(a) Applicability.
  (1) This section applies to combined heat and power (CHP) units that are powered by pipeline-quality natural gas-fired engines, including turbines. This section also authorizes any fugitive components associated with a CHP unit authorized by this section.
  (2) This section does not relieve the owner or operator from complying with any other applicable provision of the Texas Health and Safety Code, Texas Water Code, rules of the Texas Commission on Environmental Quality (TCEQ), or any additional local, state, or federal laws or regulations. Emissions that exceed the limits in this section are not authorized and are violations.
(b) Definitions.
  (1) Combined heat and power (CHP) unit--A collection of facilities and other equipment that generally consists of an electric generating unit (EGU) and a means of extracting energy from the EGU for useful purposes other than electricity generation, such as heating or cooling. A CHP unit does not include facilities for generating additional electricity after the EGU. Equipment that is not a source of emissions itself but also extracts energy from the exhaust flow to create electricity is not a facility and may be used in addition to a CHP unit authorized by this section.
  (2) Pipeline-quality natural gas--A naturally occurring fluid mixture of hydrocarbons (composed predominantly of methane, with lesser amounts of ethane, propane, nitrogen, carbon dioxide, and trace amounts of hydrogen sulfide) produced in geological formations beneath the Earth's surface that maintains a gaseous state at standard atmospheric temperature and pressure under ordinary conditions, and that is provided by a supplier through a pipeline. Pipeline-quality natural gas must either be composed of at least 70% methane by volume, or have a gross calorific value between 950 and 1,100 British thermal units (BTU) per standard cubic foot. Sour gas as defined in §101.1 of this title (relating to Definitions) is not pipeline-quality natural gas for purposes of this section.
(c) General Requirements.
  (1) A CHP unit must be registered with the commission using the appropriate PI-7 form or an approved electronic registration method before start of construction. A CHP unit at a residential location that generates less than 20 kilowatts(kW) of electricity does not require registration and does not have to meet any other requirements of this section except subsection (a) of this section and paragraph (2) of this subsection.
  (2) For a CHP unit to be eligible for authorization under this section, the heat recovered must equal at least 20% of the total heat energy output of the CHP unit. This requirement must be met continuously based on any calendar week of operation except for no more than two weeks in a rolling 52-week period if operation of the EGU component is necessary due to lack of available electricity.
  (3) No owner or operator of a CHP unit that is required to register under this section may begin construction and/or operation without first obtaining written approval from the executive director.
  (4) Except for oxidation-reduction (three-way) catalysts on rich-burn engines, and oxidation catalyst controls as required by subsection (d)(3) or (4) of this section, add-on controls may not be used to comply with the emission standards of this section.
  (5) Any individual CHP unit, or any group of units meeting paragraph (7)(B) of this subsection, may not exceed 15 megawatts (MW) in capacity.
  (6) Only one permit by rule (PBR) for Natural Gas-Fired CHP Units per this section may be registered at a site.
  (7) No more than one CHP unit may be authorized at a site under this section, except as follows:
    (A) Any units with a capacity of less than 20 kW are not limited in number, or restricted in location. Units with a capacity of less than 20 kW are not required to be considered when applying subparagraphs (B) or (C) of this paragraph.
    (B) Multiple units may be authorized under this PBR if all stack emission points associated with the units are located within a circular area with a radius of 200 feet, and the total EGU capacity of the group is not greater than 15 MW.
    (C) Multiple units may be authorized under this PBR if all stack emission points associated with the units are separated by a distance of at least 900 feet. Multiple groups of units meeting the requirements of subparagraph (B) of this paragraph may be authorized if the groups' emission points are separated by a distance of at least 900 feet.
  (8) Notwithstanding fuel restrictions elsewhere in this section, during an emergency, this PBR authorizes the use of propane, liquefied petroleum gas, gasoline, diesel, or fuel oil as an approved fuel for not more than 720 hours in any 365-day period. This PBR also authorizes brief use of these emergency fuels as needed for purposes of maintenance or testing, for not more than two hours in any seven-day period.
(d) Emission Standards and Control Requirements.
  (1) Notwithstanding paragraphs (2), (3), or (4) of this subsection, a CHP unit with a capacity less than 20 kW is not subject to a nitrogen oxides (NOX ) or carbon monoxide (CO) emission standard, and is not subject to the requirement for an oxidation catalyst control device.
  (2) A CHP unit or any combination of units with a total capacity greater than or equal to 20 kW, but less than or equal to 8 MW, must meet the following emission standards: 1.0 pound of NOX per megawatt-hour (lb NOX /MWh); and 9.0 lb CO/MWh.
  (3) Except as provided in paragraph (4) of this subsection, a CHP unit or any combination of units with a total capacity greater than 8 MW must meet the following emission standards: 0.7 lb NOX /MWh; and 9.0 lb CO/MWh. A CHP unit or units under this paragraph must also be equipped with an oxidation catalyst control device that maintains a minimum of 70% control of volatile organic compounds (VOC) in the CHP unit exhaust stream.
  (4) Any combination of CHP units with a total capacity greater than 8 MW that are at least 900 feet apart from one another must meet the following emission standards and control requirements. For the purposes of this paragraph, any group of units under subsection (c)(7)(B) of this section is considered to be one unit when determining whether subparagraph (A) or (B) of this paragraph applies.
    (A) CHP units with a capacity less than or equal to 8 MW: 1.0 pound of NOX per megawatt-hour (lb NOX /MWh); and 9.0 lb CO/MWh.
    (B) CHP units with a capacity greater than 8 MW: 0.7 lb NOX /MWh; and 9.0 lb CO/MWh. A CHP unit under this subparagraph must also be equipped with an oxidation catalyst control device that maintains a minimum of 70% control of VOC in the CHP unit exhaust stream.
  (5) Compliance with the NOX standards above may be achieved by taking credit for the heat recovered from the combustion unit. Credit will be at the rate of 1.0 MWh for each 3.4 million BTU of heat recovered. In order to claim this credit for CHP for units not sold and certified as an integrated package by the manufacturer, the owner or operator must provide as part of the application documentation of the heat recovered, electric output, efficiency of the generator alone, efficiency of the generator including CHP, and the use for the non-electric output.
(e) Monitoring and Testing. CHP units authorized under this section with an electric generating capacity greater than or equal to 20 kW must meet the following requirements:
  (1) Internal combustion engine-based CHP units (excluding turbines).
    (A) The owner or operator shall initially analyze the emissions from the CHP unit using a portable analyzer no later than 180 calendar days after startup.
    (B) After the initial testing specified by subparagraph (A) of this paragraph, the owner or operator shall conduct ongoing monitoring using a portable analyzer, once in the first half of each calendar year and once in the second half of each calendar year, with at least two months between tests. When a CHP unit did not operate for more than 1,000 hours in that half of the year, this test is not required.
    (C) The portable analyzer must be operated at minimum in accordance with the manufacturer's instructions. A copy of the manufacturer's instructions shall be made available upon request. The NOX and CO emissions must be converted into units of lb/MWh.
  (2) Internal combustion engine-based CHP units and turbines. If the CHP unit is not certified to meet the emission standards of subsection (d) of this section by the manufacturer according to a United States Environmental Protection Agency (EPA) testing protocol, the unit must be tested within 90 days of startup for NOX and CO according to appropriate EPA reference methods, California Air Resources Board methods, or equivalent alternative testing methods approved by the executive director and in accordance with the appropriate procedures of the TCEQ Sampling Procedures Manual. Tests must consist of three runs Cont'd...