HBA-EDN H.B. 2912 77(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 2912 By: Bosse Environmental Regulation 3/16/2001 Introduced BACKGROUND AND PURPOSE The Texas Natural Resource Conservation Commission (TNRCC) protects the state's natural resources and human health by ensuring clean air, clean water, and the safe management of waste. The legislature created the agency in 1993, by consolidating the Texas Water Commission, Texas Air Control Board, and environmental programs from the Texas Department of Health. The agency implements state and federal environmental regulatory laws by issuing permits and authorizations for the control of air pollution, the safe operation of water and wastewater facilities, and the treatment, storage, and disposal of hazardous, industrial, municipal, and low-level radioactive waste. TNRCC ensures compliance with environmental laws by conducting inspections of regulated facilities, monitoring air and water quality, providing technical assistance, encouraging voluntary compliance, and taking formal enforcement action against suspected violators. The agency also develops programs for the cleanup and eventual reclamation of contaminated industrial and abandoned hazardous waste sites. TNRCC is subject to the Texas Sunset Act and will be abolished September 1, 2001 unless it is continued by the legislature. In its review of TNRCC, the Sunset Advisory Commission (commission) found that the traditional, prescriptive regulatory approach focuses on outputs and does not adequately support innovation, provide incentives to reward performance, or solve persistent environmental problems. The commission also found that TNRCC lacks tools needed to better support its environmental protection mission and that additional changes are needed to ensure greater public access to the agency's decision making process. The commission's recommendations would give regulated entities a larger stake in and enable all affected groups to take a greater role in protecting the environment. House Bill 2912 continues TNRCC for 12 years and contains the commission's recommendations to better position the agency to address the state's environmental regulatory needs. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that rulemaking authority is expressly delegated to the Texas Natural Resource Conservation Commission in SECTION 1.12 (Sec. 5.127, Water Code); SECTION 1.18 (Sec. 5.228, Water Code); SECTION 1.20 (Sec. 7.0025, Water Code); SECTION 4.01 (Secs. 5.752, 5.754, 5.756, and 5.757, Water Code); SECTION 4.06 (Sec. 382.0216, Health and Safety Code); SECTION 5.01 (Secs. 5.802-5.805, Water Code); SECTION 6.01 (Sec. 341.102, Health and Safety Code); SECTION 8.16 (Sec. 361.079, Health and Safety Code); SECTION 8.20 (Sec. 361.082, Health and Safety Code); SECTION 8.23 (Sec. 361.089, Health and Safety Code); SECTION 9.07 of this bill. In addition, under the general rulemaking authority already granted to the policymaking bodies, rules may be developed to implement other new provisions found in this bill. ANALYSIS House Bill 2912 amends the Water and Health and Safety codes to provide for the continuation of the Texas Natural Resource Conservation Commission (TNRCC) until September 1, 2013, and to set forth standard Sunset Advisory Commission recommendations for TNRCC regarding public representation, member training, member removal, designation of a presiding officer, conflicts of interest, written complaints, development of an equal employment policy, and a state employee incentive program. Incentive-based Regulatory Structure The bill requires TNRCC by rule to establish regulatory tiers and performance incentives in which different levels of compliance with environmental regulations are used to determine eligibility for participating in innovative regulatory programs (Sec. 5.752, Water Code). The bill expands the scope of the Waste Reduction Advisory Committee and renames it as the Pollution Prevention Advisory Committee to advise TNRCC on the implementation of a regulatory structure based on incentive and performance (Sec. 361.0215, Health and Safety Code). Common Definition of Compliance History The bill requires TNRCC by rule to develop a common definition for compliance history based on specific factors, while ensuring a means to consider changes in ownership when tracking compliance (Sec. 5.754, Water Code). The bill also provides several conforming changes in ARTICLE 8 to clarify other references to compliance history throughout the Water and Health and Safety codes with the method of evaluating compliance history developed by TNRCC. TNRCC is required to track and report compliance history information of all regulated entities and by rule develop methods of performance assessment for regulated entities to determine eligibility for innovative programs and to establish permit and enforcement guidelines (Secs. 5.755 and 5.756, Water Code). TNRCC is required to adopt the components of and standards for evaluating compliance history by March 1, 2002, and begin tracking compliance information for use in the incentive-based regulatory structure by September 1, 2002 (SECTION 9.04). Accountability in Innovative Regulatory Programs TNRCC is required by rule to use compliance history when determining eligibility for participation in its innovative regulatory programs and provides that entities with an unacceptable compliance history cannot participate in innovative regulatory programs (Secs. 5.756-5.759, Water Code). Entities must show that a clear environmental benefit will result from a project to participate in TNRCC's regulatory flexibility program (Sec. 5.760, Water Code). Agency Policy on Upsets and Inspections Regulated entities must demonstrate a good compliance history before receiving announced inspections, and TNRCC is authorized to decide whether inspections are announced or unannounced (Sec. 5.758, Water Code). TNRCC is required to track and report all emissions events resulting from upsets, accidents, and maintenance; evaluate regulated persons with a higher number of emissions events; and limit, by rule, the number of emissions events that may be exempt from enforcement. The bill specifies criteria for TNRCC to consider in developing rules limiting the number of events that may occur each year (Secs. 382.0215 and 382.0216, Health and Safety Code). Laboratory Accreditation Program The bill requires TNRCC to adopt rules to implement a voluntary environmental testing laboratory accreditation program (accreditation program) consistent with national standards. The bill also transfers the Safe Drinking Water Lab Accreditation Program from the Texas Department of Health to consolidate it with the new accreditation program at TNRCC. The bill requires TNRCC by rule to assess laboratory accreditation fees sufficient to recover program administration costs, with those fees credited to an account that may be used only for the accreditation program. (Sec. 5.801-5.807, Water Code). The bill authorizes TNRCC to accept data and analyses for all decisions affecting permitting, compliance, enforcement, and corrective action only from labs accredited by TNRCC. The bill authorizes TNRCC by rule to exempt an on-site or in-house lab from the accreditation requirement, but only if the lab is inspected as part of the compliance inspection program (Sec. 5.127, Water Code). Environmental Research The bill requires TNRCC to coordinate and facilitate agency research needs and efforts with the state's scientific and academic communities and to administer grants or contracts if the money is appropriated. TNRCC is authorized to establish an advisory board to encourage participation in the research effort. TNRCC must follow a research model for working with the United States Department of Agriculture, the Texas Department of Agriculture, and other state agencies to develop long-range research plans and to pursue specific research projects. The bill also requires TNRCC to report to the legislature on its ongoing research efforts and outcomes (Sec. 5.1191-5.1193, Water Code). Public Interest Representation and Information The bill authorizes the Office of Public Interest Counsel to use outside technical support and to recommend needed legislative and regulatory changes (Secs. 5.273 and 5.274, Water Code). The bill also requires advisory committees, work groups, and task forces to be composed of balanced representation of affected stakeholders and requires TNRCC to track the composition and activities of these groups and make the information easily available to the public (Sec. 5.107, Water Code). The bill requires TNRCC decision makers to maintain a written record of communications with persons outside TNRCC regarding pending regulatory matters, except unplanned contacts occurring away from TNRCC offices. The written record is a public record and is subject to disclosure (Sec. 5.1115, Water Code). Contested Permit Hearings The bill authorizes, rather than requires, the executive director to be named a party in contested permit hearings and requires TNRCC, by rule, to specify the factors the executive director must consider when determining whether to be a party in a contested case. The bill specifies the executive director's role as a party with respect to completing the record. The bill requires TNRCC to adopt rules to determine when the executive director can assist permit applicants in meeting their burdens of proof. The bill prohibits the executive director from rehabilitating non-agency witnesses (Sec. 5.228, Water Code). The bill also consolidates permit notice requirements under TNRCC's jurisdiction into Chapter 5, Water Code and provides several conforming changes in ARTICLE 8 to predesignate and cross-reference existing notice provisions throughout the Water and Health and Safety codes. Complaint Investigations The bill requires TNRCC to enhance coordination of complaint investigations with local officials and to train local officials in investigating complaints and enforcing environmental laws, with authority to recover the cost of training. The bill also requires TNRCC to implement policies to respond to complaints after normal business hours (Secs. 5.1771 and 5.1772, Water Code). The bill authorizes TNRCC to initiate an enforcement action based on evidence received from a private individual. TNRCC is also authorized to, by rule, adopt criteria for the executive director to use in evaluating evidence. TNRCC staff would have discretion to evaluate the validity and credibility of evidence. The bill authorizes TNRCC to develop criteria for credibility and use of external evidence in an enforcement action (Sec. 7.0025, Water Code). Funding and Revenue Management The bill authorizes TNRCC to transfer a percentage of fee revenue dedicated to one TNRCC activity to other TNRCC activities as authorized in the Appropriations Act (Sec. 5.707, Water Code). The bill sets forth provisions regarding the submission and adjustment of fees and authorizes TNRCC to collect interest and penalties on delinquent fees. The bill authorizes the executive director to modify penalty and interest amounts only upon good cause and with written explanation (Secs. 5.702-5.706, Water Code). Regulation of Water Treatment Specialists The bill requires TNRCC, by rule, to establish a program to certify water treatment specialists and increases the certification fee from $10 per year to an amount not to exceed $150 per year (Secs. 341.101-341.105, Health and Safety Code). EFFECTIVE DATE September 1, 2001.