The Texas Natural Resource Conservation Commission (TNRCC or commission) proposes amendments to §303.2, Definitions; §303.21, Accounts - Amistad/Falcon Reservoirs; §303.22, Allocations to Accounts; §303.41, Sale of Water Rights; and §303.42, Amendments. The commission proposes these amendments to correct the spelling of two of the reaches in the Rio Grande, limit the conveyance of water rights until all fees are paid, prohibit the transfer of water rights from the Upper Rio Grande to the Lower or Middle Rio Grande below International Amistad Reservoir unless the transfer request utilizes a conversion factor approved by the commission which would not impair other water rights or water available for allocation, and adjust the minimum operating reserve from 150,000 to 75,000 acre-feet.

BACKGROUND AND SUMMARY OF THE FACTUAL BASIS FOR THE PROPOSED RULES

Water rights in the portions of the Rio Grande Basin and the Nueces - Rio Grande Basin which are regulated by this chapter are allocated by a watermaster employed by the commission. Water rights in these basins were allocated under the provisions of a judicial adjudication of water rights. State v. Starley, 413 S.W.2d 451 (Tex.Civ.App.-Corpus Christi 1967) ( Starley ), and State v. Hidalgo Co. Water Con. & Irr. Dist. No. Eighteen, 443 S.W.2d 728 (Tex.Civ.App.-Corpus Christi 1969) ( Hidalgo ). Water in portions of the Rio Grande River is shared with the United States of Mexico (Mexico) under several treaties, including the Treaty of 1944 which most specifically addresses the issue of water allocation. The International Boundary and Water Commission (IBWC) oversees the allocations of water between the United States and Mexico, and notifies the watermaster of the amounts of water available for allocation to water rights holders under the jurisdiction of the United States (U.S.).

Water for the allocated water rights in these basins is stored in two international reservoirs, Amistad and Falcon. The U.S. portion of the water is allocated under a schedule established in Hidalgo . In these cases, the court created several classes of water rights holders under the jurisdiction of the U.S. which have since been modified to Domestic, Municipal, and Industrial (DMI) water users, and Class A and Class B water users. The DMI users have priority rights over Class A and B water users. Rules under Chapter 303 apply only to water under U.S. jurisdiction and are not applicable to the Mexican portion of water in the International Amistad and Falcon Reservoirs.

Under the provisions of this chapter, the commission sets an operating reserve and a DMI reserve for the minimum amount of water under U.S. jurisdiction which must be stored in the reservoirs to ensure that DMI users have adequate water. The current DMI reserve is 225,000 acre- feet and remains unchanged in this proposal. The operating reserve is a minimum volume of acre-feet of water which is required to be maintained in the reservoirs to allow for losses of water from evaporation, seepage, and conveyance; to allow for emergencies; and for adjustments of storage accounts. If the unallocated water in the reservoirs drops to the minimum operating reserve, the watermaster adjusts allocations for the Class A and Class B water users by deducting water from their account balances (called negative allocations) to ensure that sufficient water is available for losses due to evaporation, seepage, and conveyance; to allow for emergencies; and for adjustments of storage accounts.

When the court determined the allocation of water rights in these basins in the Hidalgo adjudication, the court established a DMI reserve of 60,000 acre-feet. In 1986, the commission promulgated rules setting the operating reserve between 275,000 and 380,000 acre- feet, and under drought conditions, setting the operating reserve at 150,000 acre-feet. In this proposal the commission proposes changing the operating reserve to 75,000 acre-feet.

Because of the existence of severe to extreme drought conditions in the Middle and Lower Rio Grande Basins over the past six years, the commission determined there was a need to assess the operational requirements of this system. Staff reviewed historic data showing actual uses of water in the Rio Grande and Nueces - Rio Grande Basins from 1988 - 1998, system inflows reported by the IBWC, and other hydrologic data for the same period. After reviewing this data, the commission proposes to modify Chapter 303 to lower the existing operating reserve to 75,000 acre-feet. This modification will relieve some of the economic effects of the drought on Class A and Class B water rights holders in these basins. Additionally, the commission proposes to lower the trigger for negative allocations to zero acre-feet in the operating reserve from 150,000 acre-feet and to create a minimum restoration volume of 48,000 acre-feet. A negative allocation occurs when the watermaster subtracts allocations from storage accounts to ensure that sufficient water is available for losses due to evaporation, conveyance, seepage, and emergencies. The commission proposes to require that the operating reserve must be reestablished to 75,000 acre-feet by inflows before the watermaster can make any allocations to Class A and Class B accounts.

The proposed rule changes are based on historic data, and for the first time, models of actual reservoir operations over the past six years. Evaluation of this data reveals several important facts which were considered. The greatest amount of evaporative losses which would have occurred in this system was during May 1998, when the total losses from evaporation, conveyance, channel operation, and emergencies would have reduced the operating reserve to 34,471 acre-feet, well above the proposed zero acre-feet in the operating reserve which will trigger the implementation of negative allocation as contemplated by this proposed rule.

Historic data also shows that monthly evaporative losses average 39,623 acre-feet. The minimum average monthly inflow into the reservoirs is 66,000 acre-feet. Since the average monthly evaporative loss is approximately 40,000 acre-feet, and the average monthly inflow is 66,000 acre-feet, it is anticipated that the inflow of any one month will exceed the evaporative loss for that month. A minimum operating reserve of 75,000 acre-feet should exceed the difference between the evaporative loss and restorative inflow of any one month. Based on this data, the commission has determined that the operating reserve may be safely changed to 75,000 acre-feet with a trigger for negative allocations at zero acre-feet, while still protecting DMI water rights. The commission proposes to establish a restoration operating reserve of 48,000 acre-feet, which is anticipated to provide sufficient water reserves for any single month's evaporative losses. Based on this data, the commission also anticipates that monthly inflows will then reestablish the operating reserve at 75,000 acre-feet within one month, since the average monthly inflow has always exceeded the average monthly evaporative loss.

SECTION BY SECTION DISCUSSION

Section 303.2 is proposed to be amended to delete the phrase "unless the context clearly indicates otherwise," to eliminate ambiguity.

Section 303.2(11)(C) is proposed to correct the spelling of "Progreso" in Progreso Bridge.

Section 303.2(11)(D) is proposed to correct the spelling of "Progreso" in Progreso Bridge.

Section 303.2(22) is proposed to be amended to add subparagraphs (A) and (B), which define Class A and Class B water rights. Class A and B water rights are rights in the Lower and Middle Rio Grande River held under certificates of adjudication that were granted either in the adjudication of the Lower and Middle Rio Grande River in State v. Hildalgo Co. Water Con. & I. Dist. No. Eighteen , 443 S.W.2d 728 (Tex. Civ. App. - Corpus Christi 1969, writ ref'd n.r.e.), or issued by the commission. The majority of these water rights are irrigation rights, but in recent years some have been converted to other uses. These definitions are being added to define the terms "Class A" and "Class B" water rights, which are currently used in the rules, but not defined.

Section 303.21(b)(2) is proposed to establish an operating reserve of 75,000 acre-feet. This is a change from the current reserve which fluctuates between 380,000 and 275,000 acre-feet, or under drought conditions, as low as 150,000 acre-feet. This change is based in part on recommendations from the Region M Water Planning Group and the Rio Grande Watermaster Advisory Committee to provide additional water to Class A and Class B water rights holders. That recommendation was based at least in part on a study of previous droughts, system inflows, and analyses of the water levels in the system. According to historical data during drought conditions, and modeling of water use in this basin, this change should not affect DMI users. A portion of §303.21(c) is proposed for deletion from the rule. This language describes the calculating process for the fluctuating operating reserve which is proposed for change. This portion of the rule will no longer be necessary. The new operating reserve will be established as 75,000 acre-feet.

Section 303.22(a) is proposed to be amended to clarify that dead storage is water behind the dams that cannot be released due to hydrologic restrictions.

Sections 303.22(a)(3) and (4) (relating to Allocations to Accounts) describe how the water for the accounts described in §303.21(b) (relating to Operating Reserve), will be calculated and allocated. Section 303.22(a)(3) is changed to reflect the change in the operating reserve. Paragraph (4) changes irrigation and mining to Class A and Class B accounts. This paragraph is also proposed to be amended to clarify that the remaining amount of water will be allocated after the deduction of the operating reserve.

Section 303.22(b) clarifies that the remaining water available for allotment after the deductions under §331.22(a), shall be divided into Class A and Class B water rights, which are defined. The proposed amendment deletes the phrase "for irrigation and mining uses" which is unnecessary because the commission has added definitions for Class A and Class B water rights holders.

Section 303.22(f)(2) is proposed to be added as new language. The rule states that the watermaster may not allocate water to Class A and Class B water rights holders until the operating reserve is 75,000 acre-feet, which is the new operating reserve amount proposed in this rulemaking.

Section 303.22(f)(3) is renumbered and proposed to modify the amount of the operating reserve. Under this chapter, the commission sets an operating reserve and a DMI reserve for the minimum amount of water which must be stored in the reservoirs to ensure that DMI users have adequate water. The operating reserve is a minimum volume of acre-feet of water which is required to be maintained in the reservoir to allow for losses of water from evaporation, seepage, and conveyance; to allow for emergencies; and for adjustments of storage accounts. The new operating reserve is proposed to be 75,000 acre-feet. The trigger for negative allocations will be zero acre-feet in the operating reserve. If the operating reserve is reduced to zero acre-feet, the watermaster adjusts, through negative allocations, the Class A and Class B water accounts to restore the operating reserve to 48,000 acre- feet. When the operating reserve has been restored to 48,000 acre-feet, negative allocations will cease. Inflows must restore the operating reserve to 75,000 acre-feet before any positive allocations may be made. Only Class A and Class B accounts are subject to negative allocations.

Section 303.41 is proposed to clarify that all fees must be paid prior to the sale of water rights. This change is necessary because payment of fees before use is a statutory requirement in Texas Water Code (TWC), §11.329(e).

Section 303.42 has been rearranged for clarity. To create a logical flow, new paragraphs (3) and (4) have been created, and some language has been moved from the existing §303.42 to paragraph (1) and to new paragraph (3) of this section. Section 303.42 currently prohibits the transfer of the water rights from the point of diversion, or place of use of water rights from the Lower and Middle Rio Grande Basins to above International Amistad Reservoir. New language is proposed in §303.42(4) to define the conditions for an inverse sale (from above International Amistad Reservoir to the Lower and Middle Rio Grande Basins). These transfers would be prohibited unless the transfer request uses a conversion factor approved by the commission which would not impair other water rights or water available for allocation. This change is necessary to clarify that such a transfer is not allowed without an approved conversion factor and a showing of no impairment of other water rights because water rights in the Lower and Middle Rio Grande Basins are administered under a totally different system than exists above International Amistad Reservoir. These rights can only be transferred in a manner that ensures protection of other water rights.

FISCAL NOTE: COSTS TO STATE AND LOCAL GOVERNMENT

John Davis, Technical Specialist with Strategic Planning and Appropriations, has determined that for each year of the first five-year period the proposed amendments are in effect there will be fiscal implications, which are not anticipated to be significant, for units of state and local government as a result of administration and enforcement of the proposed amendments.

The proposed amendments would lower the operating reserve required to be maintained in the Amistad and Falcon reservoirs from 150,000 acre-feet to 75,000 acre-feet of water, which could potentially provide up to an additional 75,000 acre-feet of water for each allocation of water to the water right holders within the Rio Grande and Nueces - Rio Grande River Basins. No change is proposed regarding the current DMI reserve volume. Additionally, the proposed amendments would prohibit the sale of water rights from above International Amistad Reservoir to the Lower and Middle Rio Grande Basins. This is intended to bring consistency to the rules since water rights sales from the Lower and Middle Rio Grande Basins to above International Amistad Reservoir are already prohibited.

The area within the Rio Grande and Nueces - Rio Grande River Basins affected by the proposed amendments include the following counties: Hudspeth, Jeff Davis, Presidio, Brewster, Terrell, Edwards, Kinney, Dimmit, Webb, Jim Hogg, Cameron, Hidalgo, Kinney, Maverick, Starr, Val Verde, Webb, Willacy, and Zapata.

The commission estimates there are currently 1,096 Class A and Class B water rights holders that will be affected by the proposed amendments, 11 of which are units of state and local government. The commission estimates there will be economic benefits, which are not anticipated to be significant, for the Texas Parks and Wildlife Department (TPWD) and approximately ten municipalities in the affected regions. The TPWD and the municipalities hold several Class A and Class B water rights in the region. The total Class A and Class B water rights held by affected units of state and local government are expected to be small compared to private agricultural and mining operations. The commission estimates that if affected units of state and local government receive additional water, it would be used to maintain wildlife areas and municipal green spaces and would not result in significant economic benefits.

PUBLIC BENEFITS AND COSTS

Mr. Davis has also determined that for each of the first five years the proposed amendments are in effect, the public benefit anticipated as a result of implementing the proposed amendments will be increased amounts of water for Class A and Class B water right holders, which is intended to help alleviate drought-related business losses in the Rio Grande and Nueces - Rio Grande River Basins.

The proposed amendments would establish a new operating reserve level of 75,000 acre-feet of water required to be maintained in the International Amistad and Falcon Reservoirs, which provide water for users in the affected river basins. Lowering the operating reserve to 75,000 acre-feet of water could potentially provide up to 75,000 acre-feet of additional water for each allocation of water to Class A and Class B users. The commission estimates there are 1,085 privately-owned and operated Class A and Class B water rights holders that will be affected by the proposed amendments. This additional water is expected to have a beneficial economic impact to irrigation and mining water users in the affected river basins. There are at least four coal/lignite mines in the affected counties: three in Webb County and one in Maverick County. These are smaller mines that require approximately 150 acre-feet of water per year to operate. Although these mines have water rights for the required amount of water, drought conditions over the past few years have made it difficult for these mines to be allocated their water rights. Lowering the operating reserve level to 75,000 acre-feet of water could potentially help alleviate the shortage of water for mining operations in the region.

The primary beneficiary of the increased water supply is expected to be agricultural irrigators in the affected regions. According to a report produced by the Texas Water Development Board (TWDB), the Department of Agricultural Economics, Texas A&M University, and the Texas Water Resource Institute at Texas A&M University titled "The Value of Applied Irrigation Water and the Impact of Shortages on Rio Grande Valley Agriculture, 2001," $652 could be gained in gross regional product from the sale of irrigated crops for every acre-foot of applied irrigation to the affected areas.

Allocation of the additional 75,000 acre-feet of water, less any potential evaporation and transportation losses, is anticipated to result in an economic gain of approximately $37 million generated from the production and sale of irrigated crops. The total amount of additional water available for allocation due to lowering the operating reserve depends on water levels within the International Amistad and Falcon Reservoirs. The DMI and operating water reserves must both be maintained prior to any water being allocated for Class A and Class B users; therefore, the actual economic gain could increase, or decrease, depending on the reservoir levels.

SMALL BUSINESS AND MICRO-BUSINESS ASSESSMENT

There will be no adverse economic effects to small or micro-business as a result of the implementation of the proposed amendments. The rulemaking would establish a new operating reserve level of 75,000 acre-feet of water required to be maintained in the International Amistad and Falcon Reservoirs, which provide water for users in the Rio Grande and portions of the Nueces - Rio Grande Basins. Lowering the operating reserve from 150,000 acre-feet to 75,000 acre-feet of water could potentially provide up to 75,000 acre-feet of water for allocation to Class A and Class B water rights users.

According to a report produced by the TWDB, the Department of Agricultural Economics, Texas A&M University, and the Texas Water Resource Institute at Texas A&M University titled "The Value of Applied Irrigation Water and the Impact of Shortages on Rio Grande Valley Agriculture, 2001," $652 could be gained in gross regional product from the sale of irrigated crops for every acre-foot of applied irrigation to the affected areas.

The commission estimates there are 1,085 Class A and Class B private water rights holders that will be affected by the proposed amendments, the majority of which will probably be small and micro- businesses. Allocation of the additional 75,000 acre-feet of water, less any potential evaporation and transportation losses, is anticipated to result in an economic gain of approximately $37 million generated from the production and sale of irrigated crops. However, the total amount of additional water available for allocation due to lowering operating reserve depends on water levels within the International Amistad and Falcon Reservoirs. The DMI and operating water reserves must be maintained prior to any water being allocated for Class A and Class B users; therefore, the actual economic gain could increase, or decrease, depending on the reservoir levels.

DRAFT REGULATORY IMPACT ANALYSIS DETERMINATION

The commission reviewed the proposed rulemaking in light of the regulatory analysis requirements of Texas Government Code, §2001.0225 and determined that a full regulatory impact analysis (RIA) is not required for the changes currently proposed to 30 TAC Chapter 303.

The commission's determination is based upon the premise that an RIA is required only for a rule amendment meeting the definition of "major environmental rule" in Texas Government Code, §2001.0225(g)(3). Texas Government Code, §2001.0225(g)(3) states that for a rule change to qualify under that definition, its specific intent would have to be "to protect the environment or reduce risks to human health from environmental exposure." Additionally, the same subsection requires that, once either or both of those two intentions exist, the possibility must exist that the amended rule "may adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, or the public health and safety of the state or a sector of the state."

Generally speaking, the proposed changes impact Chapter 303 in three ways by: 1) reducing the Rio Grande system's arbitrarily determined minimum operating reserve, the impact of which is to reduce waste in the reservoir system and to increase the amount of water available for Class A and Class B water rights holders in times of drought; 2) providing procedures for the maintenance and replenishment of an appropriate operating reserve once reservoir levels fall below a specified minimum amount of acre-feet; and 3) clarifying the limits on the ability of the holders of Rio Grande water rights upstream of International Amistad Reservoir to transfer water through the system, or to convert such water rights for use and withdrawal from the reservoirs or downstream from International Amistad Reservoir, a potentiality that has never been allowed by the watermaster because the Lower and Middle Rio Grande is a court-adjudicated, administratively-closed system.

Since none of these rule amendments are specifically intended to protect the environment or reduce risks to human health from environmental exposure, none of the amendments meet the definition of "major environmental rule" in Texas Government Code, §2001.0225, and further analysis of impact is unwarranted. The commission invites public comment on its draft regulatory impact analysis determination.

TAKINGS IMPACT ASSESSMENT

The commission evaluated these proposed rules and performed a preliminary assessment of whether Texas Government Code, Chapter 2007 is applicable. The commission's preliminary assessment indicates that Texas Government Code, Chapter 2007 does not apply to these proposed rules because this is a modification of a program or regulation that does not rise to the level of a recognized interest in private real property, §2007.003(b)(5), and because the government action being taken does not affect an owner's real property in a manner that restricts or limits the owner's right to the property that would otherwise exist in the absence of the action, §2007.002(5)(B)(i).

Among other things, Texas Government Code, §2007.043 (Takings Impact Assessment) requires: a description of the specific purpose of the proposed action; an identification of how the action substantially advances its stated purpose; a description of the burdens imposed on private real property, if any, "...resulting from the proposed use of private real property..." Texas Government Code, §2007.043(b(1)(B); and a determination of whether the proposed action will constitute a taking.

For the purpose of this assessment, the actions being taken constitute the following: changes to required procedures and volumes related to the Rio Grande system's minimum operating reserve; and clarification of the watermaster's position regarding the conversion of water rights upstream from the International Amistad Reservoir and the transfer of water rights by owners with unpaid fees. The purpose of the operating reserve changes is to reduce waste in the reservoir system and to increase the amount of water available for Class A and Class B water rights holders in times of drought. The purpose of the clarification of water rights is to bring consistency to the rules' application to water rights in the Lower, Middle, and Upper Rio Grande Basins.

With regard to the changes in the operating reserve volume and procedures, these changes do not affect any private real property in any manner that restricts or limits any owner's right to such property that would exist in the absence of these changes. If anything, the reduction of the operating reserve will result in an increase in the likelihood that private rights will be fully satisfied. No private property right exists to water contained in the operating reserve; it cannot be allocated for private use. Thus, these changes do not constitute a taking under Texas Government Code, §2007.002(5)(B)(i).

Since water rights are included in the definition of "private real property" in Texas Government Code, §2007.002(4), the clarification of the right to convert or transfer those water rights requires a more detailed analysis. The proposed language is intended to clarify the conditions under which water from upstream water rights holders could be sent to downstream users. The watermaster has not allowed such a transfer in the past, nor does the watermaster intend to allow such a transfer in the future absent an approved conversion factor or a showing that existing water rights below International Amistad will not be impaired because of the uniqueness of the court-adjudicated system of allocation. Likewise, a water rights owner could currently believe that his or her rights may be conveyed prior to all delinquent fees and penalties being paid. Such a belief is contrary to TWC, §11.329(e). Therefore, these amendments do not affect an owner's real property in a manner which restricts or limits the owner's right to the property that would otherwise exist in the absence of the rulemaking.

The TWC, §11.122(a) (Amendments to Water Rights Required) requires that holders of permits, certified filings, and certificates of adjudication "shall obtain from the commission, authority to change the place of use, purpose of use, point of diversion, rate of diversion, acreage to be irrigated, or otherwise alter a water right." The Austin Court of Civil Appeals held that these limitations on water rights do not constitute a taking. Clark v. Briscoe Irr. Co., 200 S.W.2d 674 (Tex.Civ.App. Austin 1947). Thus, a holder of water rights in the upper regions of the Rio Grande has a defined right to divert a specific volume of water from a specific diversion point and use that water for a specific authorized purpose. However, the holder does not have an absolute right to change the point of diversion or the purpose of use because the possibility/probability exists that an amendment for the purpose of making such changes would not be granted. Under TWC, §11.134, water rights amendments are not authorized if other water rights would be impaired. No such amendments of Upper Rio Grande rights have ever been granted. The granting of such amendments would require complicated calculations in order to ensure that other rights would not be affected. No conversion factors currently exist for volumes of water transferred into the system. Such conversion factors would have to be formulated to determine the amount of water that could be diverted hundreds of miles downstream. The reality is that the Amistad/Falcon system is already a fully allocated administratively-closed system and the introduction of new water rights into the system is currently unworkable without impairing existing rights to water already allocated within the system. The commission would only consider granting such a transfer if it had a workable approved conversion factor and a showing that no water rights in the system would be impaired.

In summary, the proposed changes do not constitute a taking. The changes related to the operating reserve pertain to water owned by the State of Texas. The clarification related to Upper Rio Grande water rights is not a taking because there is no absolute right to transfer this water without the express approval of both the Rio Grande Watermaster and the commission. No mechanism currently exists for calculating either the reduction of water volume from upstream through the administratively- closed and fully-allocated system or the extent of impairment of existing allocated water rights.

CONSISTENCY WITH THE COASTAL MANAGEMENT PROGRAM

The executive director reviewed the proposed rulemaking and found that the rules are neither identified in Coastal Coordination Act Implementation Rules, 31 TAC §505.11, relating to Actions and Rules Subject to the Texas Coastal Management Program (CMP), nor will they affect any action or authorization identified in Coastal Coordination Act Implementation Rules, 31 TAC §505.11. Therefore, the proposed rules are not subject to the CMP.

PUBLIC HEARING

A public hearing on this proposal will be held in Harlingen on February 23, 2001, at 2:00 p.m. at the commission's regional office located at 1804 West Jefferson Avenue. The hearing is structured for the receipt of oral or written comments by interested persons. Individuals may present oral statements when called upon in order of registration. Open discussions will not occur during the hearing; however, an agency staff member will be available to discuss the proposal 30 minutes prior to the hearing and will answer questions before and after the hearing. A Spanish translator will be provided by the commission at the hearing.

Persons with disabilities who have special communication or other accommodation needs who are planning to attend the hearings should contact the agency at (512) 239-4900. Requests should be made as far in advance as possible.

SUBMITTAL OF COMMENTS

Comments may be submitted to Joyce Spencer, Office of Environmental Policy, Analysis, and Assessment, MC 205, P.O. Box 13087, Austin, Texas 78711-3087, or faxed to (512) 239-4808. All comments should reference Rule Log Number 2000-041-303-WT. Comments must be received by 5:00 p.m., February 26, 2001. For further information contact Melissa Estes, Policy and Regulations Division, at (512) 239-3937.

Subchapter A. INTRODUCTORY PROVISIONS

The Texas Natural Resource Conservation Commission (TNRCC or commission) proposes amendments to §331.2, Definitions; §331.7, Permit Required; §331.9, Injection Authorized by Rule; §331.10, Inventory of Wells Authorized by Rule; §331.11, Classification of Injection Wells; §331.12, Conversion of Wells; §331.82, Construction Requirements; §331.131, Applicability; §331.132, Construction Standards; and §331.133, Closure Standards. The commission also proposes new §331.8, Prohibition of Motor Vehicle Waste Disposal Wells; §331.135, Construction Standards for Large Capacity Septic Systems; §331.136, Closure Standards for Motor Vehicle Waste Disposal Wells, Large Capacity Septic Systems, Large Capacity Cesspools, and Drywells; §331.137, Permits for Motor Vehicle Waste Disposal Wells; and §331.138, Monitoring Requirements for Motor Vehicle Waste Disposal Wells.

BACKGROUND AND SUMMARY OF THE FACTUAL BASIS FOR THE PROPOSED RULES

Underground injection wells are regulated under the authority of Part C of the federal Safe Drinking Water Act (SDWA or the Act) (42 United States Code (USC), 300h et seq.). Part C mandates the regulation of underground injection of fluids through wells. Section 1421 of the Act requires the United States Environmental Protection Agency (EPA) to propose and promulgate regulations specifying minimum requirements for state programs to prevent underground injection that endangers drinking water sources. The EPA entered into a consent decree with the Sierra Club on August 31, 1994, subsequently modified on January 28, 1997, requiring the EPA to complete the promulgation of regulations for high risk Class V wells to prevent underground injection that endangers drinking water. Class V wells are generally shallow wells used to inject nonhazardous fluids into or above formations that contain underground sources of drinking water (USDW). The EPA has promulgated a final rule, Underground Injection Control Regulations for Class V Injection Wells, in the December 7, 1999 issue of the Federal Register (64 FR 68546). The new federal rule provisions are in Title 40, Code of Federal Regulations (CFR), Part 144, Underground Injection Control Program, and Part 146, Underground Injection Control Program: Criteria and Standards.

The federal rules primarily address two types of Class V injection wells that have high potential for endangering USDWs: large capacity cesspools and motor vehicle waste disposal wells. The EPA's rulemaking links the Class V underground injection control (UIC) program and the State Drinking Water Source Assessment and Protection Program for motor waste disposal wells. The federal rules also adopt new definitions of "subsurface fluid distribution system" and "improved sinkhole" which define these as Class V injection wells and therefore subject to these rules. Under the federal rules, construction of new large capacity cesspools and motor vehicle waste disposal wells are banned by the federal rules as of April 5, 2000. Under the EPA's rulemaking, all existing motor vehicle waste disposal wells in a groundwater protection area must close or obtain a permit within one year of the designation of the groundwater protection area, but no later than by January 1, 2005 (40 CFR §144.87(b)). Groundwater protection areas are delineated under the Drinking Water Source Assessment and Protection Program for source water protection areas for community or non-transient non-community water systems that use groundwater as a source of drinking water. The EPA's rulemaking also provides that states may delineate other sensitive groundwater areas for groundwater areas that are critical for public health protection because of hydrogeologic and other features that would cause USDWs to be vulnerable to contamination from injection wells. The owner or operator may request an extension of one year on the closure requirement in groundwater protection areas from the UIC program director. Additionally, EPA's rulemaking requires the closing of all other motor vehicle waste disposal wells in other sensitive groundwater areas, if delineated by the state, or statewide by January 1, 2007, if other sensitive groundwater areas are not delineated unless the owner or operator of the well obtains a permit or converts the well (40 CFR §144.87).

Options for motor vehicle waste disposal well owners offered in the new federal rules are to: 1) apply for a permit (40 CFR §144.84); 2) to get an extension of the closure compliance date in groundwater protection areas for up to one year, if the most efficient compliance option is to route the waste to a sanitary sewer or to install a new treatment technology (40 CFR §144.87(b)); or 3) convert the motor vehicle waste disposal well to another type of Class V well if all motor vehicle fluids are segregated by physical barriers and are not allowed to enter the well, and injection of motor vehicle waste is unlikely based on a facility's compliance history and records showing proper waste disposal (40 CFR §144.89(b)). A motor vehicle waste disposal well is defined in the federal rules as a well which currently receives or has ever received motor vehicle waste. The federal rules further state that if a motor vehicle waste disposal well owner or operator applies for a permit, the disposed waste must meet the primary maximum contaminant levels (MCLs) for drinking water, and other health- based standards at the point of injection. Additionally, the owner or operator must follow best management practices and monitor the injectate (40 CFR Part 144, Table 2). The federal rules also clarify plugging and abandonment requirements for Class IV and V wells, and propose new and amended definitions.

To demonstrate environmental need, the EPA cited evidence in its rulemaking that fluids released in motor vehicle waste disposal wells commonly exceed primary MCLs for drinking water, and that these wells have been linked with contamination of USDW. Data provided by the EPA indicates that fluids being injected may exceed health-based limits for contaminant levels in water by ten to 100 times. The data also demonstrates that contaminants known to be associated with motor vehicle waste disposal wells occur nationwide in public water systems. (64 FR 68548 December 7, 1999).

The EPA justifies the ban on large capacity cesspools because large capacity cesspools have a high potential to contaminate USDWs. The effluent released from cesspools frequently exceeds drinking water MCLs for nitrates, total suspended solids, and coliform bacteria; and may contain other constituents of concern such as phosphates, chlorides, grease, viruses, and industrial chemicals such as trichloroethane and methylene chloride. Pathogens in untreated sanitary waste released into large capacity cesspools could contaminate water supply sources and pose a serious health risk with a single exposure (64 FR 68551, December 7, 1999). Also, the use of large capacity cesspools is recognized as an inferior method of disposing of waste that can be remedied by the installation of a septic system (64 FR 68553, December 7, 1999). Prior to this federal rulemaking, the commission had banned and continues to ban cesspools in §285.3 of this title (relating to On-Site Sewage Facilities).

Section 1422 of the SDWA provides that states may apply to the EPA for primary enforcement responsibility to administer the federal UIC program. Texas has applied for and been approved by the EPA to administer the federal UIC program in this state since January 6, 1982. The commission is therefore obligated to maintain rules at least as stringent as the federal rules to retain federal authorization to implement the UIC program in Texas.

In Texas, the UIC program is implemented under Texas Water Code (TWC), Chapter 27, Injection Wells, and the commission's rules, 30 TAC, Chapter 331, Underground Injection Control. The new and amended federal rule requirements are proposed to be incorporated into Chapter 331, Subchapter A, General Provisions, and Subchapter H, Standards for Class V Wells.

The main purpose of the commission's rulemaking is to implement these new federal rules. The commission proposes to require all existing motor vehicle waste disposal wells in groundwater protection areas to close or obtain a permit within one year of the date the groundwater protection areas are identified by the commission, and no later than January 1, 2005. This is in compliance with new 40 CFR §144.87(b). Additionally, with the effective date of these rules, the commission prohibits the construction of new motor vehicle waste disposal wells or large capacity cesspools. Because there are no currently inventoried (registered) motor vehicle waste disposal wells in the state and only a small number are believed to exist, the commission decided not to designate other sensitive groundwater areas (as allowed by the federal rules) and instead, is proposing to require all existing motor vehicle waste disposal wells outside of groundwater protection areas to close or obtain a permit. Therefore, owners and operators of all motor vehicle waste disposal wells in areas other than groundwater protection areas must close the wells or obtain a permit by January 1, 2007. The commission determined that this will provide consistent and equitable regulation throughout the state and will not require the commitment of additional resources to determine other sensitive groundwater protection areas, or to develop a program and regulations for motor vehicle waste disposal wells. This decision to apply the rules statewide does not mean the commission determined that the entire state is a sensitive groundwater protection area. The phasing in of these deadlines is intended to give any owners of motor vehicle waste disposal wells the most time possible to close these wells. The commission solicits comments from motor vehicle waste disposal well owners and operators and other interested persons on the proposal to apply the rules statewide rather than designating other sensitive groundwater areas.

The commission determined that the cost of complying with the options of obtaining a permit for a motor vehicle waste disposal well and meeting primary MCLs for drinking water at the point of injection, or installing a new on-site treatment process would most likely not be cost effective for a majority of the well owners or operators. Similarly, the option of converting a motor vehicle waste disposal well to another use by physically blocking off the motor vehicle wastes present, not allowing injection of motor vehicle wastes, and monitoring the injectate was also considered most likely not too cost-effective. Recycling or off-site disposal of motor vehicle waste is anticipated to be more cost effective than these options. If public comment does not show a need for the permitting option, that option will be deleted from the final rule. However, the commission included the option of obtaining a permit or converting the well in the proposed rules and is seeking public comment on these options.

In addition to changes to implement the federal rules, the commission proposes to incorporate some minor clarifications and updates. The commission proposes to include specific definitions of large capacity cesspools, septic systems, subsurface fluid distribution systems, and improved sinkholes to clarify their status as Class V injection wells. Temporary injection points are proposed to be added to reflect advances in technology such as the current use of push point technology for the delivery of fluids into or above a USDW. The proposed amendments also clarify that the Class V wells listed in TWC, §32.001(8) shall be installed by a licensed water well driller. In addition, amendments are proposed to the construction and closure sections of the rules because they include the types of Class V injection wells that are the primary focus of the new federal rules and the commission wants to update the construction and closure methods to reflect recent advances in technology.

SECTION BY SECTION DISCUSSION

Subchapter A: General Provisions

Section 331.2, Definitions, is proposed to be amended to add new definitions for "cesspool," "drywell," "groundwater protection area," "improved sinkhole," "point of injection," "sanitary waste," "septic system," and "subsurface fluid distribution system" and to amend the definition of "well" for compatibility with new 40 CFR §144.3. In addition, the commission proposes to add new definitions for "large capacity cesspool," "large capacity septic system," "motor vehicle waste disposal well," "temporary injection point," and "well injection."

The definition for "large capacity septic system" found in §331.2(50) is "A septic system that is designed for a flow of greater than 5,000 gallons per day." In the federal rules, a "large capacity cesspool" is one which receives sanitary waste and serves more than 20 persons a day. The commission is proposing that a cesspool capacity of 5,000 gallons per day is equivalent to a cesspool that serves 20 persons per day. The definition of "large capacity septic system" is not in the federal rules; however, the commission is proposing this definition to provide consistency with Chapter 285 of this title (relating to On-Site Sewage Facilities).

The new definition for "motor vehicle waste disposal well" is derived from new 40 CFR §144.81(16) and is proposed to be added to clarify that wells which receive or have ever received motor vehicle waste are Class V injection wells. The new definition of "temporary injection point" is being proposed to keep the state rules up to date with push point injection technology used in remediation of groundwater. The new definition of "well injection" is proposed to be added to simply state that well injection means the subsurface emplacement of fluids through a well. These definitions are being added and/or amended for compatibility with the federal rules located at 40 CFR §144.3.

The terms "improved sinkhole" and "subsurface fluid distribution system" are also defined under 40 CFR §144.3 as types of injection wells regulated under the UIC program. These proposed definitions codify the commission's interpretation that the intentional disposal of fluids in natural depressions, open fractures, and crevices (such as those commonly associated with cooling of lava flows or weathering of limestone) fits within the statutory definition of underground injection. Because improved sinkholes and subsurface fluid distribution systems are now considered Class V wells, owners or operators of these wells must comply with the inventory requirements of this chapter. The definition "groundwater protection area" defines the area subject to motor vehicle waste disposal well regulation. In compliance with the new federal rules, the definition of "well" is proposed to be amended to clarify that "well" includes improved sinkholes and subsurface fluid distribution systems. Where necessary, the definitions in the section have been renumbered to accommodate the addition of the new definitions.

The proposed new definitions for "cesspool," "drywell," "point of injection," "sanitary waste" and "septic system" are derived from the new federal definitions in 40 CFR §144.3.

Section 331.7, Permit Required, is proposed to be amended. New §331.7(c) is added to clarify that a wastewater discharge permit is required for large capacity septic systems, or septic systems which accept industrial waste, in addition to the requirements of this chapter. Large capacity septic systems are currently regulated by the commission under TWC, Chapter 26, and 30 TAC Chapter 305 (relating to Consolidated Permits).

New §331.8, Prohibition of Motor Vehicle Waste Disposal Wells and Large Capacity Cesspools, is proposed to implement the federal requirement under 40 CFR §144.87, since the commission is proposing to use the option of not identifying "other sensitive groundwater protection areas." Proposed new §331.8(a) implements a ban on the construction of all new motor vehicle waste disposal wells and large capacity cesspools. The construction of these two types of wells has been prohibited by the federal rules since June 2, 1987. Proposed new §331.8(b) specifies that the owner or operator of an existing motor vehicle waste disposal well located in a groundwater protection area must close the well within one year of the designation of the groundwater protection area, but no later than January 1, 2005, or must apply for a UIC Class V permit prior to the closure date. This subsection also describes well permitting and closure procedures and requirements. It should be noted that if comments received on the proposed rules do not indicate a need for a permitting program, this permitting option will be deleted from the final rules. If the most efficient compliance option is connection to a sanitary sewer or installation of new treatment technology, proposed §331.8(b)(1) establishes the procedure and requirements for applying for an extension from the closure date for one year, as provided in 40 CFR §144.87(b)(2). Proposed §331.8(b)(2) specifies that to continue operating during an extension, the owner or operator must ensure that the injectate meets primary MCLs for drinking water and other health-based standards at the point of injection. Proposed §331.8(c) establishes that the owner or operator of all existing motor vehicle waste disposal wells in areas of the state other than groundwater protection areas must close the well by January 1, 2007, or apply for a Class V UIC permit prior to January 1, 2007. Proposed new §331.8(d) specifies that the owner or operator of an existing motor vehicle waste disposal well must close the well in accordance with closure standards specified in new §331.136 of this title (relating to Closure Standards for Motor Vehicle Waste Disposal Wells, Large Capacity Septic Systems, Large Capacity Cesspools, and Drywells).

Section 331.9, Injection Authorized by Rule, is proposed to be amended. Subsection 331.9(a) is proposed to be amended to update the cross-reference to §331.133 of this title (relating to Closure Standards), and §331.136 of this title. Section 331.9(b) is also proposed to be amended to require that Class V wells used to dispose of greater than 5,000 gallons per day of sewage or sewage effluent must be authorized by a wastewater discharge permit. The amount of effluent is proposed to be increased from 1,000 gallons per day to greater than 5,000 gallons per day for consistency with other commission rules and to be equivalent to federal rules where the capacity is specified as greater than 20 persons per day in 40 CFR §144.81(9).

Section 331.10, Inventory of Wells Authorized by Rule, is proposed to be amended. Section 331.10(b) repeats the requirement that drillers of closed loop and air conditioning return flow injection wells submit an inventory form provided by the executive director as required under §331.132(b)(3) of this title (relating to Construction Standards). Minor grammatical changes are also proposed for this subsection. New §331.10(d) is proposed to require that inventory information for all Class V wells, with the exception of closed loop and air conditioning return flow wells, be submitted prior to construction, conversion, or use of the well. Inventory information for closed loop and air conditioning return flow wells may be submitted after construction of these types of wells.

Proposed new §331.10(e) specifies that owners and operators of existing subsurface fluid distribution systems and improved sinkholes must submit the inventory information within one year of the effective date of these rules. All new subsurface fluid distribution systems and improved sinkholes must comply with subsection (d) of this section.

Section 331.11, Classification of Injection Wells, is proposed to be amended. New §331.11(a)(1)(C) is proposed to specify that radioactive waste disposal wells which inject fluids below the lowermost formation containing an underground source of drinking water (USDW) within 1/4-mile of the well bore are classified as Class I injection wells. This requirement is added to implement the new federal rules at 40 CFR §144.6(a)(3). These disposal wells are primarily associated with in situ uranium mining operations in South Texas and are used for disposal of uranium byproduct as defined in Texas Health and Safety Code, §401.003(3)(B). These wells have historically been permitted as Class I injection wells, and are identical to other Class I injection wells in terms of their design, the nature of injected fluids, and their potential to endanger USDWs; therefore, they warrant the same level of control as other Class I injection wells. This classification change does not mean that the Class II injection wells permitted by the Railroad Commission of Texas (RCT) to inject oil and gas naturally-occurring radioactive material (NORM waste) are reclassified as Class I wells. These wells remain under RCT jurisdiction as Class II wells. However, any wells used to inject non-oil and gas NORM waste for disposal are Class I wells under TNRCC jurisdiction.

Section 331.11(a)(4) is proposed to be amended to improve readability by moving the second sentence in the paragraph to the beginning of the paragraph. Clarification as to which Class V injection wells are under the jurisdiction of the RCT is provided. Section 331.11(a)(4)(C) is proposed to be amended to clarify that large capacity cesspools which are Class V wells are those cesspools which receive greater than 5,000 gallons of waste per day. Sections 331.11(a)(4)(J)(i) and (ii) are proposed to be amended to clarify that vertically completed septic systems that receive greater than 5,000 gallons per day are classified as Class V wells. Sections 331.11(a)(4)(K) and (L) are proposed to be amended for punctuation. New §331.11(a)(4)(M) and (N) are proposed to list motor vehicle waste disposal wells and improved sinkholes as types of Class V injection wells in accordance with the federal rules at 40 CFR §144.1 and §144.81. New §331.11(a)(4)(O) is proposed to list aquifer remediation wells, temporary injection points, and subsurface fluid distribution systems as additional types of Class V wells.

Section 331.12, Conversion of Wells, is proposed to be amended. Proposed new §331.12(a)(4) clarifies that prior to converting a Class V motor vehicle waste disposal well, the owner or operator must inventory the well with the executive director, as required in §331.10 of this title. Proposed new §331.12(c) provides the conversion requirements for motor vehicle waste disposal wells. Proposed new §331.12(c)(1) states that the use of a semi-permanent plug is not sufficient to segregate waste; §331.12(c)(2) states the conditions under which the executive director may approve a Class V well conversion. Proposed new §331.12(c)(2)(C) limits the conversion of Class V wells to those circumstances where the future injection of motor vehicle fluids is unlikely based on a facility's compliance history and records.

Subchapter E: Standards for Class III Wells

Section 331.82(b) and (g), Construction Requirements, are proposed to be amended to change "commission" to "executive director" to distinguish that the actions are actually performed by the executive director and not the commissioners. These amendments are not related to the new federal rules.

Subchapter H: Standards for Class V Wells

Section 331.131, Applicability, is proposed to be amended to delete the word "new." This amendment clarifies that rules in Subchapter H are applicable to> with the new federal rules.

Section 331.132, Construction Standards, is proposed to be amended. Section 331.132(a) is proposed to be amended to make explicit the requirement that the types of injection wells listed in TWC, §32.001(8) shall be installed by a licensed water well driller. Section 331.132(b)(1) is proposed to be amended to specify the requirement that inventory information for Class V wells in accordance with §331.10(a) of this title, shall be submitted for review and approval prior to construction of the well. Additionally, paragraph (b)(1) is proposed to be amended to require that inventory information for large capacity septic systems be submitted as part of the wastewater discharge permit application. Section 331.132(b)(2) adds large capacity septic systems, subsurface fluid distribution systems and temporary injection points to the requirement to submit the Texas Department of Licensing and Regulation state well report form to the executive director within 30 days of construction of the well. Section 331.132(d)(1) is proposed to be amended to specify that surface completion requirements for injection wells do not apply to temporary injection points and large capacity septic systems. New 331.132(d)(4) is proposed to be added to implement the requirement that temporary injection points shall be completed in such a manner as to prevent the movement of surface fluids into a USDW. New §331.132(h) is proposed to specify that sampling shall be done on a Class V injection well from the point of injection, the last accessible sampling point prior to the waste fluids being released into the subsurface environment. This requirement is to ensure that any sampling is representative of the waste fluid being released and is consistent with the sampling requirement for permitted motor vehicle waste disposal wells in 40 CFR §144.88(b), Table 2.

Section 331.133, Closure Standards, is proposed to be amended. The title of this section is proposed to be amended to "Closure Standards for Vertically Completed Injection Wells," and to provide that the closure standards specified in this section apply to vertically completed injection wells. This is to distinguish these closure standards from those of horizontally completed septic systems and subsurface fluid distribution systems, for which the closure requirements found in new §331.136 of this title are more generally applicable. Section 331.133(a) is proposed to be amended for consistent use of terminology; specifically, the term "close" is substituted for "plug or plugged." This subsection is also proposed to be amended to specify that the injection well must be closed in a manner that complies with §331.46(d) of this title (relating to Closure Standards), 40 CFR §144.12 (Prohibition of movement of fluid into underground sources of drinking water, effective June 2, 1987), and disposal or other management of any contaminated soil, gravel, sludge, liquids, or other materials removed from or adjacent to the well must be in accordance with Chapter 350 of this title (relating to Texas Risk Reduction Program). New §331.133(e) is proposed to specify the proper closure technique for temporary injection points. This subsection accommodates the use of push point technology for remediation of groundwater.

New §331.135, Construction Standards for Large Capacity Septic Systems, is proposed to provide appropriate regulatory standards for the construction of large capacity septic systems. During construction, the movement of fluids which might contaminate a USDW, violate primary drinking water standards, or other health-based standards is prohibited. There were no construction standards previously specified in commission rules for these types of Class V injection wells. These wells do require permits from the Wastewater Permits Section of the commission under Chapter 305 of this title (relating to Consolidated Permits) and Chapter 281 of this title (relating to Applications Processing).

New §331.136, Closure Standards for Motor Vehicle Waste Disposal Wells, Large Capacity Septic Systems, Large Capacity Cesspools and Drywells, is proposed to provide appropriate regulatory standards for the closure of these types of Class V injection wells. These proposed standards, in part, implement the federal requirements for closure of Class V wells found in new 40 CFR §144.89. These standards ensure that wells are closed in a manner that prevents the movement of contaminated fluids into a USDW, which may cause a violation of the primary drinking water or other health-based standards, or adversely affect public health. Proposed new §331.136(a) specifies that owners or operators of large capacity cesspools, motor vehicle waste disposal wells, large capacity cesspools, and dry wells must comply with the standards set forth in this section. Proposed new §331.136(b) specifies that owners or operators of large capacity cesspools and motor vehicle waste disposal wells must provide pre-closure notification to the executive director 30 days prior to closure. In addition, proposed new §331.136(c) specifies closure procedures and requirements.

Proposed new §331.137, Permit for Motor Vehicle Waste Disposal Wells, establishes the minimum requirements for a motor vehicle waste disposal well permit. Proposed new §331.137(1) establishes that owners or operators of motor vehicle waste disposal wells shall demonstrate that fluids released in their wells meet the primary drinking water MCLs and other health- based standards at the point of injection. Proposed new §331.137(2) establishes that owners or operators shall follow prescribed best management practices as specified in their permits. Proposed new §331.137(3) establishes that owners or operators are required to monitor the quality of their injectate and sludge both initially and on a continuing basis as specified in their permit to demonstrate compliance with MCLs at the point of injection. If no comments are received to show a demand for this permitting program, it will be deleted from the final rules.

New §331.138, Monitoring Requirements for Motor Vehicle Waste Disposal Wells, establishes that owners or operators are required to characterize the quality of their injectate and any sludge. Proposed new §331.138(1) specifies that if liquid from sludge has chemical concentrations below the MCLs, then owners or operators are required to analyze the injectate quarterly for the first three years of operation after receiving a permit, and then annually to ensure that the injectate is consistently below the MCLs. Proposed new §331.138(2) establishes that owners or operators are required to analyze their sludge annually. Proposed new §331.138(3) establishes that if the injectate is below the primary MCLs for drinking water but liquid from the sludge is above the MCLs, then owners or operators are required to meet the monitoring requirements specified in §331.138(1) and (2), and also must pump and properly dispose of the sludge. Proposed new §331.138(4) specifies that if the injectate exceeds the primary MCLs for drinking water and the liquid from the sludge also exceeds the MCLs, then the owner or operator must comply with treatment techniques specified in subparagraphs (A) - (E) of this paragraph. Proposed new §331.138(4)(A) - (E) specify that the owner or operator must install treatment techniques to meet permit requirements, pump and properly dispose of the sludge, perform quarterly sampling of injectate for the first three years of operation after receiving a permit and then perform annual sampling if consistently below the primary MCLs for drinking water, perform annual sampling of the sludge, and follow all other requirements established by the executive director.

FISCAL NOTE: COST TO STATE AND LOCAL GOVERNMENT

John Davis, Technical Specialist with Strategic Planning and Appropriations, has determined that for each year of the first five-year period the proposed amendments are in effect there will be fiscal implications which may be significant, depending on the number of affected Class V injection wells that a unit of state or local government owns or operates, as a result of administration or enforcement of the proposed amendments. The average annualized cost to close Class V motor vehicle waste disposal wells affected by the proposed amendments would range from $4,300 to $11,000 and the cost to close large capacity cesspools would be approximately $3,700.

The proposed amendments will adopt new federal UIC regulations for Class V injection wells, which were adopted by the EPA in December 1999. Class V injection wells are generally shallow wells used to release non-hazardous fluids either directly into USDW or into the shallow subsurface that overlies the USDW. Types of Class V injection wells include, but are not limited to: motor vehicle waste disposal wells, large capacity cesspools, storm water drainage wells, aquifer remediation wells, aquifer storage and retrieval wells, aquifer recharge, and large capacity septic systems. The federal rules primarily address two types of Class V injection wells that have a high potential for endangering USDW: large capacity cesspools and motor vehicle disposal wells. In addition to implementing the UIC federal rules, the proposed amendments incorporate editorial updates for clarification of existing rules.

Large capacity cesspools are usually drywells, which are a bored, drilled, or driven, shaft or a dug hole whose depth is greater than its largest surface dimension, which is completed above the water table so that its bottom and sides are typically dry when receiving fluids. Large capacity cesspools are drywells that receive untreated sanitary waste, which sometimes have an open bottom and/or perforated sides. The UIC requirements do not apply to single-family residential cesspools or to non-residential cesspools that receive solely sanitary waste and have the capacity to serve fewer than 20 persons or 5,000 gallons a day or less.

Motor vehicle waste disposal wells are wells or subsurface fluid distribution systems that receive or have received fluids from vehicular repair or maintenance activities, such as an auto body repair shop; automotive repair shop; new and used car dealerships; aviation, marine, and rail repair facilities; specialty repair shops (such as transmission and muffler repair shops); or any facility that does any vehicular repair work.

The construction of new large capacity cesspools and motor vehicle waste disposal wells are banned by the federal rules as of April 5, 2000. The construction of large capacity cesspools in Texas has been banned since at least 1997. The proposed amendments will require operators of existing motor vehicle waste disposal wells that are located in groundwater protection areas to obtain a permit or close the facility by no later than January 1, 2005. Motor vehicle waste disposal wells not located in groundwater protection areas will have to obtain a permit or close the facility by no later than January 1, 2007. The agency is in the process of determining the location of groundwater protection areas in Texas.

The total number of wells affected by this rulemaking is undetermined at this time because none have been inventoried. Any unit of state or local government that operates a facility that conducts vehicle maintenance may possibly be affected by the proposed amendments. Although the total number is unknown, the commission estimates there will be units of state or local government that have operational wells affected by the proposed amendments.

The EPA conducted an economic analysis of the federal rules and published the findings in the November 19, 1999, report titled "Economic Analysis for Final Rule: Revision to the Underground Injection Control Regulations for Class V Injection Wells." Data from this report was used in this fiscal note to provide the costs and issues associated with obtaining a permit or closing affected facilities. Based on the EPA report, the annual cost to units of state and local government would be approximately $3,700 to close a large capacity cesspool.

For a motor vehicle waste disposal well to qualify for a permit, the injectate cannot exceed primary drinking water MCLs and other health-based standards. Costs associated with obtaining a permit include initial sampling of injectate, implementation of best management practices (if required), permit application and development fees, and annual injectate and sludge sampling to ensure MCLs and other health-based standards are not exceeded.

The EPA estimated that all motor vehicle waste disposal facilities would have to implement best management practices to meet MCLs and other health-based standards. The EPA's estimates concerning meeting MCL thresholds did not incorporate data from facilities in Texas; therefore, it is undetermined how many facilities in Texas would have to implement best management practices to meet the required MCLs and other health-based standards. Facilities in Texas would only have to implement best management practices if the operator wanted to pursue a permit and if the facility could not meet MCLs and other health-based standards. Examples of best management practices that would be implemented include installation of collection devices, improvement of handling processes, recycling wastes in on-site solvent units, overall improvement of facility cleanliness, installation of mechanical devices for material removal, and installation and operation of built-in distillation units. One-time capital costs to implement best management practices would range from: 1) approximately $1,800 for small auto/home supply operations; 2) approximately $7,500 for the majority of sites including auto repair shops, trucking operations, auto transmission and exhaust repair shops, and auto dealerships; and 3) approximately $27,000 for airport operations. The annual operation and maintenance (O&M) costs for each sector would be approximately $1,300, $1,700, and $4,700, respectively.

The total costs to obtain a permit depends on the waste stream developed by the facility and whether best management practices would have to be implemented to meet MCLs and other health- based standards. For facilities that do not have to implement best management practices, the total one- time costs (including initial sampling, permit development, and application fees) would be approximately $2,600 with annual monitoring costs of approximately $1,900. If a facility has to implement best management practices, the total capital, sampling, and permit costs would be approximately $4,400 to $29,600 with annual monitoring and O&M costs (for best management practice equipment) of approximately $3,200 to $6,500. This last annual range could increase if capital expenditures for best management practice equipment were financed over several years.

If a facility cannot meet required MCLs or other health-based standards, the well would have to be closed. Steps involved in closing the facility include off-site recycling or disposal of well contents, closing the well, sampling the soil, and remediation of the soil and groundwater if required. The EPA estimated that the annual cost, including annualized capital and O&M costs, to units of state and local government to close motor vehicle waste disposal wells would be approximately $4,300 to $11,000 depending on the waste stream.

In addition to closing the well, if the facility continues operations, it will have to continue to handle the generated waste. The agency estimates that the majority of urban facilities are also tied into sewer systems, which could be used to dispose of waste, depending on the waste stream. Fewer rural sites would have access to sewers and would have to rely on other options. Other alternatives to dispose of waste would include sending the waste offsite to a publicly-owned treatment works facility, an industrial/commercial wastewater treatment facility, or to a recycler. There will be monthly or annual costs associated with these options; however, the agency does not have an estimate at this time. The overall fiscal impact to units of state and local government will depend on the number of affected injection wells that are closed or permitted due to implementation of the proposed amendments.

PUBLIC BENEFIT AND COSTS

Mr. Davis has also determined for each of the first five years the proposed amendments are in effect, the public benefit anticipated as a result of implementing the proposed amendments will be greater environmental protection through stricter regulation of Class V injection wells (specifically large capacity cesspools and motor vehicle waste disposal wells) that have a high risk of contaminating a USDW. These wells will be closed or permitted and a prohibition against new wells will be established. These measures are intended to permanently remove the risk of contamination from these high risk wells.

The proposed amendments will adopt new federal UIC regulations for Class V injection wells, which were adopted by the EPA in December 1999. Types of Class V injection wells include: motor vehicle waste disposal wells, large capacity cesspools, storm water drainage wells, aquifer remediation wells, and large capacity septic systems. The federal rules primarily address two types of Class V injection wells that have a high potential for endangering USDWs: large capacity cesspools and motor vehicle disposal wells. In addition to implementing the UIC federal rules, the proposed amendments will incorporate editorial updates for clarification of existing rules and will incorporate updates in injection well technology.

Large capacity cesspools are drywells that receive untreated sanitary waste, and which sometimes have an open bottom and/or perforated sides. The UIC requirements do not apply to single-family residential cesspools or to non-residential cesspools that receive solely sanitary waste and have the capacity to serve fewer than 20 persons (receive less than 5,000 gallons a day). Motor vehicle waste disposal wells are wells or subsurface fluid distribution systems that receive or have received fluids from vehicular repair or maintenance activities, such as an auto body repair shop, automotive repair shop, new and used car dealerships, specialty repair shops (such as transmission and muffler repair shops), or any facility that does any vehicular repair work.

The construction of new large capacity cesspools and motor vehicle waste disposal wells are banned by the federal rules as of April 5, 2000. The construction of large capacity cesspools in Texas has been banned since at least 1997. The proposed amendments will require operators of existing motor vehicle waste disposal wells that are located in groundwater protection areas to obtain a permit or close the facility by no later than January 1, 2005. Motor vehicle waste disposal wells not located in groundwater protection areas will have to obtain a permit or close the facility by no later than January 1, 2007. The agency is in the process of determining the location of groundwater protection areas in Texas.

The total number of wells affected by this rulemaking is undetermined at this time because none have been inventoried. Any individual or business that owns and operates a facility that conducts vehicle maintenance may possibly be affected by the proposed amendments. Although the total number is unknown, the commission estimates there will be a few individuals and businesses that have operational wells affected by the proposed amendments.

The EPA conducted an economic analysis of the federal rule and published the findings in the November 19, 1999, report titled "Economic Analysis for Final Rule: Revision to the Underground Injection Control Regulations for Class V Injection Wells." Based on the EPA report, the annual cost to individuals and businesses would be approximately $3,700 to close a large capacity cesspool, and $4,300 to $11,400 to close a motor vehicle waste disposal well, depending on the waste stream entering the well.

If a facility qualified for a permit, the total costs to receive the permit would depend on whether best management practices have to be implemented to meet required environmental standards. If a facility meets environmental standards, the total one-time costs (including initial sampling, permit development, and application fees) would be approximately $2,600 with annual monitoring costs of approximately $1,900. If a facility has to implement best management practices, the total capital, sampling, and permit costs would be approximately $4,400 to $29,600 with annual monitoring and O&M costs (for best management practice equipment) of approximately $3,200 to $6,500. This last annual range could increase if capital expenditures for best management practice equipment was financed over several years.

In addition to closing the well, if the facility continues operations, it will have to continue to handle the generated waste. The agency estimates that the majority of urban facilities are also tied into sewer systems, which could be used to dispose of waste, depending on the waste stream. Fewer rural sites would have access to sewers and would have to rely on other options. Other alternatives to dispose of waste would include sending the waste offsite to a publicly-owned treatment works facility, an industrial/commercial wastewater treatment facility, or to a recycler. There will be monthly or annual costs associated with these options; however, the agency does not have an estimate at this time. The overall fiscal impact to individuals and businesses will depend on the number of affected injection wells that are closed or permitted due to implementation of the proposed amendments.

SMALL AND MICRO-BUSINESS ASSESSMENT

There will be adverse economic effects, which are not anticipated to be significant, to small or micro-business as a result of the implementation of the proposed amendments. The construction of new large capacity cesspools and motor vehicle waste disposal wells are banned by the federal rules as of April 5, 2000. The construction of large capacity cesspools in Texas has been banned since at least 1997. The proposed amendments will require operators of existing motor vehicle waste disposal wells that are located in groundwater protection areas to obtain a permit or close the facility by no later than January 1, 2005, and January 1, 2007 for all remaining motor vehicle waste disposal wells located outside of groundwater protection areas. The agency is in the process of determining the location of groundwater protection areas in Texas.

Large capacity cesspools are drywells that receive untreated sanitary waste, and which sometimes have an open bottom and/or perforated sides. The UIC requirements do not apply to single-family residential cesspools or to non-residential cesspools that receive solely sanitary waste and have the capacity to serve fewer than 20 persons (receive 5,000 gallons a day or less). Motor vehicle waste disposal wells are wells or subsurface fluid distribution systems that receive or have received fluids from vehicular repair or maintenance activities, such as an auto body repair shop; automotive repair shop; new and used car dealerships; aviation, marine, and rail repair facilities; specialty repair shops (such as transmission and muffler repair shops); or any facility that does any vehicular repair work.

The commission estimates that the majority of Class V Injection wells located in Texas will be owned and operated by small or micro-businesses. Data presented in the referenced EPA report indicates that approximately 98% of all owners and operators of Class V Injection wells affected by the proposed amendments are small or micro-businesses. The total number of wells affected by this rulemaking is undetermined at this time because none have been inventoried (registered) as required by existing rules. Because large capacity cesspools have been banned in Texas, the commission estimates that the number of cesspools affected by the proposed amendments will be fairly low. Any small or micro-business that owns and operates a facility that conducts vehicle maintenance may possibly be affected by the proposed amendments. Although the total number is unknown, the commission estimates there will be a few small or micro-businesses that have operational wells affected by the proposed amendments.

The EPA conducted an economic analysis of the federal rules and published the findings in the November 19, 1999, report titled "Economic Analysis for Final Rule: Revision to the Underground Injection Control Regulations for Class V Injection Wells." Based on the EPA report, the annual cost to individuals and businesses would be approximately $3,700 to close a large capacity cesspool, and $4,300 to $11,400 to close a motor vehicle waste disposal well, depending on the waste stream in the well.

If a facility qualified for a permit, the total costs to receive the permit would depend on whether best management practices have to be implemented to meet required environmental standards. If a facility meets environmental standards, the total one-time costs (including initial sampling, permit development, and application fees) would be approximately $2,600 with annual monitoring costs of approximately $1,900. If a facility has to implement best management practices, the total capital, sampling, and permit costs would be approximately $4,400 to $29,600 with annual monitoring and O&M costs (for best management practice equipment) of approximately $3,200 to $6,500. This last annual range could increase if capital expenditures for best management practice equipment was financed over several years.

In addition to closing the well, if the facility continues operations, it will have to continue to handle the generated waste. The agency estimates that the majority of urban facilities are also tied into sewer systems, which could be used to dispose of waste, depending on the waste stream. Fewer rural sites would have access to sewers and would have to rely on other options. Other alternatives to dispose of waste would include sending the waste offsite to a publicly-owned treatment works facility, an industrial/commercial wastewater treatment facility, or to a recycler. There will be monthly or annual costs associated with these options; however, the agency does not have an estimate at this time. The overall fiscal impact to small and micro-businesses will depend on the number of affected injection wells that are closed or permitted due to implementation of the proposed amendments.

DRAFT REGULATORY IMPACT ANALYSIS DETERMINATION

The commission reviewed the proposed rulemaking in light of the regulatory analysis requirements of Texas Government Code, §2001.0225, and determined that the rulemaking is not subject to §2001.0225 because it does not meet the definition of a "major environmental rule" as defined in the act. "Major environmental rule" means a rule the specific intent of which is to protect the environment or reduce risks to human health from environmental exposure and that may adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, or the public health and safety of the state or a sector of the state. Although the intent of the rules is to protect the environment or reduce risks to human health from environmental exposure, the rules will not have a material adverse impact on the economy because the primary purpose of the proposed rules address groundwater contamination from large capacity cesspools and motor vehicle waste disposal wells. Large capacity cesspools have already been banned in the state and the commission has no inventory of registered motor vehicle waste disposal wells. Furthermore, the rulemaking does not meet any of the four applicability requirements listed in §2001.0225(a). Section 2001.0225 only applies to a major environmental rule, the result of which 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. The proposed rulemaking does not exceed a standard set by federal law, an express requirement of state law, a requirement of a delegation agreement, nor adopt a rule solely under the general powers of the agency.

Chapter 27 of the TWC authorizes the commission to regulate injection wells and §27.019 authorizes the commission to adopt rules reasonably required for the regulation of injection wells. Section 330h(b)(1) of the federal SDWA requires that the EPA promulgate regulations for state underground injection programs containing minimum requirements for effective programs to prevent underground injection which endangers drinking water sources. The commission believes that the proposed rules do not exceed standards set by federal law. New federal requirements ban all new motor vehicle waste disposal wells and require existing motor vehicle waste disposal wells in groundwater protection areas or other sensitive groundwater areas to close or obtain a permit. The new federal requirement found in 40 CFR §144.87(c) provides: "States may also delineate other sensitive groundwater areas by January 1, 2004... If a state or EPA region fails to identify these additional sensitive groundwater areas by January 1, 2004, the new requirements of this rule will apply to all motor vehicle waste disposal wells in the state effective January 1, 2007...." Because the commission is choosing not to identify other sensitive groundwater protection areas, the requirements applicable to existing motor vehicle waste disposal wells must be implemented statewide by January 1, 2007. Under the proposed rules, all large capacity cesspools and new motor vehicle waste disposal wells are banned. Owners or operators of existing motor vehicle waste disposal wells must close the wells or apply for a permit.

The commission believes that the proposed rules do not exceed an express requirement of state law. Requirements for injection wells are found in Chapter 27 of the TWC. Section 27.003 of the TWC provides that: "It is the policy of this state and the purpose of this chapter to maintain the quality of fresh water in the state to the extent consistent with the public health and welfare, the operation of existing industries, and the economic development of the state, to prevent underground injection that may pollute fresh water, and to require the use of all reasonable methods to implement this policy." However, Chapter 27 of the TWC does not provide specific standards or requirements for large capacity cesspools or motor vehicle waste disposal wells. Therefore, the commission does not believe that an express requirement of state law has been exceeded in the proposed rules.

The commission has also determined that the proposed rules do not exceed a requirement of a delegation agreement or contract between the state and an agency of the federal government. The State of Texas has been delegated authority to administer the UIC program in the state by the EPA pursuant to the federal SDWA. The SDWA requires the EPA to promulgate minimum requirements for effective state UIC programs that prevent underground injection which endangers drinking water sources. The commission believes that the proposed rules do not exceed the new federal requirements for large capacity cesspools or motor vehicle waste disposal wells, nor exceed the requirements in the delegation agreement with the EPA for state authorization of the UIC program.

The commission also believes that these rules are proposed under specific authority of the Injection Well Act, Chapter 27 of the TWC. Section 27.003 requires the use of all reasonable methods to implement the policy of the state to maintain the quality of fresh water in the state to the extent consistent with the public health and welfare, the operation of existing industries, and the economic development of the state, and to prevent underground injection that may pollute fresh water. Section 27.019 requires the commission to adopt rules reasonably required for the regulation of injection wells. These proposed rules implement requirements for certain types of Class V wells to prevent underground injection that may pollute fresh water.

The commission invites public comment on the draft regulatory impact analysis determination.

TAKINGS IMPACT ASSESSMENT

The commission evaluated these proposed rules and performed a preliminary assessment of whether Texas Government Code, Chapter 2007 is applicable. The commission's preliminary assessment indicates that Texas Government Code, Chapter 2007 does not apply to these proposed rules because this is an action that is reasonably taken to fulfill an obligation mandated by federal law, which is exempt under Texas Government Code, §2007.003(b)(4). The State of Texas has received authorization from the EPA to administer the UIC program in Texas. The SDWA, 42 USC §300h, requires that the administrator of the EPA promulgate regulations for state underground injection programs containing minimum requirements for delegated programs to prevent underground injection which endangers drinking water sources. The proposed rulemaking will provide consistency with new federal rules for two categories of Class V wells the EPA has determined to be a source of endangerment to drinking water.

Nevertheless, the commission further evaluated these proposed rules and performed a preliminary assessment of whether these proposed rules constitute a taking under Texas Government Code, Chapter 2007. The following is a summary of that evaluation and preliminary assessment. The primary purpose of these proposed rules is to implement federal requirements for large capacity cesspools and motor vehicle waste disposal wells. The proposed rules would substantially advance this purpose by banning new motor vehicle waste disposal wells and by requiring the owners and operators of existing motor vehicle waste disposal wells to close the wells or obtain a permit from the commission. Cesspools have already been banned in Texas.

Promulgation and enforcement of these proposed rules would be neither a statutory nor a constitutional taking of private real property. Specifically, the subject proposed regulations do not affect a landowner's rights in private real property because this rulemaking does not burden (constitutionally), nor restrict or limit, the owner's right to property and reduce its value by 25% or more beyond which would otherwise exist in the absence of the regulations. In other words, these rules implement federal requirements for closure of motor vehicle waste disposal wells and large capacity cesspools, but because there are no inventoried motor vehicle waste disposal wells in the state and cesspools have already been banned, there will be no burden, restriction, or limitation on the owner's right to property. Additionally, a prohibition on such disposal wells and cesspools would not reduce property value by 25%.

CONSISTENCY WITH THE COASTAL MANAGEMENT PROGRAM

The executive director reviewed the proposed rulemaking and found that the rule is neither identified in Coastal Coordination Act Implementation Rules, 31 TAC §505.11, relating to Actions and Rules Subject to the Texas Coastal Management Program (CMP), nor will it affect any action or authorization identified in Coastal Coordination Act Implementation Rules, 31 TAC 505.11. Therefore, the proposed rule is not subject to the CMP.

PUBLIC HEARING

A public hearing on this proposal will be held in Austin on February 20, 2001 in Building F, Room 2210 at 10:00 a.m. at the commission's central office located at 12100 Park 35 Circle. The hearing is structured for the receipt of oral or written comments by interested persons. Individuals may present oral statements when called upon in order of registration. Open discussions will not occur during the hearing; however, an agency staff member will be available to discuss the proposal 30 minutes prior to the hearing and will answer questions before and after the hearing.

Persons with disabilities who have special communication or other accommodation needs who are planning to attend the hearing should contact the agency at (512) 239-4900. Requests should be made as far in advance as possible.

SUBMITTAL OF COMMENTS

Comments may be submitted to Joyce Spencer, Office of Environmental Policy, Analysis, and Assessment, MC 205, P.O. Box 13087, Austin, Texas 78711-3087, or faxed to (512) 239-4808. All comments should reference Rule Log Number 2000-015-331-WT. Comments must be received by 5:00 p.m., March 5, 2001. For further information contact Melissa Estes, Policy and Regulation Division, (512) 239-3937.

Subchapter A. GENERAL PROVISIONS