HBA-EDN C.S.H.B. 2912 77(R)BILL ANALYSIS Office of House Bill AnalysisC.S.H.B. 2912 By: Bosse Environmental Regulation 4/3/2001 Committee Report (Substituted) BACKGROUND AND PURPOSE The Texas Natural Resource Conservation Commission (TNRCC) protects the state's natural resources and human health by ensuring clean air, clean water, and the safe management of waste. The legislature created the agency in 1993, by consolidating the Texas Water Commission, Texas Air Control Board, and environmental programs from the Texas Department of Health. The agency implements state and federal environmental regulatory laws by issuing permits and authorizations for the control of air pollution, the safe operation of water and wastewater facilities, and the treatment, storage, and disposal of hazardous, industrial, municipal, and low-level radioactive waste. TNRCC ensures compliance with environmental laws by conducting inspections of regulated facilities, monitoring air and water quality, providing technical assistance, encouraging voluntary compliance, and taking formal enforcement action against suspected violators. The agency also develops programs for the cleanup and eventual reclamation of contaminated industrial and abandoned hazardous waste sites. TNRCC is subject to the Texas Sunset Act and will be abolished September 1, 2001 unless it is continued by the legislature. In its review of TNRCC, the Sunset Advisory Commission (commission) found that the traditional, prescriptive regulatory approach focuses on outputs and does not adequately support innovation, provide incentives to reward performance, or solve persistent environmental problems. The commission also found that TNRCC lacks tools needed to better support its environmental protection mission and that additional changes are needed to ensure greater public access to the agency's decision making process. The commission's recommendations would give regulated entities a larger stake in and enable all affected groups to take a greater role in protecting the environment. C.S.H.B. 2912 continues TNRCC for 12 years and contains the commission's recommendations to better position the agency to address the state's environmental regulatory needs. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that rulemaking authority is expressly delegated to the Texas Natural Resource Conservation Commission in SECTION 1.12 (Secs. 5.127 and 5.129, Water Code); SECTION 1.18 (Sec. 5.228, Water Code); SECTION 1.21 (Sec. 7.0025, Water Code); SECTION 4.01 (Secs. 5.752, 5.754, 5.756, and 5.757, Water Code); SECTION 4.06 (Sec. 382.0216, Health and Safety Code); SECTION 5.01 (Secs. 5.802-5.805, Water Code); SECTION 6.01 (Sec. 341.102, Health and Safety Code); SECTION 7.03 (Sec. 366.076, Health and Safety Code); SECTION 8.01 (Sec. 361.119, Health and Safety Code); SECTION 9.16 (Sec. 361.079, Health and Safety Code); SECTION 9.20 (Sec. 361.082, Health and Safety Code); SECTION 9.23 (Sec. 361.089, Health and Safety Code); SECTIONS 10.05,10.08, 10.10, and 10.11 of this bill. In addition, under the general rulemaking authority already granted to the policymaking bodies, rules may be developed to implement other new provisions found in this bill. ANALYSIS C.S.H.B. 2912 amends the Water and Health and Safety codes to provide for the continuation of the Texas Natural Resource Conservation Commission (TNRCC) until September 1, 2013, and to set forth standard Sunset Advisory Commission recommendations for TNRCC regarding public representation, member training, member removal, designation of a presiding officer, conflicts of interest, written complaints, development of an equal employment policy, and a state employee incentive program. Incentive-based Regulatory Structure The bill requires TNRCC by rule to establish regulatory tiers and performance incentives in which different levels of compliance with environmental regulations are used to determine eligibility for participating in innovative regulatory programs (Sec. 5.752, Water Code). The bill expands the scope of the Waste Reduction Advisory Committee and renames it as the Pollution Prevention Advisory Committee to advise TNRCC on the implementation of a regulatory structure based on incentive and performance (Sec. 361.0215, Health and Safety Code). Components of and Standards for Evaluating Compliance History The bill requires TNRCC by rule to develop a single set of components of and standards for evaluating compliance history based on specific factors, while ensuring a means to consider changes in ownership when tracking compliance (Sec. 5.754, Water Code). The bill also provides several conforming changes in ARTICLE 9 to clarify other references to compliance history throughout the Water and Health and Safety codes with the method of evaluating compliance history developed by TNRCC. TNRCC is required to track and report compliance history information of all regulated entities and by rule develop methods of performance assessment for regulated entities to determine eligibility for innovative programs and to establish permit and enforcement guidelines (Secs. 5.755 and 5.756, Water Code). TNRCC is required to adopt the components of and standards for evaluating compliance history by March 1, 2002, and begin tracking compliance information for use in the incentive-based regulatory structure by September 1, 2002 (SECTION 10.05). Accountability in Innovative Regulatory Programs TNRCC is required by rule to use compliance history when determining eligibility for participation in its innovative regulatory programs and provides that entities with an unacceptable compliance history cannot participate in innovative regulatory programs (Secs. 5.756-5.759, Water Code). Entities must show that a clear environmental benefit will result from a project to participate in TNRCC's regulatory flexibility program (Sec. 5.760, Water Code). Agency Policy on Upsets and Inspections Regulated entities must demonstrate a good compliance history before receiving announced inspections, and TNRCC is authorized to decide whether inspections are announced or unannounced (Sec. 5.758, Water Code). TNRCC shall require the owner or operator of a facility that experiences an emissions event to report to TNRCC all information necessary to evaluate the emissions event. The bill requires TNRCC to establish criteria for determining when emissions events are excessive. The bill authorizes the executive director to require a facility to take action to reduce emissions from excessive emissions events. The bill authorizes TNRCC, by rule, to establish an affirmative defense to a commission enforcement action if the emissions event meets criteria defined by TNRCC rule (Secs. 382.0215 and 382.0216, Health and Safety Code). Laboratory Accreditation Program The bill requires TNRCC to adopt rules to implement a voluntary environmental testing laboratory accreditation program (accreditation program) consistent with national standards. The bill also transfers the Safe Drinking Water Lab Accreditation Program from the Texas Department of Health to consolidate it with the new accreditation program at TNRCC. The bill requires TNRCC by rule to assess laboratory accreditation fees sufficient to recover program administration costs, with those fees credited to an account that may be used only for the accreditation program. (Sec. 5.801-5.807, Water Code). The bill authorizes TNRCC to accept data and analyses for all decisions affecting permitting, compliance, enforcement, and corrective action from a lab accredited by TNRCC, an on-site or in-house lab that is periodically inspected by TNRCC, or a lab accredited under federal law. The bill authorizes TNRCC to accept data and analyses from a lab not accredited by TNRCC or under federal law if the data and analysis are necessary for emergency response activities. TNRCC is authorized to require, by rule, that data and analysis used in other TNRCC decisions be obtained from a lab accredited by TNRCC (Sec. 5.127, Water Code). Environmental Research The bill requires TNRCC to coordinate and facilitate agency research needs and efforts with the state's scientific and academic communities and to administer grants or contracts if the money is appropriated. TNRCC is authorized to establish an advisory board to encourage participation in the research effort. TNRCC must follow a research model for working with the United States Department of Agriculture, the Texas Department of Agriculture, and other state agencies to develop long-range research plans and to pursue specific research projects. The bill also requires TNRCC to report to the legislature on its ongoing research efforts and outcomes (Sec. 5.1191-5.1193, Water Code). Public Interest Representation and Information The bill authorizes the Office of Public Interest Counsel to use outside technical support and to recommend needed legislative and regulatory changes (Secs. 5.273 and 5.274, Water Code). The bill also authorizes TNRCC or the executive director to create and consult with advisory committees, work groups, or task forces. The bill requires these groups to be composed of balanced representation of affected stakeholders and requires TNRCC to track the composition and activities of these groups and make the information easily available to the public (Sec. 5.107, Water Code). The bill requires TNRCC decision makers to maintain a written record of communications with persons outside TNRCC regarding pending regulatory matters, except unplanned contacts occurring away from TNRCC offices. The written record is a public record and is subject to disclosure (Sec. 5.1115, Water Code). Contested Permit Hearings The bill requires the executive director to be named a party in hearings before TNRCC on an enforcement matter under TNRCC's jurisdiction and requires TNRCC, by rule, to specify the factors the executive director must consider when determining whether to be a party in a permit hearing or a contested case permit hearing. The bill specifies the executive director's role as a party with respect to completing the record. The bill requires TNRCC to adopt rules to determine when the executive director can assist permit applicants in meeting their burdens of proof. The bill prohibits the executive director from rehabilitating non-agency witnesses (Sec. 5.228, Water Code). The bill also consolidates permit notice requirements under TNRCC's jurisdiction into Chapter 5, Water Code and provides several conforming changes in ARTICLE 9 to predesignate and cross-reference existing notice provisions throughout the Water and Health and Safety codes. Complaint Investigations The bill requires TNRCC to enhance coordination of complaint investigations with local officials and, on requests, to train local officials in investigating complaints and enforcing environmental laws, with authority to recover the cost of training. The bill also requires TNRCC to implement policies to respond to complaints after normal business hours (Secs. 5.1771 and 5.1772, Water Code). The bill authorizes TNRCC to initiate an enforcement action based on evidence received from a private individual. TNRCC is also authorized by rule to adopt criteria for the executive director to use in evaluating the validity and credibility of evidence. The bill authorizes TNRCC to develop criteria for credibility and use of external evidence in an enforcement action (Sec. 7.0025, Water Code). Funding and Revenue Management The bill authorizes TNRCC to transfer a percentage of fee revenue dedicated to one TNRCC activity to other TNRCC activities as authorized in the Appropriations Act (Sec. 5.707, Water Code). The bill sets forth provisions regarding the submission and adjustment of fees and authorizes TNRCC to collect interest and penalties on delinquent fees. The bill authorizes the executive director to modify penalty and interest amounts or audit findings only upon good cause and with written explanation (Secs. 5.702-5.706, Water Code). Regulation of Water Treatment Specialists The bill requires TNRCC, by rule, to establish a program to certify water treatment specialists and increases the certification fee from $10 per year to an amount not to exceed $150 per year (Secs. 341.101-341.105, Health and Safety Code). Electronic Reporting to TNRCC and Reduction of Duplicate Reporting The bill requires TNRCC to encourage the use of electronic reporting through the Internet for reports and to strive to reduce duplication in reporting requirements (Sec. 5.128, Water Code). Public Notices The bill requires TNRCC, by rule, to provide for each public notice issued or published by TNRCC or by a person under TNRCC's jurisdiction as required by law or commission rule to include at the beginning of the notice a succinct statement of the subject of the notice (Sec. 5.129, Water Code). Exemption from Notice Requirement The bill provides that the notice requirement for an intent to obtain a preconstruction permit or permit review does not apply to the relocation or change of location of a portable facility to a site where a facility permitted by TNRCC is located or a facility located temporarily in the right-of-way, or contiguous to the right-of-way, of a public works project (Sec. 5.673, Water Code). Regulation of Solid Waste Facilities The bill requires TNRCC, by rule, to ensure that a solid waste processing facility the primary function of which is the transfer of solid waste is regulated as a solid waste facility and is not allowed to operate unregulated as a recycling facility (Sec. 361.119, Health and Safety Code). Change of Name of Agency The bill provides for changing the name of TNRCC to the Texas Department of Environmental Quality, to be phased in by January 1, 2004, and provides for all powers, duties, rights, and obligations of TNRCC to be transferred to the Texas Department of Environmental Quality (SECTION 10.01). EFFECTIVE DATE September 1, 2001. COMPARISON OF ORIGINAL TO SUBSTITUTE C.S.H.B. 2912 modifies the original by specifying that the executive director, in addition to TNRCC, is authorized to create and consult with advisory, committees, work groups, and task forces (Sec. 5.107, Water Code). The substitute narrows the requirement for TNRCC members and employees to record outside contacts to the specific regulatory matter before that member or employee. It also specifies that discretionary authority means final decision-making authority for that regulatory matter (Sec. 5.1115, Water Code). The substitute clarifies TNRCC's authority to accept data from on-site laboratories instead of exempting them from accreditation if inspected by TNRCC. It also permits TNRCC to accept data from a laboratory that is accredited under federal law and from an unaccredited lab in emergency situations (Sec. 5.127, Water Code). The substitute requires TNRCC to encourage electronic reporting through the Internet and to make efforts to reduce duplication in reporting requirements (Sec. 5.128, Water Code). The substitute requires TNRCC ,by rule, to provide for each public notice issued or published to include a succinct statement of the subject of the notice (Sec. 5.129, Water Code). The substitute stipulates that TNRCC is required to provide training in complaint investigation procedures for local enforcement officials only upon request (Sec. 5.1771, Water Code). The substitute requires, rather than authorizes, the executive director to be named a party in hearings before TNRCC on an enforcement matter under TNRCC's jurisdiction (Sec. 5.228, Water Code). The substitute provides that the notice requirement for an intent to obtain a preconstruction permit or permit review does not apply to the relocation or change of location of a portable facility to a site where a facility permitted by TNRCC is located or a facility located temporarily in the right-of-way, or contiguous to the right-of-way, of a public works project (Sec. 5.673, Water Code). The substitute applies the same knowing culpability standard to the calculation of fee amounts as the original provided for reporting requirements. It also authorizes the executive director to modify findings of fee auditors, whereas the original prohibited modifications of audit findings (Sec. 5.705, Water Code). The substitute redefines emissions event to include emissions from an upset, start-up, shut-down, or maintenance and removes references to allowable numbers of emissions events and exemptions from enforcement. Instead, it requires TNRCC to establish criteria to determine when emissions events are excessive, triggering either a corrective action plan or a permit. It also authorizes TNRCC to establish, by rule, an affirmative defense to TNRCC enforcement action for certain emissions events unless the person fails to take corrective action as prescribed by TNRCC (Secs. 382.0215 and 382.0216, Health and Safety Code). The substitute expands the segments of environmental analyses covered in the definition of "environmental testing laboratory" by deleting specific media descriptions. It also deletes references to commercial laboratories to make all labs eligible for the voluntary certification (Sec. 5.801, Water Code). The substitute requires TNRCC, by rule, to ensure that a facility that transfers solid waste is regulated as a solid waste facility and not allowed to operate unregulated as a recycling facility (Sec. 361.119, Health and Safety Code). The substitute provides for changing the name of TNRCC to the Texas Department of Environmental Quality and provides for all powers, duties, rights, and obligations of TNRCC to be transferred to the Texas Department of Environmental Quality (SECTION 10.01).