ACG C.S.H.B. 2444 75(R)BILL ANALYSIS ENVIRONMENTAL REGULATION C.S.H.B. 2444 By: Talton 4-3-97 Committee Report (Substituted) BACKGROUND Texas environmental permitting programs generally predate federal law. Texas permitted wastewater discharges, hazardous and solid waste management, underground injection and regulated air emissions before federal regulatory programs were adopted. In 1975, the legislature passed the Administrative Procedure and Texas Register Act which established the current process for contested-case hearings. When the Legislature amended Texas law to provide for delegation of federal programs, no real consideration was ever given to changing the Texas permit hearing process. While this trial-like process met the need for the early Texas environmental programs, it is no longer appropriate, considering the superior technical review processes that are in place today. Since 1995, environmental groups and the U.S. Environmental Protection Agency have questioned whether Texas' current permitting process meets federal requirements for public participation. In a petition filed last summer asking EPA to revoke jurisdiction of the UIC program, the Environmental Defense Fund argued that "unless the Texas Natural Resource Conservation Commission (commission) were to return to the historic scope of the State's adjudicatory hearing process, an adequate notice and comment process would be required." It also stated "the (EPA) rules also require that comments be considered in the final decision and that the agency respond to those comments." PURPOSE HB 2444 will replace the Texas contested-case permit hearing process with the more open notice and comment hearing process used and required by EPA. HB 2444 would significantly increase the opportunity for public participation in the permit hearing process by replacing the current contested case process with a more open process that would also be more cost-effective for applicants, opponents, and the state. RULEMAKING AUTHORITY It is the committee's opinion that this bill grants rulemaking authority to the Texas Natural Resource Conservation Commission in SECTION 1, Sections 5.371 (b), (d) and (e) and 5.374 (a) and (e), Health and Safety Code. SECTION BY SECTION ANALYSIS SECTION 1. Creates a new Subchapter J to Chapter 5, Water Code, as follows: Section 5.371(a) States that this subchapter applies to general permitting procedures for Chapter 26 or 27, Water Code (water quality permits or underground injection permits) or Chapter 361 or 382, Health and Safety Code (solid waste permits or air quality permits). Section 5.371(b) Requires the commission to provide additional notice, opportunity for public comment, and opportunity for hearing to satisfy requirements for United States Environmental Protection Agency authorization of a state permit program. Section 5.371(c) Requires permits-by-rule to the greatest extent practicable. Section 5.371(d) Allows commission to identify categories of applications for permits for which notice or opportunity for public hearing is not required. Allows the commission to provide specified exemptions. Section 5.371(e) Allows commission to delegate authority to issue permits under subdivision (d) to the executive director. Section 5.372(a) Requires the executive director to prepare and issue a notice of intent to deny or a draft permit after certain requirements have been met. Section 5.372(b) Requires a record or proposed decision in accordance with Section 5.373 to accompany the notice of intent to deny or issue a draft permit. Section 5.372(c) Requires notice of intent to deny to state reasons for denial. Section 5.372(d) Outlines requirements for draft permit. Section 5.372(e) Requires distribution of copies of the record to applicant, state or federal agencies, and persons who request copies. Section 5.372(f) Allows applicants to give notice before a draft permit or notice of intent to deny is issued. Section 5.372(g) Allows executive director to issue uncontested permits (or permits for which there is no significant degree of public interest) effective immediately like the current process for air quality permits. Section 5.373(a) Outlines requirements for a record of proposed decision. Section 5.373(b) States what must be included in the record of proposed decision. Section 5.373(c) Requires commission to make the record of proposed decision available when public notice is published. Section 5.374(a) Requires the commission by rule to provide for public notice. Section 5.374(b) Requires that the executive director provide at least 30 days for public review, comment, and request for public hearing. Allows for the commission or the executive director to extend or reopen the comment period. Section 5.374(c) Requires the filing of arguments and the raising of all reasonably ascertainable issues concerning conditions of draft permits by close of the public comment period. Requires extension of comment period on demonstration of reasonable need. Section 5.374(d) Provides that notice in this section is in addition to other notice required in the law and that notice may be combined. Section 5.374(e) Requires the commission to require additional notice and opportunity for public comment to satisfy U.S. EPA requirements. Section 5.374(f) Requires the executive director to respond to and attempt to resolve opposition. Allows alternative dispute resolution to be used and allows opponents to withdraw hearing request. Section 5.375(a) Requires opportunity for public hearing before a ruling on permit issuance or denial. Section 5.375(b) Provides for oral or written comments. Allows agency to set reasonable time limits for oral comments and allows agency to require written comments or comments under oath. Section 5.375(c) Provides criteria for determining when the executive director shall hold a hearing. Section 5.375(d) Requires hearings for hazardous waste permits when requested. Section 5.375(e) Allows the executive director to appoint presiding officer or hearing panel which may include technical experts. Section 5.375(f) Provides direction to the presiding officer of the hearing panel for the conduct and purpose of the hearing. Section 5.375(g) States that the hearing is not a contested-case under Chapter 2001, Government Code, and is to be conducted so that all relevant information, views, arguments, and other data are sufficiently and fairly received without undue repetition. Section 5.375(h) Requires the recording of the hearing and provides for transcription of the proceedings at the expense of the person who requests it. Section 5.375(i) Provides for the record and transcript, if prepared, to be available for review. Section 5.375(j) Provides person requesting copies to pay for those copies. Section 5.376(a) Requires the executive director to consider comments when determining whether to issue the permit or what conditions are to be placed on the permit. Section 5.376(b) Allows the executive director to deny the permit in whole or in part under stated conditions; allows the executive director to consider compliance history from the previous five years. Section 5.376(c) Provides for conditions under which compliance history is considered under Section 5.376(b). Section 5.376(d) Requires the executive director to respond to comments when issuing a decision. Section 5.376(e) Requires response to comments to be made available to the public. Section 5.376(f) Requires the executive director to mail notice of final decision to applicant and persons who commented and provides for content of that notice. Section 5.376(g) Provides for final decision on a permit to be effective 30 days after date notice of decision is mailed unless a petition for review is filed or the executive director specifies a later date. Section 5.377(a) Provides for commission review of the executive director's decision. Section 5.377(b) Provides that certain persons may petition the commission for review within 30 days after the date the executive director's notice of decision is mailed. Section 5.377(c) Provides that an act of filing a petition automatically stays the permit until the commission determines whether to grant a petition for review. Section 5.377(d) Outlines the required contents of a petition. Section 5.377(e) Requires the commission to act on a petition within 60 days after the date the notice of final decision is mailed. If the commission fails to act, the petition is denied. Section 5.378(a) Requires commission to give notice to certain persons of any decision granting the petition for review. Specifies what must be included in the notice. Section 5.378(b) Specifies when the entire permit or certain provisions only are stayed pending the commission decision. Section 5.378(c) If the commission modifies or rejects the executive director's decision, the commission is required to issue a written decision and contents of that decision. Section 5.378(d) Requires commission decision to be based on the record and specifies distribution of that decision to certain persons. Section 5.378(e) Allows the commission to remand matters to the executive director to resolve difficult issues or conflicting factual claims. Allows the commission to limit the scope of the remand. Section 5.378(f) Allows the commission on its own initiative to review any condition of a draft permit prepared by the executive director. Section 5.379 Provides conditions for motions to reconsider including the filing before the 11th day. Section 5.380(a) Provides for petitions for judicial review by persons aggrieved by the executive director's final decision or the commission's action. Requires petitions for judicial review to be filed within 30 days. Section 5.380(b) Provides that failure to file a timely petition is a bar to judicial review. Section 5.380(c) Provides for the standard of judicial review. Section 5.380(d) Specifies that the filing of an appeal does not stay any action required by the commission's decision. Section 5.380(e) Specifies the record of appeal. Section 5.380(f) Provides for the court to allow the consideration of additional information and to refer that information back to the commission for consideration. Allows the commission to change its findings or decision. Section 5.380(g) Provides that the court shall conduct the review without a jury and may not go outside the administrative record except to receive evidence of procedural irregularities. SECTION 2. Amends Section 361.0833(a), (c), (d), (f), and (g), Health and Safety Code by eliminating references to "person affected" and substituting terms which are more appropriate to the new process; makes conforming changes implemented by SECTION 1 of the bill. SECTION 3. Amends Subchapter I, Chapter 2001, Government Codes to add a new Section 2001.227 to state that certain subchapters do not, under certain circumstances, apply to permits issued under Chapter 26 or 27, Water Code, or Chapter 361 or 382, Health and Safety Code. SECTION 4. Provides that, on the effective date of this Act, references to Subchapters C-H, Chapter 2001, Government Code, or any provisions in those subchapters, do not apply to permits under Chapter 26 or 27, Water Code, or Chapter 361 or 382, Health and Safety Code, and those references are now references to this Act. SECTION 5. Emergency Clause COMPARISON OF ORIGINAL TO SUBSTITUTE SECTION 1. Section 5.371 (a) of the substitute adds a stipulation that Subchapters C-H, Chapter 2001, Government Code, do not apply to a proceeding to which this subchapter applies. There is no similar provision in the original bill. Section 5.371 (b) of the substitute requires the commission to provide additional notice, opportunity for public comment, and opportunity for hearing to satisfy requirements for United States Environmental Protection Agency authorization of a state permit program. The original bill does not have a similar provision. Section 5.371 (c)(3) of the original requires the commission to exempt from notice and public hearing requirements an application to increase air emissions that are incidental to the installation of an emission control device. The corresponding Section 5.371 (d)(3) of the substitute requires the commission to exempt from notice and public hearing requirements an application to increase emissions of air contaminants that are incidental to the installation of an emission control device. Section 5.372 of the original is titled INITIAL DETERMINATION BY EXECUTIVE DIRECTOR. Section 5.372 of the substitute is titled ISSUANCE OF PERMIT, DRAFT PERMIT, OR NOTICE OF INTENT TO DENY. Section 5.372 of the substitute reorganizes the subsections and clarifies language. Section 5.372 (a) of the original stipulates that the record of proposed decision must show the principal facts. Section 5.372 (a) of the substitute stipulates that the record of proposed decision must state the principal facts. Section 5.373(c) of the substitute adds a stipulation not in the original that when the record of proposed decision is published, it be made available to the public. Section 5.374(a) of the substitute requires the commission to provide for public notice for each draft permit or notice of intent to deny. The original does not have this provision. Section 5.374(a) of the original corresponds to Section 5.374(b) of the substitute, but the substitute adds that the commission or executive director may extend or reopen the comment period any time before a final decision to allow the receipt of information that may help to resolve an issue. Section 5.374(c) of the original corresponds to Section 5.374(d) of the substitute, and the substitute adds a provision that required notice may be combined with other notice requirements. Section 5.374(d) of the original corresponds to Section 5.374(e) of the substitute, although the original is permissive language and the substitute requires necessary notice and opportunity for public comment. Section 5.374(e) of the original corresponds to Section 5.374(f) of the substitute, and the substitute adds a provision that the executive director may refer parties to alternative dispute resolution. Section 5.375(d) of the substitute allows a hearing to be held at a convenient location, but the original requires it. Section 5.375(f) of the substitute is added to require the hearing to be conducted in a manner that helps develop the administrative record; allows the presiding officer or panel to question persons who testify. Section 5.376 of the original regarding new hazardous waste permits is not in the substitute. Section 5.377 of the original corresponds to 5.376 of the substitute with the following changes: The language is structured differently. Section 5.377(f)(2) and (5) of the original are not included in the substitute. Section 5.378 (b) of the original allows any person who submitted comments on the tentative decision of the executive director to file a petition for review with the commission. This section also gives certain provision for persons who failed to submit comments to be able to file a petition for review. Section 5.377 (b) of the substitute also allows a person who participated in a public hearing to file a petition for review with the commission, as well as giving certain provision for persons who did not participate in a public hearing to be able to file a petition for review. Section 5.377 (c) of the substitute adds a provision not in the original, that to the extent a condition of a new permit is stayed under this section, a person who holds an existing permit must comply with any condition of the existing permit, with certain exceptions. Section 5.377 (d)(2)(B) of the substitute adds a provision not in the original, that if the issue was not raised during the comment period or hearing, or it was not raised for a good cause a petition may not be considered. Section 5.378 (f) of the original corresponds to Section 5.378 (a) of the substitute. The substitute adds a conforming reference to persons who participated in a public hearing. Section 5.378 (g) of the original corresponds to Section 5.378 (b) of the substitute. The provision in the original about stayed provisions being identified by the commission when giving notice is not included in the substitute. Section 5.378 (e) and (f) of the substitute are not included in the original. Section 5.379 (c) of the original stipulates that judicial review of decisions shall be under the substantial evidence rule as provided by Section 2001.174, Government Code. Section 5.379 (c) of the substitute stipulates what a court may do in reviewing a decision of the commission. Section 5.380 (f) and (g) of the substitute are not in the original. SECTION 2 of the substitute is not included in the original. SECTION 4 of the substitute is not included in the original.