LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 77th Regular Session
May 3, 2001
TO: Honorable J.E. "Buster" Brown, Chair, Senate Committee on
Natural Resources
FROM: John Keel, Director, Legislative Budget Board
IN RE: HB2912 by Bosse (Relating to the continuation and
functions of the Texas Natural Resource Conservation
Commission.), As Engrossed
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* Estimated Two-year Net Impact to General Revenue Related Funds for *
* HB2912, As Engrossed: positive impact of $2,967,968 through the *
* biennium ending August 31, 2003. *
* *
* The bill would make no appropriation but could provide the legal *
* basis for an appropriation of funds to implement the provisions of *
* the bill. *
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General Revenue-Related Funds, Five-Year Net Impact:
****************************************************
* Fiscal Year Probable Net Positive/(Negative) *
* Impact to General Revenue Related *
* Funds *
* 2002 $1,398,475 *
* 2003 1,569,493 *
* 2004 1,570,451 *
* 2005 1,635,451 *
* 2006 736,451 *
****************************************************
All Funds, Five-Year Impact:
***********************************************************************
*Fiscal Probable Probable Probable Probable Change in *
* Year Revenue Savings/ Revenue Savings/ Number of *
* Gain/(Loss) (Cost) from Gain/(Loss) (Cost) from State *
* from General from Waste Waste Employees *
* General Revenue Management Management from FY 2001 *
* Revenue Fund Account/ Account/ *
* Fund 0001 GR- GR- *
* 0001 Dedicated Dedicated *
* 0549 0549 *
* 2002 $2,237,919 $(839,444) $405,021 $(149,047) 16.0 *
* 2003 2,177,000 (607,507) 0 (131,604) 21.0 *
* 2004 1,804,000 (233,549) 0 (100,524) 20.0 *
* 2005 1,869,000 (233,549) 0 (100,524) 12.0 *
* 2006 970,000 (233,549) 0 (100,524) 5.0 *
***********************************************************************
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*Fiscal Probable Probable Probable Probable *
* Year Savings/(Cost) Savings/(Cost) Revenue Savings/(Cost) *
* from Hazardous from Clean Air Gain/(Loss) from New *
* and Solid Waste Account/ from New General Revenue *
* Remediation Fee GR-Dedicated General Revenue Dedicated - *
* Account/ 0151 Dedicated - Environmental *
* GR-Dedicated Environmental Testing *
* 0550 Testing Laboratory *
* Laboratory Accreditation *
* Accreditation Account *
* Account *
* 2002 $(90,575) $(593,379) $149,105 $(149,105) *
* 2003 (85,917) (527,931) 383,935 (383,935) *
* 2004 (56,260) (461,777) 634,801 (634,801) *
* 2005 (56,260) (461,777) 634,801 (634,801) *
* 2006 (56,260) (461,777) 634,801 (634,801) *
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*Fiscal Probable Revenue Probable Probable *
* Year Gain/(Loss) from Savings/(Cost) from Savings/(Cost) from *
* Petroleum Storage Petroleum Storage State Highway Fund *
* Tank Remediation Tank Remediation 006 *
* Account/ Account/ 0006 *
* GR-Dedicated GR-Dedicated *
* 0655 0655 *
* 2002 $94,544,000 $(94,544,000) $(8,497,850) *
* 2003 106,659,000 (106,659,000) (5,497,859) *
* 2004 88,387,000 (88,387,000) (5,497,850) *
* 2005 91,592,000 (91,592,000) (5,497,850) *
* 2006 47,525,000 (47,525,000) (5,497,850) *
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Technology Impact
The bill would require the acquisition of personal computers and printers
for sixteen additional positions and the two positions transferred from
the Texas Department of Health (TDH).
Fiscal Analysis
The bill continues the Texas Natural Resource Conservation Commission
(TNRCC) for 12 years, until September 1, 2013, and makes several
statutory modifications. Those statutory modifications with fiscal
implications are as follows:
- Create an incentive and performance based regulatory system to be
phased in over a period of three years. This system would distinguish
regulatory tiers based upon levels of compliance with environmental
regulations. (Article IV, Sec. 4.01)
- Requires TNRCC to develop and implement policies to protect the public
from cumulative risks and give priority to monitoring and enforcement in
communities in which regulated facilities are located. (House Floor
Amendments No. 7 and 8; Article I, Sec. 1.12)
- Establishes an independent Office of Natural Resource Public Interest
Counsel by transferring existing personnel and resources in TNRCC's
Office of Public Counsel to a newly created state agency. (House Floor
Amendment No. 18; Article 1, Sec. 1.22)
- Provides for general transferability of appropriations and funds from
fees in an amount up to the lesser of 7 percent or $20.0 million in
appropriations. (Article III, Sec. 3.03)
- Changes the waste treatment inspection fee into a water quality fee
that would be imposed on wastewater discharge and water rights permit
holders, and combine the waste treatment inspection and water quality
assessment fees into one water quality fee. The fee provisions in the
bill would result in an increase in water quality fee of $10,000 per
permit holder. (Article III, Sec. 3.02 and 3.04)
- Prohibits location of crushing facilities for concrete production
facilities in Harris County within one-half mile of residences, schools
and churches. (House Floor Amendments No. 44 and 45; Article IV, Sec.
4.12)
- Reinstates the petroleum product delivery fee, but specifies a
declining fee schedule, and extends the reimbursement program for clean
up and remediation of petroleum storage tanks from September 1, 2003 to
September 1, 2006. (House Floor Amendment No. 56, Article XIII, Sec.
13.08-3.09 and Sec. 13.03-13.06)
- Implements an environmental laboratory accreditation program, and
transfer the Safe Drinking Water Laboratory Assessment Program from the
Texas Department of Health to consolidate it with the new accreditation
program at TNRCC. (Article V, Sec. 5.01; Article XVIV, Sec. 19.01)
- Improves revenue management and fee collection practices by requiring
all fees to be paid on the date due, and limit adjustments to
self-reported fee data, and fee amounts. Authorize fee audit staff to
issue a notice of violation to fee payers for violation of reporting
requirements, and authorize the charging of interest and penalties on
delinquent unpaid fees. (Article III, Sec. 3.03).
Methodology
Total costs of implementing this bill are estimated to be $218.8 million
during the 2002-03 biennium. The bill also would require an additional
sixteen FTEs in fiscal year 2002 and twenty-one additional FTEs in 2003.
Most of this biennial cost is attributable to the Petroleum Storage Tank
Remediation (PSTR) program, which is estimated to cost $201.2 million
during the 2002-03 biennium. In addition, the Texas Department of
Transportation (TxDOT) estimates that implementing the provisions of the
bill related to rock crushing facilities will increase road improvement
project costs by $13.9 million for the 2002-03 biennium.
Based on estimates provide by TNRCC for similar legislation, six
additional FTEs and total costs of $430,638 in fiscal year 2002 and
$377,838 in fiscal year 2003 are required to develop and implement
policies that evaluate cumulative risks when reviewing applications for
siting, expansion or operation of facilities in areas where multiple
permitted facilities already exist.
The bill requires TNRCC to collect and track compliance history data on
regulated entities, to prepare a comparative analysis of data evaluating
performance, and to report the information in an annual report.
Implementation of this responsibility would require one database
administrator. This FTE would oversee the development or restructuring
of a current database with the data the agency will use to differentiate
compliance levels of regulated entities.
TNRCC is also required to develop a performance assessment for use in
determining eligibility for incentive-based and innovative regulatory
programs, permitting and enforcement decisions, and determining whether
an entity receives an announced inspection. It is assumed that
implementation of the performance-based regulatory program would require
three enforcement coordinators; and two legal staff (one additional
attorney and one legal assistant) for complex rulemaking, legal support
and permit review. The coordinators would provide cross-agency support in
the development of performance-based regulation.
The total cost estimate for the bill's provisions relating to compliance
history data, performance assessments and incentive-based and innovative
regulatory programs is $782,773 in fiscal year 2002, and $724,273 in
fiscal year 2003. These cost estimates include salaries and benefit
costs for the six additional positions described above.
It is assumed that implementation of the voluntary laboratory
accreditation program would require five new positions, including support
staff (an Accountant) and four inspectors. TNRCC could phase in this
program, adding four positions in fiscal year 2002 and one more in fiscal
year 2003. Program costs (including benefits) are estimated at $458,935
in fiscal year 2002 and $501,696 in fiscal year 2003 and thereafter.
Although these costs are expected to be offset by fees, all costs for the
first 18 months of the program would require General Revenue
appropriations, until revenue collections are sufficient to fund
operating costs. TNRCC is expected to obtain approval from the National
Environmental Laboratory Accreditation Conference (NELAC) to administer a
NELAC program within 18 months of the effective date of the bill. After
which, TNRCC may begin to assess lab fees associated with accreditation.
This bill transfers the drinking water certification program, staff,
equipment, and funding from the Texas Department of Health to TNRCC
effective September 1, 2001. This provision also authorizes TNRCC to
administer fees for the program. The transfer would move two positions
from TDH to TNRCC. The estimated cost of the drinking water
certification program for the 2002-03 biennium is $282,210. This
transfer would result in an offsetting reduction in TDH spending and FTE
levels.
TxDOT estimates that the prohibition on crushing operations for concrete
production within one-half mile of churches, residences and schools in
Harris County will increase road improvement costs by $13.9 million
during the 2002-03 biennium. According to TxDOT, the increase in travel
distance between project sites and the rock crushing equipment caused by
the one-half mile prohibition on crushing operations will increase
project costs by approximately $5.5 million per fiscal year. In
addition, TxDOT anticipates a one-time increase of $3.0 million in
material costs due to the shutdown and relocation of rock crushing
facilities impacted by the one-half mile prohibition.
The bill continues the reimbursement program for clean up and remediation
of petroleum storage tanks (PSTR) to September 2006, and reinstates the
petroleum product delivery fee, but specifies a declining fee schedule.
The estimated cost of the PSTR program for the 2002-03 biennium is
$201.2 million, all of which would be funded by fee collections.
Based on information provided by the agency, groundwater sampling and
financial assurance reviews for the PSTR program would be privatized.
This combined with the assumption that all reimbursements for eligible
sites will be received by March 1, 2006, results in a net decrease in
positions funded by the administrative allocation from PSTR Account No.
0655. Based on current law, 82 of the 92 positions currently funded by
the 6.7 percent administrative allocation would be eliminated during the
2002-03 biennium. However, for purposes of this analysis, it is assumed
that funding for these 92 positions is restored in the 2002-03
appropriations bill as proposed in the Committee Substitute for Senate
Bill 1. Finally, it is assumed that the phase out of positions funded by
the administrative allocation would start in fiscal year 2006, during
which 12 positions would be eliminated, and continue through fiscal year
2007, with all remaining positions eliminated by March 2007. This
phase-out of PSTR program positions accounts for the smaller number of
additional FTEs estimated for the agency as a whole during the five year
forecast period.
Major revenue changes anticipated to result from the bill are discussed
below:
(1) A one-time revenue gain of $712,940 in fiscal year 2002 is expected
due to proposed changes in due dates and assessments for fees. It is
expected that $307,919 of these additional revenues would be deposited to
the credit of the General Revenue Fund and that $405,021 would be
deposited to the Waste Management Account No. 549.
(2) New fees to cover the cost of the laboratory accreditation program
are expected to total $250,848 in fiscal year 2003, increasing to
$501,696. The drinking water certification program is expected to
transfer $149,105 in revenues in fiscal year 2002 and $133,105 in
revenues in each year thereafter from the Department of Health to TNRCC.
It is assumed that both the laboratory accreditation fees and the
drinking water certification program fees would be deposited to a newly
created account in the General Revenue Fund, the Environmental Testing
Laboratory Accreditation Account.
(3) Based on projects provided by the Comptroller's Office, the petroleum
product delivery fee would generate an average of $95.3 million in
revenue per year. Based on existing state law, no further revenues from
the petroleum product delivery fee are expected to be received. As a
result, a 2 percent service charge authorized by the Water Code to
reimburse the Comptroller for administrative costs and deposited to the
General Revenue Fund would no longer be collected. However,
reinstatement of the petroleum product delivery fee, as included in this
bill, would result in an annual average revenue gain to the General
Revenue Fund of $1,750,000 per year.
The funding flexibility provisions in this bill-- transferability of up
to the lesser of 7 percent or $20 million of appropriations -- are
assumed to be revenue neutral. Using broader criteria to establish rates
for water, waste treatment and wastewater discharge fees, and
consolidating water fees are assumed to produce an additional, but
presently unknown amount of revenues. These revenues would be an
appropriate funding source for the Total Maximum Daily Load
Implementation plans requested by the agency.
Since the laboratory accreditation fees are not anticipated to be
collected until 18 months after the bill's enactment, this estimate
assumes that program costs in the initial period would be paid out of the
General Revenue Fund. Future costs for the laboratory accreditation
program would be covered by fees deposited to the newly created
Environmental Testing Laboratory Accreditation Account. This estimate
assumes that all costs for the drinking water certification program would
be paid out of the Environmental Testing Laboratory Accreditation
Account. Although this is not a new requirement of the committee
substitute, a revision has been made to the fiscal note to account for
the anticipated cost of the program out of general revenue.
It is assumed that all costs associated with the bill's requirements
relating to compliance history data and performance assessments for
incentive-based and innovative programs would be funded by TNRCC's
multiple funding sources. Cost increases not related to the PSTR
program, rock crushing operations or the self-supporting environmental
lab accreditation and safe drinking water programs were allocated to
TNRCC's multiple funding sources as follows: costs were distributed
among the four largest dedicated accounts based on the percentage each
account represented of the biennial budget recommended for the TNRCC in
House Bill 1. The four accounts are the Clean Air Account No. 151, Water
Resource Management Account No. 153, Waste Management Account No. 549,
and the Hazardous and Solid Waste Remediation Account No. 550. One
additional adjustment was made: funding that otherwise would have come
from the Water Resource Management Account No. 153 was provided by the
General Revenue Fund.
Neither the after-hours complaint response or removal of clean air
grandfather provisions are expected to have significant fiscal
implications for the agency. Removing the 4,000 ton cap on emissions
from grandfathered facilities and possibly doubling or tripling emission
fees for these facilities should not have fiscal implications because it
is assumed that these facilities will apply for the appropriate permit
before the fees would increase. The agency currently has an after-hours
response policy and already provides employees with flex-time in certain
high-incident areas. As a result, no additional FTEs or operating costs
are needed to implement after-hours complaint response.
Local Government Impact
Provisions of the bill relating to the Texas Clean Fleet program may
affect local units of government in 111 Texas counties that own, operate
or lease a fleet of more than 25 vehicles. The bill would require
affected units of local government that purchase or lease new vehicles to
insure that by September 1, 2003, one quarter of the vehicles meet the
stricter emission standards, and that by September 1, 2008, 100 percent
of the fleet meet the strict emissions standards. There could be a
significant negative fiscal impact on units of local government that must
purchase new vehicles, or convert current vehicles to bring these
vehicles into compliance with stricter emissions standards. Units of
local government that are planning on purchasing new vehicles should not
experience a significant fiscal impact as a result of the bill.
Local units of government that own or operate petroleum storage tanks
that are located in aquifers in Bexar and Comal counties may incur costs
to comply with provisions of the bill relating to containment systems for
their storage tanks. Additional costs are estimated to range between
$4,900 to $7,700 per tank, depending on the type of containment system
used.
Provisions of the bill relating to the location of rock crushing
facilities would only affect local units of government in Harris county.
Harris county would experience cost increases of $5 per cubic yard of
concrete mix, and per ton of hot mix. Harris county would also incur a
$5 per ton increase of flex base for an estimated 5 percent of the volume
of aggregate the county would use.
Local units of government holding water quality permits could experience
cost increases up to $10,000 per year, depending on the rate the TNRCC
would set for the water quality permit fee.
Source Agencies: 601 Texas Department of Transportation, 592 State
Soil & Water Conservation Board, 582 Texas Natural
Resource Conservation Commission, 304 Comptroller
of Public Accounts, 116 Sunset Advisory Commission
LBB Staff: JK, CL, ZS, DW