C.S.H.B. 1366 78(R)    BILL ANALYSIS


C.S.H.B. 1366
By: Elkins
Business & Industry
Committee Report (Substituted)



BACKGROUND AND PURPOSE 

Under current law, there is no provision to fund a dry cleaning pollution
clean up program.  No federal or state programs exist that are
specifically related to the environmental impact of dry cleaners.  It is
impossible for small, family owned dry cleaners to afford the cost of
private remediation.  The voluntary compliance cost for most small
business dry cleaners is greater than they can afford.     

This bill adds Chapter 374, Dry Cleaner Environmental Response, to the
Health and Safety Code and attempts to provide assistance to the dry
cleaning industry in cleaning up chemical spills.   

The purpose of the bill is to prevent pollution and move industry toward
less polluting chemicals and pollution prevention in delivery of storage,
use and handling of chemicals.  The fund's floor is ten million dollars
and the ceiling is twenty million dollars. 

Twelve states have such programs.  Kansas has the best of the twelve and
this is a similar  adaptation of the Kansas statute to meet Texas needs.
The bill's intent is to, at no additional state cost, fully administer the
program. 


RULEMAKING AUTHORITY

It is the committee's opinion that rulemaking authority is expressly
granted to the Texas Commission on Environmental Quality in SECTION 1
(Sections 374.051, 374.052, 374.053, Health and Safety Code) and SECTION
3, Chapter 374, Health and Safety Code of this bill.  Rulemaking authority
is expressly granted to the Comptroller of Public Accounts in SECTION 1
(Section 374.104, Health and Safety Code) and SECTION 2, Chapter 374,
Health and Safety Code of this bill. 


ANALYSIS


SECTION 1.  Subtitle B, Title 5, Health and Safety Code, is amended by
adding Chapter 374,  Dry Cleaner Environmental Response. 

Sec. 374.001  Definitions
This section provides definitions for:  "Chlorinated dry cleaning
solvent," "Commission," "Corrective action," "Corrective action plan,"
"Dry cleaning facility," "Dry cleaning solvent," "Dry cleaning unit,"
"Executive director," "Fund," "Owner," and "Release." 

Sec. 374.002  Applicability Of Other Law
To the extent that this chapter is inconsistent or in conflict with
Chapter 361 or other general law, this chapter prevails. 

Sec. 374.003  Applicability To Governmental Bodies
This chapter does not apply to a governmental entity or a political
subdivision of this state. 

Sec. 374.004  Advisory Committee
Membership to the advisory committee consists of three representatives of
the dry cleaning industry,  one public representative of urban areas, and
one public representative of rural areas.  The advisory committee will
review and comment on the methodology used to rank contaminated sites,
review and comment on the report the commission will prepare each
biennium, and assist in the development of rules to implement this
chapter.  A member of the committee serves at the will of the executive
director. 

Sec. 374.051 Commission Rules And Standards
The commission shall adopt rules to administer and enforce this chapter.
Rules adopted under this section must be reasonably necessary to preserve
natural resources and provide corrective action of contaminated releases.
The rules will establish performance standards, requirements for the
removal of dry cleaning solvents, criteria to be used in setting
priorities for the expenditure of money from the fund, and criteria under
which the level at which corrective action is considered complete. 

Sec. 374.052  Facility Retrofitting
The commission will require dry cleaning facilities operating on or before
January 1, 2004 to implement performance standards not later than January
1, 2006.  The commission may exempt businesses on the basis of financial
hardship with annual gross receipts of $200,000 or less.  This section
expires January 1, 2007. 

Sec. 374.053  Performance Standards For New Dry Cleaning Facilities
The commission will adopt performance standards for a new dry cleaning
facility.  Rules must allow for new technologies, require proper storage
and disposal of wastes, require compliance with emissions standards,
require dikes or other containment structures to be installed around dry
cleaning units and storage areas and capable of containing a leak, spill
or release.  Require all diked floor surfaces to be made of the
appropriate material and all chlorinated dry cleaning solvents be
delivered by the appropriate means.  Rules under this section shall ensure
that wastewater or solvent is not discharged to a sanitary sewer, septic
tank, or water of this state. 

Sec. 374.054 Completion Criteria
Various factors will be considered in determining whether a corrective
action is complete, such as individual site characteristics, state water
quality standards, deviation from state water quality standards, and any
additional factors that are relevant. 



Sec. 374.055 Criteria For Administration Of Chapter
The commission shall deal with contamination from dry cleaning facilities
by using money in the fund, use the fund as sites are discovered, consider
interim or early corrective action, use innovative technology, and use the
fund to address contamination from releases. 

Sec. 374.056  Report To Governor And Legislature
A report will be submitted to the Governor and Legislature on or before
December 1 of each evennumbered year regarding activity in the fund during
the two previous fiscal years including money deposited to the fund and
the sources, disbursements from the fund and the purposes of the
disbursements and the extent of corrective action taken.  The report will
also include the ranking of sites on the date the report is made. 

Sec. 374.101  Dry Cleaning Facility Release Fund
The dry cleaning facility release fund is an account in the general
revenue fund. The fund consists under this chapter from proceeds from
charges and fees, interest attributable to investment of the money, money
recovered by the state and money received in the form of gifts, grants,
reimbursements, or appropriations.  The fund may be appropriated only to
the commission including any administrative duty imposed under this
chapter.  Before September 1, 2005 the commission may not exceed 15
percent of the fund for administrative and start-up expenses.  Beginning
on September 1, 2005, the commission may not exceed 10 percent of the fund
for administrative expenses. 

Sec. 374.102  Registration; Fee; Posting
Each dry cleaning facility must register with the Commission annually
along with a $250.00 registration fee.  The owner's registration number
shall be posted in the public area of each dry  cleaning facility.  Fees
paid under this section will be deposited to the fund. 

Sec. 374.103  Environmental Remediation Charge; Disposition Of Proceeds
All receipts received for dry cleaning or laundering services are subject
to an environmental remediation charge of 1.5 percent which will be paid
to the Comptroller.  Receipts that are exempt from the charge are:
services performed through a coin-operated device, laundering without use
of dry cleaning solvents of uniforms, linens, or other textiles for
commercial use, or services exempt from the retail sales tax. 

The comptroller may retain five percent of the charges collected for the
purpose of covering costs incurred under this chapter.  The rest of the
charges will be credited to the fund.  If the costs to administer the fund
are less than the amount retained, the comptroller will return the
unexpended balance to the fund on or before August 31 of that year. 

Sec. 374.104  Fee On Purchase Of Dry Cleaning Solvent; Disposition Of
Proceeds 
A fee of $5.00 per gallon is imposed on the purchase of dry cleaning
solvent by a dry cleaning facility.  The person that distributes the
solvent shall pay the fee to the comptroller.  The comptroller shall
deposit all fees to the fund.  This section does not apply to an owner who
has never used the dry cleaning solvent perchloroethylene in a dry
cleaning unit.   


Sec.  374.105  Imposition Of Charge Dependent On Balance Of Fund
The environmental remediation charge is not required to be paid after July
1 of a calendar year if the unobligated principal balance exceeds $20
million on April 1 of that year.  The environmental remediation charge
shall be reinstated effective July 1 of a calendar year if the unobligated
principal balance of the fund is less than $10 million on April 1 of that
year.  The commission will notify the comptroller of the unobligated
balance of the fund no later than April 5 of each year.  The comptroller
shall notify persons that pay the fee if the charge is to be suspended or
reinstated on the following July 1. 

Sec. 374.151 Response To Release
A person may not intentionally allow a release.  A person that is aware of
a release shall contain and control the release and notify the commission
of the release within 48 hours. 

Sec. 374.152  Investigation And Assessment Of Release; Emergency Action
If a release poses a threat to human health or the environment, the
commission will investigate and assess the contamination and take
necessary action to ensure that human health or safety is not threatened
by the release. 

Sec. 374.153  Corrective Action
The commission shall take corrective action for a release from a dry
cleaning facility that results in contamination, including contamination
that may have moved off the dry cleaning facility. Corrective action
includes the cleanup of affected soil, groundwater, or surface water using
the most cost effective method.  The commission shall operate, maintain,
monitor releases, proper disposal of wastes, and pay reasonable costs for
the corrective action. 

Sec. 374.154 Ranking Of Contaminated Dry Cleaning Sites
The commission shall assign a rank for sites awaiting corrective action.
The application for ranking must contain information and evidence required
by commission rule to aid in ranking.  The costs incurred by an applicant
in collecting the information shall be credited against the deductible
payed by the applicant.  The commission will notify the applicant of their
ranking on or before the 90th day after the application is received. 

Sec. 374.155 Power To Modify Commission Rankings Or Postpone Corrective
Actions 
The commission may modify the ranked status or postpone temporarily the
completion of a corrective action if it is necessary to make money
available for action at a site with a higher ranking. 

Sec. 374.156 Entry Onto Property
The commission may enter onto property to take corrective action if action
is necessary to protect  the public health or environment at reasonable
times and on written notice to the owner.  If consent is not granted to
enter the property, the commission may issue an order directing compliance
with the notice. 



Sec. 374.201  Proportionate Share Of Liability
The commission may use money in the fund to pay for the proportionate
share of the liability and determine relative liability of the fund for
costs of corrective action.  The commission shall issue an order
establishing the percentage of liability. 

Sec. 374.202  Owner Responsibility
The commission may hold an owner responsible for the costs of corrective
action if they caused  a release by operating improper practices, is in
arrears for money owed under this chapter, obstructed the efforts of the
commission, a material violation, or more than once violated commission
rules. 

Sec.374.203  Limitation On Use Of Fund For Corrective Action
In this section, "contaminated dry cleaning site" is defined.  The
commission may not use in excess of $5 million from the fund for
corrective action at a single contaminated dry cleaning site.  This
section lists limitations on the use of the fund.  The applicant must pay
a deductible of the first $5,000 of corrective action costs. 

Sec. 374.204  Limitation On Liability
The fund, the commission, the executive director, this state, or agents or
employees of this state may not be held liable for loss of business,
damages, or taking of property associated with any corrective action. 

Sec. 374.205  Limitation On Use Of Fund For Third Parties
Money from the fund may not be used to compensate third parties for bodily
injury or property damage caused by a release, other then property damage
included in a corrective action plan. 

Sec. 374.206  Use Of Other Sources Of Money
This chapter does not create a liability or responsibility to pay any
corrective action costs from a source other than the fund or to take
corrective action if the amount of money in the fund is not sufficient. 

Sec. 374.207  Eligible Owner Exempt From Certain Claims
If a site is eligible to have corrective action costs paid by the fund, an
administrative or judicial claim may not be made under state law by or on
behalf of this state or by any other person, except a political
subdivision, to compel or seek recovery of corrective action. 

Sec. 374.208  Unauthorized Payments
This section deals with the costs that the commission may pay or may not
pay from the fund.    

Sec. 374.251  Review of Orders And Decisions
A person affected by an order or decision by the commission may make a
written request for a hearing.  A person under this section is entitled to
judicial review. 



Sec. 374.252  Violations; Penalties
A person is subject to an administrative penalty under Section 7.0525,
Water Code, if the person is responsible for any of the violations stated
in this section. 
                               
Sec. 374.253  Expiration
This chapter expires on September 1, 2021.  A corrective action begun
before the expiration date shall be completed with money from the fund to
the extent possible.  Any unobligated money in the fund after completion
of all corrective actions shall be transferred to the general revenue
fund. 

 SECTION 2.  Subchapter C. Chapter 7, Water code is amended by adding:

Sec. 7.0525.  Penalties For Violations Related To Certain Dry Cleaning
Facilities. 
The amount of the penalty for a violation of section 374.252, Health and
Safety Code, may not exceed $5,000 except violation of Section 374.252
(a)(1), Health and Safety Code, may not exceed $1,000.  In assessing an
administrative penalty, the commission shall consider the factors under
this section. 

SECTION 3.  Not later than December 1, 2003, the Texas Commission on
Environmental Quality and the comptroller shall adopt rules, performance
standards, or forms required for the implementation of this act. 

The changes in law as added by this act, apply only to a cause of action
that accrues on or after January 1, 2004, and before September 1, 2021. 

SECTION 4.  This act takes effect September 1, 2003 except as provided by
this section. 
Before January 1, 2005, the commission shall limit disbursements from the
fund to those disbursements allowed by Section 374.101(d) as added by this
Act. 

Disbursements from the fund for corrective action, as added by this Act,
may not begin before January 1, 2005. 

Sections 374.056, 374.204, 374.207, and 374.252, as added by this Act,
take effect January 1, 2004.  


EFFECTIVE DATE

This Act takes effect September 1, 2003, except as provided in Section 4
of the bill. 


COMPARISON OF ORIGINAL TO SUBSTITUTE

C.S.H.B. 1366 modifies the original version by the following:

SECTION 1

Sec. 374.001
The substitute adds the word retail to the definition of a "Dry cleaning
facility", deletes the definition of "Retailer". 

Sec. 374.003
The substitute adds an additional exemption to the Applicability to
Governmental Bodies which is a political subdivision of this state. 

Sec. 374.004
The substitute adds that the advisory committee will be composed of one
public representative of urban areas and one public representative of
rural areas. 

Sec. 374.052
The substitute adds language where the commission by rule may exempt
businesses on the basis of financial hardship for facility retrofitting. 

Sec. 374.055
The substitute deletes language from the criteria for administration of
chapter which discouraged other units of government from becoming involved
in the contamination problems resulting from releases.  C.S.H.B 1366
deletes the language that the commission shall prevent the listing of
sites where dry cleaning solvents are involved on the federal National
Priorities List.    
C.S.H.B. 1366 deletes the language may not seek out contaminated dry
cleaning facility sites because of the existence of the fund or this
chapter by the commission.   
 
Sec. 374.101
The substitute adds language to clarify that the commission shall use
money from the fund to pay for all expenses, including administrative
duties, under this chapter.  Language has also been added to clarify how
much the commission may annually spend for administrative expenses from
the fund. It also adds Section 403.095, Government Code, does not apply to
money deposited to the fund. 

Sec. 374.102
The substitute changes the registration fee to $250.00.

Sec. 374.103
The substitute modifies Surcharge to Remediation Charge and deletes the
use of the word gross in gross receipts.  The charge shall be at a rate of
1.5 percent of all receipts.  The substitute deletes the consumer shall
pay the surcharge to the retailer.  C.S.H.B. 1366 deletes the charge shall
be collected in the same manner as the retail sales tax imposed under
Chapter 151, Tax Code.  Language has been inserted to clarify that the
comptroller may retain five percent of the charges collected under this
section for the costs incurred under this chapter.  If the comptroller's
costs are less than the amount retained, the comptroller shall deposit the
unexpended balance to the fund. 

Sec. 374.104
The substitute deletes the language on the purchase of a fraction of a
gallon.  The fee will be imposed on the purchase of all dry cleaning
solvent, not just perchloroethylene as stated in the original bill. An
exemption has been added to state that the fee does not apply to an owner
who has never used the dry cleaning solvent perchloroethylene in a dry
cleaning unit.  The substitute removes the language in reference to fees
collected in the same manner as the retail sales tax imposed under Chapter
151, Tax Code. 

Sec. 374.105
The substitute changes surcharge and fees to charge.  This section deletes
the reference to fees imposed by Section 374.104. 

Sec. 374.154
The substitute deletes the language, for not less than five years, on an
owner of a dry cleaning facility who is eligible to apply for a site to be
ranked.  Language has been deleted on the commission shall keep a list on
corrective actions taken before January 1, 2004. 

Sec.374.202
The substitute deletes the language on purchasers of stock or indicia of
ownership. 

Sec. 374.203
The substitute adds the commission may use money from the fund if the
owner applies for ranking under Section 374.154 and is not otherwise
ineligible.  The substitute deletes the language on reimbursement at a
site after September 1, 2003 and before January 1, 2005.  It also deletes
the language on the limit of payment from the fund to an amount not to
exceed three percent of the fund. 

Sec. 374.207
The substitute adds that a political subdivision is eligible to make a
claim against the owner to compel corrective action.     

Sec. 374.252
The substitute adds the language under Section 7.0525, Water Code, a
person is subject to an administrative penalty.  Language has been deleted
that imposed on a person a penalty not to exceed $500 for a violation. 

Sec. 374.253
The substitute adds this section for the expiration of this chapter and
the fund.  This section also adds any unobligated money remaining in the
fund after the completion of all corrective actions shall be transferred
to the general revenue fund to the credit of the commission or a successor
agency. 

SECTION 2
 The substitute adds Section 2 to read: Subchapter C, Chapter 7, Water
Code, is amended by adding Section 7.0525.  This section provides the
penalties for violations of Section 374.252.  It also adds in addition to
the factors prescribed by 7.053 in assessing an administrative penalty. 

SECTION 3
Section 2 of the original bill is now Section 3 in the substitute and adds
the date of September 1, 2021 to the language. 

SECTION 4
Section 3 of the original bill is now Section 4 in the substitute.  The
substitute deletes language that the commission may not collect fees or
deposit fees to the fund before January 1, 2004.  Language is added to the
substitute to clarify that before January 1, 2005 the commission shall
limit disbursements from the fund as allowed by Section 374.101 (d), as
added by this Act.  The substitute adds Sections 374.204 and 374.207 take
effect January 1, 2004.