TITLE 16.ECONOMIC REGULATION

Part 1. RAILROAD COMMISSION OF TEXAS

Chapter 4. ENVIRONMENTAL PROTECTION

Subchapter D. RAILROAD COMMISSION OF TEXAS VOLUNTARY CLEANUP PROGRAM

16 TAC §§4.401, 4.405, 4.410, 4.415, 4.420, 4.425, 4.430, 4.435, 4.440, 4.445, 4.450

The Railroad Commission of Texas proposes new §§4.401, 4.405, 4.410, 4.415, 4.420, 4.425, 4.430, 4.435, 4.440, 4.445, and 4.450, which will be new Subchapter D of new Chapter 4, Title 16 of the Texas Administrative Code, relating to the Railroad Commission of Texas Voluntary Cleanup Program. Chapter 4 will be entitled "Environmental Protection."

The purpose of the voluntary cleanup program (VCP) is to provide an incentive to those lenders, developers, owners, and operators who did not cause or contribute to the pollution to remediate soil and water that has been contaminated by activities over which the Commission exercises jurisdiction. The proposed new rules set forth provisions relating to eligibility to participate in the Commission's voluntary cleanup program, application to participate in the program, rejection of an application, entering into a voluntary cleanup agreement, termination of such agreement and cost recovery, voluntary cleanup work plans and reports, certificates of completion, conditional certificates of completion, and persons released from liability.

Senate Bill 310, 77th Legislature (2001), amended Texas Natural Resources Code, Chapter 91, by adding new §§91.651- 91.661 (Subchapter O), specifically authorizing the Commission to establish a voluntary cleanup program. The purpose of new Subchapter O is to provide an incentive for the remediation of property by removing the liability to the state of lenders, developers, owners, and operators who did not cause or contribute to contamination released at the property. Neither Subchapter O nor the proposed new rules establish technical cleanup standards. Instead, the voluntary cleanup agreement will list all statutes, rules, and standards with which the participant must comply, including cleanup standards. Once a person has completed a cleanup under this program, the Commission will issue a certificate of completion that will specifically release the person from state liability. Because the statute and the proposed new rules require that participants in the program pay for Commission oversight, there is no net additional cost to the agency for this program. The benefit to the state is that contaminated sites are cleaned up and returned to productive use.

Proposed new §4.401 states the purpose of the voluntary cleanup program, and proposed new §4.405 sets forth definitions used in the subchapter. Proposed new §4.410 states the eligibility standards for the voluntary cleanup program. The application and acceptance process provides the Commission with a formal means of determining whether or not a site and a party are eligible to enter the program. Proposed new §4.415 lists basic information that must be submitted as part of the application that the Commission will use to make this determination. This proposed rule also includes the $1,000 application fee required by Texas Natural Resources Code §91.654.

Proposed new §4.420 contains the standards for acceptance or rejection of an application, and provides that if the Commission rejects an application, an applicant may resubmit an application using the process set out in this rule. This rule also contains a method by which the Commission may return half of the application fee for those sites the Commission determines are ineligible. The Commission specifically requests comments on the sufficiency of the list of factors that will be considered in determining whether to accept or reject an application.

If the Commission accepts an application, the eligible applicant and the Commission will negotiate a voluntary cleanup agreement under proposed new §4.425. The rule establishes a process and a schedule by which the Commission and an eligible applicant may either negotiate and execute an agreement or terminate negotiations. The rule also outlines certain elements that the Commission is required by statute to include in any agreement, including reimbursement to the Commission by the participant for reasonable oversight costs incurred by the Commission and a schedule by which these costs will be collected; the statutes, rules, and standards with which the participant must comply; a description of work plans and reports to demonstrate cleanup activities; and a schedule for submission of these documents.

Proposed new §4.430 outlines the standards for terminating a voluntary cleanup agreement and for cost recovery by the Commission in that event.

Proposed new §4.435 states the standards and procedures for the Commission's review of all work plans and reports. These standards include consideration of future land use, protection of human health and the environment and avoidance of actions that could result in spreading or exacerbating contamination beyond current limits or that may increase the cost of cleanup. The Site Remediation Section may request additional information.

Under proposed new §4.440, the Commission will issue to the participant a certificate of completion granting the release of liability to the state; acknowledging the protection from liability provided by the newly-enacted Texas Natural Resource Code, §91.660; stating the proposed future land use; and including a legal description of the site and the name of the site's surface and mineral owners and mineral operators at the time the application was filed to participate in the program. The Commission specifically requests comments on the proposed definition of "completion" in §4.405 and on the statutory authority, if any, for the Commission issuing conditional certificates of completion. The Commission also specifically requests comments on what circumstances, if any, would be appropriate for a conditional certificate. The Commission has included proposed provisions for conditional certificates in §4.440(c).

Persons who caused or contributed to the pollution are not eligible to participate in the program. Only those persons who are not "responsible persons" as defined by Texas Natural Resources Code, §91.113, may be released from liability under this program. This statutory definition of "responsible person" is carried through to proposed new §4.405(13) as "any operator or other person required by law, rules adopted by the Railroad Commission, or a valid order of the Railroad Commission to control or clean up the oil and gas wastes or other substances or materials."

The Commission estimates that it will receive applications for between 12 and 19 sites each year under the program these proposed rules establish. Texas Natural Resources Code, Chapter 91, Subchapter O, directs the Commission to recover all reasonable costs fairly attributable to the voluntary cleanup program, including direct and indirect costs of overhead, salaries, equipment, utilities, legal, management, and support costs. The Commission is currently developing a methodology by which to routinely recover these costs, and the Commission expects that as it gains experience with the VCP it will be in a position to formalize its VCP cost recovery methods in future amendments to this rule. While the Commission's Oil Field Cleanup Fund will be used as the operating account for the voluntary cleanup program funds, the program is designed to be self-funding. Other than possible use of funds to start up the voluntary cleanup program, which ultimately will be recovered in the form of VCP application fees, funds from the Oil Field Cleanup Fund account targeted towards plugging of abandoned oil and gas wells, remediation of abandoned facilities, and other authorized activities are not expected to be used to operate the voluntary cleanup program.

Leslie Savage, Planning and Administration, Oil and Gas Division, has determined there will be no net fiscal impact for state government associated with the adoption of the proposed rules. Senate Bill 1, 77th Legislature (2001) appropriated to the Commission funding for one full-time employee to assist in the development and execution of the voluntary cleanup program. The Commission will incur overhead and administrative costs in reviewing applications and initial communications with persons who apply for the program. Most, if not all, of these costs should be offset by the application fee. Those costs not offset by the application fee will be recovered through reimbursement to the Commission by applicants to the program. Also, during the course of various projects, Oil and Gas Division staff oversight costs will be incurred before they are reimbursed, resulting in potential minor net cost to the Commission based on the time value of money. However, the Commission anticipates that because the voluntary cleanup agreements into which the Commission will enter under these proposed new rules will provide for regularly scheduled payments during the project life, the Commission's costs effectively will be zero.

Local governments may incur overhead and administrative costs if particular projects include efforts that ordinarily would require a local permit. For these projects, the person engaged in the voluntary cleanup and Commission staff may need to consult with local government employees to assure that the activity proceeds consistent with what the local permit would have required.

David Cooney, Jr., Assistant Director, Environmental Law Section, Office of General Counsel, has determined that for each year of the first five years the proposed new rules are in effect, the public benefits include reduction of the number of sites to be remediated with money from the Oil Field Cleanup Fund; additional protection of human health and the environment; faster cleanup of sites; productive use of formerly contaminated properties; and possible restoration of property values that may have been depressed due to environmental damage.

Mr. Cooney has also determined that there will be no mandatory increased costs to small businesses, micro-businesses, or individuals who are members of the regulated community, because the program established under the proposed new rules is voluntary. These proposed rules are consistent with the Commission's response to spills and releases, and create only an additional incentive to encourage cleanup.

Because of the myriad variables that affect costs for cleanup activities it is not possible to calculate an average or anticipated cost of compliance. As an example of the way in which costs could be incurred under proposed new §§4.401- 4.450, assume that a person, such as a developer, undertakes a voluntary cleanup of a typical primary production facility with one old tank battery site and one reserve pit where all equipment has been removed and wells plugged according to Commission regulation. This hypothetical person would incur the expense of the $1,000 application fee; personnel, labor and possibly travel expenses in negotiating a voluntary cleanup agreement with the Commission staff; expense for the environmental assessment, if required; and, if the project went forward, the expense of cleaning up the property and reimbursing the Commission for the costs of staff oversight of the project.

The Commission has not requested a local employment impact statement pursuant to Texas Government Code, §2001.022(b), because it is not known where cleanup under the voluntary cleanup program may be implemented, if at all. The Commission has not conducted a regulatory analysis of a major environmental rule under Texas Government Code, §2001.0225(b), for two reasons. First, the Commission finds that proposed new §§4.401-4.450 are not "major environmental rules" as that term is defined in Texas Government Code, §2001.0225(g)(3). Second, the Commission proposes new §§4.401-4.450 under the specific provisions enacted by Section 34, Senate Bill 310, 77th Legislature (2001), rather than the general powers of the Commission. Therefore, according to Texas Government Code, §§2001.0225(a)(4), these new rules are not subject to the requirements of the section.

During an informal comment period from August 7, 2001, to October 8, 2001, the Commission received informal comments from representatives of the Texas Oil and Gas Association (TXOGA); the Permian Basin Petroleum Association (PBPA); Daniel B. Stephens&Associates, Inc.; and Staff of EPA's Region 6 Brownfields Team (EPA). Commission staff has reviewed the informal comments and offers the following responses.

TXOGA recommended that this proposal for creation of a separate chapter for environmental regulations be abandoned (or at least deferred) until such time as the benefit is defined and confusion is eliminated as to how this action will impact existing waste management regulations. A previous staff proposal (which has not proceeded to rulemaking) for consolidating the Commission's oil and gas environmental rules into a separate chapter of the Texas Administrative Code contained a proposed statement of purpose for the new chapter. According to that statement, the new chapter was to contain information and procedures by which operators demonstrate compliance with environmental regulations of the Commission. It would have set forth standards and procedures (applicable to all new and existing regulations put in that chapter) for: (1) determining whether an actual or potential risk exists at a site; (2) screening contaminants at the site to identify those that pose a risk; (3) developing cleanup standards based on contamination levels that are protective of human and health and the environment; and (4) establishing a reporting mechanism for informing the Commission regarding specific remediation activities. The standards and procedures in that statement are consistent with the statutory authority of the Commission to establish risk assessment as the guide for conducting site investigations and environmental assessments, and for controlling and cleaning up oil and gas wastes and other substances and materials. TXOGA agrees that these standards are appropriate for development of optional risk-based corrective action guidelines for remediation of sites at which cleanup to simple standards defined in permits by rule is not relatively easy and inexpensive. TXOGA stated that there is no reason to believe the legislature ever intended that these standards and procedures should apply to the whole of the Commission's oil and gas environmental regulations. To do so would imply that all waste management and remediation activities must be subject to rigorous analysis to prove that each provision meets each of the above tests.

The Commission does not believe the creation of a new chapter should be abandoned, and points out that the only provisions at issue at this time are the provisions in the VCP. As TXOGA stated, the Commission's previous proposal never proceeded to formal rulemaking. None of the provisions in that effort are part of the proposed VCP rules. The Commission proposes the VCP rules in Chapter 4 because the VCP rules do not sensibly fit into any other chapter of Commission rules. Commission staff is evaluating the potential benefit to the public and the staff from a reorganization of all oil and gas rules into two general categories of production rules and environmental protection rules, and a new chapter would facilitate such a reorganization. However, that possible reorganization of existing Commission rules is not part of this proposal. The Commission will not adopt any rule or statement of purpose without proper public notice, comment, and vote by the Commission.

Next TXOGA commented on approval authority for the various aspects of the Voluntary Cleanup Program being specifically delegated in the proposed rules to the "Assistant Director" (defined as the administrative head of the Site Remediation Section). TXOGA did not object to delegation of such authority to this level but stated that definition by rule of the specific level to which authority is delegated removes the ability of the Commission to modify that delegation (e.g., in the event the Site Remediation Section is renamed) without further rulemaking.

The Commission agrees with this comment and notes that the delegation provision in the proposed rule actually defines "Commission" as the Railroad Commission of Texas, the director of the Oil and Gas Division, or a staff delegate of the division director. The Commission has worded the proposed rules so that persons who read the rules clearly understand to whom participants will be reporting in the VCP process, so the rules refer to the Site Remediation Section when that section is specifically involved.

For clarification, TXOGA recommended revising §4.405(l) to read: "(1) Applicant--A person who is eligible to participate in the voluntary cleanup program and who submits the required forms and information for doing so, together with the application fee required by §4.415(b)(3) ."

The Commission agrees with this comment and proposes the new rule with this wording.

TXOGA questioned the wording in Texas Natural Resources Code and proposed §4.410(a). Texas Natural Resource Code, §91.653(a) states: "Any site that is contaminated with a contaminant is eligible for participation in the voluntary cleanup program except the portion of a site that may be subject to a Commission order." Proposed new §4.410(a) says: "Any site that is contaminated with a contaminant is eligible for participation in the voluntary cleanup program except the portion of a site that is or may become subject to a Commission order to control or clean up the contaminants."

The Commission notes that the language in the rule is intended to make clear that sites actually under Commission order or involved in an active enforcement proceeding do not qualify for the program, which is the Commission's interpretation of the statute. This comment caused the Commission to consider the efficacy of allowing into the program sites under Commission order where the party subject to the order is neither available nor capable of accomplishing the directives of the order, and a third party is willing to perform the cleanup. The Commission believes there may be circumstances where allowing such a third party to participate in the program would benefit the state; however, the Commission believes Texas Natural Resource Code, §91.653(a), does not currently authorize the Commission to allow such sites into the program. The Commission certainly invites comment on this issue.

The Permian Basin Petroleum Association (PBPA) stated that the term "Assistant Director" should be replaced with "Railroad Commission" or "Railroad Commissioners."

The Commission notes that the proposed rule defines "Commission" as "the Railroad Commission of Texas, the director of the Oil and Gas Division or a staff delegate of the division director." The Commission has worded the proposed rules so that persons who read the rules clearly understand to whom participants will be reporting in the VCP process, so the rules refer to the Assistant Director when the Assistant Director is specifically involved.

Daniel B. Stephens and Associates, Inc. (DBSA) commented that the VCP should allow any person who is not under an enforcement order by any State or Federal agency and has right, title or legal share of the affected property that has been negatively impacted by activities under the jurisdiction of the Texas Railroad Commission to participate in the program.

The Commission's proposed rule does not allow participation by any person who caused or contributed to the contamination subject of the voluntary cleanup agreement. Such persons have a legal obligation to clean up a contaminated site, are subject to Commission enforcement, and should not be considered "voluntary" participants. Furthermore, the Legislature established the VCP based on a projection of 12 to 20 sites per year, so the Commission may not have the personnel or resources to accommodate a large influx of sites which could occur if the program were opened up to any person who is not under an enforcement order by any state or federal agency and has right, title, or legal share of the affected property. Accordingly, this rule proposal does not allow persons who caused or contributed to the contamination to participate in the VCP.

DBSA recommended that the proposed rules include a Conditional Certification of Completion to create a cooperative atmosphere between the Commission and the regulated community.

The Commission agrees and proposed new §4.440 (c) includes provisions for a Conditional Certificate of Completion.

In addition to the VCP, DBSA recommended that the Commission consider creating an Innocent Owner Program (IOP) at a future date. An IOP would provide liability protection for persons who did not have prior knowledge of negative environmental conditions and did not cause or contribute to contamination on their property. Properties that contain environmental source areas would not be eligible for the IOP.

The Commission has determined that issues concerning any IOP program are beyond the scope of its statutory authority and thus should be addressed by the legislature.

DBSA agreed that the VCP agreement should refer to the appropriate statues, rules, and standards necessary for completion of voluntary cleanup. Regarding listed cleanup standards, all agreements should be virtually identical. Alternate cleanup standards should be justified using site- specific information and a full evaluation of human and ecological risk, both on- and off-site. DBSA stated that it may be simpler to include all default cleanup values in the appropriate statues, rules, and standards with equations and models available to calculate site-specific values, instead of detailing cleanup values in the agreement. It also may be problematic to include appropriate cleanup standards exclusively in the agreement. Including cleanup standards in the agreement requires properties to be fully investigated and completely delineated prior to acceptance into the VCP in order to guarantee that the appropriate values are listed. If additional constituents not identified in the agreement are identified during the course of the investigation, the absence of listed cleanup values may potentially cause inadequate investigation and cleanup.

The Commission anticipates operating the program with sufficient flexibility to address the contingencies pointed out in this comment. For example, a VCP agreement may state that the site will be remediated according to a specific state standards protocol, thereby incorporating into the agreement all of the options available under such protocol.

DBSA suggested some additional definitions for clarity.

DBSA suggested that defining "completion" as "the point at which no additional response actions are necessary and all appropriate cleanup standards have been met." DBSA recommended that "conditional completion" be defined as "the point at which the applicant is satisfactorily maintaining remediation systems, engineering controls, post-closure monitoring programs, or institutional controls with the eventual goal of obtaining completion." DBSA proposed to define "Conditional Certificate of Completion" as "an interim certificate that would be followed by a final Certificate of Completion after all cleanup goals stated in the agreement have been met." DBSA suggested that "ineligible applicant" be defined as "an applicant who did cause or contribute to the contaminants on the site subject of the voluntary cleanup agreement and whose application the Site Remediation Section has accepted." DBSA suggests an ineligible applicant is not eligible to receive the liability release in the final certificate, but may obtain the certificate to ensure that future owners and operators are released of liability. DBSA goes on to state that in certificates obtained by ineligible applicants, the responsible party must be listed along with the site's surface and mineral owners and mineral operators on the certificate.

The Commission declines to incorporate the suggested definitions into the proposed rule at this time because the provisions in proposed new §4.440 relating to Certificate of Completion and Conditional Certificate of Completion are sufficient to address the issues raised in the comment. The Commission declines to define the term "ineligible applicant" because persons who caused or contributed to the contamination that is the subject of the VCP agreement may not participate in the program.

DBSA suggested that a conditional certificate of completion would be extremely beneficial for the success of the VCP. Section 4.401 states that the goal of the VCP is to provide an incentive to clean up property by removing the liability to the state of lenders, developers, owners, and operators who did not cause or contribute to contamination released at the site. Issuance of conditional certificates of completion would stimulate property transactions encouraged by the liability release, while at the same time would require the applicant to continue tasks required to obtain a final certificate of completion. Issuance of such a certificate would be appropriate if (1) no receptors are immediately threatened by contamination originating from the VCP site and; (2) any of the following are used to mitigate exposure of contamination originating from the VCP site to potential receptors including but not limited to remediation systems, engineering controls, post-closure monitoring programs, and/or institutional controls; and (3) a notarized affidavit signed by the applicant or representative of the applicant that details a schedule of post closure monitoring activities and reporting to the Railroad Commission of Texas with an estimated date of completion. The estimated date of completion should not exceed 15 years from the date of the affidavit. If post-closure monitoring is expected to exceed 15 years, then a more active method of contaminant mitigation may be necessary. Once no additional response actions are necessary and all cleanup standards have been met, then a Final Certificate of Completion may be issued.

The Commission agrees that conditional certificates of completion may be appropriate in certain circumstances, and one of the purposes of the VCP is to encourage property transactions; however, the Commission declines to incorporate the specific suggested language concerning conditional certificates of completion into the proposed rule. The provisions in proposed new §4.440, relating to Certificate of Completion and Conditional Certificate of Completion, are sufficient to address the issues raised in the comment. The Commission has incorporated into proposed new §4.440(c)(7) the suggestion concerning a notarized affidavit signed by the applicant that details a schedule of post closure monitoring activities and reporting to the Railroad Commission of Texas with an estimated date of completion.

DBSA disagreed with the exclusion of responsible persons from participation in the VCP. Section 4.401 states that the purpose of the VCP is to provide an incentive to clean up property by removing the liability to the state of lenders, developers, owners, and operators who did not cause or contribute to the contamination released at the site. While responsible persons should not be granted a release from liability, including responsible persons as participants would provide an incentive to clean up contaminated properties still under the financial obligation of responsible persons. Subsequent property owners or operators would benefit from the liability release certificate. Regarding proposed new §4.440(c)(3), DBSA commented that if the responsible party is known, then this party should be listed on the final certificate of completion along with the site's current surface and mineral owners and mineral operators.

The Commission notes that it currently uses an Operator Cleanup Program where persons who caused or contributed to contamination are subject to enforcement and may work with the Commission to achieve remediation. Further, the Legislature established the VCP based on a projection of 12 to 20 sites per year, so the Commission may not have the personnel or resources to accommodate a large influx of sites that could occur if the program were opened up to responsible persons not under an enforcement order by any state or federal agency. Accordingly, this rule proposal does not allow persons who caused or contributed to the contamination to participate in the VCP.

DBSA asked for further explanation as to why the proposed rules do not meet the requirements of Texas Government Code, §2001.0225, or the definition of Texas Government Code, §2001.0225(g)(3).

The Commission's proposed rules are not "major environmental rules" as defined by Texas Government Code, §2001.0225(g)(3), because they do not 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, which is an essential element in the definition of a major environmental rule. Even if this rulemaking were a "major environmental rule," it does not exceed any state or federal standards and would not be adopted under the agency's general rulemaking authority. Accordingly, this rulemaking does not meet the criteria of Texas Government Code, §2001.0225(a).

With respect to proposed new §4.401, DBSA requested clarification to insure that the applicant understands that third-party liability is not removed by earning a VCP Certificate of Completion. An example of a third party could be the Environmental Protection Agency (EPA), unless the Commission has a memorandum of agreement indicating the EPA will honor the liability release granted in Commission VCP certificates.

The Commission will consider this comment during the comment period. The Commission does not have a memorandum of agreement indicating that the EPA will honor the liability release granted in Commission VCP certificates, but believes such an understanding would be in order for those sites, if any, where EPA has jurisdiction under federal law.

Regarding proposed new §4.410, DBSA questioned subsection (b)(2)(A)(i) which states that the applicant must provide general information concerning the applicant's financial ability to perform the voluntary cleanup. DBSA asked whether, since responsible persons cannot be included as applicants, an eligible applicant may include responsible persons as the entity financially responsible for cleanup activities on the property.

This comment raises the following question: Would the Commission disqualify an applicant whose application indicates that a responsible person is one of the applicant's sources of financial capability to perform the remediation? The answer to this question is no. The Commission is interested in assuring that the applicant has the financial ability to carry out the entire voluntary cleanup, and is not concerned about the source of the applicant's funding. Note, however, that the focus is on the applicant. The applicant is required to have the funding as a qualification for approval to participate. The Commission will not approve an application unless the applicant has sufficient financial resources to carry out the project that is subject of the application. Further note that a responsible person who funds an applicant's voluntary cleanup will not immunize itself from obligations imposed on "responsible persons."

DBSA recommended that §4.415(c)(3)(C) include the wording "relevant information concerning the potential for human and ecological exposure to contamination at the site."

The Commission agrees that a wording change is needed for clarity, but has not used DBSA's suggested language. The Commission rule proposal for §4.415(c)(3)(C) now reads, "relevant information concerning exposure to contamination at the site by all potential receptors as indicated by site specific considerations."

DBSA stated that in §4.420, the section should include wording that indicates that the identified contaminating activity or environmental contamination must be one that is regulated under the jurisdiction of the Texas Railroad Commission and not other state or federal programs.

The Commission has addressed this concern in proposed new §4.401, which states, "The purpose of the voluntary cleanup program is to provide an incentive to clean up property contaminated by activities under Railroad Commission jurisdiction by removing the liability . . ."

DBSA recommended that §4.420(a)(6) be reworded to state "provided information does not indicate that the person or the site is ineligible."

The Commission agrees with this comment and the proposed rule reflects the change by adding the suggested phrase to §4.420(a)(3), moving what was (a)(7) to (a)(6), and deleting (a)(7) as these paragraphs were written in the draft rules considered in the informal comment period. DBSA observed that some verbiage in proposed new §4.425 conflicts with the information conveyed in the preamble. DBSA recommended that §4.425(a) should include the wording, "Before the Site Remediation Section evaluates any plan or report detailing cleanup goals and proposed response action methods, the applicant shall enter into a voluntary cleanup agreement with the Commission that sets forth the default cleanup values terms and conditions of the evaluation of the reports, including proposed alternative cleanup values , and the implementation of work plans."

The Commission points out that the concerns raised in this comment are addressed in §4.425(b)(7), regarding technical standards.

DBSA requested that proposed new §4.425(c)(2)include negotiation time limits.

The Commission expects the parties to establish negotiation time frames in the VCP agreements, so that a failure to meet schedules will subject participants to the same consequences as failure to abide by the terms of the agreement.

DBSA suggested that proposed new §4.440 include additional text that defines which entity determines when response actions are no longer necessary and specifies that final certificates will be issued only upon attainment of appropriate cleanup standards.

The Commission agrees that the rule should clearly state that the Commission will determine when response actions are no longer necessary; however the Commission foresees the possibility that a final certificate, with reopeners, could be issued before attainment of appropriate cleanup standards when the participant employs certain engineering or institutional controls.

Regarding §4.440(c)(3), DBSA commented that if the responsible person is known, then this person should be listed on the final certificate of completion along with the site's current surface and mineral owners and mineral operators.

The Commission's primary purpose in creating the VCP is to facilitate site remediation. The phrase "if the responsible party is known" involves legal issues beyond the intended purpose of the program. The Commission therefore declines to incorporate this suggestion into the proposed rule.

The Environmental Protection Agency (EPA) commented that the cleanup selected for some VCP sites may result in controls ( e.g. , caps) to assure protectiveness. Conditional certificates or use of reopeners would be appropriate in these situations.

The Commission agrees that reopeners are appropriate for all remediations that include use of post-closure care, engineering, and institutional controls. The proposed rules include a definition of and provisions for conditional certificates of completion, which the Commission anticipates will be appropriate for long-term remediations that involve more active care and reporting, such as pump-and-treat groundwater cleanups. Sites at which passive engineering controls or land use restrictions are used may be eligible for a final certificate with reopener to cover contingencies such as control failure or a change in land use.

In general, the Commission foresees three types of closures: (1) the remediation work is complete, the site is closed to protective levels for all constituents in all pathways for all property uses, all requirements of the VCP agreement have been met, and the final certificate of completion is issued with standard health and safety reopeners; (2) the remediation work is complete, but control maintenance is required so that receptors are and will remain protected, and a certificate is issued with more site-specific reopeners; and (3) a reliable long-term remediation system is in place for which a conditional certificate, requiring continued maintenance and success of the long-term system, would be issued, so that receptors are and will remain protected. The Commission contemplates that there will be cases where certificates described in scenarios (2) and (3) may, over time, be replaced by the type of certificate described in scenario (1) once a site meets the standards for which the Commission issues a type (1) certificate. There also may be times when conditions made part of certificates described in scenarios (2) and (3) may fail, triggering a requirement that the participant revisit relevant remediation issues at the site.

The EPA commended the Commission for requiring that certificates include the proposed future land use as in §4.440(c)(2). EPA suggested also that reopeners could be included in certificates issued for site cleanups to non- residential standards.

The Commission intends that certificates issued for site cleanups to non-residential standards shall be conditioned on maintaining the land use for which the certificate was issued. Certificates of completion for such sites will include reopeners or conditions requiring the land use to be maintained.

The EPA suggested that the recordation of certificates in public records would inform future land owners and the community of the VCP cleanup and ensure the integrity of the institutional controls.

The Commission has stated that a primary purpose of the VCP is to return unmarketable land to productive use. Where institutional controls are used to ensure protectiveness, the voluntary cleanup agreement shall provide for the use of such controls, which may include recordation of the certificate of completion, deed restrictions, or reliance on city ordinances or other laws relating to restrictions in property use.

The EPA commented that the meaning of the term "completion" in §4.440(a) of the draft considered during the informal comment period is an important VCP definition and suggested that the description be included in §4.405 as a definition.

The Commission agrees with this comment and proposed new §4.405 includes the definition of "completion."

The EPA also suggested that the definition of "completion" ("that no more response actions are necessary") should indicate that closure is contingent on maintenance of planned land use and any other post-certificate controls required for the selected cleanup.

The Commission's proposed new rules include a definition of and provisions for conditional certificates of completion, which the Commission anticipates will be appropriate for long-term remediations that involve more active care and reporting, such as pump-and-treat groundwater cleanups. Sites at which passive engineering controls or land use restrictions are used may be eligible for a final certificate with reopener to cover contingencies such as control failure or a change in land use. The definition of "completion" in proposed new §4.405 indicates that closure is contingent on maintenance of planned land use and any other post-certificate controls required for the selected cleanup.

The EPA observed that prospective participants might benefit from a preamble discussion of any interaction, division of responsibilities, and relationship of the Railroad Commission VCP and the Texas Natural Resources Conservation Commission (TNRCC) VCP.

The Commission's VCP may include only sites contaminated by activities over which the Commission exercises jurisdiction, as outlined in Texas Natural Resources Code, §91.101. For sites contaminated by activities over which both the Commission and the TNRCC have jurisdiction, the Commission will operate consistent with the principles stated in its Memorandum of Understanding with TNRCC, found in 16 Texas Administrative Code, §3.30, relating to Memorandum of Understanding between the Railroad Commission of Texas (RRC) and the Texas Natural Resources Conservation Commission (TNRCC).

The EPA commented that the draft rules were not clear as to whether the VCP will provide an opportunity for community involvement.

Proposed new §4.450(b)(2)(D) states that if the applicant is not the surface owner of the site, the applicant must provide written authorization from all surface owners of the site agreeing to the applicant's participation in the program. The Commission also notes that involvement of parties such as surface owners and adjoining landowners will be a necessary component of delineation of the full nature and extent of contamination subject of the voluntary cleanup. Participants in the program will need permission for access to properties included in the delineation and will need to involve surface owners with any land use restrictions that may be part of remediations.

The EPA suggested that a description of the Commission's oversight role (both during cleanup and post-certificate) would help to support and encourage the VCP. The information would reduce potential customers' anxiety and increase citizens' confidence.

The Commission finds from a review of the proposed new rules that the Commission's oversight role is clearly described.

In reference to the proposed new provision stating that the Commission will process applications in the order in which they are received, the EPA pointed out that some of the VCP sites may be related to development projects and, given the time pressures normally associated with development projects and the desire to encourage the cleanup and revitalization of these contaminated sites, the Commission might consider including a provision allowing sites involved in development projects to be prioritized or perhaps put on an expedited the Commission review schedule.

The Commission finds that proposed new §4.420 clearly gives the Commission 45 days to reject an application, which means all applications should be processed within 45 days. The Commission is not inclined to change either this provision or the provision that applications will be processed in the order received because these provisions provide sufficient certainty to applicants and maintain order and efficiency for Commission staff. The Commission notes that the Voluntary Cleanup Agreement may include deadlines that further the goals of developments under a time crunch. The Commission also notes that it has discretion as to the enforceability of its rules which allow staff to accommodate the rare true emergency, such as the discovery of previously unknown contamination during the course of a project.

EPA observed that the preamble to the draft rules stated that the rules do not establish technical cleanup standards; rather, the voluntary cleanup agreement between the Commission and the participant will include site-specific cleanup standards. Including general guidance or rules about VCP cleanup standards and remediation planning strategies would support and encourage the program by providing potential customers valuable information and would increase citizens confidence in the VCP. Guidance on Commission expectation for assessments, work plans, and reports would be useful.

The Commission intends to evaluate developing such guidance based on experience as its VCP program matures, and will include some of these issues in future rulemakings.

The EPA sought clarity whether the release provided by the certificate applies to future owners not listed on the certificate as participants and whether the certificate is transferable.

The Commission intends for the release provided by the certificate to apply to future owners not listed on the certificate as participants and to be transferable in order to facilitate property transactions and redevelopment.

The EPA recommended that one of the final report requirements should be confirmatory analytical sample results, when appropriate.

The Commission agrees with this comment and anticipates its VCP agreements will include a requirement for a final confirmatory analytical sample results, when appropriate.

The EPA commended the Commission for not limiting VCP participation to prospective purchasers.

The Commission does not intend to limit VCP participation to prospective purchasers, but also reminds the reader that the proposed new rules do not allow persons who caused or contributed to the contamination to be allowed to participate in the VCP.

Comments on the proposed rules should be submitted to David Cooney, Jr., Office of General Counsel, Railroad Commission of Texas, P. O. Box 12967, Austin, TX 78711-2967, or via electronic mail at david.cooney@rrc.state.tx.us. Comments will be accepted until 5:00 p.m. on the 45th day after publication of these rules in the Texas Register . The Commission specifically requests comments on proposed new §4.420, regarding the sufficiency of factors for acceptance or rejection of an application, and on proposed new §4.440, regarding the legal authority and circumstances that would be appropriate for issuance of conditional certificates of completion. For further information, call Mr. Cooney at (512) 463-6977.

The Commission proposes the new rules under the provisions of Section 34, Senate Bill 310, 77th Legislature (2001), which enacts new Texas Natural Resources Code, §§91.651-91.661, authorizing the Commission to establish a voluntary cleanup program according to the standards set forth in those new sections; Texas Natural Resources Code, §91.113, which governs the investigation, assessment, or cleanup by Commission of oil and gas wastes or other substances or materials regulated by the Commission under Texas Natural Resources Code, §91.101; and Texas Water Code, §26.131, which makes the Commission solely responsible for the control and disposition of waste and the abatement and prevention of pollution of surface and subsurface water resulting from activities associated with the exploration, development, and production of oil or gas or geothermal resources and any other activities regulated by the Commission pursuant to Texas Natural Resources Code, §91.101.

Texas Natural Resources Code, §91.113, and §§91.651- 91.661, as enacted by Senate Bill 310, 77th Legislature (2001), and Texas Water Code, §26.131, are affected by the proposed new rules.

Issued in Austin, Texas, on February 21, 2002.

§4.401.Purpose.

The purpose of the voluntary cleanup program is to provide an incentive to clean up property contaminated by activities under Railroad Commission jurisdiction by removing the liability to the state of lenders, developers, owners, and operators who did not cause or contribute to contamination released at the site. The program is restricted to voluntary actions but does not replace other voluntary actions.

§4.405.Definitions.

The following words and terms when used in this subchapter shall have the following meanings unless the context clearly indicates otherwise.

(1) Applicant--A person who is eligible to participate in the voluntary cleanup program and who submits the required forms, information, and fee for doing so.

(2) Assistant director--The administrative head of the Site Remediation Section.

(3) Certificate of completion--The document executed by the Commission upon satisfactory completion of obligations under a Voluntary Cleanup Agreement.

(4) Completion--The cleanup of a site to the point that no more response actions are necessary.

(5) Commission--The Railroad Commission of Texas, the director of the Oil and Gas Division, or a staff delegate of the division director.

(6) Conditional certificate of completion--The document executed by the Commission upon a participant's satisfactory conditional completion of obligations under a Voluntary Cleanup Agreement.

(7) Conditional completion -- The cleanup of a site to the point that further response actions are limited to maintenance of engineering or institutional controls and/or the continued successful operation of long-term remediation systems.

(8) Contaminant--A waste, pollutant, or other substance or material regulated by or that results from an activity under the jurisdiction of the Commission under Texas Natural Resources Code, Chapters 91 or 141, or the Texas Water Code.

(9) Division--The Oil and Gas Division of the Commission.

(10) Eligible applicant--An applicant who did not cause or contribute to the contaminants on the site that is the subject of the voluntary cleanup agreement and whose application the Site Remediation Section has accepted.

(11) Participant--An eligible applicant with whom the Commission has entered into a voluntary cleanup agreement.

(12) Response action--The control, cleanup, or removal of a contaminant from the environment.

(13) Responsible person--Any operator or other person required by law, rules of the Commission, or a valid order of the Commission to control or clean up the oil and gas wastes or other substances or materials.

(14) Site Remediation Section--Those Commission staff, individually or collectively, who are employed in the Site Remediation Section, or its successor, of the Oil and Gas Division.

(15) Voluntary cleanup--A response action taken under and in compliance with this subchapter.

§4.410.Eligibility for the Voluntary Cleanup Program.

(a) Any site that is contaminated with a contaminant is eligible for participation in the voluntary cleanup program except the portion of a site that is or may become subject to a Commission order to control or clean up the contaminants.

(b) Any person who is not a responsible person as that term is defined in §4.405(13) of this title (relating to Definitions) is eligible to participate in the voluntary cleanup program.

§4.415.Application to Participate in the Voluntary Cleanup Program.

(a) A person applying to participate in the voluntary cleanup program shall submit to the Site Remediation Section an application to participate in the voluntary cleanup program and an application fee as required by subsection (b) of this section.

(b) A person submitting an application to participate in the voluntary cleanup program shall:

(1) use the application form provided by the Commission;

(2) provide the following information:

(A) general information concerning:

(i) the applicant and the applicant's capability, including the applicant's financial capability, to perform the voluntary cleanup;

(ii) the site; and

(iii) the names, addresses, and telephone numbers of all surface and mineral owners and mineral operators of property where the contamination came to be located;

(B) other background information requested by the Site Remediation Section based on the particular circumstances of the site in question;

(C) an environmental assessment of the actual or threatened release of the contaminant or contaminants at the site that includes, at a minimum, the information set forth in subsection (c) of this section; and

(D) if the applicant is not the surface owner of the site, written authorization from all surface owners of the site agreeing to the applicant's participation in the program;

(3) submit the application fee of $1,000; and

(4) follow any schedule set by the Site Remediation Section.

(1) a legal description of the site;

(2) a description of the physical characteristics of the site; and

(3) to the extent known by the applicant:

(A) the operational history of the site;

(B) information concerning the nature and extent of any relevant contamination or release at the site and immediately contiguous to the site, and wherever the contamination came to be located; and

§4.420.Acceptance or Rejection of an Application.

(a) The Site Remediation Section shall process applications in the order in which they are received.

(b) The Commission may accept an application if it:

(1) is submitted by a person eligible to participate in the program, pursuant to §4.410(b) of this title (relating to Eligibility for the Voluntary Cleanup Program);

(2) pertains to an eligible site, pursuant to §4.410(b) of this title (relating to Eligibility for the Voluntary Cleanup Program);

(3) includes all of the information required by §4.415 of this title (relating to Application to Participate in the Voluntary Cleanup Program), provided the information does not indicate that either the person or the site is ineligible;

(4) demonstrates that the applicant has the financial capability to pay for all costs of the response action, including but not limited to the direct costs of the response action and the reasonable costs attributable to the oversight of the response action likely to be incurred by the Commission;

(5) includes written authorization from all surface owners of the site agreeing to the applicant's participation in the program, or proof that the applicant is the surface owner of the site; and

(6) includes the application fee.

(1) a state or federal enforcement action is pending that concerns the remediation of the contaminant or contaminants described in the application;

(2) a federal grant requires an enforcement action at the site;

(3) the application is incomplete or inaccurate; or

(4) the application fails to meet the requirements of subsection (b) of this section.

(d) If the Commission rejects the application, the Commission shall:

(1) not later than the 45th day after the Site Remediation Section receives the application, notify the applicant in writing that the application has been rejected;

(2) explain the reasons for rejection of the application; and

(3) inform the applicant that the Commission will refund half the application fee unless the applicant indicates a desire to resubmit the application.

(e) If the Commission rejects an application because it is incomplete or inaccurate, then not later than the 45th day after the Site Remediation Section receives the application, the Assistant Director shall notify the applicant in writing of all information needed to make the application complete or accurate. If the applicant resubmits the application not later than the 45th day after the Assistant Director issues notice that the application has been rejected, the applicant shall not submit an additional application fee. This waiver of the application fee applies only to the first re-submission within 45 days of notice of an incomplete application. An applicant who re-submits an application after the 45th day shall submit the application fee required by §4.415(b)(3) of this title, relating to Application to Participate in the Voluntary Cleanup Program.

§4.425.Voluntary Cleanup Agreement.

(a) Before the Site Remediation Section evaluates any plan or report detailing the cleanup goals and proposed response action methods, the eligible applicant shall enter into a voluntary cleanup agreement with the Commission that sets forth the terms and conditions of the evaluation of the reports and the implementation of work plans.

(b) A voluntary cleanup agreement shall:

(1) include provisions by which the participant commits to pay the Commission all reasonable costs:

(A) incurred by the Commission for review and oversight of the participant's work plan and reports and for the Commission's field activities;

(B) attributable to the voluntary cleanup agreement including direct and indirect costs of overhead, salaries, equipment, utilities, and legal, management, and support costs; and

(C) that exceed the amount of the application fee submitted to the Commission by the applicant as required by §4.415 of this title (relating to Application to Participate in the Voluntary Cleanup Program);

(2) identify all statutes and rules with which the participant shall comply;

(3) identify all state and federal standards, requirements, criteria, or limitations to which the response action would otherwise be subject if a state or federal permit were required;

(4) describe any work plan or report that the participant is required to submit for review by the Commission, including a final report that provides all information necessary to verify that all work contemplated by the voluntary cleanup agreement has been completed;

(5) include a schedule for the participant to submit and for the Site Remediation Section to review the information required by paragraph (4) of this subsection;

(6) identify specific tasks, deliverables, and schedules for conducting and completing the response action, including terms specifying negotiating periods between reports and consequences for failure to meet deadlines in the agreement;

(7) state the technical standards to be applied by the Site Remediation Section in evaluating the work plans and reports with reference to the proposed future land use to be achieved; and

(8) be signed by both the participant or the participant's authorized representative and the Assistant Director.

(c) If the eligible applicant and the Commission do not reach an agreement on or before the 30th day after good faith negotiations have begun:

(1) either the eligible applicant or the Commission may withdraw from the negotiations, in which event the Commission shall retain the application fee; or

(2) the eligible applicant and the Commission may continue negotiating.

(d) The Commission shall not initiate an enforcement action against a participant who is in compliance with this section for the contamination or release that is the subject of the voluntary cleanup agreement or for activity that resulted in the contamination or release that is the subject of a voluntary cleanup agreement.

§4.430.Termination of Agreement and Cost Recovery.

(a) At any time and for any reason, either the Commission or the participant may terminate a voluntary cleanup agreement by giving to the other written notice 15 days prior to the stated termination date. The participant shall pay and the Commission shall recover only those costs incurred or obligated by the Commission before notice of termination of becomes effective. The Commission shall retain the application fee.

(b) Termination of the agreement does not affect any right the Commission has under other law to recover its costs. The Commission shall not issue a certificate of completion to a participant in a voluntary cleanup agreement that is terminated.

(c) If the participant does not pay to the Commission the Commission's costs under a voluntary cleanup agreement before the 31st day after the date the person receives notice that the costs are due and owing, the Commission may request that the attorney general bring an action in the name of the state in Travis County to recover the amount owed plus reasonable legal expenses, including attorneys' fees, witness costs, court costs, and deposition costs, pursuant to Texas Natural Resources Code, §91.657(c).

§4.435.Voluntary Cleanup Work Plans and Reports.

(a) After signing a voluntary cleanup agreement, the participant shall prepare and submit to the Site Remediation Section the work plans and reports required by the agreement.

(b) The Site Remediation Section shall review and evaluate the work plans and reports for accuracy, quality, and completeness. The Site Remediation Section may approve or not approve a voluntary cleanup work plan or report. If the Site Remediation Section does not approve a work plan or report, the Site Remediation Section shall, within the deadline established by the Voluntary Cleanup Agreement, notify the participant of the specific additional information or commitments needed to obtain approval.

(c) At any time during the evaluation of a work plan or report, the Site Remediation Section may request additional or corrected information.

(d) After considering future land use, the Site Remediation Section may approve work plans and reports submitted under this section that do not require cleanup or removal of all contaminants at a site if the partial response actions for the property:

(1) will be completed in a manner that protects human health and the environment;

(2) will not cause, contribute, or exacerbate discharges, releases, or threatened releases that are not required to be cleaned up or removed under the work plan; and

(3) will not interfere with or substantially increase the cost of response actions to address any remaining contaminants.

§4.440.Certificate of Completion and Conditional Certificate of Completion.

(a) If the Site Remediation Section determines that a participant has completed a voluntary cleanup approved under this subchapter, the Commission shall certify that the action has been completed by issuing the participant a certificate of completion.

(b) The certificate of completion shall:

(1) acknowledge the protection from liability provided by §4.445 of this title (relating to Persons Released from Liability);

(2) indicate the proposed future land use;

(3) include a legal description of the site and the names of the site's surface and mineral owners and mineral operators at the time the application to participate in the voluntary cleanup program was filed; and

(4) include an Affidavit of Completion on a form prescribed by the Commission. The affidavit of completion is a sworn statement made by the participant that is attached to and becomes part of the certificate of completion issued by the Commission. The affidavit shall:

(A) identify the site and its surface and mineral owners and mineral operators;

(B) identify the response actions performed including, if appropriate, any reliance on engineering or institutional controls;

(C) declare that the degree of inquiry used in determining the appropriate response actions, the response actions, and reporting were consistent with industry standards; and

(D) state that the certificate of completion has not been acquired by fraud, misrepresentation, or knowing failure to disclose material information.

(c) If the Site Remediation Section determines that the participant has substantially completed a voluntary cleanup approved under this subchapter, and that oversight and maintenance of controls and remediation systems provide a strong likelihood of success with minimal maintenance and reporting, the Commission may issue a conditional certificate of completion. The conditional certificate of completion shall:

(1) acknowledge the protection from liability provided by §4.445 of this title (relating to Persons Released from Liability);

(2) indicate the proposed future land use;

(4) identify the oversight and maintenance activities and results the person must perform, reach, and maintain for the conditional certificate to remain in force;

(5) include a schedule of activities;

(6) identify responses in case of remedy failure; and

(7) include an Affidavit of Response Action Implementation. The Affidavit of Response Action Implementation is a sworn statement made by the participant and that is attached to and becomes part of the conditional certificate of completion issued by the commission. In addition to all of the elements identified in §4.40(b)(4), the Affidavit of Response Action Implementation shall include a schedule the participant's post closure monitoring activities and reporting to the Railroad Commission of Texas with an estimated date of completion, and identify contingencies that the participant is obligated to implement if any response action fails in whole or in part.

(d) If the Site Remediation Section determines that the participant has not completed a voluntary cleanup approved under this subchapter, the Assistant Director shall so notify the participant, the current surface and mineral owners and the mineral operators of the site that is the subject of the cleanup.

§4.445.Persons Released from Liability.

(a) A person who is not a responsible person, as that term is defined in §4.405 of this title (relating to Definitions), at the time the person applies to participate in a voluntary cleanup does not become a responsible person solely because the person signs the application or the voluntary cleanup agreement.

(b) A participant who is not a responsible person at the time the Commission issues a certificate of completion under §4.440 of this title (relating to Certificate of Completion and Conditional Certificate of Completion) is released, as of the date of the certificate, from all liability to the state for cleanup of contaminants specified in the voluntary cleanup agreement for areas of the site covered by the certificate, except for releases and consequences that the participant causes.

(1) caused or contributed to the contamination at the site covered by the certificate;

(2) acquires a certificate of completion by fraud, misrepresentation, or knowing failure to disclose material information;

(3) knows at the time the person acquires an interest in the site for which the certificate of completion was issued that the certificate was acquired by fraud, misrepresentation, or knowing failure to disclose material information; or

(4) changes the land use from the use specified in the certificate of completion if the new use may result in increased risks to human health or the environment.

§4.450.Federal, State, or Local Permits.

(a) A state or local permit is not required for a voluntary cleanup under this subchapter. A participant shall coordinate a voluntary cleanup with ongoing federal and state waste programs.

(b) Any participant conducting a voluntary cleanup shall comply with any state or federal standard, requirement, criterion, or limitation to which the response action would otherwise be subject if a state or federal permit were required.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on February 21, 2002.

TRD-200201070

Mary Ross McDonald

Deputy General Counsel

Railroad Commission of Texas

Earliest possible date of adoption: April 7, 2002

For further information, please call: (512) 475-1295

Part 8. TEXAS RACING COMMISSION

Chapter 307. PROCEEDINGS BEFORE THE COMMISSION

Subchapter A. GENERAL PROVISIONS

16 TAC §307.7

The Texas Racing Commission proposes an amendment to §307.7, relating to ejection and exclusion. The amendment would establish a deadline to request a hearing to contest an ejection or exclusion. The 20-day period was selected to be consistent with the administrative penalty provision in the Racing Act. The amendment is necessary because the absence of a deadline required an interpretation of a "reasonable" period to request a hearing. With this deadline, the procedure to request a hearing will be definite.

Judith L. Kennison, General Counsel for the Texas Racing Commission, has determined that for the first five-year period the amendments are in effect there are no fiscal implications for state or local government as a result of enforcing the proposal.

Ms. Kennison has also determined that for each of the first five years the rule is in effect the public benefit anticipated will be greater certainty in the procedural rules of the agency. There will be no fiscal implications for small or micro-businesses. There is no anticipated economic cost to an individual required to comply with the amendment as proposed. The proposal has no effect on the state's agricultural, horse breeding, horse training, greyhound breeding, or greyhound training industries.

Written comments must be submitted within 30 days after publication of the proposed amendment in the Texas Register to Judith L. Kennison, General Counsel for the Texas Racing Commission, P.O. Box 12080, Austin, Texas 78711-2080, fax (512) 833-6907.

The amendment is proposed under the Texas Civil Statutes, Article 179e,§3.02, which authorizes the Commission to adopt rules for conducting racing with wagering and for administering the Texas Racing Act; and Government Code, §2001.004, which requires the Commission to adopt rules of practice stating the nature and requirements of all available formal and informal procedures.

The proposed amendment implements Texas Civil Statutes, Article 179e.

§307.7. Ejection or Exclusion.

(a) The Commission, executive secretary, stewards, or racing judges, may order an individual ejected or excluded from an association's grounds in accordance with the Act if the Commission, executive secretary, stewards, or racing judges, determine that:

(1) the individual may be excluded or ejected under the Act, §3.16 or §13.01; and

(2) the individual's presence on association grounds is inconsistent with maintaining the honesty and integrity of racing.

(b) Not later than 20 days after notification of the exclusion or ejection is sent or served, a [ A ] person ejected or excluded under this section may request a hearing pursuant to the Act, §13.02 and this chapter .

(c) If a person is excluded under this section, a race animal owned or trained by or under the care or supervision of the person is ineligible to be entered or to start in a race in Texas.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on February 22, 2002.

TRD-200201079

Judith L. Kennison

General Counsel

Texas Racing Commission

Earliest possible date of adoption: April 7, 2002

For further information, please call: (512) 833-6699

Chapter 309. RACETRACK LICENSES AND OPERATIONS

Subchapter D. GREYHOUND RACETRACKS

1. FACILITIES AND EQUIPMENT

16 TAC §309.313

The Texas Racing Commission proposes an amendment to §309.313, relating to kennel buildings. Gulf Greyhound Park, with the support of the Texas Greyhound Association, petitioned the Commission for this rule change. The amendment would lift the lift maximum number of greyhounds permitted in a kennel building and, instead, would leave it to the discretion of the executive secretary to determine the appropriate number. The executive secretary would make such a determination based on the input of commission veterinarians with regard to the health and safety of the greyhounds.

Judith L. Kennison, General Counsel for the Texas Racing Commission, has determined that for the first five-year period the amendments are in effect there will be no fiscal implications for state or local government.

Ms. Kennison has also determined that for each of the first five years the amendment is in effect the public benefit anticipated as a result of enforcing the proposal will be that the public is assured that the welfare of greyhounds is protected. There will be no economic impact to small or micro businesses. There is no anticipated economic cost to an individual required to comply with the amendment as proposed. The proposal has no effect on the state's agricultural, horse breeding, horse training, greyhound breeding, or greyhound training industries.

The amendment is proposed under the Texas Civil Statutes, Article 179e, §3.02, which authorizes the Commission to adopt rules for conducting racing with wagering and for administering the Texas Racing Act; and §6.06, which authorizes the Commission to adopt rules on all matters relating to the operation of pari-mutuel racetracks.

The proposed amendment implements Texas Civil Statutes, Article 179e.

§309.313. Kennel Buildings.

(a) - (b) (No change.)

(c) The executive secretary shall approve the maximum number of crates for each kennel building. The executive secretary may permit a change in the number of crates upon a showing that the change will have no impact on the health and safety of the individuals and greyhounds in the building. [ ~~Each kennel building must be furnished 60 crates constructed of stainless steel or a comparable material.~~ ] Each crate must:

(1) have a drop latch or a comparable latch;

(2) be constructed of stainless steel or a comparable material and on casters; and

(3) measure at least three feet wide, four feet deep, and three feet high.

(d) - (f) (No change.)

(g) An association may not permit [ : ]

~~[(1) more than 60 greyhounds to be housed in a kennel building; or ]~~

[ ~~(2)~~ ] more than one greyhound to be housed in a crate.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on February 22, 2002.

TRD-200201080

Judith L. Kennison

General Counsel

Texas Racing Commission

Earliest possible date of adoption: April 7, 2002

For further information, please call: (512) 833-6699

2. OPERATIONS

16 TAC §309.351

The Texas Racing Commission proposes an amendment to §309.351, related to kennel contracts. The purpose of this amendment is to establish a deadline for associations to file their executed kennel contracts with the Commission.

Ms. Kennison has also determined that for each of the first five years the amendment is in effect the public benefit anticipated as a result of enforcing the proposal will be that the public can be assured that the Commission is kept informed of the contractual agreements of all individuals and entities involved in pari-mutuel racing. There will be no economic impact to small or micro businesses. There is no anticipated economic cost to an individual required to comply with the amendment as proposed. The proposal has no effect on the state's agricultural, horse breeding, horse training, greyhound breeding, or greyhound training industries.

The amendments are proposed under the Texas Civil Statutes, Article 179e, §3.02, which authorizes the Commission to adopt rules for conducting racing with wagering and for administering the Texas Racing Act; and §6.06, which authorizes the Commission to adopt rules on all matters relating to the operation of pari-mutuel racetracks.

The proposed amendment implements Texas Civil Statutes, Article 179e.

§309.351.Kennel Contracts.

(a) In contracting with a kennel owner, an association shall use a contract approved by the executive secretary. [ ~~Commission.~~ ]

(b) Not later than January 31 of each year for which the contract is to be performed, an [ An ] association shall file a copy of each executed kennel contract with the Commission.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on February 22, 2002.

TRD-200201081

Judith L. Kennison

General Counsel

Texas Racing Commission

Earliest possible date of adoption: April 7, 2002

For further information, please call: (512) 833-6699

Chapter 319. VETERINARY PRACTICES AND DRUG TESTING

Subchapter D. DRUG TESTING

1. GENERAL PROVISIONS

16 TAC §319.301

The Texas Racing Commission proposes an amendment to §319.301, related to drug testing of animals. The proposal would explicitly state that there is no entitlement to a purse from a race until drug testing on the race animals has been completed and the executive secretary has cleared the race for payment. This amendment is necessary because although it was clearly set forth in horse racing, there was only an implication in greyhound racing. This amendment makes it clear that a negative test result is a pre-condition to the awarding of purses for both species.

Judith L. Kennison, General Counsel for the Texas Racing Commission, has determined that for the first five-year period the amendment is in effect there will be no fiscal implications for state or local government as a result of enforcing the proposal.

Ms. Kennison has also determined that for each of the first five years the amendment is in effect the public benefit anticipated as a result of enforcing the proposal will be that there is a clearer understanding of the Commission's rules. There will be no fiscal implications for small businesses or micro-businesses. There is no anticipated economic cost to an individual required to comply with the amendment as proposed. The proposal will have no effect on the state's agricultural, horse breeding, horse training, greyhound breeding, or greyhound training industries.

The amendment is proposed under the Texas Civil Statutes, Article 179e, §3.02, which authorizes the Commission to adopt rules for conducting racing with wagering and for administering the Texas Racing Act; §3.021, which authorizes the Commission to regulate all aspects of greyhound and horse racing in Texas, and §3.16 which authorizes the Commission to adopt rules relating to split testing procedures.

The proposal implements Texas Civil Statutes, Article 179e.

§319.301.Testing Authorized.

(a) The stewards and racing judges may require a specimen of urine, blood, saliva, or other bodily substance to be taken from a race animal for the purpose of testing for the presence of a prohibited drug, chemical, or other substance.

(b) Testing under this subchapter may be required at any time in accordance with these rules and may be conducted in an area approved by the commission veterinarian under the supervision of the commission veterinarian.

(c) A person is not entitled to a purse until drug testing has been completed and the executive secretary has cleared the race for payment.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on February 22, 2002.

TRD-200201082

Judith L. Kennison

General Counsel

Texas Racing Commission

Earliest possible date of adoption: April 7, 2002

For further information, please call: (512) 833-6699

Chapter 323. DISCIPLINARY ACTION AND ENFORCEMENT

Subchapter C. CRIMINAL ENFORCEMENT

16 TAC §323.201

The Texas Racing Commission proposes an amendment to §323.201, related to the reporting of criminal activity, arrests, and convictions. The amendment will delete the requirement that licensees, Commission employees, and applicants report arrests to the Commission. The amendment also updates the reference to the current traffic statutes.

Ms. Kennison has also determined that for each of the first five years the amendment is in effect the public benefit anticipated will be greater reliance on the accuracy of the Commission rules. There will be no fiscal implications for small businesses or micro-businesses. There is no anticipated economic cost to an individual required to comply with the amendments as proposed. The proposal will have no effect on the state's agricultural, horse breeding, horse training, greyhound breeding, or greyhound training industries.

The amendment is proposed under the Texas Civil Statutes, Article 179e, §3.02, which authorizes the Commission to adopt rules for conducting racing with wagering and for administering the Texas Racing Act; and §3.021, which authorizes the Commission to regulate all aspects of greyhound and horse racing in Texas.

The amendment implements Texas Civil Statutes, Article 179e.

§323.201.Reporting of Criminal Activity [ ~~, Arrests,~~ ] and Convictions.

(a) A licensee, a Commission employee, or an applicant for a license from the Commission shall report any [ ~~arrest for or~~ ] conviction of a felony or misdemeanor, other than a misdemeanor under Vernon's Texas Codes Annotated, Transportation Code, Title 7, Vehicles and Traffic, [ ~~the Uniform Act Regulating Traffic on Highways, Texas Civil Statutes, Article 6701d,~~ ] or a similar misdemeanor traffic offense.

(b) (No change.)

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on February 22, 2002.

TRD-200201083

Judith L. Kennison

General Counsel

Texas Racing Commission

Earliest possible date of adoption: April 7, 2002

For further information, please call: (512) 833-6699