The Texas Commission on Environmental Quality ("TCEQ") is preparing to work with the U.S. Environmental Protection Agency ("EPA") to develop a process to transition the prevention of significant deterioration ("PSD") greenhouse gas ("GHG") permitting program for sources in Texas from EPA Region 6 to TCEQ. The transition will be accomplished pursuant to Texas House Bill 788 which Governor Perry signed into law on June 14, 2013.

Consistent with Texas’ position against GHG regulation, new Texas Health & Safety Code Section 382.05102 created by House Bill 788 requires Texas to repeal the GHG permitting program if at any point federal law no longer requires such permitting. With the District of Columbia Circuit Court of Appeal’s July 26, 2013 opinion dismissing for lack of jurisdiction lawsuits filed by Texas and others challenging EPA rules that require implementation of GHG permitting, it is unlikely that the Texas program repeal provision will be triggered, at least any time soon.

TCEQ’s proposed and arguably ambitious timeframe for initiating a GHG permitting program is to publish proposed rules by the end of October 2013, adopt rules by April 2014, and submit the rules to EPA by June 2014 for review and incorporation into the Texas state implementation plan ("SIP") by the end of 2014. While this schedule is susceptible to delay, staff at TCEQ and EPA expect that both agencies will look for ways to expedite the transition. In the interim, Region 6 staff has confirmed that EPA will continue to process GHG permit applications until a Texas GHG permitting program is approved into the Texas SIP. How already-issued permits, pending applications and the overall permit program transfer are to be handled will be among the subjects of discussion and negotiation between TCEQ and EPA. We will provide updates as information becomes available.