| TO: | Honorable Troy Fraser, Chair, Senate Committee on Natural Resources |
| FROM: | John S O'Brien, Director, Legislative Budget Board |
| IN RE: | SB657 by Huffman (Relating to the continuation and functions of the Texas Commission on Environmental Quality and abolishing the On-site Wastewater Treatment Research Council.), As Introduced |
| Fiscal Year | Probable Net Positive/(Negative) Impact to General Revenue Related Funds |
|---|---|
| 2012 | $560,000 |
| 2013 | $560,000 |
| 2014 | $560,000 |
| 2015 | $560,000 |
| 2016 | $560,000 |
| Fiscal Year | Probable Revenue Gain/(Loss) from General Revenue Fund 1 |
Probable Savings/(Cost) from General Revenue Fund 1 |
Probable Revenue Gain/(Loss) from Water Resource Management 153 |
Probable Savings/(Cost) from Water Resource Management 153 |
|---|---|---|---|---|
| 2012 | $1,161,256 | ($601,256) | $5,011,736 | $601,256 |
| 2013 | $1,161,256 | ($601,256) | $5,011,736 | $601,256 |
| 2014 | $1,161,256 | ($601,256) | $5,011,736 | $601,256 |
| 2015 | $1,161,256 | ($601,256) | $5,011,736 | $601,256 |
| 2016 | $1,161,256 | ($601,256) | $5,011,736 | $601,256 |
| Fiscal Year | Probable Revenue Gain/(Loss) from Petro Sto Tank Remed Acct 655 |
Probable Savings/(Cost) from Low-level Waste Acct 88 |
Probable Revenue Gain/(Loss) from New General Revenue Dedicated--Low Level Compact |
Probable Savings/(Cost) from New General Revenue Dedicated--Low-Level Compact |
|---|---|---|---|---|
| 2012 | $26,731,000 | $100,000 | $583,298 | ($583,298) |
| 2013 | $29,200,000 | $100,000 | $583,298 | ($583,298) |
| 2014 | $29,200,000 | $100,000 | $583,298 | ($583,298) |
| 2015 | $29,200,000 | $100,000 | $583,298 | ($583,298) |
| 2016 | $29,200,000 | $100,000 | $583,298 | ($583,298) |
| Fiscal Year | Probable Savings/(Cost) from Water Districts and Water Supply Corporations |
|---|---|
| 2012 | ($5,642,992) |
| 2013 | ($5,642,992) |
| 2014 | ($5,642,992) |
| 2015 | ($5,642,992) |
| 2016 | ($5,642,992) |
The Texas Commission on Environmental Quality (TCEQ) and the Texas On-site Wastewater Treatment Research Council are subject to the Sunset Act and will be abolished on September 1, 2011, unless continued by the Legislature. The bill would continue the TCEQ until 2023, and it contains various provisions to implement Sunset recommendations. Only those changes that have a fiscal impact are included in this analysis.
The bill would transfers the authority for making groundwater protection recommendations regarding oil and gas activities from TCEQ to the Railroad Commission. The transfer of authority would include disposal wells used for injecting oil and gas waste and permits for geologic storage of anthropogenic carbon dioxide. The Railroad Commission would also be authorized to assess expedited surface casing fees and fees for non-expedited recommendations to cover costs of the groundwater protection recommendation program and to pay for the digitization of well maps.
The bill would increase the TCEQ's administrative penalty caps for 20 categories of violations to match civil penalty ranges already in law. It would establish a minimum penalty of $50 and a maximum penalty of $5,000 for violations involving Occupational Licensing, On-Site Sewage Disposal, Used Oil, and Performance Standards for Plumbing Fixtures. It would also establish a minimum penalty of $50 and a maximum penalty of $25,000 for all other violations within the jurisdiction of the commission that do not have penalty minimums and maximums already carved out elsewhere in statute.
The bill would prohibit the delivery of certain petroleum products to uncertified tanks and authorize TCEQ to assess administrative penalties for violations. Further, the bill would expand the use of the petroleum storage tank (PST) remediation fee to allow TCEQ to remove non-compliant petroleum storage tanks that pose a contamination risk, that are out of service, and are owned or operated by a person who is financially unable to remediate the tank, and it would reauthorize the PST remediation fee which is set to expire on August 31, 2011. The bill would change the current PST fee levels from statutorily set rates to caps and authorizes the TCEQ to set the fees in rule. Fee rates would be set in an amount to not to exceed the amount necessary to cover the cost of the program, as appropriated to the agency by the Legislature.
The bill would adjust the Water Utility Regulatory Assessment Fee, which is deposited to the credit of the General Revenue-Dedicated Water Resource Management Account No. 153, to be 1 percent for all utilities, including water supply corporations and districts, and eliminates three existing water and wastewater utility application fees relating to applications for rate changes, Certificates of Convenience and Necessity (CCN), and the sale, transfer, or merger of a CCN. The bill also would allow appropriations to be made out of the Water Resource Management Account No. 153 to the Public Utilities Commission (PUC) for the regulation of water and wastewater utilities.
The bill also would clarify the Texas Low-Level Radioactive Waste Disposal Compact Commission’s (LLRWDCC) funding mechanism, by providing that the portion of the compact waste disposal fee allocated to the Compact Commission be deposited in a new General Revenue-Dedicated LLRWDCC Account created by the bill, which could only be appropriated to support the operations of the Compact Commission.
The bill would remove the Certificate of Convenience and Necessity (CCN) and rate change application fees from the list of fees that are deposited to the General Revenue-Dedicated Water Resource Management Account No. 153. It would also direct proceeds of the Texas Onsite Waste Water Treatment Council fee to the Water Resource Management Account No. 153, which are currently deposited to the credit of the General Revenue Fund.
The bill would abolish the Texas On-site Wastewater Treatment Research Council, transfer authority to award grants for on-site sewage research to TCEQ, and require TCEQ to seek input from stakeholder experts when choosing research topics, awarding grants, and holding the conference.
The bill would take effect on September 1, 2011.
The bill's provisions relating to the transfer of authority for making groundwater protection recommendations regarding oil and gas activities from TCEQ to the Railroad Commission would not have an net fiscal impact on the state, but it would result in a transfer of funds and FTEs from TCEQ to the Railroad Commission. It is estimated that 9.0 FTEs and $931,256 in annual costs out of the Water Resource Management Account No. 153 would transfer from TCEQ to the Railroad Commission. Because the bill would allow for the Railroad Commission to collect fees similar to those assessed currently by the TCEQ to operate the groundwater protection recommendation program, but it does not specify where such fees would be deposited, this estimate assumes that fee revenues from expedited surface casing recommendation letters currently collected by the TCEQ and deposited to the Water Resource Management Account No. 153 would be collected instead by the Railroad Commission and deposited to the General Revenue Fund. This estimate assumes such fees would be appropriated to the Railroad Commission. The additional fees and costs to General Revenue are shown in the table above.
The bill's provisions increasing per violation and per day administrative penalty caps for 20 categories of violations could result in an increase in penalty revenues deposited to the General Revenue Fund. However, this estimate assumes that the amount of additional revenue would not be significant.
The bill's provisions prohibiting the delivery of certain petroleum products to uncertified petroleum storage tanks is expected to result in an estimated gain to the General Revenue Fund of $560,000 annually. This estimate is based on TCEQ's past experience when the prohibition was in law prior to 2005 and the identified violations of the prohibition. TCEQ reports having collected $2.8 million in penalties from 2001-2005, the last five years the delivery prohibition was in place. The agency expects to collect a similar amount over the 2012-2016, and this estimate assumes the annual revenue stream would thus be equal to one-fifth of the $2.8 million or $560,000.
The bill's provisions extending the petroleum products delivery fee would have a positive fiscal impact to the General Revenue-Dedicated PST Remediation Account No. 655 of about $29.2 million per year. This estimate assumes that the TCEQ would set the petroleum products delivery fee at a rate to generate sufficient revenue to cover the agency's 2010-11 annual expenditures out of the PST Remediation Account No. 655 of $26.2 million plus estimated associated employee benefit costs of $3.0 million per fiscal year. If the Legislature would appropriate less than the $26.2 million per fiscal year assumed in this estimate for the 2012-13 biennium, the revenue generated by the fee could be less. The revenue amount shown in the table above for fiscal year 2012 is only $26,731,000 because it reflects the additional amount that would be collected above the $2,469,000 already included in the Comptroller's Biennial Revenue Estimate for 2012-13.
The bill's provisions relating to the LLRWCC would result in revenues to the newly created Low-Level Waste Disposal Compact Commission Account in an amount sufficient to fund the operations of the LLRWCC. Based on the TCEQ's Legislative Appropriations Request for the LLRWCC, those costs are estimated at $583,298 per fiscal year. This estimate assumes that the Legislature would appropriate that amount to the agency. Because the TCEQ provides $100,000 per fiscal year in funding out of the General Revenue-Dedicated Low-Level Waste Account No. 88, a savings equal to that amount is also shown in the table above.
The proposed adjustment of the Water Utility Regulatory Assessment fee is expected to result in a gain of $5,642,992 per fiscal year to the General Revenue-Dedicated Water Resources Management Account No. 153. This estimate is based amounts paid by two categories that currently pay 0.5 percent, Water Districts and Water Supply Corporations. Actual collections from these entities totaled $5.6 million in calendar year 2009, so collecting an additional 0.5 percent on each of the two categories is expected to yield an additional $5.6 million per fiscal year. Because the bill would allow the Public Utility Commission (PUC) to receive funds from the Water Resource Management Account No. 153 for regulation of water and wastewater utilities, if additional legislation were to pass, such as Senate Bill 661, transferring the regulation of water and wastewater utilities from TCEQ to PUC, then appropriations out the Water Resources Management Account No. 153 sufficient to fund the programs could be made directly to the PUC.
The elimination of three existing water and wastewater utility application fees (Rate Change Application Fees; CCN fees; and Sale, Transfer or Merger of a CCN fee), is expected to result in a loss of $30,000 to the Water Resource Management Account No. 153 each fiscal year, which is included as an offset to the revenue gain shown in the table above.
Abolishment of the On-Site Wastewater Treatment Research Council and the transfer of its authority to award grants for on-site sewage research to TCEQ would result in the $330,000 in each fiscal year of 2010-11 that is provided the Council would be transferred to TCEQ for the same purposes. The bill's provision for the fee collected to fund the on-site wastewater treatment grant program to be deposited into TCEQ’s Water Resource Management Account No. 153, instead of to the General Revenue Fund, as it is currently, would result in loss to General Revenue Fund of $330,000 per fiscal year and an equal gain to the Water Resource Management Account No. 153. Costs to the General Revenue Fund would be reduced and costs to the Water Resource Management Account No. 153 would increase in an equal amount.
| Source Agencies: | 116 Sunset Advisory Commission, 304 Comptroller of Public Accounts, 582 Commission on Environmental Quality
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| LBB Staff: | JOB, TL, SZ, SD
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