any new or substantially different methods or assumptions used in the Hot Spot or Regional Emissions Analysis, provide an opportunity for the agencies specified in paragraph (1)(A) of this subsection to review and comment; (ix) in coordination with TxDOT and the local transit agencies, disclose all known, regionally significant, non-federal projects, even if the sponsor has not made a final decision on its implementation; include all disclosed, or otherwise known, regionally significant non-federal projects in the regional emissions analysis for the nonattainment area; respond in writing to any comments that known plans for a regionally significant non-federal project have not been properly reflected in the regional emissions analysis; and have recipients of federal funds determine annually that their regionally significant non-federal projects are included in a conforming MTP or TIP, or are included in a regional emissions analysis of the MTP and TIP. The MPO shall consult with project sponsors to determine the non-federal projects' location and design concept and scope to be used in the regional emissions analysis, particularly for projects for which the sponsor does not report a single intent because the sponsor's alternatives selection process is not yet complete. If the MPO assumes a design concept and scope which is different from the sponsor's ultimate choice, the next regional emissions analysis for a conformity determination must reflect the most recent information regarding the project's design concept and scope; (x) pursuant to sec.114.23 of this title (relating to Transportation Control Measures), ensure the timely implementation of TCMs and report to the TNRCC annually on the status of adopted TCMs. If alternative TCMs or other reduction measures are deemed necessary, and these are not already included in the SIP, the MPO shall develop new TCMs with equal or greater emissions reductions consistent with the MTP, TIP, SIP, and conformity requirements, pursuant to sec.114.23(e) of this title. Any changes in TCMs will be coordinated with the affected agencies specified in paragraph (1)(A) of this subsection; (xi) cooperatively share the responsibility for conducting conformity determinations on transportation activities which cross the borders of MPOs or nonattainment and maintenance areas. The affected MPOs will enter into a Memorandum of Agreement (MOA) which will define the effective boundary and the respective responsibilities of each MPO for regional emissions analysis. The MPOs will be responsible within their respective metropolitan area boundaries and, at their option, beyond to the boundaries of the nonattainment/maintenance areas, for regional emissions analysis. Adjacent MPOs or nonattainment/maintenance areas or basins will share information concerning air quality modeling assumptions and emission rates that affect both areas; and (xii) for the purpose of determining the conformity of all projects outside the metropolitan planning area, but within the nonattainment or maintenance area, enter into an MOA involving the MPO and TxDOT for cooperative planning and analysis of projects. (B) the TNRCC, as the lead air quality planning agency, shall work in consultation with the agencies specified in paragraph (1)(A) of this subsection in developing applicable transportation related SIP revisions, air quality modeling, general emissions analysis, emissions inventory, and all related activities. Specifically, TNRCC shall: (i) set agendas and schedule meetings to seek advice and comments from all agencies specified in paragraph (1)(A) of this subsection during preparation of applicable transportation related SIP revisions; (ii) schedule public hearings in order to gather public input on the applicable transportation-related SIP revisions and notify the agencies specified in paragraph (1)(B) of this subsection of the hearings according to 40 CFR, sec.51.102; (iii) provide copies of final documents, including applicable adopted or approved transportation related SIP revisions and supporting information, to all agencies specified in paragraph (1)(B) of this subsection; and (iv) after consultation with the MPO regarding TCMs pursuant to sec.114.23(b) of this title, distribute to all agencies specified in paragraph (1)(B) of this subsection and other interested persons the list of TCMs proposed for inclusion in the SIP. In consultation with the agencies specified in paragraph (1)(A) of this subsection, the TNRCC shall determine whether past obstacles to implementation of TCMs have been identified and are being overcome, and determine whether the MPOs and the implementing agencies are giving maximum priority to approval or funding for TCMs. Also, TNRCC shall consider, in consultation with the affected agencies, whether delays in TCM implementation necessitate a SIP revision to remove TCMs or substitute TCMs or other emission reduction measures. (3) General procedures. (A) The MPO, TxDOT, or TNRCC, as applicable, shall respond to comments of affected agencies on MTPs, TIPs, projects, or SIP revisions in accordance with the public involvement procedures that govern the involved action. The MPO, TxDOT, or TNRCC, as applicable, shall include all comments and the replies to those comments with final documents when they are submitted for adoption by the agency's governing board. In the event that comments are not adequately resolved, the procedures outlined in paragraph (4) of this subsection regarding conflict resolution shall apply. (B) Because the validity of the regional emissions analysis depends on transportation modeling assumptions which need periodic updates, the MPO, with the assistance of TxDOT and local publicly owned transit agencies, will conduct meetings with the agencies specified in paragraph (1)(A) of this subsection to cooperatively establish research and data collection efforts and regional model development (e.g., household/transportation surveys). (C) For the purposes of evaluating and choosing a model (or models) and associated methods and assumptions to be used in Hot-Spot and Regional Emissions Analyses, TNRCC shall establish a working group identified as the Transportation and Air Quality Technical (TAQT) Working Group. The TAQT Working Group shall include the agencies specified in paragraph (1)(A) of this subsection. The frequency of meetings and agendas for them will be determined by TNRCC in cooperation with the agencies specified in paragraph (1)(A) of this subsection. The function of this working group may be delegated to an existing group with similar composition and purpose. (D) The TNRCC, affected MPOs, and TxDOT shall cooperatively evaluate events which will trigger the need for new conformity determinations. New conformity determinations may be triggered by events established in 40 CFR, sec.51.400 as well as other events, including emergency relief projects that require substantial functional, locational, and capacity changes, or in the event of any other unforeseeable circumstances. (4) Conflict resolution. (A) The TNRCC and the MPO (or TxDOT where appropriate) shall make a good-faith effort to address the major concerns of the other party in the event they are unable to reach agreement on the conformity determination of a proposed MTP or TIP. The efforts shall include meetings of the agency executive directors if necessary. (B) In the event that the MPO or TxDOT determines that every effort has been made to address the TNRCC concerns, and that no further progress is possible, the MPO or TxDOT shall notify the TNRCC executive director in writing to this effect. This subparagraph shall be cited by the MPO or TxDOT in any notification of a conflict which may require action by the Governor, or his or her delegate pursuant to subparagraph (C) of this paragraph. (C) The TNRCC has 14 calendar days from date of receipt of notification as required in subparagraph (B) of this paragraph to appeal to the Governor. If TNRCC appeals to the Governor, the final conformity determination must then have the concurrence of the Governor. The Governor may delegate his or her role in this process, but not to the Commission or staff of TNRCC, a local air quality agency, the Texas Transportation Commission or staff of TxDOT, or a MPO. This subparagraph shall be cited by TNRCC in any notification of a conflict which may require action by the Governor or his or her delegate. If TNRCC does not appeal to the Governor within 14 calendar days from receipt of written notification, the MPO or TXDOT may proceed with the final conformity determination. (5) Public comment on conformity determinations. Consistent with the requirements of 23 CFR, Part 450 relating to public involvement, the agencies specified in paragraph (1)(A) of this subsection shall establish a public involvement process which provides opportunity for public review and comment prior to taking formal action on conformity determinations for all MTPs and TIPs. In addition, these agencies shall address in writing any public comment claiming that a non-FHWA/FTA funded, regionally significant project has not been properly represented in the conformity determination for a MTP or TIP. Also, these agencies shall provide opportunity for public involvement in conformity determinations for projects where otherwise required by law. (6) In formulating an enforcement policy regarding a violation of a rule of this subsection (relating to the consultation process) TNRCC may consider any good faith effort made by the consulting agencies to comply. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on October 24, 1994. TRD-9450074 Mary Ruth Holder Director, Legal Division Texas Natural Resource Conservation Commission Effective date: November 15, 1994 Proposal publication date: July 19, 1994 For further information, please call: (512) 239-1966 Chapter 114. Control of Air Pollution from Motor Vehicles 30 TAC sec.114.29 The Texas Natural Conservation Commission (TNRCC) adopts new sec.114.29, concerning the Accelerated Vehicle Retirement program, with changes to the proposed text as published in the June 14, 1994, issue of the Texas Register (19 TexReg 4624). The Accelerated Vehicle Retirement program establishes procedures for scrapping high-emitting vehicles in order to earn mobile source emission reduction credits (MERCs). This program increases the options available to stationary sources facing more stringent pollution control regulations. The additional flexibility offered by MERCs should reduce the costs of compliance for small, medium, and large businesses. Stationary sources can use MERCs as offsets for short-term emission increases and as offsets for major modifications. Additional rule language is being developed for future rulemaking that will allow industry to use MERCs to extend a compliance deadline. This program also provides motorists an alternative to high repair costs if their vehicles should fail an emission test. A public hearing was held on July 12, 1994 in Austin to consider the proposed rule. Comments on the rule were received from several companies and individuals: NAPA Auto Parts stores and distribution centers (NAPA); Auto Zone Auto Parts Stores (Auto Zone); Western Auto Supply (Western Auto); CarQuest Auto Parts; Harwood Industries, Inc.; Classic Chevy Parts; Vintage Air; Gulf States Distributors; Prestigious Accessories, Inc.; Competition Sales, Inc.; Romero/Surlow Sales; Martel Brothers Racing Products; Pro Products; Perfect Performance Products, Inc.; Putco Automotive Accessories; Year One, Inc.; Alamo Auto Supply; N&N Automotive, Inc.; Faldyn Auto Supply; Seguin Auto Parts; Rare Parts; Neal's Automotive & Affordable Classics; Specialty Equipment Market Association (SEMA); Hi/Lo Auto Supply (Hi/Lo); Automotive Parts Rebuilders Association (APRA); Automotive Engine Rebuilders Association (AERA); Galveston-Houston Association for Smog Prevention (GHASP); Automotive Parts & Accessories Association (APAA); Houston-Galveston Area Council (HGAC); Greater Houston Partnership (GHP); Texas Automotive Dismantlers & Recyclers Association (TADRA); RAM Auto Parts, Inc. (RAM); Texas Chemical Council (TCC); a member of the Houston City Council; Houston Lighting and Power (HL&P); Coalition for Auto Repair Equality (CARE); Texas Towing and Storage Association (TTSA); United States Environmental Protection Agency (EPA); and two individuals. General comments are as follows for those who supported or opposed the Accelerated Vehicle Retirement program (AVRP or scrappage). Most of the comments received were in opposition to the program. The vast majority of these letters came from auto parts stores and associations representing auto parts stores. The 178 letters received from NAPA, Auto Zone, and independent auto parts outlets (IAPO) and the testimony submitted by CARE and Western Auto stated that the rule should not be adopted. Their main objection to the rule is that cars are to be scrapped instead of repaired. They believe that most vehicles that fail the emission test can be repaired for a small amount of money and should be repaired rather than scrapped. There were other issues presented in their letters, which will be reported in the following sections of this document. The staff believes that the vast majority of motorists will repair their vehicles, especially if the repairs cost only $200 as the auto parts retailers claim. The benefits derived from this program for both the consumer and the scrappage sponsor are highest when the vehicle repair estimate exceeds the minimum expenditure amount for a waiver. There is nothing in the AVRP that discourages or prevents a vehicle owner from repairing his or her vehicle. The underlying incentives in both the Inspection and Maintenance (I/M) program and auto scrappage promote repair of the vehicle rather than scrappage. The value of the vehicle diminishes drastically if it fails the emission test. The amount paid for a scrappage vehicle does not cover the cost of purchasing a newer vehicle, as the auto parts retailers point out. Therefore, in most cases, it is more cost beneficial to repair the vehicle and maintain it, than it is to scrap the vehicle. The various independent auto parts outlets are opposed to the program because they believe cars will be crushed instead of recycled. The AVR rule does allow the scrapped autos to be recycled. The certified scrappers are permitted to recycle all the parts, except for the exhaust system. Two individuals, CARE, 15 IAPOs, and Western Auto also opposed the rule, because they believe it allows industry to evade emission reduction regulations. The concern is that there will be no improvement in air quality with the AVRP and that industry will not reduce emissions, while the citizenry is bearing the burden of cleaning the air. The GHASP also wrote in opposition to the rule. The GHASP believes that the emission reductions provided through scrappage should not be traded to industry so industry can continue to emit at the same levels. According to GHASP, the TNRCC should be making every effort to reduce ozone and emission trading does not move the state in this direction. The GHASP also believes that emission trading from mobile sources to stationary sources is illegal under the Federal Clean Air Act (FCAA) and it should be prohibited by the state. The scrappage program does not allow stationary sources to evade the volatile organic compounds (VOCs) or nitrogen oxides (NO [sub]x) regulations, nor will this program be harmful to the air in the nonattainment areas. The provisions added to Chapter 115 and Chapter 117 allow stationary sources to extend a control requirement deadline, not evade a VOC or NO [sub]x requirement. Included in these regulations are provisions that provide greater emission reductions from mobile sources than are required by the VOC or NO [sub]x control requirements. Therefore, there is an air quality benefit derived from emission trading that would not have been realized otherwise. If MERCs are used for offset purposes, there is a built-in ratio that provides an environmental benefit of additional emission reductions. The staff does not agree that the responsibility of cleaning the air has shifted from industry to the motoring public. On-road mobile sources (autos, trucks, etc.) are major contributors to smog in the nonattainment areas. The nonattainment areas cannot achieve attainment by solely relying on industry for reductions. Therefore, motorists will be expected to bear some of the cost and burden of improving the air quality and moving the nonattainment areas into attainment. As a result, vehicle owners will be required to achieve and maintain a vehicle emission standard. The EPA allows intersource emission credit trading. The EPA Interim Guidelines on the Generation of Mobile Source Emission Reduction Credits describes the structure and standards for a mobile-to-stationary-source trading program. Many of the commenters submitting letters from NAPA expressed a concern that the AVRP will eventually be a mandatory program. Western Auto suggested that there will be a tax increase to support the program when the state makes auto scrappage mandatory. The GHASP is also concerned that all salvage yards will be certified scrappers buying vehicles for credits only. The GHASP believes the motorists who want to dispose of their vehicles, but not for credits, will have no place to go. The staff disagrees with NAPA's position. The program is voluntary and will remain voluntary. The state will not force anyone to sell his or her vehicle, nor confiscate any vehicles. There will be no tax increase to support this program. Any vehicle owner can dispose of his or her vehicle at a salvage yard without the car being included in a scrappage program. The CARE is concerned that the owners of scrappage vehicles will allow their replacement vehicle to become "clunkers." The CARE believes the replacement vehicle will not be maintained any better than the scrappage vehicle. The staff has no data to support or deny CARE's supposition. However, the staff believes that I/M emission standards will force motorists to better maintain their vehicles or they will be replacing them every two years. The APAA, APRA/AERA, and Hi/Lo did not oppose the rule, but suggested revisions to it. The APRA/AERA stated that the TNRCC AVRP is one of the best scrappage programs developed to date. Hi/Lo says that the state does target the appropriate vehicles, those that fail the emission test, rather than older model vehicles. Several organizations wrote in support of the AVRP. The HL&P, TCC, HGAC, a member of the Houston City Council, and GHP support the program because of the additional flexibility it provides stationary sources in meeting new air quality regulations. This program also provides the credits necessary for economic development in the nonattainment areas. The HGAC is looking to auto scrappage as a possible source of credits for the Houston-Galveston Area Emission Reduction Credit Organization (AERCO). The GHP supports the linkage of the scrappage program with I/M, saying it makes the process and credits more reliable. The GHP also approves of the scrapper certification requirements and the additional environmental benefits this provides. The RAM and TTSA support the scrappage program for the business opportunities it provides the auto dismantler and recycler. This program requires salvage yards to be environmentally clean, which will benefit the automotive parts recycling industry. The TTSA believes this program provides an alternative for those consumers whose car repairs exceed the value of the car or who cannot afford to repair the vehicle. It also stated that this program will provide credits needed for economic development in Houston. Comments regarding the impact of AVRP on air quality and local business are as follows. Sixty-four identical letters from Auto Zone, testimony from Western Auto, and one letter from an IAPO claimed that the AVRP will not cure the air pollution problems in the nonattainment areas. The staff agrees that the scrappage program will not cure the air pollution problem. No one program can solve the air pollution problem. The AVRP is designed to provide additional flexibility for stationary sources and a cost- effective approach to complying with new regulations, as stated in the preamble of the proposed rule. The CARE, Western Auto, and some NAPA letters stated that the AVRP will cause financial hardship for many auto parts stores located in the nonattainment areas. These organizations are concerned that autos that could be repaired are scrapped instead, thereby reducing demand for new or used auto parts. Auto parts sales will diminish as the auto population gets smaller and newer. The staff does not deny the fact that some of the vehicles that are scrapped as a result of this program could probably be repaired for less that $450. Of these vehicles, some of the owners might have purchased new or used parts from a retail outlet. However, the staff believes there will be such a large increase in business for these same auto parts stores from motorists trying to comply with the new standards for vehicle emissions and the increasing vehicle population in Texas, that the loss of a few scrappage vehicles will go unnoticed. Thousands more motorists will be repairing their vehicles as a result of emission testing in the nonattainment areas. This increase in activity will certainly result in a greater demand for new and used auto parts. The staff believes that auto parts stores would suffer much greater losses if industry was not offered cost-effective, flexible ways for reducing emissions. Many businesses currently operating in the nonattainment areas may be forced to move out of the nonattainment areas because of the high cost of environmental regulations, taking their employees with them. A reduction in the work force or an increase in unemployment would ultimately result in financial losses for auto parts stores. One Western Auto store owner stated that this program is an extreme waste of government spending. The GHASP believes that this program should be "junked, " since there is no estimate of how many MERCs will be generated. The state does not agree that the AVRP is a waste of money or that it should be "junked." The cost to the state for this program is minor, since the private sector will provide the funds to purchase the vehicles. The state believes it is important to dedicate resources to the development of innovative programs that help industry comply, in the most cost-effective manner, with the more stringent 1990 FCAA amendments. Without economic incentive programs, new business development may diminish and existing businesses may move away. The GHASP claimed that the AVRP is not needed because the I/M program is designed to remove high-emitters. The scrappage program in effect defeats the potential achievements of the I/M program. The SEMA also stated that I/M would generate the emission reductions claimed by auto scrappage and that emission reductions are only creditable when they are surplus to other requirements. The staff disagrees with GHASP. The scrappage program takes I/M one step further, by permanently removing potential waiver vehicles. Vehicles that would otherwise qualify for a waiver and remain on the road polluting the air will now be removed. By removing potential waiver vehicles, all the emission reductions generated by vehicle scrappage are surplus to other Clean Air Act requirements. Comments regarding the impact of scrappage on low income consumers are as follows. Ninety-three letters were received from NAPA Auto Parts stores inside and outside the four nonattainment areas. These letters, in addition to three letters from IAPOs, stated that low income motorists who cannot afford to purchase a newer vehicle will be forced to sell their cars to the state. A few of the NAPA letters claimed that the state will take cars away from the people who can least afford to replace them. The NAPA employees, Hi/Lo, and Western Auto believe that the scrappage program would create a hardship for the family who needs affordable transportation. One NAPA employee and CARE stated that a motorist who scraps a vehicle could not replace it with a newer vehicle for the money paid for the scrapped vehicle. Under no circumstances will motorists be forced to sell their vehicles, nor will the state take anyone's vehicle. The AVRP is a voluntary program, so each consumer has the opportunity to evaluate the benefits of repairing the vehicle, selling it, or scrapping it. The consumer is able to choose the action that is best suited to his or her financial situation and transportation needs. Low income consumers can apply for hardship waivers if their vehicles fail the emission test. This waiver exempts their vehicles from having to meet the emission standard until the next biennial emission test. Low income motorists will be allowed to drive their vehicles for an additional two years without having to spend a large amount of money to repair the emission control systems. The staff agrees that the payment for a scrapped vehicle will not cover the cost of purchasing a newer vehicle, but it could serve as a down payment. The objectives of the scrappage program are to reduce mobile source emissions and offer industry greater flexibility in complying with environmental regulations. As an aside, scrappage also offers owners of high-emitting, low value vehicles an alternative to high repair costs. Commenters submitting 64 Auto Zone letters from inside and outside the four nonattainment areas also voiced a concern that consumers will be forced to sell their older cars, driving up used car prices. The staff agrees that used car prices will increase as the availability of used cars decreases. However, much of the increase in used car values will come from consumers wanting to buy vehicles that will pass the emission test. The diminishing demand for older vehicles with questionable maintenance records will have a greater impact on the used car market than scrapping a few thousand vehicles. Comments regarding the inclusion of a repair or retrofit option for generating MERCs are as follows. All the NAPA, Auto Zone, and IAPO comments, in addition to the comments from Hi/Lo, Western Auto, CARE, APAA, and SEMA included the request that a repair option be offered in the AVRP. These organizations believe MERCs should be generated when vehicle repairs are funded by a private enterprise. The MERCs would serve as an incentive for stationary sources to fund repairs for failed vehicles. A credit is generated when a vehicle eligible for a minimum expenditure waiver is repaired to pass the emission test. The emission reduction achieved from the fail level to the pass level is the creditable amount. A retrofit option refers to the installation of emission control equipment that will reduce that vehicle's emissions below the original standards for that vehicle. Motorists with hardship waivers would be perfect candidates for this program, since the scrappage sponsor would get full credit for all the repairs made and the vehicle would be repaired to a passing level. The staff believes that a repair option is an interesting concept, but one that would be very difficult to implement within the confines of the EPA guidelines for economic incentive programs and the authority of the TNRCC to regulate individuals. For an emission reduction to be creditable, it must be permanent and enforceable, among other things. A permanent emission reduction is a reduction obtained in year one which exists, in the same amount, in year two, year three, and so forth, until the credit expires. Therefore, the emission reduction achieved by repairing the vehicle must continue to exist one week, one month, one year after the repair. The other requirement that impacts this option directly is enforceability. To guarantee permanence, participating vehicles would have to be tested at least once a year if the credit life is to exceed one year. At this time, the TNRCC has no mechanism to force motorists to submit to an annual emission test. The scrappage sponsor could require the participant to enter into a binding agreement that would require annual emission tests for participants. If the consumer fails to comply with the agreement, the sponsor has the responsibility of enforcing the agreement, not the state. The state would probably have to set all repair option credits to expire after a year, renewable only if an emission test shows the emission reduction still exists in the same amount. The credit may also be disqualified if the emission standard is raised (lower hydrocarbon emissions allowed) and the vehicle does not meet the new standard. The repair option would be suitable only for potential waiver vehicles, since emission reductions achieved at a lower cost than the minimum expenditure level are not creditable. The creditable amount of an emission reduction is the difference between the failed emission level after the consumer spends $450 (Houston/Galveston) and the passing emission level. The consumer must spend the first $450 for the vehicle to qualify for the program. The sponsor then pays for the necessary repairs for the vehicle to pass the emission test. The sponsor may spend anywhere from $10 to $1,000. This may be a cost-effective approach for the sponsor if the sponsor limits participation to vehicles with repair estimates on the lower end of that range rather than the higher end. The staff is not comfortable including a repair option in the AVRP for the reasons outlined in the previous paragraphs and because this option would add an administrative burden at the TNRCC, which is not staffed to handle it at this time. However, if a stationary source wishes to pursue vehicle repair for MERCs, there is a clause in the Emissions Banking rule, sec.101.29, that allows any source to submit an emission reduction to the TNRCC Executive Director and the EPA for approval. The TNRCC will review the AVR rule in the future if another state or private entity in Texas demonstrates that a vehicle repair program is a cost-effective, easy-to-administer, permanent, enforceable, surplus, and quantifiable method of generating MERCs. Some of the NAPA commenters believe there should be legislation or a policy that promotes ongoing maintenance of vehicles and vehicle inspections. If the vehicles are properly maintained, they will emit less pollution. With regards to legislation to promote vehicle maintenance, the state has implemented an I/M program that tests vehicle emissions. Vehicle registration is denied any vehicle that fails the emission test. The staff believes that passing this test and driving one's car legally is a very strong incentive to maintain one's car. Comments regarding vehicle screening and eligibility are as follows. The CARE and NAPA believe that the natural attrition of the fleet will eliminate the high-emitting vehicles, so a scrappage program is not warranted. Most of the targeted vehicles of this program will naturally retire without the extra push from an AVRP. The staff agrees there is a natural attrition rate for a vehicle fleet, which is why the scrapped vehicle pool is reduced by 20% in year two and year three of the credit life. The 20% reduction represents those vehicles that would have been retired if there was no scrappage program. The intent of the AVRP is to accelerate the natural attrition rate of the vehicle fleet, increasing the attrition rate beyond 20%. The NAPA and Auto Zone believe that the participating vehicles in this program will be the least driven vehicles, so the autos truly contributing to the air pollution problem will not be removed from the road. The staff disagrees with NAPA's position. The pilot studies in Illinois and Delaware provided data on vehicle miles traveled (VMT) per year for scrappage vehicles. The average VMT was between 8,000 and 9,000 miles per year. This demonstrates that participating scrappage vehicles are driven by their owners, rather than standing idle in the garage. Low VMT will reduce the value of the MERC, since the vehicle's emissions are multiplied by the annual VMT. It would not be cost-effective for the scrappage sponsor to accept vehicles with a very low VMT, because it would take a lot more vehicles to equal a ton of emissions. The staff believes the eligibility requirements and the methodology for determining MERCs assures scrappage vehicles have been contributing and would have continued to contribute to the pollution problem in their area. Fourteen letters from IAPO asked that pre-1968 vehicles be exempt from the program, since these vehicles were not designed to have low emissions. Pre-1968 vehicles are already exempt from the I/M program. However, owners of pre-1968 vehicles can choose to sell their vehicles to a scrappage program. As stated previously, this is a voluntary program, so motorists may sell their exempt vehicles to a scrappage program, although they are not required to meet any emission standard. Comments regarding sec.114.29(a), definitions, are as follows. The GHASP believes the definition for high-emitting vehicle is loosely defined and should not include marginal failures that can be easily repaired. The staff believes the definition of high-emitting vehicle is appropriate for this rule. Vehicles that fail the emission test are the targets for this program and are considered to be high-emitting vehicles. Tightening up the definition as GHASP requests may eliminate eligible participants. The owner of the vehicle, not the state, must be the one who determines whether it is cost-effective and easy to repair the vehicle. The EPA requested that the definition for scrapper be clarified by adding the following phrase, "in accordance with sec.114.29(e)." The staff agrees to insert this phrase to clarify the scrapper definition. The USEPA requested that "off cycle testing" be defined instead of "on cycle testing." The staff has added language to the on cycle testing definition so as to remove any ambiguity with regard to the meaning of off cycle testing. The EPA asked the state to clarify the definition of replacement vehicle so it is understood that the replacement vehicle is equivalent to the average fleet vehicle for the nonattainment area as calculated from the most recent version of the EPA MOBILE model. The staff agrees to include this clarification in the definition of replacement vehicle. Comments regarding sec.114.29(b), program scope and purpose, are as follows. The EPA requested that the nonattainment areas be defined by county. The staff has added the nonattainment counties to the program scope. The EPA stated that the TNRCC I/M State Implementation Program (SIP) does not provide IM240 emission testing in the Beaumont/Port Arthur nonattainment area. As a result, scrappage vehicle emissions cannot be quantified as required by this rule. The staff has removed Beaumont/Port Arthur from subsection (b) and added a new subsection (i) that will describe the scrappage process for the Beaumont/Port Arthur nonattainment area. Automobile scrappage can be used to generate credits in Beaumont/Port Arthur, but emissions will be modeled using the most recent version of the EPA MOBILE model, rather than measured. The state will work with any scrappage sponsor in the Beaumont/Port Arthur area to develop a scrappage plan that meets the requirements of the EPA guidelines and this section. Comments regarding sec.114.29(c), scrapping procedures, are as follows. The EPA asked if a vehicle can be eliminated from the MERC calculation if it does not comply with subsections (c) and (d), even though the sponsor submitted an acceptable plan as required in subsection (c)(1). The staff confirms that a vehicle can be eliminated as stated previously. The GHASP requested that all the items requested for a scrappage plan be mandatory, rather than to the extent practicable. The rule requires a scrappage plan prior to the initiation of vehicle scrapping as a means of keeping the state informed. The plan is not binding, since much of the information provided is based on expectations and proposals. In addition, the state lists a number of items that should be included in the plan, all of which may not be applicable to a specific scrappage program. Therefore, the state does not support GHASP's request to make all the items mandatory. The TNRCC I/M Section suggested that the documentation required to establish residency in a nonattainment area be consistent with the requirements of the Texas Department of Transportation. The staff agrees to revise subsection (c)(3) to read as follows: "The owner must present at the time of sale a picture ID to verify vehicle ownership and a voter registration card, driver's license, utility bill, property tax bill/payment, or a school tuition receipt to verify residency in the nonattainment area." The TADRA and RAM asked that paragraph (3) be revised so that the scrapper, rather than the dealer, takes possession of the certificate of title for all vehicles purchased. Any entity that engages in the business of obtaining motor vehicles for scrap disposal or resale of parts must turn over all titles upon request to the State Department of Transportation, according to Texas Civil Statutes, Article 6687-2. The state agrees to revise subsection (c)(3) so that it is consistent with Texas Civil Statutes. The certificate of title will be turned over to the scrapper when the vehicle is transferred from the dealer to the scrapper. The HL&P has requested that subsection (c)(4) be deleted, because it would limit participation by fleet owners. The HL&P believes paragraphs (2) and (3) safeguard the state against a third party stockpiling vehicles for the purpose of selling them to a scrappage sponsor. The state included this requirement as an additional mechanism to prevent abuse of the program. It was not the state's intent to restrict participation by fleet owners, but allowing only one vehicle per owner to be scrapped would prohibit fleets from participating in the scrappage program. As HL&P points out, there are other requirements in the rule that should safeguard the program from abuse. Therefore, the state agrees to delete paragraph (4). The GHASP requested that the potential scrappage vehicle not only be operable, but must have been driven each week for it to be eligible for the program. The state has no means of determining how often a particular vehicle was driven during the previous year. The state assumes that if the vehicle owner purchased auto insurance for the previous 12 months, as required by the rule, the vehicle was in all likelihood driven. In addition, if the annual VMT is too low (i.e., less than 1,000 miles), the vehicle has very little value as a scrappage vehicle and this vehicle should be screened out by the sponsor. The staff, therefore, will make no changes to the rule relative to this request. The HL&P suggested that the eligibility time limit for scrapping a vehicle be extended from seven days to 30 days, since most consumers will need more time to evaluate their options. The staff agrees with HL&P, but will extend the eligibility period from seven days to 90 days to be consistent with the I/M regulation. The IM240 Vehicle Emissions Certificate (VEC) is good for 90 days, so the motorist will now have 90 days to scrap the vehicle from the date of the IM240 emission test. The vehicle must be retested if the VEC has expired. The HL&P requested that IM240 emission tests at referee facilities not be required of those vehicles that are subjected to an IM240 test as part of their routine testing. In Houston, 1984 and newer model years will automatically receive an IM240 test at the emission testing center along with a VEC reporting emissions in grams/mile. The staff agrees and has revised paragraph (6)(A) to allow IM240 tests performed at the emission testing center to meet the requirements of the rule. Vehicles that receive an IM240 test at the emission testing center will not be required to get a duplicate test at a referee facility. The EPA requested that the rule refer to the section in Chapter 114 that defines a certified repair technician and a certified repair facility. The staff agrees to insert a reference to sec.114.3 in sec.114.29(c)(6)(A). The GHASP requested that a vehicle owner be required to obtain a repair estimate before the vehicle is scrapped. The GHASP believes that such a requirement, rather than just an option, will promote the repair of failed vehicles. The repair estimate is used to determine the value of the MERC. If the motorist does not obtain a repair estimate, the value of the MERC is equal to the emission standard, which may in fact be less than the MERC value had the consumer obtained a repair estimate. The scrappage sponsor may require all participants to obtain a repair estimate to assure the greatest credit value. The staff believes there are inherent incentives in both the I/M and scrappage programs that promote repair first. Each motorist should be allowed to evaluate his or her options without the state placing excessive burdens on this evaluation. The EPA asked that the rule include a reference to the section in Chapter 114 in which tampering is defined. The GHASP requested that any vehicle with emission equipment removed, damaged, or broken be disqualified from the program. One NAPA store owner asked that the state enforce the tampering laws already in effect. A visual inspection of the catalytic converter and inlet restrictor is conducted at the emission testing center. The inspector records the results of the tamper inspection on the VEC. This is the only physical inspection conducted of the vehicle and will be the only one used to determine tampering. If the vehicle fails due to tampering, the vehicle is still eligible to participate in the scrappage program. However, the credits that can be earned by this vehicle are discounted. A new subparagraph (G) will be added to subsection (f)(4) that sets the MERC value for tampered vehicles at a level equivalent to the emission standard by model year. The staff did not want to eliminate these vehicles from participation because vehicle scrappage may be the only legal alternative for these motorists. Motorists who own vehicles without a catalytic converter will not be able to sell their cars and repairs may be cost-prohibitive. As a result, the owner may resort to driving the car illegally. Vehicle scrappage may provide enough of a financial incentive for these owners to buy a newer vehicle. By discounting the MERC value, the TNRCC is not rewarding illegal activity, but offering an alternative for consumers with old, substandard cars with few choices. Enforcement of the tampering rule, sec.114.1, is beyond the scope of this program. The EPA requested that the state provide additional guidelines for vehicle pricing. The EPA is concerned that if the vehicle purchase price is set too low, the scrappage program will only attract vehicles with very little remaining life. As a result, the three-year life of the credit will exceed the remaining life of most participating vehicles. The staff understands EPA's concern, but believes the vehicle purchase price should be determined by the scrappage sponsor based on supply and demand of potential scrappage vehicles. The staff is not aware of another accelerated vehicle retirement regulation that establishes the vehicle price or even provides parameters for vehicle pricing. The EPA Guidance for the Implementation of Accelerated Retirement of Vehicles Programs does not include requirements or standards for vehicle pricing. The staff believes that by requiring proof of auto insurance and requiring an IM240 emission test of all vehicles, the vehicles with little remaining life will be eliminated. In addition, the three-year life of the credit is the average remaining life of all the scrappage vehicles and should not be viewed as the standard for each participating vehicle. The staff will not add additional restrictions to the guidelines for vehicle pricing, but may request the scrappage sponsor to raise the proposed vehicle purchase price if the staff believes it is unreasonably low. Comments regarding sec.114.29(e), scrapper certification, are as follows. The EPA stated that the reference to automotive parts recycling facility is not consistent with the definition of a scrapper. The staff agrees to replace "automotive parts recycling facility" in subsection (e) with "scrapper." The TADRA requested that the TNRCC change the customer parking requirement from 30 spaces to 10. According to TADRA, 75% of automotive parts recycling facilities will not meet this requirement. The RAM recommended that the parking requirement be changed to 10 vehicles, but that a requirement be added for a 50 vehicle holding area. The staff believes that 30 parking spaces is a reasonable standard for certified scrappers. A scrappage event may occur over a limited time period, with vehicle screening and purchasing taking place in an even shorter period at the scrapper's location. Therefore, there may be times when a large number of vehicles, driven by their owners, arrive at the scrapper's site for screening and purchase. The staff believes a scrapper must be able to accommodate at least 30 vehicles, so that these rushes can be handled without interfering with local traffic or surrounding business parking. However, the scrapper may also allow waiting motorists to park within the scrapper's property lines if it is safe for the waiting vehicle owner. The RAM suggested that paragraph (3) be changed to read, "The facility must be able to process the paperwork for 25 scrappage vehicles and move them out of the parking area before closing time that day and out of the holding area within 24 hours of their arrival." The RAM also requests that the state clarify the paperwork required in this paragraph. The TADRA requested that the 24-hour requirement in paragraph (3) be changed to "whenever possible." The TADRA believes the 24-hour requirement may prevent some facilities from being certified. The staff agrees to change paragraph (3) so that scrappers are required to move at least 25 cars from the parking area and process the paperwork by the close of business on the day the vehicles arrive. This will assure that customer parking is available the next day of business. The TADRA's request provides the scrapper with too much latitude and provides no deadline for processing. The objective of the certification process is to provide a listing of salvage yards that have the capacity to manage a scrappage event in a timely, orderly, and clean manner. The sponsor should feel confident that any certified scrapper on the list will have a large enough facility and staff and environmentally clean processes to meet their auto scrapping demands. The staff believes the second part of RAM's request is not necessary to assure timely processing of scrappage vehicles and may be overly burdensome. The scrapper should be permitted to park the vehicle anywhere within its property lines (excluding customer parking) as long as the parking location does not violate a local, state, or federal regulation. The paperwork required is logging in the vehicles purchased, including all the information that must be submitted to the TNRCC Emissions Bank and all the documentation received from the vehicle owners. The staff wants to assure that all certified scrappers have enough personnel available to process scrappage cars in a timely fashion. The RAM asked that a provision be included that specifies the minimum operating hours for a certified scrapper. The commenter suggested those hours be 8:00 a.m. until 5:00 p.m., Monday-Friday, and 9:00 a.m. until 4:00 p.m. on Saturday. The staff agrees to include such a provision. A new paragraph will be added that says a scrapper must be open at least one evening a week until 7:00 p.m. and on Saturday from 9:00 a.m. until 1:00 p.m. during a scrappage event. The EPA requested that the rule include a reference to the appropriate regulation that defines recycling. The staff agrees to add a reference to 40 Code of Federal Regulations, sec.261.1, which defines recycling in the definition in subsection (a). The GHASP asked that all certified scrappers be required to recycle the oil filter. The rule says that the certified scrapper must comply with the procedures listed in paragraph (4), one of which is recycling the oil filter. The staff believes the rule already requires the scrapper to recycle the oil filter. The GHASP stated that transmission fluid, brake fluid, and power steering fluid must be drained, rather than drained to the extent possible. The rule states that these fluids must be drained and recycled. "To the extent possible" refers to the inability of a scrapper to drain 100% of all the fluids that circulate through the vehicle. The GHASP requested that the state require that bad batteries be recycled. The rule says that good batteries may be recycled. This gives the scrapper the opportunity to reuse batteries that have some remaining life. Bad batteries with no remaining life can be recycled according to 30 TAC sec.330. 1103 or they can be disposed of with a battery retailer, battery wholesaler, or a lead smelter. The staff believes that requiring the scrapper to be in compliance with sec.330.1103 is sufficient to assure an environmentally clean operation. The RAM asked that paragraph (4)(B) be changed from four days to four business days. The staff agrees to make this change. The APRA, AERA, and RAM asked that the scrappage program allow engines to be sold to a qualified engine rebuilder or remanufacturer who agrees not to resell them until they have been properly rebuilt or remanufactured. The scrapper would be allowed to remove an engine and sell it to a rebuilder, rather than dismantling the engine before it can be recycled. The intent of paragraph (5)(B) is to prevent the installation of a scrappage vehicle's deficient engine into another vehicle, thereby automatically creating another high-emitting vehicle. As a result, the rule requires that the engine be broken down by the scrapper and sold in pieces. The state can remove a scrapper's certification if it finds that the scrapper is not complying with this regulation. The certification determination gives the TNRCC the authority to periodically audit the scrapper's operation to ensure compliance with the regulation. However, the state has no such mechanism to guarantee compliance by engine rebuilders, nor the authority to penalize a company if it is found out of compliance. Even if the engine rebuilders will allow the TNRCC to monitor their operations, the agency is not staffed to handle the additional administrative burden. The staff is, therefore, opposed to allowing the sale of the engine to a rebuilder or remanufacturer. The TADRA requested that paragraph (5)(B) specify the engine components that can be recycled to avoid confusion. The staff is opposed to specifying the engine components that can be recycled, because it may unnecessarily restrict the scrapper's latitude in this area. The scrapper can and is encouraged to recycle all engine parts as long as the engine is disassembled to the point where the engine is not functional. Comments regarding sec.114.29(f), MERC calculation, are as follows. The EPA requested that hydrocarbons be changed to "non-methane hydrocarbons" and that the state equate non-methane hydrocarbons emissions with VOC emissions. The staff agrees to remove hydrocarbons, but will replace it with VOCs, rather than non-methane hydrocarbons. The IM240 does measure methane, so non-methane hydrocarbons would be an inaccurate representation of tailpipe emissions. The VOCs are measured and reported on the VEC and it is the pollutant traded, so VOCs will be the terminology used rather than hydrocarbons. The GHASP opposed the use of the most recent version of the EPA MOBILE model to calculate emissions for the replacement vehicle. The GHASP asked that the TNRCC test the actual replacement vehicle to determine its emissions and use that measurement to calculate the MERC value. The APRA/AERA questioned the use of the average fleet vehicle as an appropriate representation of the replacement vehicle for the majority of scrappage vehicles. The APRA/AERA believes that most scrappage participants will replace the scrappage vehicle with only a slightly newer vehicle and the commenters quote the Illinois pilot study to demonstrate their point. The average model year for the replacement vehicle in the Illinois pilot study was 1984, which APRA/AERA stated is older than the average fleet vehicle. The APRA/AERA asked that TNRCC use studies done in other states to establish the model year of the replacement vehicle. The TNRCC believes that the average fleet vehicle, as estimated by the most recent version of the EPA MOBILE model, is the best estimate of the replacement vehicle. The EPA suggests the states use this methodology in the Guidance for Accelerated Retirement of Vehicles Programs. It would be extremely difficult for the TNRCC to track down each scrappage participant for the purpose of determining the replacement vehicle and then require vehicles to be brought to a referee facility for an IM240 emission test. The state has neither the staff nor the authority to enforce such a requirement. The staff reviewed the Illinois and Delaware studies. The average model year of the replacement vehicle in Illinois was 1984 and in Delaware 1986. The emission estimates for those model years for the Houston nonattainment area are very close to the emission estimate for the average fleet vehicle: 2.48 grams/mile for 1984, 1.92 for 1986, and 1.41 for the average fleet vehicle. If the staff chose to use a specific model year as requested by APRA/AERA, the staff would have to conduct periodic follow-ups with scrappage participants, because the model year will change over time. The MERC formula would then be revised according to the new data. Given the minor differences between the emission estimates for the average fleet vehicle and the given model years, the ease of use of the model, and the difficulty in obtaining additional information from scrappage participants after the program is concluded, the staff will continue to use the EPA MOBILE model to estimate the emission level of the replacement vehicle. The APRA/AERA suggested that the annual VMT for the replacement vehicle will be different from the VMT of the scrappage vehicle even though the driver does not change. The APRA/AERA believes that motorists drive their vehicles more often and longer distances when the vehicles are newer. According to APRA/AERA, VMT increases as model years get newer. The APRA/AERA goes on to suggest that the VMT for a replacement vehicle be equal to the VMT estimate for the average fleet vehicle. The staff has chosen to follow the EPA guidance in this regard and assume that the estimated VMT for the scrappage vehicle is equivalent to the VMT for the replacement vehicle. This is the methodology recommended by the California Air Resources Board and the Office of Technology Assessment. It is believed that the distances a motorist drives to work, to shopping areas, and on family visits, for instance, will not change because the motorist buys a newer vehicle. The motorist may take longer trips, but these will probably be outside the nonattainment area. Even if some motorists buy new vehicles and drive more miles per year, other motorists will use mass transit, reducing their VMT to zero. The combination of these occurrences will produce little or no change in total VMT. The GHASP asked that any vehicle with a broken odometer be disqualified from participating in the program. This could be another loophole that would allow more pollution. The staff believes that a broken odometer should not disqualify a vehicle from participating in the program. The typical scrappage vehicle will be an older model vehicle, and therefore, there is an increased probability that the odometer may be broken. It has been demonstrated in earlier studies that motorists can estimate their annual mileage with a good degree of accuracy. Since the odometer has no impact on the emission level of the vehicle and VMT can be estimated without this instrument, a broken odometer should not be a disqualifying factor. The EPA asked that the TNRCC revise subsection (f)(2) to include a time period in which credits must be certified (e.g., 60 days) and a time limit (e. g., one year) for converting scrapped vehicles into MERCs. The EPA wants to prevent credits from being certified long after the emission reduction has taken place. The staff agrees to revise subsection (f)(2) as requested by EPA. However, the TNRCC will limit the whole process to 12 months, so that credits must be certified and used within 12 months of the purchase of the scrappage vehicle. The GHASP requested that MERCs expire in 12 months rather than 36. The MERCs should not be hoarded by industry, but used as needed over a short time period. The 36-month life of a credit is based on the estimated remaining life for a scrappage vehicle. It is assumed that on average a scrappage car would have been driven, and therefore polluting, for another three years. If the car is permanently removed from the fleet, the vehicle is no longer a source of pollution. Therefore, the emission reduction occurs over 36 months, not just 12 months. The EPA asked that the TNRCC define the IM240 emission standard referred to in paragraph (4)(A) and (D), since Texas does not have IM240 emission standards for older model vehicles. The emission standards that will be used for the purpose of calculating MERCs are obtained from the EPA High-Tech I/M Test Procedures, Emission Standards, Quality Control Requirements, and Equipment Specifications, Final Technical Guidance, sec.85.2205. This section lists the IM240 emission standard by model year back to 1968. This information will be added to paragraph (4)(A) and (D). The GHASP asked that vehicles that pass the emission test be ineligible for the accelerated vehicle retirement program, because these vehicles are not high- emitting vehicles. The staff included this option so that all motorists will be able to participate if they so choose. Most owners of passing cars will have no reason to scrap their cars. Also, sponsors may not be interested in purchasing these vehicles because of their low emissions. The TNRCC does not want to eliminate the opportunity to include passing vehicles if both the sponsor and motorist determine it is cost-effective and beneficial to do so. The APRA/AERA and APAA believe that the methodology used to calculate MERCs allows for double counting of credits. The TNRCC should not allow a vehicle to get full emission credit if the repair estimate is over $450. These organizations state that some emission reductions would occur if the motorist made the minimum expenditure required to receive a waiver. The APRA/AERA proposes that the TNRCC reduce the emission level for these vehicles to a level halfway between the emission standard and the IM240 emission test. The MERC restrictions provided in paragraph (4) do not allow double counting of credits. When a vehicle receives a minimum expenditure waiver in the I/M program, the state gets no emission reduction credit for that vehicle, even though some emission reductions may have occurred as a result of the repairs. The state is charged with a waivered vehicle at the original emission levels recorded at its first emission test, not the retest following repairs. Due to this credit accounting methodology for the I/M program, the TNRCC is not counting credits in the scrappage program that may have been designated as SIP credits from I/M. The state builds in an environmental benefit into all its trading programs to prevent any backsliding that may occur from the quantification of emission reductions. Stationary sources are required to purchase at least 10% more credits than are needed to cover a deadline extension or emission increase. In some cases, stationary sources may purchase 50% more credits than needed. These trading requirements should produce a net environmental benefit, as well as cover any slack that may result from the credit calculation methodology. The EPA asked that the state use a 20% attrition rate as required in the EPA guidance, unless the state can justify a lower rate. The AVR rule contains a 15% attrition rate or discount factor. This rate is an estimate based on remaining life figures provided by General Motors (GM). The GM data showed that vehicles in the southwest have a slightly longer remaining life than the three years assumed by EPA. The staff believes that reducing the attrition rate to 15% was justified because of the longer remaining life for vehicles in Texas. However, after further review, the staff has decided to use the EPA recommendation of a 20% attrition rate. The staff has chosen to increase the attrition rate so as to enhance the environmental benefit of the program. The TNRCC wants to assure an air quality benefit from this program, as well as prevent any backsliding that may result from estimating and modeling key components of the MERC calculation. Comments regarding sec.114.29(g), MERC uses, are as follows. The GHASP expressed some concern about trading VOCs that have different levels of toxicity. The GHASP believes that VOCs should not be traded for this reason. The EPA is not restricting the trading of VOCs by their levels of toxicity. The volume of VOCs that will be traded as a result of this program will not be large enough to impact the urban airshed of the nonattainment areas. In addition, any source that uses MERCs to extend a compliance deadline will have had a health effects review at the time their permit was issued or renewed. If the emission reduction credits come from the reduction of VOCs with higher toxicity than that of the source, there is an additional benefit of trading. On the other hand, if the source's emissions have greater toxicity than the emission reduction credits, the permitted site had already passed the health effects review, so the application of MERCs will not impact the nonattainment area's airshed. The new rule is adopted under the Texas Health and Safety Code (Vernon 1990) , the Texas Clean Air Act (TCAA), sec.382.017, which provides the TNRCC with the authority to adopt rules consistent with the policy and purposes of the TCAA. sec.114.29. Accelerated Vehicle Retirement Program. (a) Unless specifically defined in the Texas Clean Air Act (TCAA) or in Chapter 101 of this title (relating to General Rules), the terms in this section have the meanings commonly used in the field of air pollution control. Additionally, the following meanings apply, unless the context clearly indicates otherwise. (1) Area wide fleet-All the automobiles and light duty trucks covered under the Texas Inspection and Maintenance program as set forth in sec.114.3 of this title (relating to the Vehicle Emission Inspection and Maintenance program) in the ozone nonattainment area. (2) High-emitting vehicle-A vehicle that fails the Texas Inspection and Maintenance emission test. (3) Dealer-The entity that locates the potential scrappage vehicles, purchases the vehicles, sells the mobile source emission reduction credits, and initiates the proper recycling and reclamation of the vehicle by a scrapper; the broker or middleman that may exist between the scrappage sponsor and the scrapper. (4) Mobile Source Emission Reduction Credit (MERC) -The credit obtained from an enforceable, permanent, quantifiable, and surplus (to other federal and state regulations) emission reduction that results from the permanent removal of a high-emitting vehicle from the area wide vehicle fleet and which has been banked in accordance with sec.101.29 of this title (relating to Emissions Banking). (5) On testing cycle-The vehicle's required emission test is within the six months preceding the deadline for emission testing and vehicle registration pursuant to the Texas Inspection and Maintenance program. The 18 months following the vehicle registration expiration date are the off cycle months. (6) Recycling-Refer to the Code of Federal Regulations, Title 40, sec.261.1. (7) Replacement vehicle-The vehicle the motorist is assumed to drive after his/her original vehicle is sold to a scrapper. The replacement vehicle is equal to the average fleet vehicle for that ozone nonattainment area as calculated from the most current auto registrations and the most recent version of the United States Environmental Protection Agency (EPA) MOBILE Model. (8) Scrappage sponsor-Any organization that funds the purchase of high- emitting vehicles for the purpose of obtaining mobile source emission reduction credits. The sponsor and the dealer can be the same enterprise. (9) Scrappage vehicle-An automobile or light-duty truck in the area wide fleet that is sold or will be sold to a scrapper for recycling and reclamation. (10) Scrapper-The entity, such as a salvage yard, automotive dismantler, or parts recycler, that recycles and reclaims the scrappage vehicle pursuant to the Accelerated Vehicle Retirement program. The scrapper can also purchase the vehicle from the motorist, making the scrapper and the dealer the same enterprise. Each scrapper shall be certified by the Texas Natural Resource Conservation Commission (TNRCC) in accordance with subsection (e) of this section. (11) Stationary source (applies only to nonattainment area, new source review rules pursuant to Federal Clean Air Act provisions)-Any building, structure, facility, or installation which emits or may emit any air pollutant subject to regulation under the Federal Clean Air Act. (b) The purpose of this program is to reduce mobile source emissions of volatile organic compounds (VOCs) and oxides of nitrogen (NO [sub]x), and provide additional flexibility for stationary sources in the following ozone nonattainment counties: Brazoria, Chambers, Collin, Dallas, Denton, El Paso, Fort Bend, Galveston, Harris, Liberty, Montgomery, Tarrant, and Waller. A scrappage program reduces VOC, NO [sub]x, and carbon monoxide emissions from mobile sources, such as automobiles and light duty trucks, by permanently removing high-emitting vehicles from the area wide fleet. With this rule, stationary sources will have the opportunity to select the most cost-effective approach to comply with federal and state regulations for ozone reductions. The Accelerated Vehicle Retirement program is a voluntary program for both the stationary source and the motorist. (c) In order for a mobile source emission reduction to be creditable under these rules and certified in accordance with sec.101.29 of this title, the following procedures and requirements must be met. (1) Entities seeking to obtain MERCs through automobile scrappage shall submit a scrappage plan to the Executive Director at least 45 days prior to planned initiation of vehicle scrapping. The Executive Director reserves the right to reject a scrappage plan if it does not meet the requirements outlined in this regulation. The sponsor will be notified within 30 days of receipt of the plan by the TNRCC if it is rejected, otherwise the plan is acceptable. The plan should include, to the extent applicable, the following items: (A) the purpose of the scrappage program; (B) the planned number of cars to be scrapped; (C) the proposed purchase price for the vehicles; (D) the targeted number of tons per year of MERCs to be generated by the scrappage program; (E) the manner in which the sponsor will locate potential scrappage vehicles; (F) the location and dates for the vehicle screening and documentation review, if there is a prescreening prior to the purchase of the vehicle; (G) the name and address of the dealer; (H) the name and location of the scrapper recycling and reclaiming the scrappage vehicles; (I) the date the scrappage sponsor will initiate the program and the proposed end date; and (J) the scrappage sponsor contact person, address, and phone number. (2) To be eligible for the scrappage program, a vehicle must have been registered to an address within an ozone nonattainment area for at least 12 months prior to the sale of the vehicle. Proof of insurance for the same 12- month period is required at the point of sale. The vehicle is eligible for scrappage only in the nonattainment area in which it is registered. (3) The owner of the scrappage vehicle or legal representative of the owner must be present at the time of the sale. The certificate of title must contain the current owner's name. The vehicle title is surrendered to the dealer at the time of the sale. The scrapper shall take possession of the certificate of title when the vehicle is transferred to the scrapper from the dealer. The vehicle owner must have lived in the same nonattainment area in which the vehicle is registered for the 12 months prior to the sale of the vehicle and present proof to this effect. The owner must present at the time of sale a picture ID to verify vehicle ownership and a voter registration card, driver's license, utility bill, property tax bill/payment, or a school tuition receipt to verify residency in the nonattainment area. Other documentation may be requested to verify the identity and address of the owner. (4) The scrappage vehicle must be in operable condition and driven to the scrapper's location. Vehicles cannot be towed or trailered to the scrapper's site. (5) The owner of the scrappage vehicle must have obtained an IM240 vehicle emission certificate (VEC), at a referee facility, prior to the sale of the vehicle. A purge and pressure test will be required as specified by the Texas Inspection and Maintenance program. The vehicle is eligible for scrappage for up to 90 calendar days following the IM240 emission test. A motorist must submit the vehicle to an emissions test according to the following procedures. (A) If the vehicle is on testing cycle, the owner shall first go to an emission testing center for the required emission test. If the vehicle fails the test, the owner should obtain a repair estimate from a certified emission repair technician of Texas operating at a certified facility, as specified in sec.114.3 of this title. If the owner chooses to scrap the vehicle rather than register or repair it, she/he shall take the vehicle to a referee facility for an IM240 emission test, unless an IM240 test was conducted at the emission testing center. Appointments for emission tests will be required at all referee facilities and a fee will be charged, as specified by the Texas Inspection and Maintenance program. The owner shall obtain a vehicle emission certificate at the referee facility or the emission testing center for newer model vehicles, which must be presented to the scrappage dealer, along with the repair estimate, at the time the vehicle is sold. (B) If the vehicle is off-cycle or the vehicle owner has received a minimum expenditure waiver or hardship waiver within the last 18 months, the owner should go directly to the referee facility for an IM240 emission test. Appointments for emission tests will be required at all referee facilities and a fee will be charged, as specified by the Texas Inspection and Maintenance program. The owner shall obtain a vehicle emission certificate at the referee facility, which must be presented to the scrappage dealer at the time the vehicle is sold. (C) Scrappage sponsors may solicit vehicle owners for potential scrappage vehicles at any time during the year. Vehicles solicited by the sponsor will be required to follow the same procedures specified in subparagraphs (A) and (B) of this paragraph. (6) The scrappage sponsor, dealer, or scrapper is responsible for setting the price for each scrappage vehicle. The sponsor or dealer may not set vehicle purchase prices based on the emission level of any individual vehicle. (7) All scrappage vehicles shall be scrapped by a scrapper certified by the TNRCC. (d) Following the scrappage event or as MERCs are needed in a continuous program, the scrappage sponsor shall submit the following documents for each scrapped vehicle to the TNRCC Emissions Bank to obtain certified MERCs. The Executive Director reserves the right to eliminate any vehicle from the MERC calculation that does not comply with the requirements outlined in subsection (c) of this section or for which proper documentation, as described in paragraphs (1)-(5) of this subsection, is not provided: (1) the vehicle emission certificate; (2) where applicable, a repair estimate signed by a certified repair technician; (3) a copy of the vehicle title; (4) a copy of the owner's driver's license, plus copies of any other identification documentation provided to the dealer; and (5) all information listed in subsection (i)(1)(A)-(H) of this section. (e) In order for a scrapper to obtain and maintain certification under the Accelerated Vehicle Retirement program, the facility must comply with the following requirements. (1) The facility must be a licensed motor vehicle salvage dealer as required by the Texas Department of Transportation. (2) The facility must have a customer parking area for at least 30 vehicles. (3) The facility must be able to process the paperwork for 25 scrappage vehicles and move them out of the parking area within 24 hours of their arrival. (4) The facility must be open at least one night a week until 7:00 p.m. and from 9:00 a.m. until 1:00 p.m. on Saturday during a scrappage event. (5) The facility must handle all automotive material in a manner that protects the environment and is in accordance with all local, state, and federal regulations for waste management and clean water. At a minimum, the facility must comply with the following procedures: (A) process all scrappage vehicles in the following manner: (i) drain the crankcase of all motor oil and properly recycle the oil with a registered used oil handler. If the oil filter is removed, it should also be properly recycled; (ii) evacuate the air conditioning system of all refrigerant and properly recycle with a certified reclaimer as specified in the Code of Federal Regulations, Title 40, Part 82; (iii) drain the antifreeze or coolant and properly recycle; (iv) drain the transmission fluid, brake fluid, and power steering fluid to the extent possible and properly recycle; (v) drain all fuel and reuse or properly recycle; and (vi) remove the battery and store on raised shelves in a covered shelter. The shelter must have a cement floor. Good batteries may be recycled. Bad batteries shall be disposed of in accordance with sec.330.1103 of of this title (relating to Disposal of Batteries); (B) drain and capture all the automotive fluids, as described in subparagraph (A)(i)-(v) of this paragraph, within four business days of the vehicle's arrival at the facility's location; (C) prevent leaks and spills of any automotive fluid, and immediately remediate spills at all scrapper locations; (D) where available, recycle automotive fluids with a registered recycler; (E) provide a complete listing of all the companies that the certified scrapper uses to manage the automotive fluids and batteries. The facility shall provide any revisions to this list within 14 days of the change; and (F) maintain manifests for all the fluids transported from the scrapper's location. These manifests shall be made available to TNRCC staff upon request. (6) A certified scrapper is allowed to recycle or sell all parts of the vehicle with the following exceptions: (A) the exhaust system, including the catalytic converter, tailpipe, muffler, exhaust inlet pipe, vapor storage canister, vapor liquid separator, and resonator. These items must be destroyed. The catalytic converter can be recycled for the precious metals, but cannot be reused; and (B) the engine with all the components attached. The cylinder block and other engine components can be recycled only if the component parts are removed and recycled individually. (7) A scrapper must renew its certification every five years. A scrapper's certification may be suspended or revoked for good cause at any time by order of the TNRCC after notice and opportunity for public hearing is provided pursuant to the Texas Government Code, sec.2001.054. Good cause includes, but is not limited to, failure to comply with the certification, operating conditions, and requirements contained in this subsection. The TNRCC may refuse to issue a certification under this subsection if the applicant has a history of noncompliance with the provisions of this subsection or for other good cause shown. (f) Each scrappage vehicle creates a measurable emission reduction of VOCs, NO [sub]x, and carbon monoxide (CO). (1) The emission reduction is calculated using the following equation for VOC, NO [sub]x, or CO: Figure 1: 30 TAC sec.114.29(f)(1) (2) The emission reduction generated by each scrappage vehicle is converted into a MERC that can then be deposited in the Bank or transferred directly to the scrappage sponsor. The Bank calculates the MERC value for the pool of vehicles or each individual vehicle in tons per year as the dealer submits the supporting documentation (application) to the Bank. The application for MERCs must occur within 10 months of the date each vehicle is purchased by the dealer. The Bank has two months to certify the credits requested in the application. The MERCs expire 36 months following its certification by the Bank. (3) The emission reduction, as calculated in paragraph (1) of this subsection for VOC, NO [sub]x, or CO, is multiplied by a factor that converts grams per year into tons per year. The MERC calculation for stationary source usage for year one is as follows: Figure 2: 30 TAC sec.114.29(f)(3) (4) The following restrictions apply to the MERC calculation: (A) for a failed vehicle with a repair estimate less than the minimum expenditure as set forth in the Vehicle Emission Inspection and Maintenance program, TE equals the IM240 emission standard by model year, as reported in the EPA High-Tech I/M Test Procedures, Emission Standards, Quality Control Requirements, and Equipment Specifications, Final Technical Guidance, sec.85. 2205; (B) for a failed vehicle with a repair estimate greater than or equal to the minimum expenditure as set forth in the Vehicle Emission Inspection and Maintenance program, TE equals the IM240 emission measurement; (C) for a vehicle that has received a one-time hardship waiver or a minimum expenditure waiver within the last 18 months, TE equals the IM240 emission measurement; (D) for a failed vehicle with no repair estimate, TE equals the IM240 emission standard by model year, as reported in the EPA High-Tech I/M Test Procedures, Emission Standards, Quality Control Requirements, and Equipment Specifications, Final Technical Guidance, sec.85.2205; (E) for a vehicle that is tested off cycle or is not required to be emission tested, TE equals the IM240 emission measurement; (F) for a vehicle that passes, TE equals the IM240 emission measurement; and (G) for a vehicle that fails due to tampering, TE equals the emission standard by model year, as reported in the EPA High-Tech I/M Test Procedures, Emission Standards, Quality Control Requirements, and Equipment Specifications, Final Technical Guidance, sec.85.2205. (5) The MERC value for year two is 20% lower than the MERC value for year one. The MERC value for year three is 20% lower than the MERC value for year two. The discounting in year two and year three adjusts the MERC value for the natural attrition in the vehicle fleet that occurs over time. The MERC purchaser has the option of averaging the discounts over the 36-month life of the credit, in 12- month increments, or applying the discount in year two and year three, thereby reducing the MERC value in each succeeding year. The MERCs cannot be distributed across the 36-month life of the credit in any manner that may cause excessive emissions in year one, two, or three. (g) The MERCs can be used to achieve compliance as provided for in any provision of Chapter 115 of this title (relating to Control of Air Pollution from Volatile Organic Compounds) and sec.117.540 of this title (relating to Control of Air Pollution from Nitrogen Compounds) and as offsets as set forth in sec.101.29 of this title. The MERCs shall be banked in accordance with sec.101.29 of this title. (h) The TNRCC scrappage program will begin on January 1, 1995 in the three ozone nonattainment areas in Texas: Houston/Galveston, Dallas/Fort Worth, and El Paso. (i) The MERCs may be generated in the ozone nonattainment counties of Hardin, Jefferson, and Orange in accordance with the EPA Interim Guidelines on the Generation of Mobile Source Emission Reduction Credits, EPA Guidance for Implementation of Accelerated Retirement of Vehicle programs, February 1993, and subsections (a), (c)(2)-(4), (6)-(7), (d)(3)-(5), (e), (f)(2) and (5), and (g) of this section. A scrappage plan, as described in subsection (c)(1), must be submitted to the Executive Director for approval 120 days prior to the initiation of vehicle scrapping. (j) The TNRCC Emissions Bank will maintain a data base containing the following information: (1) for each scrappage vehicle purchased: (A) the model year, model, make, transmission type, engine size, and vehicle identification number (VIN); (B) the scrappage vehicle owner's name, address, telephone number, and driver's license number; (C) the final odometer reading, the date on the old safety inspection sticker, and the mileage on the old safety inspection sticker. If the odometer is not functioning properly, refer to subsection (f)(1) of this section for the methodology to calculate VMT; (D) the date purchased by the dealer; (E) the purchase price; (F) the IM240 emission test results and purge/pressure test results; (G) the dealer/scrapper that processed the vehicle; (H) in the case of a scrappage event, the scrappage sponsor that purchased the vehicle; (I) the repair estimate from the certified repair technician; and (J) the MERC value for that vehicle; (2) for each MERC sold: (A) the purchase price; (B) the name and location of the seller; (C) the name, location, and the TNRCC account of the buyer; (D) tons per year for year one, two, and three; and (E) creation, certification, and expiration dates. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's authority. Issued in Austin, Texas, on October 21, 1994. TRD-9450018 Mary Ruth Holder Director, Legal Division Texas Natural Resource Conservation Commission Effective date: November 14, 1994 Proposal publication date: June 14, 1994 For further information, please call: (512) 239-1966 TITLE 34. PUBLIC FINANCE Part I. Comptroller of Public Accounts Chapter 3. Tax Administration Subchapter Y. Controlled Substances Tax 34 TAC sec.3.681 The Comptroller of Public Accounts adopts an amendment to sec.3.681, concerning imposition and rate of the Controlled Substances Tax Act, Tax Code, Chapter 159, without changes to the proposed text as published in the May 20, 1994, issue of the Texas Register (19 TexReg 3901). The amendment provides for the taxation of controlled substances, counterfeit substances, or simulated controlled substances, commonly sold by dosage unit. This amendment is a result of amendments to the Tax Code, sec.159. 001, by the 73rd Legislature, 1993. No comments were received regarding adoption of the amendment. The amendment is adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on October 25, 1994. TRD-9450042 Martin E. Cherry Chief, General Law Section Comptroller of Public Accounts Effective date: November 15, 1994 Proposal publication date: May 20, 1994 For further information, please call: (512) 463-4028 TITLE 40. SOCIAL SERVICES AND ASSISTANCE Part XIX. Texas Department of Protective and Regulatory Services Chapter 700. Child Protective Services The Texas Department of Protective and Regulatory Services (TDPRS) adopts the repeal of sec.sec.700.1701, 700.1749, 700.1753, 700.1763, 700.1765, and 700. 2101, 2110; and adopts new sec.sec.700.1701, 700.1707, 700.1711, 700.1718, 700. 1726, 700.1736, 700.1741, 700.1750, and 700.1761, 700.1763, in the department's child protective services chapter. New sec. sec.700.1711, 700.1713, and 700.1714 are adopted with changes to the proposed text published in the September 20, 1994 issue of the Texas Register (19 TexReg 7402). The repeal of sec.sec.700.1701, 700.1749, 700.1753, 700.1763, 700.1765, and 700.2101, 700.2110 and new sec.sec.700.1701, 700.1707, 700.1712, 700.1715, 700.1718, 700. 1726, 700.1736, 700.1741, 700.1750, and 700.1761, 700.1763 are adopted without changes to the proposed text and will not be republished. The justification for the repeals and the new sections is to reorganize, update, and clarify the department's policies for providing protective services to families and children through contracted providers. The department's policies for purchasing protective services have not been systematically revised since 1984. They require systematic revision now to accommodate changes in state and federal laws and regulations regarding contracting, the Office of Child-Care Licensing's new Minimum Standards for Child-Placing Agencies, the establishment of TDPRS as an independent state agency, TDPRS's recent implementation of a risk-based system for delivering protective services to families and children, and recent revisions of the department's policies for providing family preservation services and services to children in substitute care. The new sections also accommodate a simplified structure for managing contracted services, with regional contract staff reporting directly to regional directors and working directly with state-office contract staff. In addition, the new sections effectively transfer TDPRS's rules for the services-to-runaways-and-at-risk-youth (STARS) program to the subchapter for purchased protective services without substantially changing the STARS rules. The repeals and new sections will function by improving the system through which children and families receive protective services from contractors when the Office of Protective Services for Families and Children (PSFC) cannot provide a needed service directly or when a contractor can provide it more promptly, efficiently, or effectively than PSFC. No comments were received regarding adoption of the repeals and new sections. The department, however, has made minor changes in new sec.sec.700.1711, 700.1713, and 700.1714 to simplify the wording and clarify the meaning of the sections. In sec.700.1711(e)(6)(B), the department has deleted the word "coverage." In sec.700.1713(g)(2), the department has changed one of the headings in the chart. The heading "mandatory vs. optional and direct vs. subcontracted" has been changed to "type of requirement." In sec.700.1713(i)(3), the department has deleted hyphens from the phrase "three to six months." And in sec.700.1714(d)(1)(B)(ii), the department has substituted the word "both" for "each." Subchapter Q. Purchased Protective Services 40 TAC sec.sec.700.1701-700.1749, 700.1753-700.1763, 700.1765 The repeals are adopted under the Human Resources Code (HRC), Title 2, Chapter 22, which authorizes the department to administer public assistance programs; Chapter 41, which authorizes the department to enforce laws for the protection of children; and Chapter 47, which authorizes the department to provide services after adoption to adoptees and adoptive families to whom the department provided services before adoption. The repeals are also adopted under the Texas Family Code, Title 2, Chapter 34, which authorizes the department to provide services to alleviate the effects of child abuse and neglect. In addition, the repeals are adopted under Public Law Number 96-272, Title I, which authorizes the department to administer foster-care and adoption assistance programs provided for under the Social Security Act, Title IV-E. And finally, the repeals are adopted under Texas Civil Statutes, Article 4413 (503), historical note (Vernon Supplement 1993), 72nd Legislature, which transferred all functions, programs, and activities related to the child protective services program from the Texas Department of Human Services to TDPRS. The repeals implement Texas Civil Statutes, Article 4413(503), sec.15, which authorizes the department to enter into contracts as necessary to perform any of its powers or duties. The repeals also implement HRC, sec.22.002(f), which authorizes the department to enter into agreements with federal, state, or other public or private agencies or individuals to accomplish the purposes of the programs authorized by the HRC. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on October 25, 1994. TRD-9450061 Nancy Murphy Section Manager, Media and Policy Services Texas Department of Protective and Regulatory Services Effective date: September 20, 1994 Proposal publication date: December 1, 1994 For further information, please call: (512) 450-3765 Subchapter Q. Purchased Protective Services 40 TAC sec.sec.700.1701-700.1707, 700.1711-700.1718, 700.1726-700. 1736, 700.1741-700.1750, 700.1761-700.1763 The new sections are adopted under the Human Resources Code (HRC), Title 2, Chapter 22, which authorizes the department to administer public assistance programs, including a program to provide services for runaways, truants, and other children who are considered at risk of running away from home or at risk of suffering abuse or neglect, and for the families of those children; Chapter 41, which authorizes the department to enforce laws for the protection of children; and Chapter 47, which authorizes the department to provide services after adoption to adoptees and adoptive families to whom the department provided services before adoption. The new sections are also adopted under the Texas Family Code, Title 2, Chapter 34, which authorizes the department to provide services to alleviate the effects of child abuse and neglect. In addition, the new sections are adopted under Public Law Number 96-272, Title I, which authorizes the department to administer foster-care and adoption assistance programs provided for under the Social Security Act, Title IV-E. And finally, the new sections are adopted under Texas Civil Statutes, Article 4413 (503), historical note (Vernon Supplement 1993), 72nd Legislature, which transferred all functions, programs, and activities related to the child protective services program from the Texas Department of Human Services to TDPRS. The new sections implement Texas Civil Statutes, Article 4413(503), sec.15, which authorize the department to enter into contracts as necessary to perform any of its powers or duties. The new sections also implement HRC, sec.22.002(f), which authorizes the department to enter into agreements with federal, state, or other public or private agencies or individuals to accomplish the purposes of the programs authorized by the HRC. Subchapter Q. Purchased Protective Services. sec.700.1711. Homemaker Services. (a) Types of providers. The Texas Department of Protective and Regulatory Services (TDPRS) has the authority to contract for homemaker services with any of the following types of providers: (1) government agencies; (2) nonprofit organizations; (3) for-profit organizations; and (4) individuals and partnerships (if no agency or organization is available). (b) Types of service. The Office of Protective Services for Families and Children (PSFC) purchases two types of homemaker services: (1) emergency homemaker services, as specified in subsection (c) of this section; and (2) protective homemaker services, as specified in subsection (d) of this section. (c) Emergency homemaker services. (1) Definition. (A) Emergency homemaker services consist of the supervision and care of children and family members by trained and supervised homemakers during an emergency in which a child in the family would be at risk of abuse or neglect if homemaker services were not provided. (B) The specific services provided under this definition are: (i) emergency in-home child care; and (ii) household maintenance to meet the needs of a child (examples: cooking and cleaning). (C) Emergency homemaker services do not include medical or nursing care. (D) Contractors for emergency homemaker services must offer the services on call, 24 hours a day, seven days a week. (2) Purpose. PSFC purchases emergency homemaker services to prevent removal of a child from the home during an emergency that would result in removal if homemaker services were not provided. PSFC may purchase emergency homemaker services when a parent is: (A) absent from the home; or (B) in the home but incapacitated. (3) Client eligibility. Contractors provide emergency homemaker services: (A) to children in their own homes, and to their families; and (B) to children and their foster families or preconsummation adoptive families, when providing services will preserve a child's placement. (4) Unit of service. The unit of service for emergency homemaker services is an hour. Direct service delivery and travel time can be paid at the same hourly rate, but they do not have to be. When they are, the ratio of travel time to direct delivery time is a factor in negotiating the hourly rate. (d) Protective homemaker services. (1) Definition. (A) Protective homemaker services consist of the supervision and care of children and family members by trained and supervised homemakers under an ongoing case plan. Protective homemaker services are focused on modeling and teaching home management and child care in the home, and on securing needed resources. (B) Specific services provided under this definition include: (i) modeling and teaching home management in the following areas: (I) nutrition and cooking; (II) personal hygiene; (III) budgeting; (IV) housekeeping; (V) stress management; (VI) home safety; and (VII) time management; (ii) modeling and teaching the following aspects of child care: (I) child development; (II) behavior management; (III) the parent-child relationship; and (IV) child-care skills; (iii) locating and using needed resources; (iv) providing limited transportation to give clients access to needed resources; and (v) appearing in court to provide testimony when needed. (C) Protective homemaker services do not include medical or nursing care. (2) Purpose. PSFC purchases protective homemaker services to prevent removal of children and to promote family reunification by improving family functioning. (3) Client eligibility. Contractors provide protective homemaker services to: (A) families with children at home; and (B) families with children in substitute care whose permanency plan is to return home. (4) Unit of service. The unit of service for protective homemaker services is an hour. Direct service delivery and travel time can be paid at the same hourly rate, but they do not have to be. When they are, the ratio of travel time to direct delivery time is a factor in negotiating the hourly rate. (e) The plan of operation for homemaker contracts. In addition to including the elements specified in sec.700.1705(b) of this title (relating to Contract Documentation), the plan of operation in contracts for homemaker services must: (1) require the contractor to offer emergency homemaker services on call, 24 hours a day, seven days a week; (2) specify: (A) the longest period of time for which emergency homemaker services can be authorized on any one occasion; and (B) the conditions under which PSFC may extend the authorization; (3) indicate how the contractor will ensure that everyone employed as a homemaker: (A) is qualified to: (i) care for children; (ii) manage a home; (iii) perform household duties; and (iv) purchase and prepare food; (B) respects and understands people of different races, cultures, and backgrounds; (C) is in good health; and (D) has a valid driver's license; (4) restrict emergency-homemaker placements to situations in which: (A) a child's parents or other caregivers consent to the services; or (B) a court order allows the homemaker to enter the home and care for the child until the parents return, the child is removed, or the services are no longer needed; (5) require the contractor to coordinate service planning with the PSFC worker assigned to the case; and (6) if the contractor provides transportation to clients, require the contractor to periodically verify that everyone who transports clients under the contract: (A) is licensed to drive by the state of Texas; and (B) has current automobile liability insurance. (Note: TDPRS does not provide insurance for client transportation.) (f) Licensing standards. The Office of Child-Care Licensing's Minimum Standards for Child-Placing Agencies includes standards that apply to homemakers who provide services to children in substitute care. Homemakers must meet those standards before providing such services. The contractor must keep documentation on file to show that contract staff meet all applicable licensing requirements. sec.700.1713. Purchased Family-Preservation Services. (a) Types of providers. The Texas Department of Protective and Regulatory Services (TDPRS) has the authority to contract with any of the following types of providers for purchased family-preservation services: (1) government agencies; (2) nonprofit organizations; (3) for-profit organizations; and (4) individuals and partnerships. (b) Definition. Purchased family-preservation services consist of the contracted casework necessary to plan, deliver, and coordinate "family preservation services" and "intensive family-preservation services" as those terms are defined in sec.sec.700.702(a) and 700.703(a) of this title (relating to Family Preservation Services and Intensive Family-Preservation Services). (c) General purpose. The purposes of family preservation services are to: (1) protect children from abuse and neglect; (2) help families reduce the risk of abuse or neglect; and (3) avert the removal of children from their homes. (d) Purpose of contracting. The Office of Protective Services for Families and Children (PSFC) contracts for family preservation services to reach families and children who need such services when PSFC lacks the resources to provide them directly. (e) Basis of payment. To reimburse contractors for family preservation services, TDPRS uses either the cost-reimbursement method or the unit-rate method, or a combination of both, as specified in sec.700.1707 of this title (relating to Reimbursement). (f) Liability. Contractors for family preservation services must provide liability coverage for their staff. The liability protections available to PSFC staff as state employees, including representation by the Texas attorney general's office in lawsuits, do not extend to contractors. (g) Mandatory and optional services. (1) Primary services. When PSFC refers a family to a contractor for family preservation services, the contractor must provide the services that PSFC ordinarily provides to such families, including the services specified in: (A) sec.700.702 of this title (relating to Family Preservation Services) ; (B) sec.700.703 of this title (relating to Intensive Family-Preservation Services), when applicable; and (C) sec.700.705 of this title (relating to the Family Service Plan). (2) Specialized services. In addition to providing the services specified in paragraph (1) of this subsection, family-preservation-services (FPS) contractors also provide the following array of specialized services: Figure 1: 40 TAC sec.700.1713(g)(2) (h) Staff requirements. (1) Assigning staff to cases. Whenever PSFC refers a family to a contractor for family preservation services, the contractor must assign: (A) a worker to work with the family; and (B) a supervisor to advise and support the worker, as specified in PSFC's policies and procedures for providing family preservation services directly, including: (i) sec.700.702 of this title (relating to Family Preservation Services); (ii) sec.700.703 of this title (relating to Intensive Family-Preservation Services); and (iii) sec.700.705 of this title (relating to the Family Service Plan). (2) Additional supervisory requirement. In every purchased intensive-services case, in addition to conferring with the worker at each staffing specified in PSFC's policies and procedures for providing intensive family-preservation services directly, the supervisor must review the worker's activities in the case at least once a month. (3) Qualifications. The workers and supervisors assigned to contracted family- preservation-services cases must have the following minimum qualifications: Figure 2: 40 TAC sec.700.1713(h)(3) (4) Basic job training. Contractors must provide new workers and supervisors with basic job training within 30 days of their first day of employment. The topics covered in the training must include PSFC's policies and procedures for: (A) intake and investigation of reports of child abuse and neglect; (B) risk assessment and service planning; (C) family preservation services; and (D) intensive family-preservation services, when applicable. (i) Client eligibility and referral. (1) Client Eligibility. Purchased family-preservation services can be provided to any family that qualifies for family preservation services or intensive family-preservation services under the definitions and criteria specified in sec.sec.700.701(a)(b), 700.702, and 700.703 of this title (relating to Services to Families, Family Preservation Services, and Intensive Family-Preservation Services). (2) Making a referral. To refer a family to a contractor for family preservation services, the family's worker: (A) completes a referral form specified by TDPRS to certify the family's eligibility and authorize services; and (B) arranges to have the family's investigation or case record, and any other appropriate information, duplicated and given to the contractor along with the referral form. (3) Initial time frames. The worker must specify a time frame for the services authorized on the referral form specified in paragraph (2)(A) of this subsection. The possibilities are limited as follows: Figure 3: 40 TAC sec.700.1713(i)(3) (4) Accepting the referral and initiating services. (A) As specified in subsection (h) of this section, on receipt of the completed referral form and accompanying case record specified in paragraph (2) of this subsection, the contractor must assign the case to a worker and a supervisor. The worker must attempt to establish face-to-face contact with the family within: (i) 72 hours in a basic-services case; or (ii) 48 hours in an intensive-services case. (B) If the family refuses to accept the contractor's services when the worker contacts the family, the contractor must send written notice of the refusal to the PSFC program liaison specified in subsection (j) of this section. (j) The PSFC program liaison. The regional director for families and children in every region must assign a PSFC program liaison to each family-preservation- services contractor. The contractor must cooperate with the assigned program liaison in the manner specified by PSFC. The program liaison's general responsibilities include: (1) conferring with the contractor about casework and operational problems that require the mutual attention of the contractor and PSFC; and (2) monitoring the contractor's contract operations and casework. (k) Returning open cases to PSFC. (1) When an open case may be returned. A contractor for casework services must confer with the PSFC program liaison and consider returning a case to PSFC if: (A) a new incident of child abuse or neglect occurs (Note: The contractor must report the new incident to PSFC within 24 hours after learning of it.); (B) the family can no longer ensure a child's safety; or (C) the family has demonstrated an unwillingness to cooperate with the contractor, and a child remains at risk of abuse or neglect. (2) Reopening the case for PSFC services. (A) When the contractor and the PSFC program liaison decide to return a family's case to PSFC, the contractor gives PSFC a current copy of the case record, and PSFC reopens the case for PSFC services. (B) In reopening the case, PSFC assumes responsibility for providing any additional family preservation services that the family needs. When appropriate, however, the contractor may continue providing other types of purchased services to the family (examples: homemaker services, child-care training). (l) Closing cases. (1) Contractors for family preservation services close cases without PSFC approval based on the criteria for case closure in: (A) sec.700.702(c) of this title (relating to Family Preservation Services); and (B) sec.700.703(d) of this title (relating to Intensive Family-Preservation Services). (2) Whenever a contractor closes a family's case, the worker assigned to the case must: (A) meet with the family and discuss issues related to the withdrawal of PSFC's services as specified in PSFC's policies and procedures for closing family-preservation-services cases; (B) notify the PSFC program liaison that the case is being closed; and (C) send the PSFC liaison a complete copy of the family's case record. (m) The plan of operation for purchased family-preservation services. In addition to including the elements specified in sec.700.1705(b) of this title (relating to Contract Documentation), the plan of operation in contracts for family preservation services must: (1) stipulate that the contractor will comply with PSFC's policies for family- preservation-services casework; (2) stipulate that the contractor's workers and supervisors will meet the minimum qualifications and receive the basic job training specified in subsection (h) of this section; (3) require the contractor to have workers available to respond to crises 24 hours a day, seven days a week; (4) require the contractor and the PSFC program liaison to maintain regular contact; (5) stipulate that the contractor will: (A) comply with PSFC's policies for maintaining and disposing of case records; (B) give the contract manager a copy of the contractor's written procedures for maintaining and disposing of case records; and (6) require the contractor to submit program and financial reports in formats acceptable to TDPRS. sec.700.1714. Evaluation and Treatment Services. (a) Types of providers. The Texas Department of Protective and Regulatory Services (TDPRS) has the authority to contract with any of the following types of providers for evaluation and treatment services: (1) government agencies; (2) nonprofit organizations; (3) for-profit organizations; and (4) individuals and partnerships. (b) Types of service. The Office of Protective Services for Families and Children (PSFC) purchases the following types of evaluation and treatment services: (1) psychological and developmental testing; (2) developmental, psychological, and psychiatric evaluations; (3) diagnostic consultations; (4) counseling; (5) programs for developmentally delayed children; and (6) depositions and court appearances to provide testimony about clients. (c) Evaluations. (1) Psychological and developmental testing. (A) Definition. (i) Psychological and developmental testing consists of: (I) the formal administration of psychological and developmental tests; and (II) their written interpretation. (ii) Contractors must provide written interpretations of tests as specified in the contract. They must also provide oral interpretations when asked. (B) Purpose. PSFC purchases psychological and developmental testing to assess a client's current level of functioning in order to develop a service plan that accurately addresses the client's needs. (C) Client eligibility. Contractors provide psychological and developmental testing services to all PSFC clients whom PSFC refers for such testing. (D) Unit of service. (i) The unit of service for psychological and developmental testing is either: (I) an hour; or (II) a testing battery. (ii) Contractors cannot bill separately for the time required to travel with clients, but PSFC may consider travel time in establishing the unit rate. (2) Developmental, psychological, and psychiatric evaluations. (A) Component services. (i) Developmental, psychological, and psychiatric evaluations include the following components: (I) a face-to-face evaluative meeting with the client; (II) an interpretive meeting with the client if requested; (III) a written report to the worker within the time frames established in the contract, and an oral report if requested; and (IV) participation in the client's case planning, as requested. (ii) Participation in case planning may be limited to a discussion with the worker, or extend to attendance at one or more case-planning meetings, or staffings. The types of participation required of particular providers must be specified in their contracts. (B) Purpose. PSFC purchases developmental, psychological, and psychiatric evaluations to assess a client's current level of functioning in order to develop a service plan that accurately addresses the client's needs. (C) Client eligibility. Contractors provide developmental, psychological, and psychiatric evaluation services to all PSFC clients whom PSFC refers for such evaluations. (D) Unit of service. The unit of service for developmental, psychological, and psychiatric evaluations is an hour. TDPRS pays for the time required to provide each component of the service. Contractors cannot bill separately for the time required to travel to and from appointments with clients, but PSFC may consider travel time in establishing the unit rate. (3) Diagnostic consultations. (A) Definition. (i) A diagnostic consultation is a professional consultation provided to PSFC, or to another party involved in a case on PSFC's behalf, regarding an open case in which PSFC (or the other party) needs the advice of an outside expert. (ii) A contractor may provide diagnostic consultations by: (I) participating in one or more case-planning meetings, or staffings, with others involved in a case (Note: Before participating in a staffing, the contractor must review all relevant case materials.); (II) preparing and providing documentation pertinent to a particular case, as specified by PSFC staff; (III) operating a 24-hour "hotline" to provide advice about parent-child problems on request; and (IV) providing expert court testimony pertinent to a particular case in response to a PSFC request for testimony. (B) Purpose. PSFC purchases diagnostic consultations to help: (i) PSFC staff and contractors: (I) plan services to clients; and (II) provide information to the courts; and (ii) foster caregivers manage children's behavior. (C) Client eligibility. PSFC can refer any active case for a diagnostic consultation. (D) Unit of Service. (i) The unit of service for diagnostic consultation is an hour. The time required to prepare for a consultation may either be: (I) paid at the unit rate; or (II) considered as a factor in establishing the unit rate. (ii) Diagnostic consultations can be purchased separately or as one type of service among others under a direct-services contract (usually a contract for evaluation and treatment services). (d) Treatments. (1) Counseling. (A) Component services. (i) Purchased counseling services include the following components: (I) any combination of: (-a-) individual counseling; (-b-) group counseling; and (-c-) family counseling; (II) a written report to staff within the time frames established in the contract, and an oral report if requested; and (III) participation in the client's case planning, as requested. (ii) The contractor's participation in a client's case planning may be limited to a discussion with the worker, or extend to attendance at one or more staffings. The types of participation required of particular providers must be specified in their contracts. (B) Definitions. (i) Individual counseling consists of private counseling between a client and a counselor or therapist to help the client meet his treatment goals. (ii) Group counseling consists of counseling provided simultaneously to at least two unrelated individuals to help both of them meet their treatment goals. (iii) Family counseling consists of counseling provided to two or more members of a family to help them meet their treatment goals, both individually and as a family. The family group may include parents, children, and any other individuals who are close to or part of the family. (C) Purpose. PSFC purchases counseling services to meet the need for treatment identified in a client's service plan. (D) Client eligibility. Contractors provide counseling services to all PSFC clients whom PSFC refers for counseling. (E) Unit of service. (i) For individual counseling, the unit of service is one hour per client. (ii) For group counseling, the unit of service is either one hour per group or one hour per client. Staff must negotiate with the contractor to determine which unit of service the contractor will use. When a contractor bills TDPRS for group counseling, the unit rate is always expressed individually. If the contractor's unit of service is one hour per group, the unit rate for each client is determined by dividing the unit rate for the group by the number of clients attending the group session. (iii) For family counseling, the unit of service is one hour per family. The contractor bills family counseling under the name of the head of the household, or under the name of another family member who participated in the session if the head of the household was not present. (F) Travel time. Contractors cannot bill separately for the time required to travel to and from appointments with clients, but PSFC may consider travel time in establishing the unit rate. (2) Programs for developmentally delayed children. (A) Definition. (i) Programs for developmentally delayed children are programs of professional treatment to correct identified developmental delays in children. (ii) Developmental treatment programs: (I) may include training to teach caregivers to help children overcome developmental delays; but (II) cannot include day care services. (iii) Developmental treatment programs may also include speech therapy. Speech therapy, in fact, cannot be purchased separately or as a part of any testing or treatment service apart from a developmental treatment program. (iv) Providers of developmental treatment services include but are not limited to: (I) pediatric nurses; (II) child development specialists; (III) rehabilitation centers; (IV) infant stimulation programs; and (V) educational diagnosticians. (B) Purpose. PSFC purchases treatment services for developmentally delayed children to correct or improve identified developmental delays. (C) Client eligibility. Contractors provide developmental treatment services to children with identified developmental delays whom PSFC refers for treatment. (D) Unit of service. The unit of service for developmental treatment is an hour. (e) Missed appointments. TDPRS may pay a contractor as much as 70% of the unit rate when a client misses an appointment without notifying the contractor at least 24 hours in advance. To be paid for a missed appointment, the contractor must notify the client's worker and the regional contract manager about it by the end of the next workday. (f) Depositions and court appearances. (1) Definitions. A deposition consists of testimony given out of court under oath for later use in open court. A court appearance consists of an appearance at a court session or hearing with the intent to testify and make recommendations about a PSFC client whom the contractor has served, whether or not the testimony is actually provided. (2) Purpose. PSFC reimburses contractors for depositions and court appearances to secure testimony and recommendations to the court from professionals involved in the testing, evaluation, and treatment of clients. (3) Contractor eligibility. To be reimbursed for a deposition or a court appearance, the contractor: (A) must either: (i) have been involved in the testing, evaluation, or treatment of the client; or (ii) possess special expertise pertinent to a client's case; and (B) must have received a request from PSFC to make a deposition or appear in court. (4) Unit of service. (A) The unit of service for a deposition or a court appearance is an hour. (B) TDPRS pays for: (i) the time spent: (I) waiting to make a deposition; and (II) making the deposition; and (ii) the time spent: (I) waiting in a courthouse to be called by the court while a hearing is in progress; and (II) testifying in court. (C) Contractors cannot bill separately for the time required to travel to and from a courthouse or the site of a deposition, but PSFC may consider the time required for such travel in establishing the unit rate. (D) Depositions and court appearances can be purchased separately or as one type of service among others under a direct-services contract. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on October 25, 1994. TRD-9450063 Nancy Murphy Section Manager, Media and Policy Services Texas Department of Protective and Regulatory Services Effective date: December 1, 1994 Proposal publication date: September 20, 1994 For further information, please call: (512) 450-3765 Subchapter U. Services and Runways and At-Risk Youth 40 TAC sec.sec.700.2101-700.2110 The repeals are adopted under the Human Resources Code (HRC), Title 2, Chapter 22, which authorizes the department to administer public assistance programs, including a program to provide services for runaways, truants, and other children who are considered at risk of running away from home or at risk of suffering abuse or neglect, and for the families of those children; and Chapter 41, which authorizes the department to enforce laws for the protection of children. The repeals are also adopted under the Texas Family Code, Title 2, Chapter 34, which authorizes the department to provide services to alleviate the effects of child abuse and neglect. In addition, the repeals are adopted under Public Law No. 96-272, Title I, which authorizes the department to administer foster-care and adoption assistance programs provided for under the Social Security Act, Title IV-E. And finally, the repeals are adopted under Texas Civil Statutes, Article 4413 (503), historical note (Vernon Supplement 1993), 72nd Legislature, which transferred all functions, programs, and activities related to the child protective services program from the Texas Department of Human Services to TDPRS. The repeals implement Texas Civil Statutes, Article 4413(503), sec.15, which authorizes the department to enter into contracts as necessary to perform any of its powers or duties. The repeals also implement HRC, sec.22.002(f), which authorizes the department to enter into agreements with federal, state, or other public or private agencies or individuals to accomplish the purposes of the programs authorized by the HRC. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on October 25, 1994. TRD-9450062 Nancy Murphy Section Manager, Media and Policy Services Texas Department of Protective and Regulatory Services Effective date: September 20, 1994 Proposal publication date: December 1, 1994 For further information, please call: (512) 450-3765