30 TAC §335.347
The Texas Commission on Environmental Quality (commission)
adopts the amendment to §335.347
with change
to the proposed text as published in the December 5, 2003 issue of
the
Texas Register
(28 TexReg 10877).
BACKGROUND AND SUMMARY OF THE FACTUAL BASIS FOR THE ADOPTED RULE
The commission adopts these revisions to Chapter 335 to implement legislation
from the 78th Legislature, 2003.
House Bill (HB) 2252 amended Texas Health and Safety Code (THSC), Chapter
361 (also known as the Solid Waste Disposal Act), Subchapter F, Registry and
Cleanup of Certain Hazardous Waste Facilities. The legislation required the
commission to adopt rules to implement the changes to THSC, §§361.181,
361.194, 361.197, and 361.201. THSC, §361.181(c) was amended to add a
definition of "homestead." THSC, §361.194(b) was amended to allow the
executive director to consider a landowner's financial ability to satisfy
a lien in determining whether to prepare a lien affidavit or whether a lien
is satisfied, including whether the landowner received financial compensation
for the disposal of the substance addressed by the remedial action and whether
the real property that is the subject of the lien is a homestead with a fair
market value of $250,000 or less. THSC, §361.197 was amended by the addition
of new subsection (e), which prohibits the commission from filing a cost recovery
action under that section against an individual whose only significant asset
is a homestead that includes the facility that is subject to, or affected
by, a remedial action, that is occupied by the individual as a home, and that
has a fair market value of $250,000 or less. THSC, §361.201 was amended
by the addition of new subsections (d) and (e), which require, in cases where
an individual's homestead includes the facility that is subject to, or affected
by, a remedial action, that the commission adopt criteria by rule to determine
whether the individual is financially capable of conducting any necessary
remediation studies or remedial action and that the rule must provide that
the individual's homestead may not be included in the total amount of the
individual's assets if the homestead is occupied by the individual as a home
and has a fair market value of $250,000 or less.
The adopted rule addresses the procedures and information necessary for
the executive director to make these determinations under HB 2252. Additionally,
the rule sets forth the statutory deadline for filing certain cost recovery
actions and requires the agency to provide notice to property owners after
a lien is filed.
SECTION DISCUSSION
The proposed amendment to §335.347 placed existing rule language into
a new subsection (a) and added new subsections (b) - (h) to address the requirements
of HB 2252 at proposal. The commission makes several changes to the proposed
rules, including placing proposed subsections (g) and (h) into subsection
(f). The name of the section is also changed from proposal to reflect the
changes made at adoption.
In subsection (a), the commission added, at adoption, the catch phrase
"Financial capability- general" to describe the contents of the subsection
and changed "a" to "any" in two instances to clearly show that the new subsections
do not alter the applicability of subsection (a) to all superfund sites. In
subsection (a)(8) the commission changed, at proposal, the words "pursuant
to" to "under" to comply with agency rule writing standards. The title of §335.347
is changed at adoption to better describe the information included in the
section.
New §335.347(b) includes provisions from new THSC, §361.201(d)
and (e). The new provisions in §335.347(b) require that the executive
director make a determination of the potentially responsible party's (PRP)
financial capacity if the party is an individual whose homestead includes
the facility subject to, or affected by, a remedial action. New §335.347(b)
prohibits the agency from including the value of an individual's homestead
in the total amount of the individual's assets if the individual is occupying
the homestead as a home and the fair market value of the homestead is $250,000
or less. At adoption, the catch phrase "Homesteads" is added to the subsection
and the word "will" is changed to "shall" to conform with agency style requirements.
New §335.347(c) includes provisions from new THSC, §361.194(b)(2).
These provisions cover new criteria that the executive director may consider
in determining whether to prepare an affidavit to attach a lien to real property
or whether a lien is satisfied. At adoption, the catch phrase "Liens under
Texas Health and Safety Code, §361.194" is added to describe the content
of the subsection. At adoption, a new paragraph (1) is added and the proposed
language in the subsection is renumbered as paragraph (2). The catch phrase
"Filing of lien" is added to paragraph (1) and the catch phrase "Financial
ability to satisfy lien" is added to paragraph (2). In paragraph (1), a provision
is added, at adoption, to require that the executive director send notice
to property owners after placing a lien on their property. The notice is required
so that property owners are aware of the encumbrance on the property and may
take steps to resolve the matter. In paragraph (2), the phrase "under Texas
Health and Safety Code, §361.194" is deleted, at adoption, because the
statutory section is cited in the catch phrase of the subsection. Additionally
at adoption, the two paragraphs that had been in the proposed language are
relettered as subparagraphs.
New §335.347(d) includes provisions from new THSC, §361.197(e).
These provisions prohibit the commission from filing a cost recovery action
under specified circumstances. At adoption, the catch phrase "Cost recovery
actions" is added to the subsection to describe its content. Also at adoption,
the proposed language is placed in paragraph (1) with the catch phrase "Homesteads"
is added and the proposed three paragraphs are relettered as subparagraphs.
A new paragraph (2) is added to reflect the statutory deadline of one year
for the agency to file cost recovery actions in certain circumstances and
the catch phrase "Limitation on filing" is added to describe the content at
adoption.
New §335.347(e) addresses how the fair market value of a homestead
is determined, since fair market value is a key element in HB 2252. At adoption,
the catch phrase "Fair market value" is added to describe the content.
New §335.347(f) addresses the information that must be provided by
the PRP within 90 days of a written request so that the executive director
may make the determinations under the new §335.347(b) - (d). This provision
is important to allow a case to move forward in a timely manner and to allow
the commission to proceed with a cost recovery action within any required
statute of limitations if the PRP does not qualify for the cost recovery prohibition.
The catch phrase "PRP information" is added, at adoption, to describe the
content. At adoption, the proposed language is placed into paragraph (1),
with the existing paragraphs relettered as subparagraphs, and a citation is
updated.
Proposed §335.347(g), which is moved to §335.347(f)(2) at adoption,
allows the PRP to request an extension of the time frame for providing documents
in subsection (f)(1). This provision gives the executive director the flexibility
to consider extenuating circumstances when PRPs are having difficulties meeting
the 90-day deadline. At adoption, this proposed subsection is placed into §335.347(f)(2)
so that all provisions relating to a PRP's submittal of information are in
subsection (f).
Proposed §335.347(h), which is moved to §335.347(f)(3) at adoption,
states that for the purposes of the section, the executive director may determine
that the property is not a homestead that is occupied by the individual as
a home if the PRP does not provide the requested information within the required
time frame. This provision is important so that the issue may be resolved
and the case moved forward in situations where the information needed to make
a determination that the property is a homestead that is occupied by the individual
as a home is not provided. In addition, provisions are included which state
that the PRP will receive notice of such a determination and that the determination
is appealable. At adoption, this proposed subsection is placed into §335.347(f)(3),
a citation is corrected, and the word "will" is changed to "shall" to conform
with agency style requirements.
FINAL REGULATORY IMPACT ANALYSIS DETERMINATION
The commission reviewed the rule in light of the regulatory analysis requirements
of Texas Government Code, §2001.0225, and determined that this rulemaking
is not subject to §2001.0225 because it does not meet the definition
of a "major environmental rule" as defined in that statute. While the specific
intent of a "major environmental rule" is to protect the environment or reduce
the risks to human health from environmental exposure, the specific intent
of the rule is to allow, and in some instances require, the executive director
to consider certain financial information when pursuing cost recovery and
liens or when compelling an individual to perform remediation studies or remedial
actions. Additionally, the intent of the rule is to set forth the statutory
deadline for filing certain cost recovery actions and to require the agency
to provide notice to property owners after a lien is filed. Thus, the specific
intent of the rule is not to protect the environment nor reduce the risks
to human health from environmental exposure. Additionally, the rule does 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.
Additionally, Texas Government Code, §2001.0225 only applies to a
major environmental rule if the result of the rule is to: 1) exceed a standard
set by federal law, unless the rule is specifically required by state law;
2) exceed an express requirement of state law, unless the rule is specifically
required by federal law; 3) exceed a requirement of a delegation agreement
or contract between the state and an agency or representative of the federal
government to implement a state and federal program; or 4) adopt a rule solely
under the general powers of the agency instead of under a specific state law.
This rulemaking is not subject to the regulatory analysis provisions of §2001.0225
because it does not meet any of the four applicability requirements. Specifically,
the rule is adopted to comply with and is specifically required by state law
and is not adopted solely under the general powers of the agency. The rule
also does not exceed a requirement of state law, federal law, or a delegation
agreement or contract between the state and an agency or representative of
the federal government.
TAKINGS IMPACT ASSESSMENT
The commission evaluated the rule and performed an assessment of whether
the rule constitutes a takings under Texas Government Code, Chapter 2007.
The specific purpose of the rule is to allow, and in some instances require,
the executive director to consider certain financial information when pursuing
cost recovery and liens or when compelling an individual to perform remediation
studies or remedial actions. Additionally, the purpose of the rule is to set
forth the statutory deadline for filing certain cost recovery actions and
to require the agency to provide notice to property owners after a lien is
filed.
The rule substantially advances this stated purpose by amending §335.347
to: 1) require the executive director to determine a PRP's financial capacity
if the party is an individual whose homestead includes the facility subject
to or affected by a remedial action; 2) prohibit the agency from including
the value of an individual's homestead in the total amount of the individual's
assets if the individual is occupying the homestead as a home and the fair
market value of the homestead is $250,000 or less; 3) specify criteria that
the executive director may consider in determining whether to prepare an affidavit
to attach a lien to real property or whether a lien is satisfied; 4) prohibit
the commission from filing a cost recovery action under specified circumstances;
5) state how the fair market value of a homestead is determined; 6) require
the PRP to submit certain information within 90 days of a written request
so that the executive director may make such determinations; 7) specify that,
for the purposes of the rule, the property is not a homestead that is occupied
by the individual as a home if the PRP does not provide the requested information
within the required time frame; 8) limit the period in which the agency may
file a cost recovery action against responsible parties that have not complied
with the terms of an administrative order under THSC, §361.188 to no
later than one year after all remedial action has been completed; and 9) require
the executive director to provide notice to property owners after a lien is
filed on property under THSC, §361.194.
The rule does not impose a burden on private real property and it does
not require a use of private real property. Promulgation and enforcement of
the rule are neither a statutory nor a constitutional taking of private real
property. Specifically, the rule does not affect a landowner's rights in private
real property because the rulemaking does not burden the property in a manner
that requires compensation as provided in specific articles of the United
States and Texas Constitutions; nor does it restrict or limit the owner's
right to the property resulting in a reduction in value by 25% or more beyond
that which would otherwise exist in the absence of regulations.
CONSISTENCY WITH THE COASTAL MANAGEMENT PROGRAM
The commission reviewed this rulemaking for consistency with the Texas
Coastal Management Program (CMP) goals and policies in accordance with the
regulations of the Coastal Coordination Council and determined that the amendment
is consistent with CMP goals and policies because the rulemaking relates only
to the procedural mechanisms for cost recovery for remediation actions taken
by the commission. The rulemaking will not have direct or significant adverse
effect on any coastal natural resource areas; the rulemaking will not have
a substantive effect on commission actions subject to the CMP; and promulgation
and enforcement of the amendment will not violate (exceed) any standards identified
in the applicable CMP goals and policies.
PUBLIC COMMENT
The public comment period ended at 5:00 p.m. on January 5, 2004. No comments
were received during the comment period.
STATUTORY AUTHORITY
The adopted amendment is authorized under HB 2252, 78th Legislature, 2003,
which requires rules to implement the changes in law made to THSC, §§361.181,
361.194, 361.197, and 361.201. The amendment is also authorized by THSC, §361.024,
which provides the commission with the authority to adopt rules necessary
to carry out its powers and duties under THSC, Chapter 361. Additionally,
the amendment is authorized by Texas Water Code, §5.103, which provides
the commission with the authority to adopt rules necessary to carry out its
powers and duties under the Texas Water Code.
§335.347.Financial Capability, Liens, and Cost Recovery Actions.
(a)
Financial capability general. The executive director may
make a determination of whether any potentially responsible party (PRP) is
financially capable of participating in any facility investigation or remediation.
Such a determination may be based on some or all of the following financial
information:
(1)
a PRP's audited financial statements;
(2)
a PRP's federal or state income tax returns;
(3)
a PRP's gross and net income for each of the preceding
three years;
(4)
a PRP's net worth for each of the preceding three years;
(5)
a PRP's current cash flow position;
(6)
a PRP's long-term liabilities;
(7)
the liquidity of a PRP's assets; and
(8)
any other data requested under §335.345 of this title
(relating to Requests for Information or Production of Documents), which in
the opinion of the executive director is relevant to a determination of the
ability of the PRP to participate in a facility investigation or remediation.
(b)
Homesteads. The executive director shall determine whether
a PRP is financially capable of conducting any necessary remediation studies
or remedial action if the PRP is an individual whose homestead includes the
facility subject to, or affected by, a remedial action. The value of an individual's
homestead may not be included in the total amount of the individual's assets
if:
(1)
the individual is occupying the homestead as a home; and
(2)
the fair market value of the homestead is $250,000 or less.
(c)
Liens under Texas Health and Safety Code, §361.194.
(1)
Filing of lien. If the executive director files a lien
on property, the executive director shall send a copy of the filed lien to
the last known address of the owner of the property.
(2)
Financial ability to satisfy lien. In making a determination
whether to prepare an affidavit for lien or whether a lien is satisfied, the
executive director may take into account a landowner's financial ability to
satisfy the lien, including consideration of whether the landowner received
financial compensation for the disposal of any substance addressed by the
remedial action and whether the real property that is the subject of the lien:
(A)
is a homestead and is being occupied as a home by the landowner;
and
(B)
has a fair market value of $250,000 or less.
(d)
Cost recovery actions.
(1)
Homesteads. The executive director may not file a cost
recovery action under Texas Health and Safety Code, §361.197, against
an individual if the individual's only significant asset is a homestead that:
(A)
includes the facility subject to, or affected by, a remedial
action;
(B)
is occupied by the individual as a home; and
(C)
has a fair market value of $250,000 or less.
(2)
Limitation on filing. A cost recovery action against the
responsible parties that have not complied with the terms of an administrative
order under Texas Health and Safety Code, §361.188, may be filed by the
agency no later than one year after all remedial action has been completed.
(e)
Fair market value. For the purposes of this section, the
fair market value of a homestead is the market value ascribed to a property
by the tax appraisal authority of the county or counties in which the property
is located, exclusive of any downward adjustment related to contamination.
If this information is unavailable, the executive director may determine the
fair market value of the property, which excludes any downward adjustment
related to contamination, from information available at the time.
(f)
PRP information.
(1)
The PRP shall provide the following information within
90 days after receipt of a written request by the executive director so that
the executive director may conduct the determinations under subsections (b)
- (d) of this section:
(A)
information listed in subsection (a) of this section;
(B)
evidence that the subject property is the individual's
homestead; and
(C)
evidence that the individual is occupying the property
as a home.
(2)
The PRP may request an extension of the required time frame
for providing documents if the extension is requested by the PRP within the
initial 90-day time frame.
(3)
For the purposes of this section, the executive director
may determine that the property is not a homestead that is occupied by the
individual as a home if the PRP does not provide the information requested
in paragraph (1) of this subsection within the required time frame, including
any extensions granted by the executive director. The executive director shall
provide any such determination in writing to the PRP. The executive director's
determination that the property is not a homestead that is occupied by the
individual as a home is final and appealable under Texas Health and Safety
Code, §361.321.
This agency hereby certifies that the adoption has been
reviewed by legal counsel and found to be a valid exercise of the agency's
legal authority.
Filed with the Office of
the Secretary of State on May 14, 2004.
TRD-200403266
Paul C. Sarahan
Director, Litigation Division
Texas Commission on Environmental Quality
Effective date: June 3, 2004
Proposal publication date: December 5, 2003
For further information, please call: (512) 239-0348