Subchapter N. Financial Assurance Requirements for the Texas Risk Reduction Program Rule

Subchapter A. General Provisions

The commission proposes amendments to §§332.4, 332.23, 332.37, and 332.45, concerning the composting and beneficial reuse of organic materials.

EXPLANATION OF THE PROPOSED RULES The commission is proposing a new rule, commonly referred to as the Texas Risk Reduction Program (TRRP) rule, that will establish a uniform set of risk-based performance-oriented technical standards to guide response actions at affected properties regulated via the agency's Office of Waste Management program areas and other applicable program areas. The rule will be promulgated as new 30 Texas Administrative Code (TAC) Chapter 350. The commission is proposing the amendments to sections in this chapter as a conforming rulemaking to the proposed new Chapter 350. Currently, corrective action requirements do not exist in this chapter for compost facilities.

The commission is proposing to amend §332.4, General Requirements, to establish a general standard for corrective action at any compost facility at which a chemical of concern is detected. Amendments to §§332.23, 332.37, and 332.45 would also add the corrective action requirement to the operational requirements for notification, registration, and permit tier facilities.

FISCAL NOTE Matthew Johnson, Chief Financial Officer Division, has determined that there will be fiscal implications as a result of administration and enforcement of the proposed sections. For the first five-year period the section as proposed is in effect, individuals, businesses, state agencies, local governments and other entities participating in and subject to the State's environmental remediation programs, will be affected. The State's environmental remediation programs affect the Superfund, Petroleum Storage Tank Remediation, the Voluntary Cleanup Program, the Industrial and Hazardous Waste program, the Municipal Solid Waste, the Composting and the Underground Injection Control programs.

As a whole, the proposed Texas Risk Reduction Program rules are expected to have positive economic effects on responsible parties subject to the State Superfund, Voluntary Cleanup, and Industrial and Hazardous Waste programs. These positive effects are primarily expected to take the form of cost savings for remediation. In some situations, remediation cost savings may be substantial. For participants in the Petroleum Storage Tank program, the cost of assessment, remediation or monitoring may or may not increase, depending on the nature and extent of contamination, the geologic setting and proximity to groundwater, surface water, sources of drinking water and developed real estate. The following summarizes, by agency program, the anticipated effects on costs of the proposed Texas Risk Reduction Program rule. Costs and cost savings for sites in the Industrial and Hazardous Waste, Underground Injection Control and Composting programs are expected to be similar to those in the State Superfund and Voluntary Cleanup programs. To the extent that Municipal Solid Waste facilities are subject to the proposed rule, the costs and cost savings are also expected to be similar to the Voluntary Cleanup and State Superfund programs. To facilitate this discussion, the phases of any site, regardless of agency program, are generically referred to as "site assessment," "remediation," and "monitoring."

Site Assessment Petroleum Storage Tank Remediation Program: Costs are expected to remain level or increase. Increases under the Texas Risk Reduction Program are driven by site-specific conditions. For example, under the Texas Risk Reduction Program, benzene at a groundwater site requires additional delineation. Generally, there will be no increase for soils-only sites.

Superfund Program: Costs are expected to generally decrease, reflecting a shift in assessment from background to health-based levels.

Voluntary Cleanup Program: Cost are expected to remain generally level. While revised in content, costs are not expected to change due to the Texas Risk Reduction Program.

Remediation Petroleum Storage Tank Remediation Program: Costs are expected to remain level or increase. For groundwater sites, costs may increase if there is no landowner concurrence for a plume management zone or natural attenuation is ineffective. For soil-only contaminated sites, generally no increase in cost is anticipated.

Superfund Program: Costs are expected to decrease, substantially in some cases, or remain level due to the shift from background to health-based clean-up standards.

Voluntary Cleanup Program: Costs are expected to decrease, substantially in some cases, or remain level due to the shift from background to health-based clean-up standards.

Monitoring Petroleum Storage Tank Remediation Program: Costs are expected to remain level or increase. Costs will increase with plume management zone or natural attenuation remedies. Generally, no cost increases are anticipated with removal/excavation remedies under the Texas Risk Reduction Program.

Superfund Program: Costs are expected to decrease or remain level. Small businesses should benefit from the new financial assurance option. Some responsible parties may benefit from the $100,000 financial assurance waiver.

Voluntary Cleanup Program: Costs are expected to decrease or remain level. Small businesses should benefit from the new financial assurance option. Some responsible parties may benefit from the $100,000 financial assurance waiver.

The proposed Texas Risk Reduction Program rule should afford cost saving to responsible parties required to demonstrate financial assurance for post response action care. Where the total 30- year cost of post-response action care is estimated at less than $100,000, the proposed rule gives the agency the option to exempt the responsible party from demonstrating financial assurance. Responsible parties benefitting from this new provision should realize savings in the form of staff or consultant time to prepare, submit and monitor a financial assurance mechanism, and the actual cost of the financial assurance instrument.

The proposed Texas Risk Reduction Program rules should also afford cost saving to responsible parties who are small businesses, as defined, and who are required to demonstrate financial assurance for post-response action care. Under the proposed rules, small business may seek to reduce the amount of financial assurance demonstrated if the post response action care period is greater than 10 years.

Cost implications for State agencies, local governments, business, the public and others that own Underground Storage Tanks, Superfund sites, Voluntary Cleanup, Industrial and Hazardous Waste, Municipal Solid Waste, Composting and Underground Injection Control sites are the same as for other persons subject to these remediation programs. The TNRCC, as the agency administering these programs, may realize a reduction in costs to manage or oversee sites, primarily Superfund and Voluntary Cleanup, where the proposed Texas Risk Reduction Program rule allows scaled-down assessments, remediation or monitoring. While the agency's "per-site" cost of management or oversight are expected to decline where scaled-down assessments, remediation or monitoring are allowed, specific cost savings to the agency cannot be quantified due to the uncertainties of how many new sites will come into these programs in the future and what their site characteristics will be. For State Superfund sites, where federal funding is not involved, any reductions in the cost of assessment, remediation or monitoring as a result of the proposed Texas Risk Reduction Program rule will represent direct savings to the State. Again, specific cost savings to the state cannot be quantified due to the uncertainties of how many new State Superfund sites will come into the program and which, if any, will benefit from the provisions of the proposed Texas Risk Reduction Program rules.

PUBLIC BENEFIT Mr. Johnson also has determined that, for the first five-year period, the sections as proposed are in effect, the public benefit anticipated as the result of enforcement of and compliance with the section will be greater flexibility for individuals, businesses, state agencies, local governments and other entities participating in and subject to the State's environmental remediation programs. Additionally, some participants in the State's Superfund, Voluntary Cleanup, Industrial and Hazardous Waste, Municipal Solid Waste, Composting and Underground Injection Control programs may realize cost savings where the proposed sections facilitate remediation to risk-based protective concentration levels rather than to background concentrations. Some participants in the State's Petroleum Storage Tank program may experience higher costs as a result of the proposed sections. Additionally, the proposed rule shifts the focus of the Petroleum Storage Tank program to greater natural resource protection which should benefit the public.

DRAFT REGULATORY IMPACT ANALYSIS The commission has reviewed the rulemaking in light of the regulatory analysis requirements of Texas Government Code §2001.0225 to assess whether the proposed rule is a major environmental rule and whether any the four applicability criteria of the statute are met.

A "major environmental rule" as defined by §2001.0225(g)(3) of the Texas Government Code means a rule the specific intent of which is to protect the environment or reduce risks to human health from environmental exposure and that may adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, or the public health and safety of the state or a sector of the state. The proposed rule is intended to protect the environment and reduce risks to human health from environmental exposure to releases of chemicals of concern. The proposed rule as applied will impact the economy, a sector of the economy, productivity, competition, jobs, the environment, or the public health and safety of the state. The degree of impact that rises to the level of a material adverse effect is subject to interpretation. The Commission is confident the overall effect of the proposed rule will be positive for human health, the environment and the economy, but it may adversely affect in a material way a sector of the economy. Specifically, The commission anticipates a sector of the economy involved with leaking petroleum storage tanks may realize some increased financial burden when the proposed rule begins to apply to it in year 2001. Although debatable, this sector may argue that the proposed rule's financial impact on them is material and adverse. Other sectors of the economy may believe the same.

A major environmental rule requires a draft regulatory impact analysis if it: (1) exceeds a standard set by federal law, unless the rule is specifically required by state law; (2) exceeds an express requirement of state law unless the rule is specifically required by federal law; (3) exceeds a requirement of a delegation agreement or contract between the state and an agency or representative of federal government to implement a state and federal program; or (4) is adopted solely under the general powers of the agency instead of under the provisions of a specific state law. The proposed rule does not exceed a state or federal law. Although differing in some individual aspects, the proposed rule does not exceed standards set by federal law or standards set by state law. Federal and state statutes require action to ensure current and future protection of human health and the environment from releases of regulated substances and hazardous waste into the environment. The proposed rule institutes the criteria by which protective response actions will be achieved in Texas. The proposed rule does not exceed the requirements of any delegation agreement between the state and an agency of the federal government. The Municipal Solid Waste (MSW), Underground Injection Control (UIC), Petroleum Storage Tank (PST), and Resource Conservation and Recovery Act (RCRA) programs are the only programs affected by the proposed rule that have received federal delegation or federal approval. The rule was developed to not exceed any federal requirement. Finally, the rule is not being proposed solely under the general powers of the commission.

Because the proposed rule applies to every TNRCC corrective action program, and because different parties may have different beliefs about whether the proposed rule as applied adversely affects them in a material way, the commission will, for the purpose of conducting this draft regulatory impact analysis pursuant to §2001.0225, treat the proposed rule as a major environmental rule. The full draft regulatory impact analysis is presented in Figure 1 of the preamble to proposed 30 Texas Administrative Code Chapter 350.

The commission invites public comment on the Draft Regulatory Impact Analysis.

STATEMENT OF THE EFFECT OF THE PROPOSED RULE ON SMALL BUSINESSES The proposed Texas Risk Reduction Program ("proposed rule") will have an economic effect on small businesses. That economic effect may be an increase in the cost of complying with the proposed rule or may be a cost savings. Assuming in the interest of caution that any negative economic effect, regardless of degree, falls within the meaning of "adverse economic effect" in the Texas Government Code, §2006.002, the Texas Natural Resource Conservation Commission ("commission") must "reduce that effect if doing so is legal and feasible considering the purpose of the statute under which the rule is to be adopted."

The purpose of the statutes under which the proposed rule is adopted is the protection of human health and the environment. In light of this substantial purpose, it is unreasonable to hold any entity responsible for remediating contaminated property to a lesser standard than that which is scientifically determined to be protective of human health and the environment. Indeed, allowing small businesses to remediate properties under less stringent conditions because of economic impacts is tantamount to allowing small businesses to endanger human health and the environment while others cannot. Because the majority of the proposed rule establishes methodologies for removing health risks to the public and the environment resulting from contamination, it is not legal or feasible to broadly reduce the effect of the proposed rule on small businesses when doing so will endanger human health and the environment. However, the commission is allowing expanded use of exposure prevention remedies which are often more affordable than pollution cleanup remedies so that all businesses would have more remedial options and better cost containment opportunities.

An exception in the proposed rule specifically aimed at reducing any adverse economic impact of the proposed rule on small businesses, if any, concerns financial assurances. Financial assurances are necessary to provide funding for the continued maintenance of engineered remedial actions such as a concrete cap covering contaminated soil. Under the proposed rule, small businesses responsible for a remediation may seek to reduce the amount of financial assurance if the post response action care period is greater than 10 years. The proposed rule also provides a flexible framework in which to calculate cleanup levels and establishes performance-based standards rather than design standards for all entities responsible for remediating contamination, including small businesses, allowing them to determine for themselves the most appropriate cleanup level and the least costly means by which a cleanup goal is to be achieved. Finally, specific clarity is provided in rule provisions to facilitate rule interpretation so that persons, including small and large businesses alike, can make decisions that are likely to be approved by the agency the first time.

Analysis and Comparison of the Cost of Compliance with the Proposed Rule for Small Businesses Using the Cost for Each $100 of Sales

Benefits and Costs to Small Businesses :

Taken as a whole, the proposed rule is expected to have a positive economic impact on small businesses subject to the Industrial and Hazardous Waste, State Superfund, and the Voluntary Cleanup Programs. These positive impacts are primarily expected to take the form of cost savings for remediation and financial assurance. Small businesses actively involved in cleaning up a site, regardless of program, would achieve the same cost savings as a large business. Cost impacts to businesses subject to the Municipal Solid Waste, Composting, and Underground Injection Control programs are expected to be similar to those subject to the Industrial and Hazardous Waste, State Superfund, and Voluntary Cleanup programs. Conversely, small businesses participating in the Petroleum Storage Tank Program would incur the same potential cost increase under the proposed rule as a large business.

The definition of "small business" is "a legal entity, including a corporation, partnership, or sole proprietorship that: (A) is formed for the purpose of making a profit; (B) is independently owned and operated; and (C) has fewer than 100 employees or less than $1 million in annual gross receipts." Texas Government Code Annonated, §2006.001(1) (Vernon 1998).

Virtually any small business whose underground storage tanks leak are potentially subject to cost increases under the proposed rule. Such businesses could include heavy equipment owners or lessors, trucking companies, agricultural operations or other small businesses that own one or more petroleum storage tanks to service motorized equipment. Small fuel retailers, however, may be adversely affected as a group by the proposed rules. The commission does note that all compliance deadlines have passed for meeting release detection, spill and overfill, tank integrity assessment and cathodic protection standards. Therefore, all tanks operating today must meet all technical standards and be less likely to suffer a leak.

Of the twelve petroleum storage tank sites in the Regulatory Impact Analysis, the "worst case" PST site resulted in an estimated $187,623 increase in the cost to assess, remediate, monitor and close the site under the proposed rule. (As mentioned earlier in this report, $187,623 is based on the higher and more conservative $151,200 estimated groundwater remediation cost than the $107,297 remedial cost actually used in the case examples.) That is an increase over the actual cost of $24,343 under existing program rules, which would bring the responsible party's total estimated cost under the proposed rules to $211,966. For a small business with $500,000 in annual sales, a $187,623 estimated cost increase for one site would represent 38% of sales or $37.52 for every $100 in annual sales. For a business with $1,000,000 in annual sales, a $187,623 estimated cost increase for one site would represent 19% of sales or $18.76 for every $100 in annual sales. For a business with $2,000,000 in annual sales, that $187,623 cost increase for one site would represent 9% of sales or $9.38 for every $100 in annual sales. For a business with $3,000,000 in annual sales, that $187,623 cost increase for one site would represent 6% of sales or $6.25 for every $100 in annual sales. Fuel retail, however, is a low-margin, high-volume business, so even "small" fuel retailers will typically post annual sales in excess of $3 million. Under the proposed rules, large businesses are expected to incur the same cost increases on a per-site basis as small businesses. For corporations such as Texaco, with 1997 revenue of $46 billion, the $187,623 estimated cost increase for one site discussed earlier in this paragraph would represent less than 1% of sales or less than one cent for every $100 in annual sales.

The proposed rule, however, affords cost savings to responsible parties who are small businesses and who are required to demonstrate financial assurance for post response action care. Under the proposed rule, small business responsible parties may seek to reduce the amount of financial assurance required if the post response action care period is greater than 10 years. Actual cost savings realized by small business responsible parties as a result of this provision will vary with the amount of financial assurance required. However, for estimating purposes only, by assuming post response action cost at $30,000 per year (based on $5,000 for lab analysis and $25,000 for a consultant to collect samples), the cost to demonstrate for 10 years would be $300,000, substantially less than $900,000 for 30 years. Further assuming the responsible party uses a bank letter of credit to demonstrate financial assurance and the responsible party's annual cost for a bank letter of credit is 0.75%, demonstrating financial assurance for 10 years at $300,000, would cost an estimated $2,250 per year ($300,000 x 0.75%). In this example, the 10-year demonstration cost represents a $4,500 annual savings from the 30-year demonstration cost of $6,750 per year ($900,000 x 0.75%). If financial assurance is still required at the end of the first or second 10-year period, the small business responsible party may again seek to demonstrate financial assurance for the subsequent 10-year period.

Despite the economic impact of the proposed rule on small businesses, the proposed rule is necessary to protect human health and the environment. The proposed rule incorporates performance standards scientifically determined to protect human health and the environment. Changing the rule to reduce the impact on small businesses is not legal or feasible because any change in the standards could put the public health and environment at risk at sites remediated by small businesses. The proposed rule incorporates performance standards rather than design standards and small business can seek to reduce the amount of financial assurances in some instances. These two features of the rule are specifically aimed at reducing the economic impact of the proposed rule on small businesses.

TAKINGS IMPACT ASSESSMENT The commission has prepared a Takings Impact Assessment for this rule pursuant to Texas Government Code Annotated §2007.043. This is a summary of the Takings Impact Assessment. The specific purpose of the proposed rule is to create one risk-based rule that will guide affected property assessments, notifications, and response actions through the establishment of a consistent, reliable program that encourages the cost-effective corrective action for affected properties while ensuring the adequate protection of human health and the environment. The proposed rule will substantially advance this specific purpose through the use of a tiered process for the establishment of health-based protective concentration levels, by allowing the use of site-specific data, and by providing flexibility in selection and design of response actions. Because a landowner always has the option not to consent to institutional controls such as deed restrictions and because another person, not the TNRCC, chooses the remedy, the proposed rule itself will not limit or restrict the real property rights associated with the affected property. Further, the proposed rule does not burden private real property because it: (1) will set minimum requirements for remediation of affected property; (2) will cause no release of chemicals of concern onto the affected property; (3) will not prohibit the pursuit of adequate compensation by the affected property owners from the responsible parties; and (4) will not cause a diminution in property value. Finally, the proposed rule is promulgated to fulfill federal requirements, prevent or abate public nuisance, is necessary to prevent a grave and immediate threat to life or property resulting from hazardous substances, and the proposed rule is in response to the real and substantial threat to public health and safety resulting from hazardous substances. For these reasons, the proposed rule is exempt from the requirement for a Takings Impact Statement as required by statute; however, the commission has prepared a Takings Impact Assessment which may be examined in Figure 2 of the preamble to proposed 30 Texas Administrative Code Chapter 350.

COASTAL MANAGEMENT PROGRAM CONSISTENCY REVIEW The commission has reviewed the proposed rulemaking and found that the rules are subject to the Coastal Management Program and must be consistent with all applicable goals and policies of the Coastal Management Program (CMP).

The commission has prepared a consistency determination for the proposed rules pursuant to 31 TAC §505.22 and has found that the proposed rules are consistent with the applicable CMP goals and policies. The following is a summary of that determination. The CMP goal applicable to the proposed rules is the goal to protect, preserve, restore, and enhance the diversity, quality, quantity, functions, and values of coastal natural resource areas. CMP policies applicable to the proposed rules include the administrative policies and the policies for specific activities related to construction and operation of solid waste treatment, storage, and disposal facilities. Promulgation and enforcement of these rules is consistent with the applicable CMP goals and policies because the proposed rules will establish clear, consistent standards to guide the assessment and cleanup of contaminated properties from site investigation through post-response action care. The rules will require persons conducting response actions to ensure that the concentrations of chemicals of concern are protective of human and ecological receptors. The new rules will result in an overall environmental benefit across the state, including in coastal areas, by implementing a comprehensive and consistent approach to corrective action that utilizes new and scientifically sound corrective action methods; thereby serving to protect, preserve, restore, and enhance the diversity, quality, quantity, functions, and values of the coastal natural resource areas. In addition, the proposed rules do not violate any applicable provisions of the CMP's stated goals and policies.

The commission invites public comment on the consistency of the proposed rules with the applicable goals and policies of the Coastal Management Program.

SUBMITTAL OF COMMENTS Written comments may be mailed to Bettie Bell, Texas Natural Resource Conservation Commission, Office of Policy and Regulatory Development, MC 205, P.O. Box 13087, Austin, Texas 78711-3087 or faxed to (512) 239-4808, (512) 239-5687, or (512) 239-6385. Please reference Rules Tracking Log Number 96106-350-WS. Comments must be received by 5:00 p.m., 30 days from the date of publication of this proposal in the Texas Register . For further information, please contact Chet Clarke, Greg Tipple, or Paul Lewis of the Remediation Division, (512) 239-0310; Scott Crouch, Voluntary Cleanup Program, (512) 239-2486; or Clark Talkington, Waste Policy and Regulations Division, (512) 239-6731. If you have specific questions on rule language regarding ecological risk assessments, please contact Larry Champagne, Remediation Division, (512) 239-0310.

The commission will hold two public hearings. A public hearing will be held on April 19, 1999, at 1:30 p.m. at the City of Houston Pollution Control Building Auditorium, 7411 Park Place Boulevard, Houston, Texas. A second public hearing on the proposal will be held on April 22, 1999, at 10:00 a.m. in Building E, Room 201S, of Texas Natural Resource Conservation Commission complex, located at 12100 North IH-35, Park 35 Technology Center, Austin. The hearings are structured for the receipt of oral or written comments by interested persons. Individuals may present oral statements when called upon or in the order of registration. Open discussion within the audience will not be allowed during the hearings; however, an agency staff member will be available to discuss the proposal 30 minutes prior to the hearings and answer questions before and after the hearings.

Subchapter A. General Information

Subchapter A. Voluntary Cleanup Program Section

The commission proposes amendments to §§333.2, 333.7-333.10 and the repeal of §333.11, concerning the Voluntary Cleanup Program (VCP).

EXPLANATION OF THE PROPOSED RULES The commission is proposing a new rule, commonly referred to as the Texas Risk Reduction Program (TRRP) rule, that will establish a uniform set of risk-based performance-oriented technical standards to guide response actions at affected properties regulated via the agency's Office of Waste Management program areas and other applicable program areas. The rule will be promulgated as new 30 Texas Administrative Code (TAC) Chapter 350. The commission is proposing the amendments to sections in Chapter 333 as a conforming rulemaking to the proposed new Chapter 350.

Section 333.2 contains definitions. The commission proposes amendments to the definitions for "Change in Land Use" and "Completion." The definitions are being amended so that terms used within the definitions are consistent with terminology in the TRRP rule. The commission proposes to delete "Exposure assessment model" because the TRRP rule prescribes exposure pathways and points of exposure rather than the use of exposure assessment models. In addition, the commission is proposing to add paragraph numbers to the definitions to comply with 1 TAC §91.23 of the Texas Register Rules.

Section 333.7 sets forth requirements for voluntary cleanup work plans and reports. Because proposed Chapter 350 establishes clear requirements for site investigation and reports, the commission proposes to amend §333.7(a) to reference the requirements in Chapter 350. Also references to "exposure assessment model" are being removed.

Section 333.8 sets forth response action standards for the VCP, §333.9 discusses deed recordation, and §333.10 establishes standards for the certificate of completion. The proposed changes to §333.8 identify Chapter 350, Subchapters D and B for the development of protective concentration levels and response action standards. Amendments to §333.9 will make the deed recordation requirements of the VCP the same as for other programs governed by the TRRP. Section 333.10 is being amended to make terminology consistent with the TRRP rule terminology.

Section 333.11 address public notice requirements for sites entering the VCP. The commission is proposing to repeal the section because the TRRP rule contains requirements for notice to owners of off- site properties and leased lands.

FISCAL NOTE Matthew Johnson, Chief Financial Officer Division, has determined that there will be fiscal implications as a result of administration and enforcement of the proposed sections. For the first five-year period the section as proposed is in effect, individuals, businesses, state agencies, local governments and other entities participating in and subject to the State's environmental remediation programs, will be affected. The State's environmental remediation programs affect the Superfund, Petroleum Storage Tank Remediation, the Voluntary Cleanup Program, the Industrial and Hazardous Waste program, the Municipal Solid Waste, the Composting and the Underground Injection Control programs.

As a whole, the proposed Texas Risk Reduction Program rules are expected to have positive economic effects on responsible parties subject to the State Superfund, Voluntary Cleanup, and Industrial and Hazardous Waste programs. These positive effects are primarily expected to take the form of cost savings for remediation. In some situations, remediation cost savings may be substantial. For participants in the Petroleum Storage Tank program, the cost of assessment, remediation or monitoring may or may not increase, depending on the nature and extent of contamination, the geologic setting and proximity to groundwater, surface water, sources of drinking water and developed real estate. The following summarizes, by agency program, the anticipated effects on costs of the proposed Texas Risk Reduction Program rule. Costs and cost savings for sites in the Industrial and Hazardous Waste, Underground Injection Control and Composting programs are expected to be similar to those in the State Superfund and Voluntary Cleanup programs. To the extent that Municipal Solid Waste facilities are subject to the proposed rule, the costs and cost savings are also expected to be similar to the Voluntary Cleanup and State Superfund programs. To facilitate this discussion, the phases of any site, regardless of agency program, are generically referred to as "site assessment," "remediation," and "monitoring."

Site Assessment Petroleum Storage Tank Remediation Program: Costs are expected to remain level or increase. Increases under the Texas Risk Reduction Program are driven by site-specific conditions. For example, under the Texas Risk Reduction Program, benzene at a groundwater site requires additional delineation. Generally, there will be no increase for soils-only sites.

Superfund Program: Costs are expected to generally decrease, reflecting a shift in assessment from background to health-based levels.

Voluntary Cleanup Program: Cost are expected to remain generally level. While revised in content, costs are not expected to change due to the Texas Risk Reduction Program.

Remediation Petroleum Storage Tank Remediation Program: Costs are expected to remain level or increase. For groundwater sites, costs may increase if there is no landowner concurrence for a plume management zone or natural attenuation is ineffective. For soil-only contaminated sites, generally no increase in cost is anticipated.

Superfund Program: Costs are expected to decrease, substantially in some cases, or remain level due to the shift from background to health-based clean-up standards.

Voluntary Cleanup Program: Costs are expected to decrease, substantially in some cases, or remain level due to the shift from background to health-based clean-up standards.

Monitoring Petroleum Storage Tank Remediation Program: Costs are expected to remain level or increase. Costs will increase with plume management zone or natural attenuation remedies. Generally, no cost increases are anticipated with removal/excavation remedies under the Texas Risk Reduction Program.

Superfund Program: Costs are expected to decrease or remain level. Small businesses should benefit from the new financial assurance option. Some responsible parties may benefit from the $100,000 financial assurance waiver.

Voluntary Cleanup Program: Costs are expected to decrease or remain level. Small businesses should benefit from the new financial assurance option. Some responsible parties may benefit from the $100,000 financial assurance waiver.

The proposed Texas Risk Reduction Program rule should afford cost saving to responsible parties required to demonstrate financial assurance for post response action care. Where the total 30- year cost of post-response action care is estimated at less than $100,000, the proposed rule gives the agency the option to exempt the responsible party from demonstrating financial assurance. Responsible parties benefitting from this new provision should realize savings in the form of staff or consultant time to prepare, submit and monitor a financial assurance mechanism, and the actual cost of the financial assurance instrument.

The proposed Texas Risk Reduction Program rules should also afford cost saving to responsible parties who are small businesses, as defined, and who are required to demonstrate financial assurance for post-response action care. Under the proposed rules, small business may seek to reduce the amount of financial assurance demonstrated if the post response action care period is greater than 10 years.

Cost implications for State agencies, local governments, business, the public and others that own Underground Storage Tanks, Superfund sites, Voluntary Cleanup, Industrial and Hazardous Waste, Municipal Solid Waste, Composting and Underground Injection Control sites are the same as for other persons subject to these remediation programs. The TNRCC, as the agency administering these programs, may realize a reduction in costs to manage or oversee sites, primarily Superfund and Voluntary Cleanup, where the proposed Texas Risk Reduction Program rule allows scaled-down assessments, remediation or monitoring. While the agency's "per-site" cost of management or oversight are expected to decline where scaled-down assessments, remediation or monitoring are allowed, specific cost savings to the agency cannot be quantified due to the uncertainties of how many new sites will come into these programs in the future and what their site characteristics will be. For State Superfund sites, where federal funding is not involved, any reductions in the cost of assessment, remediation or monitoring as a result of the proposed Texas Risk Reduction Program rule will represent direct savings to the State. Again, specific cost savings to the state cannot be quantified due to the uncertainties of how many new State Superfund sites will come into the program and which, if any, will benefit from the provisions of the proposed Texas Risk Reduction Program rules.

PUBLIC BENEFIT Mr. Johnson also has determined that, for the first five-year period, the sections as proposed are in effect, the public benefit anticipated as the result of enforcement of and compliance with the section will be greater flexibility for individuals, businesses, state agencies, local governments and other entities participating in and subject to the State's environmental remediation programs. Additionally, some participants in the State's Superfund, Voluntary Cleanup, Industrial and Hazardous Waste, Municipal Solid Waste, Composting and Underground Injection Control programs may realize cost savings where the proposed sections facilitate remediation to risk-based protective concentration levels rather than to background concentrations. Some participants in the State's Petroleum Storage Tank program may experience higher costs as a result of the proposed sections. Additionally, the proposed rule shifts the focus of the Petroleum Storage Tank program to greater natural resource protection which should benefit the public.

DRAFT REGULATORY IMPACT ANALYSIS The commission has reviewed the rulemaking in light of the regulatory analysis requirements of Texas Government Code §2001.0225 to assess whether the proposed rule is a major environmental rule and whether any the four applicability criteria of the statute are met.

A "major environmental rule" as defined by §2001.0225(g)(3) of the Texas Government Code means a rule the specific intent of which is to protect the environment or reduce risks to human health from environmental exposure and that may adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, or the public health and safety of the state or a sector of the state. The proposed rule is intended to protect the environment and reduce risks to human health from environmental exposure to releases of chemicals of concern. The proposed rule as applied will impact the economy, a sector of the economy, productivity, competition, jobs, the environment, or the public health and safety of the state. The degree of impact that rises to the level of a material adverse effect is subject to interpretation. The Commission is confident the overall effect of the proposed rule will be positive for human health, the environment and the economy, but it may adversely affect in a material way a sector of the economy. Specifically, The commission anticipates a sector of the economy involved with leaking petroleum storage tanks may realize some increased financial burden when the proposed rule begins to apply to it in year 2001. Although debatable, this sector may argue that the proposed rule's financial impact on them is material and adverse. Other sectors of the economy may believe the same.

A major environmental rule requires a draft regulatory impact analysis if it: (1) exceeds a standard set by federal law, unless the rule is specifically required by state law; (2) exceeds an express requirement of state law unless the rule is specifically required by federal law; (3) exceeds a requirement of a delegation agreement or contract between the state and an agency or representative of federal government to implement a state and federal program; or (4) is adopted solely under the general powers of the agency instead of under the provisions of a specific state law. The proposed rule does not exceed a state or federal law. Although differing in some individual aspects, the proposed rule does not exceed standards set by federal law or standards set by state law. Federal and state statutes require action to ensure current and future protection of human health and the environment from releases of regulated substances and hazardous waste into the environment. The proposed rule institutes the criteria by which protective response actions will be achieved in Texas. The proposed rule does not exceed the requirements of any delegation agreement between the state and an agency of the federal government. The Municipal Solid Waste (MSW), Underground Injection Control (UIC), Petroleum Storage Tank (PST), and Resource Conservation and Recovery Act (RCRA) programs are the only programs affected by the proposed rule that have received federal delegation or federal approval. The rule was developed to not exceed any federal requirement. Finally, the rule is not being proposed solely under the general powers of the commission.

Because the proposed rule applies to every TNRCC corrective action program, and because different parties may have different beliefs about whether the proposed rule as applied adversely affects them in a material way, the commission will, for the purpose of conducting this draft regulatory impact analysis pursuant to §2001.0225, treat the proposed rule as a major environmental rule. The full draft regulatory impact analysis is presented in Figure 1 of the preamble to proposed 30 Texas Administrative Code Chapter 350.

The commission invites public comment on the Draft Regulatory Impact Analysis.

STATEMENT OF THE EFFECT OF THE PROPOSED RULE ON SMALL BUSINESSES The proposed Texas Risk Reduction Program ("proposed rule") will have an economic effect on small businesses. That economic effect may be an increase in the cost of complying with the proposed rule or may be a cost savings. Assuming in the interest of caution that any negative economic effect, regardless of degree, falls within the meaning of "adverse economic effect" in the Texas Government Code, §2006.002, the Texas Natural Resource Conservation Commission ("commission") must "reduce that effect if doing so is legal and feasible considering the purpose of the statute under which the rule is to be adopted."

The purpose of the statutes under which the proposed rule is adopted is the protection of human health and the environment. In light of this substantial purpose, it is unreasonable to hold any entity responsible for remediating contaminated property to a lesser standard than that which is scientifically determined to be protective of human health and the environment. Indeed, allowing small businesses to remediate properties under less stringent conditions because of economic impacts is tantamount to allowing small businesses to endanger human health and the environment while others cannot. Because the majority of the proposed rule establishes methodologies for removing health risks to the public and the environment resulting from contamination, it is not legal or feasible to broadly reduce the effect of the proposed rule on small businesses when doing so will endanger human health and the environment. However, the commission is allowing expanded use of exposure prevention remedies which are often more affordable than pollution cleanup remedies so that all businesses would have more remedial options and better cost containment opportunities.

An exception in the proposed rule specifically aimed at reducing any adverse economic impact of the proposed rule on small businesses, if any, concerns financial assurances. Financial assurances are necessary to provide funding for the continued maintenance of engineered remedial actions such as a concrete cap covering contaminated soil. Under the proposed rule, small businesses responsible for a remediation may seek to reduce the amount of financial assurance if the post response action care period is greater than 10 years. The proposed rule also provides a flexible framework in which to calculate cleanup levels and establishes performance-based standards rather than design standards for all entities responsible for remediating contamination, including small businesses, allowing them to determine for themselves the most appropriate cleanup level and the least costly means by which a cleanup goal is to be achieved. Finally, specific clarity is provided in rule provisions to facilitate rule interpretation so that persons, including small and large businesses alike, can make decisions that are likely to be approved by the agency the first time.

Analysis and Comparison of the Cost of Compliance with the Proposed Rule for Small Businesses Using the Cost for Each $100 of Sales

Benefits and Costs to Small Businesses :

Taken as a whole, the proposed rule is expected to have a positive economic impact on small businesses subject to the Industrial and Hazardous Waste, State Superfund, and the Voluntary Cleanup Programs. These positive impacts are primarily expected to take the form of cost savings for remediation and financial assurance. Small businesses actively involved in cleaning up a site, regardless of program, would achieve the same cost savings as a large business. Cost impacts to businesses subject to the Municipal Solid Waste, Composting, and Underground Injection Control programs are expected to be similar to those subject to the Industrial and Hazardous Waste, State Superfund, and Voluntary Cleanup programs. Conversely, small businesses participating in the Petroleum Storage Tank Program would incur the same potential cost increase under the proposed rule as a large business.

The definition of "small business" is "a legal entity, including a corporation, partnership, or sole proprietorship that: (A) is formed for the purpose of making a profit; (B) is independently owned and operated; and (C) has fewer than 100 employees or less than $1 million in annual gross receipts." Texas Government Code Annonated, §2006.001(1) (Vernon 1998).

Virtually any small business whose underground storage tanks leak are potentially subject to cost increases under the proposed rule. Such businesses could include heavy equipment owners or lessors, trucking companies, agricultural operations or other small businesses that own one or more petroleum storage tanks to service motorized equipment. Small fuel retailers, however, may be adversely affected as a group by the proposed rules. The commission does note that all compliance deadlines have passed for meeting release detection, spill and overfill, tank integrity assessment and cathodic protection standards. Therefore, all tanks operating today must meet all technical standards and be less likely to suffer a leak.

Of the twelve petroleum storage tank sites in the Regulatory Impact Analysis, the "worst case" PST site resulted in an estimated $187,623 increase in the cost to assess, remediate, monitor and close the site under the proposed rule. (As mentioned earlier in this report, $187,623 is based on the higher and more conservative $151,200 estimated groundwater remediation cost than the $107,297 remedial cost actually used in the case examples.) That is an increase over the actual cost of $24,343 under existing program rules, which would bring the responsible party's total estimated cost under the proposed rules to $211,966. For a small business with $500,000 in annual sales, a $187,623 estimated cost increase for one site would represent 38% of sales or $37.52 for every $100 in annual sales. For a business with $1,000,000 in annual sales, a $187,623 estimated cost increase for one site would represent 19% of sales or $18.76 for every $100 in annual sales. For a business with $2,000,000 in annual sales, that $187,623 cost increase for one site would represent 9% of sales or $9.38 for every $100 in annual sales. For a business with $3,000,000 in annual sales, that $187,623 cost increase for one site would represent 6% of sales or $6.25 for every $100 in annual sales. Fuel retail, however, is a low-margin, high-volume business, so even "small" fuel retailers will typically post annual sales in excess of $3 million. Under the proposed rules, large businesses are expected to incur the same cost increases on a per-site basis as small businesses. For corporations such as Texaco, with 1997 revenue of $46 billion, the $187,623 estimated cost increase for one site discussed earlier in this paragraph would represent less than 1% of sales or less than one cent for every $100 in annual sales.

The proposed rule, however, affords cost savings to responsible parties who are small businesses and who are required to demonstrate financial assurance for post response action care. Under the proposed rule, small business responsible parties may seek to reduce the amount of financial assurance required if the post response action care period is greater than 10 years. Actual cost savings realized by small business responsible parties as a result of this provision will vary with the amount of financial assurance required. However, for estimating purposes only, by assuming post response action cost at $30,000 per year (based on $5,000 for lab analysis and $25,000 for a consultant to collect samples), the cost to demonstrate for 10 years would be $300,000, substantially less than $900,000 for 30 years. Further assuming the responsible party uses a bank letter of credit to demonstrate financial assurance and the responsible party's annual cost for a bank letter of credit is 0.75%, demonstrating financial assurance for 10 years at $300,000, would cost an estimated $2,250 per year ($300,000 x 0.75%). In this example, the 10-year demonstration cost represents a $4,500 annual savings from the 30-year demonstration cost of $6,750 per year ($900,000 x 0.75%). If financial assurance is still required at the end of the first or second 10-year period, the small business responsible party may again seek to demonstrate financial assurance for the subsequent 10-year period.

Despite the economic impact of the proposed rule on small businesses, the proposed rule is necessary to protect human health and the environment. The proposed rule incorporates performance standards scientifically determined to protect human health and the environment. Changing the rule to reduce the impact on small businesses is not legal or feasible because any change in the standards could put the public health and environment at risk at sites remediated by small businesses. The proposed rule incorporates performance standards rather than design standards and small business can seek to reduce the amount of financial assurances in some instances. These two features of the rule are specifically aimed at reducing the economic impact of the proposed rule on small businesses.

TAKINGS IMPACT ASSESSMENT

The commission has prepared a Takings Impact Assessment for this rule pursuant to Texas Government Code Annotated §2007.043. This is a summary of the Takings Impact Assessment. The specific purpose of the proposed rule is to create one risk-based rule that will guide affected property assessments, notifications, and response actions through the establishment of a consistent, reliable program that encourages the cost-effective corrective action for affected properties while ensuring the adequate protection of human health and the environment. The proposed rule will substantially advance this specific purpose through the use of a tiered process for the establishment of health-based protective concentration levels, by allowing the use of site-specific data, and by providing flexibility in selection and design of response actions. Because a landowner always has the option not to consent to institutional controls such as deed restrictions and because another person, not the TNRCC, chooses the remedy, the proposed rule itself will not limit or restrict the real property rights associated with the affected property. Further, the proposed rule does not burden private real property because it: (1) will set minimum requirements for remediation of affected property; (2) will cause no release of chemicals of concern onto the affected property; (3) will not prohibit the pursuit of adequate compensation by the affected property owners from the responsible parties; and (4) will not cause a diminution in property value. Finally, the proposed rule is promulgated to fulfill federal requirements, prevent or abate public nuisance, is necessary to prevent a grave and immediate threat to life or property resulting from hazardous substances, and the proposed rule is in response to the real and substantial threat to public health and safety resulting from hazardous substances. For these reasons, the proposed rule is exempt from the requirement for a Takings Impact Statement as required by statute; however, the commission has prepared a Takings Impact Assessment which may be examined in Figure 2 of the preamble to proposed 30 Texas Administrative Code Chapter 350.

COASTAL MANAGEMENT PROGRAM CONSISTENCY REVIEW

The commission has reviewed the proposed rulemaking and found that the rules are subject to the Coastal Management Program and must be consistent with all applicable goals and policies of the Coastal Management Program (CMP).

The commission has prepared a consistency determination for the proposed rules pursuant to 31 TAC §505.22 and has found that the proposed rules are consistent with the applicable CMP goals and policies. The following is a summary of that determination. The CMP goal applicable to the proposed rules is the goal to protect, preserve, restore, and enhance the diversity, quality, quantity, functions, and values of coastal natural resource areas. CMP policies applicable to the proposed rules include the administrative policies and the policies for specific activities related to construction and operation of solid waste treatment, storage, and disposal facilities. Promulgation and enforcement of these rules is consistent with the applicable CMP goals and policies because the proposed rules will establish clear, consistent standards to guide the assessment and cleanup of contaminated properties from site investigation through post-response action care. The rules will require persons conducting response actions to ensure that the concentrations of chemicals of concern are protective of human and ecological receptors. The new rules will result in an overall environmental benefit across the state, including in coastal areas, by implementing a comprehensive and consistent approach to corrective action that utilizes new and scientifically sound corrective action methods; thereby serving to protect, preserve, restore, and enhance the diversity, quality, quantity, functions, and values of the coastal natural resource areas. In addition, the proposed rules do not violate any applicable provisions of the CMP's stated goals and policies.

The commission invites public comment on the consistency of the proposed rules with the applicable goals and policies of the Coastal Management Plan.

SUBMITTAL OF COMMENTS Written comments may be mailed to Bettie Bell, Texas Natural Resource Conservation Commission, Office of Policy and Regulatory Development, MC 205, P.O. Box 13087, Austin, Texas 78711-3087 or faxed to (512) 239-4808, (512) 239-5687, or (512) 239-6385. Please reference Rules Tracking Log Number 96106-350-WS. Comments must be received by 5:00 p.m., 30 days from the date of publication of this proposal in the Texas Register . For further information, please contact Chet Clarke, Greg Tipple, or Paul Lewis of the Remediation Division, (512) 239-0310; Scott Crouch, Voluntary Cleanup Program, (512) 239-2486; or Clark Talkington, Waste Policy and Regulations Division, (512) 239-6731. If you have specific questions on rule language regarding ecological risk assessments, please contact Larry Champagne, Remediation Division, (512) 239-0310. The commission will hold two public hearings. A public hearing will be held on April 19, 1999, at 1:30 p.m., at the City of Houston Pollution Control Building Auditorium, 7411 Park Place Boulevard, Houston, Texas. A second public hearing on the proposal will be held on April 22, 1999, at 10:00 a.m. in Building E, Room 201S, of Texas Natural Resource Conservation Commission complex, located at 12100 North IH-35, Park 35 Technology Center, Austin. The hearings are structured for the receipt of oral or written comments by interested persons. Individuals may present oral statements when called upon or in the order of registration. Open discussion within the audience will not be allowed during the hearings; however, an agency staff member will be available to discuss the proposal 30 minutes prior to the hearings and answer questions before and after the hearings.

The commission proposes amendments to §§334.71, 334.201, and 334.503, concerning the Petroleum Storage Tank Program (PST).

EXPLANATION OF THE PROPOSED RULES The commission is proposing a new rule, commonly referred to as the Texas Risk Reduction Program (TRRP) rule, that will establish a uniform set of risk-based performance-oriented technical standards to guide response actions at affected properties regulated via the agency's Office of Waste Management program areas and other applicable program areas. The rule will be promulgated as new 30 Texas Administrative Code (TAC) Chapter 350. The commission is proposing the amendments to sections in Chapter 334 as a conforming rulemaking to the proposed new Chapter 350.

Section 334.71 defines the applicability of PST corrective action regulations. The commission proposes to amend the section by designating Chapter 350 as the applicable corrective action requirements in lieu of §§334.78-334.81 for all releases from underground and aboveground storage tanks which are reported on or after September 1, 2001.

Section 334.201 defines the applicability of Chapter 334, Subchapter G which contains the risk-based corrective action requirements for the PST program. The commission proposes amendments to this section which require that any release from underground and aboveground storage tanks which are reported on or after September 1, 2001 be subject to Chapter 350. Subchapter G is applicable only to those releases discovered and reported prior to that date.

Section 334.503 sets the requirements for reuse of petroleum-substance waste. The commission proposes to amend this section to establish reuse levels in accordance with the provisions of Chapter 350.

FISCAL NOTE Matthew Johnson, Chief Financial Officer Division, has determined that there will be fiscal implications as a result of administration and enforcement of the proposed sections. For the first five-year period the section as proposed is in effect, individuals, businesses, state agencies, local governments and other entities participating in and subject to the State's environmental remediation programs, will be affected. The State's environmental remediation programs affect the Superfund, Petroleum Storage Tank Remediation, the Voluntary Cleanup Program, the Industrial and Hazardous Waste program, the Municipal Solid Waste, the Composting and the Underground Injection Control programs.

As a whole, the proposed Texas Risk Reduction Program rules are expected to have positive economic effects on responsible parties subject to the State Superfund, Voluntary Cleanup, and Industrial and Hazardous Waste programs. These positive effects are primarily expected to take the form of cost savings for remediation. In some situations, remediation cost savings may be substantial. For participants in the Petroleum Storage Tank program, the cost of assessment, remediation or monitoring may or may not increase, depending on the nature and extent of contamination, the geologic setting and proximity to groundwater, surface water, sources of drinking water and developed real estate. The following summarizes, by agency program, the anticipated effects on costs of the proposed Texas Risk Reduction Program rule. Costs and cost savings for sites in the Industrial and Hazardous Waste, Underground Injection Control and Composting programs are expected to be similar to those in the State Superfund and Voluntary Cleanup programs. To the extent that Municipal Solid Waste facilities are subject to the proposed rule, the costs and cost savings are also expected to be similar to the Voluntary Cleanup and State Superfund programs. To facilitate this discussion, the phases of any site, regardless of agency program, are generically referred to as "site assessment," "remediation," and "monitoring."

Site Assessment Petroleum Storage Tank Remediation Program: Costs are expected to remain level or increase. Increases under the Texas Risk Reduction Program are driven by site-specific conditions. For example, under the Texas Risk Reduction Program, benzene at a groundwater site requires additional delineation. Generally, there will be no increase for soils-only sites.

Superfund Program: Costs are expected to generally decrease, reflecting a shift in assessment from background to health-based levels.

Voluntary Cleanup Program: Cost are expected to remain generally level. While revised in content, costs are not expected to change due to the Texas Risk Reduction Program.

Remediation Petroleum Storage Tank Remediation Program: Costs are expected to remain level or increase. For groundwater sites, costs may increase if there is no landowner concurrence for a plume management zone or natural attenuation is ineffective. For soil-only contaminated sites, generally no increase in cost is anticipated.

Superfund Program: Costs are expected to decrease, substantially in some cases, or remain level due to the shift from background to health-based clean-up standards.

Voluntary Cleanup Program: Costs are expected to decrease, substantially in some cases, or remain level due to the shift from background to health-based clean-up standards.

Monitoring Petroleum Storage Tank Remediation Program: Costs are expected to remain level or increase. Costs will increase with plume management zone or natural attenuation remedies. Generally, no cost increases are anticipated with removal/excavation remedies under the Texas Risk Reduction Program.

Superfund Program: Costs are expected to decrease or remain level. Small businesses should benefit from the new financial assurance option. Some responsible parties may benefit from the $100,000 financial assurance waiver.

Voluntary Cleanup Program: Costs are expected to decrease or remain level. Small businesses should benefit from the new financial assurance option. Some responsible parties may benefit from the $100,000 financial assurance waiver.

The proposed Texas Risk Reduction Program rule should afford cost saving to responsible parties required to demonstrate financial assurance for post response action care. Where the total 30- year cost of post-response action care is estimated at less than $100,000, the proposed rule gives the agency the option to exempt the responsible party from demonstrating financial assurance. Responsible parties benefitting from this new provision should realize savings in the form of staff or consultant time to prepare, submit and monitor a financial assurance mechanism, and the actual cost of the financial assurance instrument.

The proposed Texas Risk Reduction Program rules should also afford cost saving to responsible parties who are small businesses, as defined, and who are required to demonstrate financial assurance for post-response action care. Under the proposed rules, small business may seek to reduce the amount of financial assurance demonstrated if the post response action care period is greater than 10 years.

Cost implications for State agencies, local governments, business, the public and others that own Underground Storage Tanks, Superfund sites, Voluntary Cleanup, Industrial and Hazardous Waste, Municipal Solid Waste, Composting and Underground Injection Control sites are the same as for other persons subject to these remediation programs. The TNRCC, as the agency administering these programs, may realize a reduction in costs to manage or oversee sites, primarily Superfund and Voluntary Cleanup, where the proposed Texas Risk Reduction Program rule allows scaled-down assessments, remediation or monitoring. While the agency's "per-site" cost of management or oversight are expected to decline where scaled-down assessments, remediation or monitoring are allowed, specific cost savings to the agency cannot be quantified due to the uncertainties of how many new sites will come into these programs in the future and what their site characteristics will be. For State Superfund sites, where federal funding is not involved, any reductions in the cost of assessment, remediation or monitoring as a result of the proposed Texas Risk Reduction Program rule will represent direct savings to the State. Again, specific cost savings to the state cannot be quantified due to the uncertainties of how many new State Superfund sites will come into the program and which, if any, will benefit from the provisions of the proposed Texas Risk Reduction Program rules.

PUBLIC BENEFIT Mr. Johnson also has determined that, for the first five-year period, the sections as proposed are in effect, the public benefit anticipated as the result of enforcement of and compliance with the section will be greater flexibility for individuals, businesses, state agencies, local governments and other entities participating in and subject to the State's environmental remediation programs. Additionally, some participants in the State's Superfund, Voluntary Cleanup, Industrial and Hazardous Waste, Municipal Solid Waste, Composting and Underground Injection Control programs may realize cost savings where the proposed sections facilitate remediation to risk-based protective concentration levels rather than to background concentrations. Some participants in the State's Petroleum Storage Tank program may experience higher costs as a result of the proposed sections. Additionally, the proposed rule shifts the focus of the Petroleum Storage Tank program to greater natural resource protection which should benefit the public.

DRAFT REGULATORY IMPACT ANALYSIS The commission has reviewed the rulemaking in light of the regulatory analysis requirements of Texas Government Code §2001.0225 to assess whether the proposed rule is a major environmental rule and whether any the four applicability criteria of the statute are met.

A "major environmental rule" as defined by §2001.0225(g)(3) of the Texas Government Code means a rule the specific intent of which is to protect the environment or reduce risks to human health from environmental exposure and that may adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, or the public health and safety of the state or a sector of the state. The proposed rule is intended to protect the environment and reduce risks to human health from environmental exposure to releases of chemicals of concern. The proposed rule as applied will impact the economy, a sector of the economy, productivity, competition, jobs, the environment, or the public health and safety of the state. The degree of impact that rises to the level of a material adverse effect is subject to interpretation. The Commission is confident the overall effect of the proposed rule will be positive for human health, the environment and the economy, but it may adversely affect in a material way a sector of the economy. Specifically, The commission anticipates a sector of the economy involved with leaking petroleum storage tanks may realize some increased financial burden when the proposed rule begins to apply to it in year 2001. Although debatable, this sector may argue that the proposed rule's financial impact on them is material and adverse. Other sectors of the economy may believe the same.

A major environmental rule requires a draft regulatory impact analysis if it: (1) exceeds a standard set by federal law, unless the rule is specifically required by state law; (2) exceeds an express requirement of state law unless the rule is specifically required by federal law; (3) exceeds a requirement of a delegation agreement or contract between the state and an agency or representative of federal government to implement a state and federal program; or (4) is adopted solely under the general powers of the agency instead of under the provisions of a specific state law. The proposed rule does not exceed a state or federal law. Although differing in some individual aspects, the proposed rule does not exceed standards set by federal law or standards set by state law. Federal and state statutes require action to ensure current and future protection of human health and the environment from releases of regulated substances and hazardous waste into the environment. The proposed rule institutes the criteria by which protective response actions will be achieved in Texas. The proposed rule does not exceed the requirements of any delegation agreement between the state and an agency of the federal government. The Municipal Solid Waste (MSW), Underground Injection Control (UIC), Petroleum Storage Tank (PST), and Resource Conservation and Recovery Act (RCRA) programs are the only programs affected by the proposed rule that have received federal delegation or federal approval. The rule was developed to not exceed any federal requirement. Finally, the rule is not being proposed solely under the general powers of the commission.

Because the proposed rule applies to every TNRCC corrective action program, and because different parties may have different beliefs about whether the proposed rule as applied adversely affects them in a material way, the commission will, for the purpose of conducting this draft regulatory impact analysis pursuant to §2001.0225, treat the proposed rule as a major environmental rule. The full draft regulatory impact analysis is presented in Figure 1 of the preamble to proposed 30 Texas Administrative Code Chapter 350.

The commission invites public comment on the Draft Regulatory Impact Analysis.

STATEMENT OF THE EFFECT OF THE PROPOSED RULE ON SMALL BUSINESSES The proposed Texas Risk Reduction Program ("proposed rule") will have an economic effect on small businesses. That economic effect may be an increase in the cost of complying with the proposed rule or may be a cost savings. Assuming in the interest of caution that any negative economic effect, regardless of degree, falls within the meaning of "adverse economic effect" in the Texas Government Code, §2006.002, the Texas Natural Resource Conservation Commission ("commission") must "reduce that effect if doing so is legal and feasible considering the purpose of the statute under which the rule is to be adopted."

The purpose of the statutes under which the proposed rule is adopted is the protection of human health and the environment. In light of this substantial purpose, it is unreasonable to hold any entity responsible for remediating contaminated property to a lesser standard than that which is scientifically determined to be protective of human health and the environment. Indeed, allowing small businesses to remediate properties under less stringent conditions because of economic impacts is tantamount to allowing small businesses to endanger human health and the environment while others cannot. Because the majority of the proposed rule establishes methodologies for removing health risks to the public and the environment resulting from contamination, it is not legal or feasible to broadly reduce the effect of the proposed rule on small businesses when doing so will endanger human health and the environment. However, the commission is allowing expanded use of exposure prevention remedies which are often more affordable than pollution cleanup remedies so that all businesses would have more remedial options and better cost containment opportunities.

An exception in the proposed rule specifically aimed at reducing any adverse economic impact of the proposed rule on small businesses, if any, concerns financial assurances. Financial assurances are necessary to provide funding for the continued maintenance of engineered remedial actions such as a concrete cap covering contaminated soil. Under the proposed rule, small businesses responsible for a remediation may seek to reduce the amount of financial assurance if the post response action care period is greater than 10 years. The proposed rule also provides a flexible framework in which to calculate cleanup levels and establishes performance-based standards rather than design standards for all entities responsible for remediating contamination, including small businesses, allowing them to determine for themselves the most appropriate cleanup level and the least costly means by which a cleanup goal is to be achieved. Finally, specific clarity is provided in rule provisions to facilitate rule interpretation so that persons, including small and large businesses alike, can make decisions that are likely to be approved by the agency the first time.

Analysis and Comparison of the Cost of Compliance with the Proposed Rule for Small Businesses Using the Cost for Each $100 of Sales

Benefits and Costs to Small Businesses :

Taken as a whole, the proposed rule is expected to have a positive economic impact on small businesses subject to the Industrial and Hazardous Waste, State Superfund, and the Voluntary Cleanup Programs. These positive impacts are primarily expected to take the form of cost savings for remediation and financial assurance. Small businesses actively involved in cleaning up a site, regardless of program, would achieve the same cost savings as a large business. Cost impacts to businesses subject to the Municipal Solid Waste, Composting, and Underground Injection Control programs are expected to be similar to those subject to the Industrial and Hazardous Waste, State Superfund, and Voluntary Cleanup programs. Conversely, small businesses participating in the Petroleum Storage Tank Program would incur the same potential cost increase under the proposed rule as a large business.

The definition of "small business" is "a legal entity, including a corporation, partnership, or sole proprietorship that: (A) is formed for the purpose of making a profit; (B) is independently owned and operated; and (C) has fewer than 100 employees or less than $1 million in annual gross receipts." Texas Government Code Annonated, §2006.001(1) (Vernon 1998).

Virtually any small business whose underground storage tanks leak are potentially subject to cost increases under the proposed rule. Such businesses could include heavy equipment owners or lessors, trucking companies, agricultural operations or other small businesses that own one or more petroleum storage tanks to service motorized equipment. Small fuel retailers, however, may be adversely affected as a group by the proposed rules. The commission does note that all compliance deadlines have passed for meeting release detection, spill and overfill, tank integrity assessment and cathodic protection standards. Therefore, all tanks operating today must meet all technical standards and be less likely to suffer a leak.

Of the twelve petroleum storage tank sites in the Regulatory Impact Analysis, the "worst case" PST site resulted in an estimated $187,623 increase in the cost to assess, remediate, monitor and close the site under the proposed rule. (As mentioned earlier in this report, $187,623 is based on the higher and more conservative $151,200 estimated groundwater remediation cost than the $107,297 remedial cost actually used in the case examples.) That is an increase over the actual cost of $24,343 under existing program rules, which would bring the responsible party's total estimated cost under the proposed rules to $211,966. For a small business with $500,000 in annual sales, a $187,623 estimated cost increase for one site would represent 38% of sales or $37.52 for every $100 in annual sales. For a business with $1,000,000 in annual sales, a $187,623 estimated cost increase for one site would represent 19% of sales or $18.76 for every $100 in annual sales. For a business with $2,000,000 in annual sales, that $187,623 cost increase for one site would represent 9% of sales or $9.38 for every $100 in annual sales. For a business with $3,000,000 in annual sales, that $187,623 cost increase for one site would represent 6% of sales or $6.25 for every $100 in annual sales. Fuel retail, however, is a low-margin, high-volume business, so even "small" fuel retailers will typically post annual sales in excess of $3 million. Under the proposed rules, large businesses are expected to incur the same cost increases on a per-site basis as small businesses. For corporations such as Texaco, with 1997 revenue of $46 billion, the $187,623 estimated cost increase for one site discussed earlier in this paragraph would represent less than 1% of sales or less than one cent for every $100 in annual sales.

The proposed rule, however, affords cost savings to responsible parties who are small businesses and who are required to demonstrate financial assurance for post response action care. Under the proposed rule, small business responsible parties may seek to reduce the amount of financial assurance required if the post response action care period is greater than 10 years. Actual cost savings realized by small business responsible parties as a result of this provision will vary with the amount of financial assurance required. However, for estimating purposes only, by assuming post response action cost at $30,000 per year (based on $5,000 for lab analysis and $25,000 for a consultant to collect samples), the cost to demonstrate for 10 years would be $300,000, substantially less than $900,000 for 30 years. Further assuming the responsible party uses a bank letter of credit to demonstrate financial assurance and the responsible party's annual cost for a bank letter of credit is 0.75%, demonstrating financial assurance for 10 years at $300,000, would cost an estimated $2,250 per year ($300,000 x 0.75%). In this example, the 10-year demonstration cost represents a $4,500 annual savings from the 30-year demonstration cost of $6,750 per year ($900,000 x 0.75%). If financial assurance is still required at the end of the first or second 10-year period, the small business responsible party may again seek to demonstrate financial assurance for the subsequent 10-year period.

Despite the economic impact of the proposed rule on small businesses, the proposed rule is necessary to protect human health and the environment. The proposed rule incorporates performance standards scientifically determined to protect human health and the environment. Changing the rule to reduce the impact on small businesses is not legal or feasible because any change in the standards could put the public health and environment at risk at sites remediated by small businesses. The proposed rule incorporates performance standards rather than design standards and small business can seek to reduce the amount of financial assurances in some instances. These two features of the rule are specifically aimed at reducing the economic impact of the proposed rule on small businesses.

TAKINGS IMPACT ASSESSMENT The commission has prepared a Takings Impact Assessment for this rule pursuant to Texas Government Code Annotated §2007.043. This is a summary of the Takings Impact Assessment. The specific purpose of the proposed rule is to create one risk-based rule that will guide affected property assessments, notifications, and response actions through the establishment of a consistent, reliable program that encourages the cost-effective corrective action for affected properties while ensuring the adequate protection of human health and the environment. The proposed rule will substantially advance this specific purpose through the use of a tiered process for the establishment of health-based protective concentration levels, by allowing the use of site-specific data, and by providing flexibility in selection and design of response actions. Because a landowner always has the option not to consent to institutional controls such as deed restrictions and because another person, not the TNRCC, chooses the remedy, the proposed rule itself will not limit or restrict the real property rights associated with the affected property. Further, the proposed rule does not burden private real property because it: (1) will set minimum requirements for remediation of affected property; (2) will cause no release of chemicals of concern onto the affected property; (3) will not prohibit the pursuit of adequate compensation by the affected property owners from the responsible parties; and (4) will not cause a diminution in property value. Finally, the proposed rule is promulgated to fulfill federal requirements, prevent or abate public nuisance, is necessary to prevent a grave and immediate threat to life or property resulting from hazardous substances, and the proposed rule is in response to the real and substantial threat to public health and safety resulting from hazardous substances. For these reasons, the proposed rule is exempt from the requirement for a Takings Impact Statement as required by statute; however, the commission has prepared a Takings Impact Assessment which may be examined in Figure 2 of the preamble to proposed 30 Texas Administrative Code Chapter 350.

COASTAL MANAGEMENT PROGRAM CONSISTENCY REVIEW The commission has reviewed the proposed rulemaking and found that the rules are subject to the Coastal Management Program and must be consistent with all applicable goals and policies of the Coastal Management Program (CMP).

The commission has prepared a consistency determination for the proposed rules pursuant to 31 TAC §505.22 and has found that the proposed rules are consistent with the applicable CMP goals and policies. The following is a summary of that determination. The CMP goal applicable to the proposed rules is the goal to protect, preserve, restore, and enhance the diversity, quality, quantity, functions, and values of coastal natural resource areas. CMP policies applicable to the proposed rules include the administrative policies and the policies for specific activities related to construction and operation of solid waste treatment, storage, and disposal facilities. Promulgation and enforcement of these rules is consistent with the applicable CMP goals and policies because the proposed rules will establish clear, consistent standards to guide the assessment and cleanup of contaminated properties from site investigation through post-response action care. The rules will require persons conducting response actions to ensure that the concentrations of chemicals of concern are protective of human and ecological receptors. The new rules will result in an overall environmental benefit across the state, including in coastal areas, by implementing a comprehensive and consistent approach to corrective action that utilizes new and scientifically sound corrective action methods; thereby serving to protect, preserve, restore, and enhance the diversity, quality, quantity, functions, and values of the coastal natural resource areas. In addition, the proposed rules do not violate any applicable provisions of the CMP's stated goals and policies.

The commission invites public comment on the consistency of the proposed rules with the applicable goals and policies of the Coastal Management Program.

SUBMITTAL OF COMMENTS Written comments may be mailed to Bettie Bell, Texas Natural Resource Conservation Commission, Office of Policy and Regulatory Development, MC 205, P.O. Box 13087, Austin, Texas 78711-3087 or faxed to (512) 239-4808, (512) 239-5687, or (512) 239-6385. Please reference Rules Tracking Log Number 96106-350-WS. Comments must be received by 5:00 p.m., 30 days from the date of publication of this proposal in the Texas Register . For further information, please contact Chet Clarke, Greg Tipple, or Paul Lewis of the Remediation Division, (512) 239-0310; Scott Crouch, Voluntary Cleanup Program, (512) 239-2486; or Clark Talkington, Waste Policy and Regulations Division, (512) 239-6731. If you have specific questions on rule language regarding ecological risk assessments, please contact Larry Champagne, Remediation Division, (512) 239-0310.

The commission will hold two public hearings. A public hearing will be held on April 19, 1999, at 1:30 p.m., at the City of Houston Pollution Control Building Auditorium, 7411 Park Place Boulevard, Houston, Texas. A second public hearing on the proposal will be held on April 22, 1999, at 10:00 a.m. in Building E, Room 201S, of Texas Natural Resource Conservation Commission complex, located at 12100 North IH-35, Park 35 Technology Center, Austin. The hearings are structured for the receipt of oral or written comments by interested persons. Individuals may present oral statements when called upon or in the order of registration. Open discussion within the audience will not be allowed during the hearings; however, an agency staff member will be available to discuss the proposal 30 minutes prior to the hearings and answer questions before and after the hearings.

Subchapter D. Release Reporting and Corrective Action

The commission proposes amendments to §§335.8, 335.341, 335.342, 335.344, 335.348 and 335.551, concerning Industrial Solid Waste and Municipal Hazardous Waste rules.

EXPLANATION OF THE PROPOSED RULES The commission is proposing a new rule, commonly referred to as the Texas Risk Reduction Program rule, that will establish a uniform set of risk-based performance-oriented technical standards to guide response actions at affected properties regulated via the agency's Office of Waste Management program areas and other applicable program areas. The rule will be promulgated as new 30 Texas Administrative Code (TAC) Chapter 350. The commission is proposing amendments to Chapter 335 as a conforming rulemaking to the proposed new Chapter 350. In addition, the commission is proposing changes to clarify the existing State Superfund rule.

Section 335.8 of Subchapter A defines the applicability of the existing risk reduction rules to persons who perform closures and remediations at facilities or areas subject to industrial solid waste and municipal hazardous waste regulations. The commission proposes to add to subsection (a) provisions that will establish dates by which persons must terminate their use of the existing risk reduction rules for projects in progress. New closures and remediations reported and initiated after the effective date of Chapter 350 must comply with that chapter. Subsection (b) establishes the closure and remediation obligations which must be completed once a person establishes applicability under subsection (a). The commission proposes to add provisions to paragraph (2) of subsection (b) to clarify the performance requirement for closure for waste management facility components such as a tank, sump, surface impoundment, etc., and to distinguish the requirements for remediation of unauthorized discharges, which are to be addressed with the procedures of Chapter 350 after the effective date of that chapter.

Section 335.341 of Subchapter K (relating to Hazardous Substance Facilities Assessment and Remediation) establishes the purpose and scope of the State Superfund Program. In §335.341(b), the existing rule cites Health and Safety Code, §361.271 as the statutory guidance for determining who is a potentially responsible party. To clarify that other statutory language exists addressing potential liability, the commission is proposing to include Health and Safety Code, §361.275(g) along with §361.271 as statutes that identify potentially responsible parties.

The commission proposes to add a new subsection (c) to §335.341 to define the applicability of the Texas Risk Reduction Program to the release or threatened release of hazardous substances into the environment that may constitute an imminent and substantial endangerment to the public health and safety or the environment. The commission is proposing that Chapter 350 shall be applicable to the State Superfund Program unless it conflicts with a statutory requirement or a requirement of Subchapter K. In this instance, the requirements of the statute and Subchapter K shall apply rather than Chapter 350.

Section 335.342 contains definitions for the State Superfund Program. The commission is amending the definitions of "Remedial action" and "Remedial investigation" to note that they are similar to a response action and an affected property assessment, respectively, under the Texas Risk Reduction Program. Also, a reference to "baseline risk assessment" has been removed from the definition of remedial investigation because the Texas Risk Reduction Program no longer uses baseline risk assessments. Instead, proposed Chapter 350 specifies requirements for the development of protective concentration levels including defining human health exposure pathways and points of exposure.

Section 335.344 addresses delisting of State Superfund sites from the State Superfund Registry. Subsection §335.344(c) outlines five criteria the executive director will consider in determining whether to delist a site. The commission proposes to add a sixth criteria to the current five. Specifically, the commission is proposing to add language allowing the executive director to consider whether the site has been deferred to a state or federal agency for further action as a criteria for delisting.

The proposed changes to §335.348, General Requirements for Remedial Investigations, remove references to "baseline risk assessment" consistent with changes to §335.342.

Section 335.551 establishes the purpose, scope and applicability of Chapter 335, Subchapter S (relating to Risk Reduction Standards). The commission proposes to add to subsection (c) provisions that will establish dates by which persons must terminate their use of the existing risk reduction rules for projects in progress. New closures and remediations reported and initiated after the effective date of Chapter 350 must comply with that chapter.

FISCAL NOTE Matthew Johnson, Chief Financial Officer Division, has determined that there will be fiscal implications as a result of administration and enforcement of the proposed sections. For the first five-year period the section as proposed is in effect, individuals, businesses, state agencies, local governments and other entities participating in and subject to the State's environmental remediation programs, will be affected. The State's environmental remediation programs affect the Superfund, Petroleum Storage Tank Remediation, the Voluntary Cleanup Program, the Industrial and Hazardous Waste program, the Municipal Solid Waste, the Composting and the Underground Injection Control programs.

As a whole, the proposed Texas Risk Reduction Program rules are expected to have positive economic effects on responsible parties subject to the State Superfund, Voluntary Cleanup, and Industrial and Hazardous Waste programs. These positive effects are primarily expected to take the form of cost savings for remediation. In some situations, remediation cost savings may be substantial. For participants in the Petroleum Storage Tank program, the cost of assessment, remediation or monitoring may or may not increase, depending on the nature and extent of contamination, the geologic setting and proximity to groundwater, surface water, sources of drinking water and developed real estate. The following summarizes, by agency program, the anticipated effects on costs of the proposed Texas Risk Reduction Program rule. Costs and cost savings for sites in the Industrial and Hazardous Waste, Underground Injection Control and Composting programs are expected to be similar to those in the State Superfund and Voluntary Cleanup programs. To the extent that Municipal Solid Waste facilities are subject to the proposed rule, the costs and cost savings are also expected to be similar to the Voluntary Cleanup and State Superfund programs. To facilitate this discussion, the phases of any site, regardless of agency program, are generically referred to as "site assessment," "remediation," and "monitoring."

Site Assessment Petroleum Storage Tank Remediation Program: Costs are expected to remain level or increase. Increases under the Texas Risk Reduction Program are driven by site-specific conditions. For example, under the Texas Risk Reduction Program, benzene at a groundwater site requires additional delineation. Generally, there will be no increase for soils-only sites.

Superfund Program: Costs are expected to generally decrease, reflecting a shift in assessment from background to health-based levels.

Voluntary Cleanup Program: Cost are expected to remain generally level. While revised in content, costs are not expected to change due to the Texas Risk Reduction Program.

Remediation Petroleum Storage Tank Remediation Program: Costs are expected to remain level or increase. For groundwater sites, costs may increase if there is no landowner concurrence for a plume management zone or natural attenuation is ineffective. For soil-only contaminated sites, generally no increase in cost is anticipated.

Superfund Program: Costs are expected to decrease, substantially in some cases, or remain level due to the shift from background to health-based clean-up standards.

Voluntary Cleanup Program: Costs are expected to decrease, substantially in some cases, or remain level due to the shift from background to health-based clean-up standards.

Monitoring Petroleum Storage Tank Remediation Program: Costs are expected to remain level or increase. Costs will increase with plume management zone or natural attenuation remedies. Generally, no cost increases are anticipated with removal/excavation remedies under the Texas Risk Reduction Program.

Superfund Program: Costs are expected to decrease or remain level. Small businesses should benefit from the new financial assurance option. Some responsible parties may benefit from the $100,000 financial assurance waiver.

Voluntary Cleanup Program: Costs are expected to decrease or remain level. Small businesses should benefit from the new financial assurance option. Some responsible parties may benefit from the $100,000 financial assurance waiver.

The proposed Texas Risk Reduction Program rule should afford cost saving to responsible parties required to demonstrate financial assurance for post response action care. Where the total 30- year cost of post-response action care is estimated at less than $100,000, the proposed rule gives the agency the option to exempt the responsible party from demonstrating financial assurance. Responsible parties benefitting from this new provision should realize savings in the form of staff or consultant time to prepare, submit and monitor a financial assurance mechanism, and the actual cost of the financial assurance instrument.

The proposed Texas Risk Reduction Program rules should also afford cost saving to responsible parties who are small businesses, as defined, and who are required to demonstrate financial assurance for post-response action care. Under the proposed rules, small business may seek to reduce the amount of financial assurance demonstrated if the post response action care period is greater than 10 years.

Cost implications for State agencies, local governments, business, the public and others that own Underground Storage Tanks, Superfund sites, Voluntary Cleanup, Industrial and Hazardous Waste, Municipal Solid Waste, Composting and Underground Injection Control sites are the same as for other persons subject to these remediation programs. The TNRCC, as the agency administering these programs, may realize a reduction in costs to manage or oversee sites, primarily Superfund and Voluntary Cleanup, where the proposed Texas Risk Reduction Program rule allows scaled-down assessments, remediation or monitoring. While the agency's "per-site" cost of management or oversight are expected to decline where scaled-down assessments, remediation or monitoring are allowed, specific cost savings to the agency cannot be quantified due to the uncertainties of how many new sites will come into these programs in the future and what their site characteristics will be. For State Superfund sites, where federal funding is not involved, any reductions in the cost of assessment, remediation or monitoring as a result of the proposed Texas Risk Reduction Program rule will represent direct savings to the State. Again, specific cost savings to the state cannot be quantified due to the uncertainties of how many new State Superfund sites will come into the program and which, if any, will benefit from the provisions of the proposed Texas Risk Reduction Program rules.

PUBLIC BENEFIT Mr. Johnson also has determined that, for the first five-year period, the sections as proposed are in effect, the public benefit anticipated as the result of enforcement of and compliance with the section will be greater flexibility for individuals, businesses, state agencies, local governments and other entities participating in and subject to the State's environmental remediation programs. Additionally, some participants in the State's Superfund, Voluntary Cleanup, Industrial and Hazardous Waste, Municipal Solid Waste, Composting and Underground Injection Control programs may realize cost savings where the proposed sections facilitate remediation to risk-based protective concentration levels rather than to background concentrations. Some participants in the State's Petroleum Storage Tank program may experience higher costs as a result of the proposed sections. Additionally, the proposed rule shifts the focus of the Petroleum Storage Tank program to greater natural resource protection which should benefit the public.

DRAFT REGULATORY IMPACT ANALYSIS The commission has reviewed the rulemaking in light of the regulatory analysis requirements of Texas Government Code §2001.0225 to assess whether the proposed rule is a major environmental rule and whether any the four applicability criteria of the statute are met.

A "major environmental rule" as defined by §2001.0225(g)(3) of the Texas Government Code means a rule the specific intent of which is to protect the environment or reduce risks to human health from environmental exposure and that may adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, or the public health and safety of the state or a sector of the state. The proposed rule is intended to protect the environment and reduce risks to human health from environmental exposure to releases of chemicals of concern. The proposed rule as applied will impact the economy, a sector of the economy, productivity, competition, jobs, the environment, or the public health and safety of the state. The degree of impact that rises to the level of a material adverse effect is subject to interpretation. The Commission is confident the overall effect of the proposed rule will be positive for human health, the environment and the economy, but it may adversely affect in a material way a sector of the economy. Specifically, The commission anticipates a sector of the economy involved with leaking petroleum storage tanks may realize some increased financial burden when the proposed rule begins to apply to it in year 2001. Although debatable, this sector may argue that the proposed rule's financial impact on them is material and adverse. Other sectors of the economy may believe the same.

A major environmental rule requires a draft regulatory impact analysis if it: (1) exceeds a standard set by federal law, unless the rule is specifically required by state law; (2) exceeds an express requirement of state law unless the rule is specifically required by federal law; (3) exceeds a requirement of a delegation agreement or contract between the state and an agency or representative of federal government to implement a state and federal program; or (4) is adopted solely under the general powers of the agency instead of under the provisions of a specific state law. The proposed rule does not exceed a state or federal law. Although differing in some individual aspects, the proposed rule does not exceed standards set by federal law or standards set by state law. Federal and state statutes require action to ensure current and future protection of human health and the environment from releases of regulated substances and hazardous waste into the environment. The proposed rule institutes the criteria by which protective response actions will be achieved in Texas. The proposed rule does not exceed the requirements of any delegation agreement between the state and an agency of the federal government. The Municipal Solid Waste (MSW), Underground Injection Control (UIC), Petroleum Storage Tank (PST), and Resource Conservation and Recovery Act (RCRA) programs are the only programs affected by the proposed rule that have received federal delegation or federal approval. The rule was developed to not exceed any federal requirement. Finally, the rule is not being proposed solely under the general powers of the commission.

Because the proposed rule applies to every TNRCC corrective action program, and because different parties may have different beliefs about whether the proposed rule as applied adversely affects them in a material way, the commission will, for the purpose of conducting this draft regulatory impact analysis pursuant to §2001.0225, treat the proposed rule as a major environmental rule. The full draft regulatory impact analysis is presented in Figure 1 of the preamble to proposed 30 Texas Administrative Code Chapter 350.

The commission invites public comment on the Draft Regulatory Impact Analysis.

STATEMENT OF THE EFFECT OF THE PROPOSED RULE ON SMALL BUSINESSES The proposed Texas Risk Reduction Program ("proposed rule") will have an economic effect on small businesses. That economic effect may be an increase in the cost of complying with the proposed rule or may be a cost savings. Assuming in the interest of caution that any negative economic effect, regardless of degree, falls within the meaning of "adverse economic effect" in the Texas Government Code, §2006.002, the Texas Natural Resource Conservation Commission ("commission") must "reduce that effect if doing so is legal and feasible considering the purpose of the statute under which the rule is to be adopted."

The purpose of the statutes under which the proposed rule is adopted is the protection of human health and the environment. In light of this substantial purpose, it is unreasonable to hold any entity responsible for remediating contaminated property to a lesser standard than that which is scientifically determined to be protective of human health and the environment. Indeed, allowing small businesses to remediate properties under less stringent conditions because of economic impacts is tantamount to allowing small businesses to endanger human health and the environment while others cannot. Because the majority of the proposed rule establishes methodologies for removing health risks to the public and the environment resulting from contamination, it is not legal or feasible to broadly reduce the effect of the proposed rule on small businesses when doing so will endanger human health and the environment. However, the commission is allowing expanded use of exposure prevention remedies which are often more affordable than pollution cleanup remedies so that all businesses would have more remedial options and better cost containment opportunities.

An exception in the proposed rule specifically aimed at reducing any adverse economic impact of the proposed rule on small businesses, if any, concerns financial assurances. Financial assurances are necessary to provide funding for the continued maintenance of engineered remedial actions such as a concrete cap covering contaminated soil. Under the proposed rule, small businesses responsible for a remediation may seek to reduce the amount of financial assurance if the post response action care period is greater than 10 years. The proposed rule also provides a flexible framework in which to calculate cleanup levels and establishes performance-based standards rather than design standards for all entities responsible for remediating contamination, including small businesses, allowing them to determine for themselves the most appropriate cleanup level and the least costly means by which a cleanup goal is to be achieved. Finally, specific clarity is provided in rule provisions to facilitate rule interpretation so that persons, including small and large businesses alike, can make decisions that are likely to be approved by the agency the first time.

Analysis and Comparison of the Cost of Compliance with the Proposed Rule for Small Businesses Using the Cost for Each $100 of Sales

Benefits and Costs to Small Businesses :

Taken as a whole, the proposed rule is expected to have a positive economic impact on small businesses subject to the Industrial and Hazardous Waste, State Superfund, and the Voluntary Cleanup Programs. These positive impacts are primarily expected to take the form of cost savings for remediation and financial assurance. Small businesses actively involved in cleaning up a site, regardless of program, would achieve the same cost savings as a large business. Cost impacts to businesses subject to the Municipal Solid Waste, Composting, and Underground Injection Control programs are expected to be similar to those subject to the Industrial and Hazardous Waste, State Superfund, and Voluntary Cleanup programs. Conversely, small businesses participating in the Petroleum Storage Tank Program would incur the same potential cost increase under the proposed rule as a large business.

The definition of "small business" is "a legal entity, including a corporation, partnership, or sole proprietorship that: (A) is formed for the purpose of making a profit; (B) is independently owned and operated; and (C) has fewer than 100 employees or less than $1 million in annual gross receipts." Texas Government Code Annonated, §2006.001(1) (Vernon 1998).

Virtually any small business whose underground storage tanks leak are potentially subject to cost increases under the proposed rule. Such businesses could include heavy equipment owners or lessors, trucking companies, agricultural operations or other small businesses that own one or more petroleum storage tanks to service motorized equipment. Small fuel retailers, however, may be adversely affected as a group by the proposed rules. The commission does note that all compliance deadlines have passed for meeting release detection, spill and overfill, tank integrity assessment and cathodic protection standards. Therefore, all tanks operating today must meet all technical standards and be less likely to suffer a leak.

Of the twelve petroleum storage tank sites in the Regulatory Impact Analysis, the "worst case" PST site resulted in an estimated $187,623 increase in the cost to assess, remediate, monitor and close the site under the proposed rule. (As mentioned earlier in this report, $187,623 is based on the higher and more conservative $151,200 estimated groundwater remediation cost than the $107,297 remedial cost actually used in the case examples.) That is an increase over the actual cost of $24,343 under existing program rules, which would bring the responsible party's total estimated cost under the proposed rules to $211,966. For a small business with $500,000 in annual sales, a $187,623 estimated cost increase for one site would represent 38% of sales or $37.52 for every $100 in annual sales. For a business with $1,000,000 in annual sales, a $187,623 estimated cost increase for one site would represent 19% of sales or $18.76 for every $100 in annual sales. For a business with $2,000,000 in annual sales, that $187,623 cost increase for one site would represent 9% of sales or $9.38 for every $100 in annual sales. For a business with $3,000,000 in annual sales, that $187,623 cost increase for one site would represent 6% of sales or $6.25 for every $100 in annual sales. Fuel retail, however, is a low-margin, high-volume business, so even "small" fuel retailers will typically post annual sales in excess of $3 million. Under the proposed rules, large businesses are expected to incur the same cost increases on a per-site basis as small businesses. For corporations such as Texaco, with 1997 revenue of $46 billion, the $187,623 estimated cost increase for one site discussed earlier in this paragraph would represent less than 1% of sales or less than one cent for every $100 in annual sales.

The proposed rule, however, affords cost savings to responsible parties who are small businesses and who are required to demonstrate financial assurance for post response action care. Under the proposed rule, small business responsible parties may seek to reduce the amount of financial assurance required if the post response action care period is greater than 10 years. Actual cost savings realized by small business responsible parties as a result of this provision will vary with the amount of financial assurance required. However, for estimating purposes only, by assuming post response action cost at $30,000 per year (based on $5,000 for lab analysis and $25,000 for a consultant to collect samples), the cost to demonstrate for 10 years would be $300,000, substantially less than $900,000 for 30 years. Further assuming the responsible party uses a bank letter of credit to demonstrate financial assurance and the responsible party's annual cost for a bank letter of credit is 0.75%, demonstrating financial assurance for 10 years at $300,000, would cost an estimated $2,250 per year ($300,000 x 0.75%). In this example, the 10-year demonstration cost represents a $4,500 annual savings from the 30-year demonstration cost of $6,750 per year ($900,000 x 0.75%). If financial assurance is still required at the end of the first or second 10-year period, the small business responsible party may again seek to demonstrate financial assurance for the subsequent 10-year period.

Despite the economic impact of the proposed rule on small businesses, the proposed rule is necessary to protect human health and the environment. The proposed rule incorporates performance standards scientifically determined to protect human health and the environment. Changing the rule to reduce the impact on small businesses is not legal or feasible because any change in the standards could put the public health and environment at risk at sites remediated by small businesses. The proposed rule incorporates performance standards rather than design standards and small business can seek to reduce the amount of financial assurances in some instances. These two features of the rule are specifically aimed at reducing the economic impact of the proposed rule on small businesses.

TAKINGS IMPACT ASSESSMENT The commission has prepared a Takings Impact Assessment for this rule pursuant to Texas Government Code Annotated §2007.043. This is a summary of the Takings Impact Assessment. The specific purpose of the proposed rule is to create one risk-based rule that will guide affected property assessments, notifications, and response actions through the establishment of a consistent, reliable program that encourages the cost-effective corrective action for affected properties while ensuring the adequate protection of human health and the environment. The proposed rule will substantially advance this specific purpose through the use of a tiered process for the establishment of health-based protective concentration levels, by allowing the use of site-specific data, and by providing flexibility in selection and design of response actions. Because a landowner always has the option not to consent to institutional controls such as deed restrictions and because another person, not the TNRCC, chooses the remedy, the proposed rule itself will not limit or restrict the real property rights associated with the affected property. Further, the proposed rule does not burden private real property because it: (1) will set minimum requirements for remediation of affected property; (2) will cause no release of chemicals of concern onto the affected property; (3) will not prohibit the pursuit of adequate compensation by the affected property owners from the responsible parties; and (4) will not cause a diminution in property value. Finally, the proposed rule is promulgated to fulfill federal requirements, prevent or abate public nuisance, is necessary to prevent a grave and immediate threat to life or property resulting from hazardous substances, and the proposed rule is in response to the real and substantial threat to public health and safety resulting from hazardous substances. For these reasons, the proposed rule is exempt from the requirement for a Takings Impact Statement as required by statute; however, the commission has prepared a Takings Impact Assessment which may be examined in Figure 2 of the preamble to proposed 30 Texas Administrative Code Chapter 350.

COASTAL MANAGEMENT PROGRAM CONSISTENCY REVIEW The commission has reviewed the proposed rulemaking and found that the rules are subject to the Coastal Management Program and must be consistent with all applicable goals and policies of the Coastal Management Program (CMP).

The commission has prepared a consistency determination for the proposed rules pursuant to 31 TAC §505.22 and has found that the proposed rules are consistent with the applicable CMP goals and policies. The following is a summary of that determination. The CMP goal applicable to the proposed rules is the goal to protect, preserve, restore, and enhance the diversity, quality, quantity, functions, and values of coastal natural resource areas. CMP policies applicable to the proposed rules include the administrative policies and the policies for specific activities related to construction and operation of solid waste treatment, storage, and disposal facilities. Promulgation and enforcement of these rules is consistent with the applicable CMP goals and policies because the proposed rules will establish clear, consistent standards to guide the assessment and cleanup of contaminated properties from site investigation through post-response action care. The rules will require persons conducting response actions to ensure that the concentrations of chemicals of concern are protective of human and ecological receptors. The new rules will result in an overall environmental benefit across the state, including in coastal areas, by implementing a comprehensive and consistent approach to corrective action that utilizes new and scientifically sound corrective action methods; thereby serving to protect, preserve, restore, and enhance the diversity, quality, quantity, functions, and values of the coastal natural resource areas. In addition, the proposed rules do not violate any applicable provisions of the CMP's stated goals and policies.

The commission invites public comment on the consistency of the proposed rules with the applicable goals and policies of the Coastal Management Program.

SUBMITTAL OF COMMENTS Written comments may be mailed to Bettie Bell, Texas Natural Resource Conservation Commission, Office of Policy and Regulatory Development, MC 205, P.O. Box 13087, Austin, Texas 78711-3087 or faxed to (512) 239-4808, (512) 239-5687, or (512) 239-6385. Please reference Rules Tracking Log Number 96106-350-WS. Comments must be received by 5:00 p.m., 30 days from the date of publication of this proposal in the Texas Register . For further information, please contact Chet Clarke, Greg Tipple, or Paul Lewis of the Remediation Division, (512) 239-0310; Scott Crouch, Voluntary Cleanup Program, (512) 239-2486; or Clark Talkington, Waste Policy and Regulations Division, (512) 239-6731. If you have specific questions on rule language regarding ecological risk assessments, please contact Larry Champagne, Remediation Division, (512) 239-0310.

The commission will hold two public hearings. A public hearing will be held on April 19, 1999, at 1:30 p.m., at the City of Houston Pollution Control Building Auditorium, 7411 Park Place Boulevard, Houston, Texas. A second public hearing on the proposal will be held on April 22, 1999, at 10:00 a.m. in Building E, Room 201S, of Texas Natural Resource Conservation Commission complex, located at 12100 North IH-35, Park 35 Technology Center, Austin. The hearings are structured for the receipt of oral or written comments by interested persons. Individuals may present oral statements when called upon or in the order of registration. Open discussion within the audience will not be allowed during the hearings; however, an agency staff member will be available to discuss the proposal 30 minutes prior to the hearings and answer questions before and after the hearings.

Subchapter A. Industrial Solid Waste and Municipal Hazardous Waste Management in General

The Texas Natural Resource Conservation Commission (TNRCC, commission or agency) proposes new §§350.1-350.5, 350.31-350.37, 350.51-350.55, 350.71-350.79, 350.91-350.96, 350.111, and §350.131-350.135, concerning the requirements for off-site properties and leased lands; the required actions when substantial changes in circumstances occur at an affected property; the assessment of property affected by chemicals of concern (COCs); the development of protective concentration levels for human and ecological receptors; the performance of response actions necessary to restore a property to active and productive use; the performance of post-response action care; the establishment and maintenance of financial assurance for post-response action care in certain circumstances; the reporting requirements; the use of institutional controls and requirements for Facilities Operations Areas.

SUMMARY

A.Introduction

As part of the commission's regulatory reform goals, the commission is proposing new rules to establish requirements for corrective actions at sites where a release of a chemical of concern has impacted the environment. The proposed rule, commonly referred to as the Texas Risk Reduction Program (TRRP) rule, has been in development for over three years and is the culmination of an unprecedented level of public input for a waste-related rulemaking in the state.

The proposed rule outlines a comprehensive program that addresses the investigation of contaminated sites, establishes reasonable standards for notice, provides flexibility in calculating site-specific cleanup levels, and sets forth appropriate response actions to address the environmental contamination. The proposed program will provide a consistent corrective action process directed toward protection of human health and the environment balanced with the economic welfare of the citizens of this state. The proposed rule uses a tiered approach incorporating risk assessment techniques to help focus investigations, to determine appropriate protective concentration levels, and to set reasonable response objectives that will protect human health and the environment.

The programs affected by the proposed rule are, for the most part, regulated by the commission's Office of Waste Management. These programs include State Superfund, Voluntary Cleanup, Petroleum Storage Tank, Industrial & Hazardous Waste, and Underground Injection Control. Currently these programs operate under several different corrective action programs. In addition, other programs such as the Municipal Solid Waste, Composting, and Wastewater treatment programs are affected.

The commission emphasizes that the provisions of this chapter do not prohibit actions which should be taken by the person to mitigate emergency situations, to abate an on-going release, or to stabilize or abate the spread of released chemicals of concern. Additionally, the proposed rule does not establish reporting or requirements for action, as such; persons are still required to follow program-specific guidelines for reporting discovered releases of chemicals of concern to the agency.

B.Dates

Written comments must be submitted to the agency by 5:00 p.m., April 26, 1999. The agency will hold public hearings in Houston, Texas on April 19, 1999, and in Austin, Texas on April 22, 1999, to receive oral or written comments by interested persons. Agency staff will be available to discuss the proposal 30 minutes before to the hearing and answer questions before and after the hearing. More information on the address for written comments and the location of the public hearings is in the section of the preamble entitled "SUBMITTAL OF COMMENTS."

C.Location of Documents Associated With the Proposed Rulemaking

The executive director has established a record of the rulemaking so that documents used during the development of the rule can be easily accessed by the public. Persons interested in reviewing these documents may view them at the following locations. Documents generated prior to July 22, 1998, are housed at the Texas State Library & Archives, State & Local Records Management Division, State Record Center, 4400 Shoal Creek Blvd., Austin, Texas 78756, (512) 454-2751. Documents generated since July 22, 1998, may be viewed at Texas Natural Resource Conservation Commission, Building D, Room 190, 12100 Park 35 Circle, Austin, Texas 78753, (512) 239-2920. The commission has also established a web page for the Texas Risk Reduction Program at http://www.tnrcc.state.tx.us/waste.

D.Organization of the Preamble to the Proposed Rule

The commission has subdivided the preamble of the proposed rule to better assist persons in understanding the purpose of the proposed rule, the history of the proposed rule, differences between the proposed rule and existing programs, and the requirements of the rule. The preamble is ordered as follows:

I.EXPLANATION OF PROPOSED RULE

A.History of the rulemaking

B.Terminology for the preamble and rule

C.Reason for the proposed rule

D.Short summary explaining the requirements of the proposed rule

E.Comparison of the proposed rule with current TNRCC risk-based rules

F.The proposed rule in detail

II.FISCAL NOTE - A discussion of the fiscal impacts to state and local governments required by Government Code, §2001.024.

III.PUBLIC BENEFIT - A discussion of the public benefits and costs expected from the implementation of the rule required by Government Code, §2001.024.

IV.DRAFT REGULATORY IMPACT ANALYSIS - An analysis addressing whether the proposed rule is a major environmental rule and the costs and benefits anticipated from implementation of the proposed rule required by Government Code, §2001.0225.

V.SMALL BUSINESS IMPACT - An analysis of the impact of the proposed rule on small businesses required by Government Code, §2006.002.

VI.TAKINGS IMPACT ASSESSMENT - An assessment of the impact of the proposed rule on private real property required by Government Code, §2007.043.

VII.COASTAL MANAGEMENT PROGRAM CONSISTENCY REVIEW - A review of the proposed rule to assess the applicability of the Coastal Management Plan, and, if applicable, whether the proposed rule is consistent with the applicable goals and policies of the Coastal Management Plan required by 31 Texas Administrative Code §505.22 of the rules of the General Land Office.

VIII.SUBMITTAL OF COMMENTS

A.Instructions for submitting written comments and a list of agency contacts.

B.Information on dates and locations for the public hearing on the proposed rule.

EXPLANATION OF PROPOSED RULE

A.History of the Rulemaking

The commission began development of the Texas Risk Reduction Program in 1995. Acknowledging the scope and impact of the proposed rule, the commission has sought public input throughout the rulemaking process. The agency has released two versions of a conceptual document setting forth the agency's vision of the proposed program. The first version was released May 15, 1996, and the second was released December 16, 1996. In addition, a draft ecological risk assessment guidance document was released in November 1996. The commission received comment from a large number of interested parties on all three documents. In addition to the public comment periods, the commission discussed the Texas Risk Reduction Program at commission work sessions on February 22, 1996, and September 18, 1997. Each step in the development of the proposed program represented a refinement over the previous step.

Following publication of the second conceptual document and review of comments on that document, the commission proposed the Texas Risk Reduction Program rule and associated conforming rulemakings on May 15, 1998, in the Texas Register. The proposed rule was open for public comment until July 22, 1998. Two public hearings on the proposed rule were conducted. The first public hearing was on July 6, 1998, in Austin, and the second public hearing was on July 9, 1998, in Houston. Eighty seven people commented on the proposed rule submitting approximately 800 pages of comment. Based on the comments received, it was clear that significant revisions to the rule were necessary to make the rule more "user-friendly" so that it would be easier to follow and understand. In addition, key technical and policy issues were raised by the commenters which warranted further analysis. Finally, the commission determined that it was necessary to revisit certain procedural issues, notably the Fiscal Note, the Draft Regulatory Impact Analysis (RIA), and the Small Business Impact Statement. The commission withdrew the proposed rulemaking on August 26, 1998, and remanded the rule to agency staff. The Notice of Withdrawal was filed with the Texas Register on September 15, 1998 and was effective on that date. The Notice of Withdrawal was published in the October 2, 1998, issue of the Texas Register (23 Tex.Reg. 9969).

Most commenters supported the use of a risk-based corrective action program; however, some commenters recommended retaining background as a remedy and investigation standard. Almost all commenters expressed concern that the rule was overly complex and difficult to understand and follow. Many of those further commented that the rule was too prescriptive and too costly as proposed, contending that the concept of a "one size fits all" rule unfairly places smaller sites, such as sites with leaking petroleum storage tanks, on the same scale as Superfund sites. While the majority of commenters expressed these concerns, some commenters supported the detail contained in the May 15, 1998, proposed rule and the concept of a unified approach to corrective action. Another general comment was the need to place much of the rule in guidance so that the program can respond rapidly to changes in technology. In addition to these general comments, the commission received many comments on specific provisions in the rule. Persons wishing to examine the list of commenters, copies of the written comments and the public hearing transcripts may view those documents in the public record of the rulemaking located in TNRCC Central Records, Bldg D, Room 190.

B.Terminology for the Preamble and Rule

As explained later in the preamble, many new terms are used in the proposed rule due to the convergence of several different programs. For example, "person" is used instead of "responsible party" or "responsible persons" because not everyone is a responsible party. Under the Voluntary Cleanup Program, the agency often receives applications from non-responsible parties to clean up a site. In those situations, it is inaccurate to refer to the Voluntary Cleanup Program applicant as a responsible party. In addition, other terms have been developed to more accurately reflect their meaning. An example is "Chemical of Concern." The term is used in place of "contaminant," because the mere presence of a contaminant would not imply that unprotective situations exist. Rather, the term chemical of concern is intended to relate specifically to those contaminants at concentrations which may not be protective should exposure occur. A similar concept was addressed in the preamble to the existing Risk Reduction Rule which introduced the term "contaminated media" to refer to an environmental media which contains contaminants at levels that pose a substantial present or future threat to human health and the environment.

The commission understands that the use of the new terminology may initially challenge readers of the proposed rule. For this reason, the preamble to the proposed rule uses both the new and traditional terms to help persons understand the rule. The following is a list of new rule terms and the corresponding terms that are sometimes used in the preamble. The new term is followed in parentheses with other terms used in the preamble to mean the same thing: chemical of concern (chemical, contaminant); affected property (property, contaminated property, site); protective concentration levels (cleanup levels); protective concentration level exceedence zone (contaminated soil, contaminated groundwater, affected soil, affected groundwater); groundwater protective concentration level exceedence zone (plume, contaminated plume); response action (remedial action, cleanup).

C.Reason for the Proposed Rule

The commission initiated this rulemaking as the next logical step in the development of a risk-based program. The agency currently administers several different sets of corrective action regulations. Corrective actions regulated under the agency's Industrial & Hazardous Waste (including RCRA) and State Superfund Programs must comply with 30 TAC Chapter 335 (current Risk Reduction Rule). Corrective actions regulated under the agency's Petroleum Storage Tank Program must comply with 30 TAC Chapter 334 (Petroleum Storage Tank rule). Further, corrective actions conducted under the agency's Voluntary Cleanup Program must comply with either the current Risk Reduction Rule or the current Petroleum Storage Tank rule, depending on the regulatory authority applicable to the affected property, but also must comply with corrective action provisions contained in 30 TAC Chapter 333 (Voluntary Cleanup Program rule) which supercede portions of the current Risk Reduction Rule. Operating landfills in the Municipal Solid Waste Program comply with yet a fourth set of corrective action requirements specific to landfills, but corrective action at other municipal solid waste and composting facilities is case-specific.

The adoption of the current Risk Reduction Rule in 1993 and the risk-based corrective action portion of the Petroleum Storage Tank rule in 1995 established the commission's philosophy that risk-based cleanups are an acceptable remedial response to affected environmental media (i.e., soil, groundwater, etc.) because risk-based corrective action ensures protection of human health and the environment while making response actions more economically feasible. Prior to the adoption of the current Risk Reduction Rule in 1993, the commission's industrial and hazardous waste programs required all affected media to be restored to background levels or to be closed as a landfill with post-closure care. With regard to the waste program areas, the agency recognized for the first time in the current Risk Reduction Rule that a limited quantity of chemicals of concern could remain within an environmental medium and not present an unacceptable risk to human health or the environment. However, the current Risk Reduction Rule has a remedy standard which is based upon the attainment of background conditions (i.e., Risk Reduction Standard 1) and requires a notice to be placed in the property deed records for all sites where contaminants remain in environmental media above background levels. This deed notice effectively drives cleanups toward the background standard.

The implementation of risk-based rules since 1993 has proven successful in encouraging remediation of contaminated sites in a timely and cost-effective manner compared with the historical practice of complete cleanups. However, the current Risk Reduction Rule, the Petroleum Storage Tank rule, and the Voluntary Cleanup Program rule contain different, and in some respects, contradictory regulatory approaches, requirements and cleanup objectives. The net effect is that the agency and the regulated community are responsible for learning, implementing and complying with different regulations which address releases of chemicals of concern into the environment. Having different corrective action regulations for different programs can cause inconsistent results under comparable circumstances. For example, assume two almost identical releases of benzene occur in two separate areas of a single property. Assume further one release is regulated by the current Risk Reduction Rule and the other release is regulated by the Petroleum Storage Tank rule. Because the two rules set different requirements for the investigation, cleanup levels, soil and groundwater response objectives, and reporting, under the current rules the two releases must be investigated to different degrees, cleaned up to different standards, and be addressed under different administrative procedures and time frames. Different concentrations of benzene will be allowed to remain on a single property under the two sets of rules. These kinds of differences are difficult to justify, cause unnecessary confusion and frustration, and unnecessarily burden the public and private resources that must learn, implement, and comply with different corrective action regulations.

In addition, the current regulations do not in all situations provide clear, consistent or complete requirements for some critical policy matters such as the minimum degree of assessment required for release sites, notification of affected landowners, acceptable protectiveness benchmarks, conditions where exposure prevention remedies are allowable in lieu of pollution cleanup remedies, current and future land use, and consideration of ecological impacts. The lack of clear positions on critical corrective action policy matters is the reason for many the inconsistencies between the different corrective action rules, has resulted in inconsistent application of the individual rules on a day-to-day basis, and has been a cause of delay and disagreement in the corrective action process. Based on the experience of the corrective action programs since adoption of the current Risk Reduction Rule in 1993, the commission believes these policy issues need to be addressed in new regulations.

Since the adoption of the current Risk Reduction Rule in 1993 and the Petroleum Storage Tank rule in 1995, continued advances in science have progressed beyond the scope of the current rules. The proposed rule incorporates new and more scientifically sound corrective action methods that have developed nationally. By incorporating updated standards in risk reduction, the commission anticipates the proposed rule will improve protection of human health and the environment while enhancing flexibility and cost-containment for the regulated community.

The goals of the new program are: to create a unified performance-based approach to corrective action which will be the same regardless of which of the agency's program areas review the adequacy of a response action; to complete the movement away from background as a regulatory standard; and to implement a consistent, streamlined approach that will expedite remediations of affected properties. The commission also seeks to address in the proposed rule a number of technical, legal, risk assessment and risk management policy questions which have arisen and were insufficiently or inconsistently addressed in the previously promulgated risk-based rules.

Specifically, among legal and policy issues the proposed rule addresses include: landowner consent to deed notification; notification to owners of affected property; and land use determinations.

Technical issues addressed include: requirements to demonstrate completion of post-response action care; requirements to provide certainty as to when exposure prevention remedies are and are not acceptable alternatives; useable quantities of groundwater/minimum groundwater yield to represent a usable groundwater; site assessment requirements; and groundwater classification. Lack of specificity regarding what exposure pathways must be evaluated and when, and the ecological risk assessment are among the risk assessment policy issues addressed.

Risk management policy issues the commission is addressing in the proposed rule include the following: criteria for setting points of exposure; groundwater restoration (natural resource protection) versus exposure prevention; and financial assurance for exposure prevention remedies.

D. Summary of the Proposed Rule

The proposed rule is organized so that persons using the rule can follow a logical progression in assessing their site, in developing human health and/or ecological-based cleanup levels, and in conducting response actions. Subchapter A of the proposed rule provides general information about the purpose and applicability of the proposed rule, including definitions and acronyms. This subchapter describes who must comply with the Texas Risk Reduction Program and how they must comply. Generally, persons will be required to comply with the proposed rule because they have been referred to this rule by other agency programs. However, the proposed rule does not establish contaminant release reporting requirements for any agency program, nor supersedes program-specific trigger levels for notification and corrective action.. Sites in the State Superfund, Voluntary Cleanup, Petroleum Storage Tank, Industrial & Hazardous Waste, Underground Injection Control, Municipal Solid Waste, and Composting, and Wastewater Treatment programs and the Spill Response Program (in certain instances) will be directed to the Texas Risk Reduction Program. For example, sites entering the Voluntary Cleanup Program or the State Superfund Program will be directed by those programs to the Texas Risk Reduction Program for the technical and additional procedural requirements necessary to remediate the site to levels protective of human health and the environment.

Once a person has been referred to the Texas Risk Reduction Program, the person must comply with all requirements of the proposed rule unless otherwise stated in another agency rule or unless a federal standard or state statutory requirement is more stringent. For example, public participation (public meeting to receive public comment) during remedy selection is generally not required under the Texas Risk Reduction Program, but is necessary for many sites regulated under federal programs or other state programs. Although not required by the Texas Risk Reduction Program, federal or state regulations may require the remedy selection for a site to be presented at a public meeting where comments are received.

The remedy standards in Subchapter B were placed after the General Information section of the proposed rule to clarify the cleanup goals in the beginning of the remedial action so that persons know the desired end points before starting the site assessment. As explained below, there are two remedy standards, Remedy Standard A and Remedy Standard B. The person conducting the response action has the flexibility to determine the most effective remedy standard for the situation considering issues such as exposure, risk, cost, timing, liability and technical complexity. Thus, cost-effectiveness decisions are left to the person and not the agency.

To attain Remedy Standard A, the affected environmental media (surface water, groundwater, surface and subsurface soil, and sediment) shall be removed and/or decontaminated to protective concentrations such that physical controls (such as caps, slurry walls) or institutional controls (such as deed restrictions or deed notices) are not necessary to protect human beings and ecological receptors (animals, plants) from exposure to unprotective levels of the contaminants. In other words, the affected property must be cleaned up. Remedy Standard A can be thought of as a "walk away" remedy so that once the property is cleaned, no additional actions are needed. An example of this type of remedy is one in which contaminated soils are excavated and replaced with clean soil. Due to the reduced need for oversight, the commission is proposing that response actions under Remedy Standard A be self-implementing. Persons will only need to submit a notice to the agency that they are undertaking a Remedy Standard A response action, and submit an update on progress every three years until the site is adequately clean. Upon completion of the response action, persons will submit a report for agency review to confirm completion. Once the agency confirms that the response action is completed, the agency will send a No Further Action letter.

On the other hand, if the person conducting the response action wants to eliminate exposure to a contaminant through the use of a control measure rather than by cleaning the property, the person must comply with the requirements of Remedy Standard B. Controls can be either physical controls such as a cap or an institutional control such as a deed notice which identifies the problems with the affected property. Instead of cleaning the soil to protective concentrations as might happen under Remedy Standard A, a cap such as a parking lot, could be placed over the contaminated soil to eliminate or severely restrict exposure to the contamination. Unlike Remedy Standard A, Remedy Standard B will not be self- implementing. Persons will be required to submit a response action plan to the agency and receive agency approval before commencing with the response action. As with Remedy Standard A, persons will be required to update the agency on the progress of the response action every three years until completion. A report will be submitted to the agency upon completion of the response action. If a Remedy Standard B response action includes a physical control, post-response action care will be required for Remedy Standard B response actions. The proposed rule requires that the post-response action care be 30 years; however, a lesser time period may be provided if the need for it is demonstrated. If physical controls are used, financial assurance for post-response action care will also be required. Subsequent post-response action care periods may be necessary if the contaminants continue to present a potential hazard to human health or the environment.

When conducting a response action under Remedy Standard A or Remedy Standard B, the proposed rule requires that the property be made safe for residential or commercial/industrial use. Persons must compare the actual land use with the definitions of residential and commercial/industrial land use contained in the proposed rule. With regard to either of these two choices, the owner of affected property may determine the land use for that property to the extent allowed by other authorities, such as zoning, and conformance with the definitions. However, as noted in the Substantial Change in Circumstances section of the proposed rule, if the landowner chooses commercial/industrial land use and the actual use of the property fits the definition of commercial/industrial, the property must be made safe for residential users when the land use later changes to residential use in the future. Alternatively, if the affected property is actually used for commercial/industrial purposes but the landowner refuses to consent to commercial/industrial land use and the associated institutional control, then the property must meet residential standards. To ensure that future owners and interest holders are notified of the limitations on affected properties, the person must file an institutional control for any site attaining Remedy Standard A - commercial/industrial, Remedy Standard B - residential, or Remedy Standard B - commercial/industrial. An institutional control is not required for a response action under Remedy Standard A - residential.

After the approval of the final report under Remedy Standard A, the agency will prepare a No Further Action letter. Under Remedy Standard B, the agency shall prepare a conditional No Further Action letter if post-response action care is necessary. Upon completion of the post-response action care period, the agency will issue a final No Further Action letter. If post-response action care is not necessary for an affected property under Remedy Standard B, then the agency will prepare a final No Further Action letter upon approval of the final report.

While Subchapter B, Remedy Standards, describes the remedial objectives, Subchapter C, "Affected Property Assessment," sets forth the requirements for defining the problem. Upon entry into the Texas Risk Reduction Program, persons are required to conduct an affected property assessment to characterize the site. Chemicals of concern identified for a particular site are set by the specific program area. With the exception of the Facility Operations Area, outlined in Subchapter G, the Texas Risk Reduction Program, in and of itself, does not establish an obligation to extend the assessment to additional chemicals of concern or to other areas of a facility that may be unrelated to the affected area under investigation. Thus, the initial threshold issue of whether a site needs to be assessed will continue to be determined by the criteria of the respective programs. Once it is determined that a site needs to be addressed, the proposed rule will apply.

The assessment identifies contaminants, locates human and ecological receptors, and characterizes the geological and hydrogeological features of the site. Following completion of the affected property assessment, there should be a clear understanding of the contaminants present, the environmental media impacted by each contaminant, and the nature of any exposure to human and ecological receptors posed by the contaminant. Recognizing the variability among sites, the proposed rule does not define the number of samples required to determine the extent of contamination, but requires that a sufficient number of samples be collected and analyzed to reliably characterize the site. In keeping with the commission's philosophy of moving from background as a regulatory standard, persons must define the horizontal extent of contamination in soil and groundwater to risk-based levels, but are not required to investigate to background unless background is greater than the risk-based level. The investigation of the vertical extent of groundwater contamination will be to the risk-based level as well; however, the vertical soil investigation must proceed to the greater of the background concentration or the method quantitation limit (i.e., laboratory detection limit) so that it can be adequately determined whether groundwater has been impacted by contaminants in soil.

As part of the site assessment, persons will be required to classify the groundwater as class 1, class 2, or class 3 groundwater so that groundwater and soil response objectives are properly established for the site. Class 1 groundwaters are high yield, high quality groundwater resources and contaminated groundwater expected to migrate to the groundwater production zone of a public water system. Class 2 groundwater is a potentially useable groundwater resource but not of the quality and/or yield of a class 1 groundwater. Class 3 groundwater is a poor quality or poorly productive groundwater.

To complete the affected property assessment, the person conducting the assessment may be required to take samples on land owned by another person or on land where an interest such as an easement exists. In these cases, the person must notify the owner or interest holder that the information is available at the time it is submitted to the agency. If the land owner or interest holder requests the information, then the person must provide it to the owner or interest holder within 14 days of the request. In addition, critical protective concentration levels must be provided with the analytical reports to allow persons to compare site concentrations to the health-protective levels. In some cases an actual human exposure to contaminants that exceed the critical protective concentration level may exist. In these instances, persons must provide notice as soon as possible to those persons, the property owner, and to the executive director, but not later than 35 calendar days from the date the laboratory analysis was received. If exposure conditions that did not initially exist later develop, then these same notification provisions would require notice at that time to those exposed, the property owner, and the executive director.

To determine protective concentration levels for humans and ecological receptors, persons will follow the methodology described in the Subchapter D of the proposed rule. A process has been established in the proposed rule based on the Risk-Based Corrective Action (RBCA) model of the American Society of Testing and Materials (ASTM). The RBCA model establishes a three-tiered approach to calculating cleanup levels. However, as part of calculating the cleanup levels, persons must determine risk-based exposure limits. The risk-based exposure limit is the "safe" concentration of a contaminant at the point of human contact (e.g., inhalation, ingestion, dermal absorption). For example, when a volatile organic compound is present in subsurface soils, vapors rise to the surface and are released into the air. The point of exposure to air is where a receptor inhales the vapors. The risk-based exposure limit is the concentration of the volatile organic compound in the air that is safe for the receptor to breathe. In contrast, the protective concentration level would be the concentration of the volatile compound at the source as opposed to the receptor. In this example, the protective concentration level is the concentration of the volatile compound in the subsurface soil that will ensure that the vapors a person inhales are protective.

A three-tiered process is provided in the proposed rule to aid the development of appropriate protective concentration levels. The tiers represent increasing levels of evaluation where site-specific information is factored into the process. The first tier is based on conservative, generic models that do not account for site-specific factors. The agency will publish and regularly update tables specifying the Tier 1 protective concentration levels. Under Tier 2, persons may apply site-specific data and use agency- specified lateral transport equations. Tier 3 allows for more detailed and complex evaluations. In practice, persons will sample their site and compare the site concentrations with the Tier 1 values in the tables. If the site concentrations are less than the Tier 1 table values, persons may stop provided the cumulative risk and hazard criteria are met. If the site concentrations are greater than the Tier 1 values, persons may remediate the site to the Tier 1 levels or proceed to Tier 2. By applying site-specific information and lateral transport equations in the Tier 2 equation, the risk-based protective concentration will possibly increase, reducing the extent of site remediation, and therefore the cost of remediation, without compromising protection. If the actual site concentrations surpass the Tier 2 protective concentration levels, persons may either clean to the Tier 2 protective concentrations or proceed to a Tier 3 evaluation. In all cases, the ability to use more complex evaluations continues to ensure the protective concentration levels are appropriate for the site conditions. In addition to developing protective concentrations for human health, persons will also be required to evaluate each site for impact to ecological receptors and possibly conduct an ecological risk assessment. If ecologically protective concentration levels are lower than the human health protective concentration levels, it is possible that ecological risks may drive the site remediation. The person will then identify the "critical" protective concentration level. The critical protective concentration level is the cleanup level for a chemical of concern within an environmental media considering all of the cleanup levels for each of the exposure pathways applicable to an environmental media. This is the level that will be the target cleanup level.

The tiered approach to developing protective concentration levels and the two available remedy standards are the cornerstones of the proposed program. This process establishes a clear, scientifically defensible methodology for developing protective concentration levels while providing persons with the flexibility to balance cost considerations for their sites. As one moves through the tiers, costs increase due to increased analysis and data needs. However, the result of the increased analysis may be a reduction in the area to be addressed which, in turn, could be an even more significant reduction in overall project costs.

The Facility Operations Area is outlined in Subchapter G and requires an area-wide approach to address chemicals of concern. If a facility chooses the Facility Operations Area approach, areas within the Facility Operations Area are placed under an area-wide corrective action management plan and are subject to the Facility Operations Area provisions of the proposed rule. At the termination of the Facility Operations Area, the former Facility Operations Area is subject to the standard provisions of the proposed rule.

E. Comparison of the Proposed Rule with the Current Risk Reduction Rule and the Petroleum Storage Tank Risk-Based Corrective Action Program.

The Texas Risk Reduction Program rule incorporates successful elements from the current Petroleum Storage Tank program and Risk Reduction Rule, and the American Society for Testing and Materials (ASTM) Program Risk-Based Corrective Action (RBCA) Process as the foundation for a consistent corrective action process. Each of the three procedures has a similar scope, which is the assessment of contamination, establishment of protective cleanup levels, and completion of response actions as necessary to protect human health and the environment. In general, the new rule provides more detail where experience with the current Risk Reduction Rule or the Petroleum Storage Tank rule has shown more detail is justified. While more comprehensive, the proposed Texas Risk Reduction Program also has substantially more flexibility built into the rule than the current Risk Reduction Rule. The current Petroleum Storage Tank program has flexibility, but much of this flexibility is specified and managed in guidance rather than rule providing less certainty for the responsible party. Most notably, the proposed rule represents a synthesis in the commission's risk management philosophy. The proposed Texas Risk Reduction Program rule, like the Petroleum Storage Tank program, relies more on exposure prevention than the current Risk Reduction Rule, but the level of reliance is a more appropriate balance between exposure prevention and pollution cleanup for remedial actions, with the scale tipping more one way or the other depending on site conditions.

In addition to the general similarities and differences between the proposed rule and the two current risk-based corrective action programs, there are specific differences which are noted below.

Remedy standards As noted earlier, the proposed rule has two remedy standards, Remedy Standard A and Remedy Standard B. Remedy Standard A is protective of residential or commercial/industrial use without physical controls. Remedy Standard B is protective of residential or commercial/industrial use with controls. The Petroleum Storage Tank program does not have formal remedy standards, but allows both exposure prevention and pollution cleanup remedies to meet risk-based levels. The current Risk Reduction Rule has three remedy standards, Risk Reduction Standards 1, 2, and 3. Standard 1 requires the site to be cleaned to background levels. Standard 2 requires a site to be cleaned to residential and commercial/industrial levels without controls. Standard 3 utilizes a baseline risk assessment to develop cleanup levels for use with a pollution cleanup or exposure prevention remedy.

Use of background as a cleanup standard Unless greater than residential or commercial/industrial protective levels, the proposed rule will not require a property to be cleaned to background levels. This is similar to the PST program. However, under the current Risk Reduction Rule, background is the cleanup standard under Risk Reduction Standard 1.

Property assessment requirements In the proposed rule, persons may limit the horizontal investigation of a property to health-based concentrations. The current Risk Reduction Rule requires investigation of a property to background concentrations, although the Voluntary Cleanup Program rule may limit investigation to health-based levels. Investigations in the Petroleum Storage Tank program are receptor-driven so that investigations may be stopped before the health-based limits are identified if there are no receptors.

Link between development of cleanup levels and remedies In the proposed Texas Risk Reduction Program rule, determination of cleanup levels and selection of the response action are independent decisions. This is similar to the Petroleum Storage Tank program. In the current Risk Reduction Rule, the remedy standard and methodology used to determine cleanup levels are tied together. For example, if a person chooses to remediate under Risk Reduction Standard 2, the person must use Standard 2 media-specific concentrations to determine protective concentration levels and must clean to those levels in lieu of any physical or institutional controls. However, under the proposed rule, persons will be able to use protective concentrations from a Tier 1 analysis (similar to Risk Reduction Standard 2 in that they are generic protective concentrations and available in published tables) and will able to choose Remedy Standard B which could include physical and/or institutional controls, similar to current Risk Reduction Standard 3.

Protectiveness benchmarks for carcinogens The proposed rule establishes a single risk level for individual carcinogens of 1 x 10 ^-5 (1 in 100,000) versus a target risk level in the current Risk Reduction Rule for individual carcinogens of 1 x 10 ^-6 (1 in 1 million). Under the current Petroleum Storage Tank program, the carcinogenic risk level is varied between 1 x 10-6 and 1 x 10 ^-5 in accordance with specific criteria established in guidance. The cumulative risk level for multiple carcinogens in the proposed rule is 1 x 10 ^-4 similar to the current Petroleum Storage Tank program and Risk Reduction Rule.

Protectiveness benchmarks for non-carcinogens The proposed rule establishes a hazard quotient for non-carcinogens of 1 and hazard index of 10 for multiple non-carcinogens. The current rules establish a hazard quotient for non-carcinogens of 1 and a hazard index of 1.

Ecological risk The proposed rule addresses ecological risks in detail and requires that protective concentration levels be developed to protect ecological receptors where necessary. Under the proposed rule, persons may choose where in the three-tiered ecological process they will begin their ecological assessment. They may begin by completing the Tier 1 exclusion criteria checklist to determine the potential for complete ecological exposure pathways, or conduct a screening-level ecological risk assessment in Tier 2, or proceed directly to a site-specific ecological risk assessment in Tier 3. On the other hand, the current rules establish a general requirement to consider ecological risk, but no detailed provisions are provided.

Deed notification Under the current Risk Reduction Rule, deed notification is required for any concentration remaining above background. In the Petroleum Storage Tank program, deed notification is determined on a site-specific basis. The proposed Texas Risk Reduction Program rule requires an institutional control (deed notice or restrictive covenant) for any site under Remedy Standard B and any commercial/industrial site under Remedy Standard A. Remedies attaining a residential health-based level without any controls would not require an institutional control.

Issues relating to off-site owners and leased lands The current Risk Reduction Rule does not address notice to affected landowners and concurrence from the landowner for remedy selection and deed notification. The Petroleum Storage Tank program requires notice to affected landowners and requires concurrence from the landowner for deed notification. Likewise, due to "takings" concerns, the programs utilizing the current Risk Reduction Rule requires notice and landowner consent for deed notification. In comparison, the proposed rule establishes requirements for notice to affected landowners and requires concurrence from such landowner for any deed notice of their property.

Current land use versus future land use Where future protection is provided through institutional controls, the cleanup levels under the current rule are based on current and probable future land use. Under the proposed rule, cleanup levels are based on present land use (i.e., commercial/industrial versus residential).

Groundwater classification The current Risk Reduction Rule establishes two classes of groundwater: groundwater that is a potential current or future resource (i.e., a drinkable groundwater resource) and groundwater that is not a potential current or future resource (i.e, an nondrinkable groundwater resource). For a groundwater to be considered drinkable, total dissolved solids must be less than 10,000 milligrams per liter (mg/l) and the groundwater formation must yield useable quantities of groundwater. The Petroleum Storage Tank program establishes four categories of groundwater based on total dissolved solids content, presence of water wells, and aquifer yield. The proposed Texas Risk Reduction Program rule establishes three classes of groundwater. In addition to the two classes in the current rule, the proposed rule is creating an additional class, class 1, which is a class of "primary groundwater resources" such as high yield, high quality groundwaters and sole-sources of drinking water. The proposed rule also makes clear that a formation must be capable of yielding 150 gallons per day on a sustainable basis. One hundred and fifty gallons is considered the minimum amount necessary to sustain a family of three.

Corrective measures study The current Risk Reduction Rule Standard 3 requires a person to conduct a corrective measures study. The study documents that the remedy chosen for a site will be a permanent remedy or one that achieves the greatest degree of long-term effectiveness to the extent practicable. The proposed Texas Risk Reduction Program rule, like the current Petroleum Storage Tank rule, will not require the person to compare the relative attributes of a number of remedies and will only require that the remedy meet the response action objectives. Cost-effectiveness of decisions under the proposed rule will be left to the responsible person.

Plume management zones Plume management zones, which provide that the plume may expand to a limited degree beyond the existing health-based limits of the plume in class 2 and class 3 groundwater as part of the response action, will be allowed under the proposed rule. While not explicitly allowing plume management zones, the Petroleum Storage Tank program's reliance on receptor-driven investigations, site-specific setting of alternate points of exposure, and natural attenuation as a remedy effectively allows plume management zones. The current Risk Reduction Rule allows the limited creation of these zones through the use of alternate concentration limits at commercial/industrial sites in accordance with federal requirements. The use of alternate concentration limits is similar to the plume management zone concept.

Post-response action care and financial assurance The proposed rule establishes post-response action care for remedies that use physical or institutional controls and financial assurance for any response action that uses physical controls. The current Risk Reduction Rule does not specify a post-closure care period nor does it specifically require financial assurance outside of the programs required to conduct post-closure care and to maintain financial assurance. However, post-response action care could be required on a site-specific basis. Effective December 23, 1998, facilities with petroleum storage tanks are required to maintain financial responsibility to ensure financial resources to address releases from the tanks. Financial responsibility has been provided through the Petroleum Storage Tank Remediation Fund.

F. The Proposed Rule in Detail

This section of the preamble provides a section-by-section overview of the proposed Texas Risk Reduction Program rule by presenting the key aspects of each proposed section in a narrative format. The intent of this section of the preamble is to provide a more clear understanding of each component of the proposed rule.

The proposed rule contains subchapters A - G. Subchapter A, General Information, consists of §§350.1-350.5 and sets forth the general requirements of the proposed Texas Risk Reduction Program rule. Subchapter B, Remedy Standards, §§350.31-350.37, establishes the desired goals and the end results of the corrective action process. Subchapter C, Affected Property Assessment, §§350.51-350.55, sets forth criteria for classifying groundwater and land use while establishing performance standards for property assessments. Subchapter D, Development of Protective Concentration Levels, §§350.71-350.79, directs persons to evaluate exposure pathways and determine the concentration of the chemical of concern which is protective for human and ecological receptors at the point of exposure. This concentration is referred to as risk-based exposure limits. Persons then derive protective concentration levels that, when met in the source areas, will achieve the risk-based exposure limits. Subchapter E, Reports, §§350.91-350.96 sets forth the necessary information for each report required by the Texas Risk Reduction Program rule. Subchapter F - Institutional Controls, §350.111, sets forth requirements for various types of institutional controls. Subchapter G, Establishing a Facility Operations Area, §§350.131 - 350.135, provides an option for responding to multiple releases on an area-wide basis at certain industrial facilities under a permit or corrective action order. Provided a facility meets the qualifying criteria and application requirements, the Facility Operations Area portion of the facility can be addressed with an interim response action, such that a final response action may be deferred to the end of active manufacturing operations.

SUBCHAPTER A. GENERAL INFORMATION.

Subchapter A contains §§350.1-350.5.

§350.1. Purpose. Section 350.1 sets forth the purpose of the Texas Risk Reduction Program rule. The purpose of the proposed rule, as noted earlier, is to establish a reasonable, consistent, risk-based, performance-oriented approach applicable to most waste program areas regulated by the commission with the goal of balancing protection of human health and the environment with the economic welfare of the citizens of the state. The commission emphasizes that the provisions of the proposed rule do not establish reporting requirements nor prohibit actions that should be taken by the person to mitigate emergency situations, to abate an on- going release, or to stabilize or abate the spread of released chemicals of concern.

§350.2. Applicability. Section 350.2 discusses those programs that must comply with the requirements of the proposed rule. As proposed, the rule will affect the following agency programs (all in Title 30 Texas Administrative Code (TAC)): Chapter 327 relating to Spill Prevention and Control; Chapter 330 relating to Municipal Solid Waste; Chapter 331 relating to Underground Injection Control; Chapter 332 relating to Composting; Chapter 333 relating to the Voluntary Cleanup Program; Chapter 334 relating to Underground and Aboveground Storage Tanks (i.e., Petroleum Storage Tank program); and Chapter 335 relating to Industrial Solid Waste and Municipal Hazardous Waste including State Superfund Sites. The commission is proposing conforming amendments to Chapters 327, 331, 332, 333, 334, and Chapter 335 to clarify the applicability of Chapter 350 in those chapters. A conforming rulemaking to Chapter 330 will coordinated with anticipated future rulemakings to that Chapter. Other facilities that may utilize the Texas Risk Reduction Program include municipal wastewater treatment facilities and used oil facilities. The executive director may reference this chapter in permits and registrations issued under 30 TAC Chapter 312 when specifying closure provisions to address unauthorized releases of contaminants from municipal wastewater treatment plants. The commission also expects used oil facilities (30 TAC Chapter 324) to enter the Texas Risk Reduction Program through other program areas such as the Spill Response Program, the Voluntary Cleanup Program, and the Petroleum Storage Tank program.

In addition to those programs identified in the previous paragraph, the commission is also proposing to provide the executive director with the discretion to require the use of this chapter to address other unauthorized releases of chemicals of concerns subject to Texas Water Code, Chapter 26.

Except for substantial changes in circumstances, the commission emphasizes that the Texas Risk Reduction Program rule will not establish the requirement for a person to take a response action at an affected property. Further, the proposed rule will not establish action levels or requirements for reporting releases. In other words, the proposed rule, in and of itself, will not place an affirmative obligation on persons in Texas to determine if their property is contaminated, although the statutes relating to various subject matters often do. The proposed rule will be used to review the adequacy of a property assessment and a response action once the obligation to respond has occurred via the agency rules for one of the covered program areas, by statute, or by other agency order or permit. In addition, chemicals of concern identified for a particular site are set by the specific program area or by commission order.

Except for the Facility Operations Area approach, the Texas Risk Reduction Program, in and of itself, does not establish an obligation to extend the assessment to additional chemicals of concern or to other areas of a facility that may be unrelated to the affected area under investigation. If a facility chooses the Facility Operations Area approach, areas within the Facility Operations Area are placed under an area- wide corrective action management plan and are subject to the Facility Operations Area provisions of the proposed rule. At the termination of the Facility Operations Area, the former Facility Operation Area is subject to the standard provisions of the proposed rule.

In some cases, minimum standards are established by federal rule or state statute. The commission emphasizes that the Texas Risk Reduction Program rule will supplement but will not replace any requirements for closure or response actions specified in the regulations in programs where these minimum standards exist.

The following is a summary of the specific program areas and how facilities in those programs will be integrated with the Texas Risk Reduction Program:

Chapter 327 - For spills and discharges under Chapter 327, the responsible person has the option at any time following discovery of the spill or discharge to enter the Texas Risk Reduction Program rather than develop a site-specific response action in consultation with the TNRCC Regional Office. However, if a site-specific response action is chosen, the response action must be completed within six months of discovery. If the responsible party cannot complete the response action within six months, the responsible person will be required to enter the Texas Risk Reduction Program.

Chapter 330 - Municipal Solid Waste Landfills subject to the federal regulations in 40 Code of Federal Regulations (CFR) Parts 257 and 258 must comply with 30 TAC Chapter 330, Subchapter I rather than the Texas Risk Reduction Program for corrective action. Subchapter I incorporates prescriptive federal minimum criteria for corrective action at landfills. However, under limited circumstances, the federal municipal solid waste rules allow for the development of risk-based protective concentration levels for landfills. In these instances, the Texas Risk Reduction Program would serve as the guidance for developing these risk-based concentrations. Corrective action concerning groundwater, surface water, and soil at all other municipal solid waste sites including old landfills, non-federally regulated construction/demolition landfills, transfer stations, waste incinerators, etc. will be subject to the Texas Risk Reduction Program. Requirements for closure and post-closure care of permitted municipal solid waste landfills remain in Chapter 330. However, persons will be required to comply with the post-response action care requirements in the Texas Risk Reduction Program when corrective action is performed at non- permitted (i.e., old, abandoned, or unauthorized) municipal solid waste facilities under the program. Management of landfill gases for all municipal solid waste facilities is addressed in Chapter 330 rather than Chapter 350.

Chapter 331 - Underground Injection Control. Persons must address unauthorized releases of chemicals of concern from associated tankage and equipment under the Texas Risk Reduction Program, but excursions of injected mining solutions at in-situ mining properties or injection of waste that is confined below all underground sources of drinking water is subject to Chapter 331.

Chapter 332 - Composting. Persons must conduct corrective action under the proposed Texas Risk Reduction Program rule to address unauthorized releases of chemicals of concern at land application sites subject to the requirements of Chapter 332 and at all composting/mulching facilities. Persons conducting any of the operations governed under Chapter 332 should be aware that "chemicals of concern" do not include biological contaminants such as salmonella; therefore, corrective action to address biological contamination is not addressed under the Texas Risk Reduction Program.

Chapter 333 - Voluntary Cleanup Program. Persons in the Voluntary Cleanup Program will be required to comply with the requirements of the Texas Risk Reduction Program for the assessment of the affected property, notice to affected persons, development of protective concentration levels, and response actions. In addition to the requirements of Chapter 350, persons are also required to comply with all requirements in 30 TAC Chapter 333, Subchapter A and Texas Health and Safety Code Chapter 361, Subchapter S. The two subchapters specifically address eligibility, contents of the Voluntary Cleanup application, issuance of certificates, release of liability and other procedural aspects of the Voluntary Cleanup Program.

Chapter 334 - Petroleum Storage Tank Program. Like the Voluntary Cleanup Program, persons in the Petroleum Storage Tank Program will be required to comply with the requirements of Chapter 350 for the assessment of the affected property, notice to affected persons, development of protective concentration levels, and response actions. Texas Water Code, Chapter 26, Subchapter I also affects the Petroleum Storage Tank Program. The effective date for sites in the Petroleum Storage Tank Program to comply with the Texas Risk Reduction Program is proposed to be September 1, 2001. Any persons notifying the agency of releases and intent to conduct response actions for sites prior to that date may use the procedures outlined in Chapter 334 to develop Plan A or Plan B target concentration criteria.

Chapter 335 - Industrial and Hazardous Waste Program. The proposed Texas Risk Reduction Program rule will apply to any discharges of chemicals of concern from entities regulated under Chapter 335 into environmental media, either as a part of closure or at any time before or after closure. Closure of facilities, presently regulated under Chapter 335, will be addressed entirely in Chapter 350, unless grandfathered. Language has been added to establish a performance standard for closure of waste management facility components and to clarify what a person must do to address removal of wastes and response to releases during closure. The only provision in Chapter 335 that will apply to new closures will be the requirement to close, which will refer the person to Chapter 350 for details. The current Risk Reduction Rule will remain in Chapter 335 for an interim period for use by grandfathered facilities. Texas Health and Safety Code, Chapter 361, also establishes requirements for the Industrial and Hazardous Waste Program.

Chapter 335, Subchapter K - State Superfund Program. Persons in the State Superfund Program will be required to comply with the requirements of Chapter 350 for the assessment of the affected property, development of protective concentration levels, and requirements for response actions. In addition, other requirements for the State Superfund Program in Subchapter K and Texas Health & Safety Code, Chapter 361, Subchapter F will continue to apply and will supercede the Texas Risk Reduction Program if a conflict should arise. A notable change for the State Superfund Program will be the removal of the requirement to perform a baseline risk assessment.

Chapter 336 - Radioactive Substances. Persons must comply with Chapter 336 when addressing releases of material containing radioactive substances. When releases involve radioactive substances and non-radioactive contaminants, protective concentrations for the radioactive substances must be determined under Chapter 336 while the protective concentrations for non-radioactive substances will be determined under the Texas Risk Reduction Program.

Chapter 312 - Sludge Use, Disposal, and Transportation. Although the Water Quality program, rather than the Waste Program, regulates the processing and discharging of municipal and industrial wastewater, permits and registrations for wastewater treatment facilities require closure of facilities in accordance with the current Risk Reduction Rule in 30 TAC Chapter 335. Because the Texas Risk Reduction Program will replace the current Risk Reduction Rule, wastewater permits and registrations will require closure under Chapter 350. Industrial wastewater facility closures have and will continue to be sent to the Remediation Division of the Waste Program for approval of closure. On the other hand, the executive director has allowed municipal facilities to choose between closing under the current Risk Reduction Rule or undertaking a site-specific "clean" closure approved by the Water Quality Program. Historically most municipal facilities have chosen the clean closure alternative. The agency will continue to allow municipal facilities this option.

Section 350.2 also presents grandfathering provisions to promote an effective transition between the Texas Risk Reduction Program on or after the effective date of the rule. Section 335.8 of the current Chapter 335 Risk Reduction Rule requires persons to submit a notice to the TNRCC regional office 10 days before commencing remedial action under Risk Reduction Standards 1 and 2. If a person submits this notice to the agency prior to the effective date of the Texas Risk Reduction Program, the person may continue under the old rules. To give the executive director adequate notice that response actions will continue under the old rules, the person is required to resubmit a notification letter within one year of the effective date of the Texas Risk Reduction Program rule unless the agency by letter acknowledges receipt of the initial notification. To remain under the provisions of the existing rule, the response action must be completed within 5 years of the effective date of the Texas Risk Reduction Program rule. In the interest of regulatory certainty, the commission is setting a bright line of applicability regarding these self-implemented actions and intends to place a degree of "urgency" into the completion of these self-implemented actions. The commission determined that 5 years is generally an adequate time period to address small sites using the agency's experience with the Petroleum Storage Tank program. For longer actions, the commission prefers that they move into the proposed rule to expedite the phase out of the current Risk Reduction Rule. A person who has submitted a work plan under Standard 3 that establishes response objectives and cleanup criteria (e.g., a baseline risk assessment or a corrective measures study but not an investigation work plan) to the agency prior to the effective date of the Texas Risk Reduction Program rule may elect to continue under the current Risk Reduction Rule or to convert to the Texas Risk Reduction Program.

Workplans submitted to address unauthorized releases of chemicals of concern approved as part of a permit issued prior to the effective date of Chapter 350 but not implemented at the time of permit renewal must be compliant with the Texas Risk Reduction Program at the time of permit renewal. At any time, persons may revise plans or reports to comply with the requirements of Chapter 350 except in instances where resubmittal of revised plans and reports would result in varying from a previously-approved schedule of compliance. The commission also emphasizes that persons eligible to choose between the new and old rules are bound by the rules they choose until such time as they are required to move to the new rules. The commission is proposing to prohibit mixing and matching of the two rules to avoid implementing a piece- meal approach that would likely prove confusing and inefficient. However, corrective action will be given consideration on a case-by-case basis considering its quality.

§350.3. Process. Section 350.3 sets forth the process for the Texas Risk Reduction Program in an outline format so that persons in the program can more easily understand the logical progression for demonstrating compliance with the requirements of Chapter 350. The process will generally proceed as follows. An affected property assessment will be conducted to determine the vertical and horizontal extent of chemicals of concern and to classify groundwater and land use. An affected property owner will be notified if necessary. The assessment should be conducted in light of the remedy standard that will likely be pursued, if one is necessary, so that the proper information is obtained to support development of a response action. Protective concentration levels will be developed as part of or following the affected property assessment. Following development of the protective concentrations, a remedy standard is chosen and a response action to achieve the remedy is developed, implemented, and completed. Then, if necessary, persons conduct post-response action care. Necessary reports must be submitted as required. Although the process is described in steps for clarity, persons should understand that steps in the process may be integrated. Protective concentration levels may be calculated as part of the affected property assessment, and the remedy standard may figure into the development of protective concentration levels.

§350.4. Definitions and Acronyms. Section 350.4 contains definitions, acronyms, and risk-based nomenclature. Because the Texas Risk Reduction Program brings together several different programs into one set of standards, many terms will be new to the reader. To avoid confusion with requirements of existing programs, the agency has attempted to use generic terms which do not have pre-existing meanings within the covered program areas. In numerous instances the commission has developed new terms, since the old terms may be used by several program areas but do not have the same definitions. For example, the proposed rule refers to "affected property" rather than "site" because site does not have the same meaning within the covered program areas.

The commission is also adding definitions to more comprehensively explain the process for defining risk-based exposure limits, protective concentration levels, exposure pathways, and points of exposure to environmental media. For example, a critical protective concentration level is the lowest protective concentration level for a chemical of concern within a source medium considering all of the applicable exposure pathways for that source medium. Also, the assessment level is the level of required assessment where the human health protective concentration levels are established under Tier 1 and where the protective concentration levels established for the soil to protect groundwater may be determined under any tier.

§350.5. Severability. Section 350.5 states that the provisions in Chapter 350 are severable. Therefore, if certain provisions of this chapter are rendered unenforceable by a court of competent jurisdiction or other appropriate authority, all other remaining provisions will continue to be enforceable. In other words, if a court of law rules that one section of the Texas Risk Reduction Program rule is invalid and remands that section to the commission, persons must still comply with the other sections of the rule. The commission has included the severability clause in the proposed rule because it believes negating an entire rule due to limited concerns could delay corrective action at contaminated sites and possibly place members of the public, site workers, and ecological receptors at greater risk.

SUBCHAPTER B. REMEDY STANDARDS.

Subchapter B contains §§350.31-350.37.

§350.31. General Requirements for Remedy Standards. Section 350.31 specifies the general requirements that apply to both remedy standards. Section 350.31(a) requires that persons must use either Remedy Standard A or Remedy Standard B, at their own discretion, to guide their response actions at affected properties under the proposed rule. Section 350.31(b) specifies the performance standard to be used to distinguish between a treatment process that achieves decontamination and a treatment process that is a physical control measure. To be considered decontamination, the person must demonstrate that the treatment process permanently and irreversibly destroys or extracts chemicals of concern in a waste or environmental medium to concentration levels below the critical protective concentration levels and must further demonstrate that any residue remaining after treatment will not pose a threat of a future release of chemicals of concern into environmental media at concentration levels greater than the critical protective concentrations levels. The initial presumption is that stabilization, solidification, and fixation processes are physical controls rather than decontamination, but persons may attempt to demonstrate that any of these processes result in decontamination.

Under §350.31(c), persons must demonstrate that remaining concentrations of volatile chemicals of concern in the soil or groundwater will not result in vapor concentrations in excess of 25% of the lower explosive limit for the chemical of concern or chemical of concern mixture within outdoor air, surface or below-ground structures, or within the soil zone extending from ground surface to 15 feet in depth, or to the typical depth of the construction zone as defined under §350.2. Subsection (d) of §350.31 requires persons to notify the executive director and the agency's regional office at least 10 days before confirmation sampling to demonstrate that a response action is complete and a remedy standard has been attained.

Sections 350.31(e) and (f) discuss required reports. A Response Action Completion Report is required to be submitted upon completion of the response action. For Remedy Standard A response actions, the Response Action Completion Report must be submitted within 90 days of completion. To ensure that sufficient progress is made toward completion of the response action, a Response Action Effectiveness Report must be submitted every three years until the Response Action Completion Report is submitted. If insufficient progress is being made, the executive director may require the person to evaluate or perform an alternative response action. Specific requirements for these reports are contained in Subchapter E, Reports.

Section 350.31(g)-(i) concern use of institutional controls. Persons attaining Remedy Standard A for commercial/industrial use or Remedy Standard B must provide proof of the filing of an institutional control within 90 days of the executive director's approval of the Response Action Completion Report. Persons attaining Remedy Standard A for residential use are not required to file an institutional control. The institutional control is intended to inform others of limits on the use of property, which are necessary to ensure adequate protection of human health and the environment. For example, if property is safe for commercial/industrial use, it may not be safe for residential use, and additional response actions may be necessary to make it safe for residential use. Thus, institutional controls provide notice of the property's limited use.

In addition to institutional controls as a part of completed response actions, the commission is also proposing that institutional controls be required for ongoing long-term response actions that are not completed within 15 years of submittal of the Self-Implementation Notice for Standard A remedies. The commission is also proposing that institutional controls for ongoing, long-term response actions that are not completed within 15 years of approval of the Response Action Plan for Standard B remedies. The commission considers these requirements necessary to inform others of ongoing response actions and to prevent abuse of the Remedy A residential standard as a means to avoid deed recordation. Additionally, the possibility of the need to file an institutional control will provide an incentive to complete response actions in a timely manner. The 15-year time period is considered an adequate time frame, based on the agency's experience with the Petroleum Storage Tank program, to complete a remedial action that relies on monitored natural attenuation. However, the agency retains discretion to extend the time frame beyond 15 years if the progress of the response action is satisfactory and there is no unacceptable increased risk in doing so. The agency is balancing incentives for expediting corrective action, the need for notice, and adequate opportunity to avoid use of an institutional control.

In addition to the requirements above, persons are required by §350.31(i) to inform any prospective buyer or tenant of the property of any current or future limitations on the property until such time as an institutional control is filed within the real property records noting those limitations. The person must secure the written permission of the landowner in accordance with §350.55 prior to filing, or causing to be filed, any institutional control within the real property records for leased lands or off-site properties. Prior concurrence provides the commission with a level of assurance that the landowner is aware of and agrees to the condition of the property. As such, landowner concurrence assures the protection of human and ecological receptors over the long term and shields the commission against possible takings claims.

§350.32. Remedy Standard A. Section 350.32(a) sets forth the performance standards to meet Remedy Standard A. To attain Remedy Standard A, a person must within a reasonable time frame: (1) remove any listed hazardous waste as defined in 40 CFR Part 261, Subpart D that is contained within a waste management facility component or that is separable using simple mechanical removal processes; (2) remove and/or decontaminate any waste or environmental media that is characteristically hazardous due to ignitability, corrosivity, reactivity, or toxicity characteristic as defined in 40 CFR Part 261, Subpart C; (3) remove and/or decontaminate the soil and groundwater protective concentration level exceedence zones, other environmental media, and non-hazardous waste to achieve chemical of concern concentration levels below the residential or commercial/industrial critical protective concentration levels, as applicable; and (4) demonstrate the affected property is protective for ecological receptors.

Section 350.32(b) emphasizes that response actions under Remedy Standard A must result in permanent risk reduction at an affected property. The person may not use physical controls under Remedy Standard A; as such, persons must remediate the site to the critical protective concentration levels. The commission considers Remedy Standard A to be a "walk-away" remedy. This section also allows the use of natural attenuation if, like any other remedial alternatives, it will meet the remedial requirements and is appropriate considering the hydrogeologic characteristics of the affected property, chemical properties, timelines, and exposure potential. For example, use of natural attenuation is not appropriate as a sole remedy when there is unprotective human or ecological exposure to the chemicals of concern in that environmental media.

Proposed §350.32(c) requires the person to determine the protective concentration levels for Remedy Standard A using exposure pathways where the human or ecological receptor comes into contact with chemicals of concern directly within, above, or below a source. Remedy Standard A does not allow use of lateral transport considerations that place the point of exposure at a location outside of the source area (other than to ensure that an off-site resident on residential property is protected when the receptor is assumed to be a commercial/industrial worker).

The commission has experienced much success with the self-implementation of Remedy Standards 1 and 2 under the current Risk Reduction Rule. The commission is proposing to continue the policy of self-implementation for Remedy Standard A under §350.32(d) unless the person wishes to modify default exposure factors (discussed in §350.74(j)). The commission believes self-implementation will continue to expedite response actions. A person must submit a Self-Implementation Notice (SIN) at least 10 days prior to conducting a response action to notify the executive director and the agency's office in the region where the affected property is located. If a person chooses not to self-implement, a Response Action Plan must be submitted for review and approval by the executive director. As mentioned previously, a person self-implementing a remedy under Remedy Standard A must submit a Response Action Completion Report when the remedy has been completed that demonstrates that all the requirements of Standard A have been attained.

The flexibility of response available under Remedy Standard B is not allowed for a Remedy Standard A response action since the Remedy A response action needs no further oversight or notice. Specifically, §350.32(e) prohibits the demonstration of technical impracticability under Remedy Standard A, and §350.32(f) prohibits contaminants above the critical groundwater protective concentration levels from migrating beyond the existing boundary of the affected groundwater. However, it is important to note that monitored natural attenuation can be used as all or part of a groundwater response action under Remedy Standard A provided the "no growth" requirement is followed, the Remedy Standard A performance requirements are appropriate considering exposure potential, and the objectives will be achieved within a reasonable time frame.

As stated in proposed §350.32(g), there are no post-response action care or financial assurance requirements for Remedy Standard A response actions, provided the person adequately documents attainment of the Standard A remedy requirements. When considered warranted, the executive director may require the person to monitor environmental media to verify the models used under a Tier 2 or Tier 3 evaluation of protective concentration levels.

Successful completion of Remedy Standard A also requires that the remedy be protective of ecological receptors.

§350.33. Remedy Standard B. Section 350.33(a) sets forth the performance standards to meet Remedy Standard B. To attain Remedy Standard B in response to §350.33, a person must remove, decontaminate, and/or control the contaminated surface soil, subsurface soil, and groundwater zones, other environmental media, and hazardous and non-hazardous waste such that human and ecological receptors will not be exposed to concentrations of contaminants in the exposure media in excess of the residential or commercial/industrial critical human health protective concentration levels, as applicable, at the prescribed, or any approved alternate, on-site or off-site points of exposure established for environmental media. The person must also ensure that leachate from the surface and subsurface soil protective concentration level exceedence zones does not increase the concentration of contaminants in class 2 groundwater above the measured concentration at the time of Response Action Plan submittal in circumstances when an alternate point of exposure to class 2 groundwater is authorized.

Successful completion of Remedy Standard B also requires that the remedy be protective of ecological receptors. Because the Texas Risk Reduction Program requires the protection of the environment in addition to protection of people, it is possible that concentrations of contaminants at an affected property may be protective of human health but not certain ecological receptors. There is also the possibility that a response action to address minimal threats to human health may have a significant and highly disproportionate effect on ecological receptors. In these instances, the commission is proposing two options. The first option requires persons to perform a response action to achieve the ecological protective concentration level as they would perform a response action to achieve human health protective concentrations. The second option, subject to approval on a site-specific basis by the executive director and the Natural Resource Trustees, is the use of an ecological services analysis to consider the present and predicted ecological services of the affected property as well as the beneficial and/or detrimental effects on services associated with potential response actions to address residual ecological risk. The ecological services analysis may include a plan to provide compensatory habitat restoration that may also be combined with some type of active response action (e.g., hot spot removal) or passive response action (e.g., natural attenuation) for the affected property. The ecological services analysis serves as a basis for determining the degree of compensatory habitat restoration that may be warranted. The ecological services produced by the habitat restoration activity must exceed the decreased future ecological service potentially associated with the continued exposure to contaminants and/or any selected response action at the affected property. These considerations may be a factor in the selection of Remedy Standard A or B, because they may have costs.

With the exception of response actions for class 1 groundwater, Section §350.33(b) provides that a person performing a response action to attain Remedy Standard B may use removal and/or decontamination with physical or institutional controls or use controls only. Protective concentration level exceedence zones for class 1 groundwater must be removed and/or decontaminated to the critical groundwater protective concentration level for each chemical of concern. Under this rule, the person must demonstrate to the satisfaction of the executive director that the response action that they propose to use, including monitored natural attenuation, will attain the Standard B remedy requirements within a reasonable time frame given the particular circumstances of an affected property.

As noted in §350.33(c), protective concentration levels for Remedy Standard B are determined through consideration of on-site and off-site points of exposure, or alternate points of exposure.

Due to the complex nature of the response actions used to attain Remedy Standard B, and the need for regulatory oversight and appropriate notice, §350.33(d) states that Remedy Standard B will not be a self-implementing standard. Persons must submit a Response Action Plan for review and approval by the executive director before commencing response actions. The commission emphasizes that this does not prohibit persons from taking interim measures, investigation, or emergency action.

Section 350.33(e) sets forth the surface and subsurface soil response objectives under Remedy Standard B. Persons conducting a Remedy Standard B response action may use the following to meet the response objectives identified in §350.33(a): (1) removal and/or decontamination; (2) removal and/or decontamination with institutional or physical controls; or (3) use of physical and/or institutional controls only. Persons choosing removal and/or decontamination without the use of controls should not have to rely upon post-response action care and are not required to provide financial assurance. A person employing the use of physical and/or institutional controls must meet other requirements in addition to fulfilling the post-response action care obligations described in the approved Response Action Plan. First, the person must demonstrate that any physical control or combination of measures proposed to be used (e.g., waste control unit, cap, slurry wall, treatment that does not attain decontamination, or a landfill) will reliably contain chemicals of concern from the affected surface and subsurface soil zone over time. Second, financial assurance is required to assure post-response action maintenance of physical controls. Financial assurance requirements are detailed further in the discussion on proposed §350.33(l), (m) and (n).

The groundwater response objectives under Remedy Standard B are outlined in proposed §350.33(f). A person must achieve the general Remedy Standard B groundwater response objectives, unless the person demonstrates to the satisfaction of the executive director that an affected property meets the qualifying criteria for one, or a combination, of the modified groundwater response approaches described in the proposed rule. These modified approaches include disregarding areas below engineered waste control units as a point of exposure to groundwater, the use of a technical impracticability demonstration, and the use of plume management zones. However, a person cannot combine a technical impracticability demonstration with the use of a plume management zone. The commission does not consider a technical impracticability demonstration as justification for failure to manage a plume. Rather a technical impracticability demonstration shows only that protective concentration levels can not be met. Because the modified approaches use physical and institutional controls, a person who uses the modified groundwater response approaches must fulfill the post-response action care obligations described in the approved Response Action Plan. Also, as with other remedies that employ physical controls, financial assurance is required for any modified groundwater response approach that utilizes physical controls.

The following are the general groundwater responses under Remedy Standard B for class 1, 2, and 3 groundwater: (1) use either an active restoration approach or monitored natural attenuation to reduce the concentration of chemicals of concern to the critical groundwater protective concentration levels; (2) while achieving the first objective, prevent chemicals of concern at concentrations above the critical groundwater protective concentration levels from migrating beyond the existing boundary of the affected groundwater; (3) remove non-aqueous phase liquids to the maximum extent practicable (certain exceptions apply); (4) prevent chemicals of concern from migrating to air at concentrations above the protective concentration levels for air; (5) prevent chemicals of concern from migrating to surface water at concentration levels above the protective concentration levels for groundwater discharges to surface water; and (6) prevent human and ecological receptor exposure to the affected groundwater.

Proposed §350.33(f)(2)-(4) provide more specificity for the modified groundwater response objectives mentioned above. Again, these modified objectives are removal of areas below engineered waste control units from consideration as a point of exposure to groundwater, use of a technical impracticability demonstration, and use of plume management zones. Under the proposed rule, to be able to exclude the portion of the affected groundwater underlying a waste control unit from meeting the response action objectives, the person must give notice in the Response Action Plan and receive executive director approval. The commission emphasizes that beyond the perimeter of the engineered waste control unit, the groundwater response objectives must be met. The commission is proposing this alternative because it is unlikely that the groundwater directly beneath the waste control unit will be used and response actions could negatively impact the integrity of the containment systems in the waste control unit. A person may use a technical impracticability demonstration for all three classes of groundwater under Remedy Standard B. The person also must demonstrate that reducing concentrations of chemicals of concern to the critical protective concentrations within a reasonable time frame is not feasible from an engineering perspective using currently available remediation technologies. In addition, the person must remediate that portion of the affected groundwater for which remediation is technically practicable, and must prevent migration of contamination beyond the limits of the zone deemed technically impracticable.

With the approval of the executive director, the person may establish a plume management zone under Remedy Standard B for class 2 and class 3 groundwater-bearing units. If the executive director determines that a plume management zone is appropriate at a site, the point of exposure to the affected groundwater may be changed for class 2 and class 3 groundwater. In other words, the plume may expand beyond its current size to a limited extent provided that some attenuation distance is established in which to exercise control of the contaminants on the affected property. To use a plume management zone, attenuation monitoring points must be established and it must be demonstrated that the chemicals of concern will not pose a threat as long as the attenuation action levels are met. The commission has chosen to allow the use of plume management zones in certain instances recognizing that: (1) groundwater restoration is not always feasible or warranted; (2) exposure prevention remedies are protective and are often feasible to implement; and (3) analogous allowances are provided in the existing rules, but without sufficient clarity for consistent use. The maximum additional length of the plume management zone is identified in proposed §350.37(l) and (m). For class 2 groundwater, the maximum length is the smallest of the following applicable distances: (A) up to 500 feet beyond the current length of the residential-based groundwater plume; (B) a length of up to 0.25 times the current length of the residential-based groundwater protection concentration level exceedence zone (i.e., up to 25% additional plume length); (C) up to a boundary not less than 2 years groundwater travel time of the closest hydraulically downgradient off-site property for which the owner has not provided written concurrence to allow an institutional control; (D) at the current downgradient extent of the residential-based plume when the residential-based groundwater plume is already within the 2 year travel time setback boundary; or (E) the boundary where groundwater discharges to surface water. For class 3 groundwater, the plume management zone must be established at a boundary no less than the lesser of 2 years groundwater travel time upgradient of the closest hydraulically downgradient off-site property for which the landowner has not provided written concurrence to allow an institutional control or to the distance to where groundwater discharges to surface water. To clarify this, the commission offers the following examples: the groundwater underlying a property has been classified as a class 2 groundwater; the residential health-based limits have been identified and the plume has been delineated. The current length of the plume is 1000 feet and, based on analysis of groundwater travel time, the plume is determined to be 400 feet from the downgradient property traveling at a rate of 50 feet per year. There are no groundwater discharge points to surface water near the site. Twenty-five percent additional plume length would result in an increase of 250 feet. A boundary no less than two years travel time from the downgradient property would be 100 feet from the property boundary which would result in the boundary of the plume extending 300 feet. The person using a plume management zone approach must take the lesser of 500 feet, 250 feet, or 300 feet in this example. Therefore, the point of exposure must be placed up to 250 feet beyond the existing 1000 foot length giving a total plume management zone of 1250 feet. If this same example were applied to a class 3 groundwater, the point of exposure could be extended up to 300 feet which would be at a boundary two years travel time of the downgradient property. In order to use a plume management zone approach, the person must place an institutional control in the real property records of the affected property and meet the technical requirements outlined in §350.33(f)(4)(C) and (D).

In section 350.33(f)(4)(E), to provide additional flexibility the commission is proposing to allow non- aqueous phase liquids to remain within the plume management zone provided the person demonstrates that the nonaqueous phase liquids will not generate explosive conditions, will not discharge to environmental media and structures, and will not increase in size under natural conditions (or an active recovery system can be demonstrated to effectively control or contain migration of non-aqueous phase liquids). In addition, the person must demonstrate that the non-aqueous phase liquids will not result in the critical protective concentration levels being exceeded at the applicable points of exposure (including the groundwater point of exposure at the downgradient boundary of the plume management zone). The provisions are added to provide reasonable exceptions when recovery of nonaqueous phase liquids is not warranted to protect human health and the environment, and may cause the waste of limited financial resources that could be more beneficially used for other more needed corrective actions.

Persons using a plume management zone have a continuing obligation under proposed §350.33(f)(4)(F) to assess whether changes to local hydraulic gradients would affect the plume management zone. If changed conditions occur, any corrective action necessary to ensure the integrity of the plume management zone must be taken.

Section §350.33(g)-(k) address post-response action care for response actions under Remedy Standard B. The default post-response action care period is 30 years and begins upon approval of the Response Action Completion Report. On a case-by-case basis, the executive director may consider reducing the 30 year period if the person demonstrates that a shorter period will be appropriate. The type, method, and extent of post-response action care will be a function of the long-term effectiveness of the response action, the nature and design of any physical controls, the physical and chemical characteristics of the chemicals of concern, the geology and hydrogeology of the affected property, and the adjacent land use. The post-response action care period is considered complete when the person demonstrates that a threat to human health or the environment no longer exists. If this demonstration cannot be made during the 30-year period, a person will be required to continue post-response action care for additional 30-year periods until the demonstration is made. The proposed rule presents detailed criteria for determining when post-response action care may be discontinued. If the person submits a demonstration that documents that post-response action care is no longer necessary, then upon written approval by the executive director the remainder of the post-response action care period will be canceled and the financial assurance will be returned to the person. Section 350.33(k) establishes recordkeeping and reporting requirements. In addition to standard recordkeeping requirements, persons must submit Post-Response Action Care Reports in accordance with the approved Response Action Plan and, during the post-response action care period, and must notify the executive director in writing within 30 days after an unexpected event occurs, or a condition is detected, which indicates that additional response actions will be required.

Proposed §350.33(l), (m) and (n) set forth financial assurance requirements. As discussed earlier, financial assurance is required when physical controls are used under Remedy Standard B. The financial assurance would cover the cost of a third party to operate and maintain all physical controls during the post-response action care period. The commission is aware that this is a new requirement for many sites; however, the commission is concerned that the State of Texas, and thus the taxpayers of Texas, could incur operation and maintenance costs without this financial assurance provision. The commission, though, emphasizes that the financial assurance is for expenses such as monitoring a cap, sampling and analyzing groundwater, etc. It does not cover failure of the remedy and the cost of conducting a new response action. Some argue that the additional cost for financial assurance is onerous. Others argue that the financial assurance is inadequate since it does not cover failed remedies. The commission is proposing a compromise between these considerations that is affordable and limits to a large extent the risk to taxpayers. Sites in programs where existing federal and state financial assurance requirements exist (i.e., permitted municipal solid waste landfills, hazardous waste facilities) must still meet the financial assurance requirements of the specific programs. The person must prepare and include in the Response Action Plan a written cost estimate, in current dollars, of the cost of the post-response action care activities for the entire 30-year post-response action care period. The person must comply with the financial assurance requirements in Chapter 37 of the commission's rules when demonstrating financial assurance for post-response action care.

The commission recognizes that the overall risk regarding annual monitoring and maintenance costs on sites with a 30-year post response action care cost estimate under $100,000 is low. Accordingly, it has included a provision in the proposed rule that persons may be exempted by the executive director from providing financial assurance if the 30-year post-response action care cost estimate is under $100,000. The commission is expressly seeking comment on this issue. Specifically, the commission wants to know if commenters believe this exemption will cause the State of Texas to incur substantially greater costs, due to persons not fulfilling the post response action care requirements, and if the increase in costs incurred by the State will be offset by relief from the cost burden of providing financial assurance by persons on sites with 30 year post-response action care cost estimate under $100,000.

The commission is aware that many small businesses are still concerned with the cost of obtaining financial assurance for 30 years of operations and maintenance. Therefore, the commission is proposing to allow small businesses the opportunity to demonstrate financial assurance for one third of the 30-year cost estimate during each 10-year period. To request this option, the owner or authorized officer of a business must demonstrate that it meets the definition of a small business and submit an affidavit stating such. It must notify the agency when the business no longer meets the definition. The definition of small business is consistent with that which is found in the commission's enforcement rules in 30 TAC

70.9.It is defined as any person, firm, or business which employs, by direct payroll and/or through contract, fewer than 100 full time employees and has net annual receipts of less than $3 million. Net annual receipts are defined as annual gross receipts less returns, discounts, and adjustments. A business that is a wholly-owned subsidiary of a corporation will not qualify as a small business if the parent organization does not qualify as a small business.

§350.34. No Further Action. Section 350.34, No Further Action, states that individual agency programs will confirm by letter when a person has completed all necessary response actions and that no further action is required. For Remedy Standard A, such confirmation will be issued after approval of the Response Action Completion Report by the executive director, and, if the response action is protective only for commercial/industrial use, receipt by the agency of proof of filing of an institutional control in the real property records of the county of the affected property. For Remedy Standard B, the agency programs will issue a conditional No Further Action letter upon approval of the Response Action Completion Report and the filing of any institutional controls. Upon termination of the post-response action care period by the executive director, a final No Further Action letter will be issued. The conditional letter is intended to acknowledge that response actions have been completed. This should address concerns that waiting to issue a No Further Action letter upon completion of the post-response action care period will disrupt land transactions and cause undue concern. The commission, though, cannot issue a final No Further Action until post-response action care is complete. Of course, if post-response action care is not necessary at site, then a final No Further Action letter would be issued instead of a conditional No Further Action letter.

§350.35. Substantial Change in Circumstances. Proposed §350.35, Substantial Change in Circumstances, addresses changes following completion of a response action that necessitate additional response actions. The section applies to changes undertaken by persons such as changes in land use and "unplanned" conditions which might arise because of new information. The proposed section states that no person shall cause, suffer, allow, or permit a threat to human health or the environment by changing a land use following a response action from commercial/industrial to residential or by removing, altering or failing to maintain a physical or institutional control. A person planning to change land use or modify a control must notify the agency at least 60 days prior to the planned activity, and must follow-up with a reevaluation of the property within 30 days of the initial notification. In §350.35(d), four "unplanned" changes are listed: (1) the failure of an institutional or physical control to prevent exposure at the required levels; (2) an actual exposure to unprotective concentration levels is occurring; (3) new information indicates that the affected property was not sufficiently characterized; or (4) the exposure area changes. The section clarifies that a change in numeric cleanup levels or a change in the procedures to calculate those levels does not constitute a substantial change in circumstances unless these changes are of such magnitude to present an unacceptable threat to human health or the environment.

§350.36. Relocation of Soils Containing Chemicals of Concern for Reuse Purposes. Section 350.36 sets forth standards for soil reuse and affects the relocation of soils at affected properties when the soil contains chemicals of concern at concentrations above naturally-occurring background concentrations. Additional requirements and restrictions may exist within specific program areas such as the Petroleum Storage Tank and the Industrial and Hazardous Waste program. The commission has included this subsection in the proposed rule because soils containing chemicals of concern still have a value as a resource and can be used for beneficial purposes. The state has limited landfill capacity and exhausting that capacity with soils which can be effectively used elsewhere is not sound policy. Additionally, use of pristine soils for purposes that could be just as adequately and safely completed with chemical of concern-containing soils (e.g., in asphalt mix, beneath concrete structures or roadways) is not necessarily the best use of limited natural resources. The Petroleum Storage Tank program has had success with a soil reuse program, and, as a consequence, has managed to redirect petroleum-contaminated soils destined for landfilling to beneficial uses such as beneath parking lots and roadways. At the same time, these provisions set up a process for the reuse of soils in a manner which is fully protective of human health and the environment.

Excavated soils containing non-aqueous phase liquids must be treated prior to relocation or managed as solid wastes. The commission notes, though, that excavation of contaminated soils by non-responsible parties during construction activities (e.g., installation, repair, removal of telephone lines or other utilities, or other construction activities) and the subsequent replacement of those soils back into that same excavation is not considered relocation or reuse in regard to the applicability of this chapter. Therefore such activities are not subject to the requirements of this section.

Soils to be relocated must meet either of the Remedy Standards and, depending on the designated land use, must be protective of human and ecological receptors. In other words, soils intended for reuse at commercial/industrial properties must meet commercial/industrial protective concentration levels, and, if reused under Remedy Standard A, must meet the performance requirement for Remedy Standard A response actions established in §350.32(a). If controls are necessary to prevent exposure, then the soil relocation must meet the same requirements as Remedy Standard B response actions, possibly including post-response action care and financial assurance. Soil reuse under Remedy Standards A and B may also require the filing of an institutional control.

For soil reuse that meets Remedy Standard A requirements, the commission is proposing to not require prior approval for the relocation if it is within the boundaries of the property containing the affected area; however, reuse under Remedy Standard B will require the prior approval of the executive director wherever the relocation occurs.

If soils that contain concentrations of chemicals of concern above naturally-occurring background levels resulting from an unauthorized releases are to be relocated for reuse on property not owned by the person, then the person must obtain the written consent of the landowner prior to relocation of the soils.

§350.37. Human Health Points of Exposure. Proposed §350.37 sets forth the prescribed on-site and off-site human health points of exposure to environmental media under Remedy Standards A and B. The points of exposure are the locations where human receptors are reasonably likely to come into contact with contaminants. The commission believes establishing the points of exposure in the rule is integral to the adoption of a consistent, performance- oriented, risk-based corrective action rule and will ensure that risks are adequately assessed and identified. Within each environmental medium, the rule prescribes on-site and off-site points of exposure. For both on-site and off-site exposures, persons must use the appropriate receptor for residential or commercial/industrial land use (i.e., a commercial/industrial site worker cannot be considered the receptor if addressing contamination at a residential site). The commission is proposing to allow the consideration of competent existing physical controls during pathway analysis; however, the existence of a physical control does not negate or supercede the prescribed points of exposure. More detail on the use of existing physical controls is provided in the discussion of proposed §350.71(d). To establish on-site or off-site points of exposure for commercial/industrial land use, or alternate points of exposure for on-site or off-site properties, the person must comply with the proposed provisions in §350.111, Use of Institutional Controls, which require the landowner's written approval for the placement of an institutional control on the property deed record.

Section 350.37 only addresses human health points of exposure. Points of exposure for ecological receptors are established on a property-specific basis in accordance with proposed §350.77, Ecological Risk Assessment and Development of Ecological Protective Concentration Levels.

The rule establishes on-site and off-site human health points of exposure in the following environmental media: air; soil; class 1, 2, and 3 groundwater; surface water; and sediment. The proposed rule language presents a description of each point of exposure.

With the exception of groundwater, alternate points of exposure are not allowed. For example, the on-site point of exposure for soil is throughout surface soil. For residential properties, surface soil is from the ground surface to a depth of 15 feet or to the top of the upper-most groundwater-bearing unit, whichever is less in depth. For commercial/industrial land use, surface soil is from the ground surface to a depth of 5 feet or to the top of the upper-most groundwater-bearing unit, whichever is less in depth. The commission believes these depths are reasonable compromises between the inconsistent depth provisions contained in the current rules. The 15 foot depth represents a reasonable maximum depth above which soils could be excavated and brought to ground surface during routine construction activities. The 5 foot depth is within the common depth of utilities, and should therefore be protective of many construction activities that may take place at commercial/industrial sites. A person cannot move the on-site point of exposure to outside the soil zone.

Consistent with the groundwater response objectives discussed previously in the overview of Remedy Standard B, §350.33, this section establishes alternate points of exposure for groundwater. Whenever there is affected groundwater beneath a waste control unit, the person may, with the executive director's approval, exclude the area underlaying the waste control unit as a point of exposure to groundwater. Also, as discussed earlier, plume management zones are allowed for class 2 and class 3 groundwater. The point of exposure may be moved to the downgradient boundary of the plume management zone. There are several restrictions on the use of plume management zones. They may not be established for class 1 groundwater or under Remedy Standard A because the commission considers class 1 groundwater to be a critical groundwater deserving of a pollution cleanup approach. Nor may they be established in uncontaminated class 2 or 3 groundwaters because the commission considers a pollution prevention approach to be appropriate for those uncontaminated groundwaters.

Proposed §350.37(l) contains detailed requirements for the location of groundwater points of exposure which defines the plume management zone. The plume management zone includes the existing affected groundwater plus the smallest of the allowable distance for plume management zones discussed earlier with regard to §350.33. Similar distance requirements are used to establish an alternate point of exposure for class 2 groundwater at the off-site boundary of a plume management zone for off-site properties that currently contain the residential-based groundwater plume. To preserve important reserves of groundwater, the person must not allow a plume management zone to extend onto off-site property with class 2 groundwater that does not currently contain the contaminated residential-based groundwater plume, unless the person can demonstrate to the satisfaction of the executive director that the existing quality of class 2 groundwater, considering non-point sources of chemicals of concern and their cumulative impact on the groundwater quality, or the proximity and the withdrawal rates of groundwater users indicates that the groundwater-bearing unit has no reasonably anticipated beneficial use.

SUBCHAPTER C - AFFECTED PROPERTY ASSESSMENT.

Subchapter C consists of §§350.51 through 350.55 and details the requirements necessary to assess the affected property including the classification of groundwater and land use. In addition, the subchapter provides performance-based standards for quality assurance/quality control of data and notification requirements for off-site properties and leased lands.

§350.51. Affected Property Assessment. Under proposed §350.51, persons are required to conduct an affected property assessment in a manner appropriate for the affected property. Other common, and possibly more familiar, terms for "affected property assessment" are site investigations and site assessments. The goal of the assessment is to define the vertical and horizontal extent of contamination. The assessment must be designed to collect information necessary to support notification of affected landowners, to determine whether or not water resources have been affected or are threatened, and to facilitate remedy selection. In addition, the assessment may also evaluate the effectiveness of existing physical controls. When existing physical controls will be used as part of the response action as discussed previously, the health-based assessment may be conducted such that the primary focus is placed beyond the areal limits of the existing physical control. However, some investigation may be necessary to evaluate threats to underlying groundwater within the physical control. Additionally, adequate information must be available to evaluate the exposure pathway and protective concentration level development for the physical control adequacy to be evaluated. This matter is further discussed in relation to proposed §350.71(d). Results of the assessment must be documented in an Affected Property Assessment Report.

The commission, through this proposed rule, wants to address investigations of class 3 groundwater, a groundwater that is not considered a drinking water resource. The May 15 1998, proposal of the Texas Risk Reduction Program rule, which was subsequently withdrawn, stated that the lateral investigation of all classes of groundwater be to the critical Tier 1 protective concentration for class 1 (highest quality) groundwater. The protective concentration levels for class 3 (not a current or future use) groundwater are 100 times the protective concentration levels for class 1 groundwater. In many cases the class 1 groundwater protective concentration levels are the U.S. Environmental Protection Agency's Maximum Contaminant Levels (MCLs) for drinking water; therefore, in such cases, the class 3 concentrations are 100 times the MCLs. Concerns have been raised that this philosophy of investigation of class 3 groundwater to drinking water standards is overly conservative and that it would unnecessarily increase costs and time without a real benefit. Based on these concerns, the commission has removed this provision in the proposed rule. Therefore, the lateral investigation of class 3 groundwater may be limited to the critical protective concentration level for class 3 groundwater. The commission is requesting comment on this provision due to concerns that allowing assessments to the critical protective concentration level for class 3 groundwater may result in off-site properties having contaminant concentrations above the drinking water standard without notice having been given to those property owners.

Persons are required to investigate vertically and laterally the affected environmental media to the "assessment" level. The assessment level is the lowest of the critical Tier 1 human health protective concentration level and the protective concentration level for the soil-to-groundwater exposure pathway that may be established under Tier 1, 2 or 3. The assessment level may also include ecological protective concentration levels when necessary. The commission has based the assessment level within each environmental medium on the Tier 1 human health protective concentrations to facilitate a consistent process of notification to owners of affected land. Allowing persons to base the soil-to-groundwater levels on Tier 1, 2, or 3 evaluations recognizes the great variability of soil and groundwater conditions across the state. Additionally, because this evaluation is not a direct health-based evaluation, it does not compromise the goal of consistent health-based notification to landowners. In some cases, background concentrations will be above the Tier 1 protective concentrations in which case the background concentration becomes the assessment level. There are two exceptions to the requirement to conduct the investigation to the assessment level. First, for on-site soil investigations, a person may limit investigation to the critical Tier 1, 2, or 3 protective concentration level. However, the person is still required to conduct any necessary soil investigation off-site to the residential assessment level. The commission expects the flexibility provided for on-site soil investigations to reduce the cost and time of investigations because the on-site area of investigation at many sites will be reduced. In practice, persons may take samples at the property boundary to determine if off-site concentrations are above the residential assessment levels. Additionally, this can be accomplished without compromising the commission's goal of consistent landowner notification. On-site receptors will still be protected because the assessment is to the appropriate cleanup level (residential or commercial/industrial), and off-site receptors will be protected because the investigation must continue off-site to the residential-based assessment level. Second, the vertical soil investigation is to the higher of the method quantitation limit (i.e., laboratory analytical testing limits) or background concentrations. The commission is proposing this standard for the vertical soil investigation to determine if groundwater has been impacted. The vertical soil investigation may continue past the upper-most groundwater bearing unit on a site-specific basis. The commission intends that the horizontal and vertical extent of assessments be routinely conducted as described in this paragraph. However, the proposed rule provides that the executive director may require investigation to beyond these assessment levels when necessary to ensure receptors are not threatened or to verify the appropriate groundwater classification. For example, the executive director may require the additional assessment to verify classification of a class 3 groundwater due to the presence of water wells nearby in the downgradient direction.

As part of the affected property assessment, the person shall conduct a field survey to locate potential receptors, including water wells and surface waters to at least 500 feet beyond the boundary of the affected property and a records survey to identify all water wells and surface water bodies within 1/2 mile of the limits of groundwater plume. Also, the person must attempt to identify any off-site properties within 1/4 mile of the on-site property concerning the availability of environmental information (e.g., soil boring logs, analytical results from samples of environmental media, etc.) that may be useful for the affected property assessment

Section 350.51(l) - (m) concern determination of concentration of chemicals of concern. Persons may use statistical methods to determine representative concentrations of chemicals of concern. The commission is proposing general performance standards for the use of statistics rather than prescriptive requirements. This allows for appropriate site-specific considerations. If statistical or geostastical methods are used, then persons are to use appropriate statistical methods based upon the suitability of the data and an appropriate number of samples. Judgmental samples may be used as long as it can be demonstrated that the resulting estimated representative concentration is not biased low. The soil exposure area for residential properties must not exceed 1/8 acre or the size of the front or back yard of the existing affected residential lot, unless it is demonstrated that a larger area, not to exceed 1/2 acre, is appropriate. The soil default exposure area for commercial/industrial properties is 1/2 acre but persons are provided the flexibility to use site-specific activity patterns to demonstrate that a larger area is appropriate. If an area larger than 1/8 acre for residential properties or 1/2 acre for commercial/industrial properties is assumed, then this shall be noted through the filing of an institutional control.

Non-detected analytical results must be considered whether doing direct comparisons of individual measurements or when using statistical or geostatistical approaches. For instance, where there is reason to believe that the chemical of concern is present below the sample quantitation limit, then the use of half the sample quantitation limit may be appropriate.

The commission is proposing language in §350.51(l)(5) to define and address "hot spots." Distinct areas of elevated contaminant concentrations that significantly exceed either the risk level of 1 x 10 ^-5 (1 in 100,000) for carcinogens or the hazard quotient of 1 for noncarcinogens for human receptors or a hazard quotient of 50 for ecological receptors are considered hot spots. Hot spots may require a separate evaluation based on the distribution of chemicals of concern and the information on exposure conditions.

In proposed §350.51(m), the commission has developed Texas-specific median background concentrations for metals. Persons may compare their site concentrations with the background Texas- specific median background concentrations. If the site concentration of a chemical of concern is below the median background concentration for that chemical, then the person can assume that the site concentration is "below" background for purposes of the Texas Risk Reduction Program rule. Otherwise, the person can always determine background on a site-specific basis.

§350.52. Groundwater Resource Classification. Proposed §350.52 sets forth the groundwater resource classification system under the Texas Risk Reduction Program. The section establishes explicit performance standards for defining groundwater as class 1, class 2, or class 3 groundwater resources. Each groundwater-bearing unit that contains chemicals of concern at concentrations equal to or greater than the residential groundwater assessment level must be classified. If a groundwater-bearing unit meets the criteria for more than one of the classifications, then, generally, the person must assign the higher quality classification of the two classifications (e.g., if a groundwater-bearing unit contains groundwater described by the definitions for both class 1 and class 3, it will be classified as class 1). To be considered a class 1 primary groundwater resource, the groundwater- bearing unit must meet one of the following conditions: (1) a groundwater-bearing unit which contains chemical of concern concentrations above the residential assessment level within one-half mile of an existing well used to supply drinking water to a public water system and the chemicals of concern are likely to migrate to the groundwater production zone; (2) a groundwater-bearing unit is the only reliable source of water, is not more than 800 feet below the land surface, has a total dissolved solids content of less than 1,000 milligrams per liter (mg/l), and has a sustainable rate greater than 5,000 gallons per day (gpd) to a well with a 4 inch diameter casing; or (3) a groundwater-bearing unit has a total dissolved solids content of 3,000 mg/l, a sustainable rate greater than or equal to 144,000 gpd to a well with a 12 inch diameter casing, and the natural quality meets all primary drinking water standards as defined in 40 Code of Federal Regulations Part 141. Class 2 groundwater resources include: (1) any groundwater-bearing unit which is a groundwater production zone for an existing well located within 1/2 mile of the affected property and which is used to supply groundwater for human consumption, agricultural purposes or any purpose that could result in exposure to human or ecological receptors; or (2) any groundwater-bearing unit with a naturally occurring total dissolved solids content of less than 10,000 mg/l and which is capable of producing groundwater at a sustainable rate greater than 150 gpd to a well with a 4 inch diameter casing. A class 3 groundwater resource includes any groundwater-bearing unit that produces water with a naturally occurring TDS content of greater than 10,000 mg/l or at a sustainable rate less than 150 gpd to a well with a 4 inch diameter casing. The commission selected 150 gpd criteria as it is based on the average daily water use of a family of three and is, therefore, a reasonably conservative production criteria that should satisfy most minimum domestic water uses.

§350.53. Land Use Classification. Section 350.53 requires persons to determine the current land use of the affected properties. The commission proposes two types of land use: residential and commercial/industrial. Definitions for residential land use and commercial/industrial land use are included in §350.4, Definitions and Acronyms. Residential land use is property used for dwellings such as single family houses and multi- family apartments, children's homes, nursing homes, and residential portions of government-owned lands (local, state or federal). Because of the similarity of exposure potential and the sensitive nature of the potentially exposed population, day care facilities, educational facilities, hospitals, and parks (local, state or federal) will also be considered residential. Commercial/industrial land use is essentially any land use not defined as residential and must be reinforced with an institutional control. Therefore, land use classification is dependent on two factors: conformance of the affected property with residential and commercial/industrial land use definitions, and the willingness of the landowner to consent to an institutional control for commercial/industrial land use.

To illustrate how these two factors would work, two examples are provided. If a property is currently used as a commercial/industrial property, but the landowner will not consent to the institutional control, then the land use is residential for the purpose of this rule. If a person claims commercial/industrial land use, but someone is living at the property (or other such residential use) at the time a Response Action Plan or a Response Action Completion Report is submitted to the agency, the agency will not concur with commercial/industrial land use.

If land use changes during the remedial process, the final response action must be protective of the new use. If off-site property or leased affected property is determined to be commercial/industrial, the person must provide written landowner concurrence for the associated institutional control required to assure that commercial/industrial use continues.

§350.54. Data Acquisition and Reporting Requirements. Proposed §350.54 sets forth requirements for quality assurance/quality control of data submitted to the agency. The proposed rule establishes a set of performance standards that must be met by persons in the program. Because the section outlines these standards, it is not necessary for this preamble to repeat them. The commission would like to emphasize two key points though. Under §350.54(d), it is the responsibility of the person submitting the data to ensure that the laboratory performing the analysis has an adequate and documented quality assurance program in place that is consistent with the International Organization of Standardization "Guide 25: General Requirements for the Competence of Calibration and Testing Laboratories " or the National Environmental Laboratory Accreditation Program. Under §350.54(h), the person is responsible for having all documentation readily available to demonstrate that the sample integrity has not been compromised and that an appropriate analytical method has been used. In addition, the persons must provide all information reasonably requested by the executive director.

§350.55. Notification Requirements Pertaining to Off-Site Properties and Leased Lands. Proposed §350.55 requires persons to make environmental sampling data available to the owners and interest holders of the property where the samples are collected. An interest holder could be a fee holder (including fractional interest holders in the surface rights but not mineral interest owners), leaseholder, easement holder, franchise or right-of-way holder. The commission is proposing that all interest holders be notified because the commission believes that interest holders should be aware of any investigation of conditions potentially affecting them or their property. The commission has no basis to determine which of those parties who have an interest in the property are likely or not likely to frequent the property or to disturb contaminated media. The commission recognizes that it may not be possible to identify all interest holders in a timely manner; therefore, the commission is proposing that notification be to franchisees and leaseholders to the extent they are known and obvious and to all property owners and interest holders of record. Throughout the development of the Texas Risk Reduction Program, stakeholders have supported public notice. However, some stakeholders have questioned the need to notify every person, especially those who have limited contact with the affected property. The commission's goal for the notice requirements is to assure adequate notice with the attention to the possibility of vapor contamination from underlying media in buildings, the potential exposure of utility workers, and potential presence of playgrounds among other relevant considerations.

Persons are also required to notify owners and interest holders when site concentrations exceed ecological protective concentration levels. Ecologically protective concentrations are only calculated when there are potential ecological concerns. Therefore, the commission is proposing that a landowner be notified of ecological protective concentrations only when there are ecological concerns. The commission has determined that such notification is particularly appropriate since that affected land may be a park, natural area, rural agricultural land, or other critical ecological habitat. Therefore, the commission believes that it is appropriate to tie notification requirements to ecological considerations.

At a minimum, the information made available shall include the analytical results from the sampling along with the critical Tier 1, 2, or 3 human health protective concentration levels (i.e., the cleanup levels) for the applicable land use. If ecological protective concentration levels are developed, the person must make them available also. The information must be made available upon submission of a plan or report to the executive director. In addition, any other information submitted to the executive director regarding their property or interest must be made available to these interest holders, property owners, and leaseholders. Within 30 calendar days of the date the notices are due to the parties, persons are required to provide proof to the executive director that the parties were notified. If a property owner, leaseholder, or interest holder requests the information, the person must deliver the information within 14 calendar days after the date of receipt of the request. The rule does not prescribe a form for providing the notice, but the commission will have an example notice available in guidance.

In some instances, a person may discover that an actual exposure exists that presents a threat to human health. In these instances, notice is required under §350.55(e) as soon as possible but not later than 35 calendar days after receipt of the laboratory analysis. Those noticed must include the property owner, those exposed, and the executive director. The commission understands that sometimes it is difficult to ensure that everyone required to be contacted has been contacted; therefore, the commission has increased time to do this from the time allotted in the May 15, 1998, proposal of the rule. However, the commission emphasizes that notice for actual exposures is as soon as possible . Every attempt should be made to provide notification immediately upon receipt of the laboratory analysis. If actual exposure conditions which did not initially exist later develop, then these same notification provisions apply at that point in time

SUBCHAPTER D - DEVELOPMENT OF PROTECTIVE CONCENTRATION LEVELS Subchapter D contains §§350.71 through 350.79. The subchapter establishes the procedures for calculating the risk-based exposure limits and then the protective concentration levels for contaminants at affected properties. In effect, the protective concentration levels are the cleanup levels at a site. Protectiveness benchmarks and exposure pathways for human health are defined in the subchapter. In addition, requirements for ecological risk assessments are also presented.

Separate risk-based exposure limits are established for human and ecological receptors. For example, when a volatile organic compound is present in subsurface soils, vapors rise to the surface and are released into the air. The point of exposure to air is where a receptor inhales the vapors. The risk- based exposure limit is the concentration of the volatile organic compound in the air that is safe for the receptor to breathe assuming long-term, chronic exposure.

Beginning with the risk-based exposure limit, persons then derive protective concentration levels. Protective concentration levels are the concentration limits of contaminants in the source media (e.g., soil and groundwater) that will achieve the risk-based exposure limits in the exposure media. Continuing the example, the protective concentration level is the concentration of the volatile organic compound in the subsurface soil that will, based upon cross-media transfer from subsurface soil to the air, achieve the risk- based exposure limit for breathing the volatile organic compound at the point of exposure in air. Two three-tiered processes are provided to establish human health and ecological protective concentration levels, Tier 1, 2 and 3, for human health evaluations and Tier 1, 2, and 3 for ecological evaluations.

§350.71 General Requirements Section 350.71 requires persons to develop protective concentration levels for each contaminant for the complete and reasonably anticipated to be completed ecological and human health exposure pathways. The individual human health exposure pathways are set out in this section and are as follows: (1) ingestion of chemicals of concern in class 1 or 2 groundwater; (2) ingestion of chemicals of concern in class 3 groundwater (for management of groundwater); (3) inhalation of volatile emissions in outdoor air from chemicals of concern in groundwater and saturated zones; (4) combined inhalation of volatile emissions and particulates from chemicals of concern in surface soil, dermal contact with chemicals of concern in surface soil, ingestion of chemicals of concern in surface soil, and for affected residential properties, ingestion of above and below-ground vegetables grown in surface soils containing chemicals of concern; (5) leaching of chemicals of concern in surface and subsurface soils to groundwater; (6) inhalation of volatile emissions from chemicals of concern in subsurface soils; (7) contact with surface water or sediment containing chemicals of concern originating from the source area, and (8) other complete or reasonably anticipated to be completed exposure pathways. In the discussion of each human health exposure pathway, the rule clarifies when the pathway should be considered complete or reasonably anticipated to be completed. The commission's goal in establishing the evaluation of specific exposure pathways in the rule is to ensure a consistent approach in the evaluation of exposure pathways and to properly assess the risk associated with contaminated media. Persons are not required to combine exposure pathways across source media (e.g., soil and groundwater) unless directed by the executive director to address situations where receptors are simultaneously exposed to chemicals of concern present in multiple source media. When establishing protective concentration levels for on-site commercial/industrial land use, off-site residents must also be protected. Ecological risk assessment is addressed in §350.77.

Questions have been raised regarding the ingestion of above and below-ground vegetables when developing protective concentration levels for affected residential properties noting that not everyone has a vegetable garden. The commission acknowledges this, but considers the inclusion of vegetable ingestion to be appropriate to assure protection of human health in the event a resident decides to grow vegetables in the future.

Another area of concern raised in the past has been the inability of persons to exclude human health exposure pathways in the development of protective concentration levels based on the existence of a physical control such as a parking lot, building foundation, etc., or an institutional control such as deed restriction. The argument put forward by those supporting the ability to "screen out" pathways has been that the control limits the exposure to the contaminants; therefore, the exposure pathway and the associated risk to human health is eliminated. The commission recognizes in §350.71(d) that physical controls can limit exposure. Therefore, the proposed rule states that the presence of a competent existing physical control may be used to show that the exposure pathway is incomplete for the area covered by the control. However, if a person chooses to use a physical control in the pathway analysis, the person must meet the requirements of Remedy Standard B including the filing of an institutional control noting the use of the physical control. As part of a remedy, the adequacy of the physical control must be demonstrated. To make the demonstration, exposure pathways and protective concentration levels must still be evaluated for the physical control area. In this regard, although the pathway is not specifically "screened out," the contamination is already effectively remediated, and, this control is carried into the formal remedy for the site.

Section 350.71(k) describes the conditions when chemicals of concern may be screened from further consideration. In these instances the person is not required to develop protective concentration levels for those chemicals of concern. For example, if the chemical of concern is a common laboratory contaminant it may be screened out in certain situations, or if the contaminant is below the Texas-Specific median background levels, protective concentration levels are not required to be developed. The proposed rule does not determine which chemicals of concern must be initially investigated at a site, but once these chemicals of concern are identified, the proposed rule provides a mechanism to screen out chemicals of concern that contribute insignificantly to exposure at the site.

§350.72. Carcinogenic Risk Levels and Hazard Indices for Human Health Exposure Pathways. Proposed §350.72 sets forth the risk levels for carcinogens (i.e., cancer causing substances) and the hazard quotient/hazard indices for noncarcinogens. The commission believes that use of a clear, single protectiveness benchmark will benefit public health and the environment by avoiding confusion and controversy over the level of protection on which the cleanup levels should be based. Therefore, the commission proposes a carcinogenic risk level of 1 in 100,000 (1 x 10 ^-5 in scientific nomenclature) for individual carcinogens and a cumulative risk level of 1 in 10,000 (1 x 10 ^-4 ) for multiple carcinogens. For noncarcinogens, the commission proposes a hazard quotient of 1 for individual noncarcinogens and a hazard index of 10 for multiple noncarcinogens.

It is important to note that if multiple carcinogens or noncarcinogens are present, the individual risk level for each carcinogen or hazard quotient for each noncarcinogen can never exceed 1 in 100,000 or 1, respectively. Therefore, individual risk levels and hazard quotients cannot be upwardly adjusted to meet the cumulative risk levels. Taking carcinogens as an example, when 10 or more carcinogens are present at their 1 in 100,000-based protective concentrations, the allowable 1 in 10,000 cumulative risk level would be reached. If there are more than 10 carcinogens, each at their 1 in 100,000-based protective concentration level, then the protective concentration level for at least one individual carcinogen will have to be downwardly adjusted to a concentration less than the 1 in 100,000-based value (e.g., 1 in 1,000,000) so that the cumulative risk of 1 in 10,000 is not exceeded.

Modifications to the proposed cumulative risk levels are set forth in proposed §350.72(b). Examples include use of predetermined standards such as U.S. EPA's maximum contaminant levels (MCLs) and the most currently available federal action levels for drinking water, calculation of protective concentration levels for dioxins, and calculation of the protective concentration level for polychlorinated biphenyls (commonly referred to by their initials "PCBs") when the protective concentration is taken from the Toxic Substances Control Act.

§350.73. Determination and Use of Human Toxicity Factors and Chemical Properties. Proposed §350.73 directs persons to use a hierarchy of sources to determine the chronic toxicity factors including the following two highest ranked sources: the U.S. EPA's Integrated Risk Information System (IRIS) and the U.S. EPA Health Effects Assessment Summary Tables. Persons shall first consult the Integrated Risk Information System for the relevant chronic human toxicity factor. Persons may utilize the Health Effects Assessment Summary Tables only if the toxicity factor is not available in the Integrated Risk Information System. Likewise, if the toxicity factor is not available in the Health Effects Assessment Summary Tables, then persons must use the U.S. EPA National Center for Environmental Assessment (i.e., Superfund Technical Support Center), and so on. The chronic human toxicity factors that are most current as of the submittal date of the Self-Implementation Notice or the Response Action Plan are presumed to be protective of human health and the environment, unless a person rebuts this presumption by published credible authority.

Recognizing that toxicity factors may change during the course of a response action, the commission is addressing such changes in the proposed rule. Under the proposed rule, the executive director may determine, during review of the Response Action Completion Report, that a change in a toxicity factor since the submittal of the Self-Implementation Notice or the Response Action Plan has been of such a magnitude that the protective concentration levels previously developed would not be protective in such cases. The adequacy of the response action must be re-evaluated. Likewise, if the executive director determines at any time that a subsequent change in a toxicity factor is of such a magnitude that the proposed response action is no longer warranted to protect human health and the environment, then a response action based on that previous chronic toxicity factor consideration shall no longer be required.

For chemicals of concern that do not have chronic toxicity factors provided in the listed sources, the executive director will provide toxicity factors.

In circumstances where neither a U.S. EPA unit risk factor nor a U.S. EPA reference concentration is available, the person must use the Texas Natural Resource Conservation Commission Chronic Remediation-Specific Effects Screening Level value as the reference concentration in evaluating the inhalation pathway for both residential and commercial/industrial land use. Effects Screening Levels are recognized as protective standards in the agency's air program, and this requirement establishes consistency between the agency's waste and air programs.

The section also specifies the chemical/physical parameter values for each contaminant. Persons must use the prescribed parameters to determine the protective concentration levels unless the executive director approves the use of a more scientifically supportable alternative parameter value. Criteria are also provided by which some site-specific information can be used to select an appropriate chemical/physical parameter. The commission has provided these chemical/physical parameters to ensure consistency in the calculation of Tier 1 protective concentrations and to expedite the calculation and regulatory review of protective concentrations.

350.74.Development of Risk-Based Exposure Limits. Proposed §350.74 presents the procedures for the development of human health risk-based exposure limits. The section identifies the specific risk-based exposure limit equations to calculate the exposure limits for the completed and reasonably anticipated to be completed exposure pathways. As noted earlier, a risk-based exposure limit is the "safe" concentration of a chemical of concern at the point of human contact (e.g., inhalation, ingestion, dermal absorption). The Texas Risk Reduction Program requires the following human risk-based exposure limits to be calculated for residential and commercial/industrial land uses: air inhalation, soil dermal contact, soil ingestion, vegetable ingestion (residential only), groundwater ingestion, class 3 groundwater (for groundwater management purposes) and surface water (ingestion, contact, and acquatic life). The following paragraphs discuss risk-based exposure limits for each pathway identified previously. The exposure limits are defined in terms of the on-site, off-site, and alternate points of exposure presented in proposed §350.37 for residential and commercial/industrial properties.

Air inhalation. The air inhalation pathway is the protective concentration in air at the point of exposure for human inhalation (i.e., 2 meters). For the air inhalation risk-based exposure limit, the person may use the Occupational Safety and Health Administration (OSHA) Permissable Exposure Limits, Threshold Limit Values, or other applicable OSHA criteria as the risk-based exposure limit for the inhalation pathway at affected commercial/industrial properties with a health and safety plan in place and when that action is deed noticed. The health and safety plan must be designed to ensure compliance with the OSHA standards, require the monitoring of levels of chemicals of concern in the working air environment, and specify actions that will be taken in the event of exceedence of the OSHA standards.

Soil dermal contact. The soil dermal contact risk-based exposure limit is the protective concentration of a chemical of concern in soil based upon direct dermal contact to soil by humans.

Soil ingestion. The soil ingestion risk-based exposure limit is the protective concentration of a chemical of concern at the point of exposure in soil based upon human ingestion.

Vegetable ingestion. The vegetable ingestion risk-based exposure limits are the protective concentrations of chemicals of concerns in aboveground vegetables and below-ground vegetables for ingestion by residents. Determination of a risk-based exposure limit for ingestion of aboveground vegetables is only necessary when the land use is residential and when the chemical of concern is a metal. For below-ground vegetable determination of a risk-based exposure limit is required when certain criteria outlined in the proposed rule are met.

Groundwater ingestion. The groundwater ingestion risk-based exposure limit is the concentration of a chemical of concern at the point of exposure in groundwater that is safe for human ingestion. For the groundwater ingestion risk-based exposure limit, the person shall use the federal primary maximum contaminant levels, commonly referred by their acronym "MCLs," or the most currently available federal action level for drinking water as the risk-based exposure limit when available for the chemical of concern. When available, the contaminant-specific secondary federal maximum contaminant levels shall be used as the risk-based exposure limit when the chemicals of concern are present in class 1 groundwater and for class 2 groundwater under certain circumstances specified in the proposed rule. A risk-based exposure limit for ingestion is set only for class 1 and 2 groundwater since class 3 groundwater is presumed to be an undrinkable groundwater.

Class 3 groundwater. The class 3 groundwater risk-based exposure limit is set at a factor of 100 times the risk-based exposure limit established for class 1 and 2 groundwaters. The risk-based exposure limit is set primarily for purposes of managing the affected class 3 groundwater. This is necessary in order to control the extent and potential continued migration of contaminated class 3 groundwater such that unprotective situations do not develop.

Surface water. The surface water risk-based exposure limit is the protective concentration of a chemical of concern at the point of exposure in surface water. The surface water risk-based exposure limit is based upon a consideration of the acute and chronic criteria and the human health criteria to protect drinking water and fisheries, all as specified in the Texas Surface Water Quality Standards presented at 30 Texas Administrative Code Chapter 307 of the commission's rules.

The commission is proposing aesthetics criteria in §350.74(i) for circumstances when a risk- based exposure limit cannot be calculated by the methods outlined in the Texas Risk Reduction Program rule or the risk-based exposure limit concentration adversely impacts environmental quality, public welfare and safety, or presents objectionable characteristics such as odor or taste. Specifically, if odors are determined to be a nuisance under the provisions of §101.4 of the commission's air rules, the executive director may require a person to address the odor nuisance. Also, the commission is proposing that the maximum total soil concentration of chemicals of concern that are liquid at standard temperature and pressure must not exceed 10,000 milligram per kilogram (mg/kg) within the soil interval of 0-10 feet. The commission is proposing this standard to ensure that surface use of the soil is not diminished. However, persons may demonstrate that, at concentrations in excess of 10,000 mg/kg, no free liquids or sludges exist or surface use is not impaired. Also, the executive director may require other scientifically valid published criteria such as secondary maximum contaminant levels for water to be used as risk-based exposure limits.

The proposed rule lists which default risk-based exposure limit exposure factors can be modified and describes the information a person will be required to submit to support such a modification. The section concludes by listing those default exposure factors that must not be modified when determining risk-based exposure limits under the proposed Texas Risk Reduction Program rule.

In the case of three default exposure factors for commercial/industrial land use that can be changed, the commission is proposing a more rigorous process to change them. Persons wanting to vary the averaging time, exposure duration, or the exposure frequency for commercial/industrial land use must submit a request for variance to the Executive Director. The Executive Director cannot delegate this decision to agency staff. The Executive Director, not the agency staff, is the decision-making authority in this instance because changes to these factors will be a risk management policy determination rather than a technical decision. Public notice is required, and at the Executive Director's discretion, a public meeting may also be required. Public comment will be accepted on the proposed variance. If a variance is granted for one or more of these three exposure factors, the person must indicate the variance granted by filing an institutional control within the real property records for the county in which the affected property is located. Persons disagreeing with the Executive Director's decision may file a Motion for Reconsideration of the Executive Director's decision. If the commission rules on the motion, the ruling is final. The commission considers public notice to be a very important aspect of the process because alteration of any of these three factors likely could dramatically reduce the current and future use of a property. In turn, this could directly affect other entities such as adjacent landowners, taxing authorities, and others. Under the proposed rule, persons requesting the variances must do so early in the Texas Risk Reduction Program process. This is because the granting of the variance could dramatically affect the level of on-site investigation and subsequent response actions. This is of particular concern under Remedy Standard A where a self-implemented response action would be completed but where there is a high likelihood that the commission will not agree with cleanup levels upon which the response action is based. The commission points out that the person is still able to prepare a response action plan and provide information concerning the planned response action to the public as part of the public notice for the variance.

350.75.Tiered Human Health Protective Concentration Level Evaluation. The next step in the Texas Risk Reduction Program process is the establishment of human health-based protective concentration levels through a tiered process. The tiered process is patterned after the tiered process of the American Society of Testing and Materials Standard Guide for Risk-Based Corrective Action Applied at Petroleum Release Sites E S-1739-95 and Standard Provisional Guide for Risk-Based Corrective Action , PS 104-98. In general, as one moves through the tiered process, the level of technical sophistication necessary for developing protective concentration levels increases. As technical sophistication increases so do the costs of protective concentration level development. However, the result may be that remediation costs decrease because of the additional analysis necessary for the higher tiers.

The proposed rules establishes three tiers, Tiers 1, 2, and 3, with Tier 3 being the most sophisticated tier. The decision to determine the appropriate tier is left to the discretion of the person except in situations where a lower tier does not address a particular exposure pathway. Also, for state-funded response actions the executive director may specify which tier to use. Tier 1 protective concentration levels incorporate conservative assumptions that do not consider alternate points of exposure or site-specific factors. The Tier 1 levels assume the point of exposure is either within, directly above, or directly below the source area within the source medium. No lateral transport equations may be used for a Tier 1 evaluation other than to ensure that residential receptors at off-site points of exposure are protected when on-site commercial/industrial land use is assumed. In essence, they are protective of human health in any situation. Where standards such as EPA's maximum contaminant levels (MCLs) or Texas Surface Water Quality Standards exist, those standards will be the Tier 1 protective concentration levels.

If the concentration of a chemical of concern exceeds the Tier 1 protective concentration level, persons may either remediate the affected property to the Tier 1 protective concentration or proceed to a Tier 2 or Tier 3 assessment. Although the Tier 1 protective concentration levels may be used as cleanup standards, the commission expects them to often be used as screening tools during affected property assessments, provided the cumulative risk and hazard index criteria are met. Tier 2 incorporates lateral transport equations and more property-specific parameters.

If the concentration of a chemical of concern exceeds the calculated Tier 2 protective concentration level, then persons can either remediate the affected property to the Tier 2 protective concentration or proceed to Tier 3. In a Tier 3 evaluation, the person can use field measured natural attenuation factors and/or appropriate natural attenuation factor equations/models other than those prescribed for Tiers 1 and 2. As with Tier 2, persons can use site-specific data in Tier 3.

The proposed rule contains the equations and input parameters for Tier 1. Details for calculating Tier 2 and Tier 3 protective concentration levels, including equations and parameters, will be included in a guidance document developed for the Texas Risk Reduction Program. The equations for the risk-based exposure limits are prescribed in the proposed rule for all three tiers. The commission believes the Tier 1 equations and parameters are integral to the consistency of the proposed rule and are crucial for ensuring appropriate notifications; therefore, the equations and input parameters have been included in the rule. Because the Tier 2 and Tier 3 protective concentration level evaluations are alternatives to the Tier 1 protective concentration level evaluation, the commission considers a guidance document to be an acceptable regulatory medium for the fate and transport models and equations that are likely to change.

The commission wants to address in this proposed rule two issues relating to the development of protective concentration levels under Tier 3: the use of probabilistic analysis techniques and variances from default exposure factors. Traditionally, the agency has required that potential risks posed by contaminated sites be evaluated using "deterministic" techniques. Deterministic techniques involve using single values for each of the various exposure factors used in calculating protective concentration levels. Previous comments on drafts of the Texas Risk Reduction Program rule have suggested that the agency allow the use of "probabilistic" techniques under Tier 3. The goal of probabilistic techniques is to quantify the uncertainty and variability in calculations of exposure and risk. As such, probabilistic analysis techniques such as Monte Carlo would allow for use of multiple values (i.e., distributions of values) for each of the various exposure factors used in calculating protective concentration levels. The use of probabilistic techniques requires a level of sophistication that goes far beyond the resources and knowledge base of most federal and state environmental regulatory agencies. As such, probabilistic techniques have only been utilized in this arena on an extremely limited basis in the United States. While the proposed rule does not expressly prohibit the use of probabilistic techniques under Tier 3, stakeholders have correctly pointed out that the Texas Risk Reduction Program effectively precludes the use of probabilistic techniques by restricting variances to default parameters. However, the commission has determined that probabilistic analysis techniques such as Monte Carlo analysis, given adequate supporting data and credible assumptions, may one day be viable statistical tools for determining the need for and degree of remediation necessary at contaminated sites. At present, however, the agency does not have the personnel or expetise that would be necessary to support the use of probabilistic analysis techniques in evaluating contaminated sites. Therefore, the agency has chosen not to accept the use of probabilistic techniques under any of the three tiers of the Texas Risk Reduction Program rule at this time. The commission expects that it will take several years for the agency to develop the policy framework and technical expertise necessary to accept and properly review submittals utilizing probabilistic techniques. During this interim period, the agency is interested in working with stakeholders to establish procedures for a sound, defensible framework for the use of probabilistic analysis techniques to be authorized by future rule.

As noted earlier in the discussion of §350.74, Risk-Based Exposure Limits, certain exposure factors cannot be altered from the defaults provided in the proposed rule. Previous comments on drafts of the Texas Risk Reduction Program rule have suggested that flexibility should be given to allow for the development of site-specific information in the place of all default exposure factors for commercial/industrial sites under Tier 3 rather than for just a limited subset of exposure factors. However, given that many of these additional exposure factors are activity-related and activities may change over time, the commission is concerned about how persons at the affected commercial/industrial property, both currently and in the future, would be notified of such variances in these additional exposure factors and the policy implications concerning future uses of the property. The rule as currently proposed does not contain provisions addressing notification of variances in these additional default exposure factors to persons at the affected property and still only allows variances for a limited subset of exposure factors. If, based on public comment, the commission determines that variances in additional default exposure factors are appropriate for commercial/industrial sites under Tier 3 based on the development of site-specific information (i.e., not alternative literature values), the commission gives notice to commentors that it will require that notice of a variance be provided to any person that may be impacted by the variance including, but not limited to, employees, contractors, site visitors, the owner or lessee of the property, residents and others in a manner similar to the proposed variance procedures specified in §350.74(j)(2). In addition, to ensure that future property owners are aware of the limitations on the use of the property, the commission would also require that the person receiving the variance file an institutional control noting such limitations in the real property records of the county in which the property is located. Presuming comments will be submitted concerning the possible expansion of variances in default exposure factors, the commission seeks comment on associated notice procedures and institutional controls.

In addition to introducing the tiered approach, proposed §350.75 also establishes the methods for developing the human health protective concentration levels for each soil and groundwater exposure pathway and pathways for air, surface water, and sediments. The groundwater exposure pathways are ingestion of groundwater, class 3 groundwater (for purposes groundwater management), inhalation of volatile chemicals of concern in outdoor air from class 1, 2, or 3 groundwater, groundwater discharge to surface water, any other complete or reasonably anticipated to be completed exposure pathway, or any other groundwater pathway identified by the executive director. For class 1 or 2 groundwater, groundwater ingestion must be assumed. The person must develop protective concentration levels for class 3 groundwater when class 3 groundwater occurs at an affected property. For the contingent exposure pathways, a person must develop protective concentration levels based on the inhalation of volatile contaminants in outdoor air from class 1, 2, or 3 groundwater and for groundwater discharge to surface water unless the affected property satisfies the exclusion criteria specified for each exposure pathway in the proposed rule. For the groundwater discharge to surface water exposure pathway, the dilution of a contaminant in surface water may only be taken into account when the concentration of the contaminant in groundwater at the zone of discharge to surface water already exceeds the surface water risk-based exposure limit when the affected property assessment required by §350.33 is conducted. The commission is restricting use of surface water dilution factors to achieve pollution prevention goals. In the interest of preservation of water resources, the commission does not believe it is sound policy to allow surface waters that are not yet impacted to become impacted. On the other hand, where surface waters are already impacted, the commission does believe it is reasonable to consider the effects of surface water dilution. The person shall also establish protective concentration levels for any other groundwater exposure pathway that is complete or reasonably anticipated to be complete (e.g., inhalation of volatile emissions in indoor air from groundwater).

The soil exposure pathways include: the combined exposure pathway for ingestion of surface soil; dermal contact with surface soil; inhalation of volatile emissions and particulates from surface soil; and for residential land use only, ingestion of aboveground and below-ground vegetables grown in the surface soil; groundwater protection from surface and subsurface soil leachate; inhalation from volatile emission in outdoor air from subsurface soils; other complete or reasonably anticipated to be completed surface and subsurface soil exposure pathways; and any other soil exposure pathways identified by the executive director. The depth for surface soil is defined as 15 feet for residential land use and 5 feet for commercial/industrial land use, or to the top of the upper-most groundwater-bearing unit, whichever is less in depth. Protective concentration levels must always be developed for the combined surface soil exposure pathway. Under Tiers 2 and 3, this may involve the establishment of a property-specific theoretical soil saturation limit (Csat) to evaluate the relevance of the volatilization factor model in setting a protective concentration level for the inhalation of volatile emissions exposure pathway. The person must also develop protective concentration levels for groundwater protection from surface and subsurface soil leachate at all affected properties. The person must establish the soil-to-groundwater protective concentration level such that the soil leachate does not result in an exceedence of the critical groundwater protective concentration level and such that the groundwater response objectives can be met. Protective concentration levels based on the inhalation of volatile emissions in outdoor air from subsurface soils must also be developed unless the affected property satisfies the exclusion criteria specified in the proposed rule. The person must also establish protective concentration levels for any other soil exposure pathway that is complete or reasonably anticipated to be complete (e.g., inhalation of volatile emissions in indoor air from subsurface soils).

For air inhalation exposure pathways, the person may be required by the executive director to establish the protective concentration level for air for the purpose of determining the protective concentration that must be met in air at the point of exposure. The person may also be required by the executive director to establish the protective concentration level for surface water when chemicals of concern are present in surface water or when chemicals of concern will enter into surface water due to an unauthorized release, and a surface water response action is necessary to protect human or ecological receptors. Protective concentration levels for other air and surface water exposure pathways must be developed when required by the executive director. Protective concentration levels for sediment exposure pathways must be established when those exposure pathways are complete or reasonably anticipated to be completed, or when required by the executive director.

§350.76. Approaches for Specific Chemicals of Concern to Determine Human Health Protective Concentration Levels. Due to the unique nature and toxicity of and/or exposure to certain contaminants, the commission is proposing chemical-specific approaches in §350.76. A person must use the methods prescribed in previous sections of the rule to determine risk-based exposure limits and protective concentration levels unless otherwise directed by this section. Contaminants with a chemical-specific approach include the following: cadmium, lead, polychlorinated biphenyls, polychlorinated dibenzodioxins and dibenzonfurans, polycyclic aromatic hydrocarbons, and total petroleum hydrocarbons.

§350.77. Ecological Risk Assessment and Development of Ecological Protective Concentration Levels. Section 350.77 requires the person to conduct an ecological risk assessment. The purpose of the ecological risk assessment is to characterize the ecological character of the affected property, identify complete and reasonably anticipated to be completed exposure pathways and representative ecological receptors, scientifically eliminate chemicals of concern that pose little or no risk, and develop protective concentration levels for selected ecological receptors where warranted. Unlike the development of human health protective concentration levels, points of exposure for the selected ecological receptors are established on a site-specific basis. A three-tiered process is proposed for conducting the ecological risk assessment. Like the tiered process for human health evaluation, the person may begin the evaluation of the affected property at any tier desired. If at any time after Tier 1 it becomes apparent that response actions to protect human health will also protect ecological receptors or if human health protective concentrations are more conservative than ecological protective concentrations, then the ecological risk assessment may be terminated.

Tier 1 involves the completion of an exclusion criteria checklist contained in the rule. Completion of the Tier 1 checklist should identify any complete or reasonably anticipated to be completed ecological exposure pathways. If the affected property meets the exclusion criteria, then the person has fulfilled their ecological risk assessment requirement and is not required to conduct a Tier 2 or Tier 3 ecological risk assessment unless changing circumstances result in the affected property not meeting the exclusion criteria.

If the exclusion criteria cannot be met, then the person must perform a Tier 2 screening-level ecological risk assessment or may proceed directly to a Tier 3 site-specific ecological risk assessment. The commission will develop a guidance document to assist the person with conducting both a Tier 2 and Tier 3 assessment; however, other guidance may be used if it meets the performance criteria set forth in the proposed rule. Under Tier 2, a person must conduct a screening-level ecological risk assessment to scientifically eliminate chemicals of concern that do not pose an ecological risk and to develop protective concentration levels for those chemicals of concern that do pose an unacceptable risk to selected ecological receptors. Tier 2 ecological protective concentration levels are developed considering realistic assumptions and available site-specific information. The proposed rule sets forth 10 requirements that must be met in order for the screening-level ecological risk assessment to adequately evaluate ecological risk.

Following a Tier 2 assessment, a person may choose to conduct a Tier 3 site-specific ecological risk assessment to modify Tier 2 protective concentration levels by incorporating additional site-specific information. The Tier 3 assessment can be any site-specific study that provides an assessment of ecological risk. The result of the site-specific ecological risk assessment will be the development of site-specific Tier 3 protective concentration levels, a determination that there is no ecological risk, or a conclusion that ecological risk is not apparent based on site-specific information.

After ecological risks have been quantified and ecologically-protective concentration levels established under either Tier 2 or Tier 3 and after it has been determined that the ecological protective concentration level is the critical protective concentration level, persons must conduct a response action under either Remedy Standard A or Remedy Standard B. When determined appropriate by the executive director and approved by the Natural Resource Trustees, the person may conduct an ecological services analysis (as described earlier in the discussion of Remedy Standard B - §350.33) to determine the appropriateness of compensatory restoration as a means of managing residual ecological risk.

The agency has actively solicited input from State and Federal Natural Resource Trustee representatives (Texas Natural Resource Conservation Commission, Texas Parks and Wildlife Department, Texas General Land Office, National Oceanic and Atmospheric Administration, Department of the Interior) in the development of the Ecological Risk Assessment process. The trustees acknowledge that the potential for continuing injury to ecological resources should be negligible at sites which have undergone corrective actions where remedial decisions were based on an appropriate application of the proposed Ecological Risk Assessment process. It should be noted that natural resource damages liability beyond that associated with injury to biological resources is not addressed within the Ecological Risk Assessment framework.

To facilitate the cooperative natural resource damage assessment process currently practiced in Texas, natural resource trustees will be provided notification from the Texas Natural Resource Conservation Commission of those corrective action sites with chemicals of concern that remain after the initial Tier 2 screening step. The trustees at their discretion may or may not become involved at all referred sites. Trustees may choose to participate in the Ecological Risk Assessment process to ensure that natural resources under their jurisdiction are adequately protected and to obtain information that may be utilized in the natural resource damage assessment process. The trustees plan to develop a Memorandum of Understanding that facilitates the coordination of the trustees and their interaction in the Ecological Risk Assessment and Ecological Services Analysis processes. Persons may benefit from timely trustee involvement in the Ecological Risk Assessment process through decreased costs associated with the coordination of risk assessment and injury determination, reduction of residual natural resources injury, and timely resolution of natural resource damages liability.

§350.78. Determination of Critical Protective Concentration Levels. Methods for determining the critical protective concentration levels are set forth in proposed 350.78.The critical protective concentration level for a contaminant is the lowest protective concentration level for a chemical of concern in a particular environmental medium considering all of the exposure pathways for which a protective concentration, human health and/or ecological, is developed. The section further identifies situations where additional criteria must be met. First, if the critical groundwater protective concentration level or an attenuation action level developed under Remedy Standard B is greater than the solubility limit for contaminant in water, then the contaminant shall be monitored in accordance with the provisions concerning nonaqueous phase liquids set forth under Remedy Standard B. Second, if the critical protective concentration level for a contaminant is less than the method quantitation limit, then the greater of the method quantitation limit or the background concentration is the critical protective concentration level. Third, the critical protective concentration level and any attenuation action level must not result in vapor concentrations in excess of 25% of the lower explosive limit within outdoor air, surface or below- ground structures, or within the soil zone extending from ground surface to 15 feet in depth, or to the typical depth of the construction zone as defined in accordance with §350.2.

§350.79. Comparison of Chemicals of Concern to Protective Concentration Levels. Proposed §350.79 establishes the procedures for determining whether a response action is necessary. The determination is made by following either of the two procedures in the section. Under the first option, a person may make a direct comparison between site concentrations in the affected environmental media (e.g, groundwater, soil, sediments, etc.) and the critical protective concentration levels. If the site concentrations exceed the critical protective concentrations, a response action is required.

Under the second option, persons may employ statistics or geostatistics. Persons can make a direct comparison between representative site concentrations determined through statistical or geostatistical methods and the critical protective concentration levels. A response action is required if the representative site concentrations exceed the critical protective concentration levels. Persons may also use statistical methods to determine if concentrations at the affected property are equal to or below site-specific background concentrations. If a person chooses to conduct a statistical analysis to determine background concentrations, the person may use a two-sample one-sided statistical test when comparing the two populations or other alternative method acceptable to the executive director. If concentrations are less than or equal to background, a response action is not required. Alternatively, Texas medium-specific background concentrations may be used to calculate the critical protective concentration level.

SUBCHAPTER E. REPORTS.

Subchapter E contains §350.91-§350.96, and describes the necessary information for each report required by the proposed rule. Proposed §350.91 establishes the information to be contained in the Affected Property Assessment Report (APAR) required by §350.51. The commission notes that persons are required to provide the latitude and longitude of the affected property so that data may be linked to a geographic information system for data management/retrieval purposes. The commission is seeking comment on the most appropriate location at the affected property for the latitude/longitude (i.e., center, southeast corner, etc.). The commission believes the geographic information system provides a more economical, user-friendly approach to accessing agency information for members of the public, other government agencies, and those regulated by the commission. Proposed §§350.92-350.95 prescribe the information to be submitted with the previously discussed Self-Implementation Notice, Response Action Effectiveness Report, Response Action Plan, and the Response Action Completion Report, respectively. In the event post-response action care is necessary under Remedy Standard B, Post- Response Action Care Reports must be submitted. The requirements for Post-Response Action Care Reports are found in proposed §350.96. The requirements for each report are found in the proposed rule and are outlined. The commission considers the required reports to be necessary for effective implementation of the proposed rule. Each report is designed to ensure that the level of detail is sufficient to document that the person has attained the goals of the matter being reported.

SUBCHAPTER F. INSTITUTIONAL CONTROLS

Subchapter F consists of §350.111, Use of Institutional Controls, and establishes the institutional controls to be used in each instance that recordation in the property deed records is required by the proposed rule. In the Texas Risk Reduction Program, deed notices and restrictive covenants are the acceptable institutional controls. Deed notices do not restrict the use of the property, but are intended to provide notice and information regarding the property to the owner of the property, prospective buyers, and others. Restrictive covenants do restrict use of the property and its resources and are used to ensure that the use restrictions necessary for the remedy to be protective will be legally enforceable when the person owning the property is an innocent landowner. Under the proposed rule, a restrictive covenant must be enforceable by the state and must be filed by the landowner, unlike deed notices which may be filed by others without the landowner's consent. Deed notices and restrictive covenants are the only institutional controls allowed under the proposed rule. This has been a concern to some stakeholders who believe that other institutional controls should be allowed. The commission has limited institutional controls to deed notices and restrictive covenants because it considers deed notices and restrictive covenants to be more enforceable than other institutional controls. Local ordinances and local site registries were considered during the development of the proposed rule; however, use of these controls will require further analysis and consideration by the commission beyond this rulemaking.

Proposed §350.111(a) outlines the information to be included in an institutional control. Proposed subsection (b) describes the specific situations where an institutional control is required and whether the institutional control must be a deed notice or a restrictive covenant.

As noted in the previous paragraph, the commission is proposing to require that restrictive covenants be obtained from innocent landowners when an institutional control is necessary. Texas Health and Safety Code, Chapter 361, Subchapter V, provides that an owner/operator of property that is contaminated as a result of a release or migration from an off-site affected property source may be considered an innocent owner or operator and, as such, is not liable under the Texas Health and Safety Code or the Texas Water Code regarding the chemicals of concern from the off-site affected property source. The commission is proposing to require restrictive covenants for innocent landowner situations to ensure that controls are maintained and remain effective because the commission otherwise may not have any corrective action authority over these landowners. The commission emphasizes that it is the innocent landowner's decision to allow an institutional control to be placed on the landowner's property. The innocent landowner can refuse to consent to the placement of an institutional control which effectively forces a residential-based Remedy Standard A response action.

In addition, §350.111(c) of the proposed section details the requirements for landowner concurrence when contaminants have affected property owned by another person. If an affected property is owned by another person and it is necessary to file an institutional control for that affected property under the Texas Risk Reduction Program, then the person utilizing deed notification must obtain written landowner consent before the institutional control is placed on the property records.

In developing the proposed requirements for landowner concurrence, the commission considered takings concerns and long term effectiveness issues. The commission is concerned that allowing the placement of institutional and/or physical controls without landowner consent may cause landowners to assert regulatory takings claims against the State. Additionally, the executive director is responsible for ensuring that response actions remain effective over the long term. Landowner consent to the placement of physical and institutional controls is effectively an acknowledgment and agreement by that landowner of the conditions necessary for the control. This acknowledgment better assures the active participation of the landowner and thereby enhances long term effectiveness of the control. The commission is aware of concerns that a landowner may deny consent for deed notification, thus delaying the implementation of remedies requiring deed notification. The commission notes that deed notification is not a requirement for every response action. Persons are not compelled to perform a Remedy Standard B response action or a Remedy Standard A-commercial/industrial response. Remedy Standard A-residential, which does not require deed notification, is always available as an option. The commission understands that in some cases it may be technically impracticable to meet Remedy Standard A-residential response objectives. To address this situation, the commission is proposing in §350.111(d) to continue requiring landowner consent even if it is technically impractical to achieve a residential-based Remedy Standard A response action unless the person can demonstrate the following: (1) the landowner refuses to grant concurrence for an institutional control; (2) a court of competent jurisdiction has determined the amount of compensation due the landowner as compensation for filing a deed notice in the real property records for that property; and (3) the person has paid into the court registry any compensation determined by the court.

SUBCHAPTER G: ESTABLISHING A FACILITY OPERATIONS AREA

Subchapter G contains §§350.131 - 350.135.

§350.131. Purpose. This section establishes the applicability of the Facility Operations Area. The Facility Operations Area is intended for existing chemical manufacturing plants and petroleum refineries that must conduct corrective action for releases from solid waste management units pursuant to a hazardous waste permit or commission corrective action order.

The Facility Operations Area is defined as a portion of a facility within which is located the infrastructure for the development, manufacture, process, transfer, storage and management of chemical or refinery products, hazardous materials, substances and wastes. The commission has observed that this intensely industrialized land use, over the course of several decades, has resulted in extensive contamination of the soil and groundwater underlying such facilities. Many of the chemical plants and refineries, which make these substances in contrast to just being users of them, are required by hazardous waste permits or commission corrective action orders to conduct corrective action for releases from solid waste management units. The conventional approach has been to investigate each solid waste management unit to determine if a release has occurred and then to determine the extent of the release. These releases may be commingled with and be indistinguishable from other releases from adjacent solid waste management units or from contamination that has resulted from spillage or storage within process areas over the years. Some facilities will be able to complete the corrective action process on a solid waste management unit-by-solid waste management unit basis and will not need to utilize the Facility Operations Area. The Facility Operations Area is being proposed as an option for those facilities for which a consolidated or area-wide approach is appropriate.

There are other options available in the corrective action program's policy and guidance that can aid a facility in designing a corrective action strategy. The commission believes the advantage to the Facility Operations Area option is that all contamination from manufacturing process areas and waste units will be addressed with a response action. The facility must at a minimum apply interim or permanent remedies at and within the Facility Operations Area boundary utilizing exposure prevention such that workers are sufficiently protected to carry out their normal duties. Physical controls are to be used where necessary to confine chemicals of concern within the Facility Operations Area. Monitoring must be performed within the interior of the Facility Operations Area to determine if chemicals of concern are migrating past the Facility Operations Area boundary. Any points of exposure outside of the Facility Operations Area must be protected to levels consistent with this chapter. Another advantage of the Facility Operations Area option is that attainment of remedy standards of this chapter may be deferred to the end of active manufacturing operations so that final remedies can be performed in a more efficient manner. The commission expects that this "brownfields" element will encourage reuse of inactivated portions of facilities since cleanup is not necessary to enable immediate utilization of the land surface. In contrast, the conventional corrective action process addresses only solid waste management units and any releases that have been identified within process areas. Under the conventional process, as opposed to the Facility Operations Area process, there is the potential for releases, likely to exist but not yet identified, to migrate undetected from process areas and thus still pose a threat to human health and the environment.

§350.132. Effect. As stated in this section, the person can propose to modify the provisions of this chapter to develop an interim response action for use in the Facility Operations Area. These modifications will not extend beyond the Facility Operations Area boundary and all other requirements of this chapter will apply to affected property outside of the Facility Operations Area. Further, provisions of this chapter will apply within the Facility Operations Area unless specifically exempted. As an example, a facility must still perform an otherwise required closure of a waste management unit that is located in the Facility Operations Area. The closure of a tank would have to meet the closure performance standard of §350.2(h) for the tank itself and the waste removal provision of Subchapter B of this chapter but the release from the tank to underlying soil or groundwater could be addressed as part of the Facility Operations Area response actions. While authorizing alternative approaches to previous releases from solid waste management units and other areas of contamination within the Facility Operations Area, the commission has specified that response to releases that occur after the Facility Operations Area effective date are not subject to such modifications; instead, facilities must respond in accordance with Chapter 327. This approach is necessary to ensure that the pre- existing contamination is not exacerbated and that facilities do not diminish their diligence to prevent releases.

In establishing a Facility Operations Area, the person will have flexibility in developing an interim response action to achieve protection of human health and the environment. This action may utilize physical and institutional controls to contain releases and prevent exposure to chemicals of concern within and at the Facility Operations Area boundary. For example, rather than setting points of exposure where this chapter would normally require them, the points of exposure can be set at the Facility Operations Area boundary. The commission recognizes that working in a process area that is likely to be included in a Facility Operations Area can be inherently dangerous and that other regulatory programs address worker health and safety issues. Action levels based on worker health and safety considerations may be used in place of the procedures of Subchapter D for development of protective concentration levels for response to soils containing chemicals of concern. For example, the facility could restrict access to the Facility Operations Area to only workers with appropriate training in industrial hygiene. Although the use of personal protective equipment might be required by health and safety programs to ensure worker safety, it is not the commission's intent that equipment such as respirators or fully encapsulated suits with supplied air be used to satisfy Facility Operations Area requirements to protect workers from exposure to chemicals of concern in environmental media as they go about their routine duties. The expectation is that facilities will reduce chemical of concern concentrations with some combination of removal, decontamination or control mechanisms to levels that do not require the use of personal protection equipment. The commission prefers that property be restored to active and productive use so that site workers and others do not wear personal protection equipment to protect themselves from environmental contamination.

§350.133. Duration and Termination. This section defines the effective period of the Facility Operations Area to the duration of active industrial operations. When the facility ceases industrial operations, the Facility Operations Area interim response action must be replaced by a permanent remedy that fully complies with this chapter. One exception to this requirement is that the response objectives for class 1 and 2 groundwaters may be based solely on class 2 groundwater response objectives. Specific public comment is requested regarding the appropriateness of this allowance regarding class 1 groundwater. This section also provides that the use of the Facility Operations Area is not automatic. Authorization will be by a permit amendment or commission corrective action order. Its continued use is conditional. The Facility Operations Area authorization will be reviewed at time of permit or order renewal for changed conditions that indicate the interim response action is no longer protective. The commission can withdraw the Facility Operations Area authorization at any time that the facility fails to maintain compliance with the qualifying criteria of this subchapter, but not without first affording the facility an opportunity to re-establish compliance.

Although a facility could defer a final remedy within the Facility Operations Area for the duration of its active industrial life, the interim response action is not necessarily a total deferral of all corrective action within the Facility Operations Area. For instance, sufficient action would have to be taken within the Facility Operations Area to identify and abate the primary source of a release that is migrating, or is predicted to migrate past the Facility Operations Area boundary in concentrations exceeding the protective levels normally required by this chapter (i.e., risk-based exposure limits). The commission expects that some amount of containment and/or removal remedies will be necessary to prevent the migration of chemicals of concern beyond the Facility Operations Area boundary. The commission further expects that such interim measures, some of which will be adequate as permanent remedies, will also satisfy the environmental indicators initiative of the U.S. Environmental Protection Agency to meet the Government Performance Result Act findings for the federal Resource Conservation and Recovery Act. By being subject to corrective action, the facilities likely to seek Facility Operations Area authorization also are subject to this initiative and must show that human exposures are controlled and that groundwater releases are controlled. Finally, the commission expects that a prudent owner or operator of a facility will utilize a Facility Operations Area to pace out its corrective action obligations over time such that meeting its final remediation objectives would not be as burdensome as waiting to complete all actions.

§350.134. Qualifying Criteria. This section enumerates ten qualifying criteria that a facility must be able to satisfy at the time of application for a Facility Operations Area. The commission is initially setting a high standard for authorization to use this alternative approach because interim response actions often rely on less conservative exposure prevention techniques and potentially defer for the long-term a final response action. The commission believes the Facility Operations Area concept is most appropriate for facilities with demonstrated track records in good compliance, financial soundness, and diligence towards protection of human health and the environment. The first six criteria are intended to define the universe of facilities for which the Facility Operations Area option is available and to demonstrate their performance in the area of human health protection for workers. The seventh criterion requires the facility to have a program to protect workers from contaminated environmental media. While similar to the preceding ones as to intent, the seventh criterion also may function as the basis for developing action levels to serve in the place of protective concentration levels. The eighth criterion, an agency-approved pollution prevention program, carries a significant pollution prevention commitment with it and will be discussed in more detail below. The last two criteria relate to the facility's compliance history and financial condition. The commission recognizes that minor infractions can be found at any complex facility. It is only if a facility has not resolved significant infractions that the commission will consider it a disqualifying condition. Lastly, a facility must be able to provide financial assurance for the final response action in the event the owner or operator is unable to comply fully with this chapter at the end of Facility Operations Area authorization.

Regarding the eighth criterion, pollution prevention, the commission is seeking a rigorous effort by a facility to prevent additional contamination from occurring at the facility in general and within the Facility Operations Area in particular, so as not to exacerbate existing conditions. Also, the commission believes a reasonable measure of a facility's long term commitment to maintain protection within the Facility Operations Area is to take pro-active measures to prevent conditions that could result in a release of chemicals of concern in the future. Therefore, as a qualifying criterion for Facility Operations Area authorization, a facility must be utilizing a pollution prevention program which may be facility-wide but must, at a minimum, include spill prevention measures within the Facility Operations Area.

The person may satisfy this requirement with one or more options. First, the draft rule specifies a program of integrity testing of the infrastructure within the Facility Operations Area that would have the potential to fail and cause release of chemicals of concern. The commission is not extending this requirement to hazardous waste management units because some element of pollution prevention is already required by regulations or permits for these units. Second, the person may propose some other program that will achieve the same end result as the first option. For example, a facility could have a program of inspection and maintenance on chemical of concern-containing tanks and process vessels when these vessels and tanks are taken out of service for periodic cleaning or other shut downs. This program may achieve the same end result as a pollution prevention program. Third, the facility may be accepted into a voluntary multi-media pollution prevention program sponsored by the agency, such as Clean Industries Plus or some other equivalent program. The third option requires greater involvement with facility-wide pollution prevention than the other options, expanded public participation in the process of setting goals, as well as implementation of a written environmental management system, which addresses a facility's impact on the environment. An equivalent program would be one that is multi-media in nature, voluntary, and addresses the criteria of the Clean Industries Plus (or its successor) program.

The facility must be conducting some aspect of the previously mentioned pollution prevention when seeking a Facility Operations Area authorization, although not all elements of a program have to be completed at time of application. For example, the first option does not have to be completed for the entire infrastructure prior to Facility Operations Area authorization, but it should be carried out on an appropriate time frame given the size and complexity of the undertaking. The draft rule has a provision for inclusion of such actions in a schedule of compliance if necessary. The facility would describe its program in the Facility Operations Area application in response to §350.135(a)(14) of the proposed rule.

§350.135. Application Requirements. This section directs the person seeking Facility Operations Area authorization to submit a proposal containing specific information in the form of an application for a permit or amendment, or to aid in the preparation of an order. The form and content of the proposal is subject to review and approval by the executive director. The person must respond to requests for information or deficiencies identified by the executive director. In addition to providing documentation that the facility meets the qualifying criteria of §350.134, the person must address twelve other specific requirements itemized in subsection (a) which are discussed in more detail below. Subsection (b) describes the Facility Operations Area authorization process. When the executive director determines that the proposal is complete and technically adequate, the proposal will proceed to final authorization by the commission in the same manner as other permit applications or orders. The final authorization for permitted facilities will be considered a class 3 permit amendment. Public notice of the proposal will be required in accordance with commission rules in Chapters 39 and 305. A facility seeking Facility Operations Area authorization in a commission order will be required to provide the same type of public notice. Subsection (c) specifies that the facility will have to provide proof of financial assurance within 60 days after receiving authorization for the Facility Operations Area. The mechanisms for financial assurance must satisfy Chapter 37 of the commission's rules, except that a pay-in trust will not be an acceptable mechanism. The amount must be adjusted annually for inflation. Opportunities to revise the amount based on changed conditions at the Facility Operations Area may occur at time of permit or order amendment or renewal.

Proposed §350.135(a)(1). The Facility Operations Area boundary, which has both lateral and vertical (depth) dimensions must be depicted graphically and supported with documentation of land use and local groundwater use. The commission anticipates that agreement on Facility Operations Area boundaries will be determined on a case-by-case basis. It is likely that inclusion of large open areas on the edge of process areas will generally not be acceptable, because these areas lacking infrastructure would not meet the definition of a Facility Operations Area. Continued operation in this area would not make immediate remediation impractical. On the other hand, small open areas within the process area could be included if doing so would ease implementation of remedies.

Proposed §350.135(a)(2). The Facility Operations Area must be evaluated for its surface and subsurface conditions with the objective of identifying pathways for chemical of concern migration that will be monitored or blocked by physical controls. Data collected from other investigations may be integrated with area-wide data for this purpose.

Proposed §350.135(a)(3). The results of the investigation must be used to determine appropriate locations for points of exposure and attenuation monitoring points relative to the Facility Operations Area boundary. Points of exposure on the boundary are to be used to determine if chemicals of concern in excess of protective levels have crossed the boundary or breeched a containment barrier such as a slurry cutoff trench. Attenuation monitoring points, located inward of the boundary, must be used to verify the predicted concentrations of chemicals of concern along the migration pathways toward the Facility Operations Area boundary. If these predicted concentrations are exceeded at these points, the facility must take sufficient corrective measures within the Facility Operations Area to ensure that chemicals of concern do not cross the Facility Operations Area boundary in concentrations exceeding the protective levels. One of the institutional controls to prevent exposure to chemicals of concern in groundwater likely will be a prohibition on use of groundwater within the Facility Operations Area. If the facility chooses this option, there will not be any points of exposure for groundwater within the Facility Operations Area, unless there are actual water wells with potential for use (e.g., have not been plugged and abandoned or securely taken out of service).

Proposed §350.135(a)(4). If a facility elects to modify protective concentration level development by utilizing action levels based on the worker health and safety program, a full description of how these will be derived must be included in the application. Additionally, a description is required of how the facility will control access to the Facility Operations Area and areas within the Facility Operations Area to prevent exposure to chemicals of concern.

Proposed §350.135(a)(5). Because one of the more likely ways that workers could be exposed to soils exceeding protective concentration levels or action levels is through excavation or construction activity, the facility must describe how it will maintain human health protection in such situations, including how it will determine that soils exceed protective concentration levels or action levels.

Proposed §350.135(a)(6). The flexibility afforded to facilities to modify approaches to achieve protection of human health within the Facility Operations Area does not extend to ecologically impacted areas. The commission expects that most of the area designated as the Facility Operations Area will satisfy the Tier 1 exclusion criteria of §350.77(b), because by definition the Facility Operations Area will be the area of most intense industrial land use at the facility. However, if portions of the Facility Operations Area are not excluded by the checklist, the facility will proceed in accordance with §350.77. The commission has not developed an alternate process for ecological protection within the Facility Operations Area since the normal process affords ample consideration of site-specific conditions and flexibility in response actions.

Proposed §350.135(a)(7). In conjunction with the eighth qualifying criterion for a pollution prevention program, described previously, the commission expects facilities to continue to address future releases in a timely manner, should any occur within the Facility Operations Area after its effective date. The options of modified response objectives and deferral of final attainment of remedy standards that are allowed in the Facility Operations Area are intended for pre-existing conditions. The commission does not intend for operators to add to these conditions such that final attainment of remedy standards is a much bigger undertaking than if performed today. Therefore, the objective for response to new releases will be to remediate to pre-release conditions (e.g., background, pre-existing contamination levels). Previously unimpacted areas of the Facility Operations Area must be remediated to background, or failing that, to Remedy Standard A or B, as the rules of Chapter 327 would normally require. Remediation of releases into areas already containing chemicals of concern must be to pre-release concentrations. This determination would entail some sampling of media in the vicinity of the release. If the facility determines that these concentrations do not achieve action levels developed as part of the Facility Operations Area, then an expanded response action must be undertaken to achieve levels protective of workers. Response actions for impacted groundwater at the release site would be integrated into the Facility Operations Area approach, discussed below. In addition to the response to releases, the facility must also institute procedures to track the release, such as its location, date, composition, concentration and other information pertinent to predicting the long-term migration potential toward the Facility Operations Area boundary.

Proposed §350.135(a)(8). This item builds upon the information required in §350.135(a)(3). There are three main elements to address for groundwater response actions. First, the facility must describe how it will control the occurrence of chemicals of concern in groundwater so that protective concentrations at the Facility Operations Area boundary are maintained. Control may be achieved with any combination of removal, decontamination or control measures such that migration of chemicals of concern past the Facility Operations Area boundary is prevented. Second, there must be a monitoring program in place at the Facility Operations Area boundary and interior as necessary to demonstrate the effectiveness of the groundwater controls. Third, any groundwater monitoring program at hazardous waste units, as required by rules or permits, must continue even if located within the Facility Operations Area. The facility may propose to modify groundwater protection standards at such units to obtain alternate concentration limits based on a point of exposure at the Facility Operations Area boundary.

Proposed §350.135(a)(9). As discussed earlier, the authorization of a Facility Operations Area does not mean that all corrective action is deferred to the end of active industrial operations. The commission will require a response action as part of Facility Operations Area authorization for the subset of groundwater contaminants known as nonaqueous phase liquids. In addition to being a source material for additional groundwater contamination, nonaqueous phase liquids often behave differently in the subsurface than other soluble chemicals of concern and generally require a different remediation approach. Therefore, the commission is requiring a more active response action for nonaqueous phase liquids than what would be sufficient for more soluble chemicals of concern. Some amount of source reduction (removal or decontamination) may be necessary before control measures alone will be considered sufficient for a Facility Operations Area interim response action. The commission will consider the four conditions of §350.33(f)(4)(E) as guidance when making this determination.

Proposed §350.135(a)(10). The commission will require financial assurance to ensure adequate financial resources are available to carry out the construction of physical controls and to operate and monitor the interim response actions as well as to complete the final response action in the event the facility is not viable at the end of Facility Operations Area authorization. As part of the application, the person must provide detailed calculations of the cost estimate in current dollars for a third party to conduct these actions. This amount also will serve to satisfy the requirements of the RCRA corrective action regulations (40 CFR §264.101), which require financial assurance. The amount required to carry out the final response action for the Facility Operations Area is comparable to assuring a closure. Thus the manner in which the amount is to be calculated must not incorporate any salvage value for wastes or other assets at the facility. This approach is consistent with RCRA regulations relating to cost estimate for closure (40 CFR §264.142). The commission anticipates that a facility may not have a final response action plan developed to the point that a detailed cost estimate can be made at the time of application. Given that the Facility Operations Area could be in place for decades and that changed conditions (e.g., discovery of additional releases; response actions completed for Solid Waste Management Units) could modify the final remedy design, the commission will accept an estimate based on the total cost for corrective action at the individual Solid Waste Management Units as would be the normal requirement without a Facility Operations Area. This approach is consistent with the federal corrective action regulations cited above. The commission does not intend for the financial assurance required by this subchapter to substitute for any other financial assurance required by regulations or permit provisions for closure or post closure care of hazardous waste management units.

Proposed §350.135(a)(11). The facility must include in its application a draft version of the deed notice required to be filed as part of Facility Operations Area authorization. The notice must conform with §350.111 as to form and content. The Facility Operations Area is equated to the term "affected property" for purposes of developing the draft document, such as the requirement for a metes and bounds description. After any revisions have been made to the draft document in response to review of the application and authorization of the Facility Operations Area, such as the final Facility Operations Area boundaries, the facility must within ninety days provide proof to the executive director of the filing of the deed notice in the real property records of the county in which the Facility Operations Area is located.

Proposed §350.135(a)(12). The facility may propose a schedule of compliance for the items that are not completed at the time of Facility Operations Area authorization.

Proposed §350.135(a)(13). The facility must provide as part of the application adequate documentation that it satisfies the qualifying criteria of this subchapter.

FISCAL NOTE

Matthew Johnson, Chief Financial Officer Division, has determined that there will be fiscal implications as a result of administration and enforcement of the proposed sections. For the first five-year period the section as proposed is in effect, individuals, businesses, state agencies, local governments and other entities participating in and subject to the State's environmental remediation programs, will be affected. The State's environmental remediation programs affect the Superfund, Petroleum Storage Tank Remediation, the Voluntary Cleanup Program, the Industrial and Hazardous Waste program, the Municipal Solid Waste, the Composting and the Underground Injection Control programs.

As a whole, the proposed Texas Risk Reduction Program rules are expected to have positive economic effects on responsible parties subject to the State Superfund, Voluntary Cleanup, and Industrial and Hazardous Waste programs. These positive effects are primarily expected to take the form of cost savings for remediation. In some situations, remediation cost savings may be substantial. For participants in the Petroleum Storage Tank program, the cost of assessment, remediation or monitoring may or may not increase, depending on the nature and extent of contamination, the geologic setting and proximity to groundwater, surface water, sources of drinking water and developed real estate. The following summarizes, by agency program, the anticipated effects on costs of the proposed Texas Risk Reduction Program rule. Costs and cost savings for sites in the Industrial and Hazardous Waste, Underground Injection Control and Composting programs are expected to be similar to those in the State Superfund and Voluntary Cleanup programs. To the extent that Municipal Solid Waste facilities are subject to the proposed rule, the costs and cost savings are also expected to be similar to the Voluntary Cleanup and State Superfund programs. To facilitate this discussion, the phases of any site, regardless of agency program, are generically referred to as "site assessment," "remediation," and "monitoring."

Site Assessment Petroleum Storage Tank Remediation Program: Costs are expected to remain level or increase. Increases under the Texas Risk Reduction Program are driven by site-specific conditions. For example, under the Texas Risk Reduction Program, benzene at a groundwater site requires additional delineation. Generally, there will be no increase for soils-only sites.

Superfund Program: Costs are expected to generally decrease, reflecting a shift in assessment from background to health-based levels.

Voluntary Cleanup Program: Cost are expected to remain generally level. While revised in content, costs are not expected to change due to the Texas Risk Reduction Program.

Remediation Petroleum Storage Tank Remediation Program: Costs are expected to remain level or increase. For groundwater sites, costs may increase if there is no landowner concurrence for a plume management zone or natural attenuation is ineffective. For soil-only contaminated sites, generally no increase in cost is anticipated.

Superfund Program: Costs are expected to decrease, substantially in some cases, or remain level due to the shift from background to health-based clean-up standards.

Voluntary Cleanup Program: Costs are expected to decrease, substantially in some cases, or remain level due to the shift from background to health-based clean-up standards.

Monitoring Petroleum Storage Tank Remediation Program: Costs are expected to remain level or increase. Costs will increase with plume management zone or natural attenuation remedies. Generally, no cost increases are anticipated with removal/excavation remedies under the Texas Risk Reduction Program.

Superfund Program: Costs are expected to decrease or remain level. Small businesses should benefit from the new financial assurance option. Some responsible parties may benefit from the $100,000 financial assurance waiver.

Voluntary Cleanup Program: Costs are expected to decrease or remain level. Small businesses should benefit from the new financial assurance option. Some responsible parties may benefit from the $100,000 financial assurance waiver.

The proposed Texas Risk Reduction Program rule should afford cost saving to responsible parties required to demonstrate financial assurance for post response action care. Where the total 30- year cost of post-response action care is estimated at less than $100,000, the proposed rule gives the agency the option to exempt the responsible party from demonstrating financial assurance. Responsible parties benefitting from this new provision should realize savings in the form of staff or consultant time to prepare, submit and monitor a financial assurance mechanism, and the actual cost of the financial assurance instrument.

The proposed Texas Risk Reduction Program rules should also afford cost saving to responsible parties who are small businesses, as defined, and who are required to demonstrate financial assurance for post-response action care. Under the proposed rules, small business may seek to reduce the amount of financial assurance demonstrated if the post response action care period is greater than 10 years.

Cost implications for State agencies, local governments, business, the public and others that own Underground Storage Tanks, Superfund sites, Voluntary Cleanup, Industrial and Hazardous Waste, Municipal Solid Waste, Composting and Underground Injection Control sites are the same as for other persons subject to these remediation programs. The TNRCC, as the agency administering these programs, may realize a reduction in costs to manage or oversee sites, primarily Superfund and Voluntary Cleanup, where the proposed Texas Risk Reduction Program rule allows scaled-down assessments, remediation or monitoring. While the agency's "per-site" cost of management or oversight are expected to decline where scaled-down assessments, remediation or monitoring are allowed, specific cost savings to the agency cannot be quantified due to the uncertainties of how many new sites will come into these programs in the future and what their site characteristics will be. For State Superfund sites, where federal funding is not involved, any reductions in the cost of assessment, remediation or monitoring as a result of the proposed Texas Risk Reduction Program rule will represent direct savings to the State. Again, specific cost savings to the state cannot be quantified due to the uncertainties of how many new State Superfund sites will come into the program and which, if any, will benefit from the provisions of the proposed Texas Risk Reduction Program rules.

PUBLIC BENEFIT Mr. Johnson also has determined that, for the first five-year period, the sections as proposed are in effect, the public benefit anticipated as the result of enforcement of and compliance with the section will be greater flexibility for individuals, businesses, state agencies, local governments and other entities participating in and subject to the State's environmental remediation programs. Additionally, some participants in the State's Superfund, Voluntary Cleanup, Industrial and Hazardous Waste, Municipal Solid Waste, Composting and Underground Injection Control programs may realize cost savings where the proposed sections facilitate remediation to risk-based protective concentration levels rather than to background concentrations. Some participants in the State's Petroleum Storage Tank program may experience higher costs as a result of the proposed sections. Additionally, the proposed rule shifts the focus of the Petroleum Storage Tank program to greater natural resource protection which should benefit the public.

DRAFT REGULATORY IMPACT ANALYSIS

The commission has reviewed the rulemaking in light of the regulatory analysis requirements of Texas Government Code §2001.0225 to assess whether the proposed rule is a major environmental rule and whether any the four applicability criteria of the statute are met.

A "major environmental rule" as defined by §2001.0225(g)(3) of the Texas Government Code means a rule the specific intent of which is to protect the environment or reduce risks to human health from environmental exposure and that may adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, or the public health and safety of the state or a sector of the state. The proposed rule is intended to protect the environment and reduce risks to human health from environmental exposure to releases of chemicals of concern. The proposed rule as applied will impact the economy, a sector of the economy, productivity, competition, jobs, the environment, or the public health and safety of the state. The degree of impact that rises to the level of a material adverse effect is subject to interpretation. The Commission is confident the overall effect of the proposed rule will be positive for human health, the environment and the economy, but it may adversely affect in a material way a sector of the economy. Specifically, The commission anticipates a sector of the economy involved with leaking petroleum storage tanks may realize some increased financial burden when the proposed rule begins to apply to it in year 2001. Although debatable, this sector may argue that the proposed rule's financial impact on them is material and adverse. Other sectors of the economy may believe the same.

A major environmental rule requires a draft regulatory impact analysis if it: (1) exceeds a standard set by federal law, unless the rule is specifically required by state law; (2) exceeds an express requirement of state law unless the rule is specifically required by federal law; (3) exceeds a requirement of a delegation agreement or contract between the state and an agency or representative of federal government to implement a state and federal program; or (4) is adopted solely under the general powers of the agency instead of under the provisions of a specific state law. The proposed rule does not exceed a state or federal law. Although differing in some individual aspects, the proposed rule does not exceed standards set by federal law or standards set by state law. Federal and state statutes require action to ensure current and future protection of human health and the environment from releases of regulated substances and hazardous waste into the environment. The proposed rule institutes the criteria by which protective response actions will be achieved in Texas. The proposed rule does not exceed the requirements of any delegation agreement between the state and an agency of the federal government. The Municipal Solid Waste (MSW), Underground Injection Control (UIC), Petroleum Storage Tank (PST), and Resource Conservation and Recovery Act (RCRA) programs are the only programs affected by the proposed rule that have received federal delegation or federal approval. The rule was developed to not exceed any federal requirement. Finally, the rule is not being proposed solely under the general powers of the commission.

Because the proposed rule applies to every TNRCC corrective action program, and because different parties may have different beliefs about whether the proposed rule as applied adversely affects them in a material way, the commission will, for the purpose of conducting this draft regulatory impact analysis pursuant to §2001.0225, treat the proposed rule as a major environmental rule. The full draft regulatory impact analysis is presented in this issue, which may be found in the Tables and Graphics Section under:

Figure 1: 30 TAC Chapter 350 - Preamble

The full draft regulatory impact analysis can also be found at the TNRCC web page located at http://www.tnrcc.state.tx.us

The commission invites public comment on the Draft Regulatory Impact Analysis.

STATEMENT OF THE EFFECT OF THE PROPOSED RULE ON SMALL BUSINESSES

The proposed Texas Risk Reduction Program ("proposed rule") will have an economic effect on small businesses. That economic effect may be an increase in the cost of complying with the proposed rule or may be a cost savings. Assuming in the interest of caution that any negative economic effect, regardless of degree, falls within the meaning of "adverse economic effect" in the Texas Government Code, §2006.002, the Texas Natural Resource Conservation Commission ("commission") must "reduce that effect if doing so is legal and feasible considering the purpose of the statute under which the rule is to be adopted."

The purpose of the statutes under which the proposed rule is adopted is the protection of human health and the environment. In light of this substantial purpose, it is unreasonable to hold any entity responsible for remediating contaminated property to a lesser standard than that which is scientifically determined to be protective of human health and the environment. Indeed, allowing small businesses to remediate properties under less stringent conditions because of economic impacts is tantamount to allowing small businesses to endanger human health and the environment while others cannot. Because the majority of the proposed rule establishes methodologies for removing health risks to the public and the environment resulting from contamination, it is not legal or feasible to broadly reduce the effect of the proposed rule on small businesses when doing so will endanger human health and the environment. However, the commission is allowing expanded use of exposure prevention remedies which are often more affordable than pollution cleanup remedies so that all businesses would have more remedial options and better cost containment opportunities.

An exception in the proposed rule specifically aimed at reducing any adverse economic impact of the proposed rule on small businesses, if any, concerns financial assurances. Financial assurances are necessary to provide funding for the continued maintenance of engineered remedial actions such as a concrete cap covering contaminated soil. Under the proposed rule, small businesses responsible for a remediation may seek to reduce the amount of financial assurance if the post response action care period is greater than 10 years. The proposed rule also provides a flexible framework in which to calculate cleanup levels and establishes performance-based standards rather than design standards for all entities responsible for remediating contamination, including small businesses, allowing them to determine for themselves the most appropriate cleanup level and the least costly means by which a cleanup goal is to be achieved. Finally, specific clarity is provided in rule provisions to facilitate rule interpretation so that persons, including small and large businesses alike, can make decisions that are likely to be approved by the agency the first time.

Analysis and Comparison of the Cost of Compliance with the Proposed Rule for Small Businesses Using the Cost for Each $100 of Sales

Benefits and Costs to Small Businesses :

Taken as a whole, the proposed rule is expected to have a positive economic impact on small businesses subject to the Industrial and Hazardous Waste, State Superfund, and the Voluntary Cleanup Programs. These positive impacts are primarily expected to take the form of cost savings for remediation and financial assurance. Small businesses actively involved in cleaning up a site, regardless of program, would achieve the same cost savings as a large business. Cost impacts to businesses subject to the Municipal Solid Waste, Composting, and Underground Injection Control programs are expected to be similar to those subject to the Industrial and Hazardous Waste, State Superfund, and Voluntary Cleanup programs. Conversely, small businesses participating in the Petroleum Storage Tank Program would incur the same potential cost increase under the proposed rule as a large business.

The definition of "small business" is "a legal entity, including a corporation, partnership, or sole proprietorship that: (A) is formed for the purpose of making a profit; (B) is independently owned and operated; and (C) has fewer than 100 employees or less than $1 million in annual gross receipts." Texas Government Code Annonated, §2006.001(1) (Vernon 1998).

Virtually any small business whose underground storage tanks leak are potentially subject to cost increases under the proposed rule. Such businesses could include heavy equipment owners or lessors, trucking companies, agricultural operations or other small businesses that own one or more petroleum storage tanks to service motorized equipment. Small fuel retailers, however, may be adversely affected as a group by the proposed rules. The commission does note that all compliance deadlines have passed for meeting release detection, spill and overfill, tank integrity assessment and cathodic protection standards. Therefore, all tanks operating today must meet all technical standards and be less likely to suffer a leak.

Of the twelve petroleum storage tank sites in the Regulatory Impact Analysis, the "worst case" PST site resulted in an estimated $187,623 increase in the cost to assess, remediate, monitor and close the site under the proposed rule. (As mentioned earlier in this report, $187,623 is based on the higher and more conservative $151,200 estimated groundwater remediation cost than the $107,297 remedial cost actually used in the case examples.) That is an increase over the actual cost of $24,343 under existing program rules, which would bring the responsible party's total estimated cost under the proposed rules to $211,966. For a small business with $500,000 in annual sales, a $187,623 estimated cost increase for one site would represent 38% of sales or $37.52 for every $100 in annual sales. For a business with $1,000,000 in annual sales, a $187,623 estimated cost increase for one site would represent 19% of sales or $18.76 for every $100 in annual sales. For a business with $2,000,000 in annual sales, that $187,623 cost increase for one site would represent 9% of sales or $9.38 for every $100 in annual sales. For a business with $3,000,000 in annual sales, that $187,623 cost increase for one site would represent 6% of sales or $6.25 for every $100 in annual sales. Fuel retail, however, is a low-margin, high-volume business, so even "small" fuel retailers will typically post annual sales in excess of $3 million. Under the proposed rules, large businesses are expected to incur the same cost increases on a per-site basis as small businesses. For corporations such as Texaco, with 1997 revenue of $46 billion, the $187,623 estimated cost increase for one site discussed earlier in this paragraph would represent less than 1% of sales or less than one cent for every $100 in annual sales.

The proposed rule, however, affords cost savings to responsible parties who are small businesses and who are required to demonstrate financial assurance for post response action care. Under the proposed rule, small business responsible parties may seek to reduce the amount of financial assurance required if the post response action care period is greater than 10 years. Actual cost savings realized by small business responsible parties as a result of this provision will vary with the amount of financial assurance required. However, for estimating purposes only, by assuming post response action cost at $30,000 per year (based on $5,000 for lab analysis and $25,000 for a consultant to collect samples), the cost to demonstrate for 10 years would be $300,000, substantially less than $900,000 for 30 years. Further assuming the responsible party uses a bank letter of credit to demonstrate financial assurance and the responsible party's annual cost for a bank letter of credit is 0.75%, demonstrating financial assurance for 10 years at $300,000, would cost an estimated $2,250 per year ($300,000 x 0.75%). In this example, the 10-year demonstration cost represents a $4,500 annual savings from the 30-year demonstration cost of $6,750 per year ($900,000 x 0.75%). If financial assurance is still required at the end of the first or second 10-year period, the small business responsible party may again seek to demonstrate financial assurance for the subsequent 10-year period.

Despite the economic impact of the proposed rule on small businesses, the proposed rule is necessary to protect human health and the environment. The proposed rule incorporates performance standards scientifically determined to protect human health and the environment. Changing the rule to reduce the impact on small businesses is not legal or feasible because any change in the standards could put the public health and environment at risk at sites remediated by small businesses. The proposed rule incorporates performance standards rather than design standards and small business can seek to reduce the amount of financial assurances in some instances. These two features of the rule are specifically aimed at reducing the economic impact of the proposed rule on small businesses.

TAKINGS IMPACT ASSESSMENT

The commission has prepared a Takings Impact Assessment for this rule pursuant to Texas Government Code Annotated §2007.043. This is a summary of the Takings Impact Assessment. The specific purpose of the proposed rule is to create one risk-based rule that will guide affected property assessments, notifications, and response actions through the establishment of a consistent, reliable program that encourages the cost-effective corrective action for affected properties while ensuring the adequate protection of human health and the environment. The proposed rule will substantially advance this specific purpose through the use of a tiered process for the establishment of health-based protective concentration levels, by allowing the use of site-specific data, and by providing flexibility in selection and design of response actions. Because a landowner always has the option not to consent to institutional controls such as deed restrictions and because another person, not the TNRCC, chooses the remedy, the proposed rule itself will not limit or restrict the real property rights associated with the affected property. Further, the proposed rule does not burden private real property because it: (1) will set minimum requirements for remediation of affected property; (2) will cause no release of chemicals of concern onto the affected property; (3) will not prohibit the pursuit of adequate compensation by the affected property owners from the responsible parties; and (4) will not cause a diminution in property value. Finally, the proposed rule is promulgated to fulfill federal requirements, prevent or abate public nuisance, is necessary to prevent a grave and immediate threat to life or property resulting from hazardous substances, and the proposed rule is in response to the real and substantial threat to public health and safety resulting from hazardous substances. For these reasons, the proposed rule is exempt from the requirement for a Takings Impact Statement as required by statute; however, the commission has prepared a Takings Impact Assessment which is presented in this issue, which may be found in the Tables and Graphics Section under:

Figure 2: 30 TAC Chapter 350 - Preamble

The Takings Impact Assessment can also be found at the TNRCC web page located at http://www.tnrcc.state.tx.us

COASTAL MANAGEMENT PROGRAM CONSISTENCY REVIEW

The commission has reviewed the proposed rulemaking and found that the rules are subject to the Coastal Management Program and must be consistent with all applicable goals and policies of the Coastal Management Program (CMP).

The commission has prepared a consistency determination for the proposed rules pursuant to 31 TAC §505.22 and has found that the proposed rules are consistent with the applicable CMP goals and policies. The following is a summary of that determination. The CMP goal applicable to the proposed rules is the goal to protect, preserve, restore, and enhance the diversity, quality, quantity, functions, and values of coastal natural resource areas. CMP policies applicable to the proposed rules include the administrative policies and the policies for specific activities related to construction and operation of solid waste treatment, storage, and disposal facilities. Promulgation and enforcement of these rules is consistent with the applicable CMP goals and policies because the proposed rules will establish clear, consistent standards to guide the assessment and cleanup of contaminated properties from site investigation through post-response action care. The rules will require persons conducting response actions to ensure that the concentrations of chemicals of concern are protective of human and ecological receptors. The new rules will result in an overall environmental benefit across the state, including in coastal areas, by implementing a comprehensive and consistent approach to corrective action that utilizes new and scientifically sound corrective action methods; thereby serving to protect, preserve, restore, and enhance the diversity, quality, quantity, functions, and values of the coastal natural resource areas. In addition, the proposed rules do not violate any applicable provisions of the CMP's stated goals and policies.

The commission invites public comment on the consistency of the proposed rules with the applicable goals and policies of the Coastal Management Plan.

SUBMITTAL OF COMMENTS Written comments may be mailed to Bettie Bell, Texas Natural Resource Conservation Commission, Office of Policy and Regulatory Development, MC 205, P.O. Box 13087, Austin, Texas 78711-3087 or faxed to (512) 239-4808, (512) 239-5687, or (512) 239-6385. Please reference Rules Tracking Log Number 96106-350-WS. Comments must be received by 5:00 p.m., 30 days from the date of publication of this proposal in the Texas Register . For further information, please contact Chet Clarke, Greg Tipple, or Paul Lewis of the Remediation Division, (512) 239-0310; Scott Crouch, Voluntary Cleanup Program, (512) 239-2486; or Clark Talkington, Waste Policy and Regulations Division, (512) 239-6731. If you have specific questions on rule language regarding ecological risk assessments, please contact Larry Champagne, Remediation Division, (512) 239-0310.

The commission will hold two public hearings. A public hearing will be held on April 19, 1999, at 1:30 p.m. at the City of Houston Pollution Control Building Auditorium, 7411 Park Place Boulevard, Houston, Texas. A second public hearing on the proposal will be held on April 22, 1999, at 10:00 a.m. in Building E, Room 201S, of Texas Natural Resource Conservation Commission complex, located at 12100 North IH-35, Park 35 Technology Center, Austin. The hearings are structured for the receipt of oral or written comments by interested persons. Individuals may present oral statements when called upon or in the order of registration. Open discussion within the audience will not be allowed during the hearings; however, an agency staff member will be available to discuss the proposal 30 minutes prior to the hearings and answer questions before and after the hearings.

Subchapter A. General Information