LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 77th Regular Session
May 8, 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; providing penalties.), Committee Report 2nd
House, Substituted
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* Estimated Two-year Net Impact to General Revenue Related Funds for *
* HB2912, Committee Report 2nd House, Substituted: positive impact *
* of $3,217,968 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 $1,523,475 *
* 2003 1,694,493 *
* 2004 1,695,451 *
* 2005 1,760,451 *
* 2006 861,451 *
****************************************************
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 $2,362,919 $(839,444) $405,021 $(101,677) 10.0 *
* 2003 2,302,000 (607,507) 0 (90,042) 15.0 *
* 2004 1,929,000 (233,549) 0 (58,962) 14.0 *
* 2005 1,994,000 (233,549) 0 (58,962) 6.0 *
* 2006 1,095,000 (233,549) 0 (58,962) (1.0) *
***********************************************************************
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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) $(210,111) $149,105 $(149,105) *
* 2003 (85,917) (191,655) 383,935 (383,935) *
* 2004 (56,260) (125,501) 634,801 (634,801) *
* 2005 (56,260) (125,501) 634,801 (634,801) *
* 2006 (56,260) (125,501) 634,801 (634,801) *
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*Fiscal Probable Revenue Gain/(Loss) Probable Savings/(Cost) from *
* Year from Petroleum Storage Tank Petroleum Storage Tank *
* Remediation Account/ Remediation Account/ *
* GR-Dedicated GR-Dedicated *
* 0655 0655 *
* 2002 $94,544,000 $(94,544,000) *
* 2003 106,659,000 (82,894,178) *
* 2004 88,387,000 (88,387,000) *
* 2005 91,592,000 (77,262,661) *
* 2006 47,525,000 (57,401,860) *
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Technology Impact
The bill requires the acquisition of personal computers and related
software and equipment for fifteen additional positions.
Fiscal Analysis
The bill as substituted continues the Commission 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 III, Sec. 3.01)
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 II, Sec 2.03)
Change 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 II, Sec. 2.02 and 2.04)
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. (Article XI, Sec. 12.08-12.09 and Sec. 12.03-12.06)
Increase in water quality fee of $10,000 per permit holder. (Article II,
Sec. 2.02 and 2.04)
Precludes agency from using the competitive bidding process to procure
scientific and technical environmental services, for example, site
assessment studies, modeling, total maximum daily load studies,
scientific data analysis, etc. (Committee Amendment 43, Article I, Sec.
1.18)
Requires public notice and hearing for the reopening of closed or
inactive landfill. (Committee Amendment No. 23, Article VIII, Sec. 8.02)
Requires TNRCC to assess a fee between $1,000 to $5,000 prior to
the land application of sewer sludge. Currently, TNRCC issues permits for
the land application of sewer sludge, but charges no fee. (Committee
Amendment No. 17, Article VIII, Sec. 8)
Implement an environmental laboratory accreditation program (Article
VI, Sec. 6.01), 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 XVII, Sec. 17.01)
Improve 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 II, Sec. 2.03)
Methodology
Total costs of implementing the bill are an estimated to be $182.7
million during the 2002-03 biennium. The bill also would require an
additional ten FTEs in fiscal year 2002 and fifteen additional FTEs in
2003. The majority of the biennial cost is due to the Petroleum Storage
Tank Remediation (PSTR) program, which is estimated to cost $173.9
million during the 2002-03 biennium.
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 annual report.
Implementation of this responsibility would require one database
administrator. It is assumed that 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 to use for
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 for the bill's provisions relating to compliance history
data, performance assessments and incentive-based and innovative
regulatory programs is estimated at: $782,773 in fiscal year 2002;
$724,273 in fiscal year 2003; and $474,273 in each fiscal year from 2004
through 2006.
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 Department of Health (TDH) to TNRCC
effective September 1, 2001. This provision also authorizes TNRCC to
administer fees for the program. The estimated cost of the drinking
water certification program for the 2002-03 biennium is $282,210. This
transfer would result in an offsetting General Revenue reduction in TDH
spending of $94,615 for the 2002-03 biennium.
The bill continues the reimbursement program for clean up and remediation
of petroleum storage tanks to September 2006, reinstates the petroleum
product delivery fee, but specifies a declining fee schedule, and
increases the allowable amount for TNRCC administrative costs from 6.7 to
11.8 percent of revenue collections during the 2002-03 biennium, and up
from 16.4 percent during the 2004-05 biennium to 21.1 percent of revenue
collections during the 2006-07 biennium. The estimated cost of the PSTR
program for the 2002-03 biennium is $173.9 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
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, and the Environmental
Testing Laboratory Accreditation Account.
(3) New fees for sewer sludge application permits are expected to
generate $125,000 per fiscal year to the General Revenue Fund. This
estimate is based on the 50 permit registrations. TNRCC is currently
processing, and an average permit fee of $2,500.
(4) 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 the
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 the 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.
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
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. Finally,
requiring the agency to procure scientific and technical professional
services without a competitive bidding process is expected to increase
the cost of these services, but by an unknown amount.
Local Government Impact
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.
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.
Local government will also be assessed a charge-back fee, not to exceed
$500, by the Commission in order to cover costs related to the permitting
function that are not covered by the permit fees collected. The
charge-back fee will not have a significant impact on units of local
government.
Local units of government shall give preference in contracting for the
disposal of solid waste to license or permit holders who use processes
and technologies that reduce the volume of sludge and hazardous waste
that is being disposed of through beneficial use of land application,
landfill disposal, and other methods. This will not have a significant
impact on units of local government.
Local governments applying for permits to dispose of "Class B sludge"
will experience increased costs ranging from $1,000 to $5,000 depending
upon the amount of sludge applied to the land application unit. No
significant financial impact is anticipated as a result of this permit
fee.
Municipalities requesting a permit to reopen an inactive landfill could
experience significant cost increases associated with Subtitle D,
federal Resource Conservation and Recovery Act. Many inactive landfills
are not in compliance with this federal regulation. TNRCC reports that
costs associated with upgrading an inactive land site to meet federal
requirements would include $250,000 per acre for upgrades and $40,000 in
consultation fees. Sites are approximately 15-20 acres.
Source Agencies: 116 Sunset Advisory Commission, 304 Comptroller
of Public Accounts, 582 Texas Natural Resource
Conservation Commission, 592 State Soil & Water
Conservation Board, 601 Texas Department of
Transportation
LBB Staff: JK, CL, ZS, DW