Grandfathered Facilities - Endangered Species With No Prospects of

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Below is an update on the status of the grandfather legislation. Changes from
previous versions include a 30% reduction for oil and gas facilities instead
of 20% and an extension of the voluntary program until 9/2002 instead of
9/2001. I asked Skip Dees if that meant TNRCC would allow companies to
"authorize" grandfathered sources under old exemptions for a year longer and
his response is below. His suggestion is to act now (as is mine).

Skip's e-mail response: "If the Sunset Bill passes with the current
grandfathered facility language (and there is no guarantee of that - it ain't
gonna get any better, and it could get worse), we'd have till 9/1/02 to apply
for a VERP-type permit with
10-year old BACT. The deal on applying historical PBR's to grandfathered
facilities is a TNRCC letter interpretation, and that COULD change at any
time. If that option works for you, I'd jump on it NOW."

----- Forwarded by Marc Phillips/OTS/Enron on 05/10/2001 10:01 AM -----

"Dees, Allan W (Skip)" <deesaw@texaco.com<
05/10/2001 09:27 AM

To: "'Morphew, Cindy (TXOGA)'" <cmorphew@txoga.org<, "'Miksa, Mary (TABCC)'"
<mmiksa@tabcc.org<, "'Romero, Celina (Clark Thomas Winters)'" <cr1@ctw.com<,
"'jrandall@tnrcc.state.tx.us'" <jrandall@tnrcc.state.tx.us<,
"'jteib@trncc.state.tx.us'" <jteib@trncc.state.tx.us<, "'Mills, Alex
(NTOGA)'" <ntoga@wf.net<, "'Stevens, Bill (WCTOGA)'" <wectoga@camalott.com<,
"'Hughes, Wayne (PPROA)'" <pproa@pproa.org<, "'Burns, Morris (PBPA)'"
<pbpa@marshill.com<, "'Fleming, Martin (TIPRO)'" <mfleming@tipro.org<, "Wade,
Foster L" <wadefl@texaco.com<, "Abernathy, Linda (El Paso Natural Gas)"
<abernathyl@epenergy.com<, "Adamson, Terry (BP Amoco)" <adamsotj@bp.com<,
"Aliberti, Marilena (Shell Western E&P)" <mdaliberti@shellus.com<, "Anderson,
Lisa" <lisa@westcapitol.com<, "Blossom, Stanley (Kerr McGee)"
<sblossom@kmg.com<, "Braun-Fishman, Karla (Santa Fe Energy Res.)"
<kbraun@santafe-snyder.com<, "Broussard, Gweneyette (Equilon)"
<CGBROUSSARD@EQUILON.COM<, "Butler, Donald (Hunt Oil)"
<don.butler@huntoil.com<, "Cavazos, Hector (Chevron)" <heca@chevron.com<,
"Cortez, Naomi (El Paso Natural Gas)" <cortezn@epenergy.com<, "D'Attilio,
Wendy (El Paso Energy)" <dattiliow@epenergy.com<, "Davis, Frank (Anadarko)"
<frank_davis@anadarko.com<, "De Nicola, Mike (Chevron Pipeline)"
<MIJD@chevron.com<, "Dees, Allan W. (Skip)" <deesaw@texaco.com<, "Dorsey,
Gina (KinderMorgan)" <gina_dorsey@kindermorgan.com<, "Dougherty, Barbara
(Devon Energy)" <barbara.dougherty@dvn.com<, "Dover, Wilbur (Pioneer)"
<doverw@pioneernrc.com<, "Emery, Dave (Phillips)" <dtemery@ppco.com<, "Fish,
Marilyn (EOG Resources)" <mfish@eogresources.com<, "Frederick, Bubba (Spirit
Energy/UNOCAL)" <jfred@unocal.com<, "Galusky, Peter (Marathon)"
<lpgalusky@marathonoil.com<, "Garcia, Irene (ExxonMobil)"
<ceditg@upstream.xomcorp.com<, "Gillen, Darrell (Williams Prod)"
<darrell.gillen@williams.com<, "Golemon, R Kinnan (BMOH)"
<kgolemon@bmoh.com<, "Greer, John (KN Energy)" <john_greer@kne.com<,
"Gutierrez, Hugo A. (Marathon)" <hagutierrez@marathonoil.com<, "Hathaway,
David C. (Phillips Petroleum)" <dchatha@ppco.com<, "Hutson, Margaret
(Conoco)" <Margaret.B.Hutson@usa.conoco.com<, "Hutton, Nina (Cross Timbers
Oil Co.)" <nina_hutton@crosstimbers.com<, "Knoeller, Craig (Exxon)"
<craig.p.knoeller@exxon.com<, "Kriter, Kurt (Amerada Hess)"
<kkriter@hess.com<, "Landry-Huey, Traci (Phillips Petr.)" <tmlandr@ppco.com<,
"Laughlin, Jan (Phillips)" <jlaughl@ppco.com<, "LeBlanc, David J."
<lebladj@texaco.com<, "Maddox, Scott (Phillips Pipeline)" <sema@ppco.com<,
"Malter, Paul (Burlington)" <pmalter@br-inc.com<, "Mangels, Lynn D"
<mangelld@bp.com<, "Martinez, Rosemary (Amoco)" <martinr32@bp.com<, "McCay,
R. Scott" <mccayrs@texaco.com<, "Milliet, Michael P." <millimp@texaco.com<,
"Montgomery, Gene (OXY Permian)" <Gene_Montgomery@Oxy.com<, "Moore, Susan
(BP-Amoco)" <mooress1@bp.com<, "Muslih, Khalid (Coastal)"
<khalid.muslih@coastalcorp.com<, "Nolan, R. M. (Exxon)" <rmnolan@exxon.com<,
"Pachulski, Jim (Crescendo Resources)" <pachuljm@bp.com<, "Parra, Alvaro
(Williams Energy Services)" <alvaro.parra@williams.com<, "Phillips, Marc
(Enron Pipeline)" <mphilli@enron.com<, "Portz, Bruce (Western Gas Resources)"
<bportz@westerngas.com<, "Riddle, Mark (Hunt Petroleum)"
<mriddle@huntpetroleum.com<, "Sandilos, Bob (Chevron U.S.A.)"
<rjsa@chevron.com<, "Searle, Dave (Marathon)" <fdsearle@marathonoil.com<,
"Sebree, Ben (TXOGA)" <bsebree@txoga.org<, "Sellars, Don (Chevron)"
<drse@chevron.com<, "Sellers, Tom (Conoco)" <tom.sellers@usa.conoco.com<,
"Smith, Michael (Chevron)" <SMMB@chevron.com<, "Sorel, Kesner (Duke Energy)"
<ksorel@duke-energy.com<, "Starrett, Mike (Altura Energy)"
<mpstarrett@alturaenergy.com<, "Stephenson, Mark (Mitchell)"
<mstephsn@mitchellenergy.com<, "Templet, David (Mitchell)"
<dtemplet@mitchellenergy.com<, "Travis, Lynn (Devon Energy Corp)"
<Lynn.Travis@dvn.com<, "Wadsworth, David (Maxus Energy)"
<david_wadsworth@notes.maxus.com<, "Waisanen, Peggy (OXY Permian)"
<plwaisanen@alturaenergy.com<, "Wilhelm, Jack (Mobil Oil Corp)"
<jack_m_wilhelm@email.mobil.com<, "Wilson, Pamela (ExxonMobil)"
<Pamela.L.Wilson@exxon.com<, "Wolford, Cheryl (TEPPCO)"
<cwolford@teppco.com<, "Zygmunt, R. W. (Shell Offshore)"
<rwzygmunt@shellus.com<
cc: "Hall, Larry R" <halllr@texaco.com<, "Mire, Kerry A"
<mireka@texaco.com<, "Head, James A" <headja@texaco.com<, "Botes, Peter J"
<botespj@texaco.com<, "Turner, Kim A" <turneka@texaco.com<, "Hoover, Clay R"
<hoovecr@texaco.com<, "Smith, Todd M" <smithtm@texaco.com<, "Harvey, Ralph V"
<harverv@texaco.com<, "Dibble, John T" <DIBBLJT@texaco.com<, "Chisholm, Duane
N" <chishdn@texaco.com<, "Milliet, Michael P" <millimp@texaco.com<, "Boswell,
Jerry C" <boswejc@texaco.com<, "Lee, Arthur" <LEEA@texaco.com<, "Wenker,
Judith A" <wenkeja@texaco.com<, "Montgomery, Kathy A" <montgka@texaco.com<,
"Padon, Linda D" <padonld@texaco.com<, "Palmer, Frederick B"
<palmefb@texaco.com<, "Demeter, Rebecca M [Newcos]"
<RMDEMETER@MOTIVAENTERPRISES.COM<, "Demeter, Rebecca M. [Star]"
<DEMETRM@STARENT.COM<, "Wimberley, William F [Newcos]"
<WFWIMBERLEY@MOTIVAENTERPRISES.COM<, "Wimberley, William F. [Star]"
<WIMBEWF@STARENT.COM<, "'Thurman JR (James)'" <JRThurman@equiva.com<
Subject: Grandfathered Facilities - Endangered Species With No Prospects o f
Protection

The days of grandfathered facilities in Texas are numbered. This does not
only mean those large facilities in nonattainment areas, but ANY facility
that was constructed prior to September, 1971 and has not subsequently been
rolled into some sort of new source review (NSR) permit or Permit by Rule
(formerly Standard Exemption). Note that proposed new rules recently
published in the Texas Register for public comment will require operators to
be able to produce documentation of applicability and compliance for all
facilities authorized by a Permit by Rule/Standard Exemption, much the same
as is required for any other type of permit.

The TNRCC Sunset Bill contains language limiting the time that such
facilities may operate without NSR authorization of some sort. The Senate
Committee Substitute (SCS) for HB 2912 is a little stricter than the version
passed by the House, but both versions did contain grandfathered facility
permitting provisions and it is safe to assume that the final version will
also. If this version passes, you will have one additional year to apply
for a Voluntary Emissions Reduction Permit (VERP). If your facility is a
pipeline facility, the TNRCC will require no more than a 30% reduction in
NOx, and that reduction can be averaged for several facilities in the same
area covered in one permit.

Note that it is only through the efforts of our lobbyists - particularly
Cindy Morphew of TxOGA and Celina Romero of ATINGP - that it looks as though
we will get an additional opportunity to get these facilities permitted
without having to use today's BACT.

This memo summarizes the SCS provisions for your information. This is NOT
actual bill language - I've TRIED to make it easier to read.

Note that these provisions may be changed somewhat if the House does not
concur in all of the changes made by the Senate and the bill goes to
Conference. In addition, we expect a strong attempt to amend the bill on
the Senate floor to require shutdown on September 1, 2001 of grandfathered
facilities that do not have a pending permit application. If that attempt
is successful, the opportunity to apply for a VERP will be gone on September
1.

The memo also recaps previous recommendations to you regarding the current
opportunity to claim historical Permits by Rule (Standard Exemptions) as a
means of permitting a grandfathered facility. I am not certain how long
this opportunity will continue to exist. TAKE ADVANTAGE OF IT WHILE YOU
CAN.

In addition, I've appended some information on 10-year old BACT for
gas-fired IC engines and turbines that might be useful if you are trying to
get a VERP now.

PROVISIONS OF SCS FOR HB 2912 (PRIOR TO SENATE FLOOR DEBATE)

Sec. 382.05181. PERMIT REQUIRED.

(a) Any grandfathered facility that does not have an application pending
for a new source review permit or other authorization, other than a federal
operating permit, and that has not submitted a notice of shutdown as
provided in Section 382.05182 may not emit air contaminants on or after:

(1) September 1, 2003, if the facility is located in a
nonattainment area; or

(2) September 1, 2005, if the facility is located in an attainment
area.

(b) Any grandfathered facility that does not have a permit or other
authorization under this chapter, other than a federal operating permit
permit, may not emit air contaminants on or after:

(1) September 1, 2005, if the facility is located in a
nonattainment area; or

(2) September 1, 2007, if the facility is located in an attainment
area.

© Facilities eligible for a Small Business Stationary Source Permit are
subject to the permitting deadlines in Section 382.05184.

Sec. 382.05182. NOTICE OF SHUTDOWN.

(a) A notice of shutdown to allow operation of a grandfathered facility
beyond the deadlines of 382.05181(a) must be filed with the commission
before the applicable deadline.

(b) A notice under this section shall include:

(1) the date the facility intends to cease operating;

(2) an inventory of the type and amount of emissions that
will be eliminated when the facility ceases to operate; and

(3) any other necessary and relevant information the
commission by rule deems appropriate.

GENERAL PROVISIONS (APPLICABLE TO PERMITS UNDER 382.05183, 382.05184, AND
382.05186)

(a) The commission shall grant a permit under this section if, from the
information available to the commission, including information presented at
any public hearing or through written comment, the commission finds that
there is no indication that the emissions from the facility will contravene
the intent of this chapter, including protection of the public's health and
physical property.

(b) If the commission finds that the emissions from the facility will not
comply with Subsection ©, the commission may not grant the permit under
this section.

© A person planning the modification of a facility previously permitted
under this section must comply with new source permitting requirements
before modifying.

(d) The commission may adopt rules as necessary to implement and administer
this section.

(e) If an applicant omits any relevant facts or submits incorrect
information in an application, the applicant shall submit the relevant facts
or correct the information no later than 60 days after discovering the
error. If while processing the application, the commission determines that
additional information is necessary to evaluate or to take final action on
the application, the commission may request the information and set a
reasonable deadline for a response. Failure to comply with the deadline for
the response will result in the application being returned to the applicant.

Sec. 382.05183. EXISTING FACILITY PERMIT.

(a) The owner or operator of a grandfathered facility may apply for a
permit to operate the facility under this section.

(b) The commission shall grant a permit under this section if, from the
information available to the commission, including information presented at
any public hearing or through written comment, the commission finds that the
application:

(1) is filed before September 1, 2002 and the facility will
use an air pollution control method at least as effective as 10-year old
BACT; or

(2) is filed before the applicable deadline of 382.05181(a)
and the facility will use current BACT.

© The commission may issue an existing facility flexible permit for some
or all of the grandfathered facilities at a site. Permits issued under this
subsection shall follow the same permit issuance, modification, and renewal
procedures as existing facility permits.

Sec. 382.05184. SMALL BUSINESS STATIONARY SOURCE PERMIT.

(a) Grandfathered facilities that are located at a small business
stationary source and are not required by commission rule to submit an
annual emissions inventory report may apply for a permit under this section
before September 1, 2005.

(b) Grandfathered facilities that are located at a small business
stationary source that does not have an application pending for a new source
review permit or other authorization, other than a federal operating permit,
and that has not submitted a notice of shutdown, may not emit air
contaminants on or after September 1, 2007.

Sec. 382.05185. ELECTRIC GENERATING FACILITY PERMIT.

Special provisions for permitting grandfathered electric generating
facilities are not outlined in this memo.

Sec. 382.05186. AUTHORIZATION FOR PIPELINE FACILITIES.

(a) The commission by rule shall establish the procedures for applications
for grandfathered processing, treating, compression, or pumping facilities
connected to or part of a gathering or transmission pipeline.

(b) Based on a prioritization by the commission as necessary to meet local,
regional, and statewide air quality needs related directly or indirectly to
federal air quality standards, the commission may require up to a 30%
reduction of the hourly emission rates of NOx and VOC from reciprocating
internal combustion engines subject to this section. For facilities other
than reciprocating internal combustion engines that are connected to or part
of a gathering or transmission pipeline , the commission may consider
requiring hourly emissions rate reductions of up to 30% for NOx and 20% for
VOC. The commission by rule may designate counties or regions of the state
where greater reductions in the hourly emission rate will be required than
in other areas, but no more than 30 percent reductions in the hourly rate
may be required in any area.

© The commission shall:

(1) allow for a single permit for all facilities connected
to or part of a gathering or transmission pipeline;

(2) allow for required reductions for facilities under this
section to be achieved at one facility or averaged among more than one
facility and located in the same local, regional, or statewide areas
designated by the commission under Subsection (b);

(3) for purposes of emission averaging, allow emission
reductions achieved from grandfathered since September 1, 1997; and

(4) allow an owner or operator to apply for separate
permits under this section for discrete and separate facilities connected to
or part of a gathering or transmission pipeline.

(d) Facilities authorized by this section shall be considered permitted
under this chapter.

CURRENT OPPORTUNITY TO CLAIM A PERMIT BY RULE TO "PERMIT" A GRANDFATHERED
FACILITY

TNRCC has interpreted its rules to allow operators to permit grandfathered
facilities using any applicable "Permit by Rule," including those previously
referred to as Standard Exemptions.

For instance, old Standard Exemption 7, effective May 8, 1972, was for "Gas
fired internal combustion engines of less than 2000 hp and engine trains of
less than 5000 hp total" and can be used to permit any such engine(s). For
clarification on this particular exemption, the language used by staff in
proposing this exemption to the Texas Air Control Board in 1972 was as
follows: "Engines smaller than 2000 hp are quite numerous and are not
considered a substantial source unless joined together IN SERIES (emphasis
added) to form an engine train. Engine trains of less than 5000 hp are not
considered a substantial source. Because control technology for NOx
emissions from internal combustion and gas fired engines is very limited, it
is doubtful if significant control could be achieved through the permit
system at this time." ("Exemptions From Permits Procedures and
Justification for Exemptions," <signed< Charles R. Barden, P.E., Executive
Secretary, Texas Air Control Board, May 8, 1972.)

A list of the "Historical Standard Exemptions" is available on the TNRCC
Website at http://www.tnrcc.state.tx.us/air/nsr_permits/oldselist/index.html
<http://www.tnrcc.state.tx.us/air/nsr_permits/oldselist/index.html< . In
applying these "Permits by Rule," be sure to check the corresponding
"Exemption Preambles" (if any) for any applicable General Conditions.

TNRCC has asked that we document such permitting of grandfathered facilities
by PI-8 AND a simple notification cover letter to them so that they will
have a record that the facilities have been permitted and are no longer
considered to be grandfathered. The registration will buy you a letter of
acknowledgement that you have claimed the "permit by rule" (don't use the
term "exemption" in any correspondence) for these engines.

CORRESPONDENCE WITH TNRCC ON 10-YEAR OLD BACT FOR GAS ENGINES AND TURBINES

From: Celina Romero [cr1@ctw.com]
Sent: Monday, December 04, 2000 1:52 PM
To: kgolemon@bmoh.com; rjohnson@bmoh.com; khalid.muslih@coastalcorp.com;
mphilli@enron.com; williamkendrick@enron.com; clowneys@epenergy.com;
jordand@epenergy.com; tom.palmer@gt.pge.com; BagleyW@kochind.com;
Howard0W@kochind.com; NickelD@kochind.com;
scott.wallace@mitchell-energy.com; greg_hardin@oxy.com; deesaw@texaco.com;
cmorphew@txoga.org
Cc: james.cantrell@gt.pge.com; natgasassn@yahoo.com
Subject: Response to 11/21/00 Teleconference 001204

I believe that we have now gotten the last bit of information that the TRNCC
will provide to us regarding the development of guidelines for 10-year BACT
for grandfathered engines and turbines for use in the VERP program. The
last piece of information is an email that I am forwarding to you with this
email. It is an email from John Steib to which he attaches an email from
Jim Linville. In response to a request from us, Jim Linville sets forth in
his email an example of a large engine with emissions in the 29 gram per
horsepower hour range that cannot reduce emissions to the 2-8 gram level and
what the owner/operator of that engine must demonstrate in order to obtain a
VERP permit.
Remember, that in order to be included in the TNRCC's January 15, 2001
report to the legislature, a letter of intent or application for a VERP
should be filed with the TNRCC on or before next Thursday, December 7, 2000.
To summarize, we have obtained the following policies from the TNRCC:
1. Grandfathered internal combustion engines of less than 2000
horsepower can be authorized by Standard Exemption No. 6 effective December
1, 1972, regardless of the level of emissions from those facilities. (See my
letter to Kerry Drake dated September 15, 2000 and Drake's letter to me
dated October 3, 2000).
2. Grandfathered engine trains of less than 5000 horsepower, or a
portion of an engine train up to 5000 horsepower may be authorized under
Standard Exemption No. 6, December 1, 1972, so long as each engine in the
train does not exceed 2000 horsepower. (See my letter to James Randall
dated November 1, 2000 and Randall's letter to me dated November 16, 2000).
3. Grandfathered turbines of less than 20,000 horsepower may be
authorized by Standard Exemption No. 82, dated December 1, 1972 regardless
of the level of emissions. (See my letter to Kerry Drake dated September
15, 2000 and Drake's letter to me dated October 3, 2000).
4. Grandfathered engines and turbines that are able to be controlled to
the 2-8 gram range will not be subject to an economic reasonableness review.
(See James Randall's letter to me dated November 16, 2000).
5. Grandfathered engines and turbines that are not able to be
controlled to the 2-8 gram range may be permittable under a VERP if there is
test data to validate the old (pre-modification) and new (post-modification)
emission rates to document that verifiable reductions in actual emissions
would be achieved. Also needed would be a representation of the cost of the
controls and even though additional modifications are available, the
additional cost is prohibitive. (See Jim Randall's letter to me dated
November 16, 2000 and the email attached hereto).

I hope all of this is helpful. I have forwarded to you copies of the
referenced letters by fax on earlier dates. If you need another copy please
let me know.
Celina

-----Original Message-----
From: Jim Linville [mailto:JLINVILL@tnrcc.state.tx.us]
Sent: Tuesday, November 21, 2000 3:36 PM
To: cr1@ctw.com; james.cantrell@gt.pge.com
Cc: James Randall
Subject: Response to 11/21/00 Teleconference

Celina and James,

During our teleconference today, you asked for an example of what we would
consider "significant emission reductions" that would be acceptable in a
case-by-case review when the 2 to 8 g/hp-hr NOx level could not be achieved.
A large 2-stroke engine that is currently emitting approximately 29 g/hp-hr
of NOx would be considered to have significant emissions reductions if
actual emissions are reduced by 50 percent even though it does not meet the
2 to 8 g/hp-hr NOx level. We would agree that this would have been
considered BACT 10 years ago if there was test data to validate the old
(pre-modification) and new (post-modification) emission rates to document
that verifiable reductions in actual emissions would be achieved. Also
needed in the case-by-case review would be a representation of what the cost
of the controls would be with a discussion of why the 2 to 8 g/hp-hr NOx
level could not be achieved. This may be due to technical limitations such
as no additional controls or modifications are possible, or you may identify
cost in dollars per ton of NOx controlled to show that even though
additional modifications are available, the cost is prohibitive.

-----Original Message-----
From: Celina Romero [SMTP:cr1@ctw.com]
Sent: Friday, November 17, 2000 9:45 AM
To: kgolemon@bmoh.com; khalid.muslih@coastalcorp.com; mphilli@enron.com;
williamkendrick@enron.com; jordand@epenergy.com; tom.palmer@gt.pge.com;
BagleyW@kochind.com; Howard0W@kochind.com; NickelD@kochind.com;
scott.wallace@mitchell-energy.com; greg_hardin@oxy.com; deesaw@texaco.com;
cmorphew@txoga.org
Cc: james.cantrell@gt.pge.com; natgasassn@yahoo.com
Subject: letter from TNRCC re 10-yr BACT

I received by fax late yesterday evening, a letter signed by John Steib re
10-yr BACT guidelines for engines and turbines for use in the VERP program.
After my first read, it looks pretty good. Look for a copy of it by fax.
Let me know if you have any comments or concerns that we need to clear up
with the TNRCC.

Celina

November 16, 2000

Ms. Celina Romero
Attorney
Clark, Thomas & Winters
P.O. Box 1148
Austin, Texas 78767

Re: Permitting Grandfathered Internal Combustion
Engines and Turbines

Dear Ms. Romero:

As discussed in our meetings and teleconferences concerning the options for
grandfathered internal combustion engines and turbines, we have agreed that
some of these facilities may qualify under Standard Exemption Nos. 6 or 82,
effective on December 1, 1972 and others may be permitted under 30 Texas
Administrative Code (TAC) Chapter 116, Subchapter H: Voluntary Emission
Reduction Permits (VERP). Specific questions raised are discussed below.

You have asked for our understanding of what qualifies as an "engine train
of less than 5,000 hp." In your November 1, 2000 letter you gave two
examples of "engine trains" that you felt would meet Standard Exemption No.
6, "Gas fired internal combustion engines of less than 2000 hp and engine
trains of less than 5,000 hp total." We agree that several engines, each
less than 2000 hp, can be combined into a "train" providing compression to a
common header so long as the train does not exceed 5,000 hp, meet the
exemption requirements. In cases where the total horsepower in a train
exceeds 5,000 hp, we will allow exemption of individual engines within such
a train provided that each engine is less than 2000 hp and the total
horsepower of exempted engines in the train does not exceed 5,000 hp. In
the same standard exemption list, turbines were covered by Standard
Exemption No. 82, "Gas turbines of less than 20,000 hp burning sweet natural
gas."

The other major point of discussion has been the determination of "10 year
old BACT" required by 30 TAC o116.811(3)(A). As we discussed, our review of
permitting 10 years ago reveals that very few, if any, old engines were
permitted; so no data is available to show what we would have required for
nitrogen oxides (NOX) best available control technology (BACT). New engines
were permitted at 2 grams/horsepower-hour (g/hp-hr) of NOX for both rich
burn and lean burn engines. At that time older rich burn engines could have
been readily upgraded with catalytic converters to meet this 2 g/hp-hr limit
for NOX. Lean burn engines were and are still more problematic as both
2-stroke and 4-stroke versions are available, and no single method of
control is applicable. The large number of different engine manufacturers,
and the availability of various models, makes it impossible to establish a
single 10 year old BACT level. Some of the older engines may be capable of
being upgraded to meet a level of NOX of 5 to 8 g/hp-hr, the level
established in the 1992 revision of Standard Exemption No. 6, which also
established a 3 g/hp-hr standard for turbines. While the standard exemption
does not establish BACT for upgrades it does recognize what is available.
Many of the grandfathered engines are large and some have emissions as high
as 25 to 29 g/hp-hr, so significant emission reductions may be achievable
even if they are not able to reduce to the emissions control level of 2 to 8
g/hp-hr. The 10 year old BACT review on these engines and turbines will
have to be done on a case-by-case basis just as we would have done 10 years
ago.

We hope this guidance will allow your members to decide which engines they
will be able to either exempt or permit under the VERP program and submit
their letters of intent to participate in the VERP program by December 7,
2000.

For engines and turbines that your members decide to propose for
authorization under Standard Exemption Nos. 6 and 82, please identify the
specific engines and turbines, identified by unit number, emission point
number (EPN), air quality account number, and plant name; and for each
account please submit a Form PI-7. For each engine or turbine, please
submit a, Table 29 or 31 as applicable, and other technical information that
will support the standard exemption claim.

For engines that will be authorized by a VERP permit, please identify each
engine by unit number, EPN, air quality account number, and plant name, and
provide an estimate of the amount of emissions reductions anticipated as a
result of participation in the VERP program. When the VERP applications are
submitted, information should be provided to show that NOX emissions will be
in the 2 to 8 g/hp-hr range. If it is not possible to achieve this level of
emissions, please submit information that shows that it is not technically
feasible or economically reasonable to control NOX emissions to that level.
Information showing that actual emissions reductions will be achieved, even
when the targeted range of 2 to 8 g/hp-hr cannot be met, will be helpful in
staff review of the application.

We appreciate your assistance in helping us to make the VERP program a
success. If you have any further questions, please contact Mr. James
Randall, P.E. at (512) 239-1078.

Sincerely,

John F. Steib, Jr., Director
Air Permits Division
Office of Permitting, Remediation & Registration
Texas Natural Resource Conservation Commission

JS/JR/jo