BILL ANALYSIS C.S.H.B. 2587 By: Alexander (Brown) Natural Resources 05-10-95 Senate Committee Report (Substituted) BACKGROUND Chapter 26I of the Water Code was enacted by the legislature to regulate the use of underground and aboveground storage tanks. At the time of passage, the legislature found that leaking underground storage tanks storing hazardous, toxic, or otherwise harmful substances have caused and continue to pose groundwater contamination problems. The purpose of Subchapter I is to protect groundwater and surface water resources from certain substances in underground and aboveground storage tanks that could pollute groundwater and surface water resources. PURPOSE As proposed, C.S.H.B. 2587 amends certifying, licensing, and regulation of underground petroleum storage tank owners, operators, and installers; amends regulation of certain above ground storage tanks; provides penalties for violations by a person or business entity of rules adopted or orders issued to perform the regulation. RULEMAKING AUTHORITY It is the committee's opinion that rulemaking authority is granted to the Texas Natural Resource Conservation Commission under SECTIONS 5, 8, 9, 10, and 14 (Sections 26.3512(e) and (f), 26.352(a), 26.3572(b) and (c), 26.3573(i), 26.360, and 26.362, Water Code) of this bill. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 26.341(b), Water Code, to provide that the legislature declares that it is the state's policy and the purpose of this subchapter to require the use of all reasonable methods, including risk-based corrective action, to implement this policy, among other purposes. SECTION 2. Amends Section 26.342, Water Code, by adding Subdivision (13) and renumbering subsequent subdivisions, to define "risk-based corrective action." Redesignates existing Subdivisions (13)-(15) as Subdivisions (14)-(16). SECTION 3. Amends Section 26.346, Water Code, by adding Subsections (e) and (f), as follows: (e) Provides that the owner or operator of an underground or aboveground storage tank installed before December 1, 1995, that is required to be registered, and that has not been registered by December 31, 1995, is not eligible to receive reimbursement for that tank from the petroleum storage tank remediation fund (fund) except for an owner of a registered facility who discovers an unregistered tank; a state or local government agency that discovers the unregistered tank; or a property owner who did not know that the tank was located on the property. (f) Requires the owner of an underground or aboveground storage tank installed on or after December 1, 1995, to register the tank by the 30th day after the installation is completed to be eligible for reimbursement for the new tank. SECTION 4. Amends Chapter 26I, Water Code, by adding Section 26.3475, as follows: Sec. 26.3475. RELEASE DETECTION REQUIREMENTS; SPILL AND OVERFILL PROTECTION; CORROSION PROTECTION; NOTICE OF VIOLATION; SHUTDOWN. (a) Requires all piping in an underground storage tank (tank) system that conveys regulated substances under pressure to comply with Texas Natural Resource Conservation Commission (commission) requirements for pressurized piping release detection equipment. (b) Requires all piping in a tank system that conveys regulated substances under suction to comply with commission requirements for suction-type piping release detection equipment. (c) Sets forth commission requirements for a tank in a tank system. (d) Requires a tank system to comply with commission requirements for applicable tank integrity assessment and corrosion protection by December 22, 1998. (e) Authorizes the commission to issue a notice of violation to the owner or operator (owner) of a tank system that does not comply with this section, informing the owner of the violation and that the commission may order the noncomplying tank system placed out of service if the owner does not correct the violation within 30 days after the notice was received. Authorizes the commission to order the noncomplying tank system out of service if the owner does not correct the violation within the prescribed time. SECTION 5. Amends Section 26.3512, Water Code, by amending Subsections (b) and (e) and by adding Subsections (f)-(k), as follows: (b) Provides that the owner of a petroleum storage tank ordered by the commission to take corrective action is responsible for the payment of, among others, the owner contribution prescribed by Subsections (e)-(k), rather than only Subsection (e); any expenses for corrective action exceeding the applicable amount specified by Section 26.3573(l), rather than that exceed $1 million for each occurrence; any expenses for corrective action incurred for confirmed releases initially discovered and reported to the commission after December 22, 1998. (e) Provides a schedule for the required payment of expenses by the owner for corrective action taken for each occurrence if an owner submits to a site assessment in accordance with commission rules by December 23, 1996. (f) Provides a schedule for the required payment of expenses by the owner for corrective action taken for each occurrence, if an owner does not submit to a site assessment in accordance with commission rules by December 23, 1996. (g) Requires the owner to pay under Subsection (b)(1) the amount provided by Subsection (e) for the first expenses for corrective action taken for each occurrence if an owner's corrective action plan is approved by the commission before December 23, 1997. (h) Provides a schedule for the required payment of expenses by the owner for corrective action taken for each occurrence if an owner's corrective action plan is not approved by the commission before December 23, 1997. (i) Requires the owner to pay under Subsection (b)(1) the amount specified by Subsection (e) for the first expenses for corrective action taken for each occurrence if an owner has a corrective action plan approved by the commission before December 23, 1998, that has met the goals specified in the plan to be met by that date. (j) Provides a schedule for the required payment of expenses by the owner for corrective action taken for each occurrence if an owner does not have a corrective action plan approved by the commission or, on December 23, 1998, has not met the goals specified in the plan to be met by that date. (k) Requires an owner of a site for which a closure letter has been issued under Section 26.3572 to pay under Subsection (b)(1) the first $50,000 of expenses for corrective action for each occurrence. SECTION 6. Amends Section 26.3513, Water Code, by adding Subsection (m), to require the commission to consider the person who is in day-to-day control of a petroleum storage tank system at a site that is in violation to be the primary person responsible for taking corrective action and receiving the notice; and to be the primary subject of enforcement action. SECTION 7. Amends Section 26.3514, Water Code, by adding Subsections (f)-(i), as follows: (f) Provides that a lender is not liable as an owner because the lender sells, re-leases, liquidates, or winds up operations and preserves, protects, or prepares the secured aboveground or underground storage tank before the sale or other disposition of the storage tank or the property if the lender meets certain criteria. (g) Authorizes a lender to establish that the ownership indicia maintained after the foreclosure continue to be held to protect a security interest if the lender performs certain actions within 12 months after foreclosure. (h) Provides that the 12-month period begins, for the purposes of Subsection (g), when the lender acquires marketable title; or on the date of foreclosure or its equivalent. (i) Provides that if a lender outbids, rejects, or does not act on an offer for the aboveground or underground storage tank or the facility or property on which the tank is located, it is presumed that the lender is not holding the ownership indicia primarily to protect the security interest unless the lender is required to take a certain action in order to avoid liability under federal or state law. SECTION 8. Amends Section 26.352, Water Code, as follows: Sec. 26.352. FINANCIAL RESPONSIBILITY. (a) Requires the commission, by rule, to adopt requirements for maintaining evidence of financial responsibility for taking corrective action and compensating third parties for bodily injury and property damages resulting from certain causes. (b) Requires the rules to require, after December 22, 1998, the owner of a site for which a closure letter has been issued to have insurance coverage or evidence of financial responsibility to satisfy all financial responsibility requirements under federal law or regulations. Requires the rules to require an owner of a site that has been issued a closure letter and who is eligible to have a portion of any future paid corrective action costs to have insurance coverage or evidence of financial responsibility to satisfy the first expenses for corrective action as provided by Section 26.3512(k). (c) Requires the commission to seek the assistance of the Texas Department of Insurance in developing the minimum requirements for insurance coverage required under this section. (d) Authorizes an owner of a tank to submit the registration certificate issued by the commission to the U.S. Environmental Protection Agency as evidence of the owner's eligibility for funds for any expenses for corrective action incurred for confirmed releases initially discovered and reported to the commission on or before December 22, 1998, rather than a corrective action from the fund. (e) Provides that a registration certificate is not accessible evidence of financial responsibility for a tank that contains certain petroleum substances, among others. Makes a conforming change. (f) Requires the commission to enforce this section. Authorizes the commission to impose administrative and civil penalties on the owners of tanks if evidence of financial responsibility is not maintained. Provides that an owner commits an offense if the owner operates a tank knowing that evidence of financial responsibility does not exist and is subject to criminal prosecution. Authorizes the commission to seek injunctive relief in Travis County district courts to force temporary or permanent closure of an underground storage tank for which evidence of financial responsibility is not maintained. SECTION 9. Amends Section 26.3572, Water Code, by amending Subsections (b) and (c) and by adding Subsection (d), as follows: (b) Requires the commission, in administering the groundwater protection cleanup program (program), to perform certain acts, including negotiating with or directing parties in site assessment and remediation matters using risk-based corrective action; approving site-specific corrective action plans for each site as necessary using risk-based corrective action; using risk-based corrective action procedures as determined by commission rule to establish cleanup levels; adopt, by rule, criteria for assigning a priority to each site using risk-based corrective action and assign a priority to each site according to those criteria; and adopt, by rule, criteria for risk-based corrective action site closures and for the issuance of a closure letter. (c) Authorizes the commission, by rule, to approve its site assessment methods. Requires the commission to approve or disapprove a site assessment or corrective action plan, as defined by commission rule, by the 30th day after the commission receives the assessment or plan. (d) Prohibits the commission from approving a corrective action plan until the commission and the owner of the site by agreement set specific goals in the plan for completing discrete corrective action tasks before specified dates. Provides that the owner or operator is responsible for meeting the goals. SECTION 10. Amends Sections 26.3573(d), (f), (h), (i), (k), and (p), Water Code, as follows: (d)(1) Authorizes the increment between two and five percent, rather than between two and three percent, of the gross receipts of the fund to be used only to pay administrative expenses associated with regulating the petroleum storage tanks, reimbursing eligible owners, disposing of contaminated soils, and conducting claims audits. Deletes language authorizing between three and five percent of the gross receipts to be used for conducting claims audits, reimbursing eligible owners, and disposing of contaminated soils. (2) and (3) Make no change. (f) Authorizes the commission to perform certain acts including reimbursing an eligible owner from the fund for expenses of a corrective action that was performed on or after September 1, 1987; and conducted in response to a confirmed release that was initially discovered and reported to the commission on or before December 22, 1998. (h) Deletes language authorizing the commission, by rule, to adopt minimum qualifications the commission considers necessary for a person with whom an eligible owner may contract to participate in corrective action. (i) Authorizes the commission, by rule, to implement a registration program for persons who contract with an owner of a tank or an aboveground storage tank, or with any person, to perform corrective action. Requires the commission, on the request of an appropriately licensed or registered professional engineer, to register the engineer in the program. Authorizes an engineer registered in the program to contract to perform corrective action unless the State Board of Registration for Professional Engineers (SBRPE) determines the engineer is not qualified to perform a corrective action. Subjects an engineer registered in the program only to examination requirements, continuing education requirements, fees, and disciplinary procedures adopted by SBRPE. Authorizes the commission to adopt minimum qualifications for a person, other than an appropriately licensed or registered professional engineer, with whom an owner may contract to participate in corrective action and for a person, other than an appropriately licensed or registered professional engineer, who performs or supervises the corrective action. Authorizes the commission to require the use, rather than registration and the use, of registered contractors and registered corrective action supervisors by an eligible owner as a prerequisite to the payment of, rather than receiving, money from the fund for corrective action. Authorizes any qualified registered contractor to conduct the characterization, study, appraisal, or investigation of a site. Provides that if a site remediation involves the installation or construction of on-site equipment, structures, or systems used in the extraction or management of wastes, except for soil excavation and landfill disposal or well sampling and monitoring, the owner is not eligible for reimbursement from the fund unless the plans and specifications for the equipment, structures, or systems are sealed by an appropriately licensed or registered professional engineer and the equipment, structures or systems are constructed under the supervision of an appropriately licensed or registered professional engineer. Authorizes the commission, by rule, to establish a fee schedule and charge fees to defray the costs of administering the registration program including certain fees. Requires the fees collected to be deposited in the state treasury to the credit of the storage tank fund. Provides that a person who violates a rule or order adopted by the commission is subject to the appropriate sanctions and penalties. (k) Requires the commission to satisfy a claim for payment that is eligible to be paid under this subchapter, and rules adopted under this subchapter made by a contractor, from the fund as provided by this section and rules adopted by the commission under this section, rather than Chapter 82, Article 601f, V.T.C.S. (p) Provides that an owner, or any agent of an owner, is not entitled to and may not be paid interest on any claim for payment from the fund. Makes nonsubstantive changes. SECTION 11. Amends Chapter 26I, Water Code, by adding Section 26.35731, as follows: Sec. 26.35731. CONSIDERATION AND PROCESSING OF APPLICATIONS FOR REIMBURSEMENT. (a) Requires the commission, except as provided by Subsection (b), to consider and process a claim by an eligible owner for reimbursement from the fund in the order it is received. Requires the commission to consider and process all claims by eligible owners for reimbursement from the fund that were received by September 1, 1995, before the commission considers a claim received after that date. (b) Prohibits the commission from considering, processing, or paying a claim for reimbursement from the fund for corrective action work begun after September 1, 1993, and without prior commission approval until all claims for reimbursement for corrective action work preapproved by the commission have been considered, processed, or paid. SECTION 12. Amends Section 26.35735, Water Code, by adding Subsections (e) and (f), as follows: (e) Authorizes the commission to audit a claim for payment as required by this section only under certain guidelines or in a case of suspected fraud. (f) Requires the commission, by the 90th day after an audit has been completed, to send a copy of the audit to the person whose claim for payment is the subject of the audit. SECTION 13. Amends Sections 26.3574(b), (x), and (y), Water Code, as follows: (b) Doubles the required fee paid by a person ordering a withdrawal and collected by the operator of a bulk facility for delivery of a petroleum product on withdrawal from bulk of that product. (x) Prohibits the fee imposed under this section from being collected on or after the first day of the second month following notification by the commission of the date on which the unobligated balance in the fund is $125 million or more, after the deposits have been made to the credit of the general revenue fund. (y) Requires the fee to be reinstated if the unobligated balance is less than $25 million. Provides that the fees be $12.50 for each delivery into a cargo tank of less than 2,500 gallons, $25 for each delivery of 2,500 to less than 5,000 gallons, $37.50 for each delivery of 5,000 to less than 8,000 gallons, $50 for each delivery of 8,000 to less than 10,000 gallons, and $25 for each increment of 5,000 gallons or any part thereof delivered into a cargo tank of 10,000 gallons or more. SECTION 14. Amends Chapter 26I, Water Code, by adding Sections 26.360-26.363, as follows: Sec. 26.360. PRIVATIZATION OF PROGRAM. Authorizes the commission, by rule, to authorize the privatization of any part of the program. Sec. 26.361. EXPIRATION OF REIMBURSEMENT PROGRAM. Provides that the reimbursement program established under this subchapter expires September 1, 2001. Prohibits the commission, on or after September 1, 2001, from using money from the fund to reimburse eligible owners for corrective action; or collecting a fee under Section 26.3574. Sec. 26.362. SUIT TO TEST VALIDITY OF CLOSURE LETTER. Provides that the commission is immune from liability in any action against the commission to test the validity of a closure letter if the letter is issued in accordance with commission rules. Sec. 26.363. RELIANCE ON CLOSURE LETTER. Prohibits an owner to whom a closure letter for a site has been issued from being held liable for the owner's conduct taken in reliance on and within the scope of the closure letter. SECTION 15. Redesignates Article 8900, V.T.C.S., as Chapter 26K, Water Code, as follows: SUBCHAPTER K. New heading: UNDERGROUND STORAGE TANK INSTALLERS (Redesignates existing Article 8900) Sec. 26.451. DEFINITIONS. Redesignates existing Section 1. Redefines "certificate of registration," "critical junctures," "license," and "on-site supervisor." Deletes the definition of "commission." Makes a nonsubstantive change. Redesignates existing Subdivisions (4), (5)-(10), and (12) as Subdivisions (5), (8)-(13), and (14). Sec. 26.452. CERTIFICATE OF REGISTRATION. Redesignates existing Section 2. (a) Makes no change. (b) Authorizes an initial certificate of registration authorizing a tank contractor to engage in tank business (certificate of registration) to be issued for a period of less than one year. Deletes language authorizing initial certificates of registration issued on or after September 1, 1989, to be issued for periods of less than one year. (c) and (d) Make no change. (e) Provides that a certificate of registration issued under this subchapter, rather than Act, is not transferrable. Sec. 26.453. LICENSE REQUIRED. Redesignates existing Section 3. (a) Deletes language providing Subsection (b) as an exception to prohibiting a tank from being installed, repaired, or removed by an tank contractor. Makes a conforming change. (b) Deletes existing Subsection (b) providing that licenses issued to installers or on-site supervisors authorizing that person to engage in tank business (license) under this Act are not transferrable. Redesignates existing Subsection (c) to make a conforming and nonsubstantive change. Sec. 26.454. POWERS AND DUTIES OF COMMISSION. Redesignates existing Section 4. (a) Makes a conforming change. (b) and (c) Make no change. Sec. 26.455. EXAMINATION. Redesignates existing Section 5. (a)-(d) Make no change. Sec. 26.456. LICENSE. Redesignates existing Section 6. (a) Makes a nonsubstantive change. (b) Makes a conforming change. Sec. 26.457. LICENSE RENEWAL. Redesignates existing Section 7. (a) and (b) Make no change. Sec. 26.458. FEES. Redesignates existing Section 8. (a) Requires fees collected by the commission to defray the costs of administering this subchapter, rather than provisions of this Act, to be deposited in the state treasury to the credit of the storage tank account, instead of the underground storage tank fund. Makes a conforming change. (b) Makes a nonsubstantive change. Sec. 26.459. DENIAL, SUSPENSION, OR REVOCATION OF LICENSE OR CERTIFICATE OF REGISTRATION; REINSTATEMENT. Redesignates existing Section 9. (a) and (b) Make no change. (c) Makes conforming changes. (d) Authorizes a person or business entity whose license or certificate of registration has been revoked to apply for a new license or certificate of registration after the passage of one year after the date of the revocation. Sec. 26.460. New heading: CRIMINAL, CIVIL, AND ADMINISTRATIVE PENALTIES. Deletes existing Section 10 establishing the Petroleum Advisory Committee. Redesignates existing Section 11. (a) Provides that a person or business entity commits an offense if the person or business entity engages in certain acts. (b) Provides that a person commits an offense if the person performs or supervises the installation, repair, or removal of a tank unless the person has a license or another person who holds a license is substantially responsible for the performance or supervision of the installation, repair, or removal. (c) Provides that a person or business entity commits an offense if the person or business entity authorizes certain installations, repairs, or removal of a tank. (d) Provides that the person or business entity commits an offense if the conduct of the person or business entity makes the person or business entity responsible for a violation of this subchapter or of a rule adopted or an order issued under this subchapter. Deletes language regarding conduct resulting in the commission of an offense. (e) Provides that an offense under this section, rather than Subsection (a), is a Class A misdemeanor. Redesignates existing Subsection (b). (f) Authorizes a person or business entity who commits an offense under this section to be assessed a civil penalty by the commission in an amount not to exceed $2,500 for each day of violation. Redesignates existing Subsection (c). (g) Subjects a person or business entity who commits an offense under this section or who violates Subchapter I or a rule adopted or order issued under Subchapter I to an administrative penalty in addition to the criminal and civil penalties. Deletes existing Subsection (d) authorizing an owner to be assessed a penalty for not complying with the requirements of Section 3 or a rule adopted by the commission to implement this Act. Deletes existing Section 12 regarding initial appointments to the committee. Deletes existing Section 13 regarding the effective date for the license requirement. SECTION 16. Amends Section 403.092(c), Government Code, as added by Section 1, Chapter 533, Acts of the 73rd Legislature, 1993, as follows: (c)(1) Authorizes the comptroller to transfer cash from the general revenue fund to the fund during the 1996-1997 biennium to pay reimbursement claims against the fund that are filed with the commission on or before August 31, 1995. Requires the transfer to be on September 1, 1995. (2) Requires $80 million of the fees collected under Section 26.3574, Water Code, to be deposited to the general revenue fund by August 31, 1996. Requires $40 million of those fees to be deposited to the credit of the fund by May 31, 1997. Requires the remaining fees collected in excess of the amounts required by this subdivision to be deposited to the credit of the general revenue fund to be deposited to the fund. Deletes language regarding the deposit of the fees collected. (3) Makes no change. (4) Provides that this subsection expires on the latter of August 31, 1997, or the date of full repayment to the general revenue fund of the amount required under Subdivision (2). SECTION 17. Makes application of this Act prospective. SECTION 18. Effective date: September 1, 1995. SECTION 19. Emergency clause.