By:  Armbrister                                                   S.B. No. 455
	(In the Senate - Filed February 12, 2003; February 17, 2003, 
read first time and referred to Committee on Natural Resources; 
April 22, 2003, reported adversely, with favorable Committee 
Substitute by the following vote:  Yeas 8, Nays 2; April 22, 2003, 
sent to printer.)

COMMITTEE SUBSTITUTE FOR S.B. No. 455                                    By:  Armbrister

relating to compliance histories for and incentives to reward compliance performance by entities regulated by the Texas Commission on Environmental Quality. BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: SECTION 1. Subdivision (5), Section 5.752, Water Code, is amended to read as follows: (5) "Strategically directed regulatory structure" means a program that is designed to use innovative programs to provide maximum environmental benefit, to result in economic savings to regulated entities, and to reward compliance performance. SECTION 2. Subsections (a), (b), and (e), Section 5.753, Water Code, are amended to read as follows: (a) Consistent with other law and the requirements necessary to maintain federal program authorization, the commission by rule may [shall] develop standards [a uniform standard] for evaluating site-specific compliance history that are uniform for sites that are similar in size and complexity and at which similar activities occur. (b) The components of compliance history may [must] include: (1) enforcement orders, court judgments, [consent decrees,] and criminal convictions of this state [and the federal government] relating to compliance with applicable legal requirements under the jurisdiction of the commission [or the United States Environmental Protection Agency]; (2) [notwithstanding any other provision of this code, orders issued under Section 7.070; [(3)] to the extent readily available to the commission, enforcement orders, court judgments, consent decrees, and criminal convictions relating to violations of environmental laws of other states and the federal government, including the United States Environmental Protection Agency; and (3) [(4)] changes in ownership. (e) Except as required by other law or any requirement necessary to maintain federal program authorization, the commission by rule shall establish a period for site-specific compliance history. SECTION 3. Subsections (a) through (d), (g), (h), and (i), Section 5.754, Water Code, are amended to read as follows: (a) The commission by rule may [shall] establish a set of standards for the classification of a person's compliance history at a particular site. (b) Rules adopted under this section must, at a minimum, provide for three classifications of site-specific compliance history in a manner adequate to distinguish among: (1) poor performers, or regulated entities that in the commission's judgment perform below average at a particular site; (2) satisfactory [average] performers, or regulated entities that generally comply with environmental regulations at a particular site; and (3) high performers, or regulated entities that have a [an above-average] compliance record at a particular site that demonstrates a high level of compliance with environmental regulations at that site. (c) In classifying a person's compliance history at a particular site, the commission shall: (1) consider the size, complexity, and type of activity at the site; (2) determine whether a violation of an applicable legal requirement is of major, moderate, or minor significance; (3) [(2)] establish criteria for classifying a repeat violator, giving consideration to the size [number] and complexity of the site at which the violations occurred and limiting consideration to violations of a similar nature [facilities owned or operated by the person]; and (4) [(3)] consider the significance of the violation and whether the person is a repeat violator at the site. (d) The commission by rule shall establish methods of assessing the site-specific compliance history of regulated entities for which it does not have adequate compliance information. The methods may include requiring a compliance inspection at the site to determine an entity's eligibility for participation in a program that requires a high level of compliance. (g) Rules adopted under Subsection (e) for the use of site-specific compliance history shall provide for additional oversight of, and review of applications regarding, a site [facilities] owned or operated by a person whose compliance performance at that site is in the lowest classification developed under this section. (h) The commission by rule shall, at a minimum, prohibit a person whose compliance history at a particular site is classified in the lowest classification developed under this section from: (1) receiving an announced inspection at the site; and (2) obtaining or renewing a flexible permit for the site under the program administered by the commission under Chapter 382, Health and Safety Code, or participating at the site in the regulatory flexibility program administered by the commission under Section 5.758. (i) The commission shall consider the compliance history of and other relevant compliance information relating to a regulated entity when determining whether to grant the regulated entity's application for a permit or permit amendment for any activity under the commission's jurisdiction to which this subchapter applies. Notwithstanding any provision of this code or the Health and Safety Code relating to the granting of permits or permit amendments by the commission, the commission, after an opportunity for a hearing, shall deny a regulated entity's application for a permit or permit amendment if the regulated entity's compliance history is unacceptable based on violations constituting a recurring pattern of conduct that demonstrates a consistent disregard for the regulatory process, including a failure to make a timely and substantial attempt to correct the violations. SECTION 4. Section 5.756, Water Code, is amended by amending Subsection (b) and adding Subsection (e) to read as follows: (b) The commission shall collect data on and make available to the public [on the Internet]: (1) the number and percentage of all violations committed at a particular site by persons who previously have committed the same or similar violations at that site; (2) the number and percentage of enforcement orders issued by the commission that are issued for a particular site to entities that have been the subject of a previous enforcement order for that site; (3) whether a violation is of major, moderate, or minor significance, as defined by commission rule; (4) whether a violation relates to an applicable legal requirement pertaining to air, water, or waste; and (5) the region in which the facility is located. (e) Any material about a site that is placed on the Internet under this subchapter is subject to a quality assurance and quality control procedure, including an opportunity for the entity that holds the permit for the site to review the information before it is placed on the Internet. SECTION 5. Subsections (a), (b), (d), and (h), Section 5.758, Water Code, are amended to read as follows: (a) The commission by order may exempt an applicant from a requirement of a statute or commission rule regarding the control or abatement of pollution if the applicant proposes to control or abate pollution by an alternative method or by applying an alternative standard that is: (1) as [more] protective of the environment and the public health as [than] the method or standard prescribed by the statute or commission rule that would otherwise apply; and (2) not inconsistent with federal law. (b) The commission may not exempt an applicant under this section unless the applicant can demonstrate [present] to the commission [documented evidence of benefits to environmental quality] that the applicant's proposed project will result in protection of environmental quality that is equal to or greater than the protection afforded by existing standards [from the project the applicant proposes]. (d) The commission's order must provide a [specific] description of the alternative method or standard and condition the exemption on compliance with the method or standard as the order prescribes. (h) In implementing the program of regulatory flexibility authorized by this section, the commission shall: (1) [market the program to businesses in the state through all available appropriate media; [(2)] endorse alternative methods that will clearly benefit the environment and impose the least onerous restrictions on business, including economic benefit; [(3) fix and enforce environmental standards, allowing businesses flexibility in meeting the standards in a manner that clearly enhances environmental outcomes;] and (2) [(4)] work to achieve consistent and predictable results for the regulated community and shorter waits for permit issuance. SECTION 6. Subsection (d), Section 5.753, and Section 5.757, Water Code, are repealed. SECTION 7. This Act takes effect September 1, 2003.
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